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March 2026

 

“We received guardianship documents…”

By Pauli D. Loeffler

First things first

Where are the Oklahoma guardianship statutes? Unless indicated otherwise in this article, citations are to Title 30 of the Oklahoma Statutes. You can access the Oklahoma Statutes access online through the Oklahoma Supreme Court Network at this link: http://www.oscn.net/applications/oscn/index.asp?level=1&ftdb.

This article will concentrate on guardianship of an adult.

When the bank receives Letters of Guardianship appointing a guardian over your customer, take note of the court that issued the order. If the guardianship came from a state court other than an Oklahoma District Court, unless your bank has a branch in the state which issued the Letters of Guardianship, the court does not have jurisdiction over your bank in order to enforce the order. In that event, the following Oklahoma Statute covers this:

• 3-317 – Registration of Guardianship Order by Guardian Appointed in Another State

If a guardian has been appointed in another state and a petition for the appointment of a guardian is not pending in this state, the guardian appointed in the other state, after giving notice to the appointing court of an intent to register, may register the guardianship order in this state by filing as a foreign judgment in a court, in any appropriate county of this state, certified copies of the order and letters of office.

• 4-601 – Nonresident Ward’s Guardian – Notice

When a person liable to be put under guardianship, according to the provisions of this chapter, resides without this state, and has estate therein, any friend of such person, or any one interested in his estate, in expectancy or otherwise, may apply to the judge of the district court of any county in which there is any estate of such absent person, for the appointment of a guardian; and if, after notice given to all interested, in such manner as the judge orders, and a full hearing and examination, it appears proper, a guardian for such absent person may be appointed.

What is the definition of guardian? Guardians must be appointed by a court. §1-106 provides:  “The term “guardian” includes persons appointed as general and limited guardians of the person, general and limited guardians of property, and special guardians, but does not include persons appointed as guardians ad litem.  The term “ad litem” is Latin and means “for the lawsuit” and is a person appointed by the court solely to represent the interests of another in a legal action. For instance, a guardian ad litem is often appointed for a child in a divorce when custody is contested.

The person for whom a guardian is appointed is known as the “ward.”

Understanding guardianship orders

Useful definitions (§1-111). This section gives defines terms useful to understanding what is going on in a guardianship.

A. As used in the Oklahoma Guardianship and Conservatorship Act:

4. “Estate” means the property of the person whose affairs are subject to a guardianship proceeding…

7. A “guardian of an incapacitated person” means a person who has been appointed by a court to serve as the guardian of an incapacitated person to assure that the essential requirements for the health and safety of said person are met, to manage the estate or financial resources of said person, or both…

12. “Incapacitated person” means a person eighteen (18) years of age or older:

a. who is impaired by reason of:

(1) mental illness… as defined by Title 43A of the Oklahoma Statutes,

(2) mental retardation or developmental disability as defined by Section 1-818.2 of Title 63,

(3) physical illness or disability,

(4) drug or alcohol dependency as defined by Section 3-403 of Title 43A…, or

(5) such other similar cause, and

b. whose ability to receive and evaluate information effectively or to make and to communicate responsible decisions is impaired to such an extent that said person:

(1) lacks the capacity to meet essential requirements for his physical health or safety, or

(2) is unable to manage his financial resources. Whenever in the Oklahoma Statutes the term “incompetent person” appears and refers to a person who has been found by a district court to be an incompetent person… [I]t shall have the same meaning as “incapacitated person” but shall not include a person who is a partially incapacitated person…

16. A “limited guardian” means a person appointed by the court to serve as the guardian of a partially incapacitated person and who is authorized by the court to exercise only:

a. some of the powers of a guardian of the person or whose power as guardian of the person extends only to certain matters pertaining to the care or control of the ward as specified by the court, or

b. certain powers as guardian of the property over the estate or financial resources of the ward, or whose powers as guardian of the property extend only to some portion of the estate or financial resources of the ward;

17. “Manage financial resources” or “manage the estate” means those actions necessary to obtain, administer, and dispose of real property, business property, benefits and income, and to otherwise manage personal financial or business affairs;

“Partially incapacitated person” means an incapacitated person whose impairment is only to the extent that without the assistance of a limited guardian said person is unable to:

a. meet the essential requirements for his physical health or safety, or

b. manage all of his financial resources or to engage in all of the activities necessary for the effective management of his financial resources. A finding that an individual is a partially incapacitated person shall not constitute a finding of legal incompetence. A partially incapacitated person shall be legally competent in all areas other than the area or areas specified by the court in its dispositional or subsequent orders. Such person shall retain all legal rights and abilities other than those expressly limited or curtailed in said orders…

25. “Property” means real property, personal property, income, any interest in such real or personal property and includes anything that may be the subject of ownership;

26. “Restrictions on the legal capacity of a person to act in his own behalf” means powers of an incapacitated or partially incapacitated person which are assigned to a guardian;

Powers of the guardian. §1-119 provides: “A guardian has only those powers over the person or the property of the ward, or both such person and property, as ordered by the court…” As far as the bank is concerned, you will need to ascertain: 1) The type of guardian (general, limited or special), 2) whether the guardian is over the person, the property or both, 3) if the ward is “partially incapacitated” the extent to which the ward may conduct act on his or her own.
What type of guardian do you have? §1-108 classifies guardians:

Guardians are either:
1. General;
2. Limited; or
3. Special.

Under §1-109, a general guardian is one who is the guardian of the person or ALL the property of the ward within the state of Oklahoma or may of both the person and property of the ward.
A limited guardian is one who is authorized by the court to exercise limited powers over the person of the ward or over the property of the ward within the state of Oklahoma or both the person and property. Sometimes, multiple guardians are appointed, each with limited powers. I remember a guardianship with four siblings as coguardians. One had authority to make health care decisions, another had authority to make home and living decisions, a third one had authority to manage the business of the ward, and the fourth one had authority to manage financial resources. Fortunately, this is not the norm. It is not uncommon for coguardians to be appointed but usually it is without specific duties assigned. I will cover how to handle the situation where more than one guardian is appointed by the court.

Bankers tend to, for want of a better word, “freak-out” when they see the term “special guardian.” Pursuant to §1-110, a special guardian may be appointed by the court pursuant to §3-115. A special guardian is one that is appointed for a person whose health or safety or financial resources will be seriously damaged unless immediate action is taken, and no person appears to have authority to act or a guardian previously appointed is unable to or refuses to act. The special guardian is appointed for a period not exceeding 30 days, and a subsequent hearing will be scheduled for a date within the time period. A petition to appoint a special guardian may contain also contain a request for appointment of a general or limited guardian, or this may be done by a separate petition. §3-111 requires the court to determine whether or not it is necessary to appoint a guardian of the person, property or both as well as the nature and extent of any incapacity of the ward (see below).

When the ward is determined to be a “partially incapacitated person.” If the court determines the ward is “partially incapacitated,” the guardianship type will always be a limited guardianship with regard to powers. §3-113 requires the court to state the specific limitations imposed upon the ward, including but not limited to appointment of an agent (signer on an account or appointment of an attorney in fact under a POA/DPOA, enter into contracts, execute deeds, mortgages, and releases, make gifts of property, drive a vehicle, maintain a professional license, vote, be a juror, etc. You will need to see obtain a certified copy of the court’s order in order to know what acts the ward is considered competent to perform.

When the ward is an “incapacitated person.” If the ward is determined to be an “incapacitated person,” the court has determined the person to be legally incompetent. This means the ward cannot: a) write or indorse checks, make withdrawals using a debit card, authorize a telephone check, opt-in for ODP, add, remove or change PODs or authorized signers, b) obtain, extend, renew or modify a loan, or c) enter into a lease or renew a safe deposit box lease or even enter the box without the guardian’s consent. If the bank receives a guardianship order for an incapacitated person, you MUST flag all accounts, etc. While it is up to the guardian whether s/he wishes to close current accounts or have them restyled under the guardianship, I would want to advise the guardian that if there is any chance the ward might get access to checks on the current account or use the information to make purchases using the account information, it is advisable to close the current account and open a new one.

If the ward is an incapacitated person and is the trustee on an trust, the court order effectively removes her/him from acting as trustee. The determination does NOT, however, trump the provisions of the trust with regard to who is the successor trustee, i.e., the provisions of the trust are still effective. The guardian will not become the successor trustee of an existing trust unless s/he is named as such in the trust or the court provides a specific order to that effect. Rather, the successor trustee will step up, and the guardian will have to work with the named successor.

Similarly, if a rep payee for social security or federal fiduciary for VA benefits is someone other than the guardian, the guardian will either have to work with the rep payee or federal fiduciary or be approved as the rep payee or federal fiduciary. Since neither the SSA nor VA allows commingling of funds with other funds of the beneficiary, the guardian would need to receive the approval of these organizations before these funds could be directly deposited into a guardianship account. Otherwise, the guardian will need to set up separate rep payee and/or federal fiduciary account to receive the deposits. The guardian must account to the court for all funds received by the ward as well as account for funds paid on behalf of the ward. S/he will also have to report to SSA or VA for funds received from these organizations even if commingling in a guardianship account is approved.

If prior to the determination of incapacity by the court, the ward has named one or more PODs, it is perfectly fine for the PODs to remain on the current account subject to the guardian’s control or be carried over to a new guardianship account if one is needed. As far as the changing prior POD designations or adding PODs to an account having none, this is NOT a power granted to the guardian but would require a specific order of the court. I have seen this allowed by courts on occasion. I also have seen court orders allowing the guardian to set up a trust to avoid probate proceedings.

Under the Uniform Durable Power of Attorney Act in Title 58, § 3008, the appointment of a guardian for an incapacitated ward does NOT automatically trump a durable power of attorney Under this statute, the guardian, who is considered to stand in the shoes of the ward, may revoke the DPOA or allow the attorney in fact to continue to act. On the other hand, the guardian CANNOT appoint an authorized signer on a guardianship account without order of the court. A guardian is a fiduciary and a fiduciary cannot delegate his/her the duty without either a court order or statutory authority. Additionally, the guardian is entitled to have ALL information the ward would be entitled to obtain, so a guardian over property would be entitled to information regarding deposit accounts, loans, safe deposit boxes, retirement accounts as well as business accounts including information prior to the date of appointment.

A guardian of the property of the ward cannot sell or encumber real estate of the ward without authorization of the court.

Multiple coguardians. Quite often more than one guardian is appointed by the court over the person or property or both. The order will not state that each may act independently because 30 O.S. § 4-502 takes care of the problem:

A. If there are two guardians who are residents of this state, the act of one alone shall be effectual:

1. If a coguardian is laboring under any legal disability from serving, said coguardian in such case shall be relieved from official liability; provided however, proper finding and valid order of the district court having jurisdiction therein is first obtained; or

2. If a coguardian has given the other coguardian authority in writing to act for both.

B. If there are more than two guardians, the act of a majority of them is valid.
It is recommended that each coguardian grant the other coguardians the authority to act with an “or” between their names, if there are more than 2 guardians A template granting such authority can be accessed on the OBA’s Legal Links web page under Templates, Forms and Charts.

Arbitration Waiver in Merit Holdings v. International Bank of Commerce
By Scott Thompson

Recently, I wrote about the case of Hurt v. Arvest, wherein Division I of the Oklahoma Court of Civil Appeals (“COCA”) invalidated the arbitration clause of an account agreement because it found the entire account agreement to be an illusory contract. The OBA and others filed amicus briefs asking the Oklahoma Supreme Court to take up the case on certiorari review. That case is still pending; however, Division II of the COCA has now rendered an opinion that once again undermines arbitration clauses, including those commonly found in loan documents.

The COCA’s December 22, 2025, decision in Merit Holdings, LLC v. International Bank of Commerce (Case No. 122,379) represents a shift in the interpretation of arbitration agreements and the doctrine of waiver within the state’s commercial sector. The COCA reversed a trial court order that had stayed judicial proceedings in favor of arbitration and introduced a standard that appears to prioritize litigation conduct over express contractual anti-waiver provisions. Once again, the OBA has filed as an amicus asking the Oklahoma Supreme Court to grant review of the COCA opinion. The brief filed by OBA states the COCA opinion essentially “re-writes the rules governing commercial arbitration in Oklahoma”. The case centers on whether a sophisticated commercial entity—International Bank of Commerce (IBC)—forfeited its bargained-for right to arbitrate by defending its interests in court during the preliminary stages of a high-stakes fraud dispute.

A. The Underlying Facts

The matter of Merit Holdings begins with the collapse of a multi-million-dollar automotive dealership network. In 2019, Randy Byford, a prominent and established car dealer, sought capital to expand his operations, eventually soliciting an investment from David Le Norman, a businessman with significant capital resources. Under the resulting partnership, Byford maintained operational control of the dealerships due to his specialized relationships with vehicle manufacturers, while Le Norman and his companies provided financial backing, including supplemental floor plan financing.

For bankers unfamiliar with floor plan financing, it is a specialized revolving line of credit that allows car dealerships to purchase inventory and the loans are typically secured by the vehicles themselves. When a vehicle is sold, the dealer uses the proceeds to immediately pay down the specific advance for that vehicle—a process known as paying the unit “off the floor”. However, Le Norman discovered that Byford had been “selling out of trust,” meaning he was retaining the sales proceeds for other uses rather than repaying the lending banks, including IBC. Subsequent investigations revealed that Byford had also “fraudulently obtained advances exceeding the value of the collateral” and had secured financing with “collateral that never existed”.

Following Byford’s suicide, the full scope of the fraud was uncovered. IBC was left with a massive credit exposure. In an attempt to salvage the business and restructure this staggering debt, IBC and the successor entity, Merit Holdings, entered into a series of complex loan agreements starting in October 2020. These agreements included specific arbitration provisions designed to ensure that any future disputes regarding the debt restructuring would be handled in arbitration rather than in court.

B. The Contractual Framework: Arbitration and Anti-Waiver Provisions

The restructuring agreements between IBC and Merit Holdings contained mandatory arbitration clauses requiring that “all Covered Claims… shall be resolved through arbitration”. To protect the bank’s ability to manage its collateral during a dispute, the parties included specific “anti-waiver” provisions. These provisions stipulated that the use of “provisional judicial remedies” such as injunctions, restraining orders, or self-help measures “shall not operate as a waiver” of the right to compel arbitration. This standard risk-management tool in the banking industry allows a lender to act swiftly in court to prevent the dissipation of assets while reserving the right to have the merits of the underlying fraud or contract claims decided by an arbitrator. This approach is explicitly authorized by 12 O.S. § 1855(A), which permits contracting parties to define the circumstances that constitute—or do not constitute—the waiver of arbitration.

Despite these provisions, Merit Holdings sued in the District Court of Oklahoma County, alleging that IBC had aided and abetted Byford’s fraud and had “fraudulently and economically coerced” Merit into signing the restructuring agreements that contained the arbitration clauses. IBC responded by filing a motion to dismiss, asserting that Merit had failed to state a claim, and simultaneously filed an alternative motion to compel arbitration. Crucially, IBC asked the court to decide the motion to dismiss first.

C. Procedural History and the District Court’s Order

The trial court, presided over by Judge Natalie Mai, focused on the “gateway” question of whether the arbitration agreement itself was valid. Under Oklahoma law, if a party alleges that the entire contract was fraudulently induced, that is usually a question for the arbitrator; however, if the party alleges that the arbitration clause specifically was the product of fraud, the court must resolve that issue first. Judge Mai held a multi-day evidentiary hearing limited to this specific question.
Following the hearing, the trial court issued an order on June 25, 2024, finding that an enforceable agreement to arbitrate existed and that Merit’s claims were subject to that agreement.

Regarding the question of waiver, Judge Mai determined that IBC’s participation in the case—which included defending against an injunction sought by Merit and filing a motion to dismiss—did not constitute an intentional relinquishment of IBC’s right to arbitrate. This finding was consistent with Oklahoma’s deferential standard of review for factual determinations of waiver, as established in Howell’s Well Service, Inc. v. Focus Group Advisors, LLC.

D. The Court of Civil Appeals Decision

Upon appeal, the COCA reversed Judge Mai’s order. The panel concluded that IBC had waived its right to arbitrate by “actively participating” in the litigation. The court placed heavy weight on the fact that IBC sought to have the trial court rule on its motion to dismiss first before addressing the motion to compel arbitration.

The COCA reasoned that “IBC’s acquiescence and participation in continuing to litigate is inconsistent with its right to arbitrate”. The court characterized IBC’s strategy as an attempt to “resolve this dispute through litigation rather than arbitration, relying on arbitration as a backup, should litigation prove unsuccessful”. This strategy was deemed a “knowing relinquishment” of the right to choose the arbitral forum. The opinion also cited IBC’s participation in the injunction hearings as further evidence of waiver, effectively overriding the contract’s anti-waiver provision that specifically authorized such conduct.

A critical element of the COCA’s analysis was the application of the U.S. Supreme Court’s decision in Morgan v. Sundance, Inc. (596 U.S. 411). Prior to Morgan, many courts required a party claiming waiver of arbitration to show that they had been “prejudiced” by the other side’s delay or litigation conduct. Morgan changed this landscape by holding that under the Federal Arbitration Act (FAA), courts may not create “arbitration-specific” rules that do not exist in general contract waiver law.

The COCA in Merit Holdings interpreted Morgan as a directive to focus exclusively on the conduct of the party seeking arbitration. By stripping away the prejudice requirement, the court lowered the bar for finding waiver, concluding that IBC’s “binary choice” to litigate the motion to dismiss was enough to extinguish the right to arbitrate regardless of whether Merit Holdings was actually harmed by the delay.

E. OBA’s Amicus Brief

The OBA brief argues that the COCA misapplied Morgan by using it as a license to ignore the other half of the Morgan mandate: that arbitration agreements must be treated like “any other kind” of contract and that the COCA opinion therefore “undermines long-standing constitutional and statutory protections for freedom of contract”. The OBA’s primary concern is the court’s total disregard for the bargained-for anti-waiver clause. In Oklahoma, the principle of freedom of contract is a foundational aspect of commercial law; as the Supreme Court noted in JPMorgan Chase Bank, N.A. v. Specialty Restaurants, Inc., “courts will neither make a new contract or rewrite existing terms”.

The brief points to Section 1855(A) of the Oklahoma Uniform Arbitration Act as the statutory anchor for this principle. This section expressly allows parties to define what conduct does and does not constitute a waiver. By treating contractually authorized conduct, such as the defense of an injunction to protect collateral, as evidence of waiver, the COCA has effectively rewritten the parties’ agreement and rendered Section 1855(A) a nullity. The brief notes the inherent contradiction in the COCA’s logic: “IBC cannot simultaneously comply with and violate the same contractual provision”.

OBA also contends the COCA opinion conflicts with other caselaw, including the Oklahoma Supreme Court’s recent decision in Thompson v. Heartway Corp. (2025 OK 65). In Thompson, decided just two months prior to Merit Holdings, the Supreme Court reaffirmed that “[a]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration,” including allegations of “waiver, delay, or a like defense to arbitrability.” The COCA in Merit Holdings makes no mention of Thompson and, in fact, does the exact opposite: it resolves all doubts against arbitration and against the trial court’s factual findings. Similarly, in Huber v. MJ&H Fabrications (Case No. 121,590), a 2024 decision from Division I of COCA, the defendant engaged in significantly more extensive litigation than IBC did in Merit Holdings, including a year-long delay, filing an answer and counterclaims, and issuing merits discovery. Yet, Division I found no waiver because these actions were “neither substantive nor did they address the merits”. In contrast, Division II in Merit Holdings found waiver based on a single motion to dismiss and defensive participation in injunction hearings, despite the presence of an express anti-waiver clause. Thus, the determination of whether conduct constitutes waiver could depend on the geography of the parties and whether they are within the confines of Division I or Division II. This is all the more reason the Supreme Court should grant certiorari.

F. The “Waiver Trap”

OBA believes the COCA opinion creates a “waiver trap”. If the Merit Holdings opinion stands, it creates a “perverse incentive” for borrowers who wish to avoid arbitration. A borrower could file a lawsuit in district court and immediately seek a temporary restraining order or injunction regarding collateral. If the lender responds to protect its assets, as it must to fulfill its fiduciary duties, it risks being deemed to have “acquiesced” to the judicial forum and thus having waived its right to arbitrate the underlying dispute.

Anti-waiver provisions were specifically designed to allow for emergency judicial intervention without losing the expertise of an arbitrator for the core merits. OBA believes that borrowers could spring this waiver trap on unsuspecting lenders who believe they are operating under the settled protection of their contract and Oklahoma statutes. However, even for those aware of the trap, there could be unavoidable consequences such as:

• Collateral Management: Lenders may be forced to choose between pursuing a rapid judicial remedy to seize declining collateral or preserving their right to arbitrate.
• Credit Availability: Increased uncertainty regarding the enforceability of risk-management terms could lead banks to tighten underwriting standards or increase interest rates for borrowers.
• Strategic Forum Shopping: The opinion encourages plaintiffs to engage in “strategic litigation behavior” to manufacture waiver arguments through early, high-intensity court filings.

G. The Necessity of Supreme Court Intervention

The Merit Holdings decision has broad implications for the “predictability essential to commercial lending in Oklahoma”. If lenders cannot rely on the express terms of their contracts or the statutory protections of the OUAA, they must adjust their risk profiles accordingly. This may involve shifting from arbitration to other, more costly forms of dispute resolution. This is a systemic issue. It is not just about IBC and its debt; it is about the “integrity of commercial arbitration and lending in Oklahoma”.

The Oklahoma Court of Civil Appeals’ opinion in Merit Holding represents a critical departure from established state and federal arbitration standards. By prioritizing a “conduct-based” waiver analysis over express contractual anti-waiver language and statutory protections under 12 O.S. § 1855(A), the court has introduced a level of volatility into the commercial lending sector that could be catastrophic.

Ultimately, the resolution of Merit Holdings could define the future of commercial contracting in Oklahoma. It could determine whether the “freedom of contract” is a robust protection for sophisticated parties or a principle that can be overridden by a court’s subjective assessment of litigation behavior. Because of the broad implications for commercial contracting throughout the state, the State Chamber of Commerce has also filed an amicus brief asking the Supreme Court to take up the case.

For the banking industry, the stakes are the “predictability and enforceability” of the terms that govern billions of dollars in credit across the state. The Oklahoma Supreme Court must decide whether to allow this “waiver trap” to remain open or to close it in favor of the settled law that Oklahoma businesses have relied upon for decades. That is why OBA’s brief urges the Supreme Court to “restore certainty” by vacating the COCA opinion and reaffirming that freedom of contract—including the right to define waiver—remains a cornerstone of the state’s legal system.

t freedom of contract—including the right to define waiver—remains a cornerstone of the state’s legal system.