Florida Probate & Trust Litigation Blog

Florida Probate & Trust Litigation Blog

By Juan C. Antúnez of Stokes McMillan Antúnez P.A.

4th DCA: Can an e-filing mistake blow your probate creditor filing deadline?

Posted in Creditors' Claims, Practice & Procedure

United Bank v. Estate of Frazee, — So.3d —-,  2016 WL 3745512 (Fla. 4th DCA July 13, 2016)

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Florida implemented mandatory e-filing on April 1, 2013. For everything you’ve ever wanted to know about e-filing in Florida, see here.

Sometimes you blow a deadline and the courts cut you a break (see here). Sometimes you’re not so lucky. This case is an example of the latter.

Florida implemented mandatory e-filing on April 1, 2013. Which means that if a document’s not e-filed, it doesn’t count (even if you made your filing the old fashioned way on paper). If you blow a deadline because you made some kind of e-filing mistake, you can throw yourself on the mercy of the court and ask for an excuse under Rule 2.525(d)’s as “justice” may require exception.

An appellate court’s going to reverse a trial judge’s call on your plea for mercy only if you overcome the almost impossibly deferential “abuse of discretion” standard of review. Which means if you’re a probate lawyer, you should assume you’re probably stuck with whatever your probate judge rules. And that’s exactly what happened in this case.

Case Study:

United Bank hired counsel to file two probate creditor claims on its behalf shortly after e-filing became mandatory in Florida. The bank’s filing deadline was May 15, 2013. The claims were first filed only in paper form on May 14th, but didn’t get properly e-filed until May 23rd. So which “filing” counted? Paper or electronic? According to both the probate judge and the 4th DCA, the only filing that counted was the electronic filing on May 23rd (which meant the creditor claims were filed late):

[A] statement of claim (which qualifies as a “document”), even if submitted in paper, is not filed unless it is electronically submitted or falls within one of the exceptions to electronic filing. When a clerk must accept a paper document under one of the exceptions to electronic filing set forth in Rule 2.525(d), the clerk must “immediately thereafter convert any filed paper document to an electronic document.” Fla. R. Jud. Admin. 2.525(c)(4) (emphasis added). Since “filing” is only accomplished through electronic submission (in the absence of a Rule 2.525 exception), a document is not actually “filed” when improperly submitted to the clerk in paper, and the clerk’s obligation to convert paper filings would not kick in.

. . .

Based on [a May 23rd] filing date, the claims were untimely. There were no circumstances meriting an extension “upon grounds of fraud, estoppel, or insufficient notice of the claims period.” § 733.702(3), Fla. Stat. Unless the court considered the Bank’s claims as having been filed when the Clerk received the paper filing on May 14th, the claims would be barred under the Probate Code.

Does lack of knowledge = justifiable excuse? NO:

OK, so maybe bank’s counsel mucked up the e-filings, but the paper filings were filed timely on May 14th. Did bank counsel get any credit for that? NO. Just because you make an honest mistake figuring out our e-filing rules doesn’t mean you’re going to get a do-over:

The court . . . noted that one of the exceptions in Rule 2.525(d) would allow it to accept the document as timely filed [on May 14th] where “justice so requires.” Fla. R. Jud. Admin. 2.525(d)(8). However, the court concluded that the failure to file was a result of the negligence and lack of knowledge of the attorney . . . and those excuses did not amount to justice requiring the court to allow the late filing of the claims.

Lesson learned?

There are two big risks probate lawyers need to worry about when it comes to Florida’s mandatory e-filing system: missing deadlines and confidentiality issues. This case is a prime example of what can go wrong if you blow a creditor deadline because you didn’t get the e-filing done right. We’ve yet to see someone get slammed for improperly filing confidential documents in a probate proceeding, but probate lawyers file confidential documents all the time, so it’s probably only a matter of time (don’t be the test case!).

For more on how not to run afoul of our e-filing confidentiality requirements, you’ll want to read Laird Lile’s excellent presentation entitled The e-Thics of e-Things, and for more on how e-filing in general shouldn’t be taken for granted by litigators, you’ll want to read E-Filing or E-Failure: New Risks Every Litigator Should Know.

M.D.Fla: What’s it take to haul an offshore trust into a U.S. federal court on diversity-jurisdiction grounds?

Posted in Practice & Procedure

Kozel v. Kozel, 2016 WL 4163562 (M.D. Fla. August 4, 2016)

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An offshore trust is simply a conventional trust that is formed under the laws of an offshore jurisdiction. However, a number of offshore jurisdictions have modified their laws to make their jurisdictions more attractive to settlors forming offshore structures as trusts.

Vast sums of wealth are held in family trusts — and the size of these trusts is only getting bigger (see here). Not surprisingly, these same trusts often get dragged into contested divorce proceedings, especially if one side accuses the other of using the trust to hide assets. This kind of litigation is tricky enough when all the players are domestic (see here). Now add the confoundingly complex jurisdictional issues that get triggered when it’s an offshore trust, and you have the makings of a trust litigator’s perfect storm. Case in point: the Kozel divorce.

Kozel v. Kozel:

Ashley Kozel, the former wife of controversial oil millionaire Todd Kozel, received a nine-figure divorce settlement in the couple’s 2012 Florida divorce. A subsequent judgment resulted in her Florida divorce judge awarding her another $34 million in damages. Mr. Kozel says he doesn’t have the money to pay. Ms. Kozel isn’t buying it, and she’s prosecuting multiple fraudulent-transfer actions to claw back assets she claims her ex’ is either hiding or lavishing on his new wife (see here). One of the targets of this litigation is an offshore trust known as the “Gokana Trust”. To say this trust has been on the receiving end of decidedly unfavorable rulings in the Florida divorce litigation is putting it mildly (see here).

Apparently hoping a change of venue might improve its fortunes in court, the Gokana Trust (along with several other defendants targeted by Ms. Kozel’s claw-back actions) tried to get the fraudulent-transfer claims pending against it transferred to federal court on diversity-jurisdiction grounds. This is the aspect of the linked-to order that should be especially interesting to trusts and estates lawyers.

Since the U.S. Supreme Court’s 2006 decision in the Marshall case, most observers agree litigating inheritance cases in federal court on diversity-jurisdiction grounds has never been easier (see here). But does that view apply to trust litigation too? Maybe not.

Trusts and diversity jurisdiction:

Diversity jurisdiction is the primary avenue for getting trust cases heard in a US federal court. In order for diversity jurisdiction to apply, complete diversity is required, in other words none of the plaintiffs can be from the same state as any of the defendants. If you have one plaintiff and one defendant and they’re both individuals, figuring out if they’re from different jurisdictions is easy.

But what if one of the parties is some kind of entity? It’s still relatively simple if you’re talking about a corporation. A corporation is treated as a citizen of the state in which it is incorporated and the state in which its principal place of business is located. Again, the focus is on only one party.

On the other hand, figuring out a party’s citizenship gets way more complicated if you have to look through the entity shell and identify the citizenship of each of its owners, which is what you have to do with partnerships and LLCs. A partnership or LLC is considered to have the citizenship of all of its constituent partners/members. If even one LLC member or partner shares citizenship with any opposing party, you don’t qualify for diversity jurisdiction. Bottom line, it’s much tougher to get into federal court under this rule.

So what rule applies to trusts? Depends. If the trustee’s playing offense, then the simpler corporate rule applies. If the trustee’s playing defense, then the tougher look-through rule applies, which means that if even one of the trust’s beneficiaries is a Florida citizen there’s no diversity jurisdiction; the case stays in state court. The Gokana Trust is playing defense in this case, so the look-through rule applies. Here’s why:

Defendant lists the name of Gokana Trust’s sole trustee which is insufficient to establish diversity. The Eleventh Circuit recently held that a trustee constitutes the real party in interest and can “sue in [its] own right, without regard to the citizenship of the trust beneficiaries.” Wells Fargo Bank, N.A. v. Mitchell’s Park, LLC, 615 Fed.Appx. 561, 563 (11th Cir. 2015)(citing Navarro Sav. Ass’n v. Lee, 446 U.S. 458, 100 S.Ct. 1779, 1783–84, 64 L.Ed.2d 425 (1980) . . .

In Wells Fargo Bank and Navarro, the trustee was the Plaintiff bringing the action, and the court had to decide whether the trustee was the real party in interest that could bring the claim on behalf of the trust. In contrast, when cases involved trusts as removing defendants, the Eleventh Circuit has held that the trust’s citizenship was determined by the citizenship of all of its members. See e.g. Carden v. Arkoma Assoc., 494 U.S. 185, 195 (1990); Riley v. Merrill Lynch, Pierce, Fenner, & Smith, Inc., 292 F.3d 1334, 1339 (11th Cir. 2002), abrogated on other grounds by Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit, 547 U.S. 71, 89 (2006) . . . See also . . . First Mut. Grp., LP v. Melton, No. 6:14-CV-1758-ORL-41, 2015 WL 892369, at *4 (M.D. Fla. Mar. 2, 2015) (reviewing Carden, Navarro, and Riley and noting that the requirement to name all of the beneficiaries of the trust has a narrow exception: where the trustee is a plaintiff, bringing the action as the real party in interest.)

The Supreme Court recently noted that the “confusion regarding the citizenship of a trust is understandable and widely shared[,]” and clarified that the Navarro rule coexists with the rule that “when an artificial entity is sued in its name, it takes the citizenship of each of its members.” Americold Realty Trust, 136 S. Ct. at 1016.

To the extent that identifying the trustee’s citizenship is sufficient, in this case it is a “limited company.” As an unincorporated entity, Defendant must have listed all of its members, and the citizenship of those members, which she failed to do. Therefore, the Court concludes that Defendant has not sufficiently alleged Gokana Trust’s citizenship.[FN3] See Azzo v. Jetro Rest. Depot, LLC, 2011 WL 1357557, at *2 n. 2 (M.D. Fla. Apr. 11, 2011) (in pleading the citizenships of the members, “each member’s citizenship must [also] be properly alleged, be it an individual, corporation, LLC, or other entity”).

[FN3] To the extent that Defendant argues that a business trust is subject to different rules than other kinds of trusts for diversity purposes, the Court is not persuaded that Defendant has demonstrated sufficient cause to distinguish them in this case. See Emerald Investors Trust v. Gaunt Parsippany Partners, 492 F. 3d 192, 202 n. 14 (3rd Cir. 2007) (expressing “unwillingness to distinguish between business trusts and express trusts for citizenship purposes.”).

Lesson learned?

When the US Supreme Court tells you a rule’s confusing and this confusion is “understandable and widely shared,” you know you’re in for a hard day at the office. So how’s this all supposed to work in real life? It’s a two-step process for offshore trusts.

Step one: figure out if all of the trust-related parties can be sued in Florida by applying our special-purpose long arm statute for trust cases (see here). Step two: once it’s clear your case belongs in a Florida courtroom, you need to figure out if it should play out in federal or state court. And to do that you’ll need to work through the diversity jurisdiction rules applied to the Gokana Trust in this case. Simple right? Like I said, think perfect storm.

3d DCA: In a Will contest, will a decedent’s confidential communications with her estate planning attorney remain confidential?

Posted in Ethics & Malpractice Claims

Vasallo v. Bean, — So.3d —-, 2016 WL 6249157 (Fla. 3d DCA October 26, 2016)

testify-trialThe promise of confidentiality is at the heart of the lawyer-client relationship. Confidentiality is so important, it’s guaranteed under both our ethics rules (Rule 4-1.6) and our evidence code (F.S. 90.502).

This basic concept gets muddied in the trusts and estates context because much of the work estate planners do is ultimately intended for the benefit of third parties: a client’s heirs. Which means under certain circumstances estate planners can ethically — and voluntarily (i.e., without an authorizing court order) — disclose confidential information related to a deceased client’s estate plan to third parties (see here).

But what if litigation breaks out? In those cases our broad ethical duties of confidentiality give way to the narrower evidentiary privilege barring the disclosure of confidential lawyer-client communications. For estate planners, this means they’ll usually be forced to testify in a client’s will contest under the privilege exception found in subsection (4)(b) of F.S. 90.502, which provides as follows:

(4) There is no lawyer-client privilege under this section when . . . (b) A communication is relevant to an issue between parties who claim through the same deceased client.

Case Study:

This case involves a will contest in which four of the testator’s children were cut out of her will in favor of a fifth child. The trial court entered an order compelling the testator’s estate planning attorney “to answer counsels’ questions at deposition relating to the testator’s ‘reasons for disinheriting’ the other children.”

Was this a valid order? YES. This case is a classic example of when the evidentiary privilege exception applies.

We deny the petition for writ of certiorari, as petitioner has failed to establish that the trial court’s order constitutes a departure from the essential requirements of the law. See § 90.502(4)(b), Fla. Stat. (2016) (providing that “[t]here is no lawyer-client privilege under this section when: … A communication is relevant to an issue between parties who claim through the same deceased client.”) See also Law Revision Council Note (1976) to § 90.502(4)(b) (noting that “[w]hen multiple parties claim through the same decedent, as in a will contest or a challenge to testate or intestate succession, each party claims to best represent the interests of the deceased. To allow any or all parties to invoke the lawyer-client privilege prevents the swift resolution of the conflict and frustrates the public policy of expeditiously distributing estates in accordance with the testator’s wishes. This subsection simply disallows the privilege in favor of the policies stated above.”) (internal citation omitted); In re Estate of Marden, 355 So.2d 121, 127 (Fla. 3d DCA 1978) (holding that “[a]n attorney’s testimony about a Will drafted by him, after the death of the testator, is not ordinarily privileged.”)

Does this exception always apply in all estate litigation? NO (see here). But what if the trial court’s evidentiary order runs counter to an estate planner’s ethical duties of confidentiality? Evidence rule wins:

Petitioner’s assertion that the statements made to him by the testator are “confidential” under Rule 4–1.6, Rules Regulating the Florida Bar, is unavailing in this circumstance. See R. Regulating Fla. Bar 4–1.6, cmt. (“The attorney-client privilege [section 90.502] applies in judicial and other proceedings in which a lawyer may be called as a witness or otherwise required to produce evidence concerning a client. The rule of client-lawyer confidentiality [rule 4–1.6] applies in situations other than those where evidence is sought from the lawyer through compulsion of law”); Coffey–Garcia v. South Miami Hosp., Inc., 194 So.3d 533, 536 n. 1 (Fla. 3d DCA 2016) (observing that “[t]he distinction between the Ethics Code and Evidence Code is significant because Florida courts have interpreted the Ethics Code’s rule of client-lawyer confidentiality to be broader in scope than the Evidence Code’s attorney-client privilege.”)

Want to get better at screening estate cases? Read “The Strange Case of Dr. Jekyll’s Will: A Tale of Testamentary Capacity”

Posted in Musings on the Practice of Law

Dr. Jekyll and Mr. Hyde (1920)_03Knowing when to say “no” is one of the most difficult — and valuable — skill sets any of us ever develops as a lawyer.

“Should I take on this very wealthy but extremely difficult client?” (NO) “Should I represent a destitute child seeking to challenge a parent’s mean-spirited and unfair will that’s otherwise perfectly legal?” (NO) “What if my client says she doesn’t care who wins or loses, she just wants to ‘do what’s right'”? (NO!!).

What makes these decisions especially challenging is that you have to make them long before you have all the facts, which means they’re usually “gut” calls based on years of practical experience (think 10,000-hour rule). You can’t develop these instincts in a classroom, but you can speed up the learning curve by “virtually” experiencing these situations when you read good estate-related novels (see here), or historical studies (see here), or journalism (see here), or smartly written case studies, like Prof. Stephen Alton’s The Strange Case of Dr. Jekyll’s Will: A Tale of Testamentary Capacity.

And there’s all sorts of good research proving that reading fiction builds emotional intelligence, the essential ingredient needed to navigate complex social situations . . . like screening prospective clients.

So back to The Strange Case of Dr. Jekyll’s Will: A Tale of Testamentary Capacity. Prof. Alton describes it as a vehicle for “examining various legal rules and doctrines that might mitigate the soundness of the testator’s state of mind and, thus, his or her capacity to make a valid will.” I agree, but it’s way more than that too. What this article really does best is demonstrate how even in the midst of the craziest set of facts, when a prospective client is absolutely sure there has to be a cause of action somewhere in all this smoke, the best answer for all concerned might be: “no, you don’t have a case.”

For example, assume a smart, well-spoken lawyer (Gabriel John Utterson) comes to see you about his friend and client’s will. Utterson believes the will can be challenged on “insane delusion” grounds (see here for the Florida law on this point) because his friend signed the will while operating under the assumption that he turned into a murderous crazy person when he drank a certain potion. You might think “yeah, there’s a case here.” And you’d be wrong. Why? Because his friend was a guy named “Dr. Jekyll” who did in fact turn into a murderous “Mr. Hyde” upon drinking a certain secret potion.

Sound crazy? Yup. Is real life ever just as crazy? Oh yeah. So what’s the lesson? Just because you have a bizarre set of facts doesn’t mean you have a case (it usually takes about a decade to figure this out on your own). Here’s how Prof. Alton depicts a veteran lawyer interviewing Utterson, dissecting the operative facts, applying the law, and diplomatically saying: “no, you don’t have a case.”

“Mr. Alton, I believe that my friend Henry Jekyll was laboring under an insane delusion when he made his will conferring his estate upon Edward Hyde. Certainly, at the time he first delivered the hateful will to my care, I thought that Dr. Jekyll must have become mad to do such a thing, for the reasons you have already noted.”

“Well, sir,” I replied, “I am not convinced of this. What might have been his insane delusion? At the time of the delivery of his will to you, you had no specific idea as to what delusion, if any, might have produced the will. Establishing an insane delusion requires proof of the specific, supposed facts that do not exist and that no rational person would believe. If I may be permitted to say this, Mr. Utterson, mere general speculation on your part that Dr. Jekyll was hampered by an insane delusion at the time he made his will would have been insufficient evidence on which to strike down the will. Certainly, you must concede this point.”

“Reluctantly, I do, sir,” rejoined the lawyer.

I continued. “If, at that very time when Dr. Jekyll delivered his will to you, you had learned that he believed he could become Edward Hyde and therefore wanted to leave his entire estate to his alter ego, you might well have said that this was an insane delusion, for how could any rational person believe such a thing? That certainly would be specific evidence of an insane delusion on his part that produced his testamentary disposition, even though, as we said above, the doctor most likely was not generally of unsound mind. However, as you later learned, Dr. Jekyll, on a regular basis, was becoming Mr. Hyde at this time. Thus, the will was not a product of supposed facts that do not exist; instead, as you subsequently learned, the will was a product of a fact (the Jekyll-to-Hyde transformation) which, as astounding as it seemed, was indeed occurring in the real world of your story. Q.E.D., there was no insane delusion. Again, I believe that you must concur in this ultimate conclusion.”

The solicitor simply shrugged, and our dialogue moved on to the matters of undue influence and duress.

Want to get better at screening estate cases? Read The Strange Case of Dr. Jekyll’s Will: A Tale of Testamentary Capacity. It’s fiction, and it’s also good practice for real life.

2d DCA: Can Cayman Islands law determine the outcome of your post-divorce Florida probate proceeding?

Posted in Marital Agreements and Spousal Rights

Ebanks v. Ebanks, — So.3d —-, 2016 WL 358867 (Fla. 2d DCA January 29, 2016)

International-Travel-PalmsInternational divorces that morph into multi-national probate proceedings can be especially challenging. Even if you’re litigating your case in Florida, the law governing your dispute is often multi-jurisdictional. Which means basic assumptions we all take for granted as Florida lawyers can be traps for the unwary.

Prime example: Florida’s patchwork system for automatically severing certain inheritance rights post divorce.

If a divorcing couple jointly owns a house or other real estate in Florida as husband and wife (i.e., as tenants by the entireties), that joint property interest is automatically severed and becomes tenants in common property without survivorship rights upon divorce (see F.S. 689.15) (which means each ex-spouse inherits half at death, no one gets it all); or if your divorcing client doesn’t get around to rewriting his or her will or revocable trust, no problem, ex-spouses are automatically cut out of each other’s estate planning documents (see F.S. 732.507(2) and F.S. 736.1105); and what about beneficiary designation forms for ex-spouses? We’ve got a statutory fix for that one too (see here).

This is all basic stuff for Florida lawyers, and therein lies the trap. It’s really easy to assume (unconsciously) that these rules are universal; they’re not. None of this post-divorce law is relevant if the property at issue isn’t governed by Florida law, which is always the case when you’re talking about real estate located in another jurisdiction. And that’s exactly what happened in the Ebanks case linked-to above.

Case Study:

In this case a married couple (Arthur and Diane Ebanks) owned valuable waterfront property in the Cayman Islands as joint tenants with rights of survivorship. In Florida this would have been tenants by the entireties property. Not so in the Cayman Islands; that form of joint ownership simply doesn’t exist under Cayman Islands law.

When the couple divorced they entered into a marital settlement agreement that contemplated a sale of the Cayman Islands property, but according to the 2d DCA, the “Ebankses’ marital settlement agreement did not address what would happen to the Cayman Islands properties if one of them predeceased the other. Nor did the dissolution judgment speak to this issue.”

So what happened when Arthur died and the property hadn’t been sold? Diane got it all. And did any of Florida’s post-divorce savings statutes save the day? Nope, so saith the 2d DCA:

By operation of Florida statute, a tenancy by the entireties becomes a tenancy in common upon the divorce of the owners. § 689.15, Fla. Stat. (2012); Davis v. Dieujuste, 496 So.2d 806, 809 (Fla.1986). The statute makes no such provision in the case of joint tenancies with rights of survivorship. Of course, there being no ownership by the entireties in the Cayman Islands, that country has no law dissolving an entireties estate upon the owners’ divorce.

Thus, under . . . Cayman Islands law, the three disputed parcels became Diana’s sole property when Arthur died. Accordingly, after Arthur’s death Diana filed with the registrar of lands in the Cayman Islands the required documentation . . . to reflect that ownership of the properties was now vested in Diana alone.

Could this outcome have been avoided by agreement or a little post-divorce cleanup work? Yes. All Arthur and Diane had to do was change the way they held title to the Cayman Islands property post divorce, which is easy to do at nominal cost.

Significantly, neither the final judgment nor the settlement agreement required the Ebankses to alter the tenancy in which the properties were held from a joint proprietorship to a proprietorship in common, nor did any evidence establish that either of them ever contemplated doing so. Cf. Crawford v. Barker, 64 So.3d 1246, 1257 (Fla.2011) (noting that when a marital settlement agreement does not mandate a party to change the beneficiary of an asset, the original designated beneficiary is entitled to the property). This easily could have been accomplished simply by filing form RL 18, at a cost of approximately $60.97 U.S. per property.

Lesson learned? International divorce/probate is a team sport:

There are two big takeaways from this case. First, if you’re a divorce lawyer and the couple owns property internationally, do yourself and your clients a favor: always assume someone’s going to die before your marital settlement agreement’s fully satisfied . . . and plan accordingly.

Second, no matter how smart you think you are, you can’t do it all. If your Florida divorce or probate proceeding somehow involves an issue driven by the property law of some foreign jurisdiction (an increasingly common occurrence), your team’s going to need to include international counsel. The incremental expense is usually well worth the cost savings in the long run (as this case demonstrates).

And if you’re looking for an easy way to meet top international lawyers (and just about anyone else who makes a living working with international private clients), your best bet is to join your nearest STEP branch. I’ve been a member of the STEP Miami Branch for some time. If you have any interest whatsoever in international trusts and estates matters, STEP is where you want to be.

S.D.Fla: Does the “fiduciary exception” to the attorney-client privilege still matter in Florida?

Posted in Ethics & Malpractice Claims

Bivins v. Rogers, — F.Supp.3d —-, 2016 WL 4702682 (S.D.Fla. Sept. 07, 2016)

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The attorney–client privilege is one of the oldest recognized privileges for confidential communications. The United States Supreme Court has stated that by assuring confidentiality, the privilege encourages clients to make “full and frank” disclosures to their attorneys, who are then better able to provide candid advice and effective representation.

We all know that when attorneys represent fiduciaries of any kind (be it guardians, personal representatives or trustees) much of the work we do is intended to benefit not just our clients, but the third parties they’re charged with serving (for example, a guardian’s ward or the beneficiaries of estates and trusts).

The general trend in Florida (especially in the trusts and estates context) is that a third-party beneficiary of your legal services can sue you for malpractice. Examples of this trend include cases in which the beneficiaries of a deceased ward’s estate had standing to sue a guardian’s lawyers for malpractice (see here, here), estate beneficiaries had standing to sue a decedent’s estate planning attorneys for malpractice (see here), and a successor personal representative had standing to sue his predecessor’s attorney for malpractice (see here).

The “fiduciary exception” rule:

A corollary to the line of cases entitling third-party beneficiaries to sue a fiduciary’s attorney for malpractice is the common-law “fiduciary exception” to the attorney-client privilege, which allows third-party beneficiaries to demand access to privileged communications. The basic rule is that if the attorney-client communication has to do with normal administration issues the beneficiaries of the trust or guardianship/probate estate are the intended third-party beneficiaries of that work, so they’re entitled to the information. If the communication has to do with the fiduciary’s own  self interest, for example, if he or she is being sued for malfeasance, then he’s the sole intended beneficiary of that work, and the communications are privileged. In 2006 I wrote here about the application of this rule in the context of a contested Florida guardianship proceeding.

The fiduciary exception is an inherently ambiguous rule that creates huge uncertainties for fiduciaries and their attorneys, inhibiting the free flow of information between clients and their attorneys, which is bad news for all concerned. In 2011 we fixed that problem in Florida by legislatively abolishing the fiduciary-exception rule by adopting new F.S. 90.5021 (see here).

So here’s the question addressed in the linked-to order: Can we have it both ways? Can we allow third-party beneficiaries to sue attorneys working for their fiduciaries while simultaneously blocking those same plaintiffs from getting their hands on privilege attorney-client communications?

Case Study:

This case involves a contested guardianship proceeding that bled over into a contested probate proceeding when the ward passed away. After the ward died his son was appointed personal representative of his estate, and in that capacity he sued the guardian’s attorneys for malpractice, alleging that they “did not properly administer the guardianship to maximize its assets.”

Plaintiff demanded access to the confidential files of the guardian’s attorneys. They refused, asserting the attorney-client privilege. Plaintiff then challenged the privilege assertion on several grounds, two of which should be of interest to every trusts and estates attorney in Florida.

First, plaintiff argued that the Florida Supreme Court’s refusal to adopt F.S. 90.5021 for procedural purposes meant the statute wasn’t valid. I’ve heard this concern from other lawyers, but never thought it really made sense. And I was right. Court said NO to this argument:

While the Florida Supreme Court did decline to follow the Committee’s recommendation to adopt the new provision of the Evidence Code, it did so because the Court “question[ed] the need for the privilege to the extent that it is procedural” and not because the statute was unconstitutional or otherwise unlawful. [See In re Amendments to Florida Evidence Code, 144 So.3d 536, 536–537 (Mem) (Fla.2014).] The Florida Supreme Court’s decision not to adopt Section 90.5021 because it questioned the need for the privilege “to the extent that it is procedural” did not vitiate or overturn the statute. Therefore, contrary to Plaintiff’s argument, the statute remains the law in Florida.

Second, plaintiff argued it was crazy to allow him to sue the guardian’s attorneys for malpractice and at the same time allow these same attorneys to block his discovery requests on privilege grounds:

Plaintiff asserts that it would be nonsensical to allow beneficiaries and estates to sue the attorneys who represent the guardians for malpractice (which Defendants concede beneficiaries and estates are permitted to do by law), but then prevent the beneficiaries and estates from obtaining discovery necessary from the attorneys to prove their malpractice cases.

I don’t buy this argument. There’s nothing stopping a plaintiff from prosecuting a valid malpractice claim without ever getting bogged down in a privilege fight with the defendant attorney. And if anyone’s going to waive the privilege shield, it’s likely going to be the defendant attorney who will want to point to his work product as evidence of due care. Anyway, plaintiff struck out here as well, although the trial court’s reasoning isn’t exactly comforting to those of us who think getting rid of the fiduciary-exception rule was a good idea.

Plaintiff asserts that, since wards and their estates are permitted to sue the guardians’ attorneys for malpractice, it would only make sense for the wards and their estates to be able to obtain the documents necessary to prove their malpractice cases. While Plaintiff’s argument is arguably logical, the Court cannot simply ignore the applicable existing law. This Court will not make policy decisions as that is the job of the legislature. Whether it was prudent or not for the Florida legislature to enact Section 90.5021 is not within the purview of this Court. The fact of the matter is that Section 90.5021 is clear and unambiguous, and the statute supersedes the pre-2011 case law.

Does the fiduciary exception to the attorney-client privilege shield still matter in Florida? NO

The last thing anyone wants is for guardians, personal representatives or trustees to NOT talk to their attorneys. We want these fiduciaries to be fully aware of all of their legal obligations and get the best advice possible on how to comply with those duties. This is especially true in cases where there’s family conflict. Getting rid of the fiduciary-exception rule helps make sure those conversations take place. And cases like this one make sure the right message gets out: it’s safe to talk to your lawyer!

3d DCA: Should we assume most paternity actions in probate are now time barred?

Posted in Practice & Procedure

Rose v. Sonson,  — So.3d —-, 2016 WL 4651350 (Fla. 3d DCA September 07, 2016)

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Norman Rockwell loved the idea of having the “all-American” boy descend from a pirate and his stolen Spanish princess, though it troubled his friend and therapist Erik Erikson. “Do you think you ought to start off the family with him, a cutthroat, a barbarian?” Erikson asked. Rockwell experimented with changing the pirate to a Puritan, then a buccaneer, but finally returned to the original. “Everybody,” he said, “had a horse thief or two in his family.”

Inheritance litigation often turns on a person’s claimed “status” as a family member. Past examples include challenges to a person’s claimed status as a descendant: for example, are you a pretermitted child (click here), or an adopted adult (click herehere), or an adopted-away child (click here), or a descendant by blood (click here), or a posthumously conceived child (click here); or challenges to a person’s claimed status as a parent: for example, are you a “legally” recognized father (click here); or challenges to a person’s claimed status as a spouse: for example, are you “legally” married (click herehere).

In most of these cases a claimant doesn’t have to litigate his or her status until after someone dies. Which means your statute of limitations clock doesn’t start ticking until the moment of death. Not so with paternity actions.

Paternity litigation is different:

If a man dies without a will (intestate), any children he had while married are automatically considered his heirs, entitled to an intestate share of his estate as determined by F.S. 732.103. Not so with out-of-wedlock children. Those heirs have to prosecute paternity actions if they want a share of the estate.

So can you prosecute a paternity action after the alleged father dies? Yes, but only if the claim’s not time barred. And as explained below, the 3d DCA’s ruling in this case means most paternity actions are going to be time barred.

F.S. 95.11(3)(b) imposes a 4-year statute of limitations for paternity actions, starting as of the date the putative child turns 18. This makes sense if all we’re worried about is establishing paternity to enforce a father’s economic support obligations for his minor children. A statute-of-limitations clock that starts running when a putative child turns 18 makes a lot less sense if we’re talking about inheritance litigation, when the “child” at issue is almost always a middle aged adult.

So does F.S. 95.11(3)(b) apply to probate proceedings? In In re Estate of Smith, 685 So.2d 1206 (Fla.1996), the Florida Supreme Court said YES, it does. Was that the end of the story? NO. In 2009 the Smith ruling was overturned by statute with an amendment to F.S. 732.108(2), which said F.S. 95.11 does NOT apply to paternity actions in probate proceedings.

So was that the end of the story? NO. Why? Because until now we’ve never had an appellate court address the following question: was the 2009 change to F.S. 732.108(2)(b) retroactive (thus reviving all previously time-barred paternity claims in probate), or did it only apply prospectively (thus preserving the status quo for all probate paternity claims time barred as of 2009)? How the 3d DCA answered this question potentially impacts every intestate estate in Florida. So yeah, this case is big deal.

Case Study:

In this case a man was born out of wedlock in 1964. His alleged biological father died intestate 48 years later in 2012. The claimant turned 18 in 1982. Under F.S. 95.11(3)(b) he had 4 years to bring suit to establish paternity. In other words, his paternity action was time barred in 1986 — 26 years before his father died and his status as an intestate heir became relevant for inheritance purposes.

The claimant argued his paternity action was revived by the 2009 change to F.S. 732.108(2), which said F.S. 95.11 does NOT apply to paternity actions in probate proceedings. Trial court said NO, and the 3d DCA agreed. Here’s why:

We . . . agree with the trial court that . . . the putative child’s paternity claim following [the decedent’s] death in 2012 is time barred because more than four years has passed since [the claimant] attained majority in 1982. . . . This is because the Florida Legislature did not make the amendment to section 732.108(2)(b) retroactive in its application and applying the 2009 amendment to that provision would not have affected the outcome in any event. This is so because by the time the 2009 amendment to section 732.108(2)(b) took effect to eliminate the limitations bar previously imposed by section 95.11(3)(b), [the putative child’s paternity claim] had long since expired, and as noted in Smith, “[o]nce a claim has been extinguished by the applicable statute of limitations, the claim cannot be revived because a constitutionally protected property right to be free from the claim has vested in the defendant.” Id. at 1210; see also Wiley v. Roof, 641 So.2d 66, 68 (Fla.1994) (“Once the defense of the statute of limitations has accrued, it is protected as a property interest just as the plaintiff’s right to commence an action is a valid and protected property interest…. Florida’s statute of limitations, section 95.011, bars all action unless commenced within designated times…. Once an action is barred, a property right to be free from a claim has accrued.”).

Thus, while section 732.108(2)(b) as amended in 2009 provided relief to similarly situated individuals with existing causes of action by eliminating the four year statute of limitations imposed by section 95.11(3)(b) on paternity determinations in probate proceedings to determine intestate succession going forward, this amendment provides no relief to those such as [the claimant in this case] whose claims had already expired by the time the amendment became law. See Smith, 685 So.2d at 1210 (“[T]he 1986 amendment [to section 95.11(3)(b) to extend the limitations period for bringing paternity actions] provides Scruggs no solace because even under its terms her claim had long since expired.”); Wiley, 641 So.2d at 68 (“The Legislature has the power to increase a prescribed period of limitation and to make it applicable to existing causes of action provided the change in law is effective before the cause of action is extinguished by the force of a pre-existing statute.”) (quoting Walter Denson & Son v. Nelson, 88 So.2d 120, 122 (Fla.1956) (emphasis supplied))).

Do the math; assume most paternity actions in probate are now time barred:

Under F.S. 95.11(3)(b), the 4-year statute of limitations period for paternity actions starts running when a putative child turns 18, which means he or she has until age 22 to file suit. So if you were age 22 or older in 2009 (or 29+ in 2016) you’re forever time barred from adjudicating paternity in a Florida probate proceeding. That’s 65% of Florida’s population (see here). I’m guessing this outcome’s going to come as a big surprise to most probate lawyers. You’ve been warned!

Juan Antúnez to speak on Conflict Resolution and Ethics: A Summary of Mediator Ethics Advisory Committee (MEAC) Opinions for 2015 and 2014

Posted in Settling, Mediating & Arbitrating Inheritance Cases

conflict-resolution1The Florida Supreme Court’s Mediator Ethics Advisory Committee (MEAC) has been issuing formal advisory ethics opinions to certified and court-appointed mediators since 1994. MEAC opinions deal with mediation-related ethics questions governed primarily by Florida’s Rules for Certified and Court-Appointed Mediators.

After 20 years in the trenches, I’m convinced one of the best risk-management tools available to practicing lawyers are our ethics rules. Not because we need someone to tell us it’s a bad idea to lie, steal or cheat; but because we need someone to point out the pitfalls that are NOT self-evident. As former Secretary of Defense Donald Rumsfeld famously put it, it’s the “unknown, unknowns” you need to worry about.

Which is why MEAC opinions are a valuable resource more of us should be aware of. To that end I’m giving a presentation at the Dade County Bar Association’s Probate and Guardianship Committee lunch for Thursday, September 8, 2016 on the MEAC opinions published in 2014 (see here) and 2015 (see here). If you’re able to attend, you should. It’ll be time well spent. Click here for event/registration details and here for my outline.

S.D. Fla: In case of first impression, federal judge rules on constitutionality of Florida’s new trust-specific long arm statute

Posted in Practice & Procedure

Abromats v. Abromats, 2016 WL 4366480 (S.D. Fla. August 16, 2016)

multi-stateIf you’re a trusts and estates litigator in Florida, sooner or later you’re going to be involved in some kind of multi-jurisdictional case. This fact-of-life lead to the adoption in 2013 of F.S. 736.0202, Florida’s long-arm statute specially tailored for trust litigation (see here).

But just because a Florida statute says you can drag a non-resident into a Florida courtroom doesn’t make it so. If our statute violates the Fourteenth Amendment’s Due Process Clause, the non-resident defendant gets a pass. What’s interesting about this case is it’s the first to put F.S. 736.0202 to the constitutional due process test.

Case Study:

This case involves a revocable trust created by a parent while residing in Florida. From that trust she made distributions to a son who lives in Wyoming. After her death this son was sued in Florida by his brother, who accused him of undue influence in connection with a trust amendment that reinstated him as a beneficiary of their mother’s trust. Here’s how the lawsuit was summarized by the court:

[Plaintiff’s] Complaint seeks to declare null and void the “September Amendments,”[FN 2] which reinstated [Defendant] as a beneficiary entitled to Trust funds. . . . The Complaint also seeks approval of an Accounting, which by its nature, encompasses the distributions [Defendant] admits he received.

[FN 2:] The September Amendments were those that [the trust settlor] made with the input of [the Defendant], apparently while [the Defendant] visited Florida for that very purpose.

Under subsection (2)(a)(8) of F.S. 736.0202, our statute says you’ve submitted yourself to the personal jurisdiction of a Florida court if you cash a check sent to you by a trust administered in Florida, which is what happened in this case. Here’s the relevant statutory text:

(2) PERSONAL JURISDICTION.—

(a) Any trustee, trust beneficiary, or other person, whether or not a citizen or resident of this state, who personally or through an agent does any of the following acts related to a trust, submits to the jurisdiction of the courts of this state involving that trust:

. . .

8. Accepts a distribution from a trust having its principal place of administration in this state with respect to any matter involving the distribution.

It’s the law, but is it constitutional?

So according to our statute, a man living in Wyoming can get sued in Florida even if the only contact he’s ever had with our fair state is cashing a check from a Florida trust. But is that the end of the story? NO. The statute’s got to pass constitutional muster.

When a state passes a specialized long-arm statute, like we did in 2013, a three-part due process test gets triggered if the statute’s challenged on constitutional grounds. The three-part test examines:

(1) whether the plaintiff’s claims ‘arise out of or relate to’ at least one of the defendant’s contacts with the forum; (2) whether the nonresident defendant ‘purposefully availed’ himself of the privilege of conducting activities within the forum state, thus invoking the benefit of the forum state’s laws; and (3) whether the exercise of personal jurisdiction comports with ‘traditional notions of fair play and substantial justice.'” Louis Vuitton Malletier, S.A., 736 F.3d at 1355 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-73, 474-75 (1985); Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 413-14 (1984); Int’l Shoe Co., 326 U.S. at 316; Oldfield v. Pueblo De Bahia Lora, S.A., 558 F.3d 1210, 1220-21 (11th Cir. 2009); Sculptchair, Inc. v. Century Arts, Ltd., 94 F.3d 623, 630-31 (11th Cir. 1996)). Put another way, a “nonresident generally must have ‘certain minimum contacts . . . such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.'” Walden v. Fiore, 134 S. Ct. 1115, 1121 (2014) (quoting International Shoe Co., 326 U.S. at 316 (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)).

So did F.S. 736.0202 pass its first constitutional challenge? YES. But the primary reason wasn’t because Wyoming brother actually did anything in Florida. Instead, the court focused on the trust’s connections to Florida.

Not surprisingly, mom (who’d lived in Florida since 1972) hired a Florida lawyer to draft her revocable trust which — surprise! — was governed by Florida law and administered by a Florida trustee. Also not surprising mom’s trust account was held by a Florida bank. What did Wyoming brother do to get himself sued in Florida? Cash mom’s Florida trust-account checks:

[T]he Court finds that the distributions [Defendant] accepted from the Trust establish the requisite minimum contacts, as they are sufficiently “related to” the instant cause of action and the forum. Furthermore, by accepting distributions from the Trust administered from Florida, with the assistance of Florida-based professionals, from funds based in Florida accounts, and with the understanding that Florida law governed, [Defendant] unquestionably “purposefully availed [himself] of forum benefits” and made it such that he “could reasonably anticipate being haled into court” in Florida.

As to the third prong of the due-process test — “fair play and substantial justice” — here again the court ruled against Wyoming brother’s due process challenge. In reaching its conclusion the court pointed to a slew of procedural wrangling the parties had engaged in for the last ten months involving multiple lawsuits filed in New York and Florida. Did that really matter? I’m guessing it didn’t.

The center of gravity for this case was always Florida, and the fact that the Defendant lived over a thousand miles away in Wyoming wasn’t going to change that.

After ten months, the Court believes that it is in the best position to efficiently and effectively resolve the disputes at issue. Moreover, many of the professionals, evidentiary documents, and other discovery matters are present in this forum, making it convenient. Counter-Defendant Baxter is domiciled in South Florida, as was [the Settlor] at the time of the alleged “undue influence.” Finally, the Court finds that Florida, the forum state, has a strong interest in resolving this matter, as [the Settlor] lived, settled the Trust, and passed away in Florida, Florida law governs the Trust, the Accounting occurred in Florida, and the Trust is administered from the forum.

What’s the takeaway?

If a trust is created and administered in Florida, the gravitational pull of a Florida courtroom to adjudicate any dispute involving that trust is going to be significant — perhaps insurmountable, especially under F.S. 736.0202’s new and very expansive long-arm test. This was the statute’s first constitutional challenge by a non-resident trust beneficiary. I expect we’ll see more. In the meantime the safe bet for any beneficiary of a Florida trust is to assume you’ll have to show up in a Florida courtroom if your trust gets litigated — and it doesn’t matter where on the planet you happened to have been living when mom’s trust-account check hit your mailbox years earlier.

What “Hamilton” can teach trusts and estates lawyers about framing their cases

Posted in Musings on the Practice of Law
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Illustration by Lars Leetaru

I’m a huge Hamilton fan. To me the musical represents everything that makes this country great. But why do I feel that way? Contrary to the show’s portrayal of Hamilton as a “scrappy and hungry” man of the people, in reality he was an elitist who disdained the lower classes, feared democratic politics, and loathed the egalitarian tendencies of the revolutionary era in which he lived (see here).

And yet, I still love the show. Why? Because Lin-Manuel Miranda brilliantly “reframed” the Hamilton story in a way that’s perfect for the particular moment in history we’re experiencing today.

There’s a lesson to be had here for trusts and estates lawyers. How a story’s “framed” is critical in any kind of estate litigation. The pleadings and evidence in a typical Will contest read like a script from Days of Our Lives. The star of the show is usually the testator, often painted in surrealistic black and white terms by the contestant as a senile, diseased, mentally unbalanced victim, the equivalent of Shakespeare’s King Lear. On the other hand the proponent draws the testator as a wily, crafty senior citizen motivated by moral indignation to refuse to enable the bad conduct of relatives.

Both story lines can be compelling, which means the side that best frames its side of the case starting from the very first day in court usually has the advantage. As any veteran litigator will tell you, once a particular narrative takes hold in a judge’s mind dislodging it is practically impossible.

In this month’s ABA Journal there’s a great article that uses Hamilton as an example of how lawyers can “frame” the facts of their cases to present winning story lines. The article’s entitled What ‘Hamilton’ teaches lawyers about framing a story and it’s written by Philip N. Meyer, a professor at the Vermont Law School and the author of Storytelling for Lawyers. The article’s a must read for trusts and estates lawyers. Here’s an excerpt:

While reading the closing arguments collected in the excellent Greatest Closing Arguments books by Michael S. Lief and H. Mitchell Caldwell, I realized that trial lawyers, especially in these high-profile closing arguments in historical and spectacular trials, are akin to Miranda in Hamilton. These often theatrical closing arguments “adapt” other stories, sampling from personal anecdotes, and cultural, historical and biblical narratives. Stories-within-stories are nested like Russian dolls, one encased within the form of the next, often framed by a thematic meta-story.