Florida Probate & Trust Litigation Blog

Florida Probate & Trust Litigation Blog

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

Should Florida arbitrators be able to decide “validity” challenges to a will or trust?

Posted in Settling, Mediating & Arbitrating Inheritance Cases

Arbitration-3AAA’s rules for arbitrating wills and trusts specifically authorize arbitrators to decide the validity of the will or trust at issue in a given dispute. Since an arbitrator’s jurisdictional authority in that kind of case is a product of the document’s validity, in essence the arbitrator’s deciding his own jurisdictional authority. Here’s an excerpt from section 7 of the AAA rules:

The arbitrator shall have the power to determine the existence or validity of a trust or will in which an arbitration clause forms a part. Such an arbitration clause shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitrator that the contract is null and void shall not for that reason alone render invalid the arbitration clause.

By contrast, F.S. 731.401, Florida’s enabling legislation for arbitration clauses in wills and trusts, carves validity issues out of the statute’s scope of operation:

A provision in a will or trust requiring the arbitration of disputes, other than disputes of the validity of all or a part of a will or trust, between or among the beneficiaries and a fiduciary under the will or trust, or any combination of such persons or entities, is enforceable.

The sharp contrast between the AAA rules and Florida’s enabling statute highlights an issue the commercial arbitration world’s been grappling with for decades: does an arbitrator have jurisdictional authority to determine his own jurisdictional authority? In the commercial world the doctrine developed to answer this question has a cool German name: kompetenz/kompetenz.

Prof. Rutledge of the University of Georgia School of Law recently published an interesting article entitled The Testamentary Foundations of Commercial Arbitration, which does a great job of comparing and contrasting arbitration in the estate context vs. the commercial context. One of the points of differentiation is the kompetenz/kompetenz doctrine, which he describes as follows:

Stripped to its essence, the doctrine of kompetenz/kompetenz provides that an arbitrator has jurisdiction to determine her own jurisdiction. Though seemingly tautological, the doctrine is essential to the proper functioning of any arbitral system. The arbitrator draws her authority from the contractual agreement of the parties. Despite the source of this authority, cases regularly arise that challenge the enforceability of the arbitration clause . . . In these cases, the arbitrator will sometimes conclude that the defense is valid and, thus, the arbitration clause is unenforceable. This conclusion presents a logical conundrum: if the arbitrator derives her power from the arbitration clause, but then concludes that the arbitration clause is unenforceable, how can her award (so concluding) have any force? The doctrine of kompetenz/kompentenz solves this conundrum by providing that the arbitrator has the power to rule on challenges to her own jurisdiction.

In the United States, the [Federal Arbitration Act (“FAA”)] does not contain a specific provision addressing this issue. Instead, the rule emerged through an amalgam of case law and contractual practice. The seminal decision is typically seen to be the Supreme Court’s 1995 decision in [First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995)]. There, the Court held that courts, rather than arbitrators, presumptively have the power to rule on challenges to the arbitration clauses. However, if the agreement contains clear and unmistakable evidence that the parties intended for the arbitrators to rule on such matters, then courts must defer to that contractual allocation of authority. As a matter of practice, most sets of arbitral rules attempt to allocate decisions of this sort to arbitrators, and United States courts, relying on FirstOptions, generally have found these allocations sufficient.

So if the FAA doesn’t bar arbitrators from deciding validity issues, and the U.S. Supreme Court’s decision in First Options also allows parties to arbitrate validity issues, and the AAA rules allow parties to arbitrate validity issues, why does F.S. 731.401 take such a different tack?

Prof. Rutledge points to a California Supreme Court decision from over a hundred years ago for a possible explanation. In Carpenter v. Bailey, 60 P. 162 (Cal. 1900), a dispute among heirs involving the validity of a will was decided by arbitration. When the winning side asked the court to enforce its arbitration award, the court refused, declaring that:

[T]he matter of the contest cannot be submitted to arbitration. The matter of the probate of a will is a proceeding in rem, binding on the whole world. A few individuals, claiming to be the heirs, cannot by stipulation determine such controversy.

So maybe it’s the in rem nature of a will or trust contest that sets these cases apart. If it is, I don’t find that logic very convincing. I think a more likely reason for why the Carpenter case was decided the way it was is that it reflects a general bias against arbitration that was prevalent a century ago. Times have changed. As noted by Prof. Rutledge, “[m]ore recently, a spate of Supreme Court decisions have facilitated the expansion of arbitration into previously verboten areas, including employment disputes, consumer disputes, and most disputes involving statutory claims under federal and state law.” I believe there’s a good chance a Florida court operating in today’s pro-arbitration world wouldn’t have any problem upholding an arbitrator’s ruling on validity. Time will tell.

4th DCA: Can a probate judge use his “equitable powers” to override our Probate Code?

Posted in Creditors' Claims, Practice & Procedure

Oreal v. Steven Kwartin, P.A., — So.3d —-, 2016 WL 1239756 (Fla. 4th DCA March 30, 2016)

certaintyHaving your case decided against you because a well-intentioned judge chose not to apply some provision of our Probate Code for “equitable” reasons is to stare into the abyss. Why? Because there’s no certainty if we can’t rely on our statutes being followed when they’re most needed — in the midst of conflict. And if there’s no legal certainty, there’s no rule of law. It’s that simple.

Uncertainty breeds litigation:

Certainty is especially important in estate proceedings because one of our primary goals as lawyers in these cases should be to avoid litigation. The collateral damage suffered by families involved in estate litigation is often devastating and irreversible. When parties differ in their predictions of the outcome of a disputed issue, they’re more likely to litigate because no one knows for sure which way the judge’s going to rule.

Also, we operate within an underfunded and overworked court system (in Miami-Dade – on average – each probate judge took on 3,122 NEW cases in FY 2014-15). We simply can’t afford to waste precious judicial resources litigating cases that should’ve been resolved by applying the clear text of our Probate Code.

Bottom line, our Probate Code might seem harsh at times (it is), but in the long run abiding by its mandates is the most “equitable” option for all concerned — and it’s the law. So saith the 4th DCA.

Case Study:

In this case a creditor filed a claim against an estate to collect on an unpaid promissory note. At the time the claim was filed the unpaid principal amount was $375,000, with an accrued interest amount of $397,000, for a total of $772,500. The estate didn’t file a timely objection to the claim, and the probate judge denied the estate’s motion for an extension of time to file an objection. But the judge was apparently unhappy with how the debt was pursued, so he exercised his “equitable powers” and reserved the right to determine whether a set-off against the creditor’s “interest component [was] appropriate due to any unexcused and excessive delay exercised by [the creditor] in attempting to perfect and collect on [its] valid unpaid claim.”

Clearly reading the tea leaves, the estate filed a motion for equitable set-off which (surprise!) the judge granted, finding that the creditor had an equitable duty to prevent the accumulation of interest. According to the 4th DCA, this ruling was directly contrary to the terms of the subject promissory note and section 733.705(9) of our Probate Code:

Section 733.705(9), Florida Statutes, provides that “[i]nterest shall be paid by the personal representative on written obligations of the decedent providing for the payment of interest.” In First Union National Bank of Florida v. Aftab, 689 So.2d 1137 (Fla. 4th DCA 1997), the claimant filed a statement of claim, seeking principal and interest due under two promissory notes executed by the decedent. The estate did not object to the claims. The probate court disallowed default interest. This court reversed, reasoning that “section 733.705(8) [now section 733.705(9)] provides for the payment of interest by a personal representative on a claim that is ‘founded on a written obligation of the decedent providing for the payment of interest.’ Thus, the statute requires that the personal representative pay interest in accordance with the written instrument.” Id. at 1139.

Can a probate judge use his “equitable powers” to override our Probate Code? NO:

OK, so the judge’s ruling ran head on against the law on the books, but what if that law’s unfair. In other words, if the end result is just and equitable, can a probate judge use his “equitable powers” to override our Probate Code? NO, so saith the 4th DCA:

Just as a court cannot rewrite a contract to relieve a party from an “apparent hardship of an improvident bargain,” see Dickerson Fla. ., Inc. v. McPeek, 651 So.2d 186, 187 (Fla. 4th DCA 1995), a court cannot use equity to remedy a situation the court perceives to be unfair.

As the Florida Supreme Court has explained:

[W]e cannot agree that courts of equity have any right or power under the law of Florida to issue such order it considers to be in the best interest of ‘social justice’ at the particular moment without regard to established law. This court has no authority to change the law simply because the law seems to us to be inadequate in some particular case.

Flagler v. Flagler, 94 So.2d 592, 594 (Fla.1957) (en banc). “Where the legislature has provided” “a plain and unambiguous statutory procedure … courts are not free to deviate from that process absent express authority.” Pineda v. Wells Fargo Bank, N .A., 143 So.3d 1008, 1011 (Fla. 3d DCA 2014).

In the instant case, section 733.705(9) plainly and unambiguously provides for the payment of interest and does not provide any judicial discretion. Because “there is a full, adequate, and complete remedy at law,” equity has no role. U.S. Bank Nat’l Ass’n v. Farhood, 153 So.3d 955, 958 (Fla. 1st DCA 2014) (quoting Wildwood Crate & Ice Co. v. Citizens Bank of Inverness, 98 Fla. 186, 123 So. 699, 701 (Fla.1929)). “The imposition of sanctions which contravene … statutes … exceed a trial court’s discretion and require reversal.” Id at 959.

The Florida Fiduciary Access to Digital Assets Act

Posted in Probate & Guardianship Statutes

Illustration: Richard Mia. When You Die, Who Can Read Your Email?

A new law is making it easier for Florida personal representatives to access digital data—such as email, photos and social-media postings—after the account holder dies. It’s called the Florida Fiduciary Access to Digital Assets Act, and it’s modeled on the Revised Uniform Fiduciary Access to Digital Assets Act. This new legislation was passed as Senate Bill No. 494, and it goes into effect starting July 1, 2016. Once effective you’ll be able to find the new act at new Chapter 740 of the Florida Statutes.

The Florida Fiduciary Access to Digital Assets Act accomplishes two purposes. First, it provides fiduciaries the legal authority to manage digital assets and electronic communications in the same manner that they manage tangible assets and accounts. The act distinguishes between when a fiduciary may access the content of digital assets and electronic communications and when the fiduciary may only access a catalog of the digital property. Second, the act provides custodians of digital assets and electronic communications the legal authority they need to interact with the fiduciaries of their users while honoring the user’s privacy expectations for his or her personal communications. Most importantly, a custodian is granted immunity from liability for acts or omissions done in good faith compliance with the provisions of the new act.

And last but not least, the new legislation gives Internet users the ability to plan for the management and disposition of their digital assets if they should die or become unable to manage their assets. This is done by vesting fiduciaries with the authority to access, control, or copy digital assets and accounts.

For more on how the new law is supposed to work while still respecting legitimate privacy concerns, you’ll want to read the bill’s Legislative Staff Analysis. Here’s an excerpt:

General Overview

Because the Florida Statutes do not authorize fiduciary access to digital assets, the purpose of [Senate Bill No. 494] is to provide fiduciaries with specific authority to access, control, or copy digital assets and accounts. The four types of fiduciaries this bill applies to are personal representatives of decedents’ estates, guardians of the property of minors or incapacitated persons, agents who are acting under a power of attorney, and trustees.

According to the Real Property, Probate and Trust Law Section of The Florida Bar, or RPPTL, this act provides the legal authority that a fiduciary needs to manage digital assets in compliance with a person’s estate plan, while also ensuring that a person’s private electronic communications remain private unless the person gave consent for disclosure. The bill allows a user to specify whether his or her digital assets will be preserved, distributed to heirs, or destroyed. In keeping with federal privacy laws, the bill prevents companies that store electronic communications from releasing them to fiduciaries unless the user has consented to the disclosure. Fiduciaries are required under the bill to provide proof of their authority under Florida law to the custodians of the digital assets. Custodians that comply with a fiduciary’s apparent authorization request are given immunity from liability under the statutes that prohibit unauthorized access.

The Uniform Law Commission has stated [here] that this revised uniform act, which [Senate Bill No. 494] mirrors, gives Internet users the ability to plan for the management and disposition of their assets in similar ways that they make plans for tangible property. The bill has a three-tiered system of priorities in the event of conflicting instructions. Additionally, the bill is designed as an overlay statute that works in conjunction with a state’s existing laws involving probate, guardianship, trusts, and powers of attorney.

Limited Application

According to RPPTL, the bill is limited in its scope and applies only to fiduciaries who are already bound to act in compliance with their fiduciary duties and powers. The bill does not extend to family members or other people who seek access to digital assets unless they are also a fiduciary. Moreover, the ability of a fiduciary to access a digital asset does not entitle the fiduciary to own the asset or make transactions with the asset.

The scope of the bill is further limited by the definition of “digital assets.” The bill’s only application is to an electronic record, which includes electronic communications, and does not apply to the underlying asset or liability unless the asset or liability is itself an electronic record.

Online Tool

One significant addition to this year’s version of the bill that was not present last year is the concept of an “online tool” for directing fiduciary assets. The online tool is an electronic service provided by a custodian which allows the user, in an agreement separate and distinct from the terms-of-service agreement, to provide directions for disclosure or nondisclosure of digital assets to a third person.

2013 . . . A probate mediator’s guide to 2013 Mediator Ethics Advisory Committee (MEAC) Opinions

Posted in Settling, Mediating & Arbitrating Inheritance Cases

The 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 ethics questions governed primarily by Florida’s Rules for Certified and Court-Appointed Mediators.

The 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.

As a probate mediator and litigator, I’m convinced one of the best risk-management tools available to us are the 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 valuable tools more of us should be aware of. To that end, here’s my summary of the MEAC opinions for 2013:


It is a breach of confidentiality for a certified mediator to report to the court that a party who appears telephonically or by other electronic means pursuant to court order, failed to return the signed agreement after verbally agreeing to sign it. If a party appearing by phone fails to sign and return an agreement after agreeing to do so, that is a confidential “mediation communication.” The mediation unit cannot report to the court that a party has repeatedly not returned signed mediation agreements after agreeing to do so. A notification to the court that the mediator is “waiting for signatures” for an agreement is a breach of confidentiality.


Unless a crime disclosed to the mediator in caucus falls under one of the exceptions to confidentiality for mediation communications in section 44.405, Florida Statutes (2012), the mediator should not report it. If a mediator decides, during the course of the mediation, that the mediator will make such a report, the mediator must withdraw from the mediation.


If a mediator believes that financially contributing to a judicial campaign or signing a petition supporting a candidate for judge who would preside over the court in which the mediator mediates would compromise or could have the appearance of compromising the mediator’s impartiality or the relationship with the judge, it is ethically correct for the mediator to decline to do so.


It is beyond the scope of a mediator’s role and responsibilities to complete and file a “Notice of Confidential Information within Court Filing” pursuant to rule 2.420(d)(2), Florida Rules of Judicial Administration.


This opinion focuses on several questions related to the appropriateness of a mediator raising issues during mediation. In this case the questions pertain to a family mediation setting but the MEAC responses are not limited to family mediation unless so stated.


Unless the parties have agreed otherwise, written communications included in a mediated agreement that has been signed by all parties and counsel are not confidential.


As long as the advertising is consistent with mediation statutes, court rules, administrative orders, and the Rules for Certified and Court-Appointed Mediators, a mediator may employ an individual on his or her behalf to market mediation services.


Engaging in the dual role of mediator and notary is ethically inappropriate.


It is a clear conflict of interest for a mediator to mediate a case when a party’s attorney is or was previously related to the mediator. A clear conflict of interest cannot be waived regardless of disclosure.


The Notice of Vendor Expectations (Notice) the mediator is questioning creates a non-waivable conflict of interest because of the language it contains.


A Florida Supreme Court certified mediator subject to local rule 9019-2(A)(5), United States Bankruptcy Court, Southern District of Florida, who is mediating in the Loss Mitigation Mediation Program, may sign the referenced mediator’s oath currently required by the rule without violating the Florida Rules for Certified and Court-Appointed Mediators.

2014-15 Probate Court Filing Statistics

Posted in Musings on the Practice of Law

In Miami-Dade – on average – each judge took on 3,122 NEW cases in FY 2014-15, in Broward the figure was slightly lower at 3,044/judge, with Palm Beach scoring the lowest at 2,020/judge.

If you make your living in and around our probate courts you’ll find the FY 2014-15 Probate Court Statistical Reference Guide interesting reading. The chart below provides the “cases filed” data for three of our largest circuits/counties: Miami-Dade (11th Cir), Broward (17th Cir), and Palm Beach (15th Cir). For prior years see (2013-14), (2012-13), (2011-12).

But numbers alone don’t tell the whole story. To understand the breadth of issues a typical probate judge contends with in an average year at the end of this post I’ve provided a glossary with the official definition given for each of the categories listed in my chart. Finally, as a rough measure of the crushing case load your average big-city probate judge is saddled with in Florida, I took the total filing figures and divided them by the number of probate judges serving in each of those counties.

So what’s it all mean?

In Miami-Dade – on average – each probate judge took on 3,122 NEW cases in FY 2014-15, in Broward the figure was slightly lower at 3,044/judge, with Palm Beach scoring the lowest at 2,020/judge. Keep in mind these figures don’t take into account each judge’s EXISTING case load or other administrative duties. These stat’s may be appropriate for uncontested proceedings, which represent the vast majority of the matters handled by a typical probate judge, but when it comes to that small % of estates that are litigated, these same case-load numbers (confirmed by personal experience) make two points glaringly clear to me:

[1]  We aren’t doing our jobs as planners if we don’t anticipate — and plan accordingly for — the structural limitations inherent to an overworked and underfunded state court system. As I’ve previously written here, one important aspect of that kind of planning should be “privatizing” the dispute resolution process to the maximum extent possible by including mandatory arbitration clauses in all our wills and trusts. Arbitration may not be perfect, but at least you get some say in who’s going to decide your case and what his or her minimum qualifications need to be. And in the arbitration process (which is privately funded) you also have a fighting chance of getting your arbitrator to actually read your briefs and invest the time and mental focus needed to thoughtfully evaluate the complex tax, state law and family dynamics underlying these cases (a luxury that’s all but impossible in a state court system that forces our judges to juggle thousands of cases at a time with little or no support).

[2]  We aren’t doing our jobs as litigators if we don’t anticipate — and plan accordingly for — the “cold judge” factor I wrote about here; which needs to be weighed heavily every time you ask a court system designed to handle un-contested proceedings on a mass-production basis to adjudicate a complex trial or basically rule on any technically demanding issue or pre-trial motion of any significance that can’t be disposed of in the few minutes allotted to the average probate matter.

FY 2014-15 Probate Court Filing Statistics

Type of Case Miami-Dade (11th Cir) Broward (17th Cir) Palm Beach (15th Cir)
Probate 4,156  4,028  4,941
Baker Act  5,107  3,384  1,475
Substance Abuse 861  973  697
Other Social Cases 1,361  312  242
Guardianship 950  396  506
Trust 55  41  219
Total 12,490  9,134  8,080
# Judges 4 3 4*
Total/Judge 3,122  3,044  2,020

*In Palm Beach County (15th Cir) there are 6 part time probate judges and 1 full time probate judge. For purposes of the chart I count them as 4 full time probate judges.


Probate: All matters relating to the validity of wills and their execution; distribution, management, sale, transfer and accounting of estate property; and ancillary administration pursuant to chapters 731, 732, 733, 734, and 735, Florida Statutes.

Guardianship (Adult or Minor): All matters relating to determination of status; contracts and conveyances of incompetents; maintenance custody of wards and their property interests; control and restoration of rights; appointment and removal of guardians pursuant to chapter 744, Florida Statues; appointment of guardian advocates for individuals with developmental disabilities pursuant to section 393.12, Florida Statutes; and actions to remove the disabilities of non-age minors pursuant to sections 743.08 and 743.09, Florida Statutes.

Trusts: All matters relating to the right of property, real or personal, held by one party for the benefit of another pursuant to chapter 736, Florida Statutes.

Florida Mental Health Act or Baker Act: All matters relating to the care and treatment of individuals with mental, emotional, and behavioral disorders pursuant to sections 394.463 and 394.467, Florida Statutes.

Substance Abuse Act: All matters related to the involuntary assessment/treatment of substance abuse pursuant to sections 397.6811 and 397.693, Florida Statutes.

Other Social Cases: All other matters involving involuntary commitment not included under the Baker and Substance Abuse Act categories. The following types of cases would be included, but not limited to:

  • Tuberculosis control cases pursuant to sections 392.55, 392.56, and 392.57, Florida Statutes;
  • Developmental disability cases under section 393.11, Florida Statutes;
  • Review of surrogate or proxy’s health care decisions pursuant to section 765.105, Florida Statutes, and rule 5.900, Florida Probate Rules;
  • Incapacity determination cases pursuant to sections 744.3201, 744.3215, and 744.331, Florida Statutes;
  • Adult Protective Services Act cases pursuant to section 415.104, Florida Statutes.

3d DCA: Can you sue hostile parties for fraud if they lie to you during settlement negotiations?

Posted in Practice & Procedure, Settling, Mediating & Arbitrating Inheritance Cases

Moriber v. Dreiling, — So.3d —-, 2016 WL 145968 (Fla. 3d DCA January 13, 2016)

risk-managementLawyers love to brag about their court wins, not so much about their prowess as contract drafters. But the reality is that the vast majority of inheritance cases settle, which means in most instances “who gets what” is going to be the product of a settlement agreement, not some dramatic trial victory. And inheritance negotiations almost always turn on the value of the assets being divvied up.

So one of the big risk factors that needs to be nailed down in any estate-related settlement agreement is whether anyone’s being dishonest about the assets (which is easily done with “reps and warranties”, as discussed below). Two recent decisions out of the 3d DCA are prime examples of what can go wrong when this risk factor is NOT addressed in the text of your settlement agreement. The first was the Sugar case, which I wrote about here. The second is this case. Both boil down to one simple rule: GET IT IN WRITING!

Case Study:

This case involves three siblings, one of whom (Ms. Moriber) sued her mother over disputes involving a family business, her father’s estate and trusts, and three $1.5 million life insurance policies. The case settled. Part of the settlement agreement involved Ms. Moriber getting one-third of the life insurance after her mother’s death.

According to Ms. Moriber, her mother (and her mother’s lawyer) led her to believe the insurance policies remained in effect at the time she signed her settlement agreement. However, these were all oral statements, they weren’t incorporated into the actual text of the contract. Should Ms. Moriber have relied on her mother’s oral representations? Not according to the 3d DCA:

It is without question that the parties in the instant case had a hostile and antagonistic relationship at the time of Ms. Moriber’s alleged reliance on [her mother’s] representations. Ms. Moriber knew, or should have known, from her own dealings with [her mother] that Ms. Moriber should not rely on any representations made by [her mother].

After her mother’s death Ms. Moriber learned she’d been duped. The three insurance policies had been cancelled years before the settlement agreement was signed. Ms. Moriber sued her mother’s estate for fraud. According to the 3d DCA:

The gravamen of the fraud counts . . . is that Ms. Moriber would never have entered into the Settlement Agreement had she known that the insurance policies . . . had been canceled.

So here’s the $1.5 million question on appeal. Can you sue a hostile party for fraud if they lie to you during settlement negotiations? NO, so saith the 3d DCA:

Beginning with Columbus Hotel Corp. v. Hotel Management Co., 116 Fla. 464, 156 So. 893 (Fla.1934), Florida state and federal courts have . . . consistently [held] that, as a matter of law, a plaintiff may not rely on statements made by litigation adversaries to establish fraud claims. . . .

In reaching its holding [in Columbus Hotel, the [Florida Supreme Court] explained, “[t]here can be no ground for complaint against representations where the hearer lacked the right to rely thereon, because he had reason to doubt the truth of the representation, as where … a [representor] … was obviously hostile to the hearer and interested in misleading him.” Id. at 486, 156 So. 893.

While, in Butler v. Yusem, 44 So.3d at 105, the Florida Supreme Court recently determined that “justifiable reliance” is not an essential element of fraud, we do not read Butler as receding from the well-established and common sense principle of law espoused in Columbus Hotel and its progeny: generally, adverse parties negotiating a settlement agreement in an attempt to avoid litigation cannot rely upon the representations of one another.

So if you can’t sue a hostile adversary for (surprise!) lying to you during settlement negotiations, how can you protect yourself from this kind of deception? Better contract drafting. Again from the 3d DCA:

In the context of settlement agreements, one party certainly may insist upon certain assurances from the other party. In our opinion, however, such assurances are better enforced through contract principals (e.g., warranties, indemnities, etc.) rather than fraud claims.

What’s the takeaway? Think “reps and warranties”

If you’re settling a case based on the assurance by an adverse party that fact “X” is true, that representation needs to be incorporated into the text of your contract and the adverse party needs to assume the risk of the statement being false by warranting its truthfulness. For example, “Party ‘A’ represents and warrants that the three $1.5 million life insurance policies are in effect.” If the fact that’s been represented and warranted in your settlement agreement turns out to be false (for example, the three $1.5 million life insurance policies were cancelled), your client’s remedy is a standard breach of contract lawsuit, not a fraud claim.

For more on the value of “reps and warranties” and how they work in real life, you’ll want to read this short ABA article on the subject. Here’s an excerpt:

A lawyer drafting a business contract has multiple responsibilities, but two of the most important are to protect her client against risks and to secure those advantages that are reasonable and appropriate. Having a client receive both “representations and warranties” will generally help you fulfill these responsibilities. . . .

We will begin with representations. They are statements of present or past fact. For example, “The financial statements fairly present the financial condition of the seller.” Future “facts” cannot generally form the basis of representations because no one can know the future. At best, someone can have an opinion. . . .

Now, let’s turn to warranties. In the past 15 years, courts have been struggling anew with the meaning and implications of a common law warranty — a promise that a fact is true. The seminal case was CBS Inc. v. Ziff-Davis Publishing Co., 75 N.Y.2d 496 (1990). In that case, Ziff-Davis “represented and warranted” the financial condition of the division it was selling to CBS. CBS, however, as part of its due diligence, sent in its own accountants to review the division’s financial statements. They reported that the financial condition was not as represented and warranted. The parties closed anyway, and then CBS sued.

In New York’s highest court, the issue was whether CBS had a cause of action for breach of warranty. Ziff-Davis argued that CBS did not because it had known about the problems with the financial statements and had not justifiably relied on the warranties. Stated differently, Ziff-Davis argued that the standards for a cause of action for a fraudulent misrepresentation and a breach of warranty both required justifiable reliance on the truthfulness of the statement. Ziff-Davis lost.

According to the New York court, a warranty is a promise of indemnity if a statement of fact is false. A promisee does not have to believe that the statement is true. Indeed, the warranty’s purpose is to relieve a promisee from the obligation of determining a fact’s truthfulness.

Since the CBS case was decided, the majority of states have followed New York.


2d DCA: Do the same rules apply for temporary injunctions in trust litigation?

Posted in Practice & Procedure

Dowdy v. Dowdy, — So.3d —-, 2016 WL 56785 (Fla. 2d DCA January 06, 2016)

Einstein1In trust litigation one of the first moves you’ll often see is some kind of “emergency” motion asking the judge to freeze the trust’s assets and/or in some way remove the trustee. What this kind of motion is of course asking for (whether explicitly stated or not) is a temporary injunction. When I point this out I’m often met with blank stares (and not just from the lawyers). Which is why it’s useful to have a few appellate decisions handy stating the obvious: trust litigation is not the twilight zone, when it comes to temporary injunctions, the same rules apply. See here, here. And is that what the court decided in this case? YES!

In order to obtain a temporary injunction, the moving party must make four showings. Atomic Tattoos, LLC v. Morgan, 45 So.3d 63, 64–65 (Fla. 2d DCA 2010). The movant must demonstrate that he will suffer irreparable harm without an injunction, that he has no adequate remedy at law, that he enjoys a substantial likelihood of success on the merits, and that an injunction would be in furtherance of the public interest. Id. When granting an injunction, the court must make factual findings to support each element. Liberty Fin. Mortg. Corp. v. Clampitt, 667 So.2d 880, 881 (Fla. 2d DCA 1996) (citing City of Jacksonville v. Naegele Outdoor Advert. Co., 634 So.2d 750, 753–54 (Fla. 1st DCA 1994) (“If it is to be subject to meaningful review, an order granting a temporary injunction must contain more than conclusory legal aphorisms…. Facts must be found.”), approved, 659 So.2d 1046 (Fla.1995)); see also Fla. R. Civ. P. 1.610(c) (mandating that every injunction shall specify the reasons for entry).

Here, the circuit court’s order contained no factual findings or legal analysis, and it is vulnerable to reversal for that reason alone.

What’s important about decisions like this one is that they’ll hopefully put the brakes on the almost haphazard manner temporary injunctions are often doled out in trust cases. Dispensing with the need for an order containing detailed findings of fact based on evidence (and not just argument of counsel) may be expedient for the judge, but it actually makes litigating the merits of these cases a whole lot harder and more expensive for everyone else.

4th DCA: Can a surviving spouse’s $12.5 million “elective share” be reduced to pay attorney’s fees?

Posted in Marital Agreements and Spousal Rights, Spousal Elective Share Claims

Blackburn v. Boulis, — So.3d —-, 2016 WL 231405 (Fla. 4th DCA January 20, 2016) 

Staff Photo Ursula E. Seemann A Broward County Sheriff's department investigation resulted in the seizure of six South Florida Gambling ships including the SunCruz VI which sails out of Hollywood. Photo shows Konstantinos "Gus" Boulis the owner of the SunCruz boat declining at that moment an interview, he said," I am busy listening to this B.S." as he walked toward Jenne and Butterworth's press conference.

Konstantinos “Gus” Boulis (1949 – February 6, 2001) was a land developer, casino operator, and restaurant owner of Greek descent, who was murdered in 2001. His gangland-style death was allegedly linked to the $147.5 million sale of his company, SunCruz Casinos, to a partnership including disgraced Republican über lobbyist Jack Abramoff.

Gus Boulis was a spectacularly successful self-made millionaire with a sixth grade education whose life story was as colorful as it was improbable. And it all came to an end in 2001 when he was gunned down gangland style. The “hit” took 12 years to unravel, culminating in the 2013 murder trial and conviction of Anthony “Little Tony” Ferrari. The wheels of justice do indeed move slowly — but they still beat probate! It’s 2016 and Boulis’s estate remains embroiled in litigation.

Boulis cut his wife out of his will, leaving her nothing. But does that mean she actually gets nothing? No way! The surviving spouse of a person who dies domiciled in Florida has the right to claim a portion of the deceased spouse’s estate known as the “elective share,” which is equal to 30% of the “elective estate.” The gross value of Mrs. Boulis’s elective share was $12.5 million.

Does the “elective share” get reduced by attorney’s fees? NO

Elective share calculations are tricky under the best of circumstances; add litigation to the mix and things get interesting real fast (as I’ve reported here). And one of the most confoundingly complex elements of this calculation is figuring out which expense items get netted out of the final figure and which don’t.

In large contested estates (like this one), the two biggest expense items are going to be estate taxes and attorneys’ fees. Both were heavily litigated in this estate. First up was taxes. As I reported here, the last time this estate was before the 4th DCA the court concluded Mrs. Boulis’s $12.5 million elective share is NOT exempt from paying its proportionate share of estate taxes. This time around the question was whether Mrs. Boulis’s elective share gets whittled down even further by attorneys’ fees. The 4th DCA said NO. Here’s why:

The 1998 version of the surviving spouse’s-elective-share statute is applicable to this appeal. That statute provides:

732.207 Amount of the elective share.—The elective share shall consist of an amount equal to 30 percent of the fair market value, on the date of death, of all assets referred to in s. 732.206, computed after deducting from the total value of the assets:

  1. All [1] valid claims against the estate paid or payable from the estate; and
  2. All [2] mortgages, [3] liens, or [4] security interests on the assets.

§ 732.207, Fla. Stat. (1998).

It is axiomatic that the Legislature is presumed to know the meaning of words it uses in laws it enacts and a court must ascribe generally-accepted meanings to words in a statute in the absence of contrary meanings expressly set forth in the statute. State v. Bodden, 877 So.2d 680, 685 (Fla.2004). In other words, when interpreting a statute, the court must look to the plain meaning of the language in the statute. P.E., 14 So.3d at 234. Here, the statute clearly and unambiguously sets forth only four types of expenses or costs which the probate court is to deduct from the value of the assets in the surviving spouse’s elective share. § 732.207(1)-(2), Fla. Stat. (1998). Attorneys’ fees is not one of those four. Id. Had the Legislature intended to allow a probate court to deduct attorneys’ fees paid by an estate’s personal representative(s) in litigating claims from the surviving spouse’s elective share, it could and would have done so. Therefore, the probate court reversibly erred by deducting attorneys’ fees from the value of Spouse’s elective share.

Still true today? YES

One reason why doing an elective-share calculation can be so tough is that the statute’s been revamped heavily over time (see here). So would this case have turned out the same under today’s iteration? I think so. The controlling provision is now found in subsection (5) of F.S. 732.2055, which is limited to the same four cost items listed in the 1998 statute relied on by the 4th DCA:

  1. creditor claims,
  2. mortgages,
  3. liens and
  4. security interests.

In other words, attorney’s fees remain excluded. Here’s how the statute reads today:

732.2055 Valuation of the elective estate.—For purposes of s. 732.2035, “value” means . . .

(5) In the case of all other property, the fair market value of the property on the date of the decedent’s death, computed after deducting from the total value of the property:
(a) All [1] claims paid or payable from the elective estate; and
(b) To the extent they are not deducted under paragraph (a), all [2] mortgages, [3] liens, or [4] security interests on the property.

Interview with a Probate Lawyer: Steven K. Schwartz

Posted in Interview with a Probate Lawyer, Settling, Mediating & Arbitrating Inheritance Cases

steve-schwartz I’m a big fan of “privatizing” trusts and estates litigation whenever possible, which we can do in Florida by incorporating mandatory arbitration clauses in all our wills and trusts (see here). Florida was one of the first states to statutorily authorize these clauses in F.S. 731.401, removing all doubt as to their enforceability in this jurisdiction.

But no solution’s perfect. There are always tradeoffs. And arbitration’s no different. I was recently reminded of this fact in a conversation I had with Steven K. Schwartz, an Aventura, FL wills and probate lawyer with years of experience as a litigator. Steve’s thought long and hard about arbitration in the trusts and estates context. I invited him to share his thoughts on the blog and he graciously accepted.

Steven K. Schwartz on the “other side of the coin regarding arbitration”

First, the initial cost of proceeding via arbitration is usually more than in court.  Filing fees plus cost of the venue can be many thousands of dollars.  For a disappointed beneficiary this may be a barrier to proceeding.  Of course, while some cases should be stopped early, I am using the assumption that my hypothetical beneficiary has a meritorious claim.

We all know that mistakes get made and judges or arbitrators are not immune.  The inability of appellate review may prevent the meritorious position from being revealed, even if the arbitrator was, er, arbitrary.

The fact that there is little or no opportunity for appellate review multiplies the risks of proceeding.  Because of that limited review, the risk/reward evaluations that should be made by a party in evaluating the benefits of continued litigation, compared to settling, cannot be based upon precedent because there is no guarantee that the arbitrator’s decision will be based on precedent.  Therefore, the lawyer’s skill and expertise and judgment are diminished because the lawyer is operating in a more unpredictable environment.  For a disappointed heir, the risk may be too much.

The arbitrator may allow in evidence that would not be admissible in court.  The rules of evidence have developed over 1,000 years and the rules that have survived this long have value.  I certainly would not want to give them away for free.  In a similar note, discovery may be more limited thereby preventing facts from coming to light.

Arbitrators may have a predisposition towards trustees because there is a potential for future referrals from one trustee to another (or repeat business) and therefore a subtle bias in favor of the trustee and against the beneficiary may be in play.

While some cases may take a long time in court, that may not be bad.  Attorneys need time to prepare a case.  An arbitrator may insist on a case being prepared too quickly.

There is also a societal cost to arbitration.  If a case goes to court there is a chance the disappointed party will take an appeal.  We all benefit from those appellate decisions because they help attorneys to advise their clients as to the law as the law develops.  Fewer appeals means fewer appellate case to guide the bench and bar.

In conclusion, I am not saying that all these are always true or will be true in every case.  However, when choosing a dispute resolution forum, an informed choice must include discussion of these issues because ultimately it is the client’s choice.  Otherwise, you have essentially arbitrated away your client’s right to make an informed choice of a dispute resolution forum.

Change the Culture, Change the System

Posted in Musings on the Practice of Law

culture-change-top-10-coverI’m a lifer. After two decades in the trenches, it’s safe to say lawyering isn’t a passing phase for me. And where I make my living is in our civil court system; mostly before probate judges, but not always. Which means I’m personally vested in a civil court system that doesn’t just measure outcomes, it also values “how” disputes get resolved. Style matters. If you agree, you’ll want to read Change the Culture, Change the System. Here’s an excerpt:

Judge Paul M. Warner, a U.S. magistrate judge in the District of Utah, recently wrote Ten Tips on Civility and Professionalism. He notes “It’s a long road without a turn in it. Put another way, what goes around, comes around. This is the best reason for civility.” He also suggests that incivility almost always results in wasted resources, in terms of both time and money—for lawyers, clients, and the court. Warner proposes a new Golden Rule of Civility:

“Be courteous to everyone, even to those who are rude. Not because they are ladies or gentleman, but because you are one.” It’s not about an eye for an eye, a tooth for a tooth. It’s not even about you. It is about doing what’s best for your client. In conclusion, civility is the mark of a real professional and a true lawyer. It is not about quid pro quo. It is about having self-respect, respect for others, and the self-confidence to not respond in kind, and in the process, continuing to build your own character, credibility, and reputation.

Bottom line, if you think “civility” is important, act accordingly — even if opposing counsel (or your judge) doesn’t reciprocate. It’s not a sign of weakness, it’s called maturity. And it’s what’s going to sustain you long after the “Rambo” litigator you’re dealing with in today’s case burns out or gets disbarred (see here).

There’s another important point the authors make in Change the Culture, Change the System. If you’re a lawyer, it’s so easy to blame our judges for all that ails us. And if you’re a judge, blaming the lawyers is just as easy. Finger pointing is a lose-lose proposition. You want change? Take responsibility for your own actions and remember why we’re all here to begin with.

Lawyers may blame the system, the rules, the judge, and the court staff for unfairness, expense, and delay. Judges blame the rules, the lawyers, and the lack of staffing. That effort to shift blame is itself an indication of an unwillingness to take responsibility for making the system work in a cost- effective, procedurally fair way.

How the system functions is the result of how the actors within a particular case comport themselves. Those who are engaged in finger pointing are seldom visionary, innovative, and proactive. Both lawyers and judges need to remember that the system serves the litigants, who care little about the rules or case management principles; rather, they care about procedural fairness and cost-effectiveness. Lawyers and judges need to recognize the importance of procedural fairness for litigants and make it a guiding star throughout the process.

Bonus Material:

I was so impressed with Judge Warner’s Ten Tips on Civility and Professionalism, I decided to list them all below. Good stuff, very much worth holding on to.

  1. It’s a long road without a turn in it. Put another way, what goes around, comes around. This is the best reason for civility. Everyone needs a little extra consideration from opposing counsel occasionally. If it doesn’t prejudice your case or client, do it.
  2. Don’t be so concerned with winning the battle that you lose the war. In other words, sometimes lawyers can’t see the forest for the trees. Just because the other side wants it, doesn’t mean your automatic response should be to oppose it. Sometimes, it can be win-win, especially for settlement purposes. This is especially true in civil discovery disputes.
  3. Civil practitioners treat each other in a criminal manner, and criminal practitioners treat each other in a civil manner. The criminal bar is small, and the lawyers know they will deal with each other many times. It leads to courtesy and civility. Civil practitioners may only deal with opposing counsel one time in a career. Be civil anyway. Your reputation depends on it.
  4. Never mistake reasonableness for weakness. The really good lawyers can be tough as nails on the issues and zealous in their advocacy, and yet always remain civil and courteous. Strive to be one.
  5. When laws are not enforced, it creates contempt for the law. When rules are not enforced, it has the same effect. The rules of civil procedure and local court rules are not advisory. They need to be followed. They give order and predictability to the system, and they should be enforced by the courts.
  6. Waste not, want not. Incivility, and the behaviors that constitute it, almost always result in wasted resources of time and money — the lawyer’s time, the client’s money, and both time and money for the courts. Lawyers responsible for such waste should pay for it, personally!
  7. Know the difference between an adversary and an enemy. The lawyer on the other side is not your enemy. The clients may be “enemies,” but the opposing counsel should not be. Opposing counsel may even be your friend, or, if treated with civility and professionalism during the conduct of the case, may well become one.
  8. If you don’t write it or say it, you don’t have to explain it. There is power in the written word. “Poison pen” e-mails and letters feel good to write, but rarely should be sent. Outrageous language and accusations in briefs and memoranda are the functional equivalent of shouting in court. Don’t dignify such boorish behaviors by responding to them.
  9. Always forgive your enemies, but never forget their names. Don’t make the case personal between you and opposing counsel. Never make the mistake of getting opposing counsel’s “attention” through shoddy behavior or cheap shots. They will work nights and weekends to beat you. They are not in this business because they lack ego.
  10. The Golden Rule, with a twist. We all know the Golden Rule. “Do unto others….” I propose a new Golden Rule of Civility. “Be courteous to everyone, even to those who are rude. Not because they are ladies or gentlemen, but because you are one.” It’s not about an eye for an eye, a tooth for a tooth. It’s not even about you. It is about doing what’s best for your client.

In conclusion, civility is the mark of a real professional, and a true lawyer. It is not about quid pro quo. It is about having self-respect, respect for others, and the self-confidence to not respond in kind, and in the process, continuing to build your own character, credibility, and reputation.