Megiel-Rollo v. Megiel, — So.3d —-, 2015 WL 1740365 (Fla. 2d DCA April 17, 2015)
When it comes to wills and trusts, drafting mistakes come in all shapes and sizes. If the document’s written in a sloppy way that’s open to more than one reasonable interpretation, it’s “ambiguous” and there’s a two-step process for litigating that kind of mistake (see here). Sometimes the mistake goes beyond sloppiness to actually omitting important text. For that kind of mistake we need to “reform” the document to insert the missing text, an equitable remedy that’s been around for a long time in Florida. In 2007 this rule was codified (and expanded upon) for trust agreements in F.S. 736.0415, which provides as follows:
Upon application of a settlor or any interested person, the court may reform the terms of a trust, even if unambiguous, to conform the terms to the settlor’s intent if it is proved by clear and convincing evidence that both the accomplishment of the settlor’s intent and the terms of the trust were affected by a mistake of fact or law, whether in expression or inducement. In determining the settlor’s original intent, the court may consider evidence relevant to the settlor’s intent even though the evidence contradicts an apparent plain meaning of the trust instrument.
Our statue’s based on section 415 of the Uniform Trust Code, which includes the following commentary:
Reformation is different from resolving an ambiguity. Resolving an ambiguity involves the interpretation of language already in the instrument. Reformation, on the other hand, may involve the addition of language not originally in the instrument, or the deletion of language originally included by mistake, if necessary to conform the instrument to the settlor’s intent. Because reformation may involve the addition of language to the instrument, or the deletion of language that may appear clear on its face, reliance on extrinsic evidence is essential. To guard against the possibility of unreliable or contrived evidence in such circumstance, the higher standard of clear and convincing proof is required. See Restatement (Third) of Property: Donative Transfers § 12.1 cmt. e (Tentative Draft No. 1, approved 1995). . . . See also John H. Langbein & Lawrence W. Waggoner, Reformation of Wills on the Ground of Mistake: Change of Direction in American Law?, 130 U. Pa. L. Rev. 521 (1982).
[Reformation] applies whether the mistake is one of expression or one of inducement. A mistake of expression occurs when the terms of the trust misstate the settlor’s intention, fail to include a term that was intended to be included, or include a term that was not intended to be excluded [sic included]. A mistake in the inducement occurs when the terms of the trust accurately reflect what the settlor intended to be included or excluded but this intention was based on a mistake of fact or law. . . . Mistakes of expression are frequently caused by scriveners’ errors while mistakes of inducement often trace to errors of the settlor.
But what if the drafting mistake is huge, like omitting the list of trust beneficiaries who are supposed to inherit it all when the settlor dies. Does F.S. 736.0415 still apply, or is it limited to only fixing minor typo’s or “scrivener’s errors”? That’s the question at the heart of this case.
In the linked-to case above the attorney drafting the trust agreement never got around to preparing a list of trust beneficiaries that was supposed to be attached to the trust agreement. In other words, as drafted, the trust agreement was a blank slate as far as testamentary beneficiaries were concerned. Without testamentary beneficiaries, the trust’s only beneficiary would have been the settlor, who was also the trust’s only trustee. The “merger doctrine” terminates a trust if the legal and equitable interests in the same trust are held by the same person as both sole trustee and sole beneficiary (as discussed by the 2d DCA in this 2009 case). If the trust failed, its assets would be distributed according to the settlor’s earlier-dated will that split everything equally among her three children. According to the trust’s drafting attorney, the settlor intended to include only two of her three children as trust beneficiaries. So that’s the conflict driving this case: if the trust is effective, one child is cut out, if it fails, all three share equally.
Is Florida’s trust-reformation statute limited to only fixing “simple scrivener’s errors”? NO:
The child that was allegedly cut out of the trust argued F.S. 736.0415 couldn’t be used to reform her mother’s trust because the rule’s supposed to only apply to minor drafting errors (i.e., simple scrivener’s errors), not something as fundamental as who the trust’s beneficiaries are supposed to be.
Sharon argues that “the concept of a ‘mistake’ which would warrant reformation [of a trust] is intended to address simple scrivener’s errors that are contrary to the intent of the [settlor].” In other words, some errors in trusts are subject to correction by reformation, but others are not. According to Sharon, reformation is not available under section 736.0415 where, as in this case, the mistake amounts to a complete failure to designate any remainder beneficiaries that would result in a merger.
The trial court basically agreed with Sharon, denying the reformation claim pretrial by summary judgment. Not so fast, says the 2d DCA. First, limiting F.S. 736.0415 to “simple scrivener’s errors” is tantamount to re-writing the statute. Why? Because this limitation is nowhere to be found within the statute’s broadly-worded provisions. If you want to re-write a statue that’s a job for our legislature, not our courts. Strike one:
The broad scope of the language used in the statute is inconsistent with the notion that reformation is available to correct some mistakes in a trust, i.e., “simple scrivener’s error,” but not others. . . . For this court to read such a limitation into the statute would amount to judicial legislation of the sort in which we will not indulge.
Second, according to the 2d DCA F.S. 736.0415 is a “remedial statute,” which means it “should be liberally construed in favor of granting access to the remedy provided by the Legislature.” This is an important point: when in doubt, your judge should always opt in favor of giving you a chance to apply the statute. Strike two:
Our conclusion finds additional support in the status of section 736.0415 as a remedial statute. “A remedial statute is one which confers a remedy, and a remedy is the means employed in enforcing a right or in redressing an injury.” Grammer v. Roman, 174 So.2d 443, 446 (Fla. 2d DCA 1965). As a remedial statute, section 736.0415 “should be liberally construed in favor of granting access to the remedy provided by the Legislature.” The Golf Channel, Inc. v. Jenkins, 752 So.2d 561, 565–66 (Fla.2000). “Courts should not interpret remedial statutes strictly or narrowly to thwart the intent of the Legislature.” E.A.R. v. State, 4 So.3d 614, 629 (Fla.2009). The limiting construction that Sharon urges us to place on section 736.0415 is inconsistent with our duty to give this remedial statute a liberal rather than a narrow construction.
Finally, limiting the statute’s application to “simple scrivener’s errors” is impractical. There’s no way to articulate that rule in a way that would give anyone (least of all our judges) any objective guidance as to how they’re supposed to “enforce such a vague and amorphous standard in a fair and consistent manner.” One person’s “simple and routine matter” is another’s “complex and unusual” life-altering event. Strike three:
Finally, we note that the construction that Sharon urges us to place on section 736.0415 is impractical and would prove to be incapable of judicial enforcement. Sharon does not explain how the courts might distinguish “simple scrivener’s errors” that are subject to correction by reformation from the more complex and substantive errors that are not. Under such a rule, when litigation arises, simplicity would inevitably be in the eye of the beholder. The courts would be unable to enforce such a vague and amorphous standard in a fair and consistent manner. Moreover, seemingly routine matters regarding a trust’s administration may have a substantial impact on the interests of the beneficiaries and other interested parties. See, e.g., Morey v. Everbank, 93 So.3d 482, 484–89 (Fla. 1st DCA 2012) (addressing the issue of whether the provisions of a trust were such as to waive the exemption from creditors’ claims of two life insurance policies in the amount of $250,000 each). There is just no way to distinguish the simple and routine matter from the complex and unusual.
It ain’t over ’til it’s over:
Bottom line, the party seeking reformation in this case is entitled to her day in court — but it won’t be easy. The case is getting remanded back to the same trial-court judge that’s already ruled against reformation once. And when the petitioner gets back to that same judge, she’ll have to prove her case on the merits by clear and convincing evidence.
On remand, Denise must have an opportunity to prove her claim for reformation of the Trust. In accordance with section 736.0415, the standard of proof that she will be required to meet to establish her claim is clear and convincing evidence. See Reid v. Estate of Sonder, 63 So. 3d 7, 10 (Fla. 3d DCA 2011).
In other words, this case is far from over. In the Reid case cited above, the 3d DCA reversed a trial-court judge’s ruling against a trust reformation on technical legal grounds — just like this case (see here); but when the case got back to the same trial-court judge on remand, he simply ruled against reformation again, but this time on the merits, finding that the clear-and-convincing evidence standard hadn’t been met (see here). That’s what happens in bench trials: the same person is both lawgiver and fact finder.
If you or your attorney make a mistake, and there’s “clear and convincing evidence” that the mistake is contrary to your testamentary intent, there’s a remedy for that problem, and it’s found in F.S. 736.0415. And according to the 2d DCA, because the statute’s “remedial” in nature, courts should err on the side of granting access to it whenever possible — no matter how big the drafting error might be. But don’t think F.S. 736.0415 is a cure all. If a drafting attorney messes up, that mistake isn’t going to go away unless the rule’s extremely tough “clear and convincing evidence” standard is met, which can be daunting — as the drafting attorney in the Reid case learned (see here). And don’t expect F.S. 736.0415 to give your client’s heirs an after-the-fact “do over” just because events don’t pan out as expected when the settlor signed his trust years earlier (see here).