Florida Probate Litigation, Will Contest Lawyer & Attorney : Juan C. Antúnez : Serving Miami, Jacksonville, Tampa Saint Petersburg, Orlando, Fort Lauderdale

McMonigle v. McMonigle, __ So.2d __ (Fla. 2d DCA Feb 17, 2006)

Note: on its own motion the Second DCA withdrew its February 17, 2006, opinion and substituted the following in its place: McMonigle v. McMonigle, __ So.2d __ (Fla. 2d DCA Mar 29, 2006)

POP QUIZ: What do you do if you're the beneficiary of an estate and you think the personal representative owes the estate a debt he's not paying up on?

[A.] File a statement of claim in the estate.

[B.] File a separate cause of action seeking declaratory relief in the form of a determination of what interests the estate has in the funds allegedly owed by the personal representative to the estate.

[C.] File a petition seeking removal of the personal representative on conflict of interest grounds and appointment of a successor personal representative to file an action to recover the alleged debt.

[D.] All of the above.

If you picked any answer other than [C.], not only would you be wrong, but according to Pasco County Judge Stanley R. Mills, you'd be liable for the other side's attorney's fees under F.S. § 57.105. The grounds for such sanctions would be that because claims pursued under options [A.] and [B.] were dismissed on lack-of-standing grounds, they lacked "justiciable issues of law or fact."

Not so says the Second DCA, which reversed the trial court's sanctions order. The beneficiary in this case was legitimately attempting to protect the interests of the estate. The fact that he initially went about it the wrong way doesn't mean his actions rise to the level of warranting attorneys-fees sanctions.

The Second DCA explained its ruling as follows:

Although [Tiedeman v. City of Miami, 529 So.2d 1266 (Fla. 3d DCA 1988)] does suggest that the lack of standing may be the basis of an award of section 57.105 fees, it does not require that the fees be awarded. Clearly, Robert did not have standing to bring the separate civil action. However, the factual issues raised in the civil action were the same factual issues litigated in the probate action seeking the removal of Ronald as Personal Representative. To award fees under section 57.105, the trial court must conclude there is a total absence of a justiciable issue of either fact or law. Haas v. Roe, 696 So.2d 1254 (Fla. 2d DCA 1997); Fernandez v. Chiro Risk Mgmt., Inc., 700 So.2d 65 (Fla. 2d DCA 1997). Since the factual issues here were actionable, the trial court abused its discretion by finding a total lack of justiciable issue of fact. Because we conclude there was a justiciable issue of fact, fees should not have been awarded under section 57.105.

Furthermore, we find the facts of this case to be similar to those in O'Brien v. Sarka, 613 So.2d 47 (Fla. 2d DCA 1993). In O'Brien, Sarka, who was serving as the guardian of the deceased at the time of the deceased's death, filed an independent action against the estate to collect guardianship fees allegedly owed by the estate. O'Brien was a beneficiary of the estate and concluded that the personal representative had a conflict due to her business relationship with the guardian. Accordingly, O'Brien moved to intervene in the independent action, and the motion was granted. The guardian, Sarka, then moved for a judgment on the pleadings, which was granted. She then moved for section 57.105 fees against O'Brien, arguing that O'Brien should not have been allowed to intervene in the action as the estate already was represented and O'Brien's interest was but a claim under the estate. The trial court awarded the fees, but this court reversed. "As a beneficiary, [O'Brien] was attempting to protect the assets of the estate. Although her intervention was invalid, the action was not so frivolous as to require that she and her attorney be punished for attempting it." Id. at 48.

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In re Estate of Wejanowski, __ So.2d __ (Fla. 2d DCA February 15, 2006)

It's not unusual for a personal representative to seek explicit prior approval from the probate judge when contemplating some sort of litigation involving the estate - even is such authority is not required. This type of pre-approval is sought pursuant to F.S. § 733.602(2), which removes liability for any act of administration of the state if the act was "authorized" at the time.

This case is an example of what can go wrong when asking a probate judge for prior approval. You may not like the answer you get. Here the personal representative filed a motion with the probate court seeking approval of costs and fees associated with prosecuting an appeal of a wrongful-death judgment pending against the estate.

The trial court denied the personal representative's motion without prejudice to resubmit the request at the conclusion of the appeal upon a showing of monetary benefit to the estate and ordered him not to expend estate funds for prosecution of the appeal, to include attorney's fees and costs.

The Second DCA reversed, essentially holding that a monetary benefit (i.e., prevailing party) standard was too high a bar for approval of fees and costs associated with an appeal, stating as follows:

Requiring [the personal representative] to show a monetary benefit to the estate before he is entitled to reimbursement for appellate expenses narrows the definition of "benefit to the estate" to an unworkable level in this appellate context. An appellate attorney has an ethical duty not to prosecute a baseless or frivolous appeal. Payment of appellate fees and costs cannot be contingent upon prevailing on appeal because neither party can guarantee the outcome. The true benefit to an estate provided by an appellate attorney is the presentation of a good-faith appeal and its ultimate resolution. Our system affords litigants the right to resolve disputes with due process, safeguarded by appellate review of the trial court's decisions. Cf. Brake v. Murphy, 693 So.2d 663 (Fla. 3d DCA 1997) (reversing an order that required the personal representative and her husband to post a bond in order to file further pleadings in a surcharge proceeding because the order violated the access to the courts provision and due process clause of the state constitution).

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Tripp v. Salkovitz, __ So.2d __ (Fla. 2d DCA Feb 08, 2006)

Adult Comprehensive Protection Services ("ACPS") was appointed the decedent's plenary guardian prior to his death. Following his death, the decedent's estate sued ACPS for negligence and breach of fiduciary duty. During the discovery process the estate filed a motion seeking an order from Pinellas County Judge Kelly N. Khouzam addressing the following:

• requiring the production of documents regarding confidential communications between ACPS and its lawyer during the pendency of the guardianship, and
• ruling on whether ACPS could raise the attorney-client privilege at deposition in response to questions related to confidential communications between ACPS and its lawyer during the pendency of the guardianship.

The probate court ruled in favor of the ward's estate on both issues, determining that the attorney-client privilege now belonged to the estate. The problem with this ruling is that it failed to recognize that some of the confidential communications between ACPS and its lawyer had to do with protecting ACPS' self interests: not its ward. The Second DCA reversed the trial court with instructions to parse its ruling so that communications between ACPS and its lawyer having to do with protecting ACPS' self interests remained privileged. The Second DCA based its ruling on the same logic it applied when addressing the same issue in a trust context:

In Jacob, this court explained who holds the attorney-client privilege in trust situations:

Usually, a lawyer retained by a trust represents the trustee, not the beneficiary, even though the fees are paid with trust funds that would otherwise go to the beneficiary. If the attorney represents the trustee, the trustee holds the lawyer-client privilege. In some circumstances, however, the beneficiary may be the person who will ultimately benefit from the legal work the trustee has instructed the attorney to perform. See, e.g., Riggs Nat'l Bank of Washington, D.C. v. Zimmer, 355 A.2d 709, 711 (Del.Ch.Ct.1976) (noting that legal memorandum concerning trust tax issues, written before beneficiaries' litigation against trustee began, was prepared for the benefit of the trust beneficiaries) (cited in [ Barnett Banks Trust Co., N.A. v.] Compson, 629 So.2d [849, 850 (Fla. 2d DCA 1993)] ). In that situation, the beneficiary may be considered the attorney's "real client" and would be the holder of the lawyer-client privilege. But if the "real client" is the trustee, the beneficiary would have to prove the existence of some exception to overcome the privilege.

Jacob, 877 So.2d at 937 (some citations omitted). (Emphasis added.)

New legislation should make these types of disputes a thing of the past. As I reported here, the Florida Bar's Probate & Trust Litigation Committee is proposing the following new blanket-privilege legislation:

(Passed by Committee at meeting in Palm Beach, August, 2005 and passed by the Executive Council of RPPTL in November 2005)

90.5021 Fiduciary Lawyer- Client Privilege

(1) A communication between a lawyer and client acting as a fiduciary described in subsection (2) shall be privileged and protected from disclosure under section 90.502 to the same extent as if the client were not acting as fiduciary. For the purpose of applying section 90.502 to such a communication, the person or entity acting as fiduciary is the lawyer's only, real and true client.

(2) For the purpose of this section, a client acts as a fiduciary when serving as personal representative as defined in section 731.201, an administrator ad litem as used in section 733.308, a curator as used in section 733.501, a guardian or guardian ad litem as defined in section 744.102, a conservator as defined in section 710.102, a trustee as used in section 731.201 (35), and an attorney-in-fact as used in Chapter 709.

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The ABA Journal reported here on a Connecticut Bar proceeding in which Connecticut attorney, Joseph J. Notopoulos, was sanctioned for writing a letter to the probate judge handling his mother's estate. What I found most interesting about this story is that Mr. Notopoulos was sanctioned for accusing the Connecticut probate system of the same nefarious conduct that Prof. John H. Langbein, the Sterling Professor of Law and Legal History at Yale Law School, complained of in written testimony just last year (see here).

The following are excerpts from the linked-to ABA story:

"A Connecticut attorney says he was writing as a common, if angry, citizen when he sent a letter blasting a probate judge. But that didn't stop him from being reprimanded--nor did his appeal to the state supreme court.

Stating that Joseph J. Notopoulos provided no factual basis for statements he made attacking the probate judge overseeing his mother's estate, the Connecticut Supreme Court upheld the Statewide Grievance Committee's reprimand of the attorney. The court rejected Notopoulos' claim that it was improper to reprimand him for comments made while acting outside his role as an attorney, and that the reprimand violated his free-speech rights. Notopoulos v. Statewide Grievance Committee, No. SC 17341 (Feb. 14)."

"Notopoulos says the disciplinary action ignores the real issue of the probate system in Connecticut, which he believes is rife with conflicts of interest and cronyism. In Connecticut, probate judges are "elected town politicians with no educational requirements placed on them," Notopoulos says. Yet he admits Berman is an attorney by training and a member of the Connecticut bar."

And here is an excerpt from Prof. Langbein's testimony:

"The sad truth is that much of what goes on in Connecticut probate courts can only be called a shakedown. Our procedures invite judges to extort money from the estates of decedents by insisting upon needless court filings and court approvals."

Maybe Prof. Langbein is next on the Connecticut Bar's hit list?

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Engelke v. Estate of Engelke, __ So.2d __ (Fla. 4th DCA February 8, 2006)

Navigating Florida's homestead-protection laws is one of the primary focus points for estate planning attorneys in this state. There were two Florida Supreme Court opinions in 2005 alone attempting to unravel the thorny probate issues inherent to Florida homestead properties (see here and here).

In this case the 4th DCA addressed one of the most common questions faced by Florida estate planning attorneys: should the homestead property be put into the client's revocable trust? According to the 4th DCA, the answer is an unqualified YES. There has been hesitation in the past to put homestead property into a revocable trust because of an unfortunate Florida bankruptcy-court opinion that stood for the proposition that homestead property in a revocable trust was not owned by a "natural person," thus it lost its creditor protection. As far as I know, every published Florida opinion addressing the same issue since then has ruled the other way. The 4th DCA case linked-to above does the same, directly answering two key estate-planning questions as follows:

• "We note that in this case while [the decedent's] residence was held in a revocable trust, it was owned by a "natural person" for purposes of the constitutional homestead exemption. Because [the decedent] retained a right of revocation, he was free to revoke the trust at any point in time. Accordingly, he maintained an ownership interest in his residence, even though a revocable trust held title to the property. We therefore conclude that [the decedent's] interest as beneficiary of his own revocable trust would entitle him to constitutional homestead protections." (Emphasis added.)
• Frequently, as here, the trust contains provisions regarding the payment of expenses of the estate after the settlor's death. We have found no case in which a general direction to pay the estate expenses has trumped the constitutional homestead protections which are the rights of the heirs as much as the decedent. Because revocable trusts are merely will-substitute devices, we see no reason why the reasoning of Thompson v. Laney, precluding use of the homestead to satisfy estate debts, should not apply with equal force when homestead property is transferred through a revocable trust. Therefore, unless the trust specifically directs that the freely devisable homestead be sold, the rights of the heirs attach at the death of decedent, and the property is protected from the claims of all creditors." (Emphasis added.)

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Special thanks to Florida/New York attorney Amy B. Beller of the West Palm Beach, Florida office of Kaye Scholer LLP, for giving me the heads up on an article she recently published entitled "New York vs. Florida: A Forum Selection Guide for Will Contests," NYSBA Trusts and Estates Law Section Newsletter, Winter 2005, Vol. 38, No. 4. Ms. Beller does a great job of outlining the distinctions between New York and Florida in the will-contest arena. From a Florida perspective, I found the following observations the most interesting:

• New York law recognizes IN TERROREM clauses as enforceable and they are commonly used. In Florida, these clauses are NOT enforceable.
• New York law provides a right to JURY TRIALS in will contests. No such right exists in Florida.
• New York law does not have an equivalent to Florida's HOMESTEAD LAWS. In New York, subject to a spouse's right of election, a decedent can devise his or her home to whomever he or she pleases.

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Faerber v. D.G., 2006 WL 287322 (Fla. 2d DCA Feb 08, 2006)

Probate proceedings take place before judges, not juries. As such the parties involved (including judges), may not always feel strict compliance with Florida's rules of evidence is a necessary precaution (although Florida Probate Rule 5.170 states explicitly that the rules of evidence in civil actions generally apply to probate proceedings). That point of view is usually harmless because many of the evidentiary rules designed to shelter juries from unfair inferences may not be necessary where, as in probate proceedings, the judge is also the fact finder.

But simply skipping the need for ANY evidence is NOT acceptable, a point made by the 2d DCA in this case when it reversed a ruling by Collier County Judge Hugh D. Hayes granting a petition made pursuant to F.S. § 733.702(3) seeking leave to file a late claim against the estate because the purported creditor had allegedly been provided with insufficient notice of the claims period. According to this newspaper article, the 2d DCA's ruling will result in the dismissal of a $10 million lawsuit against the estate.

A trial court's ruling on a petition for more time to file a claim against an estate is usually reversed only if the trial court has "abused its discretion." This is a tough burden to overcome, but, as the 2d DCA makes clear in the following excerpt from its opinion, a ruling based on NO evidence is an abuse of discretion and subject to reversal:

[A]s the trial court acknowledged in its order, neither party presented any evidence below. Although, at the hearing, counsel for D.G. made certain representations as to how the Decedent and his family knew D.G. and how the Decedent's family was aware of D.G.'s involvement in the criminal case against the Decedent, counsel for Appellants objected, noting that such representations did not amount to factual evidence. We agree. See Steinhardt v. Intercondominium Group, Inc., 771 So.2d 614 (Fla. 4th DCA 2000) (stating that facts in dispute must be proven absent stipulation and that representations of counsel are insufficient). Because there was no other evidence presented at the hearing, we can only conclude that the trial court erroneously based its ultimate conclusion that D.G. was a reasonably ascertainable creditor on the assertions of D.G.'s counsel. This was an abuse of discretion. See Allstate Floridian Ins. Co. v. Ronco Inventions, LLC, 890 So.2d 300, 304 (Fla. 2d DCA 2004) ("Reaching the legal conclusion that [a]ppellees had shown due diligence when there was no evidence presented upon which to make such a finding is clearly an abuse of discretion."). Accordingly, we reverse the trial court's order granting D.G.'s petition for extension of time to file a claim against the Estate.

Because D.G. scheduled the hearing on his motion, failed to present any evidence at that hearing to establish that he had received insufficient notice of the claims period, and did not try to remedy the error when it was pointed out by Appellants' counsel, on remand the trial court is instructed to enter an order denying D.G.'s petition. (Emphasis added.)

Ouch!

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Eccles v. Nelson, 2006 WL 192633 (Fla. 5th DCA Jan 27, 2006)

Trust and estates lawyers often find themselves advising clients in anticipation of future litigation. Be it in the context of a will that disinherits family members or a trustee receiving a letter from counsel representing disgruntled trust beneficiaries, one issue that needs to be thought about at the very beginning is: will separate trial counsel be needed?

This 5th DCA case is a prime example of how these issues can come back to bite you if you're not anticipating them. Here opposing parties sought to probate conflicting wills, one signed in 2001 and the other in 2004. The validity of the 2004 will was challenged on grounds of undue influence, the decedent's lack of requisite mental capacity, and the genuiness of the decedent's signature. The attorney who drafted the 2004 will and also acted as a witness when the decedent purportedly signed the 2004 will was engaged by the party attempting to probate the 2004 will to be her trial counsel.

On a motion to disqualify, Seminole County Judge Gene R. Stephenson entered an order disqualifying the 2004-will-drafting attorney. It is important to note that the trial court did not disqualify him from representing his client either pre-trial or post-trial. The trial court's ruling was apparently based on Florida Bar Code of Professional Responsibility Rule 4-3.7, which reads in pertinent part as follows:

(a) When Lawyer May Testify. A lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness on behalf of the client except where:

(1) the testimony relates to an uncontested issue;
(2) the testimony will relate solely to a matter of formality and there is no reason to believe that substantial evidence will be offered in opposition to the testimony;
(3) the testimony relates to the nature and value of legal services rendered in the case; or
(4) disqualification of the lawyer would work substantial hardship on the client.

The following excerpts from the official "Comment" to Rule 4-3.7 sum up the prejudice/conflict-of-interest concerns underlying the rule:

Combining the roles of advocate and witness can prejudice the opposing party and can involve a conflict of interest between the lawyer and client.

The opposing party has proper objection where the combination of roles may prejudice that party's rights in the litigation. A witness is required to testify on the basis of personal knowledge, while an advocate is expected to explain and comment on evidence given by others. It may not be clear whether a statement by an advocate-witness should be taken as proof or as an analysis of the proof.

On appeal the 5th DCA upheld the trial court's ruling on the following two grounds: First, Rule 4-3.7 supports disqualification and, second, disqualification of the 2004-will-drafting attorney did not violate his client's constitutional First Amendment right to association because Florida courts have a substantial and legitimate governmental interest in protecting the integrity of the litigation process.

Lesson Learned:

The last thing a client wants to hear is that large sums of money have been paid to an attorney in preparation for a trial that he or she is now disqualified from. It may make economic sense to engage the drafting attorney as pre-trial or post-trial counsel and hire a second lawyer to act as trial counsel. The point is that clients and their attorneys need to anticipate this issue and plan accordingly - not have it thrust upon them on the eve of trial.

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Weisfeld-Ladd v. Estate of Ladd, 2006 WL 231481 (Fla. 3d DCA Feb 01, 2006)

Clearly, the couple at the center of this dispute thought that when they signed their prenuptial agreement they were waiving any spousal rights they had to each other's separate property - including rights of a surviving spouse to an elective share under F.S. § 732.201. Nonetheless when husband died, surviving spouse went ahead and filed a petition seeking an elective share of his estate. The 3d DCA summarized her testimony regarding the couple's clear intent as follows:

"Most importantly, the wife testified as to her understanding of the Prenuptial Agreement. It was her understanding that if she would have passed away, her son would have inherited all of her separate property, and that upon her husband's death, his children would inherit all of his separate property."

"[Wife] even acknowledged that if she would have predeceased her husband, her son would have been entitled to inherit all of her separate property. Based upon the wife's interpretation of the Prenuptial Agreement, it is clear that the husband and wife's intent would have been defeated if the surviving spouse was permitted to receive an elective share. There is no doubt that the wife clearly understood that, by entering into the Prenuptial Agreement, she would not receive any of the husband's separate property upon his death, and that all of his separate property would go to his two children."

The only problem was that the prenuptial agreement didn't actually say what the parties thought they were agreeing to. In fact, the key language of the prenuptial agreement doesn't mention waiving spousal elective share rights at all, what it does say is, to say the least, "ambiguous":

"It is [husband's] intent that, in the event of his death, all of his separate property be given to his children, STEVEN M. LADD and BETHANY S. LADD, or as otherwise provided for in his Last Will and Testament."

Was that one sentence enough under F.S. § 732.702 to effectuate a valid waiver of spousal elective share rights? According to Dade County Probate Judge Maria M. Korvick it was, so she denied surviving spouse's elective-share petition. By the way, here are the portions of F.S. § 732.702 focused on by the 3 DCA:

"rights of a surviving spouse to an elective share *** may be waived, wholly or partly, before *** marriage, by a written contract**** Unless the waiver provides to the contrary, a waiver of 'all rights,' or equivalent language, in the property or estate of a *** prospective spouse *** is a waiver of all rights to elective share**** (emphasis added by 3d DCA)."

What I find most interesting about this case is how the 3 DCA seems to go out of its way to affirm the trial court's ruling denying the surviving spouse's elective share claim. Obviously swayed by a compelling set of facts, the 3 DCA arrived at the "right" conclusion as follows:

First: Assume findings of fact NOT included in the trial court's order:

"The trial court did not make a specific finding as to whether the Prenuptial Agreement was ambiguous or unambiguous. However, as the trial court allowed the wife to testify as to her intent when entering into the valid Prenuptial Agreement, we assume that the trial court found that the Prenuptial Agreement was susceptible of more than one construction and, therefore, ambiguous."

Second: Agree with findings of fact ASSUMED into the record:

"Upon review of the Prenuptial Agreement, we agree with the trial court's determination that the Prenuptial Agreement was ambiguous."

Third: After assuming factual findings into the record that weren't there to begin with, then agreeing with the trial court's assumed findings of fact, hold that "PAROL EVIDENCE," i.e., testimony by the surviving spouse completely undermining her own petition, was validly admitted to construe the "ambiguous" prenuptial agreement:

"As the agreement was ambiguous, the trial court properly admitted parol evidence to shed light on the intent of the parties when entering into the Prenuptial Agreement."

Presto! Good facts save the day!

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According to this study sponsored by Allianz Life Insurance, non-financial items that parents leave behind--like ethics, morals, faith, and religion--are 10 times more important to both boomers and their parents than the financial aspects of inheritance. Little wonder then that estate planners have responded to this "values driven" estate planning perspective with trust vehicles that provide positive financial incentives for behavior parents and grandparents want to encourage, as well as financial disincentives for behavior parents and grandparents want to discourage. These trusts are referred to as "incentive trusts," and they are gaining in popularity.

The New York Times recently reported here on the growing acceptance and use of incentive trusts as estate planning tools. Although the article was well written, what I find most interesting is the fact that it was written at all. What was once as little-known planning device has now apparently gained such widespread acceptance that it warrants national attention in a general circulation newspaper.

Below are a few excerpts from the linked-to New York Times story:

"In traditional trusts, beneficiaries receive money at a certain age, but in incentive trusts, heirs must reach milestones or take actions. For example, children might receive a $25,000 bonus when they graduate from college or marry. Or they might receive funds matching money they earn."

"Mr. Holzapfel, who has many wealthy clients in the technology and real estate fields, says he has seen a growing interest in performance-based trusts.

"Quite a few people worked their tails off in high tech, working 24/7 for years, and made a lot of money," he said. "They have a very strong work ethic, and they want their kids to as well." Among his clients with young children and assets of $10 million or more, about 60 percent have incentive trusts.

Critics, however, call incentive trusts too inflexible and say that some parents can be too controlling. A trust that offers a dollar for every dollar earned can be unfair, the critics say, because it gives big rewards to already-successful business people and much smaller amounts to heirs who may work just as hard but have chosen careers as, say, artists or teachers. (And unless other provisions are made in the trust, homemakers and volunteers may get nothing.) Critics also say that some incentives may go so far as to pay children to provide their parents with grandchildren."

"The Bessemer Trust Company, a wealth management firm, serves as trustee for about half its 1,800 client families, who have a variety of estate plans. William H. Forsyth Jr., the firm's chief fiduciary counsel, says the biggest fans of performance-based wills are typically "C.E.O. types who tend to be quite controlling" and those with first-generation wealth because "they are the most scared by it." Because incentive trusts are relatively new, he predicts many legal challenges from heirs." (Emphasis added.)

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