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

Rust v. Brown, --- So.3d ----, 2009 WL 2031288 (Fla. 4th DCA Jul 15, 2009)

It's not unusual for courts to enter orders simply "granting" a summary judgment motion. Which may be gratifying to the winning side, but technically speaking, the order is meaningless. Why? Because it hasn't actually entered judgment for or against a party. Which means it's a non-final, non-appealable order. Here's how the 4th DCA explained the rule in Shroff v. Winn Dixie Stores, Inc., 570 So.2d 1135 (Fla. 4th DCA 1990):

With great reluctance, this appeal is dismissed on the authority of White Palms of Palm Beach v. Fox, 525 So.2d 518 (Fla. 4th DCA 1988), and Russell v. Russell, 507 So.2d 661 (Fla. 4th DCA 1987). Once again we caution trial judges and attorneys alike that this court lacks jurisdiction over an order granting a motion for summary judgment, when that order does not contain the requisite words of finality indicating that the complaint is dismissed.

Unfortunately, the parties (and the judge) in the linked-to probate case overlooked this bit of sage advice. Here again the 4th DCA was presented with an order that simply "granted" a summary judgment motion, and again the 4th DCA sent everyone packing with instructions to try to get it right the second time around:

The decedent died in a motor vehicle accident, which gave rise to a wrongful death claim. The personal representative of the estate is one of the decedent's three adult sons, and a residuary beneficiary of the estate. The surviving spouse is a non-citizen.

The trust beneficiaries executed a Distribution Agreement. The agreement's purpose was to convert a revocable trust into a qualified domestic trust (QDT) to preserve the marital deductions that are inapplicable to non-citizens and to save the estate money. See 26 U.S.C. § 2056A. The agreement specifically allocated the QDT administration expenses to be paid by the three sons. It did not address the proceeds of the wrongful death claim, despite everyone being aware of it prior to entering into the agreement.

Subsequently, the wrongful death claim settled for two million dollars, leaving $1.298 million for the estate. A dispute then arose over the responsibility for the administration expenses related to the QDT.

The surviving spouse filed a motion to compel the personal representative to sign the settlement checks. In response, the personal representative prepared an apportionment plan for the settlement proceeds. The second amended apportionment plan allocated $962,366 to the estate for reimbursement of the QDT's administration expenses and $335,634 to the surviving spouse.

The surviving spouse filed an objection to the plan and moved for summary judgment, attaching the Distribution Agreement, a letter written by her attorney, an estate inventory which included the value of the wrongful death claim, and an economist's report.

The personal representative filed a response, indicating that, “[p]rior to the settlement of the wrongful death action, the Parties entered into an oral agreement. As part of the Oral Agreement, [the surviving spouse] agreed to pay the expenses of the Estate out of the proceeds of the wrongful death action.” He attached his affidavit, attesting to the oral agreement. The court entered an order granting the surviving spouse's motion for summary judgment, giving rise to this appeal.

Rule 9.110(a)(2) of the Florida Rules of Appellate Procedure provides for “review of orders entered in probate and guardianship matters that finally determine a right or obligation of an interested person as defined in the Florida Probate Code.” “Significantly, the committee note explains that the 1996 amendment to the rule ‘does not abrogate prior case law holding that a party's right of appeal arises when there is a termination of judicial labor on the issue involved as to that party.’ “ Klingensmith v. Ferd & Gladys Alpert Jewish Family, 997 So.2d 436, 437 (Fla. 4th DCA 2008) (quoting Walters v. Edwards, 700 So.2d 434, 435 n. 1 (Fla. 4th DCA 1997)).

An order merely granting a motion for summary judgment is not a final order because it does not enter judgment for or against a party. White Palms of Palm Beach, Inc. v. Fox, 525 So.2d 518, 519 (Fla. 4th DCA 1988), abrogated on other grounds by Dobrick v. Discovery Cruises, Inc., 581 So.2d 645 (Fla. 4th DCA 1991).

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The esoteric tax and property-law issues at play in most will contests or contested probate proceedings are so complex that it's become common practice in Florida to use experienced trusts and estates lawyers as expert witnesses in these trials.

But is it really proper to call a lawyer-expert to explain a body of law (no matter how complex) to the judge? Isn't the judge supposed to "know" the law? And if there's any explaining to do, isn't that what counsel for the parties is supposed to do?

That was the question the trial judge was asked to rule upon recently in the trial of Anthony Marshall, the son of the philanthropist Brooke Astor. Here's how the judge's ruling was reported in Former Milbank Chairman to Testify as Wills Expert in Astor Trial:

Three months into the criminal trial of socialite Brooke Astor's son, Anthony Marshall, and the lawyer he hired who allegedly helped him loot his mother's estate, the presiding judge has cleared the way for a trusts and estate expert to testify for the prosecution.

Alexander D. Forger, the former chairman of Milbank, Tweed, Hadley & McCloy, can give expert testimony on the "patterns" of Astor's wills and codicils and the "professional practice standards" for trusts and estates attorneys, Acting Supreme Court Justice A. Kirke Bartley Jr. ruled Wednesday from the bench.

However, the judge barred Forger from testifying on issues that could prove critical to the prosecution's case: whether Henry Christensen III, who represented Astor for more than 20 years, and G. Warren Whitaker, the attorney who drafted a hotly disputed Jan. 12, 2004, codicil to the socialite's 2002 will, violated ethical standards.

By the way, if you ever find yourself arguing either side of this issue, you'll want to read the submissions of the prosecution and Marshall regarding Forger's appearance. Both do a good job of articulating the classic arguments for and against allowing lawyers to testify as expert witnesses.

But is it OK under Florida law to qualify lawyers as "experts" to explain trusts and estates law issues to a judge? Like I said, it's so commonly done, you'll rarely if ever find yourself actually having to litigate the issue. But if you do find yourself having to argue this point, a case you'll want to read - regardless of what side of the argument you may be on - is Guy v. Kight, 431 So.2d 653 (Fla. 5th DCA 1983), which provides as follows:

Section 90.703, Florida Statutes (1981) provides that “[t]estimony in the form of an opinion or inference otherwise admissible is not objectionable because it includes an ultimate issue to be decided by the trier of fact.” Additionally, it has been held that there is no error in permitting an attorney to testify as an expert witness at trial as to substantive and procedural Florida law. Warwick, Paul & Warwick v. Dotter, 190 So.2d 596 (Fla. 4th DCA 1966).

Another source you should review if you're thinking about serving as an expert witness yourself or engaging another attorney as an expert witness is ABA Formal Ethics Opinon 97-407 (Lawyer as Expert Witness or Expert Consultant).

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Lanning v. Pilcher, --- So.3d ----, 2009 WL 1941210 (Fla. 1st DCA Jul 08, 2009)

The “Save Our Homes” (SOH) amendment to Florida's constitution sets a 3% maximum limit on annual valuation increases of homestead property for ad valorem tax purposes. Over time, the SOH cap has created huge disparities in property taxes paid by Florida residents vs. non-Florida residents. Consider these 2002 stat's, as reported in Protecting and Preserving the Save Our Homes Cap:

Statewide in the year 2002 the Save Our Homes (SOH) cap protected about $80 billion in assessed value from taxation. That is up 68.50 percent over the year 2001, when it was about $47.9 billion.

But is it constitutional?

The discriminatory effect of Florida's property tax scheme on non-residents is obvious, which makes it an easy target for constitutional attack. That's basically what happened in the linked-to opinion. Unfortunately for the tax-challengers in this case all of their arguments have been tried before . . . and failed. And as explained by the 1st DCA, they didn't work this time either:

The main appeal consists of a series of federal constitutional challenges to Article VII, Section 4(d), but all of the supporting arguments have been rejected before in comparable cases. For example, the Supreme Court held in Nordlinger v. Hahn, 505 U.S. 1 (1992), that a California constitutional amendment limiting real property tax increases to 2% per year, in the absence of a change of ownership, did not violate the Equal Protection Clause. And this court held in [Reinish v. Clark, 765 So.2d 197 (Fla. 1st DCA 2000)] that the Florida homestead exemption did not violate the Equal Protection Clause, the Privileges and Immunities Clause, or the Commerce Clause. Although Reinish dealt with the application of the $25,000 homestead exemption, while this case involves a challenge to the 3% tax cap on increases in the assessment of homestead property, the analysis is the same. In both cases, the tax benefit is based on the way the property is used, not on the status of the landowner as a resident or nonresident.

The homestead exemption and the 3% tax cap apply only to property that is used as a primary residence and therefore qualifies as a homestead. A Florida resident who owns vacation property or business property in the state will not be entitled to claim any tax benefit under Article VII, Section 4(c) and will be in the same position with respect to that property as a nonresident. The plaintiffs argue that the existence of a benefit for homestead property, when combined with the tax treatment of non-homestead property, gives Florida residents a tax advantage, but this is essentially an argument that the homestead exemption is itself unconstitutional, a point rejected in Reinish.

For these reasons we hold that Article VII, Section 4(c) of the Florida Constitution is valid under the United States Constitution and that it does not violate a nonresident's rights under the Equal Protection Clause, the Privileges and Immunities Clause, or the Commerce Clause. Likewise, we hold that section 193.155, Florida Statutes, the law implementing Article VII, Section 4(c), is constitutionally valid.

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Zoldan v. Zohlman, --- So.3d ----, 2009 WL 1310995 (Fla. 3d DCA May 13, 2009)

In this case "husband" sued his second wife's estate on undue influence grounds trying to get out of a post-nuptial agreement he signed obligating him to leave a share of his $40 million estate to second wife's daughter. Husband died after filing his lawsuit, and his sons were substituted in as plaintiffs.

So by now the litigation is between two estates: husband's estate vs. wife's estate. But those are only legal titles, this fight is really between two sets of heirs: husband's sons from a prior marriage (representing his estate) vs. wife's daughter from a prior marriage (representing her estate). As the WSJ recently reported in The Right Steps, blended families are often a volatile mix (see also here), which may explain why the two estates battling it out in this case have by now gone through two full blown trials followed by two trips to the 3d DCA.

Wife's estate won the first round [click here]. Perhaps emboldened by this win, wife's estate then tried to make the best of its win by arguing that its share of husband's estate (25% of a $40 million family limited partnership) shouldn't be subject to the standard valuation discounts applicable to FLPs, but should instead be measured on a "fair value" basis (i.e., no discounts for lack of marketability or minority status) under F.S. 620.2114(1).  Nice try, but no cigar. This time around husband's side won:

Originally, the Estate disputed Ms. Zoldan's right to obtain anything other than what each of the three sons had inherited, i.e. an interest in the limited partnership. Eventually, however, the Estate took the position that if monetary damages were ordered, it was a “fair market valuation” that should be utilized in determining that award. The parties attached a dollar amount to each valuation method, concluding that the “fair market valuation” of the interest was $2,247,573, while the “fair valuation” of the interest was $6,450,937. Thus, by mutual agreement, the only question before the trial court was which valuation method should be applied.

.   .  .  .  .

While the partnership agreement does not permit a limited partner to withdraw and demand distribution from the partnership, Mr. Zohlman's sons, one of whom is the general partner with “sole and exclusive control of the Limited Partnership,” nevertheless agreed to distribute to Ms. Zoldan the “fair market value” of a one quarter interest of Mr. Zohlman's 99% limited partner interest in the partnership, i.e., the amount a full limited partner would receive if that partner took the interest and attempted to sell it on the open market. FN4 See Rothschild v. Kisling, 417 So.2d 798, 801 (Fla. 5th DCA 1982) (recognizing that fair market value is generally “what a willing buyer would pay a willing seller” for an interest). Such a distribution would be consistent with paragraph 12 .03 of the partnership agreement which provides that although “[n]o Partner shall be entitled to demand a distribution be made in partnership Property ... the General Partner may make or direct property distributions to be made, using the property's fair market value as of the time of the distribution[ ] as a basis for making the distribution[ ].”

It would also be consistent with that portion of the partnership agreement governing permitted sales of limited partnership interests, which obligates limited partners to establish the market value of their interests by obtaining a bona fide offer from a willing buyer in the marketplace:
. . . . .

Here, the stipulated fair market value of Ms. Zoldan's interest was put at $2,247,573. Based on the foregoing analysis, we find no error in the methodology used to make this determination.

We also reject the notion that there was no competent, substantial evidence to support the trial court's determination that Ms. Zoldan's interests should be valued using the fair market value method. The Estate presented the expert testimony of David Pratt, a seasoned trust and estate lawyer, who testified that fair market value is the valuation standard used when distributing trust assets and the assets of an estate. More specifically, Pratt testified that fair market value is the exclusive valuation method used for the purpose of determining distributions from a limited family partnership that is part of a trust or an estate.

Thus, we find no error in the valuation method used by the trial court. The promise made and broken was that Mr. Zohlman name Ms. Zoldan an heir equal to his three sons. Ms. Zoldan was offered and rejected an interest in the limited partnership which would have put her in the exact same position as the Zohlman brothers. Having rejected that offer, the Estate maintained that the measure of Ms. Zoldan's damages would be the “fair market value” of the interest she rejected. With no dispute as to the dollar amount attached to the use of a “fair market valuation,” with that method being identified in the partnership agreement itself, and with that valuation method being supported by expert testimony, we conclude that it was properly employed. Accordingly, we find the trial court's order was correct in its entirety, and affirm the order awarding Ms. Zoldan $2,247,573, plus pre-judgment interest.

Lesson learned?

Valuation issues involving FLPs are a BIG DEAL! to estate planners and probate lawyers alike. Florida trusts and estates lawyers will want to take note of this important valuation case. The 3d DCA's opinion is fine as far as it goes, but doesn't go into much detail explaining the losing side's "fair value" argument, for that you'll want to read Appellees' Answer Brief.

By the way, many of the issues raised in this opinion were the subject of an excellent Florida Bar Journal article by Rebecca C. Cavendish and Christopher W. Kammerer, as applied in the context of closely-held corporations: Determining the Fair Value of Minority Ownership Interests in Closely Held Corporations: Are Discounts for Lack of Control and Lack of Marketability Applicable?

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