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

Amy B. Beller of Beller Smith, P.L., in Boca Raton, Florida, was on the winning side of Pajares v. Donahue, --- So.3d ----, 2010 WL 934101 (Fla. 4th DCA Mar 17, 2010), an interesting case I wrote about here involving the enforceability of will devising homestead property (always a tricky issue).

I invited Amy to share some of the lessons she drew from this case with the rest of us and she was kind enough to accept.

[Q]  What strategic decisions did you make in this case that were particularly outcome determinative at trial? On appeal?

[A]  I struggled with the decision of whether or not to agree that extrinsic evidence was not required and, in fact, my submissions at the trial court level were equivocal on this point. Because fees were an issue for my clients, I did not take any discovery and so I did not know whether extrinsic evidence would be helpful or harmful. In the end, I decided that if the trial court had to decide the case without the benefit of extrinsic evidence, the court would more than likely decide in my favor, and my clients, after being apprised of the risk, agreed with this strategy.

[Q]  Would you have done anything differently in terms of framing your case for your probate judge?

[A]  No -- I believe the determining factor was that the Will contained cash bequests which could not be paid unless they were to be paid from the sale of the homestead, to be paid "from the sale" of the homestead property. This clearly provided me with a strong argument that the testatrix intended the homestead to be sold.

[Q]  From your perspective as probate litigator, do you think there’s anything that could have been done in terms of estate planning to avoid this litigation or at least mitigate its financial impact on the family?

[A]  Most definitely! This was apparently a self-made Will created from an internet form. Need I say more? (Note to estate litigators: be ye thankful for the internet Will form, for it brings forth the fruit of tomorrow's litigation.)

[Q]  Any final words of wisdom for probate lawyers of the world based on what you learned in this case?

[A]  I stand on the shoulders of our real homestead experts (Kelley, Felcoski & Scuderi, Stone, Baskies, to name a few) and don't feel qualified to offer any wisdom to my colleagues at the Bar. But obviously homestead is still a developing area of the law, with plenty of room for zealous litigation. A good appellate decision is the product of good lawyering on both sides. Therefore, I want to acknowledge the excellent efforts of opposing counsel, Jay Kauffman, Esq., of Herb & Kauffman.

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Pajares v. Donahue, --- So.3d ----, 2010 WL 934101 (Fla. 4th DCA Mar 17, 2010)

A will provision devising Florida homestead property is valid ONLY if BOTH elements of the following two-part test are satisfied:

1. The homestead was subject to devise. In other words, the restrictions on the devise of homestead contained in Sect. 4(c), Article X, of the Florida Constitution and F.S. 732.401, F.S. 732.4015 do NOT apply. (When in doubt as to this point, refer to Kelley's Homestead Paradigm.)
2. The will contains a specific power directing that the homestead property be sold and the sales proceeds distributed to the estate's beneficiaries.

The will at the heart of the linked-to opinion wasn't exactly a picture of clarity (thus the litigation). What's interesting about this case is the lengths to which first a probate court and then the 4th DCA went to carry out the decedent's intent, as clearly set forth in her will, even though the will lacked the sort of explicit homestead-sales clause discussed by the Florida Supreme Court in McKean v. Warburton and quoted by the 4th DCA below.

First, here's the less-than-clear text at issue in this case. The homestead property is a home in Delray Beach whose address is 202 N.W. 18 Street, Delray Beach, Florida 33444. To make sense of this opinion you'll need to focus on all references to that property:

Article One of the will stated that Kuhnreich's husband was deceased and she had no children.

Article Three, entitled “Specific Bequests of Real and/or Personal Property,” concerned two parcels of real property. First, a West Palm Beach condominium unit was devised outright to two named devisees. Second, “[f]rom the sale of: 202 N.W. 18 Street[,] Delray Beach, Florida 33444,” the will bequeathed specific dollar amounts to five persons: Robert Kuhnreich, $5,000; “Lane Abbot, AKA Orlando Abad,” $10,000; “David Mears, AKA David Abad,” $10,000; “Connie Abad, AKA Conchita Abad,” $30,000; and Maria De Cuena, $5,000. Article Three ended with this sentence: “In the event that I do not possess or own any property listed above on the date of my death, the bequest of that property shall lapse.”

Article Four was entitled “Homestead or Primary Residence.” It stated:

I will, devise and bequeath all my interest in my homestead or primary residence, if I own a homestead or primary residence on the date of my death that passes through this Will, to see above primary residence. If I name more than one person, they are to receive the property [X] equally, after all estate taxes, debts are satisfied.

And here's how the 4th DCA got to the "right" conclusion (if by "right" we mean: carrying out the decedent's testamentary intent vs. strictly enforcing Florida's restrictions on the devise of homestead property):

Where the decedent has no surviving spouse or minor children, homestead property may “pass as a general asset of the estate by a specific devise.” McKean, 919 So.2d at 345. “[W]hen the testator specifies in the will that the homestead is to be sold and the proceeds are to be divided[,] ... the homestead loses its ‘protected’ status.” Id. at 346-47 (citation omitted). “Thus, where the will directs that the homestead be sold and the proceeds added to the estate, those proceeds are applied to satisfy the specific, general, and residual devises, in that order.” Id. at 347 (citations omitted).

Reading Articles Three and Four together, we find that Kuhnreich specified that the Delray Beach property was to be sold and the proceeds divided according to the provisions of the will. With the italicized and underlined language, “see above primary residence,” Article Four specifically references the treatment of the residence in Article Three. Article Three indicates that the specific bequests will be paid from “the sale” of the Delray Beach home. In fact, the will provides for the Article Three bequests only through a sale of the real property: the will provides that if the decedent did not own one of the two properties on the date of her death, then “the bequest of that property shall lapse.” Article Four does not expressly say that the Delray Beach Property is to pass to Pajares and Donahue free of claims of the decedent's creditors, a hallmark of homestead property. See In re Estate of Hamel, 821 So.2d 1276, 1278 (Fla. 2d DCA 2002). Rather the devise is subject to “debts.” The will does not therefore demonstrate an intent to preserve the advantages of homestead for the property.

For these reasons, we affirm the order of the circuit court, which harmonized Articles Three and Four of the will.

Lesson learned?

If a client walks into your office with case involving freely-devisable homestead and a will that at first blush appears to lack the type of explicit homestead-sales clause discussed in McKean v. Warburton, don't be too quick to throw in the towel. Scour the will for language that could be read to imply the decedent intended or expected the homestead property would have to be sold. If you're dealing with freely-devisable homestead property, a decedent's testamentary intent shouldn't be frustrated simply because his or her will wasn't perfectly drafted. That's the argument, anyway. It worked in this case, it might work in yours.

Bonus:

Amy B. Beller of Beller Smith, P.L., in Boca Raton, Florida, was on the winning side of this case both at the trial-court level and on appeal. In this interview I invited Amy to share some of the lessons she drew from this case with the rest of us and she was kind enough to accept.  You can also download her appellate brief: APPELLEES' ANSWER BRIEF

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In this latest opinion from the 9th Circuit, the spotlight turns once again on the record-shattering trust-and-estates litigation the late Anna Nicole Smith a/k/a Vickie Lynn Marshall (she died in 2007) and and her former step-son, E. Pierce Marshall (he died in 2006), waged over the vast estate of her former husband, J. Howard Marshall. As I've previously written about on this blog, this case resulted in a U.S. Supreme Court decision, Marshall v. Marshall, viewed by many (including me) as opening the federal court room doors to trust-and-estates litigation to an extent we've never seen before.

Here's how Law.com reported in this piece on the 9th Circuit's ruling.

A federal appeals court ruled Friday that Anna Nicole Smith's estate will get none of the more than $300 million the late Playboy model claimed a Texas billionaire to whom she was briefly married meant to leave her after he died.

The ruling came in a 15-year legal battle that started in a sleepy Houston probate court and stretched all the way to the U.S Supreme Court.

It initially pitted Smith against the son of J. Howard Marshall over the $1.6 billion estate the oil tycoon left after his 1995 death at age 90. J. Howard Marshall had wed Smith the year before when she was 26.

Marshall's son E. Pierce Marshall died in 2006 and Smith perished after a drug overdose in 2008. Their heirs and lawyers kept up the legal fight that included one ruling awarding Smith $474 million.

Kent Richland, who represents the Smith estate, said he would appeal the latest ruling but hasn't decided whether to ask the appeals court for another hearing or take the case back to the U.S. Supreme Court regarding different issues.

Eric Brunstad, a lawyer for Marshall family members, said they hoped the legal fight was over.

"Our only wish would be that Pierce were here to see his vindication," the family said in a prepared statement.

The three-judge appeals court panel ruled unanimously that a 2001 jury verdict in Houston in favor of the Marshall family should be honored over two federal court rulings in Smith's favor.

The appeals court said the federal bankruptcy court award of about $447 million and a subsequent federal trial court ruling that lowered the amount to $89 million should be ignored.

The appeals court said the Houston jury heard from all the parties, including Smith, during a five-month trial in which she accused E. Pierce Marshall of illegally coercing his father to keep the reality TV star out of his will.

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This is a bit off topic, but I recently came across a Goldman Sachs research report entitled Take Stock of America that deserves wider attention than your standard market analysis piece. The report is all about why the smart money's riding on the U.S. Over the next 20 years China will (hopefully) continue to grow and prosper, but that growth won't come at our expense.

Warren Buffett's been beating this drum for years, first in a 2008 NYT's op ed piece, then in his very public 2009 deal to buy a U.S. railroad. “It’s an all-in wager on the economic future of the United States,” said Buffett. “I love these bets.”

What I love about the Goldman Sachs report is its focus on the hard facts underlying Buffett's sunny optimism. This isn't empty-headed jingoism. Consider the following excerpts from Take Stock of America.

[1] Economic Strength
At $14.3 trillion as of December 2009, the US accounts for 24.9% of world GDP. Its economy is 2.8 times larger than the next largest economy, Japan; 3 times larger than the third-largest economy, China; and 4.4 times larger than the fourth-largest economy, Germany. To put these numbers in perspective, the United States has a higher GDP than the next three largest economies combined. The only entity to come close to the US is Euroland, a union of 16 countries with a common currency and monetary policy. A reminder that Euroland includes countries that have their own significant economic challenges will quickly dispel any notion that it will challenge US’s economic preeminence anytime soon.

[2] Military Strength
While the gap between total GDP and GDP per capita of the US and that of other countries is quite significant, the gap in military power is even greater. As Josef Joffe has pointed out, “the United States plays in a league of its own.” Based on 2008 data from the Stockholm International Peace Research Institute, the US spends $616 billion or about 4.2% of its GDP annually on its military, accounting for close to half of the world’s total military spending. Even the sum total of the next 14 countries (including Australia as the 14th) does not add up to the US’s annual outlay.

[3] Prosperity
Let’s now turn to the softer factors that contribute to US’s preeminent status. Since its inception over 200 years ago, the US has had an extremely resilient and dynamic economy and a stable political system. It is an open society and an open economy with immigration as a core principle of its existence. Its technological achievements, in aggregate, outpace those of any other country. The question is how can one measure the factors that account for such resilience, dynamism and stability and use them to make comparisons between the US and other countries. The Legatum Prosperity Index attempts to capture some of these factors. This index is comprised of 79 different variables, which are distilled into nine different sub-indexes; each country’s score is an equal weight of the sub-indexes. The nine sub-indexes are economic fundamentals, entrepreneurship and innovation, democratic institutions, education, health, safety and security, governance, personal freedom, and social capital.

Among major countries, the US ranks number one. Overall, it is ranked ninth out of 104 countries after Finland, Switzerland, Sweden, Denmark, Norway, Australia, Canada and the Netherlands. The only country with a GDP of greater than $1 trillion in the top nine is Canada at $1.3 trillion. Japan, the world’s second largest economy, is ranked 16th. Brazil is ranked 41st, India 45th, Russia 69th and China 75th. 

[4] Taxes
[T]here is scope for a rising tax base. Federal tax revenues stand at the lowest level relative to GDP since 1950. A reversion to more typical postwar levels would equate to several percentage points of deficit reduction. Moreover, the total tax base of the US relative to GDP stands well below the level in any other developed country and the OECD average. Thus, there is capacity for the US to increase taxes without jeopardizing its comparative position in the global economy.

Lastly, it’s worth remembering that both personal and corporate tax rates are low by historical standards. While there is raging debate about the impact of such increases on prospective growth, three points bear mentioning. First, higher tax rates have not historically been an impediment to economic growth, as many of the faster-growing periods in American history occurred with tax rates much higher than today’s levels. Second, levels matter. If the federal marginal tax rate on the highest income bracket were to revert to its pre-Bush level of 39.5%, it would still stand below the 50% threshold that some experts consider highly detrimental to growth. Third, timing matters. The mistake of both the US as it was exiting the Great Depression and Japan early in their “Lost Decade” was raising tax rates during the nascent phases of economic recovery. Given the approaching mid-term elections, any broad tax hikes are unlikely to come until 2011, a point at which the economy should be on strong enough footing to absorb them. In short, while undoubtedly not welcome news for individual tax payers, the near certainty of tax hikes should benefit deficit levels going forward.

By the way, in my opinion these stat's are the byproduct of American exceptionalism, not its root cause. What has set us apart over our relatively short history is the ability to adapt to changing circumstances. This point was captured beautifully in a Alexis de Tocqueville quote the authors of Take Stock of America began their report with:

The greatness of America lies not in being more enlightened than any other nation, but rather in her ability to repair her faults.

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Thomas v. Thomas, --- So.3d ----, 2010 WL 391833 (Fla. 5th DCA Feb 05, 2010)

There are certain key milestones in a probate proceeding where Florida's probate rules build in ultra-short limitations periods designed to bring disputes to a head quickly or forever bar them. One of those milestones is when the personal representative files his final accounting. Probate Rule 5.401 says that anyone wanting to object to a final accounting has only 30 days to file an objection, and 90 days from the filing of the objection in which to serve a notice of hearing. Miss those deadlines and you're out of luck, no matter how legitimate your objections may be. Here are the relevant portions of Rule 5.401:

Rule 5.401. Objections to . . . Final Accounting

(a) Objections. An interested person may object to the . . . final accounting within 30 days after the service of the later of the . . . final accounting on that interested person.

*     *     *

(d) Hearing on Objections. Any interested person may set a hearing on the objections. Notice of the hearing shall be given to all interested persons. If a notice of hearing on the objections is not served within 90 days of filing of the objections, the objections shall be deemed abandoned and the personal representative may make distribution as set forth in the plan of distribution.

In the linked-to opinion the parties objecting to the final accounting argued that because the accounting wasn't complete, it didn't count as a "final" accounting, so Rule Rule 5.401's ultra-short limitations periods didn't apply. Clever, but no cigar. The probate judge didn't buy this argument, and neither did the 5th DCA. Here's how the 5th DCA explained its ruling:

On December 3, 2008, the court entered a final judgment granting .  .  .  the motion to strike the objection to the final accounting. The Appellee argues that the court based its ruling on the fact that the objection to the final accounting was not timely filed. That is, the accounting was filed June 16, 2006, and the objection was not filed until October 12, 2006, well beyond the 30 days in which to object as provided by rule 5.401(a).

Appellants contend that the final accounting filed in this case was not complete and, therefore, it was not a final accounting. The Appellants cite no authority for their position and this Court disagrees.

It is clear that a final accounting was filed June 19, 2006, and if infirmities in the final accounting existed, the Appellants had 30 days in which to file an objection, and 90 days from the filing of the objection in which to have a hearing. They did neither. The court found that the objection was waived.

But Wait, There's More!

I received a comment to this blog post from über probate litigator Brian Felcoski. He makes an important point that goes to the 5th DCA's construction of the rule's 90-day requirement.

Hi Juan. I saw your post concerning the Thomas decision. The language in the decision suggesting one needs to have a hearing within 90 days from filing the objection to accounting does not appear to be consistent with Florida Probate Rule 5.401. The language of the rule speaks to service of the notice of hearing and not the actual hearing itself. The committee notes reflect that (d) was amended “to clarify that 90-day period pertains to service of hearing notice, not the actual hearing date.” You might want to make an editor’s note on your probate litigation blog to make your readers aware of this issue. I am copying Tae Bronner, Chair of the Section’s probate law and procedure committee, and asking that her committee review the issue and determine if action is warranted to clarify the rule further. Best regards. Brian Felcoski

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Grainger v. Wald, --- So.3d ----, 2010 WL 479862 (Fla. 1st DCA Feb 12, 2010)

The linked-to opinion is yet another example of yet another plaintiffs lawyer seeing his trial-court win go up in smoke because he blew a deadline in probate court. The last time I wrote about this problem was a med-mal case [click here]. This time around it was a personal injury case arising out of an automobile/ motorcycle accident.

Plaintiffs suing estates often fail to realize that they're really litigating their claims in two separate courts in front of two separate judges:

1. The trial court adjudicating their lawsuit (this is where the decedent's liability is established); and
2. The probate court administering the decedent's probate estate (this is where you go to collect on your judgment).

In the linked-to opinion above the plaintiff eventually prevailed in his lawsuit, but the judgment wasn't rendered until after the decedent's death. In order to collect on his judgment, plaintiff needed to file a creditor claim against the probate estate of the now deceased defendant. This is where things went south for the plaintiff (and a good probate lawyer working for the estate snatched victory from the jaws of defeat!!).

At some time during the course of the litigation plaintiff's personal injury attorney was served with a "creditors notice" in connection with the probate proceeding. The personal injury lawyer apparently ignored this notice, which ultimately resulted in his trial court win being forfeited (ouch!!).  Here are the key facts/dates as recounted by the 1st DCA:

Wald was involved in an automobile/motorcycle accident with the decedent and brought a personal injury lawsuit to recover damages. Wald eventually prevailed in his lawsuit, but the judgment was not rendered until after the decedent’s death. Some time after obtaining the judgment, Wald filed a claim against the probate estate. 

The personal representative argued she had served notice on Wald's attorney as required by Florida Probate Rule 5.041(b) (2009) on May 23, 2007, thus triggering the time constraints of section 733.702(1). Therefore, under the statute, Wald had until June 22, 2007, to file any claim he might have. Since Wald's claim was not filed until July 2, 2007, the personal representative argued it was untimely and forever barred.

So far so good for the estate. But then the probate judge did something the 1st DCA characterized as "bizarre": he declared the estate's creditor notice wasn't valid because plaintiff's personal injury attorney had been served instead instead of plaintiff's probate attorney. What?! Yeah, that's what the 1st DCA said too.

There are two reasons why the probate court erred in finding the time constraints of section 733.702(1) inapplicable.

[1] First, the Florida Probate Rules do not make any distinction based on the scope of an attorney's representation of a client. A personal representative would have no way of knowing such information. These descriptive labels, such as “probate” attorney or “personal injury” attorney do not appear in the Rule 5.041(b), which governs the service of pleadings and papers in probate actions. Instead, the Rule simply requires that if a creditor is represented by an attorney, service must be on the attorney and not on the creditor. The language of Rule 5.041(b) states that “when service is required or permitted to be made on an interested person represented by an attorney, service shall be made on the attorney unless service on the interested person is ordered by the court.” (emphasis added).

*     *     *

[2] Second, regardless of whether the attorney served was labeled the “probate” or the “personal injury” attorney, the record reflects that Wald had actual notice and that he received notice in time to file the claim. Wald received all process that was due. The record contains Wald's original statement of claim against the estate. Although the claim was not filed until July 2, 2007, Wald signed the claim on June 16, 2007-at least six days before the time for filing claims was to expire. “[D]ue process requires the personal representative to give notice by any means that is certain to ensure actual notice of the running of the non-claim period.” Estate of Ortolano, 766 So.2d 330, 332 (Fla. 4th DCA 2000) (emphasis added). Considering the date of Wald's signature, he had actual notice and sufficient time to file a claim within the 30-day statute of limitations. Therefore, any failure was not in the service of the notice, but in the untimely filing of the claim. Since there was no excuse for Wald's failure to file the claim in a timely manner, it should have been declared time barred under section 733.702(1).

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