Kountze v. Kountze, — So.3d —-, 2012 WL 3111681 (Fla. 2d DCA August 01, 2012)

It says it right in the trust code: trust litigation must be conducted like any other form of civil litigation. F.S. § 736.0201(1). The problem is that many of these cases are litigated before probate judges, who on a day-to-day basis adjudicate un-contested probate matters governed by the less stringent probate rules. Result? Basic due process protections assumed to apply in any piece of civil litigation are often brushed aside in trust cases [see here, here, here.]

In this case the trustee apparently did a good job of upsetting the probate judge, which resulted in the trustee’s summary removal. Can the judge do this in the absence of evidence, adduced at a properly noticed evidentiary hearing? NO

Section 736.0706(1), (2)(c), Florida Statutes (2010), provides that “a trustee may be removed by the court on the court’s own initiative … if … [d]ue to the unfitness, unwillingness, or persistent failure of the trustee to administer the trust effectively, the court determines that removal of the trustee best serves the interests of the beneficiaries.” The statute therefore suggests that a factual finding must be made by the trial court as to the trustee’s unfitness, unwillingness, and persistent failure to administer the trust effectively.

On appeal, Edward Kountze argues that it was error for the trial court to make such a finding and remove him as Trustee without providing him notice and an opportunity to be heard. We agree. Edward was put on notice of a hearing on Charles’ motion to compel discovery. In that motion, Charles did seek a sanction against Edward for his failure to comply with discovery, but that sanction—the only sanction of which Edward was aware—was the imposition of an attorney’s fee award, not removal as Trustee. Additionally, in a prior contempt order entered in this case, the trial court had given Edward twenty days to comply with the discovery request then at issue and had stated that if he failed to do so “Defendant shall pay to Plaintiff $100.00 per day beginning the day after such items are due, and shall continue to pay Plaintiff $100.00 each day until Defendant has fully complied with this order.” There is nothing in the record to put Edward on notice that removal as Trustee was a possible sanction. As such, Edward had no reason to be prepared to defend against such a sanction.

Furthermore the trial court’s order expressly states that this sanction is being imposed not only for Edward’s failure to provide Charles with the requested trust accounting but also for failing to comply with previous court orders. As such, the sanction is analogous to an indirect civil contempt order, which does require notice and an opportunity to be heard. See Bresch v. Henderson, 761 So.2d 449, 451 (Fla. 2d DCA 2000) (“[A] person facing civil contempt sanctions is … entitled to a proceeding that meets the fundamental fairness requirements of the due process clause…. Such fundamental fairness includes providing the alleged contemnor with adequate notice and an opportunity to be heard.”); Whitby v. Infinity Radio, Inc., 961 So.2d 349, 355 (Fla. 4th DCA 2007) (reviewing order finding appellant in indirect civil contempt and concluding that “[a] person facing civil contempt sanctions is entitled to notice and an opportunity to be heard”).

Lesson learned?

First, the due process issues at the heart of this trustee-removal case also come up all the time in personal-representative removal cases, and (fortunately) the law is the same: you can’t boot the PR out of office in the absence of a trial on the merits [see here]. Bottom line: people have a right to pick who their fiduciaries are going to be, and that choice can’t be brushed aside lightly.

Second, if you’re already in front of a probate judge and it looks like a related trust may be affected by the probate litigation, you need to anticipate the procedural issues unique to trust cases and make a choice: either file a petition getting your trust in front of the same probate judge or file a separate trust action in the general-jurisdiction division of the circuit court and get your trust in front of a different judge. There are pros and cons to either choice, but at least you’ve dealt with the procedural issues head on.