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4th DCA: New York creditor’s claim vs. Florida ancillary estate: whose statute of limitations periods apply: NY or FL?

Staum v. Rubano, — So.3d — , 2013 WL 4081055 (Fla. 4th DCA August 14, 2013)

If you’re domiciled in one state at death (say New York), but own real property in another state (say Florida), your estate may have to be probated  or “administered” in both states, with New York being your domiciliary administration and Florida being your ancillary administration. This all works smoothly as long as the estate isn’t involved in any litigation. Once you have lawsuits pending in multiple jurisdictions you quickly bump into questions about how to reconcile each independent jurisdiction’s unique probate-law regime as applied to a single decedent’s estate.

The conflict-of-law puzzles lurking under the surface of contested multi-jurisdictional probate cases are never easy. For example, assume in our scenario NY law and FL law resulted in different outcomes in estate-related litigation pending in FL. Generally speaking, FL law would trump NY law as applied to any FL real propertySee Jones v. Habersham, 107 U.S. 174 (1883). By contrast, NY law would – generally speaking – trump FL law as applied to any FL personal property. See In re Estate of Binkow, 120 So.2d 15 (Fla. 3d DCA 1960). Confused? It gets better. Under certain circumstances the laws of NY and FL could both apply. See Cuevas v. Kelly, 873 So. 2d 367 (Fla. 2d DCA 2004).

What about creditor claims: whose statute of limitations periods apply: NY or FL?

How ancillary probate proceedings are supposed to work in Florida and what law applies has been codified to a large extent in chapter 734 of Florida’s probate code. In F.S. 734.102(7) we’re told an ancillary personal representative can’t sell, lease or mortgage Florida real estate “to pay a debt or claim that is barred by any statute of limitation or of non-claim of this state.” The non-claim statute being referred to is F.S. 733.710, our 2-year non-claim statute for probate-creditor claims. This statute is a recurring theme on this blog and a huge trap for the unwary (see here, here).

Clearly, a NY creditor can’t adjudicate his probate-creditor claim in Florida against a NY decedent’s Florida real estate if its barred by F.S. 733.710. But is that the end of the story? Apparently not. According to the 4th DCA’s linked-to opinion above, once the Florida real property is liquidated, there’s nothing stopping the NY creditor from having those funds transferred to NY, then adjudicating his creditor claim against those same funds in NY . . . even though they would have been time-barred in FL.

Case Study:

This case involves a NY nursing home trying to get paid for care it provided to a man who died domiciled in NY. At the time of his death the decedent owned real property in FL. Here are the key facts of the case as recounted by the 4th DCA:

In 2007, the decedent died while domiciled in New York. At the time of the decedent’s death, the nursing home was owed payment for its care of the decedent in New York. . . . In 2010, the decedent’s personal representative opened the New York domiciliary estate. In 2011, the nursing home filed a claim against the New York domiciliary estate. Later that year, the decedent’s personal representative opened the Broward County ancillary estate to administer the disposition of the decedent’s Broward County home. The nursing home filed a claim against the Broward County ancillary estate.

The nursing home then filed a petition in Broward County to compel an accounting of the ancillary estate and to transfer the ancillary estate’s assets to the New York domiciliary estate. See Fla. Prob. R. 5.150(b) (2011); § 734.102(6), Fla. Stat. (2011) . . . In the petition, the nursing home alleged that . . . if the personal representative transferred the ancillary estate’s assets directly to the domiciliary estate’s beneficiaries instead of to the New York domiciliary estate, then the nursing home likely would not recover on its claim against the domiciliary estate.

The personal representative filed a motion to dismiss the nursing home’s petition. The personal representative argued that because the nursing home filed its claims against both the New York domiciliary estate and the Broward County ancillary estate more than two years after the decedent’s death, the claims were untimely under Section 733.710(1) . . . The nursing home’s response to the motion argued that section 733.710(1) did not apply because its petition was not requesting the court to adjudicate the nursing home’s claim against the ancillary estate. Rather, according to the nursing home, its petition requested the court only to compel an accounting of the Broward County ancillary estate and to transfer the ancillary estate’s assets to the New York domiciliary estate so that the New York court overseeing the domiciliary estate could administer the distribution of those assets.

The NY creditor lost at the trial-court level based on the estate’s timeliness argument. Wrong answer ruled the 4th DCA, which summed up its conflict-of-law analysis in two short sentences:

[T]o the extent the circuit court found that the nursing home’s pending claim against the New York domiciliary estate was untimely, we reverse. We are aware of no authority providing a Florida court with jurisdiction to determine that a creditor’s pending claim against a foreign domiciliary estate is untimely.

Having rejected the trial-court’s application of FL’s non-claim statute to funds intended for distribution in a NY probate proceeding, the 4th DCA sent the case back with instructions to get the money moved to NY:

Based on the foregoing, we reverse the circuit court’s order granting the personal representative’s motion to dismiss the nursing home’s petition to compel an accounting of the ancillary estate and to transfer the ancillary estate’s assets to the domiciliary estate. We remand for reinstatement of the petition and for proceedings consistent with this opinion.

Lesson learned?

This 4th DCA opinion is a must-read for out-of-state probate creditors. If you accept that the primary purpose of an ancillary administration is to collect assets of nonresident decedents found in Florida and remit the proceeds to the domiciliary executor or administrator, this case makes sense. Once the Florida real property was liquidated, what happens to those funds in NY is up to a NY judge to decide. End of story.