Disque v. Unger, 2007 WL 101375 (Fla. 4th DCA  Jan 17, 2007)

The linked-to case does a good job of underscoring a key concept often lost on personal representatives: they are fiduciaries.  In other words, no matter how strongly they may personally feel about a contested issue, prior to using estate funds (i.e., assets that belong to someone else) to embark on new litigation they need to be able to answer the following question with an unqualified YES: is this litigation in the best interest of the estate?

The PR in the linked-to case failed the "best interest" test when he filed a declaratory judgment action seeking construction of a marital settlement agreement.  Only problem was that no matter how the court construed the contested marital settlement agreement . . .  no assets would flow into the probate estate being administered by the PR filing the declaratory judgment suit.  Both the trial court and the 4th DCA ruled the PR had failed the best-interest test and dismissed his action.  The following excerpts from the linked-to case summarize the controlling law at play in this case:

Section 733.602(1), Florida Statutes (2003), which describes the general duties of a personal representative, provides:

A personal representative is a fiduciary who shall observe the standards of care applicable to trustees as described by s. 737.302. A personal representative is under a duty to settle and distribute the estate of the decedent in accordance with the terms of the decedent’s will and this code as expeditiously and efficiently as is consistent with the best interests of the estate. A personal representative shall use the authority conferred by this code, the authority in the will, if any, and the authority of any order of the court, for the best interest of interested persons, including creditors. (emphasis added)

The parties do not contest the trial court’s conclusion that, no matter which way the dispute was resolved, it would be of no financial benefit to the estate. The appellants contend, however, that the probate court should have resolved the issue because the property settlement agreement authorized Rose’s estate to enforce it. The fact that the estate was authorized by the property settlement agreement to enforce it, however, does not satisfy the requirement of section 733.602(1), that the personal representative act in the best interest of interested persons.

In this case the persons interested in the estate, beneficiaries or creditors, have no interest in the dispute involving Alvin’s will. We accordingly agree with the trial court that, under these specific facts, where the estate could not benefit financially, and the dispute could be resolved in a lawsuit between all of the interested parties without the estate being a party, the estate should not be involved.

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When the personal representative found himself in a quandary as to whether to file this lawsuit, he should have sought court approval before filing the lawsuit, as is authorized by section 733.603, Florida Statutes (2003). When the trial court concluded, on its own, that pursuing this litigation was not in the best interest of the estate, it was simply doing what was contemplated by section 733.603. Because it is undisputed that the estate cannot benefit financially, and that further litigation will deplete the assets which would otherwise go to interested persons, there is no reason to prolong this proceeding.

Lesson Learned:

The concepts at play in this case can be used very effectively as defensive tools.  It will often be easier, cheaper and quicker to obtain a court order barring a PR (or any other type of fiduciary) from pursuing litigation on the grounds that the action is not in the best interests of the estate vs. obtaining a dismissal of the actual lawsuit.  For example, in the linked-to case, the initial declaratory judgment action would have probably been dismissed if at the outset the parties opposed to the action had simply filed a motion to dismiss based on the law cited above with a short affidavit stating that the outcome of the action, no matter who won, would not benefit the estate.