Klem v. Espejo-Norton, — So.2d —-, 2008 WL 2511276 (Fla. 3d DCA Jun 25, 2008)

jurisdiction-proceduralWhat do you do if an heir shows up after the probate proceeding has been closed? You can try to reopen the estate under F.S. 733.903.  But what if that doesn’t work, then what?

The 3d DCA answers that question in this case by first suggesting that the plaintiff pursue a “constructive trust” theory, then explaining the quasi in rem jurisdictional basis for this type of claim.

Constructive Trust:

The linked-to opinion is actually the second time this case has come before the 3d DCA.  In the first appeal the 3d DCA affirmed a probate court’s order refusing to reopen a probate proceeding so that a newly-discovered heir could claim her share of the estate. But in a specially concurring opinion the court suggested that the “lost heir” sue for her share of the estate’s assets under a “constructive trust” theory.  Here’s an excerpt from the first appellate opinion in this case, Espejo-Norton v. Estate of Merry, 869 So.2d 1255 (Fla. 3d DCA 2004), where the court explained the constructive trust theory:

This is a fascinating case in which one of the two goddaughters who were the named residual devisees of the testatrix’s $400,000.00-plus estate turned up several years after the estate had been closed, after she had quite erroneously been declared dead by the circuit court, and after all the proceeds had been distributed to the other devisee. Because, insofar as the record shows, diligent, although futile, efforts had been expended to find her, I must agree with affirmance of the order before us denying her motion to reopen the estate.

It should be pointed out, however, a separate action may now be successfully maintained against the other devisee to impose a constructive trust upon the half of the estate that that devisee received, but which in law and equity belongs to the appellant. As the Restatement says:

§ 126. Rights of Intended Payee or Grantee. Business Transaction.

(1) Where a person has paid money or transferred property to another in the erroneous belief, induced by a mistake of fact, that he owed a duty to the other so to do, whereas such duty was owed to a third person, the transferee, unless a bona fide purchaser, is under a duty of restitution to the third party.

* * *

Illustrations:

2. A, administrator of B’s estate, pays money out of the assets of the estate to C, B’s brother, whom both A and C believe to be B’s sole relative. Later D, B’s son and next of kin, believed to be dead, appears. D is entitled to restitution from C. (e.s.)

Quasi in Rem Jurisdiction

Based on the 3d DCA’s friendly advice in the first appeal, the plaintiff, a California resident, sued the defendant, a Maryland resident, in a Miami-Dade County court house seeking to impose a constructive trust on a brokerage account in Broward County, which is where some of the subject probate funds had been deposited.  Obviously the Miami court didn’t have in personam jurisdiction over the California defendant, and the court didn’t have general in rem jurisdiction over the estate assets because the estate had already been closed.  What the Florida court did have was quasi in rem jurisdiction over the brokerage account. Confused yet?

Reading the 3d DCA’s linked-to opinion won’t exactly clarify things for you. It’s basically a series of long string cites and close to zero discussion by the 3d DCA of the point it was trying to make. If you’re ever confronted with a quasi in rem issue in the future take the time to read a March 2008 Florida Bar Journal article cited by the 3d DCA in its opinion entitled Florida’s Third Species of Jurisdiction. Written by Tampa trial judge Scott Stephens, this article does an excellent job of actually explaining why the 3d DCA ruled the right way in this case.

The logic underlying the 3d DCA’s ruling on the quasi in rem issue in this case can be broken down as follows:

  1. A Florida circuit court has authority over any person or item of property located anywhere in the state of Florida. In other words, a circuit court in Key West has jurisdictional authority to enter a judgment determining ownership of a bank account located in Key West, or “next door” in Miami, or across the state in Pensacola.
  2. The phrase “territorial jurisdiction” is used as a stand in for the word venue in quasi-in-rem cases. Which means just like with venue, you can waive an objection to territorial-jurisdiction if not properly asserted at the beginning of your case. But just because your case may end up getting litigated in the wrong venue/territory somewhere within the State of Florida, doesn’t mean your Miami-Dade County judge lacks “jurisdictional” authority to enter a judgment affecting a bank account in Broward County.
  3. What’s confusing about all this is the use of the same word “jurisdiction” to mean different things within a single case. This is the key point made by Judge Stephens in his exceptional Florida Bar Journal article.

Here’s how the 3d DCA “explained” the territorial-jurisdiction point in the linked-to opinion:

As Escudero indicates, the fact that the res in question is not within the Eleventh Circuit makes no difference. This is because the issue, properly considered, is not one of subject matter jurisdiction, which may not be waived. . . . Rather, it involves a question of “territorial jurisdiction,” as it is sometimes called in this context, which may be waived by a failure properly to assert it below, as it was in this case.

Bonus material:

Judge Stephens provides the following factoids in footnote 1 to his article:

A sample of 7,490 district court of appeal cases using the term “jurisdiction” was taken through Lexis-Nexis on August 10, 2007. Cases using the term “subject matter jurisdiction” were counted separately, as were cases using one of several variants of personal or in personam jurisdiction.  .  .  .  The various subspecies of subject matter and personal jurisdiction collectively add up to less than one percent of the appearances of “jurisdiction” in the district court of appeal cases: pendent jurisdiction, three cases; ancillary, one; in rem, 43; quasi-in-rem, six.

If only 6 appellate decisions out of 7,490 mention the phrase “quasi in rem jurisdiction” (less than one-tenth of 1%), is it any wonder these sorts of questions make most lawyers break out in hives?