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Why any estate planner would in good conscience subject his or her clients to all the systemic problems inherent to our underfunded and overworked probate courts is beyond me; especially in Florida, which in 2007 was the first state in the nation to pass legislation expressly authorizing mandatory arbitration clauses in wills and trusts (see F.S. 731.401). As I’ve previously written here, in my opinion mandatory arbitration clauses are the best way to allow our clients to “opt out” of an underfunded/overworked court system (for sample arbitration clauses, see here). Which is why I was especially interested in the linked-to case below; to my knowledge it’s Florida’s first appellate decision enforcing a trust agreement’s mandatory arbitration clause.

Case Study

Gren v. Gren, 133 So.3d 1066 (Fla. 4th DCA January 8, 2014)

In the linked-to case above the decedent included a mandatory arbitration clause in his revocable trust. After his death a dispute arose between his ex-wife (who was representing the interests of his now-deceased son) and his new wife, who also happened to be serving as successor trustee of the decedent’s revocable trust. New wife obtained an order compelling arbitration of the dispute. So far so good. But then nothing happened for six months. New wife accused ex-wife of dragging her feet, as explained by the 4th DCA:

[New wife] alleged the ex-wife had failed to take any action since the court compelled arbitration. The ex-wife had not filed a request for arbitration, provided any names of potential arbitrators, or attempted to schedule arbitration. . . . [New wife] complained that the ex-wife was preventing her from winding down the Grantor’s affairs.

There’s nothing wrong with objecting to unreasonable delay. But rather than address the problem with the arbitrator, new wife asked the probate judge to reinsert himself into the dispute.

As a result of the ex-wife’s inaction, [new wife] claimed she was unable to file tax returns and disburse assets, and she had suffered hardship and mental anguish. She argued that dismissal was her only remedy.

At this point you’d think the probate judge would say “no way, you asked for arbitration, now live with it.” Unfortunately, that’s not what happened. As explained by the 4th DCA, this is where things inexplicably went sideways:

Without articulating a basis for its decision, the [probate] court dismissed the ex-wife’s petition with prejudice. From this order, the ex-wife has appealed.

Once a probate judge grants a motion to compel arbitration, can that same judge dismiss the claim because one side fails to initiate the arbitration proceeding on a timely basis? NO

On appeal the 4th DCA delivered an excellent opinion for those of us favoring arbitration clauses in wills and trusts. First, the court gave us all ammunition to generally enforce mandatory arbitration clauses in this context. Second, it addressed a specific objection we can expect to come up with some frequency in these cases: unreasonable delay. As explained by the 4th DCA, once arbitration is triggered, if anyone’s got a problem with the pace of the proceedings, that issue needs to be addressed by the arbitrator — NOT your probate judge.

Courts favor arbitration as an alternative to litigation. See, e.g., Seifert v. U.S. Home Corp., 750 So.2d 633, 636 (Fla.1999); Pub. Health Trust of Dade Cnty. v. M.R. Harrison Constr. Corp., 415 So.2d 756, 758 (Fla. 3d DCA 1982). In deciding a motion to compel arbitration, a trial court is restricted to three issues: “(1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitration was waived.” Seifert, 750 So.2d at 636; § 682.03, Fla. Stat. (2012).

Once those issues are determined, “‘permitting the parties to litigate the dispute in the courts instead of proceeding by arbitration as agreed would constitute a departure from the essential requirements of law.’” . . . Timeliness of a demand for arbitration is a fact question reserved for an arbitrator, not the trial judge. . . . Delay does not waive arbitration. . . . 

Here, the parties did not dispute the validity of the trust or the existence of an arbitrable issue. The Successor Trustee did not argue that the ex-wife waived her right to arbitration by petitioning the court to construct the trust instrument. Procedurally, the trust only required that the arbitrator “be a practicing lawyer” with ten years of experience primarily devoted to wills and trusts. It did not require that the demand for arbitration be made within a specific or reasonable time period.

Once the trial court granted the Motion to Compel Arbitration, factual issues other than the three Seifert issues, including the timeliness in initiating the arbitration proceeding, belonged to the arbitrator. Collyer, 616 So.2d at 178–79. We therefore reverse and remand the case for reinstatement of the petition and arbitration of the dispute.