jurisdiction-personalSection 731.105 of our Probate Code tells us that all probate matters are “in rem” proceedings. In my last post I wrote about two recent cases testing the outer limits of a probate court’s in rem jurisdictional authority. In this post the focus is on personal (i.e., “in personam”) jurisdiction in contested probate proceedings.

A distinctive feature of most in rem proceedings is that you don’t have to personally serve anyone to get your case up and running. Not surprisingly, because most of their cases are purely in rem proceedings, probate lawyers get used to litigating claims without ever having to go through the trouble of personally serving anyone. Here’s the problem: this mindset can be a trap when a probate case involves someone’s personal assets. Prime example: fee disputes.

If you want a probate judge to order a personal representative or trustee to refund excessive fees paid to himself or his lawyers, what you’re really asking for is a personal judgment against the fiduciary, which means the court must have personal jurisdiction over the fiduciary. And your court’s not going to have that kind of personal authority over your fiduciary until you personally serve him. Miss that procedural step and you may find yourself on the receiving end of a motion to dismiss, which is what happened in the Kozinski case.

Kozinski v. Stabenow, — So.3d —-, 2014 WL 5611595 (Fla. 4th DCA November 05, 2014)

This case revolves around the inheritance a woman identified by the court as “E.W.H.” left to her children. One of her daughters, Kozinski, was appointed personal representative of her mother’s estate and trustee of her trust. Two of E.W.H.’s other daughters contested the amount of fees their sister paid herself as PR/trustee, and also the amount of attorney’s fees she paid with estate assets. To contest these payments the objecting sisters filed a petition pursuant to F.S. 733.6175 and F.S. 736.0206. Both statutes provide that “[a]ny person who is determined to have received excessive compensation [from a trust or estate] for services rendered may be ordered to make appropriate refunds.” The PR/trustee wasn’t personally served with this petition, triggering a motion to dismiss for lack of personal jurisdiction. The trial court didn’t buy this argument, but stayed the case. On appeal, 4th DCA disagreed and reversed:

[W]e hold that a proceeding seeking an order or judgment imposing a refund or surcharge against a fiduciary or a fiduciary’s agent, individually, and the immediate return of money to a trust, probate, or guardianship estate as a result of a breach of fiduciary duty (charging excessive fees) is tantamount to a judgment for damages, requiring personal service on the fiduciary as an individual, and not in any representative capacity.

So how do you personally serve a PR/trustee within the context of an ongoing probate proceeding? Think “formal notice” in accordance with Probate Rule 5.040. Formal notice is the method of service used in contested probate proceedings and, according to F.S. 731.301(2), it’s “sufficient to acquire jurisdiction over the person receiving formal notice to the extent of the person’s interest in the estate.”

We hold that, absent a written waiver, formal notice served on the respondent individually, and not in a representative capacity, is required for a proceeding to surcharge a personal representative, as well as for a petition filed in a probate case pursuant to sections 733.6175 or 736.0206 seeking to require the fiduciary to return to the estate the overpayment of compensation paid to the fiduciary or agent. With regard to notice and procedure in such adversary proceedings, Florida Probate Rule 5.025(d)(1) explicitly states that in adversary proceedings, a “[p]etitioner must serve formal notice.” Fla. Prob. R. 5.025(d)(1) (emphasis added).

Kozinski was not served individually with formal notice of the petition for review of fees, and she did not waive in writing her right to receive such notice. Because personal jurisdiction over Kozinski in her individual capacity was not properly obtained, the trial court’s order denying Kozinski’s motion to dismiss is reversed without prejudice.

Simmons v. Estate of Baranowitz, — So.3d —-, 2015 WL 2089071 (Fla. 4th DCA May 6, 2015)

In this case the issue was whether the fiduciary’s counsel — not just the fiduciary — also has to be served by formal notice in accordance with Probate Rule 5.040 before the court can order the law firm to refund excess legal fees paid. Surprise! The 4th DCA came to the same conclusion it did just a few months earlier in its Kozinski opinion: formal notice = personal jurisdiction. Skip that step and you’re getting reversed. So saith the 4th DCA:

Here, as in Kozinski, the remedy sought in the petition against the personal representative’s counsel was against him individually. Therefore, service by formal notice under the Florida probate rules was required for the court to have personal jurisdiction over him.

The trustee argues that service by formal notice is not required because the Florida probate code gives a court the authority to review the propriety of any compensation paid to a personal representative’s employee and, if that employee has received excessive compensation, to order that employee to make appropriate refunds. . . .

We disagree with the trustee’s argument. We recognize that the Florida probate code gives a court the authority to review the propriety of any compensation paid to a personal representative’s employee and, if that employee has received excessive compensation, to order that employee to make appropriate refunds. See §§ 733.6175(1) & (3), Fla. Stat. (2010). Here, however, the issue is not the court’s authority to act, but the manner by which the court notifies the employee that action may be taken. As we held in Kozinski, service by formal notice is required.

Sowden v. Brea, — So.3d —-, 2010 WL 4135857 (Fla. 5th DCA Oct 22, 2010)

In the Kozinski case the fiduciary challenged the court’s personal jurisdiction over her at the very beginning of the case. She didn’t wait for the litigation to play out then realize somewhere along the way that maybe there was a problem. In the Sowden case the trustee didn’t do that. Instead, after having asked the court to bless a settlement agreement he was a party to, the trustee had second thoughts and took the position that the court didn’t really have personal jurisdiction over him. Here’s the problem with that approach; even if you’re right, if you participate in the case and generally act like a party to the litigation, the court’s going to treat you like a party — which means you’re in by consent. So saith the 5th DCA:

We . . . reject the trustee’s contention that the trial court lacked jurisdiction over the trustee. Personal jurisdiction can be conferred by consent. Bush v. Schiavo, 871 So.2d 1012 (Fla. 2d DCA 2004). By entering into and benefitting from a mediation settlement agreement that (with the trustee’s concurrence) was court-approved in the guardianship proceeding, the trustee submitted to the jurisdiction of the court.