Golden v. Jones, — So.3d —-, 2015 WL 5727788 (Fla. October 1, 2015)

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The Florida Supreme Court put to rest a statutory-interpretation issue involving F.S. 733.702(1)’s 3-month filing deadline for creditor claims that’s been roiling the Florida Probate Bar for years and lead to a split among 4 of our appellate courts. BONUS MATERIAL: You can access the Florida Supreme Court’s video of oral argument for this case by clicking here.

A cause of action against a probate estate is private property that’s protected by the Fourteenth Amendment’s due process clause. Which means it can’t be taken away from you in a probate proceeding without notice. But what we mean by “notice” depends on what kind of creditor you are. If you’re a known or reasonably ascertainable creditor, than you’re entitled to direct, personal notice. Otherwise all you get is publication notice in a local newspaper (which in today’s world equals no notice as a practical matter). This distinction’s at the core of our supreme court’s ruling in this case:

In Tulsa Professional Collection Services, Inc. v. Pope, 485 U.S. 478, 489–91, 108 S.Ct. 1340, 99 L.Ed.2d 565 (1988), the United States Supreme Court held that where a creditor is known or reasonably ascertainable, that creditor’s claim may not be barred merely by publication of the notice to creditors. Noting that a claim against an estate is property subject to protection by the Fourteenth Amendment, the Supreme Court weighed the important state interests in regulating the timeliness of creditors’ claims against the rights of those creditors to have their intangible interests in property protected by the Fourteenth Amendment. Id. at 485, 108 S.Ct. 1340. The Supreme Court determined that where a time bar is self-executing—such as the two-year statute of repose in section 733.710—there is insufficient state action to implicate the Due Process Clause of the Fourteenth Amendment. Id. at 485–87, 108 S.Ct. 1340. However, where a time bar is triggered by legal proceedings—such as the limitations periods in section 733.702—there is sufficient state action to implicate the Due Process Clause. Id. at 487–88, 108 S.Ct. 1340. The Court thus concluded that where there is sufficient state action and a creditor is “known or ‘reasonably ascertainable,’ then the Due Process Clause requires that [the creditor] be given ‘[n]otice by mail or other means as certain to ensure actual notice.'” Id. at 491, 108 S.Ct. 1340 (quoting Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 800, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983)).

With this background in mind, the Florida Supreme Court put to rest a statutory-interpretation issue involving F.S. 733.702(1)’s 3-month filing deadline for creditor claims that’s been roiling the Florida Probate Bar for years, and was at the center of 4! appellate court decisions, 3 of which ruled one way (Morgenthau, Lubee and Souder) and 1 which went the other (Golden). Proving once again that nothing’s ever certain in litigation, our supreme court held that 3 of the 4 lower appellate courts got it wrong! The one court that got it right was the 4th DCA in Golden (is it really that hard to read the text of a simple probate statute and do what it says?). Anyway, here’s how the court summarized its ruling:

We have for review Golden v. Jones, 126 So.3d 390, 390 (Fla. 4th DCA 2013), in which the Fourth District Court of Appeal held “that if a known or reasonably ascertainable creditor is never served with a copy of the notice to creditors, the statute of limitations set forth in section 733.702(1), Florida Statutes, never begins to run and the creditor’s claim is timely if it is filed within two years of the decedent’s death.” The Fourth District certified that its decision is in direct conflict with the decisions of the First and Second District Courts of Appeal in Morgenthau v. Andzel, 26 So.3d 628 (Fla. 1st DCA 2009), and Lubee v. Adams, 77 So.3d 882 (Fla. 2d DCA 2012), which held that even a reasonably ascertainable creditor who was not served with a copy of the notice to creditors is required to file a claim within three months after the first publication of the notice, unless the creditor files a motion for an extension of time under section 733.702(3) within the two-year period of repose set forth in section 733.710. We have jurisdiction. See art. V, § 3(b)(4), Fla. Const.

Because we conclude that the limitations periods prescribed in section 733.702(1) are not applicable to known or reasonably ascertainable creditors who are never served with a copy of the notice to creditors and that the claims of such creditors are timely if filed within two years of the decedent’s death under section 733.710, we approve the decision of the Fourth District in Golden and disapprove the decisions of the First and Second Districts in Morgenthau and Lubee.

So what’s the take away?

Bottom line, if you’re a known or reasonably ascertainable creditor who’s never been personally served with notice, you have up to 2 years to file your claim. And you don’t have to ask a probate judge to pretty please give you an extension to file your claim under the very tough standard found in F.S. 733.702(3), which only allows for extensions if you prove fraud, estoppel or insufficient notice.

Based on the Florida Supreme Court’s ruling in Golden, there’s now an even greater premium on being a known or reasonably ascertainable creditor vs. an unknown or conjectural creditor, which means we can expect the litigation focus to turn in that direction. And that’s exactly what happened in the Soriano case.

“Reasonably ascertainable” creditors vs. “conjectural” creditors. Guess which one you want to be.

Soriano v. Estate of Manes, — So.3d —-, 2015 WL 5965203 (Fla. 3d DCA October 14, 2015)

The U.S. Supreme Court’s drawn a clear distinction between the due process rights afforded to known or reasonably ascertainable probate creditors vs. unknown and conjectural creditors. Here’s how the 3d DCA summarized this point:

In Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 (1950) the United States Supreme Court . . . explained, it is not “unreasonable for the State to dispense with more certain notice to those beneficiaries whose interests are . . . conjectural . . .” Id. at 317. Years later, in Tulsa Professional Collection Services, Inc. v. Pope, 485 U.S. 478, 108 S.Ct. 1340, 99 L.Ed.2d 565 (1988), the Supreme Court . . . held . . . “[I]t is reasonable to dispense with actual notice to those with mere ‘conjectural’ claims.” Id. at 490. See also Strulowitz v. Cadle Co. II, 839 So.2d 876, 880 (Fla. 4th DCA 2003) (noting a “personal representative has no duty to speculate and conjecture that someone might possibly have a claim against the estate” (citing Jones, 609 So.2d at 102)).

If you’re a “conjectural” creditor who happened to miss the creditor notice buried in the back of your local newspaper that no one ever reads, you’re stuck with F.S. 733.702(1)’s 3-month filing deadline. And if you miss that very short window of opportunity, you’re stuck arguing fraud, estoppel or insufficient notice under F.S. 733.702(3) to hopefully get an extension to file your claim when you finally find out the guy who owes you money died. The extension argument’s a tough one to win under the best of circumstances. On the other hand, you could argue none of this applies to you because you were really a reasonably ascertainable creditor all along, which means you have up to 2 years to file your claim if no one ever got around to personally serving you with notice. That’s what the creditor in this case tried to do.

Case Study:

Four months after the estate’s “notice to creditors” was first published in a local newspaper (i.e., after F.S. 733.702(1)’s 3-month filing deadline), Ms. Soriano filed a creditor claim against the estate, alleging she had an unsecured claim “based upon an imminent private tort action against [the Decedent] stemming from a criminal charge he incurred on May 28, 2013 in Monroe County, Florida.” Attached to the statement of claim was a document entitled “Traffic/Criminal Case Detail Information” which showed that the Decedent had been charged with misdemeanor battery in June 2013, and that the State nolle prossed the criminal case on December 4, 2013 (a month following Decedent’s death).

Ms. Soriano asserted she was a reasonably ascertainable creditor who wasn’t personally served with a notice to creditors, thus absolving her from F.S. 733.702(1)’s 3-month filing deadline. Whether or not you’re a reasonably ascertainable creditor is an intensely fact-specific decision. So both sides filed supporting affidavits. The estate’s personal representative (PR), Ms. Manes, filed an affidavit claiming she’d done everything a PR’s supposed to do to find creditors, and she had no idea the claimant existed. According to the 3d DCA, in response:

Ms. Soriano filed three affidavits from the following individuals: (1) Luke Bovill, the prosecutor in the criminal case against the Decedent; (2) Elena Vigil–Farinas, the Decedent’s criminal defense attorney; and (3) Robert C. Stober, Ms. Soriano’s personal attorney. Bovill’s affidavit averred that the Decedent was represented by Jessica Reilley, Esq., and that Bovill was aware Ms. Soriano had retained personal counsel. Vigil–Farinas’ affidavit averred that the Decedent’s “wife contacted me and paid the retainer for [Decedent’s] criminal defense.” Finally, Stober’s affidavit averred that he “was retained by Ms. Soriano to assist her with a workplace battery” committed by Decedent and that, on or about November 13, 2013,3 he “spoke with Mr. Manes’ criminal defense attorney, Jessica Reilly, and advised Ms. Reilly of my representation of Ms. Soriano.”

So was this enough to save the day for this creditor? No. Here’s why: she couldn’t prove the PR ever had actual notice of her intent to sue the estate or that the PR wasn’t diligent in her search for creditors. Sure, maybe the PR could have guessed this claim was coming, but according to her testimony she didn’t, and that was enough to block the claimant.

There is nothing in the affidavits filed by Ms. Soriano to suggest that Ms. Manes, or Decedent’s criminal defense counsel, had any actual knowledge of Soriano’s civil claim against Decedent. Nor is there any evidence (or assertion in the affidavits) that a search more diligent than that conducted by Ms. Manes would have revealed the existence of Ms. Soriano’s claim. Neither Ms. Soriano nor her attorney placed Ms. Manes on notice of any such claim. In fact, the affidavits fail to contain an averment that Ms. Soriano or her attorney placed anyone on notice that she was pursuing, or intended to pursue, a civil claim against Decedent or his estate.

It is the absence of any such averment that distinguishes the instant case from the cases relied upon by Ms. Soriano. Compare, e.g., In re Estate of Ortolano, 766 So.2d 330 (Fla. 4th DCA 2000) (finding appellant was a reasonably ascertainable creditor where it was established that the personal representative had actual notice of the contingent creditor’s claim); Foster v. Cianci, 773 So.2d 1181 (Fla. 2d DCA 2000) (same).

The affidavits presented to the trial court failed to establish that Ms. Soriano was a reasonably ascertainable creditor and further failed to establish that Ms. Manes, following a diligent search, should reasonably have ascertained that Ms. Soriano had a claim or a potential claim. The trial court properly denied Ms. Soriano’s petition because, as a mere conjectural creditor, she was not entitled to personal service of the notice to creditors, her petition was untimely, and her asserted claim was barred by section 733.702(1), Florida Statutes.

Lesson learned?

Our supreme court’s ruling in Golden highlights again the preferential treatment afforded to known or reasonably ascertainable creditors. On the other hand, the 3d DCA’s ruling in Soriano reminds us that just because you think you’re a reasonably ascertainable creditor, doesn’t make it so. If you’re involved in one of these cases you’ll want to use Soriano as an evidentiary road map; which means these cases all boil down to two questions:

  1. Did the personal representative have actual knowledge of the probate creditor’s existence?
  2. Would a reasonably diligent search have revealed the probate creditor’s existence?