If you’re a trusts and estates litigator in Florida, sooner or later you’re going to be involved in some kind of multi-jurisdictional case. This fact-of-life lead to the adoption in 2013 of F.S. 736.0202, Florida’s long-arm statute specially tailored for trust litigation (see here).
But just because a Florida statute says you can drag a non-resident into a Florida courtroom doesn’t make it so. If our statute violates the Fourteenth Amendment’s Due Process Clause, the non-resident defendant gets a pass. What’s interesting about this case is it’s the first to put F.S. 736.0202 to the constitutional due process test.
This case involves a revocable trust created by a parent while residing in Florida. From that trust she made distributions to a son who lives in Wyoming. After her death this son was sued in Florida by his brother, who accused him of undue influence in connection with a trust amendment that reinstated him as a beneficiary of their mother’s trust. Here’s how the lawsuit was summarized by the court:
[Plaintiff’s] Complaint seeks to declare null and void the “September Amendments,”[FN 2] which reinstated [Defendant] as a beneficiary entitled to Trust funds. . . . The Complaint also seeks approval of an Accounting, which by its nature, encompasses the distributions [Defendant] admits he received.
[FN 2:] The September Amendments were those that [the trust settlor] made with the input of [the Defendant], apparently while [the Defendant] visited Florida for that very purpose.
Under subsection (2)(a)(8) of F.S. 736.0202, our statute says you’ve submitted yourself to the personal jurisdiction of a Florida court if you cash a check sent to you by a trust administered in Florida, which is what happened in this case. Here’s the relevant statutory text:
(2) PERSONAL JURISDICTION.—
(a) Any trustee, trust beneficiary, or other person, whether or not a citizen or resident of this state, who personally or through an agent does any of the following acts related to a trust, submits to the jurisdiction of the courts of this state involving that trust:
. . .
8. Accepts a distribution from a trust having its principal place of administration in this state with respect to any matter involving the distribution.
It’s the law, but is it constitutional?
So according to our statute, a man living in Wyoming can get sued in Florida even if the only contact he’s ever had with our fair state is cashing a check from a Florida trust. But is that the end of the story? NO. The statute’s got to pass constitutional muster.
When a state passes a specialized long-arm statute, like we did in 2013, a three-part due process test gets triggered if the statute’s challenged on constitutional grounds. The three-part test examines:
(1) whether the plaintiff’s claims ‘arise out of or relate to’ at least one of the defendant’s contacts with the forum; (2) whether the nonresident defendant ‘purposefully availed’ himself of the privilege of conducting activities within the forum state, thus invoking the benefit of the forum state’s laws; and (3) whether the exercise of personal jurisdiction comports with ‘traditional notions of fair play and substantial justice.'” Louis Vuitton Malletier, S.A., 736 F.3d at 1355 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-73, 474-75 (1985); Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 413-14 (1984); Int’l Shoe Co., 326 U.S. at 316; Oldfield v. Pueblo De Bahia Lora, S.A., 558 F.3d 1210, 1220-21 (11th Cir. 2009); Sculptchair, Inc. v. Century Arts, Ltd., 94 F.3d 623, 630-31 (11th Cir. 1996)). Put another way, a “nonresident generally must have ‘certain minimum contacts . . . such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.'” Walden v. Fiore, 134 S. Ct. 1115, 1121 (2014) (quoting International Shoe Co., 326 U.S. at 316 (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)).
So did F.S. 736.0202 pass its first constitutional challenge? YES. But the primary reason wasn’t because Wyoming brother actually did anything in Florida. Instead, the court focused on the trust’s connections to Florida.
Not surprisingly, mom (who’d lived in Florida since 1972) hired a Florida lawyer to draft her revocable trust which — surprise! — was governed by Florida law and administered by a Florida trustee. Also not surprising mom’s trust account was held by a Florida bank. What did Wyoming brother do to get himself sued in Florida? Cash mom’s Florida trust-account checks:
[T]he Court finds that the distributions [Defendant] accepted from the Trust establish the requisite minimum contacts, as they are sufficiently “related to” the instant cause of action and the forum. Furthermore, by accepting distributions from the Trust administered from Florida, with the assistance of Florida-based professionals, from funds based in Florida accounts, and with the understanding that Florida law governed, [Defendant] unquestionably “purposefully availed [himself] of forum benefits” and made it such that he “could reasonably anticipate being haled into court” in Florida.
As to the third prong of the due-process test — “fair play and substantial justice” — here again the court ruled against Wyoming brother’s due process challenge. In reaching its conclusion the court pointed to a slew of procedural wrangling the parties had engaged in for the last ten months involving multiple lawsuits filed in New York and Florida. Did that really matter? I’m guessing it didn’t.
The center of gravity for this case was always Florida, and the fact that the Defendant lived over a thousand miles away in Wyoming wasn’t going to change that.
After ten months, the Court believes that it is in the best position to efficiently and effectively resolve the disputes at issue. Moreover, many of the professionals, evidentiary documents, and other discovery matters are present in this forum, making it convenient. Counter-Defendant Baxter is domiciled in South Florida, as was [the Settlor] at the time of the alleged “undue influence.” Finally, the Court finds that Florida, the forum state, has a strong interest in resolving this matter, as [the Settlor] lived, settled the Trust, and passed away in Florida, Florida law governs the Trust, the Accounting occurred in Florida, and the Trust is administered from the forum.
What’s the takeaway?
If a trust is created and administered in Florida, the gravitational pull of a Florida courtroom to adjudicate any dispute involving that trust is going to be significant — perhaps insurmountable, especially under F.S. 736.0202’s new and very expansive long-arm test. This was the statute’s first constitutional challenge by a non-resident trust beneficiary. I expect we’ll see more. In the meantime the safe bet for any beneficiary of a Florida trust is to assume you’ll have to show up in a Florida courtroom if your trust gets litigated — and it doesn’t matter where on the planet you happened to have been living when mom’s trust-account check hit your mailbox years earlier.