Flanzer v. Kaplan, — So.3d —- 2017 WL 5759041 (Fla. 2d DCA November 29, 2017)

Your favorite probate lawyer calls; she’s got a potential trust case for you, but isn’t sure if it’s time barred.

You’d think something as basic as knowing how long you have to file a lawsuit would be simple to figure out. And you’d be wrong. Why? Because trust cases are almost always based on “equitable” law, which means they don’t fit neatly into our statutes of limitations (found in F.S. Ch. 95).

For example, if you’re going to sue a trustee for some kind of breach of trust, the general rule is that you’ve got 4 years to file your lawsuit, but depending on the particular facts of your case, your actual filing deadline could vary wildly: from a low of 6 months to a high of 40 years! (see here, here).

And if you’re challenging the validity of a trust based on undue influence (the most common line of attack), your limitations period is again usually going to be 4 years, but it could be up to 12 years depending on whether or not the “delayed discovery doctrine” applies to your case.

Florida’s delayed discovery doctrine:

The delayed discovery doctrine generally provides that a cause of action does not accrue until the plaintiff either knows or reasonably should know of the tortious act giving rise to the cause of action. This doctrine’s been codified in F.S. 95.031(2)(a) as follows:

An action founded upon fraud under s. 95.11(3), including constructive fraud, must be begun within the period prescribed in this chapter, with the period running from the time the facts giving rise to the cause of action were discovered or should have been discovered with the exercise of due diligence, instead of running from any date prescribed elsewhere in s. 95.11(3), but in any event an action for fraud under s. 95.11(3) must be begun within 12 years after the date of the commission of the alleged fraud, regardless of the date the fraud was or should have been discovered.

The delayed-discovery doctrine is an exception to the general rule, and it usually only applies to fraud and products liability claims. The question at issue in this appeal is whether the exception can also apply to undue influence claims.

Case Study:

This case involves an irrevocable trust created in 2005 by philanthropists Gloria and Louis Flanzer. The fact that it’s an irrevocable trust is important. Most trust cases involve revocable trusts; and F.S. 736.0207(2) tells us you can’t litigate a revocable trust until it becomes irrevocable, which is usually upon the settlor’s death. In this case, because the subject trust started off as an irrevocable trust, it was subject to challenge from its date of inception. But that’s not what happened.

The settlors’ daughter waited 10 years (after her parents had both passed away) to file suit challenging the validity of the trust on undue influence grounds. All sides agreed the generally-applicable limitations period was 4 years:

The parties agree that under chapter 95 the limitations period applicable to [plaintiff’s] action is four years. See § 95.11(3). Indeed, a review of section 95.11 reveals that undue influence claims can only fall under subsection 95.11(3)(j), “[a] legal or equitable action founded on fraud.” See Peacock v. Du Bois, 90 Fla. 162, 105 So. 321, 322 (1925) (“Fraud and undue influence are not, strictly speaking, synonymous, though undue influence has been classified as either a species of fraud or a kind of duress, and in either instance is treated as fraud in general.”); In re Guardianship of Rekasis, 545 So.2d 471, 473 (Fla. 2d DCA 1989) (describing undue influence as a “species of fraud” and holding that statute of limitations on undue influence claim did not begin to run until the influence terminated or someone on Rekasis’ behalf became aware of the influence).

Applying a 4-year limitations period, the trial judge ruled the 2015 undue-influence claim (filed 10 years after the 2005 irrevocable trust was first created) was time barred and dismissed it. Whether or not the trial judge got this one right depends on whether or not Florida’s delayed discovery doctrine applies to this case, which could potentially extend the filing deadline from 4 to 12 years (through 2017).

Does Florida’s delayed discovery doctrine apply to undue influence claims? YES

And whether or not the delayed discovery doctrine applies depends on whether or not undue influence claims are “founded upon fraud” (in which case the doctrine applies). Trial judge said they’re NOT, 2d DCA said YES they are. 2d DCA wins; the doctrine applies. Here’s why:

On appeal, [plaintiff] argues that since courts treat undue influence as a species of fraud, undue influence is therefore subject to the delayed discovery doctrine. The Trustees challenge the application of section 95.031(2)(a) by emphasizing the elements that distinguish fraud and undue influence claims. They argue that such distinctions place undue influence claims outside the meaning of actions “founded upon fraud.” We disagree.

To be sure, undue influence claims and fraud claims are distinct causes of action. See GEICO Gen. Ins. Co. v. Hoy, 136 So.3d 647, 651 (Fla. 2d DCA 2013) (enumerating elements of fraud in the inducement); Greenberg v. Van Dam, 833 So.2d 810, 812 (Fla. 3d DCA 2002) (enumerating elements of undue influence). But the uses of the prepositions “founded upon fraud” and “founded on fraud” in sections 95.031(2)(a) and 95.011(3)(j), respectively, plainly countenance a broader class of claims than merely actions alleging fraud in general. As such, we see no reason why section 95.031(2)(a) would not apply to [plaintiff’s] claim—provided that [plaintiff] otherwise satisfies the requirements of that section. The Trustees point to no other legal authority supporting the circuit court’s conclusion that [plaintiff] must have challenged the philanthropic trust within four years of its becoming irrevocable. We therefore reverse the dismissal of Count V of [plaintiff’s] complaint and remand for further proceedings.