When it comes to probate proceedings, there’s a strong public policy favoring finality, even it means valid claims sometimes get sacrificed. For example, F.S. 733.903 tells us that once a probate proceeding is closed, it won’t be reopened because sometime after the fact someone finds a perfectly valid will that would have changed everything.
And if you’re the personal representative, F.S. 733.901(2) tells us that once you’re discharged, you too can rest easy in the knowledge that you can’t be sued for anything you did during the probate proceeding. But alas, this last bit of finality is subject to a few exceptions, which are the focus of 1st DCA’s opinion in the Sims case.
Case Study No. 1
Sims v. Barnard, — So.3d —- 2018 WL 5796936 (Fla. 1st DCA November 06, 2018)
This case involves a probate proceeding that went on for over 10 years, involved multiple personal representatives, and one very active pro se litigant. The final PR was an attorney who filed a final accounting that was objected to. The probate judge overruled the objections, approved the final accounting, and discharged the PR in 2015. Two years later the PR was sued by the same objecting party for “fraud” and “embezzlement”.
The former PR claimed the suit against him was barred by F.S. 733.901(2), and the trial court agreed. On appeal the claimant argued his lawsuit shouldn’t have been dismissed because his claims fall under the “fraud” and “concealment” exceptions. Here’s how the 1st DCA summarized this argument and the controlling Florida law:
Appellant correctly asserts that section 733.901 “does not serve as an absolute bar to the suits filed after the discharge of the personal representative.” Van Dusen v. Southeast First Nat’l Bank of Miami, 478 So.2d 82, 89 (Fla. 3d DCA 1985). The statutory bar codifies “a modified res judicata concept … applicable in probate cases.” Id. at 91. The bar will not be applied to a suit for fraud by concealment, where its application “would permit a fiduciary to benefit from its alleged wrongful acts if it could conceal them for the statutory period.” Karpo v. Deitsch, 196 So.2d 180, 181 (Fla. 3d DCA 1967) (holding that suit was not barred by discharge where suit alleged PR concealed from heirs the true value of estate and concealed from the court the identities of the heirs preventing heirs from asserting objection or claim prior to discharge). Likewise, where the PR conceals its intentional transfer of an estate asset by failing to report the distribution in the petition for distribution or otherwise, the PR “is not entitled to the sanctuary provided by” section 733.901. Van Dusen, 478 So.2d at 91.
The lawsuit at the center of this case seemed to include the magic “fraud by concealment” allegations needed to survive a motion to dismiss. So rather than challenge the pleading on its face, the defendant challenged it on summary judgment, which allowed the trial court (and the appellate court) to look beyond the four corners of the complaint. When that happened, the claims crumbled, both at the trial court level and on appeal.
Appellant filed his lawsuit against Bernard and the law firm on March 13, 2017. While the amended complaint generally alleged fraud and “embezzlement,” the facts asserted by Appellant were that the PR failed to provide him with sufficient accountings to explain all expenditures, leading Appellant to the conclusion that estate funds had been removed without explanation. The missing interim accountings, which Appellant was ultimately provided, simply do not rise to the level of “concealment” by the PR presented in Van Dusen and Karpo.
Case Study No. 2
Wallace v. Watkins, — So.3d —- 2018 WL 3946062 (Fla. 5th DCA August 17, 2018)
But what if an estate gets probated and years later an heir shows up who was excluded from the original proceeding? That’s what happened in this case.
According to the appellate brief, “[a]lthough the decedent died in 1971, no one in the family had the means or know-how to file estate administration papers with the County at that time.” While it’s never stated explicitly, reading between the lines my sense is that the property at issue in this case is an example of “heirs property” passed down informally to surviving family members who lack the resources to judicially perfect their property rights in a probate proceeding.
As explained in an excellent Florida Bar Journal article entitled The Disproportionate Impact of Heirs Property in Florida’s Low-Income Communities of Color, these arrangements can lead to all sorts of negative consequences. By the way, the authors of this article advocate for Florida’s adoption of the Uniform Partition of Heirs Property Act, although not everyone thinks that’s a good idea. See The Uniform Partition of Heirs Property Act: A Solution in Search of a Problem.
Now back to the case. The decedent died in 1971. In terms of formally clearing title to her property, nothing happened until 2001 (29 years later), when her two daughters initiated a summary administration to probate a parcel of real property owned by the decedent at the time of her death. The decedent had adopted three of her grandchildren. These adopted children didn’t get notice of the probate proceeding, nor did they get a share of the property.
Fast forward another 15 years to 2016. The adopted children filed a petition to reopen the Watkins estate under F.S. 735.206(g), which provides as follows:
(g) Any heir or devisee of the decedent who was lawfully entitled to share in the estate but who was not included in the order of summary administration and distribution may enforce all rights in appropriate proceedings against those who procured the order and, if successful, shall be awarded reasonable attorney’s fees as an element of costs.
This statute seems pretty clear cut. If you’re an heir, and you weren’t included in the probate proceeding, you get a do-over. But reading the statute that way runs headlong into Florida’s strong public policy favoring finality in probate proceedings. So not surprisingly, as explained by Judge Schwartz in a thoughtful concurring opinion he wrote in Klem v. Espejo-Norton (a case I wrote about here) the usual rule in Florida is that an estate won’t be reopened even if a rightful heir was excluded. The exception to this rule being the type of “fraud by concealment” scenarios discussed in the Sims case above.
The probate judge reopened the Watkins probate proceeding in a non-evidentiary hearing where apparently no one made a “fraud by concealment” argument. Instead, the argument was made that the petition to re-open was time barred by F.S. 733.710(1), Florida’s non-claim statute for probate creditor claims. Since this isn’t a creditor-claim case (it’s a case about excluded heirs) that argument went nowhere.
Florida’s nonclaim statute applies to claims brought against the estate by creditors. It does not apply to the beneficial interests of heirs. See In re Estate of Robertson, 520 So.2d 99, 102 (Fla. 4th DCA 1988) (rejecting argument that nonclaim statute barred claim of heirship because such claims were “not the type of ‘claim’ contemplated” by nonclaim statute); see also Frank T. Pilotte, Creditors’ Claims and Family Allowance, in Practice Under Florida Probate Code (9th ed. 2017) (“[H]owever, the definition of claims and the nonclaim statute clearly do not apply to the beneficial interests of beneficiaries.”).
So what happened here? While the 5th DCA did say the heirship claims weren’t time barred as creditor claims, it didn’t grant the adoptees any property rights, all it did was affirm a trial court order reopening an estate. Does that mean the general rule barring the reopening of probate proceedings in the absence of fraud doesn’t apply in summary administration cases? Who knows. Here’s what we do know for sure: a family with not-that-much to begin with found itself enmeshed in the kind of probate/property-rights mess that seems to disproportionately burden folks most likely to be the recipients of “heirs property”. And that’s a shame.