Ever wonder why lawsuits against trustees often name them as defendants both in their representative capacities as trustees and individually? The reason for that dual designation is usually because the claim seeks some kind of money judgment against the trustee, be it the refund of excessive fees or damages resulting from some breach of trust. This kind of remedy is specifically authorized by F.S. 736.1001(2)(c), which authorizes courts to “compel [a] trustee to redress a breach of trust by paying money.”
In these cases the plaintiff seeks to impose personal liability on a defendant based solely on the defendant’s actions while serving in a representative capacity as trustee. Here’s the problem: a court can’t grant that kind of relief against a trustee unless the court has personal jurisdiction over the trustee individually. And a court won’t have that kind of jurisdiction unless the trustee’s sued in his individual capacity.
In other words, if you want a court to make a trustee pay money out of his own pocket, you need to sue that person individually, even if that person’s liability is based solely on his actions while serving in a representative capacity as trustee. This is ground the 4th DCA covered years ago in the Kozinski case (which I wrote about here).
But just because you’re right on the law doesn’t mean your trial-court judge is going to rule your way, as the parties in the Miller case recently learned. So we now have another opinion from the 4th DCA reiterating the same Kozinski rule for those who didn’t get it the first time.
Case Study
Miller v. Moore, — So.3d —-, 2024 WL 3587967 (Fla. 4th DCA July 31, 2024)
In this case a trustee was sued for “damages” and “surcharge” based on the allegation that the trustee had paid himself excessive fees. The plaintiff wanted the excessive fees returned to the trust. In other words, the plaintiff asked the trial court to impose personal liability on the trustee for the return of money to the trust.
Plaintiff didn’t sue the trustee in his individual capacity. Was that a problem? Not according to the trial court. The trial court reasoned that because F.S. 736.1001(2)(c) authorizes it to “compel the trustee to redress a breach of trust by paying money,” and the trustee’s being sued for his actions as trustee not individually, that’s enough. Wrong answer, so saith the 4th DCA:
In short, the trial court erred in ordering disgorgement against Miller as co-trustee of the Florida Trust when that remedy is available against him only in his individual capacity after he is personally served with process. …
The Florida Trust Code authorizes disgorgement as a remedy to address breaches of trust. See McCormick v. Cox, 118 So. 3d 980, 987 (Fla. 3d DCA 2013) (affirming judgment directing trustee to disgorge a fee that the trustee had paid to himself from a sale of trust property); accord § 736.1001(2), Fla. Stat. (2021). But … disgorgement imposes personal liability against a fiduciary, requiring service against the fiduciary individually, and not in any representative capacity, to acquire personal jurisdiction. Therefore, to obtain disgorgement, Moore must personally serve Miller and add him individually as a party to the underlying case. See Kozinski v. Stabenow, 152 So. 3d 650, 653-54 (Fla. 4th DCA 2014).
Our decision in Kozinski is instructive. …
[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 … is tantamount to a judgment for damages, requiring personal service on the fiduciary as an individual, and not in any representative capacity.
Id. at 653-54.