Young v. Kurlansik, — So.2d —-, 2008 WL 508427 (Fla. 4th DCA Feb 27, 2008)

The trustee of a decedent’s revocable trust and the personal representative of the decedent’s estate are inextricably linked because the PR has a claim on all assets of the revocable trust needed to pay probate administration expenses.  F.S. 736.05053.  Although this background information is not addressed in the linked-to opinion, I am assuming it had something to do with the underlying litigation. 

In the linked-to case the PR sued the trustee of the decedent’s revocable trust over a promissory note executed by the trustee.  The PR apparently had a good day at trial, because the trial-court judge not only awarded the PR damages on the promissory note (implying the note had been breached and was no longer in effect), but also "reformed" the promissory note to include omitted terms (implying the note was still in effect and would now be enforced in accordance with the new terms added by the judge).    The trustee cried foul, arguing you can’t have it both ways, and the 4th DCA agreed, reversing the trial court’s judgment as follows:

In its final judgment the trial court reformed a promissory note to include omitted terms. At the same time it entered a judgment for damages based upon several legal theories that the appellants engaged in tortious conduct by omitting those terms. The amount of the damages constituted the principal amount of the note, and in her complaint appellee had requested damages and cancellation of the note.

*     *     *     *     *

We reverse the final judgment with directions that the trial court shall allow the appellee to elect her remedy. Electing reformation will permit the appellee to sue on the promissory note and foreclose on the mortgage securing the note. The promissory note and mortgage also include an attorney’s fee provision. Electing a judgment for damages constitutes a disavowal of the promissory note and will require its cancellation. It will permit the appellee to obtain interest at the statutory rate instead of the promissory note rate. The trial court will then enter judgment on the remedy elected by the appellee. That remedy would include prejudgment interest, which we conclude is proper for this pecuniary loss. See Siedlecki v. Arabia, 699 So.2d 1040, 1042 (Fla. 4th DCA 1997).

Lesson learned?

Sometimes "probate" litigation has nothing to do with Florida’s probate code.  In those cases I’m a big believer in co-counseling with competent counsel specializing in the particular type of case at issue, e.g., breach of a promissory note.  Bringing in specialized co-counsel is good for the client: the cost is usually equal to or less than the cost of paying me to handle the case solo, and the end results are usually better.  Who can argue with that math?

The materials distributed for the last meeting of the Florida Bar’s Probate & Trust Litigation Committee included a subcommittee report entitled Collateral Attack on the Validity of A Marriage after Death Based Upon Undue Influence [click here then scroll down to AGENDA ITEM 6]. 

The subcommittee report provides an excellent state-by-state survey of current law regarding challenges to deathbed marriages and is well worth reading.  The report concludes with proposed legislation that would give a decedent’s heirs standing to challenge a deathbed marriage on the grounds of fraud, duress or undue influence.  I think this is good public policy and the subcommittee members (John Moran, Bill Hennessey, Laura Sundberg, and Russ Snyder) should be commended for a job well done. Here’s the report’s conclusion and recommended statutory fix:

VI. Conclusion

In sum, Florida follows the common law and majority rule which only allows void marriages to be challenged after death. In most instances, Florida courts have held that marriages procured by fraud, duress, and undue influence are merely voidable, affording potential heirs no ability to challenge a marriage after death. Given the extensive rights available to a surviving spouse, a wrongdoer can profit significantly by simply inducing or influencing an elderly person to enter into a marriage. The Subcommittee recommends that the full committee consider and discuss legislation to address this issue.

VII. Proposed Statute

Over the last several meetings, the Probate and Trust Litigation Committee discussed and debated a legislative change to permit a challenge to a marriage procured by fraud, duress, or undue influence. At the August 2, 2007 meeting in Palm Beach, a straw vote revealed that a majority of the Committee was in favor of working on a proposed legislative fix. Accordingly, the proposed statute set forth below would provide an avenue to attack a marriage on the basis of fraud, duress, or undue influence after the death of a party to the marriage. The proposed statute aims to narrowly focus on inheritance rights. The proposed statute also borrows from F.S. §732.802 (the slayer statute), F.S. §732.5165 (effect of fraud, duress, mistake, and undue influence), and F.S. §733.107 (burden of proof in contests; presumption of undue influence).

73X.XXXX. Challenge to marriage procured by fraud, duress, or undue influence

     (1) An action to challenge a marriage may be maintained by any interested person after the death of the husband, wife, or both in any proceeding under chapters 731 through 736, 744, 747, and the Florida Probate Code, in which the fact of marriage may be material, either directly or indirectly.

     (2) The scope of this section is limited to all inheritance rights or other benefits a surviving spouse or any other person may acquire as a result of the surviving spouse’s marriage to the decedent, including any rights or benefits acquired under chapters 731 through 736, 744, 747, and the Florida Probate Code.

     (3) A marriage is void for all purposes under subsection (2) if it is procured by fraud, duress, or undue influence.

     (4) In all proceedings contesting a marriage under this section, the contestant shall have the burden of establishing, by clear and convincing evidence, the grounds on which the marriage was procured by fraud, duress, or undue influence.

If after reading the linked-to subcommittee report you’re still not convinced that the proposed Florida legislation is a good thing, then you need to read a newly-published law journal article that advocates strongly for exactly the type of legislation being proposed here in Florida.  As reported here in the Wills, Trusts & Estates Prof Blog, Terry L. Turnipseed (Assistant Professor of Law, Syracuse University College of Law) has recently published his article entitled How Do I Love Thee, Let Me Count the Days: Deathbed Marriages in America.  Here’s the article’s abstract:

Abstract:

Should you be able to marry someone who has only days to live? If so, should the government award the surviving spouse the many property rights that ordinarily flow from marriage?

In almost every state, the only person allowed to challenge the validity of a marriage (or, by extension, the property consequences thereof) after the death of one of the spouses is the surviving spouse! Seems incredible, does it not? The expectant heirs of a dying man (or woman) who marries on his (or her) deathbed cannot challenge the marriage post-death. Ironically, the one person allowed to challenge is the only person who has absolutely no motivation to do so.

How did this rule come about? What, if anything, should we do to change it?

This article explores these and other related questions, including a proposed theoretical framework for a model act giving heirs and beneficiaries standing to sue in order to negate the property consequences that flow from marriage, depending on the level of mental capacity at the time of the marriage.

Individuals on their deathbeds have just as much right to marry as anyone, and if competent and under no duress, the parties to the marriage certainly should have protection under the law. Protection should be appropriately shaped to avoid harassment of widows and widowers.

However, I simply cannot see a valid argument for denying a decedent-spouse’s heirs (those who would take the decedent’s property if he or she died unmarried and intestate) and beneficiaries (those who would take under the decedent’s valid will, if any, absent a spousal election) the right to challenge the property consequences of a suspect marriage, especially when that challenge is based on traditional grounds that might naturally flow from a deathbed marriage.

Ironically, a decedent on their deathbed may not have the legal capacity to enter into a contract but can get married. It is only reasonable that these poor people and their heirs and beneficiaries should have state protection against a surviving spouse taking some or all of the decedent’s property. Protection of heirs and beneficiaries is necessary where a surviving spouse may have few legitimate motives for entering into a deathbed marriage, particularly in light of the surviving spouse’s ability to take some or all of the decedent’s property.

The current incentives are off kilter. A greedy potential spouse has every incentive to find a minister or officer of the law willing to marry them off to a wealthy sick person and no legal incentives not to try it. No matter how ugly the situation, a marriage becomes set in stone with no person other than the surviving spouse allowed standing to seek redress in a court of law upon the death of one of the spouses. Allowing, in an appropriate way, heirs and beneficiaries to challenge the property consequences of a suspect marriage puts in place the proper disincentives before attempting to take advantage of one of feeble mind and spirit.

If these property consequences are allowed to stand, victims will continue to abound in deathbed marriage situations where consent is lacking: the decedent, her family, and society generally. Just imagine how you would feel losing an expectancy in such circumstances.

This letter from Miami-Dade County Chief Judge Joseph Farina was recently emailed to Miami-Dade County attorneys asking us to get involved in the political process revolving around looming budget cuts.  According to Judge Farina:

The judicial branch was recently advised that due to the State of Florida’s budgetary deficit totaling approximately 4 billion dollars, the State Courts’ budget would have to be reduced by more than 16 million dollars by June 30, 2008. While this unanticipated reduction amounts to only 0.06% of the state budget, the loss of these funds would be devastating to  the judicial branch and its ability to provide access to justice and quality service to the public.

Should probate litigants “opt out” of the public court system? YES

As a “user” of Florida’s court system faced with the negative consequences of an underfunded system, I have the option of passively accepting the status quo and simply resigning myself to doing the best I can under less than ideal circumstances.  Another possible reaction is to opt out of the public court system whenever possible.  There are no jury trials in probate litigation, so these cases lend themselves to alternative dispute resolution mechanisms. At the drafting stage, the best way to “opt out” is by including mandatory arbitration clauses in your wills and trusts [I’m a big proponent of this option, click here]. In the absence of such clause, existing Florida law provides litigants and their attorneys a wide menu of ADR options to chose from, including:

[1]  Court-ordered mediation (F.S. 44.102).  This option is well-known and commonly used.  It’s not really an alternative to the public court system because there’s no third party acting as “judge” to resolve the dispute.  The parties either voluntarily come to an agreement – or they don’t – and end up right back in the public court system.

[2]  Court-ordered, nonbinding arbitration (F.S. 44.103).  This option is a little closer to private litigation because you have an independent third party making findings of fact and law that can end up in a legally-binding judgment.  Although the parties don’t have to live with the arbitrator’s ruling if they don’t want to, if you decide to reject the arbitration ruling and go back into the public court system for a trial you may have to pay the other sides attorney’s fees and costs if your after-trial judgment isn’t at least 25% higher than what you got from the arbitrator.  This can be a powerful incentive to stick with the arbitration ruling.

[3]  Special Masters (Florida Rule of Civil Procedure 1.490; Florida Probate Rule 5.697).  Special masters can perform a wide variety of tasks usually shouldered by the trial judge directly. They serve various roles in pretrial discovery and proceedings, facilitate the mediated settlement of cases, make recommendations and submit reports to judges, assist with complex issues, chair advisory committees composed of lawyers of record, help administer class actions and settlements, propose orders jointly recommended by the parties, make decisions based on judicial reference or the parties’ consent, and become engaged in post-trial proceedings.  In short, special masters are a flexible and commonly-used means of lightening the load for overburdened trial judges while also making life much easier for the litigants.  A recent Florida Bar Journal article by Howard R. Marsee entitled Utilizing “Special Masters” in Florida: Unanswered Questions, Practical Considerations, and the Order of Appointment does a good job of explaining all the ins and outs of using special masters in Florida litigation.

[4]  Voluntary trial resolution “VTR” (a/k/a “Private Judging”)  (F.S. 44.104).  I’m intrigued by this concept.  Why put up with an underfunded public court system when you can hire a judge with subject-matter expertise and get all the benefits of a trial and retain your right to appeal adverse legal rulings?

For more on Florida’s VTR statute you’ll want to read Voluntary Trial Resolution – The Most Overlooked Power Tool In The Shed by retired Florida judge Larry Schack, and Voluntary Trial Resolution: Tailor-Made for Employment Claims by Florida employment litigator Christopher M. Shulman.

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How a will contest is framed can make all the difference in the world.  If the will is being challenged on undue influence grounds, you can forget ending the case at a summary judgment hearing once the “presumption” of undue influence is established, as the parties in this case learned the hard way.

Case Study

RBC Ministries v. Tompkins, — So.2d —-, 2008 WL 398821 (Fla. 2d DCA Feb 15, 2008)

The probate court in this case ruled differently, and was reversed on appeal.  The following excerpts from the linked-to opinion sum up the 2d DCA’s analysis of the controlling Florida law on this point.

The rebuttable “presumption of undue influence implements public policy against abuse of fiduciary or confidential relationships and is therefore a presumption shifting the burden of proof.” § 733.107(2), Fla. Stat. (2005). Such a presumption “affecting the burden of proof”-as distinct from a presumption affecting the burden of producing evidence-“imposes upon the party against whom it operates the burden of proof concerning the nonexistence of the presumed fact.” § 90.302(2), Fla. Stat. (2005). Accordingly, once a will contestant establishes the existence of the basis for the rebuttable presumption of undue influence, the burden of proof shifts to the proponent of the will to establish by a preponderance of the evidence the nonexistence of undue influence. Diaz v. Ashworth, 963 So.2d 731, 735 (Fla. 3d DCA 2007); Hack v. Janes, 878 So.2d 440, 443-44 (Fla. 5th DCA 2004). …

“[O]nce the presumption arises, the undue influence issue cannot be determined in a summary judgment proceeding.” Allen v. In re Estate of Dutton, 394 So.2d 132, 135 (Fla. 5th DCA 1981). “[A] summary judgment cannot be entered in favor of one who has the burden of overcoming the presumption of undue influence for such proceeding does not afford the contesting party the right of cross-examination and an opportunity to present rebuttal testimony.” Knight v. Knight (In re Estate of Knight), 108 So.2d 629, 631 (Fla. 1st DCA 1959). Instead, “the proponent of the contested will must come forward with a reasonable explanation of his active role in the decedent’s affairs,” and “the trial court is left to decide the case in accordance with the greater weight of the evidence.” Allen, 394 So.2d at 135.

Lesson learned?

In an undue-influence case, establishing the presumption of undue influence doesn’t just shift the burden of proof, it forecloses the prospect of a quick win on summary judgment for the proponent of the will.  Understanding this point is key to understanding how high the stakes are – for both sides – once a court is asked to rule on whether the presumption’s been triggered.

Miami attorney Patrick J. Lannon just published in interesting article in this month’s Florida Bar Journal entitled Challenging Inter Vivos Transfers Procured by Undue Influence: Factors to Consider.  The article is well researched and good stuff to keep on file.  I thought the following “nuggets” were especially interesting:

The Florida Supreme Court determined in Rich v. Hallman, 143 So. 292 (Fla. 1932), that “the degree of proof necessary to invalidate a will is much greater than that required to set aside a gift inter vivos.”

*     *     *     *     *

[A] long line of cases in Florida and elsewhere consider a gift made in the course of a meretricious relationship (such as a gift to a mistress) to be essentially per se undue influence.[FN 13]

[FN 13]: See Taylor v. Johnson, 581 So. 2d 1333 (Fla. 1st D.C.A. 1991), and cases cited therein. But see Hill v. Hill, 222 So. 2d 454 (Fla. 2d D.C.A. 1969), finding mere fact of meretricious relationship insufficient to prove undue influence where the donor left his wife and set up residence with his mistress and treated her as his wife). In light of Hill, Taylor limited the application of this line of cases to situations where the mistress gains at the expense of the spouse. See also deFuria, Testamentary Gifts Resulting From Meretricious Relationships: Undue Influence or Natural Beneficence?, 64 Notre Dame L. Rev. 200 (1989) (arguing that different treatment of meretricious relationships in undue influence cases can not be justified in light of modern legal and social developments).

Our court system relies in large part on voluntary compliance with the “rules of the game.”  In contested probate/trust proceedings litigants can (and are expected to) vigorously compete with each other, but the system collapses in on itself if it turns into a mud-slinging free for all.

There are all sorts of pressures, both formal and informal, that keep lawyers (and by extension their clients) in line.  But when it comes to out-of-control pro se litigants the checks-and-balances built into our court system don’t work nearly as well, as explained in an excellent 2006 article by J. Caleb Donaldson entitled: Vexatious Pro Se Civil Litigants in the Massachusetts Courts (2006).  Here’s an excerpt:

Pro se litigants are . . . immune from many of the . . . pressures that would cause attorneys to desist from frivolous or harassing litigation. For one thing, an attorney is a repeat player whose livelihood is at stake – a reputation as a bad-faith litigant can harm an attorney’s career long before formal sanctions apply. Attorneys are also subject to discipline from the Bar and to disbarment proceedings. A pro se litigant, therefore, is not subject to the same wide range of disincentives to vexatious, frivolous or harassing litigation. And there is an additional problem, often left unspoken. Many of the most egregious vexatious pro se civil litigants appear from their pleadings to be suffering from mental illness. Such litigants cannot be expected to respond rationally to the threat of penalties.

As a result, some pro se litigants impose undue burdens on the courts. Litigants who file harassing, duplicative or incomprehensible pleadings, and whose motion practice is meritless and disproportionate to the action at bar create a drag on the system and poison the well of goodwill toward other litigants who represent themselves. Additionally, such proceedings make a mockery of the court system and threaten the respect for the judiciary that is essential to its functioning in society.

Although the “Florida Vexatious Litigant Law” [F.S. 68.093] is specifically designed to address this problem, the statute is not fool-proof.  In fact I think the procedural hurdles built into the statute render it meaningless for the vast majority of contested probate/trust proceedings where a vexatious pro se litigant is interfering with everyone’s ability to get a fair hearing on the merits.

The following two opinions provide valuable guidance for probate counsel seeking to craft a proper response to the vexatious pro se litigant in those cases where F.S. 68.093 falls short.

4th DCA: Court to pro se litigant: Put it in writing

Bernheim v. Broberg, — So.2d —-, 2008 WL 441621 (Fla. 4th DCA Feb 20, 2008)

In this case the personal representative obtained an order from the probate court requiring a pro se litigant to communicate solely through writing.  The opinion doesn’t explain why this order was needed, but I like it, and can easily imaging all sorts of scenarios where this minor restriction on a pro se’s conduct would make everyone’s life (especially the judge’s) dramatically easier.

When reading the following excerpt it’s also important to note that this is NOT the type of order that can be appealed/quashed by an appellate court (i.e., you shouldn’t get sucked into 6-12 months of meaningless appellate motion practice if the probate court grants this order).

This case involves .  .  .  a certiorari petition challenging an order granting the personal representative’s motion to require Bernheim, who was pro se, to communicate with the personal representative and his counsel solely through writing.  .  .  .  We dismiss the certiorari petition directed to the order on communication as the petitioner failed to meet his burden of demonstrating the “jurisdictional” “irreparable harm” prong of certiorari review. See Bared & Co. v. McGuire, 670 So.2d 153 (Fla. 4th DCA 1996) (en banc).

1st DCA: Court to pro se litigant: Go hire a lawyer

Pflaum v. Pflaum, — So.2d —-, 2008 WL 425585 (Fla. 1st DCA Feb 19, 2008)

As I’ve written before [click here], Florida probate courts have recognized that requiring a pro se litigant to simply hire a lawyer can be a very effective tool for curbing vexatious conduct.  That’s what the appellate court did in this case.  When you read the following excerpt note that the court also finds that Florida’s vexatious-litigant statute does NOT apply in appellate proceedings.

Having now considered appellees’ motion and appellant’s response, and taken notice of Peter E. Pflaum’s cases in this court and his filings therein, we conclude that imposition of a sanction is appropriate in accordance with Florida Rule of Appellate Procedure 9.410 and this court’s authority to control its docket. See May v. Barthet, 934 So.2d 1184 (Fla.2006); Lee v. Fla. Dep’t of Corrs., 873 So.2d 489 (Fla. 1st DCA 2004). Accordingly, Peter E. Pflaum is hereby prohibited from appearing before this court as appellant or petitioner unless represented by a member in good standing of The Florida Bar. He is permitted 15 days from the date of this order within which to retain a Florida attorney who shall file a notice of appearance in this and his other active cases, failing which the cases will be subject to dismissal. The clerk of this court is directed to accept no further pro se filings from Peter E. Pflaum; if received, the filings shall be returned to the sender without filing and with reference to this order.

Appellees have asked this court to certify that Peter E. Pflaum is a vexatious litigant pursuant to section 68.093, Florida Statutes. That portion of appellees’ motion must be denied because the statute, by its express terms, applies only to proceedings in the trial courts. That limitation, of course, does not affect our authority to impose the sanction described above. Appellees also move for an award of attorney’s fees pursuant to section 57.105, Florida Statutes, and we defer a ruling on that portion of the motion until final disposition of this proceeding. Appellees’ motion to dismiss is denied at this time, but the case will be subject to dismissal if appellant fails timely to comply with the terms of this order.

In re Estate of Cummins, — So.2d —-, 2008 WL 373414 (Fla. 3d DCA Feb 13, 2008)

Florida Probate Rule 5.401(d) requires a party objecting to a personal representative’s petition for discharge or final accounting to serve notice of hearing on the objections within 90 days of the date the objection is filed.

In the linked-to case counsel for the objecting party blew this deadline due to secretarial oversight.

My personal philosophy is to never excuse a mistake by blaming my secretary for a foul up; if something goes wrong I take the hit.  However, if it’s my client that’s being prejudiced by something a member of my staff messed up, that’s a different story.

The issue in the linked-to case was whether secretarial oversight = excusable neglect, thus allowing the objecting party to have a hearing on its objections to the PR’s final accounting.  The probate judge said NO, and was reversed when the 3d DCA said YES.

Florida Probate Rule 5.402(b) allows a probate judge to extend a deadline date in certain circumstances based on “excusable neglect.” Florida Probate Rule 5.402(b) provides as follows:

(b) Enlargement. When an act is required or allowed to be done at or within a specified time by these rules, by order of court, or by notice given thereunder, for cause shown the court at any time in its discretion . . .

(2) on motion made and notice after the expiration of the specified period may permit the act to be done when failure to act was the result of excusable neglect. The court under this rule may not extend the time for serving a motion for rehearing or to enlarge any period of time governed by the Florida Rules of Appellate Procedure.

For future reference, I’ve excerpted below the operative facts and law as summarized by the 3d DCA in support of its ruling that secretarial oversight does = excusable neglect.

The Facts:

At the hearing on the abandonment of Objections, Cummins’ counsel detailed the reasons for failing to comply with the ninety-day time period for filing the notice of hearing under Florida Probate Rule 5 .401(d). Counsel explained that the legal assistant responsible for procuring the hearing date was informed by the court that the presiding judge would not have a sufficient amount of time available for the hearing until September, 2007. In order to obtain an earlier hearing date, Cummins’ counsel decided to utilize the services of a special master. The legal assistant attempted to schedule a hearing with the special master but was informed that the attorney for the personal representative was out of the office and that only the attorney himself could place a hearing on his calendar. Subsequently, the legal assistant instructed Cummins’ counsel that she would follow-up on scheduling a hearing. However, without notice, the legal assistant ceased reporting for work in late June, 2007. On July 7, 2007, the individuals who were reassigned the legal assistant’s tasks realized that the ninety-day period for sending notice had expired. Cummins’ counsel attempted to obtain a hearing date, but because a full day was requested, the scheduling clerk could not immediately provide one. On July 17, 2007, a hearing date was set for August 29, 2007, at which time a notice of hearing was sent to the attorney for the personal representative. Additionally, throughout the course of the ninety days, Cummins’ counsel stated that the attorney for the personal representative suggested that a “global settlement” would be forthcoming, thus rendering a hearing on the Objections unnecessary.

The Law: Secretarial Oversight = Excusable Neglect

The 3d DCA based its ruling reversing the probate judge on cases construing Civil Procedure Rule 1.090(d), which also contains an “excusable neglect” out for deadline extensions and is otherwise “almost identical” to the Probate Rule 5.042(b).  Here’s how the 3d DCA framed its analysis:

The ninety-day time limit for filing a notice of hearing on the Objections is not jurisdictional. The standard of review applied to a trial court’s analysis of excusable neglect is abuse of discretion. Boudot v. Boudot, 925 So.2d 409, 415 n. 2 (Fla. 5th DCA 2006) (citing Smith v. Smith, 902 So.2d 859, 861 (Fla. 1st DCA 2005)); State Dep’t of Transp. v. Southtrust Bank, 886 So.2d 393, 396 (Fla. 1st DCA 2004) (citing Lyn v. Lyn, 884 So.2d 181, 185 (Fla. 2d DCA 2004)). A trial court is afforded discretion to consider objections for which a notice of hearing was not served within ninety days of the filing of said objections.

In Southtrust Bank, the trial court’s finding of excusable neglect pursuant to Florida Rule of Civil Procedure 1.090(b) was affirmed because “the secretary’s oversight is precisely the type of error found to constitute excusable neglect.” Southtrust Bank, 886 So.2d at 396.

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This case is the latest example of the lopsided unfairness resulting from how current Florida law treats life estates in homes.  To better understand the problem you’ll want to read The New Homestead Trap: Surviving Spouses Are Trapped by Life Estates They No Longer Want or Can Afford, published in the June 2007 edition of the Florida Bar Journal. Here’s an excerpt:

[S]urviving spouses — who are ostensibly “protected” by the Florida Constitution and statutes (given the “right” to live “rent-free in a homestead”) — are required to bear 100 percent of the burden of the state’s two largest fiscal crises: the escalation in property taxes and homeowners’ insurance. In addition, costs of ordinary upkeep, interest payments on mortgages and, in many cases, virtually all of the special assessments are also the burden of the surviving spouse. Further exacerbating the situation, many widows live in communities which have charged (and are still charging) assessments to repair common areas damaged by the hurricanes the state faced these past few years — with the promise of active hurricane seasons for the foreseeable future.

Case Study

Schneberger v. Schneberger, — So.2d —-, 2008 WL 373243(Fla. 4th DCA Feb 13, 2008)

Hurricane damages were at the heart of the dispute in the linked-to case between the life tenant (surviving spouse), and the remainderman (decedent’s son from a prior marriage).  To make matters worse, the life tenant in this case was prohibited from renting the property; and under Florida law a life tenant can’t force a sale of the property through a partition action.  Bottom line, she was stuck in the property and apparently stuck with the bills for major repairs to the home – plus taxes and insurance.  Here’s how the 4th DCA summed up the trial court’s ruling, which was upheld on appeal:

When the home was damaged by hurricanes, the expense of repair and insurance became an issue between the wife and the remainderman, the husband’s son by a prior marriage, who was also the trustee of the husband’s trust. The wife filed a complaint against the trustee and remainderman to determine who was responsible for the cost of repairs as well as the continuing cost of insurance. The remainderman filed a counterclaim for declaratory judgment as to the same issues.

After a trial, the court declared that the .  .  .  wife was entitled to a life estate in the property and as such was responsible for those duties of a life tenant, including the responsibility to pay all ordinary and necessary expenses that inure to a homeowner, including taxes, insurance, homeowner’s association fees, and general repairs for the upkeep and maintenance of the property. The remainderman was responsible to pay for the hurricane repair costs from the proceeds of the insurance as an extraordinary expense to the property. He was also required to pay the special hurricane assessment by the homeowner’s association.

As support for its affirmance of the trial court’s ruling, the 4th DCA summarized Florida law governing the allocation of expenses between life tenants and remaindermen as follows:

In Florida, “a tenant for life or a person vested with an ordinary life estate is entitled to the use and enjoyment of his estate during its existence.” Sauls v. Crosby, 258 So.2d 326, 327 (Fla. 1st DCA 1972). “The only restriction on the life tenant’s use and enjoyment is that he not permanently diminish or change the value of the future estate of the remainderman. This limitation places on the ‘ordinary life tenant’ the responsibility for all waste of whatever character.” Id. (footnote omitted). “It is well settled that life tenants are bound in law to pay property taxes during their continuance of their estate. Failure to pay taxes constitutes waste.” Chapman v. Chapman, 526 So.2d 131, 135 (Fla. 3d DCA 1988) (citations omitted). Therefore, it follows that the wife would have the responsibility to pay all ordinary and necessary expenses that inure to a homeowner, including taxes, insurance, homeowner’s association fees, and general repairs for the upkeep and maintenance of the property, and not to dissipate or cause waste to the property.

Lesson learned?

If you own property and can’t afford to keep it up, the best way to deal with the problem is to sell the property.  If you co-own property with someone you don’t get along with (for example, your ex’s children), the best way to deal with the problem is to sell the property.  Under existing Florida law a life tenant can NOT force a sale of the property.  I am assuming that the surviving spouse in the linked-to case would sell the property if she could, but her ex’s son told her to take a hike.

What’s needed is a legislative fix: surviving spouses with life estates in their homes should be able to force a sale of the property when the expenses become burdensome and the remaindermen wont voluntarily consent to the sale.  Fortunately, this legislative fix is in the works, as reported by Jeffrey A. Baskies (yes, same guy who wrote the Florida Bar Journal article) in the written materials for the January 2008 meeting of the Florida Probate Law and Procedure Committee.  The following is an excerpt from the Baskies report [click here for link to committee agenda containing Baskies’ full report starting on page 17]:

Chapter 64 of the Florida Statutes governs partition actions. With only a few modifications, it can be amended to allow partition of protected homestead property between surviving spouses and the decedent’s lineal descendants.  The subcommittee proposes revising chapter 64 as follows:

Section 64.031 is amended to read as follows.

64.031 Parties.–The action may be filed by any one or more of several joint tenants, tenants in common, owners of life estate created by F.S. 732.401, or coparceners, against their cotenants, coparceners, or the holders of remainder interests (in the case of life estates created by F.S. 732.401), or others interested in the lands to be divided.

Section 64.041 is amended to read as follows.

64.041 Complaint.–The complaint shall allege a description of the lands of which partition is demanded, the names and places of residence of the owners, joint tenants, tenants in common, owner of life estate created by F.S. 732.401 or the holders of remainder interests (in the case of life estates created by F.S. 732.401), coparceners, or other persons interested in the lands according to the best knowledge and belief of plaintiff, the quantity held by each, and such other matters, if any, as are necessary to enable the court to adjudicate the rights and interests of the party. If the names, residence or quantity of interest of any owner or claimant is unknown to plaintiff, this shall be stated. If the name is unknown, the action may proceed as though such unknown persons were named in the complaint.

Section 64.051 is amended to read as follows.

64.051 Judgment.–
(1) The court shall adjudge the rights and interests of the parties, and that partition be made if it appears that the parties are entitled to it. When the rights and interests of plaintiffs are established or are undisputed, the court may order partition to be made, and the interest of plaintiffs and such of the defendants as have established their interest to be allotted to them, leaving for future adjustment in the same action the interest of any other defendants.
(2) In the case of an action for partition of protected homestead as defined in s. 731.201(32) where the surviving spouse owns a life estate, the surviving spouse shall be entitled to an order of partition if the action is brought by the surviving spouse.
(3) If any party to the action alleges that tax as defined in s. 733.817(1)(n) will be due by reason of a severance as ordered by the court, the court shall determine all issues concerning apportionment of that tax under applicable federal and state law. The court shall have jurisdiction to determine the probable tax due or to become due from all interested persons, apportion the probable tax, and enter orders and judgments to enforce payment of any tax as so apportioned. The court may retain jurisdiction over the parties and issues to modify the order of apportionment as appropriate until after the tax is finally determined.

This proposal only gives the spouse a right to a partition. The subcommittee debated giving remainder beneficiaries a right to seek partition, but overall the subcommittee seemed to favor only permitting surviving spouses to seek partition, while not permitting remainder beneficiaries to displace the life tenants – not affording the ability to “throw the life tenant out” at will. This proposal will go a long way to helping and protecting those surviving spouses who currently have life estates (or may receive them in the future) they don’t desire to retain, while weighing and balancing the interest of the remainder beneficiaries.