Economic pressures loom large in all civil litigation. Those pressures are both the likely source of the underlying dispute and the driving force behind the course of the litigation and the manner in which the parties choose to negotiate settlement terms . . . or not. As I previously expressed here, two often opposing values shape the corporate trust market: traditional fiduciary responsibilities to trust beneficiaries and market-driven demands for increased profits. Changing market conditions will only heighten that tension in the future. This July 8, 2005 study by Tiburon Strategic Advisors reported that Bank of America has $126 billion in personal trust assets under management, Wells Fargo $62 billion, PNC Bank $38 billion, JP Morgan Chase $26 billion, and Wachovia $25 billion. While those sums are huge, they don’t tell the whole story. According to the study, banks are having trouble keeping up with changing market conditions.

  • In 1991, brokerage firms accounted for only 5% of the personal and institutional market share. Today they account for 32% of that market.
  • In 1998 there were only 117 non-bank companies offering trust services to consumers. In only five years that number grew nearly five fold to 564 companies.

How these dramatically changing market conditions will play themselves out in future litigation is anyone’s guess, but they will undoubtedly have an impact. Source: Estate Legacy Vaults

Global Travel Marketing, Inc. v. Shea, 2005 WL 1576244, 30 Fla. L. Weekly S511 (Fla. July 7, 2005) (Fourth DCA Reversed)

In a case that is sure to be of interest to personal injury attorneys (and the probate/guardianship attorneys they work with), the Florida Supreme Court reversed the Fourth DCA and held that an arbitration agreement incorporated into a commercial travel contract is enforceable against the minor’s estate in a tort action arising from the contract. Although not central to the Supreme Court’s ruling, the Court did provide the following helpful summary of current Florida law regarding when legal guardianships must be established to settle a minor’s civil claims:

Under section 2004->Ch0744->Section%20301#0744.301″>744.301(2), Florida Statutes (2004), parents, acting as the natural guardians of their minor children, [FN6] may settle their children’s claims for amounts up to $15,000. A net settlement greater than $15,000 on behalf of a minor requires establishment of a legal guardianship. See § 2004->Ch0744->Section%20387#0744.387″>744.387(2), Fla. Stat. (2004). If a legal guardian and a minor have potentially adverse interests, or if otherwise necessary, the trial court may, for a settlement greater than $15,000, and must, for a settlement greater than $25,000, appoint a guardian ad litem to represent the minor’s interests. See § 2004->Ch0744->Section%20301#0744.301″>744.301(4)(a); Fla. Stat. (2004). A presuit settlement on behalf of a minor requires court authorization, which may be given if the court determines that the settlement is in the minor’s best interest. See § 2004->Ch0744->Section%20387#0744.387″>744.387(1), Fla. Stat. (2004). Settlement of a pending claim also requires court approval. See § 2004->Ch0744->Section%20387#0744.387″>744.387(3)(a), Fla. Stat. (2004).

FN6. For children of divorced parents, “the natural guardianship shall belong to the parent to whom the custody of the child is awarded.” § 2004->Ch0744->Section%20301#0744.301″>744.301(1), Fla. Stat. (2004).

Continue Reading Establishment of legal guardianship not required to enforce minor’s pre-injury arbitration agreement

Foreman v. Northern Trust Bank of Florida, N.A., 2005 WL 1553963 (Fla. 2d DCA July 6, 2005) (Trial Court Reversed) For obvious reasons, compensation cases are always of interest to practitioners. In this latest Second DCA opinion addressing claims for attorneys fees by former counsel for a personal representative (see here for the prior Second DCA case this year involving a compensation dispute), the court reversed Sarasota County Judge Nancy K. Donnellan and held as follows:

  • Former counsel for personal representative is entitled to fees for services he performed if they benefitted the estate . . . even if those services were rendered after the date he withdrew as counsel.
  • Former counsel for personal representative is entitled to fees for the time he spent trying to obtain payment for services he rendered to the estate.
  • Former counsel for personal representative is entitled to an award of reasonable expert witness fees. The Second DCA also noted that 2004->Ch0733->Section%206175#0733.6175″>F.S. § 733.6175(4) “makes such an award mandatory if expert testimony is offered.”

Wehrheim v. Golden Pond Assisted Living Facility, 2005 WL 1537448 (Fla. 5th DCA July 1, 2005) (Trial Court Reversed)

Most cases provide good examples of mistakes you want to avoid, for example, how mishandling homestead property can lead to unintended consequences (see here) or how to make sure you’ve served formal notice on a minor to cut off future litigation (see here). Sometimes a case comes along that simply reflects good, creative lawyering. This is one of them. In this case the Fifth DCA grappled with the following scenario, which seemed ready made for litigation. The decedent executed wills in 1998, 1999, 2000 and 2002. All four wills completely cut out her three children. The 2002 will ended up primarily benefitting the assisted living facility the decedent resided in at the time of her death. This last change was a complete departure from the three previous wills the decedent had executed. When the decedent died her children and the assisted living facility favored under her 2002 will were (surprise!) soon locked in litigation. Orange County Judge Lawrence R. Kirkwood granted a summary judgment motion in favor of the assisted living facility thereby denying petitions filed by the children (1) challenging the decedent’s 2002 will and (2) seeking removal of the personal representative. The Fifth DCA reversed the trial court and in the course of its decision shed light on some pretty creative lawyering.

Basically, the decedent’s three children were faced with the following challenge: how to argue they could potentially end up as beneficiaries of their mother’s estate. Here’s how they did it:

Step One: Argue that the decedent’s last will was valid to the extent it revoked all of her prior wills, but in all other respects was void.

The children argued, and the Fifth DCA agreed, that F.S. § 732.5165 permits a court to partially invalidate a will based on undue influence, while enforcing those portions of the will not affected by wrongdoing. In this case, the children argued the portion of their mother’s 2002 will revoking all prior wills was not the product of undue influence, and was thus valid. However, the portion of the 2002 will devising all of the decedent’s estate to the assisted living facility was the produce to undue influence, and is thus void. End result: a “testate” estate that favors the children exclusively.

Step Two: Argue that the legal presumption established by the doctrine of “dependent relative revocation” does not apply and thus the decedent’s three prior wills should be disregarded.

The doctrine of dependent relative revocation creates the following two rebuttable presumptions: (1) the testator did not intend to die intestate, and (2) that the testator intended that the revocation of the prior will is conditionally qualified on the validity of the subsequent will. The children argued that the fact that the decedent’s last will favoring her nursing home was a complete departure from her three previous wills rebuts the presumed preference for validating her prior wills. The Fifth DCA was unconvinced by this argument, but essentially delivered a victory to the children anyway. The Fifth DCA held that the rebuttable presumption arising under the doctrine becomes moot if the children are able to successfully prove up their case for partial validity of their mother’s last will under F.S. § 732.5165. In that case, the Fifth DCA held, the doctrine of dependent relative revocation does not apply, i.e., no need to overcome the presumption in favor of the decedent’s prior will, because the decedent’s last will would be given partial effect.

Step Three: Argue that raising the issue of standing for the first time in a summary judgement motion was improper, and thus this “affirmative defense” had been waived.

In its summary judgement motion, the assisted living facility argued for the first time that the children lacked standing to contest the 2002. The children countered by arguing that this was an affirmative defense that was not properly plead, and was therefore waived. The Fifth DCA held that standing as an “interested person” is an element that must be established in a petition challenging the validity of a will (see F.S. § 733.109(1)), and a petition seeking removal of a personal representative (see F.S. § 733.506). As such, it is not necessary to specifically plead standing as an affirmative defense in this context.

Listen to this post

A brewing case reported on in Gannett heirs sue over father’s estate is a good example of how even the best Florida firms are not immune to malpractice claims challenging a firm’s handling of a large estate. Two heirs to the Gannett newspaper fortune allege that West Palm Beach, Fla.-based Gunster Yoakley & Stewart colluded with its client JPMorgan Trust Co., a subsidiary of New York City-based JPMorgan Chase & Co., in running up fees for planning and administering the estate of their father, Charles McAdam Jr. of Wellington, who died in early 2003. That suit seeks no specific damage figure. But the plaintiffs maintain that Gunster’s actions cost the estate almost $8 million in legally avoidable taxes alone.

Cason v. Hammock, 2005 WL 1488650 (Fla. 5th DCA June 24, 2005) (Trial Court Reversed) Florida’s probate code and procedural rules are designed to cut off possible litigation as soon as possible . . . whenever possible. Used wisely by an experienced probate attorney, these statutory and procedural rules are a powerful shield. On the other hand, not focusing on these seemingly mundane details exposes an estate to all the potential delays, expenses and rancor inherent to litigation. In this case the estate was challenged on two fronts: petitions were filed seeking (1) removal of the personal representative and (2) revocation of the probate proceedings. Citrus County Judge Richard Howard denied both petitions on purely procedural grounds. In other words, the estate seemed to have successfully employed the “litigation shields” built into Florida’s probate code and procedural rules. On appeal, the Fifth DCA snatched both victories away from the estate. Continue Reading “Specific Devisee” has standing to petition for removal of a personal representative until the moment he or she actually receives full payment; Florida Probate Rules fail to provide for service of Formal Notice on Minors

Beseau v. Bhalani, 2005 WL 1488584 (Fla. 5th DCA June 24, 2005) (Trial Court Reversed) In the underlying wrongful death suit, the defendants prevailed after a jury trial. They then obtained an order awarding attorney’s fees and costs against the personal representative of the decedent’s estate . . . in her individual capacity. Apparently Volusia County Judge J. David Walsh thought this was OK because the personal representative was named “individually” in the complaint’s caption and she never objected. The Fifth DCA made quick work of the case pointing out that regardless of what the complaint’s caption may have said, the body of the complaint made clear that the lawsuit was brought on behalf of the estate, not the individual who happened to be serving as personal representative. And if you’re not a party to the lawsuit, the court can’t assess a judgment against you . . . even if you don’t object. Continue Reading Court says NO to holding personal representative personally liable for attorney’s fees and costs in unsuccessful wrongful death lawsuit

Effective July 1, 2005, Florida enacted the Florida Uniform Disclaimer of Property Interests Act. Although the Florida statute is modeled on the Uniform Act, it is reported to contain substantial enhancements as well. The Wills, Trusts & Estate Prof Blog reported here the following comment by one of the statute’s lead authors:

The variations are so significant that Adam Hirsch, the William and Catherine VanDercreek Professor of Law at Florida State University, says that “it may fairly be described as an alternative model, potentially worthy of contemplation by other state drafting committees.”

Perry v. Agnew, 2005 WL 1397427 (Fla. 2d DCA June 15, 2005) (Trial Court Reversed)

Sometimes the best defense is a good offense. In this case, an individual trustee working out of his office in Boston, Massachusetts was sued by three beneficiaries, one of whom was a resident of Florida. The trustee moved to dismiss the complaint for improper venue under 2004->Ch0737->Section%20203#0737.203″>F.S. § 737.203. Charlotte County Judge Isaac Anderson, Jr. denied the trustee’s motion to dismiss on two grounds, the most interesting of which was based on a finding that the trust’s Florida choice-of-law provision exempted it from the application of 2004->Ch0737->Section%20203#0737.203″>F.S. § 737.203. Continue Reading Choice-of-law Clause Will Not Override Florida’s Statutory Regime for Designating the Venue of Trust Litigation

The California based Estate Business and Tax Law Blog reported here that this litigation-related excerpt from the new book by Nancy Keates, The Wall Street Journal Guide to the Business of Life was in today’s Wall Street Journal:

Don’t surprise or confuse your heirs:

A contested will can make legal fees skyrocket. Making clear decisions, telling your heirs exactly what to expect, and being explicit in your will, will help reduce the risk of a legal fight. One common problem is a poorly drafted will that can lead to ambiguities about the deceased’s wishes and, ultimately, increase the risk of legal fights. Another thing to watch out for are conflicting directives between the will and, say, a life insurance policy or a retirement account.

I couldn’t have said it better myself.