Saturday, July 27, 2013

Dinkins v. Dinkins

Dinkins v. Dinkins, 2013 WL 3834371 (Fla. 4th DCA 2013)

It is well established in Florida that penalty clauses in trusts are invalid.  Fla. Stats. 736.1108(1) provides that, "A provision in a trust instrument purporting to penalize any interested person for contesting the trust instrument or instituting other proceedings relating to a trust estate or trust assets is unenforceable."  Here, a husband's trust contained a conditional specific bequest of cash for his spouse, which said that if his wife made a valid disclaimer of her interest in the QTIP trust created under the trust, and she waived her right to elect the elective share, then she would receive a cash bequest of $5,000,000.  The wife argued that this was an unlawful penalty clause, since it would penalize her for taking the elective share by causing her to forfeit the $5,000,000 bequest.  The Court held that the clause is not a penalty clause.

The Court explained that if it were a penalty clause, the wife would have to forfeit her right to contest the instrument in order to receive the devise.  Here, she is only forfeiting her right to a statutory benefit.  Since she had the ability to reject the $5,000,000 devise to take the statutory devise, the purpose of the statutory devise is satisfied and the alternative devise clause does not penalize the beneficiary for purposes of Fla. Stats. 736.1108(1).

Friday, July 26, 2013

Offensive Measures in Trust and Estate Litigation

Yesterday I spoke at the Florida Bar's Real Property and Probate and Trust Law's (RPPTL) Trust and Estate Litigation Committee meeting on Offensive Measures in Trust and Estate Litigation.  For those of you who are interested, my materials are available here for download:

Offensive Measures in Trust and Estate Litigation

Wednesday, July 17, 2013

M. Krumholz v. Guardianship of H.K.

M. Krumholz v. Guardianship of H.K., 114 So.3d 341 (Fla. 3d DCA 2013)

An order determining that an alleged incapacitated person (AIP) is totally incapacitated and appointing a plenary guardian to act on his or her behalf requires a recitation of the requisite findings of fact required by F.S. 744.331(6)(c).  F.S. 744.331(6)(c) requires that, "In determining that a person is totally incapacitated, the order must contain findings of fact demonstrating that the individual is totally without capacity to care for herself or himself or her or his property."

Here, the trial court entered an order determining the AIP was totally incapacitated, that there were no reasonable alternatives to guardianship, that no alternatives would sufficiently address the AIP's problems and needs, and appointed a professional guardian.  The order contained the following description of the nature and scope of the AIP's incapacities:

"Imminent danger that the physical or mental health or safety will be seriously impaired.  She suffers from dementia, memory loss and amnestic cognitive impairment and delusions."

Because there were no other findings of fact in the order, the Appellate Court found that the order failed to contain sufficient findings of fact to satisfy F.S. 744.331(6)(c).  Judge Rothenberg had presided over the initial hearing and had since retired.  Since he is now serving as a private mediator for similar types of cases, he is prevented from preparing an order because of Canon 5F(2) in the Florida Code of Judicial Conduct.  The cause was remanded for a new adjudicatory hearing before a successor judge.

Bishop v. Estate of Rossi

Bishop v. Estate of Rossi, 114 So.3d 235 (Fla. 5th DCA 2013)

An order granting attorney's fees, whether in probate or otherwise, must contain two distinct findings: (1) whether the attorney is entitled to fees and (2) whether the amount of fees is reasonable.  Here, the trial court failed to address the second issue in its order, and thus the case was remanded for clarification on that issue. The Court discussed both prongs of the test:

(1) Whether the attorney is entitled to fees:

The question of whether an attorney is entitled to fees is typically a question of law.  While factual findings can be helpful, the Court explained that "entitlement to attorney's fees is based on the interpretation of contractual provisions...or a a pure matter of law..." Hinkley v. Gould, Cooksey, Fennell, O'Neill, Marine, Carter & Hafner, P.A., 971 So.2d 955, 956 (Fla. 5th DCA 2007).

(2) Reasonableness of fees:

An order setting the amount of an attorney's fees must make express findings regarding the number of hours reasonably expended and the reasonable hourly rate for that litigation (this is the "lodestar" method for determining fees- adopted by the Florida Supreme Court in Florida Patient's Comp. Fund v. Rowe, 472 So.2d 1145 (Fla. 1985)).  The lodestar method applies equally in probate matters.  Because the trial court did not make written findings in its order granting attorney's fees, the Court could not determine whether the trial court had considered and determined the reasonable number of hours expended and the reasonably hourly rate.  The Court "reluctantly" remanded for a written order making such an express finding.

Wednesday, July 10, 2013

Syfrett v. Syfrett-Moore ex rel. Estate of Syfrett

Syfrett v. Syfrett-Moore ex rel. Estate of Syfrett, 2013 WL 3389547 (Fla. 1st DCA 2013)

This case involved a dispute over ownership of two apartments owned by a decedent, and centered around whether those properties were properly transferred during the decedent's life, or whether the decedent lacked the capacity to effectuate the transfers.  The "Estate" sought a declaratory judgment regarding ownership of the units.  The Appellant, one of the purported owners of the units, filed a motion to dismiss for failure to adequately state a claim for declaratory relief.  The Court found that the complaint did not meet the pleading standard for declaratory judgment because: (1) the complaint failed to include allegations that there was a bona fide, actual, present practical need for a declaration, (2) the plaintiff designated in the complaint was the Estate, not the co-personal representative of the Estate (citing Fla. Stats. § 733.612(20), granting the personal representative the authority to prosecute or defend for the estate, (3) the complaint does not provide support for its conclusory allegations that the transfers were "in error and/or invalid," and (4) none of the deeds or other documents referenced in the complaint were attached to the complaint (citing Fla. R. Civ. P. 1.130(a)).

The Court also found that the trial court applied the wrong legal standard in ruling on Appellant's motion for summary judgment, which was heard along with the motion to dismiss.  Because Appellant had not yet answered the complaint, due to the tolling by her motion to dismiss, the Apellee was required to establish that there was no answer that Appellant could serve and no affirmative defense that she could allege which would raise an issue of material fact.  Because Appellant did raise issues in an affidavit, even though that evidence may not be sufficient to defeat a motion for summary judgment, that evidence is sufficient to demonstrate that Apellant may be able to raise disputed issues of material fact if she is permitted to answer the complaint. 

Grasso v. Grasso

Grasso v. Grasso, 113 So.3d 855 (Fla. 2d DCA 2012)

A clever client/beneficiary will often quickly realize during trust litigation how little power he or she has to stop the trustee from doing certain actions while litigation is pending.  Often, the beneficiary will want to enjoin the trustee from performing those actions, such as disposing of trust assets, during the litigation, because they know that if they challenge the trustee's actions after the fact, they will face an uphill, costly legal battle.  In this case, the trial court granted a settlor/beneficiary's request for a temporary injunction, and enjoined the trustees of the trust from disposing of trust assets.  The injunction was granted at the same time the trial court granted a motion to dismiss against the settlor/beneficiary for lack of personal and subject matter jurisdiction, with leave to amend.  

The Appellate Court held that a grant of a motion to dismiss with leave to amend is not an appealable final order, since it does not actually decide the issue of jurisdiction.  It then affirmed the temporary injunction, because it found that the appellants did not challenge the injunction on the merits.  To do so in a case concerning the use of trust assets, they must show that the moving party did not present evidence on the four prongs that would authorize the injunction: (1) irreparable harm; (2) no adequate legal remedy; (3) clear right to relief and (4) public interest (citing Kountze v. Kountze, 20 So.3d 428 (Fla. 2d DCA 2009)).

Thursday, July 4, 2013

Grant v. Bessemer Trust Co. Inc.

Grant v. Bessemer Trust Co. of Fla., Inc. ex rel. Grant, 4D11-3614, 2013 WL 3335064 (Fla. Dist. Ct. App. July 3, 2013)

Here, the decedent's son, Thomas Grant, sought the construction of his father's will and other declaratory relief against Bessemer Trust, the personal representative of his father's estate.  He alleged that Bessemer had violated a codicil of his father's will, which he claimed required Bessemer to provide him with lifetime employment with the parent company of the corporate conglomerate founded by his father.  

The trial court found the language in the codicil to be ambiguous and thus held an evidentiary hearing on the meaning of the codicil.  

During his life, Thomas' father was concerned that his son would not have a job within his company once he was gone.  He had many discussions with various parties involved in his estate plan and his business about how to accomplish this.  He was advised to do so by an employment agreement rather than through his estate planning documents, yet nevertheless, the following language was included in a codicil to his will:

"Employment provision for Thomas Jeffrey Grant. It is my intention that [Thomas] continue to be employed in a suitable and reasonable position in connection with the operation and management of my television station group. Accordingly, I hereby direct my Personal Representatives to make the necessary arrangements with my Business Trustee to ensure such employment and to ensure that his annual salary shall be no less than $125,000 per year, appropriately adjusted for annual cost of living increases."

An employment agreement was never executed.

The Appellate Court found there was substantial evidence that the decedent did not intend for this language to be construed as a lifetime employment provision.  He executed other Codicils after this one, including one in which he appointed his business partner to run the business after his death.  The Court found the language above to be precatory in nature and also focused on the fact that a testamentary direction to guarantee his son's employment would be in violation of the fiduciary duties of the officers and directors of the corporation.  The Court focused on the great degree of power and discretion the estate plan gave to the decedent's personal representative and business trustee to operate and manage the companies, which included the right to discharge employees including beneficiaries and to sell the corporation.  The Court held that the clause required the personal representative to obtain employment for Thomas with the company, but did not compel them to retain him contrary to their fiduciary obligation to the corporation.