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Putting conventional probate concepts to the test: Parker v. Parker and the decedent's estate as an indispensable party.

The recent decision by the Fourth District Court of Appeal in Parker v. Parker, 185 So. 3d 616 (Fla. 4th DCA 2016), highlights the uncertainty in Florida law over the proper party to bring a cause of action for the return of assets transferred by the decedent prior to the decedent's death or inter vivos transfers. The Parker court follows a long line of cases that have allowed the decedent's children and family members, individually, to bring claims to overturn pre-death transfers by the decedent. However, the Parker decision runs contrary to many cases with similar facts and causes of action that have relied on F.S. [section]733.607 and [section]733.608 (2016) to hold that the personal representative is the proper party to retrieve assets or pursue claims that would benefit the estate.

The Parker Facts and Opinion

The Parker case involved real property owned by the decedent, Joe Parker, Sr. After being advised that he had a terminal illness, the decedent and his wife, Joan, transferred seven pieces of real property to one of their sons, Sean Parker, and Sean's recently formed business, Parkerquest, LLC. (1) The decedent had one other son with his wife Joan, Kevin Parker. (2) Seven months after the decedent's death, the decedent's children from prior relationships sued their half-brothers, Sean and Kevin, their stepmother Joan, and Parkerquest, LLC. (3) The plaintiffs alleged tortious interference with inheritance, undue influence, unjust enrichment, accounting, constructive trust, and replevin. They ultimately sought to set aside the warranty deeds conveying real properties to Sean and Parkerquest, LLC. (4)

The defendants filed a motion to dismiss for failure to join the estate as a party to the action and alleged that, pursuant to [section]733.607, the estate was an indispensable party and the plaintiffs lacked standing. (5) The trial court judge agreed and granted the defendant's motion to dismiss with prejudice for failure to join indispensable parties. (6) Between the trial court's ruling and the appeal, the plaintiffs filed pleadings to open an estate, but a personal representative had not been appointed. (7)

The Fourth District, relying on established caselaw and the Florida Probate Code, reversed the trial court's decision. The court first looked to [section]733.607, which states, in pertinent part, that "every personal representative has a right to, and shall take possession or control of, the decedent's property...." Because the properties at issue had been transferred prior to the decedent's death, they were not part of the decedent's assets and as a result, the court did not apply [section]733.607. (8) The court then cited several Florida cases that have "repeatedly permitted a decedent's children to pursue claims to set aside inter vivos conveyances based upon allegations of undue influence without requiring that the decedent's estate be joined as a party to the suit." (9) The court noted that the defendants had provided no authority to support their position that [section]733.607 makes the estate an indispensable party to an action to set aside inter vivos conveyances. (10) Ultimately, the Fourth District concluded that the decedent's estate was not so essential to the suit that a final decision could not be rendered without joining the estate as a party. (11)

The Parker Authority

A closer look at the cases that the Fourth District relied on to make its decision provides some insight into the Parker court's holding. In Parker, the Fourth District referenced eight different cases (12) to support its position that Florida courts repeatedly allow parties other than the personal representative to bring these causes of action. For example, in Pratt v. Carns, 80 Fla. 243 (Fla. 1920), the decedent's sons and heirs brought a claim against their sister to set aside a deed based on undue influence. Similarly, in Rowland v. McCall, 118 So. 2d 846 (Fla. 2d DCA 1960), the decedent's sister brought a claim against her niece to void a deed executed during the decedent's lifetime based on fraud, duress, or undue influence.

While the cases cited by Parker did permit various family members to bring causes of action for the return of assets transferred during the decedent's lifetime based on undue influence, lack of capacity, tortious interference, (13) or replevin, none of the eight cases specifically addressed standing or the indispensable parties to the causes of action. The Parker court appeared to rely on the fact that the named plaintiffs in these prior cases were parties other than the personal representative. None of the cases cited by the Fourth District in Parker decision actually addressed the indispensable nature of the estate to the lawsuit.

Further, a personal representative's responsibility to marshal and preserve estate assets under [section]733.607 was not addressed by any of the decisions relied on by the Fourth District in Parker. Instead, those cases all focused on the merits of the cause of action and whether the parties had sufficiently proven their cases. The Parker court is the first Florida decision to hold that a personal representative is not an indispensable party to an action for the return of assets transferred by the decedent during his or her lifetime.

Florida Courts' Interpretations of F.S. [section]733.607

The Fourth District, in Parker, made the threshold determination that since the property was transferred by the decedent during his lifetime and was not in the decedent's name at the moment of death, the property was not the "decedent's property" under [section]733.607. The Parker court ended its application of the statute with that determination.

Several other Florida courts have interpreted [section]733.607. These courts concluded that a personal representative is the party best suited to bring an action for the return of assets transferred during the decedent's lifetime. Section 733.607(1) states that "the personal representative shall take all steps reasonably necessary for the management, protection, and preservation of the estate until distribution and may maintain an action to recover possession of property or to determine the title to it." For example, All Children's Hosp., Inc. v. Owens, 754 So. 2d 802 (Fla. 2d DCA 2000), and Baumann v. Dabrota, 1992 WL 63019 (M.D. Fla. 1992), applied [section]733.607 to inter vivos transfers when the property was no longer in the decedent's name at the moment of death--akin to the Parker case--and went on to hold that the task of retrieving the property for the benefit of the estate should be left to the personal representative.

Although the plain language of [section]733.607 does not directly address whether the estate is an indispensable party to actions to recover estate assets, it provides generally that a personal representative has the right to take control of the decedent's property. (14) And while [section]733.607 allows a personal representative to "maintain an action to recover possession of property or to determine title to it," it is neither mandatory that the personal representative act, nor the exclusive right of the personal representative, especially when a personal representative has not been appointed.

Divergent Approaches of Florida District and Federal Courts from Parker

Prior to Parker, a line of Florida cases held that the personal representative is the proper party to recover the decedent's assets on behalf of the estate. The courts relied on [section]733.607 and the personal representative's duty to take control of the decedent's property and his or her right to pursue valuable claims of the estate. These decisions were from multiple Florida district courts of appeal and two federal courts interpreting Florida law. There are currently no Florida Supreme Court cases addressing this issue.

In All Children's Hosp., Inc., the Second District Court of Appeal reviewed the inter vivos transfer of over $1.7 million to the decedent's caretaker, Augusta Owens. (15) Eight of the 28 charitable beneficiaries under the decedent's will sued Owens and alleged undue influence, tortious interference with an expectancy, and requested a constructive trust over the assets Owens received under the will. (16) Owens challenged the charitable beneficiaries' standing to bring these claims. (17) The Second District agreed and held that it is the general duty of the personal representative to settle and distribute the estate and, pursuant to [section]733.607, the personal representative has the specific statutory authority to recover estate assets and determine title to them. (18) The Second District held that, when the probate estate is open, "the task of retrieving property for the benefit of the [e]state and all of its residual beneficiaries should be left to the personal representative or administrator ad litem and not delegated to a small group of beneficiaries." (19) The court added that they saw "little value in allowing the residual beneficiaries to engage in personal lawsuits to place constructive trusts upon assets that otherwise would be gathered by the personal representative and included within the inventory of the estate." (20)

The All Children's Hosp., Inc., court focused on the fact that only some of the residuary beneficiaries were pursuing claims on behalf of the estate. The Second District was concerned with duplicating efforts of an administrator ad litem during pendency of the estate, citing to F.S. [section]731.303(2)(b)(3). The Second District took issue with allowing individual beneficiaries to obtain personal monetary judgments that were likely to compete with the personal representative's efforts to settle and distribute the estate. Finally, the Second District reasoned that "the [c]harities' right to eventually receive a share of any residue left in the estate does not give them the right to obtain a constructive trust for their own benefit over property they claim should be within the estate." (21)

Similarly, in Traub v. Zlatkiss, 559 So. 2d 443 (Fla. 5th DCA 1990), a widow sued the business partner of the decedent to set aside inter vivos transfers based on the decedent's purported attempt to diminish her elective share. The widow sought a constructive trust over property and a return of assets to the decedent's estate. (22) The Fifth District Court of Appeal noted that the wife had a "procedural impediment" to her cause of action and explained that rescission and constructive trust actions are to be brought by the personal representative of the estate and cannot be directly asserted by the widow. (23) Specifically, the Fifth District explained, "in cases where transfers by decedents are subject to rescission upon classic grounds such as fraud, undue influence, mistake, or lack of mental capacity, the cause of action for rescission, or to establish a constructive trust, is in the personal representative of the decedent's estate and cannot be directly asserted by the widow." (24) The Traub court went further to hold that Fla. Prob. R. 5.120(a) provides a procedural remedy when a personal representative may have a conflict in pursuing a cause of action that will increase the assets of the estate--the court may appoint an administrator ad litem. (25)

Several other Florida cases have come to the same conclusion: The personal representative is the party best suited to bring claims for the return of assets transferred during the decedent's lifetime. (26) Federal courts applying Florida law have also addressed the issue and have gone beyond requiring the estate to be a party to the lawsuit. These courts held that an heir, beneficiary, or surviving spouse, individually, does not have standing to bring such actions for the return of estate assets. (27) The Middle District of Florida, in Kastner v. Helm, 425 F. Supp. 771 (M.D. Fla. 1977), saw the decedent's individual heirs at law bring an action against the son of the decedent who was also the personal representative of the estate. The heirs claimed that a $280,000 inter vivos gift by the decedent to his son should be set aside due to incapacity and undue influence. (28) The court relied on [section]733.308 and Fla. Prob. R. 5.120 to hold that the individual heirs at law of the decedent were not the proper party plaintiffs in an action to set aside an inter vivos gift by decedent. (29) The action was required to be brought by an administrator ad litem where one of the donees was the decedent's personal representative. (30) Notably, the Middle District stated: There is no question that interests affecting the assets of the decedent's estate are involved in this case. Under Florida law, a prior confidential relationship between a donor and donee raises a prima facie question about the validity of an inter vivos gift because of undue influence. If the plaintiff should prevail in having the inter vivos transfer of money from the decedent to the defendant set aside as void, those funds would become assets of the estate, subject to the dispositive provisions of his will. Obviously, then, there is a compelling necessity that the interests of the decedent's estate be represented concerning the money at stake in the controversy. When the decedent's estate and the interests of the defendant are "diametrically adverse" Florida law provides for and contemplates the appointment of an administrator ad litem and that as a result, plaintiff is not the proper party with standing to present these claims. (31)

The Kastner decision suggests that when multiple interests are involved and those interests are wholly adverse to that of the estate, the more likely the court will be to require an administrator ad litem's involvement.

Off the Beaten Path: Status of Florida Law

In light of Parker, there is currently tension in Florida law relating to when a personal representative is necessary to recover the decedent's assets. Florida courts, prior to Parker, have clearly permitted a decedent's heirs to pursue claims to set aside inter vivos conveyances of the decedent, without requiring that the decedent's estate be joined as a party to the suit. The indispensable nature of the estate to these proceedings was not determinative in any of the cases relied upon by the Parker court to establish that the estate was not an indispensable party to the lawsuit.

On the other hand, a line of several other, somewhat more recent, Florida cases held that the task of recovering property for the benefit of the estate should be left to the personal representative (or administrator ad litem) and not delegated to individual beneficiaries. A few federal cases, interpreting Florida law, have held that the personal representative (or administrator ad litem) is a necessary party to recover the decedent's property and, have gone so far as to state that the individual heirs do not have standing to bring such actions on behalf of the estate.

Although [section]733.607 clearly authorizes the personal representative to bring these claims, Parker interprets [section]733.607 to hold that causes of action to set aside inter vivos transfers of the decedent are not exclusively the personal representative's actions, while also setting a precedent that the estate is not an indispensable party to the proceedings. While the law in this area appears to be particularly fact sensitive, the Parker decision is arguably in conflict with other decisions, which have held that, when an estate is open, the personal representative--as opposed to the individual beneficiaries --is the proper party to bring claims to recover the decedent's property. Further, Parker appears to clearly conflict with the three federal cases that interpret Florida law to hold the personal representative is a necessary party to recover the decedent's property and individual heirs lack standing to bring these claims.

Practitioners determining whether to open an estate and seek the appointment of a personal representative to pursue claims under a Parkerlike scenario have other statutory provisions to consider as well. F.S. [section]733.309 (2016) states, in relevant part, "any person taking, converting, or intermeddling with the property of a decedent shall be liable to the personal representative or curator, when appointed, for the value of the property so taken or converted and for all damages to the estate caused by the wrongful action." Although not referenced by the Parker court--and arguably difficult to reconcile with the holding in Parker--practitioners should be aware of the terms of [section]733.309 and recognize how it, along with [section]733.607, provide the personal representative with the authority to recover assets for the benefit of the estate.

Guidance from the Current Law

Parker and the cases the Fourth District relied on in Parker can be distinguished from the line of cases requiring the involvement of the decedent's estate on multiple grounds. Parker, along with many of these cases, did not have an open estate as they lacked assets subject to administration. There was no personal representative appointed and arguably, no adequate remedy in probate. Although there appears to be tension in the law with respect to when a personal representative is required to recover potential estate assets, the following are some guidelines gathered from the caselaw:

1) Is there an estate open and a personal representative appointed? In all of the district court's opinions requiring the personal representative to bring the claims, there was an estate and an appointed personal representative. In Parker, and other cases relied on by Parker, there were no assets subject to probate upon the decedent's passing and no personal representatives appointed.

2) Was the alleged wrongful transfer an inter vivos transaction or were the damages post-mortem in nature? Most often in cases in which the alleged wrongful transfers or damage took place after the decedent's death, a personal representative was required to bring the claims. (32)

3) What is the cause of action or relief sought? Some courts have held that a personal representative was required to bring the claim because the remedy sought or the cause of action (examples include rescission, constructive trust, and money judgments) "belonged to the estate." (33) For a claim of tortious interference, one court required that all remedies available in a probate proceeding be exhausted before pursuing a civil claim for tortious interference. (34)

4) Did the parties put the indispensable nature of the estate at issue? None of the cases that Parker relied on addressed the indispensable nature of the personal representative or the necessity of the estate to the action. Individual parties, therefore, were allowed to bring claims to overturn pre-death transfers by a decedent. If the indispensable nature of the estate was not raised by the parties, the courts may not have had any reason to address the topic.

5) Finally, despite the holding in Parker, the trend seems to be toward requiring a personal representative to bring claims for the return of assets transferred during the decedent's lifetime. Many of the cases relied on by the Parker court were older and the newer cases, as cited in this article, trend toward requiring a personal representative. This movement may coincide with the repeal of F.S. [section]733.02 (1973), which specifically allowed "heirs or devisees of the decedent, themselves or jointly with the personal representative," to bring and maintain actions or suits for the possession or recovery of real property of the estate against everyone except the personal representative. (35) The caselaw Parker relied on as authority does not specifically address this statute, so it is difficult to tell whether it was relevant to the prior courts.

Conclusion

Although [section]733.607 clearly authorizes the personal representative to bring claims for the return of inter vivos transfers, there is a divide in Florida caselaw relating to when the estate is an indispensable party to the action. Florida cases provide insight into the various situations in which a personal representative may be required to bring a case to set aside inter vivos transfers, but for now, after the Parker decision, the law is in flux, and there is no bright-line rule regarding the nature of the estate as an indispensable party.

(1) Parker v. Parker, 185 So. 3d 616, 617 (Fla. 4th DCA 2016).

(2) Id. at 618.

(3) Id.

(4) Id.

(5) Id.

(6) Id.

(7) Pursuant to a review of the 17th Judicial Circuit, Broward County, FL, Clerk of Court's website, Case No.: PRC130004681, the Estate of Joe R. Parker, no letters of administration were issued as of the writing of this article.

(8) Parker, 185 So. 3d at 619.

(9) Id.

(10) Id.

(11) Id.

(12) Pratt v. Cams, 80 Fla. 243 (Fla. 1920); Mulato v. Mulato, 705 So. 2d 57 (Fla. 4th DCA 1997); Dunn v. White, 500 So. 2d 565 (Fia. 2d DCA 1986); Ornei v. Simpson, 286 So. 2d 2 (Fla. 4th DCA 1980); Barger v. Barger, 183 So. 2d 253 (Fla. 2d DCA 1966); Bryan v. Bryant, 379 So. 2d 382 (Fla. 1st DCA 1979); Wrobbel v. Walda, 217 So. 2d 340 (Fla. 4th DCA 1968); Rowland v. McCall, 118 So. 2d 846 (Fia. 2d DCA 1960).

(13) At least one Florida court has held that a claim for tortious interference with an inheritance can only be prosecuted after all remedies available in a probate proceeding have been exhausted. Neumann v. Wordock, 873 So. 2d 502 (Fia. 2d DCA 2004).

(14) FLA. STAT. [section]733.607 (2016).

(15) All Children's Hosp., Inc. v. Owens, 754 So. 2d 802 (Fia. 2d DCA 2000).

(16) Id. at 804.

(17) Id.

(18) Id. at 806.

(19) Id. at 803.

(20) Id. at 806.

(21) Id.

(22) Traub v. Zlatkiss, 559 So. 2d 443, 445 (Fla. 5th DCA 1990).

(23) Id. at 447.

(24) Id.

(25) Id.

(26) See Markowitz v. Merson, 869 So. 2d 728 (Fla. 4th DCA 2004) (holding it is the duty of the personal representative to gather estate assets by demanding their return); Estate of Barsanti v. Cypen, 773 So. 2d 1206 (Fla. 3d DCA 2000) (holding the personal representative has the clear legal right under Florida's Probate Code to take all steps necessary for the management, protection, and preservation of the estate); Brake v. Murphy, 687 So. 2d 842 (Fla. 3d DCA 1996) (holding the personal representative is the proper party to bring an action on the estate's behalf); Bookman v. Davidson, 136 So. 3d 1276 (Fla. 1st DCA 2014) (holding the Probate Code grants to the personal representative the power to prosecute lawsuits for the protection of the estate and the benefit of interested parties and that a personal representative of an estate is required by law to pursue assets and claims of the estate, with value).

(27) See Baumann v. Dabrota, 1992 WL 63019 (M.D. Fla. 1992) (holding the personal representative is a necessary party to recover the decedent's property) (citing Traub v. Zlatkiss for the proposition that an heir, beneficiary, or surviving spouse, individually, does not have standing to bring such an action for return of estate assets); Tennyson v. ASCAP, 477 Fed. App'x 608 (11th Cir. 2012) (Under Florida law, deceased songwriter's daughter, who concededly was not personal representative of songwriter's estate, was not the real party in interest to assert claims against music industry defendants related to father's songs. Relying on [section]733.607(1) and Brake v. Murphy, the daughter lacked capacity to bring lawsuit on behalf of estate and that the only party who has the capacity to sue on behalf of an estate is the duly appointed legal representative of the estate.).

(28) Kastner v. Helm, 425 F. Supp. 771, 772 (M.D. Fla. 1977).

(29) Id. at 773.

(30) Id.

(31) Id.

(32) See Brake v. Murphy, 687 So. 2d 842 (Fla. 3d DCA 1996); Tennyson v. ASCAP, 477 Fed. App'x 608 (11th Cir. 2012); Bookman v. Davidson, 136 So. 3d 1276 (Fla. 1st DCA 2014) (reviewing damages to the estate after the decedent's death).

(33) See Traub v. Zlatkiss, 559 So. 2d 443, 445 (Fla. 5th DCA 1990); All Children's Hosp., Inc. v. Owens, 754 So. 2d 802 (Fla. 2d DCA 2000); Tennyson v. ASCAP, All Fed. App'x 608 (11th Cir. 2012); Brake v. Murphy, 687 So. 2d 842 (Fla. 3d DCA 1996) (holding certain causes of action belong to the estate).

(34) Neumann, 873 So. 2d at 502.

(35) FLA. STAT. [section]733.02, repealed by FLA. LAWS 1974, Ch. 74-106, [section]3.

Cady L. Huss is a fiduciary consultant with the St. Petersburg office of Raymond James Trust, N.A. She focuses on estate and trust acceptance and administration through compliance with the grantor's governing documents and fiduciaiy standards across the country.

Elizabeth M. Hughes is senior counsel at Greenspoon Marder in Miami. She earned her J.D. from the University of Miami. Hughes focuses her practice on probate, trust, and guardianship litigation.

This column is submitted on behalf of the Real Property, Probate and Trust Law Section, Deborah Packer Goodall, chair, and Doug Christy and Jeff Goethe, editors.
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Title Annotation:Florida
Author:Huss, Cady L.; Hughes, Elizabeth M.
Publication:Florida Bar Journal
Date:Mar 1, 2017
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