Florida Probate Attorney

A recent Palm Beach County case illustrates the problems that a Florida judgment creditor can have when trying to enforce a judgment in another jurisdiction.  In Corzo v. West, the judgment creditor had to jump through several hoops in response to a Georgia court’s refusal to recognize a 20+ year old judgment.  And it’s not over yet.

The Takeaway

Florida attorneys should know how to use an action on judgment to facilitate enforcement of a judgment when the statute of limitations is about to expire.   And it doesn’t hurt to style your pleadings correctly.

Summary of Holding

4DCA:  In spite of confusing terminology, a “renewed” judgment was an action on judgment and, as such, was a separate cause of action.  Although the action on judgment would have been barred by the statute of limitations, that defense was waived since it wasn’t pleaded.

The Story

• March 6, 1985 – Corzo obtains an amended final judgment against West, but is unable to enforce it (presumably because West didn’t want to be found).
• 2001 – Corzo finds out that West is living in Georgia.  It seeks to enforce the 1985 judgment, but the Georgia court holds that the judgment is barred by Georgia’s 10-year statute of limitations.  The court holds that the statute of limitations began to run in 1985 because that is “the date the judgment [was] entered or last renewed in the rendering state.”
• August 3, 2006 – Picking up on the “last renewed” language in the Georgia decisions, Corzo files a “Complaint to Renew Judgment” in Florida.  West is personally served with notice of this complaint.  The Circuit Court (15^th Judicial District) enters a default final judgment stating that the 1985 judgment is “renewed with all accrued post judgment interest.”
• Early 2009 – The Georgia court will not allow the Florida court’s “renewed” judgment to circumvent the 10-year statute of limitations.  The court reasons that to hold otherwise would give Florida judgments a longer shelf life than Georgia judgments.
  • Note: Undergirding the Georgia opinion is the court’s belief that the 2006 judgment was “a renewal of the 1985 judgment and not a new action.”
• March 2009
  • Seeking to get around the Georgia court’s decision that the 2006 judgment was not a new cause of action (and was thus barred by the statute of limitations), Corzo files a new case in Florida seeking an “action on judgment.”
  • West responds that the action on judgment is also time-barred since the statute of limitations on the original judgment expired in 2005.
  • Corzo moves for summary judgment.  The Circuit Court denies the motion and dismisses the complaint with prejudice, and enters a final judgment in favor of West. Corzo appeals.

The Law

• An action on judgment is a common law cause of action that is separate from the original judgment on which it is based. Its purpose is to allow a new, independent judgment to help enforce the original judgment. If the statute of limitations is about to run on a judgment, a judgment creditor can start the clock over by bringing an action on the original judgment to obtain a new judgment.
• When defending an action on judgment, the defendant can’t raise defenses that could have been asserted in the original action. The defendant can only raise defenses that have arisen since the time of the original judgment (e.g., payment, release, accord and satisfaction, statute of limitations).

The Analysis

• The 2006 judgment was not a renewal of the 1985 judgment.  It was an action on judgment and, as such, was a new and independent judgment.  The use of terms like “renew” and “renewed” in the Circuit Court’s 2006 opinion caused confusion, but those terms have been used in other Florida cases to refer to an action on judgment.
• Although the 20-year statute of limitations on an action on a judgment had expired by 2006, that defense is waived unless pleaded.  Since West didn’t raise that defense in 2006, he “could not attempt to resurrect that defense in this current and separate action.”

The Holding

Reversed. Since the 2006 judgment was a new cause of action and since West waived the defense of statute of limitations, the Circuit Court’s dismissal was improper.

One of the most frequent questions I get from clients has to do with Florida intestate law.  Clients want to know what happens when someone has died without a will.

Intestate succession can vary from state to state, but usually the decedent’s assets will pass to his or her spouse and children in various proportions.  Florida intestate laws are no different.  The Florida Probate Code divides a deceased person’s estate between his or her spouse and children.  But the question of who gets what depends on the decedent’s family situation.

If the Decedent Was Married and Had No Descendants

This is the easy one:  If the deceased person was married but has no living descendants (children, grandchildren, etc.), the spouse gets everything.

If the Decedent Was Married and Had Living Descendants

If the deceased person was married and had living descendants, the spouse gets one-half of the estate and the descendants will share the balance of the estate equally.  If all of the descendants are all the spouse’s children (as opposed to being children from another marriage, for example), the spouse gets an additional $60,000 off the top, before the estate is divided.

For example, suppose that John dies leaving a surviving spouse (Mary) and two children (Jack and Jill).  He had $300,000.00 in assets.  If Jack and Jill are not Mary’s children, Mary would get $150,000 in assets and Jack and Jill would get $75,000 each.  But if Mary is the mother of Jack and Jill, she would get $180,000 ($60,000 off the top plus $120,000 as her half of the $240,000 balance) and Jack and Jill would each get $60,000.

Suppose that Jack is Mary’s son but Jill is a child from a prior marriage.  Does Mary get $60,000 off the top?  No.  In order for Mary to get the $60,000, Mary must be the mother of all of John’s descendants.  If even one of John’s descendants is not also Mary’s descendant, Mary’s share is limited to one-half of the estate.

Update: This result was changed by legislative amendment effective October 2011. See Spouses Win, Children Lose Under New Florida Estate Law.

If the Decedent Was Unmarried and Had Living Descendants

If the decedent had no spouse but had living descendants, the descendants get everything on a per stirpes basis.  This means that the estate is divided at each generation, with children of any deceased parent to take the share their parent would have taken.

Suppose that John was unmarried at the time of his death.  John had three sons, Curly, Larry, and Moe. Moe died before John, leaving two sons, Little Moe and Shemp.  John’s estate would be divided in equal thirds at the first generational level (his children).  Curly and Larry would each get one third.  Since Moe predeceased John, his one third would pass to Little Moe and Shemp in equal halves, giving them one-sixth each.

If the Decedent Was Unmarried and Had No Descendants

If the decedent was unmarried and had no descendants, his estate would pass to more remote family members in order of priority:

• First, his estate would pass to his father and mother equally.  If only one of them survive the decedent, that parent would get everything.
• Second, if the decedent’s father and mother are dead, his estate would pass to his brothers, sisters, and descendants of deceased brothers and sisters on a per stirpes basis.
• Third, if there is no surviving father, mother, siblings, or descendants of siblings, the estate is split equally between the decedent’s mother’s relatives and the decedent’s father’s relatives.
  • The grandmother and grandfather (or the survivor of them) on each side would have first rights.
  • If the grandmother and grandfather are deceased, the estate would go to uncles, aunts, and descendants of deceased uncles and aunts.
  • If there are no surviving relatives on the mother’s side of the family, everything will go to the father’s side of the family, and vice versa.

So there’s the nuts and bolts of Florida intestate distribution.  Check our article on Florida Intestacy and Intestate Succession for more information.

Bank Atlantic v. Glatzer, 36 Fla. L. Weekly (Fla. 3d DCA May 18, 2011)

The Takeaway

A Florida personal representative’s right to administer the assets of the decedent’s estate does not extend to the assets of a corporation owned by the decedent.

The Story

Dr. Richard Glatzer owned 100 percent of the stock in a professional association that managed his medical practice.  The professional association had a deposit account with Bank Atlantic and a loan with Bank Atlantic that was secured by his deposit account.  On default, the promissory note gave the bank a right of setoff to use the funds in the deposit account to pay the loan:

RIGHT OF SETOFF.  To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender (whether checking, savings, or some other account).  . . .  Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts and, at Lender’s option, to administratively freeze all such accounts to allow  Lender to protect Lender’s charge and setoff rights provided in this paragraph.

Dr. Glatzer’s death was an event of default under the promissory note.

When Dr. Glatzer died, his personal representative obtained a non-final order from the Miami-Dade Circuit Court directing Bank Atlantic to transfer the funds from the professional association’s account to the estate banking account.  This prevented Bank Atlantic from exercising its right of setoff under the promissory note. Bank Atlantic appealed.

The Opinion

On review, the 3d DCA noted that there was nothing to support veil piercing or any other theory that would allow the personal representative to disregard the corporation and treat the assets of the corporation as though they were owned outright by the doctor.  While the stock of the professional association was an asset of the estate, the funds of the corporation a step removed.  The estate did not have the authority to ignore the corporate existence of the corporation, including the corporation’s debt to Bank Atlantic.

The case was remanded to the Miami-Dade County Circuit Court with directions to return the funds that had been transferred to the estate account back to Bank Atlantic.

Undue influence is a common ground for will contests in Florida probate matters.  In an undue influence case, the person contesting the will argues that it should be set aside since the decedent was unduly influenced by a substantial beneficiary. Undue influence can apply to wills or to trust-based estate plans that incorporate both a will and a trust.

A Florida Last Will and Testament will only be set aside for undue influence if the influence amounts to “over persuasion, duress, force, coercion, or artful or fraudulent contrivances to such an extent that there is a destruction of free agency and willpower of the testator.”  In other words, the influence must be so strong that it overpowers the willpower of the person making the will.

To prove undue influence, the person challenging the will must prove that alleged undue influencer:

1. is a substantial beneficiary of the estate plan;
2. occupied a “confidential relationship” with the testator; and
3. was active in procuring the will or trust.

Florida probate law defines a confidential relationship as one where there is a relation of trust and confidence between two people.  Confidential relationships can be both formal and informal.  Common examples of confidential relationships include guardian/ward, trustee/beneficiary, and attorney/client. A confidential relationship may also be found among family members.

The last prong (active procurement) can be difficult to prove since it usually depends on circumstantial evidence.  The most important case on this issue is In re Estate of Carpenter, which identified seven factors help evaluate the issue of active procurement:

1. Presence of the beneficiary at the execution of the will;
2. Presence of the beneficiary on those occasions when the testator expressed a desire to make a will;
3. Recommendation by the beneficiary of an attorney to draw the will;
4. Knowledge of the contents of the will by the beneficiary prior to execution;
5. Giving of instructions on preparation of the will by the beneficiary to the attorney drawing the will;
6. Securing of witnesses to the will by the beneficiary; and
7. Safekeeping of the will by the beneficiary subsequent to execution.

These seven factors were set out as guidelines and were not intended to be exclusive.  At least three other indications of active procurement have been identified by the courts:

1. Isolating the testator and disparaging family members;
2. Mental inequality between the decedent and the beneficiary; and
3. The reasonableness of the will or trust provisions.

In 2002, the Florida legislature amended Florida probate law to shift the burden of proof in undue influence cases.  In all will contests, the person seeking to probate the will must demonstrate that it was executed and witnesses in accordance with Florida law.  Once that is done, the person contesting the will must prove the grounds for setting aside the will.  The 2002 amendment clarified that the presumption of undue influence, once it arises, shifts the burden of proof.

Western Hay v. Lauren Financial, 36 Fla. L. Weekly D953a (May 4, 2011) – The statute of limitations on Florida fraudulent transfers begins to run when the transfer itself could be known, not when the fraudulent nature of the transfer could be known.

Florida’s fraudulent transfer statute requires the cause of action to be brought “within four years” of the date the transfer is made or “if later, within one year after the transfer” was or reasonably could have been discovered.

The 3^rd DCA upheld the Miami-Date County Circuit Court’s decision to construe this language literally.  The issue is not whether the fraudulent nature of the transfer could have been discovered, but whether the transfer itself could reasonably have been discovered.

The creditor argued that, while it knew of the transfer, it could only speculate as to the fraudulent nature of the transfer.  The fraudulent nature of the transfer was not confirmed until a deposition that occurred more than one year after the actual transfer was known.

The 3^rd DCA reasoned that the legislature could have chose to use the discovery of the fraudulent nature of the transfer as the triggering event for the statute of limitations but had not done so.  Giving the statute its plain meaning, the court held that the actual transfer is the trigger date for statute of limitations purposes.

The dissent argued that since only fraudulent transfers were actionable, the fraudulent nature of the transfer must have been reasonably knowable before the statute of limitations began to run:

“Because a [fraudulent transfer claim] requires that a transfer be considered fraudulent to a present creditor only if the debtor made the transfer with the actual intent to hinder, delay, or defraud any creditor of the debtor, the one-years savings provision … cannot be read to preclude a cause of action thereunder until all of the elements can be alleged as true.”

For the dissent, the issue what not whether there was a transfer, but whether it was a fraudulent transfer.  And other jurisdictions that have adopted the Florida Uniform Fraudulent Transfer Act “uniformly” held that the statute of limitations did not begin until the fraudulent nature of the transfer could be ascertained.