PROBATE CORNER
Beneficiary ’ s Standing to Sue Third Parties
DAVID M . GARTEN
Does a beneficiary of an estate / trust have standing to sue a third party ? Maybe .
TRUSTS
In St . Martin ' s Episcopal Church v . Prudential-Bache Secur ., Inc ., 613 So . 2d 108 ( Fla . 4th DCA 1993 ), plaintiff , as beneficiary of a trust , sued defendant securities dealer for negligence and improper trading of securities . The trial court granted defendant ’ s motion for summary judgment on the grounds that plaintiff lacked standing to sue defendant alone . The appellate court reversed holding that plaintiff had standing . The court reasoned that Fla . R . Civ . P . 1.210 ( a ), dealing with persons who have an interest to bring an action , was a rule of enlargement rather than limitation and that a beneficiary of a trust may sue someone other than the trustee while permitting the trustee to sue the beneficiary as well .
In Marshall-Shaw v . Ford , 755 So . 2d 162 ( Fla . 4th DCA 2000 ), a burglary occurred at Plaintiff ’ s residence . Plaintiff , as sole beneficiary of a trust , filed a lawsuit against defendant and others . Plaintiff ’ s attorney testified that the jewelry was owned by a trust in which he and plaintiff were co-trustees , with plaintiff being the sole beneficiary of the trust property . Defendant argued that since the trust owned the jewelry , the co-trustees were required to bring suit . The court rejected this argument . The court held that Fla . R . Civ . P . 1.210 authorizes plaintiff , as the sole beneficiary of the trust , to maintain a suit in her individual capacity , citing St . Martin ' s Episcopal Church .
In Kent v . Kent , 431 So . 2d 279 ( Fla . 5th DCA 1983 ), the trustee sold certain real property to a third party . Plaintiffs , as trust beneficiaries , sought to impose a constructive trust over the real property and filed a lis pendens . They alleged that this property was a major asset of the trusts and that it had been transferred by the trustee of the trusts to a third party for less than fair consideration with intent to defraud them . The trial court dismissed their lawsuit and discharged the lis pendens because plaintiffs lacked standing . The appellate court reversed . The court reasoned that the “ beneficiary of a trust may pursue trust funds which have been wrongfully diverted …. Appellants alleged that appellee trustee knowingly acted in concert with appellee buyers to defraud appellants , which stated grounds for equitable relief . These allegations also stated a sufficient basis for appellants ' civil conspiracy claim ”. Accordingly , the lis pendens was reinstated .
In Buerki v . Lochner , 570 So . 2d 1061 ( Fla . 2d DCA 1990 ), decedent established a revocable trust with two beneficiaries , Lochner and Robin . After decedent ' s death , Lochner improperly withdrew funds from the trust . In response , the trustee filed an action for declaratory relief seeking a decree that the funds were improperly transferred . Robin filed a crossclaim against Lochner seeking imposition of a constructive trust over the funds . The trial court dismissed the action with prejudice specifically finding that Robin lacked standing . The appellate court affirmed in part . The court held that the trustee , the legal title holder to the trust property , would be the real party in interest to a suit brought to determine the trust ' s assets . However , the court held that the trial judge abused his discretion in denying Robin the right to intervene because she had a direct pecuniary interest in the outcome of the action which the trustee has brought against Lochner .
ESTATES
In Traub v . Zlatkiss , 559 So . 2d 443 ( Fla . 5th DCA 1990 ), plaintiff , the estranged wife of the decedent , filed suit against the personal representative seeking to have included in her elective share certain assets transferred by the decedent to his sons shortly before his death . Plaintiff claimed her husband ' s transfers were taken in order to defraud her of the full value of the elective share . The court found that plaintiff lacked standing . The court held that “[ e ] ven in cases where transfers by decedents are subject to rescission upon classic grounds such as fraud , undue influence , mistake , or lack of mental capacity ( or assets subject to administration are held in a constructive trust for the decedent ), 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 . When a probate estate appears to have a cause of action that will increase the assets of the estate and therefore the beneficial interests of legatees , or the widow ' s statutory elective share , and the personal representative appears to have an interest that is adverse to , or which conflicts with , the interests of the estate , the law appears to provide a procedural remedy in Florida Rule of Probate and Guardianship 5.120 ( a )” for the appointment of an administrator ad litem .
In Brake v . Murphy , 687 So . 2d 842 ( Fla . 3d DCA 1996 ), plaintiffs , as beneficiaries of the decedent ’ s estate , sued to set aside as fraudulent two title transfers . The court rejected plaintiffs ' argument that they were the proper parties to bring this action . The court reasoned that the surcharge order inured to the estate ' s benefit . As such , pursuant to § 733.607 , F . S ., the personal representative is the proper party to bring an action on the estate ' s behalf .
( Continued on the next page )
PBCBA BAR BULLETIN 20