PBCBA BAR BULLETINS pbcba_bulletin_February 2019 - Page 16

PROBATE C o r n e r Verification Based On “To The Best Of My Knowledge And Belief” May Be No Verification At All (Part III of III) DAVID M. GARTEN The term “to the best of my knowledge and belief” is used in affidavits and court documents to indicate that statements being made are not knowingly false. Assuming your client signs a document under “knowledge and belief”, is your knowledge and belief of the facts and law imputed to your client? Can a fiduciary avoid liability by signing under “knowledge and belief”? IMPUTED/CONSTRUCTIVE KNOWLEDGE: Black’s Law Dictionary (10th Ed. 2014) defines “constructive knowledge” as “[k] nowledge that one using reasonable care or diligence should have, and therefore that is attributed by law to a given person.” “Imputed knowledge” means knowledge of one person attributed to another person. Knowledge may be imputed from one person to another based on their legal relationship. I hate imputed knowledge! You know every- thing that I know even if you don’t. The knowledge of an employee or officer in an organization may be imputed to the person making a representation or rendering an opinion on behalf of the organization. For example, in Specialized Tours, Inc. v. Hagen, 392 N.W.2d 520 (Minn. 1986), the sole shareholder of a corporation warranted “[t]hat to the best of Seller’s knowledge, the Corporation has complied with all applicable laws, rules, and regulations of the city, county, state, and federal governments,” the Supreme Court of Minnesota held that the warranty was not breached even though the corporation was in violation of Civil Aeronautics Board regulations regarding escrow accounts and the office manager of the corporation knew of this. The court reached this conclusion because the “best knowledge” warranty only extended to the shareholder’s personal knowledge, and although the knowledge of the agent may be imputed to the corporation, it may not be imputed to the individual shareholder. It is well established that the attorney- client relationship is an agent-principal relationship. Accordingly, information an attorney receives during the scope of his representation of a client will be imputed onto his client even if the client does not have actual knowledge of that information. See Gordon C. Brydger, P.A. v. Wolfe, 847 So. 2d 1074 (Fla. 4th DCA 2003), citing In re Brugh’s Estate, 306 So. 2d 599, 600 (Fla. 2d DCA 1975); Applefield, supra; State v. C.R.S., 584 So. 2d 172 (Fla. 3rd DCA 1991); State v. White, 794 So. 2d 682 (Fla. 2nd DCA 2001); Starling v. State, 799 So. 2d 425 (Fla. 5th DCA 2001); State v. Martinez, 790 So. 2d 520 (Fla. 2nd DCA 2001). But see Stueve Bros. Farms, LLC v. Berger Kahn, 166 Cal. Rptr. 3d 116, 222 Cal.App.4th 303 (Cal. App. 2013) (a client’s imputed knowledge may not apply where the standard is “knew or should have known”). FIDUCIARY LIABILITY: A fiduciary may not be able to absolve himself from liability based on reliance on a professional irrespective of whether the document at issue was signed on “knowledge and belief”. See Harrell v. Badger, 171 So. 3d 764 (Fla. 5th DCA 2015) (Reliance on counsel did not absolve a trustee from liability as his misconduct resulted from his failure to comply with clear and unambiguous statutory requirements); Laramore et al. v. Laramore et al., 64 So. 2d 662 (Fla. 1953) (A trustee may not surrender or delegate to the attorney all the functions and duties of the trust, or acquiesce in the complete management and control of the trust by the attorney without becoming liable for losses sustained thereby.) In Gurdschinsky v. Hartill, 815 P.2d 851 (Alaska 1991), the personal representative was surcharged for penalties and interest incurred by the estate for filing the estate PBCBA BAR BULLETIN 16 tax return late. On appeal, the personal representative defended on the basis that she reasonably relied on the advice of her accountant who, she claims, informed her that the returns had been timely filed. The Alaska Supreme Court, in affirming the judgment of surcharge against the PR, reasoned in part: “Gudschinsky makes several arguments to escape all or part of this surcharge. First, she argues that she reasonably relied on the advice of her accountant who, she claims, informed her that the returns had been timely filed. We have found no cases which absolve from liability a personal representative who took no steps to assure that the estate’s tax return had been filed on time…. In Gudschinsky’s case, she apparently left all tax matters to the accountant. Gudschinsky does not point to any evidence in the record which shows that she tried to find out when the taxes were due. She merely claims that she interpreted a conversation with her accountant to mean that the estate’s tax returns had been filed on time. We find that Gudschinsky’s mere passive acceptance of an interpretation of a conversation with her accountant does not relieve her of liability for penalties and interest.”