BREAKING LEGAL NEWS !! NEW FLORIDA LAW—Creditor’s Claims & Florida Estates : appellate court’s groundbreaking ruling: will Florida Supreme Court step in?
Just days ago, Florida’s 4th District Court of Appeals in West Palm Beach, Florida issued an important legal opinion regarding creditor’s claims and Florida estates. The opinion was an appeal of a trial court order from Judge Grossman in Broward County’s probate court in Ft. Lauderdale.
The Florida appellate court ruled that if a creditor is known or reasonably ascertainable, and if the creditor did not receive a notice to creditors from the estate, the time frame for the creditor to file a statement of claim in the Florida estate does not run. The known or reasonably ascertainable creditor who did not receive a notice to creditors then has two years after the date of death of the Florida decedent to file a statement of claim. This case parts way in a big way with Florida’s 2nd District Court of Appeals and their Morganthau case, which is often cited by probate lawyers who deal with creditors in Florida estates.
This new ruling is based, in part, upon the due process and fairness argument that if there is a creditor of an estate that an estate knows about or should know about, then the estate should give that creditor, personally, a notice to creditors. Put another way, if an estate in Florida knows that someone will want to make a claim against the estate, the estate should mail to the creditor an official, actual notice to that creditor. The notice will tell the creditor about the estate and how to file a statement of claim (the probate document which gives notice to the estate that the creditor is making a claim for money.) Put another way: did the dead guy owe someone money? Then that someone is a creditor and is entitled to actual notice : send him or her a notice to creditors. That known or reasonably ascertainable creditor is due, in fairness, actual notice and should not have to learn about the death of the debtor in the newspaper (so called publication of notice to creditors).
In this Broward case, the curator of the estate of a surviving spouse (Florida widow) was the creditor and appeals an order striking the widow’s statement of claim. The appellate court reversed the Broward County probate court because the Broward County probate court did not make findings of fact that the creditor was not a known or reasonably ascertainable creditor. Here’s what happened.
A Florida resident died in 2007, and a Florida estate was “opened up.” In other words, the probate administration began. A notice to creditors was published in a local newspaper. A notice of creditors is a notice in the probate case that puts potential and known creditors of the deceased Florida resident on notice that there is an estate proceeding and that any creditor has a very short time frame to make a claim in the estate. A notice to estate creditors must be published twice in a newspaper and the personal representative of an estate must personally serve a copy of the notice to creditors on all creditors of the estate who are known, or who are reasonably ascertainable.
The following calendar year, a guardian ad litem was appointed for the surviving spouse (Florida widow) of the deceased Florida resident because the widow lacked capacity. The estate did not serve the widow or the guardian ad litem with a notice to creditors.
Less than two years after the date of death of the Florida decedent, the widow files a statement of claim in the Florida estate. The widow claims that the estate owes her money from a marital agreement between the widow and the deceased spouse (Florida resident) from 2002. The widow later dies and a curator of her estate is appointed. This curator for the widow’s estate then participates in the other estate — the estate of the first spouse to die, the Florida resident. The curator of the widow’s estate is trying to recover money supposedly owed the widow from the first spouse to die.
Five years after the first spouse’s death, the curator for the widow’s estate files a petition in the Broward County probate court, asking for a determination that the widow’s statement of claim was timely, or for a ruling that the curator may have more time to file a statement of claim for the widow. The estate of the first spouse to die opposed the widow’s petition and argued that the widow was too late and also that the widow was not a known or reasonably ascertainable creditor.
In Florida, claims to an estate by a creditor, so called statements of claims by creditors, must be filed no later than two years from the date of death of a Florida resident. But often the time frame is much shorter: it’s within 3 months after the estate publishes in the newspaper a notice to creditors. The widow’s petition was denied by the Broward County probate judge. The judge ruled that the widow was time barred or that she filed her claim too late: she was outside the probate statute of limitations. The appellate court said that for the probate court to make that ruling, it had to first determine if the widow was a known or reasonably ascertainable creditor. Reversed.
For a court to make a finding of fact or a ruling that someone is, or is not, a known or reasonably ascertainable creditor, you need evidence. You need a hearing. It’s a mini probate trial where witnesses should be called, documents introduced and evidence presented. That evidently did not happen in this Broward probate.
The probate court issued an order striking the statement of claim as untimely, citing Morgenthau v. Estate of Andzel, 26 So. 3d 628 (Fla. 1st DCA 2009). The 4th District Court of Appeals came down hard and fast : if a creditor is known or is reasonably ascertainable, the time period, the limitations period, for a creditor to file a statement of claim does not begin to run. And for a probate court to strike a statement of claim in situations like this, the probate court must make a finding that the creditor was not known or reasonably ascertainable. Back to the Broward probate court so the probate court can have a hearing and make a ruling on whether the widow was a known or reasonably ascertainable creditor.
This 4th District Court of Appeals case conflicts with the 1st and 2nd Districts in Florida. Will the Florida Supreme Court step in? Email appellate attorney and probate litigator allison@pankauskilawfirm.com for a copy of the case.