If you have a creditor that you represent in a Florida probate lawsuit, or if you are involved in promissory note litigation in Florida, you will want to read the Fourth DCA’s recent opinion in Oreal v. Kwartin.This was an appeal of a ruling of equitable setoff, in the context of a creditor filing a statement of claim on a promissory note that it had with the decedent.Can you obtain an equitable setoff against the contract’s clear language of a 12% default rate? Check out what the Fourth DCA, had to say about this issue.
Oreal v. Kwartin, P.A.
- Here, Steven Kwartin P.A.(firm) and it’s principal each filed a claim against Oreal’s estate based on a promissory note.
- What is a promissory note?
- A promissory note is a signed, written promise to pay a stated amount to a party by a specific date or on demand.
- Here, a principal amount was owed plus accrued interest.
- How much accrued interest?
- There were terms in the promissory note stating the note’s interest rate and default interest rate.
- The court directed the Florida estate to pay the note’s principal.
- However, “the court exercised its “equitable powers” and reserved the right to determine whether a setoff against the firm’s interest component was appropriate due to any unexcused and excessive delay exercised by the firm in attempting to perfect and collect its valid unpaid claim.”
- The estate filed a motion for equitable setoff and the probate court granted the estate’s motion.
- What does this mean?
- The court decided that the amount of interest owed should be less than what was outlined in the promissory note because the firm had a duty to prevent the accumulation of interest.
- The Fourth DCA had a problem with this.
- Can a probate court use equity to remedy a sitation that it thinks is unfair?
- No!
- The Fourth DCA said that the court did not have the discretion to impose a setoff in regards to the interest owed simply because they thought the firm should have asked for their money sooner.
- Therefore, as indicated in Florida Statute 733.705(9), the firm was entitled to the entire amount of interest as stated in the promissory note.
Want to learn more? Check out the entire case by clicking here.