Breach of Fiduciary Duty
Breach Fiduciary Duty Against Trustees & Florida Executors
What is breach of fiduciary duty in Florida probate circles? Or, perhaps better said: what is a breach of fiduciary lawsuit against a Florida trustee or executor?
A breach of fiduciary duty lawsuit is the one of the most common probate litigation lawsuits brought by Florida litigators on behalf of beneficiaries of trusts and estates, against a trustee or estate executor or personal representative.
But, a breach of fiduciary duty lawsuit is NOT just for trustees and personal representatives. This cause of action or lawsuit or claim may be brought against any person who assumes responsibility for, and agrees to act for, and on behalf of, another. Think of a fiduciary relationship where one person is given great responsibility to help or assist another. And this fiduciary actually accepts this responsibility, and agrees to look out for, and serve, another. If that fiduciary falls short, there may, or may not, be a claim for breach of fiduciary duty. Can you bring a breach of fiduciary duty Florida lawsuit against a guardian or someone with a power of attorney? Yes.
This claim, or cause of action, is one of the most common claims which a trustee’s lawyer in Florida defends. Yes, your Florida probate litigation law firm most likely has a strong defense practice, helping trustees, executors, power-of-attorneys, personal representatives, guardians, and others. Why? Because when a trust beneficiary or estate beneficiary believes that they have been wronged or damaged by their trusted fiduciary, they often claim that the fiduciary “breached,” or broke, their duty. Think of it as if a guardian, or someone who agrees to look out for you, has fallen short, or really missed the mark with a heightened sense of purpose or heightened duty. Breach of fiduciary duty claims can be brought against a power of attorney or attorney in fact. If you don’t believe that a trustee or fiduciary lived up to the standard of care which the law requires, you may have a valid lawsuit.
How do you win a breach of fiduciary duty lawsuit? To win a breach of fiduciary duty lawsuit in Florida, you generally have to prove a) the existence of a fiduciary relationship, b) a breach of a duty, c) causation and d) damages. Whether a fiduciary relationship exists is a question of fact determined at trial by evidence. The relationship of the parties involved will determine whether a duty was owed by one to another, and what type of duty was owed, if any. That breach, or “broken” duty, has to lead to, or cause, damages. In other words, it’s not enough that someone did not live up to their fiduciary responsibility. To win a breach of fiduciary duty lawsuit in Florida probate or civil court, you should show that the damages suffered were the result of that broken duty. And don’t forget: damages in inheritance lawsuits can’t be inferred by the court. You can’t ask the judge to figure out what the damages are. And your estate litigation lawyer, no matter how good she is in Florida, can’t “argue” what the damages are. Argument of counsel is never evidence. You have to PROVE damages by actual evidence.
One question becomes: who can file a lawsuit for breach of fiduciary duty when the person who was harmed or wronged is dead. Most probate litigation law firms in Florida know that most causes of action die at death. BUT, there are some ways to have that cause of action survive. So, if your loved one, a spouse, or father or mother, was harmed, but then passed away, one question to ask your probate lawyer is: does the estate have a lawsuit against someone for breach of fiduciary duty? In the trust context, we often refer to a breach of fiduciary duty as a breach of trust.
In Kozinski v. Stabenow, 152 So. 3d 650 (Fla. 4th DCA 2014), three sisters were beneficiaries under their mother’s will and trust. Two of the sisters filed a petition seeking review the compensation of the third sister in her capacity as personal representative and trustee. The trial court’s order reserved jurisdiction to enter such surcharge or disgorgement orders as were warranted under Fla. Stat. 733.6175 (proceedings for review of employment of agents and compensation of personal representatives and employees of the estate) and Fla. Stat. 736.0206 (proceedings for review of employment of agents and review of compensation of trustee and employees of trust).
More particularly, the argument presented was that these proceedings in the probate matter were considered an “adversary proceeding”, requiring formal notice in order to obtain personal jurisdiction over the personal representative. The appellate court explained that when a personal representative is dealing with a fee dispute under Fla. Stat. 733.6175, this is tantamount to a surcharge proceeding. Id. at 652.
What is surcharge? A surcharge is essentially the amount that a court may charge a fiduciary that has breached his or her duty. “A ‘surcharge’ is the amount that a court may charge a fiduciary that has breached its duty.” Reed v. Long, 111 So. 3d 237, 238 (Fla. 4th DCA 2013) (citation omitted). It is essentially an attempt to make the estate whole again. Id. at 239.With respect to trusts, a surcharge is basically a breach of trust. See Fla. Stat. 736.1001.
The Kozinski court explained that:
Moreover, in the context of trust proceedings, the Fifth District has said that “[a] surcharge action seeks to impose personal liability on a fiduciary for breach of trust through either intentional or negligent conduct.” Miller v. Miller, 89 So. 3d 962, 962 n. 1 (Fla. 5th DCA 2012). It is clear under the case law that a surcharge proceeding can be pursued when a fiduciary pays excessive fees to himself, herself, or agents of the fiduciary. In re Estate of Winston v. Winston, 610 So. 2d 1323, 1325 (Fla. 4th DCA 1992) (“It follows without the necessity of citation of authority that the personal representative is subject to surcharge for any improper or excessive payments [of fees].”).
Then, the Kozinski court further explained:
“A personal representative is a fiduciary who shall observe the standards of care applicable to trustees.” § 733.602(1), Fla. Stat. (2014); see also § 733.609(1), Fla. Stat. (2014) (“A personal representative’s fiduciary duty is the same as the fiduciary duty of a trustee of an express trust, and a personal representative is liable to interested persons for damage or loss resulting from the breach of this duty.”); State v. Lahurd, 632 So. 2d 1101, 1104 (Fla. 4th DCA 1994) (“The personal representative, like a trustee, is a fiduciary in handling the estate for the beneficiaries. As such, he or she is to observe the standard of care in dealing with the estate as a prudent trustee exercises in dealing with property of the trust.”) (citations omitted). A trustee is required to seek only reasonable fees for his or her services and the trustee’s agents. See §§ 736.0105(1), (2)(b); 736.0801; 736.0802(1), (7)(b), (8), Fla. Stat. (2014).
“Issues of liability as between the estate and the personal representative individually may be determined in a proceeding for accounting, surcharge, or indemnification, or other appropriate proceeding.” § 733.619(4), Fla. Stat. (2014) (emphasis added). In In re Estate of Pearce, 507 So. 2d 729 (Fla. 4th DCA 1987), we said:
Inasmuch as section 733.609 likens the role of a personal representative to that of a trustee of an express trust, we find it helpful to see what is the usual law respecting surcharge, which is payment by a trustee … out of the trustee’s own funds for breach of trust.”
What does all of this mean? Ultimately the Kozinski court held that in a proceeding where a refund (surcharge) is sought against a fiduciary (or a fiduciary’s agent), individually, and the return of money to a trust or probate as a result of a breach of fiduciary duty (such as charging excessive fees) is basically equivalent to a judgment of damages, so personal service individually on that fiduciary is required.