A quick glance at any court docket these days will reveal that many foreclosure actions are being prosecuted by someone other than the real party in interest. While it is generally acceptable for an authorized agent to bring a lawsuit on behalf of a principal in a civil action, how and to what extent is this rule recognized in the probate arena?

Generally, in actions by or against a probate estate, the personal representative of the estate is a necessary and indispensable party. There is a lot of decisional case law in Florida holding that in cases involving claims made by or against an estate, the estate and its survivors are the real parties in interest, and the personal representative is merely a nominal party.

The Florida Rules of Civil Procedure also provide that every action may be prosecuted in the name of the real party in interest, but a personal representative, administrator, guardian, trustee of an express trust, a party with whom or in whose name a contract has been made for the benefit of another, or a party expressly authorized by statute may sue in that person’s own name without joining the party for whose benefit the action is brought. Fla. R. Civ. P. 1.210(a) (emphasis added).

The application of this rule was examined last week in an opinion released by the Third District Court of Appeals in Juega v. Davidson –So.2d.–, 2009 WL 1211645 (May 6, 2009) which involved the decedent, Simon Davidson, whose estate was administered after he died in Spain in 1991. The decedent was survived by a son and a brother. Luis Juega was appointed administrator of the estate by the Spanish court.

A dispute arose wherein Juega alleged that prior to the decedent’s death, Nozomi Finance International Limited loaned the decedent’s brother five million dollars secured by a mortgage on the brother’s real estate located in Miami-Dade County. Juega asserted that the decedent was the director of Nozomi. Juega also argued that after the decedent’s death Mr. Juega became a director of Nozomi, which was an asset of the decedent’s estate.

In 1994, Nozomi filed suit against the decedent’s brother in Miami-Dade County seeking repayment of the note and foreclosure on the property securing the note. In 1995, Juega, as estate administrator, joined as a plaintiff in Nozomi’s lawsuit, and asserted additional claims on behalf of the estate for conversion and civil theft. In 2003, the Spanish court entered an order closing the decedent’s estate and finding the son to be his father’s sole heir. When the estate was closed in Spain, Juega was discharged from his responsibilities as administrator.

Eventually, in the Nozomi litigation, the decedent’s brother moved to dismiss the suit arguing that Juega lacked standing to pursue the litigation. According to the brother, once the Spanish estate was closed and Juega no longer was the estate administrator, Juega was not the real party in interest.

The son’s countered by arguing that Juega was essentially his appointed agent, no different than all the authorized agents who are bringing lawsuits on behalf of the banks in Florida’s foreclosure crisis. According to the son, Juega was pursuing the litigation for the son’s benefit and ratified all actions taken by Juega since the inception of the lawsuit.

The Third District Court of Appeals agreed with the son, and reversed the Miami-Dade probate court and remanded the case. As a practice point, the appellate court was especially persuaded by the affidavit filed by the son setting forth the essential facts pointing to the conclusion that Juega was authorized to act on the son’s behalf, and the son ratified each action of Juega.

I’m always interested in how our sister jurisdictions handle problems in connection with attempts to transfer real and personal property into a trust that might fall short of the formalities required by the Uniform Trust Code. One such case recently surfaced in our Midwestern sister state of Nebraska in Chebatoris v. Moyer 757 N.W. 2d 212 (Neb. 2008).
Moyer, the decedent, created a revocable living trust, with Ron Moyer (Ron) as cotrustee. Moyer died intestate. Moyer purported to fund the trust with both real and personal property that she had described in “Appendix ‘A” attached to the trust document. This is the same method I have seen many clients use in their attempts to create and fund trusts.

The trust document in Moyer stated that “SETTLOR desires to create a trust and is concurrently herewith transferring certain properties to this trust which are set forth on Appendix ‘A attached hereto.” It also stated that “TRUSTEE agrees to hold the property described on Appendix ‘A together with all investments, reinvestments and additions thereto in trust in accordance with the provisions of this Agreement.” Appendix “A” describes three parcels of land, two in Otoe County, Nebraska, and one in Iowa, and lists a variety of personal effects, including bank accounts. The trust instrument also gave detailed instructions as to the distribution of the trust property upon the death of the settlor, Moyer.

Litigation arose in the administration of the probate estate as to whether or not the real and personal property described in the trust document had been properly conveyed by the settlor to the trustee. If it had not been properly transferred, then the trust was wholly unfunded upon Moyer’s death and all property mentioned in the trust document would be a part of the intestate estate.

The Nebraska court looked to the intent of the settlor as the governing principal in its decision and also observed that the instrument created by the settlor met the minimum requirements for a deed: “Although the transfer of real property would have been best memorialized by a separate document, we nevertheless conclude that Moyer’s trust agreement operates as a deed transferring real property…Moyer’s trust document satisfies each of the statutory requirements for a deed of real property. Moyer signed the trust agreement as the settlor of the trust, thus satisfying the requirement of signature by the grantor of the property. Moyer and Ron also signed the agreement as cotrustees, indicating their acceptance of the trusteeship. The agreement was acknowledged by a notary public and was filed with the register of deeds, albeit after Moyer’s death.”

The court also applied the principles of equity (even though trusts are governed by a trust code): “We find further support for our conclusion in equity. The duty of this court is to carry out the true intent of the parties. The particular words of a conveyance are unimportant if the intention of the parties can be determined. In construing instruments conveying property, equity concerns itself with the substance and not the form of the transaction, and the particular form or words of a conveyance are unimportant if the intention of the parties can be ascertained.”

Therefore, because the instrument contained the bare minimums for a real property transfer, coupled with the clear language of the trust instrument from which the settlor’s intent was undisputed, the Court reached the right conclusion in holding that the trust was properly funded. It is refreshing to observe a court continue to use equitable principles in an area of law consumed by legislation.