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Trust Litigation and Forum Non Conveniens

Written by on Dec 17, 2008| Posted in: Trust Litigation

Second District Court of Appeals Finds Old Trust Code Inapplicable to Action Based on Undue Influence and Breach of Fiduciary Duty and Notes Distinction Between Concepts of Venue and Jurisdiction

Frequently, when representing trust beneficiaries or trustees, I encounter a defensive argument that Florida isn’t the proper venue for the trust litigation. Venue is the legal concept of the appropriate location for a lawsuit to be heard by a Court.

Venue is a concept distinct from jurisdiction, which focuses on the authority of a court to hear a particular case. Venue is concerned with the geographical location of the court where a lawsuit is commenced. However, unlike personal jurisdiction, there is no constitutional requirement for proper venue in order to have a valid judgment.Florida’s new trust code has established certain guidelines for determining whether venue is appropriate. Current Florida law provides that venue for actions and proceedings concerning trusts, including those under the section pertaining to the role of the court in trust proceedings, may be established in the following:

(1) any county where the venue is proper under the Florida Statutes civil practice and procedure chapter on venue;

(2) any county where the beneficiary suing or being sued resides or has its principal place of business; or

(3) the county where the trust has its principal place of administration.

The principal place of administration of a trust is the trustee’s usual place of business where the records pertaining to the trust are kept or, if he or she has no place of business, the trustee’s residence. Fla.Stat. §736.0204.

On Decemberr 12, 2008, the Florida Second District Court of Appeals spoke on the issue of jurisdiction and venue in Hunt v. Hooper, –So.2d–, 2008 WL 5191505, 33 Fla.L.Weekly D2824a. The Plaintiffs in Hunt v. Hooper, were the adult children of Robert F. Hooper, Sr. (“the Father”) who was the cotrustee of the Hooper Trust until his death in 2005. In December 2006, the children sued the trustee of the Hooper Trust in Pinellas County, Florida claiming, inter alia, undue influence and breach of fiduciary duty on the part of the trustee. The trustee, relying on the old Trust Code’s section 737.203, sought dismissal of the suit, claiming that Canada was the proper venue for the action.

Section 737.203, which has been repealed by the new trust code section described above, formerly provided:

Over the objection of a party, the court shall not entertain proceedings under s. 737.201 for a trust registered, or having its principal place of administration, in another state unless all interested parties could not be bound by litigation in the courts of the state where the trust is registered or has its principal place of administration. The court may condition a stay or dismissal of a proceeding under this section on the consent of any party to jurisdiction of the state where the trust is registered or has its principal place of business, or the court may grant a continuance or enter any other appropriate order.

Judge Bruce Boyer of the Pinellas County Probate Court applied Fla.Stat.§737.203 and dismissed the lawsuit with prejudice ruling that because the trustee was domiciled in Canada, the father and the trustee were married in Canada and maintained their primary residence there, the trustee did not conduct any business in Florida, all trust administration occurred in Canada, the trust property was located in Canada, and none of the beneficiaries were located in Florida.

The Second District Court of Appeals reversed Judge Boyer’s decision, holding that under the plain language of section 737.203, “the court shall not entertain proceedings under s. 737.201 for a trust registered, or having its principal place of administration, in another state.” (Emphasis added.) The Court stated that there is no indication in the statute that it intends its reach to be broader than its plain language suggests. Since the Court could not find any cases applying section 737.203 to trusts whose principal place of administration is a foreign country (emphasis added), it reversed Judge Boyer and sent the case back to Pinellas County Probate Court for litigation. The Second District also raised serious concerns regarding the ability of the courts in many foreign countries to apply Florida law in construing a dispute like the one it faced in Hunt v. Hooper.

This decision is a good reminder to draw the distinction between jurisdiction and venue, especially when counseling disgruntled beneficiaries who need judicial relief due to a trustee’s neglect of its duties. Had the trustee focused on jurisdictional arguments it may have been more successful. It is also a good idea to advance the venue provisions in the new trust code, coupled with the common law and traditional venue grounds of forum non conveniens when defending trustees.

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