The Personal Representative’s Role In Collecting Money Owed To An Estate
When administering a probate estate, the personal representative may need to take legal action to collect any money or property owed to the estate. The personal representative has the same right to sue or be sued as the decedent. At the same time, the personal representative is also bound by any contractual arrangement signed by the decedent that might affect the estate’s ability to litigate.
Florida Appeals Court Allows Estate to Proceed with Lawsuit Over Defaulted Loan
A recent decision from the Florida Fourth District Court of Appeal, Bach. v. Vladigor Investment, Inc., provides a useful illustration. The decedent in this case, a resident of Palm Beach, loaned the defendants $1 million. The defendants used this money to operate a car wash business in California. The loan was secured by two agreements, under which the defendants made monthly interest payments to the defendant. After the defendant passed away, those payments were supposed to continue to his estate.
According to the personal representative, however, the defendants defaulted. The estate therefore filed suit in Broward County, Florida, alleging breach of contract and seeking foreclosure against the car wash. This led to a disagreement as to what state’s law should apply to the dispute. The agreements said that the parties consented to “personal jurisdiction” in Boca Raton, Florida. But if the decedent sought foreclosure against the collateral, such a dispute would be decided according to California’s version of the Uniform Commercial Code.
The defendants therefore objected to having the personal representative’s lawsuit heard in Broward County. A Broward County judge agreed it lacked personal jurisdiction over the defendants and dismissed the case. The Fourth District reversed, however, citing several grounds. First, the agreements themselves contained a binding “choice of law” provision “designating Florida law as the governing law.” So despite the separate clause designating California law to govern any disputes related to foreclosure, the Fourth District said Florida law still applied “in part” to the agreements, which weighed in favor of Florida courts having jurisdiction.
Second, a contract designating Florida law is subject to the state’s jurisdiction if the agreement involves “consideration” of at least $250,000–or related to an obligation arising from a transaction worth at least that amount. Since the agreements in this case were designed to secure a $1 million loan, which was clearly more than $250,000, then that also justified hearing the case in Florida. To be clear, the Fourth District did not rule on the merits of the underlying dispute. It simply held that a Florida court could exercise personal jurisdiction over each of the non-Florida defendants for purposes of hearing the case.
Speak with a Florida Probate Litigation Lawyer Today
Dealing with litigation can consume a significant amount of a personal representative’s time and energy. An experienced Pompano Beach estate and trust litigation attorney can provide you with valuable advice and representation. If you need assistance with any estate litigation matter, contact attorney Mark R. Manceri today to schedule an initial consultation.