4th DCA Finds Trial Court Misapplies Both Res Judicata & Laches in Granting Summary Judgment

In Woodward v. Woodward, 2016 Fla. App. LEXIS 6881 (Fla. 4th DCA, 2016), the Fourth DCA found that the trial court erred in granting summary judgment in favor of a trustee on the beneficiary’s breach of fiduciary duty claim where neither res judicata nor laches barred the action. The action arose from a new and different breach of fiduciary duty and suit was filed within six months of trust accounting, as required under Section 736.1008(2), Fla. Stat.

In the subject case, Mary Woodward established a trust for her grandchildren (the “Mary T. Woodward Trust”).  Mary named Orator Woodward, her son, (“Appellee”) as the trustee. Gregor Woodward, a beneficiary of the trust, (“Appellant”) filed an amended complaint against Appellee for breach of fiduciary duty in 1996, alleging that Appellee failed to make an accounting since the trust’s inception, improperly mortgaged real property in the trust, and improperly used the trust to pay education expenses. Appellant sought removal of Appellee as trustee. During the pendency of the action, Appellee transferred the assets of the Mary Woodward Trust into two new trusts, the “El Bravo Trust” and the “Serena Woodward Trust,” thereby terminating the Mary T. Woodward Trust. The complaint was amended and other disputes arose in its litigation, but the action was dismissed by the trial court.

Later, in 2011, Appellee served an accounting for the Trust, and the two new trusts, on the Appellant, as beneficiary.  The accounting showed the termination of the Trust and the distribution to the two new trusts.  Within six months of his receipt of the accounting, Appellant filed a new complaint, in which she sought removal of Appellee as trustee, a new accounting, restoration of the assets, an order compelling payment of money by Appellee, and other relief. He further alleged that laches applied because Appellant was aware of the transfer of assets at issue, but Appellant did not bring his claims within the applicable four-year statute of limitations. Appellant submitted an affidavit in opposition to summary judgment, claiming that until he received the accountings in 2011, he had not known that the Mary T. Woodward Trust had been terminated and that he was not a beneficiary of the Serena Woodward Trust or the El Bravo Trust.

The trial court entered an order granting summary judgment, agreeing that res judicata and laches barred the action. The court found that Appellant had already litigated the matter unsuccessfully in the 1996 case and was prohibited from proceeding on the same claims. The trial court further agreed that laches barred the action. The trial court dismissed the action, and Appellant appealed to the Fourth DCA.

The Fourth DCA found that the trial court erred in finding that res judicata barred the 2012 action. Since the facts and events that gave rise to the 2012 action are different from the 1996 action, identity of the cause of action is not present, and res judicata did not apply. See Tyson v. Viacom, Inc., 890 So. 2d 1205, 1209 (Fla. 4th DCA 2005).  Res judicata is not applicable where the claims in the two cases concern different periods of time.” M.C.G. v. Hillsborough Cnty. Sch. Bd., 927 So. 2d 224, 227 (Fla. 2d DCA 2006).  In the 1996 action, Appellant alleged that Appellee failed to make an accounting since the trust’s inception, improperly mortgaged real property in the trust, and improperly used the trust to pay education expenses. In contrast, in the 2012 action, Appellant alleged that Appellee removed all of the assets from the Mary T. Woodward Trust and assigned the assets to the El Bravo Trust and the Serena Woodward Trust, of which he was not a beneficiary. Additionally, Appellant could not have raised his claim for breach of fiduciary duty for removing all of the assets from the Mary T. Woodward Trust in the 1996 action. The removal of the assets from the Mary T. Woodward Trust did not occur until 2002, years after Appellant filed his complaint in the 1996 action.

The trial court also erred in finding that laches barred the action.  Section 95.11(6), Fla. Stat. provides that “[l]aches shall bar any action unless it is commenced within the time provided for legal actions concerning the same subject matter . . . .” “[B]reach of fiduciary duty is an intentional tort subject to a four-year statute of limitations.” The four-year statute of limitations does not begin to run until a beneficiary receives an adequate trust disclosure document issued by the trustee. Section, 736.1008(1)(a), Fla. Stat. Pursuant to same statute, when a matter is adequately disclosed in a trust disclosure document, a beneficiary must bring an action against a trustee for breach of trust within six months after receipt. If a matter is not adequately disclosed, the statute of limitations begins to run on the date of receipt of the final trust accounting and notice of the availability of the trust records for examination. When a matter is not adequately disclosed, and a trustee has not issued a final trust accounting, a claim against the trustee for breach of trust does not begin to accrue until the beneficiary has actual knowledge of the facts upon which the claim is based if such actual knowledge is established by clear and convincing evidence. Section 736.1008(3), Fla. Stat. 

In the subject case, Appellee terminated the Mary T. Woodward Trust in 2002 but did not provide an accounting to Appellant until October 11, 2011. Thus, pursuant to Section 736.1008(1)(a), Fla. Stat., the statute of limitations did not begin to run until October 11, 2011. In addition, the limitations notice contained in the accounting advised Appellant that he had six months to bring a cause of action. Appellant timely commenced his action within this timeframe, in accordance with Section 736.1008(2). Appellee argued that it was undisputed that Appellant was aware of the transfer no later than early January 2003. In order to find that laches barred the action on this ground, the trial court would have needed to find clear and convincing evidence that Appellant knew more than four years before he filed the 2012 action that Appellee had terminated the Mary T. Woodward Trust and had placed the assets into two new trusts of which Appellant was not a beneficiary. Regardless of Appellant’s awareness of the transfer, determining whether evidence meets the clear and convincing standard necessitates the weighing of facts and the credibility of witnesses, which is impermissible on summary judgment. State, Dep’t of Highway Safety & Motor Vehicles v. Fraser, 673 So. 2d 570, 571 (Fla. 4th DCA 1996). Moreover, there was no evidence that Appellant was aware that he was not a beneficiary of the two new trusts in 2003. In fact, Appellant’s affidavit in opposition to the motion for summary judgment stated that, until he received the accountings in 2011, he did not know he was not a beneficiary of the two new trusts. In sum, the Fourth DCA found that neither res judicata nor laches barred the 2012 action. Accordingly, the case was reversed and remanded for further proceedings.

If you or anyone you know is in need of representation in actions involving Guardianship, Probate and/or Trust Disputes, or questions pertaining to such proceedings, please contact The Law Offices of Glenn M. Mednick, P.L., at (954) 315-1154 or gmednick@mednicklawgroup.com.