Creditors of the Estate Seek Their Share

Posted on July 17, 2017

In the case of Lerma-Fusco v. Smith, No. 5D16-1878, 2017 WL 2605129 (Fla. 5th DCA 2017), the Personal representative of Franco Fusco’s estate appeals from an order granting Dennis and Tina Smith’s motion to set aside an order striking the Smith’s statement of claim and from an order granting the Smith’s emergency motion for temporary injunction to freeze estate assets.

Franco Fusco died testate in 2014. Lerma-Fusco is the decedents surviving spouse and the sole beneficiary of the decedents will. Lerma-Fusco sought to be appointed as the personal representative pursuant to the decedent’s will.  The trial court admitted the will to probate and appointed Lerma-Fusco as personal representative of the estate. Lerma-Fusco filed a notice to the creditors and notice of administration in addition to filing a proof of publication of the notice to creditors and providing formal notice to numerous creditors.  The Smiths did not receive any notice.

Six months after publication of notice to the creditors, the Smiths filed a statement of claim.  The Smiths claim was based on a Michigan default judgment entered against the decedent in 1999, and renewed in 2009.  The original default was in the amount of $750,000, but the total claim amount at the time the statement was filed was $1,452,057.95.  “The claim arose from the death of the Smiths’ son, Christian Smith, who was twenty years old at the time of his death. The Smiths filed a wrongful death claim against the decedent in Michigan that alleged that on December 31, 1996, the decedent hosted a New Year’s Eve party at his Michigan residence, during which Christian Smith became visibly intoxicated, left the residence, and was involved in a fatal accident while driving a vehicle.”

Lerma-Fusco claimed formal notice to the Smiths was not required because they were not known or reasonably ascertainable creditors of the estate and motioned to strike the statement of claim as untimely and that the ninety-day period for the Smiths to bring the claim had expired. Upon hearing Lerma-Fusco’s motion to strike, the probate court learned of evidence that revealed Lerma-Fusco and the decedent had lived together for twenty years and married months prior to the decedent’s death. Lerma-Fusco’s counsel conceded that if the probate court found the Smiths were in fact known or reasonably ascertainable creditors, then the claim would have been timely filed because it was filed within two years of the service by publication, and the Smiths did not receive formal notice of the administration of the estate.

At the hearing, the evidence showed the Lerma-Fusco and the decedent lived together, worked together at the decedent’s business, and hosted the New Year’s Eve Party, and despite her acknowledgment that she was notified in the early morning following the party about the death of the Smiths son, Lerma-Fusco denied knowing anything about the wrongful death suit or the Michigan judgment.  The probate court found Lerma-Fusco’s testimony “incredulous”, but granted the motion to strike the claim as untimely, finding that the Smith’s did not demonstrate they were known or reasonably ascertainable creditors.

The Smiths filed a motion to set aside the order striking the statement of claim. Alleging there was newly discovered evidence that Lerma-Fusco had actual knowledge of the default judgment, therefore, making the Smiths a known creditor of the estate. The probate court then granted the motion in addition to the Smiths’ motion for a temporary injunction to freeze the assets of the estate.

On appeal, Lerma-Fusco focuses on the evidentiary admissibility of the information that was contained in the Smiths’ motion to set aside the order striking the statement of claim and the accompanying affidavits.  If the evidence was legitimate, it would prove that Lerma-Fusco did in fact actually know about the Michigan default judgment. Lerma-Fusco argues that this evidence comes from attorney-client communications and is privileged and thus inadmissible. 

Before the court can determine the admissibility of the evidence, it must first determine whether it has proper jurisdiction to hear this matter. According to Florida Rule of Appellate Procedure 9.170(b)(17) ”appeals of orders rendered in probate and guardianship cases shall be limited to orders that finally determine a right or obligation of an interested person … [including] orders that … determine a motion or petition for enlargement of time to file a claim against an estate.” Fla. R. App. P. 9.170(b)(17).

The probate court held an additional evidentiary hearing to address Lerma-Fusco’s contention that the Smiths’ evidence was inadmissible and to determine whether the Smiths were ascertainable creditors of the estate. No court can determine, based on the face of the affidavits, whether the newly discovered evidence is privileged. To determine the status of the evidence a subsequent hearing will be needed, thus Florida Rule of Appellate Procedure 9.170(b)(17) does not provide the court with proper jurisdiction to review the probate court’s order setting aside its earlier order. Therefore, the appellate court dismisses the portion of the appeal seeking review of that order.

“Conversely, jurisdiction exists to review the order granting the temporary injunction freezing the estate assets. See Fla. R. App. P. 9.130(a)(3)(B). “A temporary injunction may be entered where the party seeking the injunction establishes: (1) the likelihood of irreparable harm; (2) the lack of an adequate remedy at law; (3) a substantial likelihood of success on the merits; and (4) considerations of the public interest.” Dickerson v. Senior Home Care, Inc., 181 So.3d 1228, 1229 (Fla. 5th DCA 2015) (citing Yardley v. Albu, 826 So.2d 467, 470 (Fla. 5th DCA 2002)). If a motion for temporary injunction meets the four criteria, the court must make findings in the order granting the injunction as to each of the criteria. See id.; see also Fla. R. Civ. P. 1.610(c) (providing that “[e]very injunction shall specify the reasons for entry, shall describe in reasonable detail the act or acts restrained without reference to a pleading or another document”). The Smiths concede error, acknowledging the order failed to comply with rule 1.610(c). Accordingly, we reverse the order granting the temporary injunction.”

NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION IN THE PERMANENT LAW REPORTS. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL.

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.

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