The Docket March 2019 - Page 16

P RO P E RT Y A N D T R U S T L AW TRUSTEES Continued from Page 13 against Anita Marshall-Shaw. 19 Ms. Ford sought writs of attachment on Ms. Marshall-Shaw’s property and also moved for the issuance of a prejudgment writ of garnishment. 20 At an evidentiary hearing on Ms. Marshall-Shaw’s motion to dissolve both writs, Ms. Ford’s attorney testified that the jewelry was owned by Ms. Ford’s trust and that he and Ms. Ford were the co-trustees of the trust while Ms. Ford was the sole beneficiary. 21 The trial court denied the motions to dissolve the writs of attachment and garnishment and Ms. Marshall-Shaw appealed. 22 Ms. Marshall-Shaw alleged that Ms. Ford and her attorney were required to bring their claims in their capacity as co-trustees because the jewelry was owned by the trust. 23 The Fourth District disagreed and looked to Rule 1.210(a) as “a rule of enlargement rather than one of limitation of parties.” 24 Without further discus- sion, the court concluded that Rule 1.210 authorized Ms. Ford, as the sole beneficiary of her trust, to main- tain the suit in her individual capaci- ty. 25 Although not expounded by the court in Marshall-Shaw, the Fourth District may have been recognizing a priori the rule in favor of Ms. Ford as the sole beneficiary and co-trustee to carve out another narrow excep- tion to the trustee’s standing to pursue actions for the return of trust assets. 26 To further support the concept of the trustee as the real party in interest for claims involving trust assets, the practitioner can also utilize both the Second and Third Restate- ments of Trusts. Secondary Sources: The Real Statement To further support the concept of the trustee as the real party in interest for claims involving trust assets, the practitioner can also utilize both the Second and Third Restatements of Trusts. The Restatement (Second) of Trusts notes that “The trustee is under a duty to the beneficiary to take reasonable steps to realize on claims which he holds in trust.” 27 The comments to §177 contemplate that it may not be reasonable for a trustee to pursue all claims. The trustee must consider the expense involved in the cause of action as well as the merits of the claim. The Restatement (Second) even considers an uncollectible defendant that may make the cause of action unsuitable for the trustee’s pursuit. The Restatement (Third) of Trusts also addresses claims by a 16 The Docket · March 2019 trustee against third parties and the situations when either a trustee or a beneficiary, respectively, is the appropriate party to bring the claim. Section 107 states: (1) A  trustee may maintain a proceeding against a third party on behalf of the trust and its beneficiaries . (2) A  beneficiary may maintain a proceeding related to the trust or its property against a third party only if:   (a) t  he beneficiary is in possession, or entitled to immediate distribution, of the trust property involved; or   (b) t  he trustee is unable, unavailable, unsuitable, or improperly failing to protect the beneficiary’s interest. (3) In appropriate circumstances, a trustee ad litem may be appointed to consider and, if appropriate, to maintain a proceeding against a third party on behalf of the trust and its beneficiaries. The comments to the Restatement (Third) also recognize that in general, the Trustee is the holder of the title to trust property (including choses of action), the party charged with representing beneficiaries, and the appropriate party to consider and bring an action on behalf of the trust against a third party. 28 Except as indicated in the limited exceptions outlined in §107(2), the beneficiary should have no standing to sue a third party on behalf of the trust. Keeping It Real Although the Florida trust code does not explicitly state that the trustee has the exclusive authority to bring claims for the return of, or to protect trust assets, a comprehensive reading of the trust code provides for the application of this concept. Other than the outlier case of Marshall- Shaw, Florida case law substantially supports the general understanding amongst practitioners that the trustee is the best party to bring these claims on behalf of the trust unless there is a conflict, delay, or the beneficiary is entitled to immediate possession of the asset. Common law throughout the country highlights the same themes as set forth in Buerki v. Lochner, such that the consensus among all sister states, and the Restatement (Third) of Trusts, is the Trustee is the best party to bring causes of action involving trust assets. Endnotes 1. F  la. Stat. § 736.0811 and § 736.0816(23) 2. Fla. Stat. § 736.1001(1)(e) 3. Fla. Stat. § 736.0816(1) and (23). 4. Fla. Stat. § 731.303(1)(b)(2). 5. W  inn v. Strickland, 34 Fla. 610 (Fla. 1894) citing Wilson v. Russ, 17 Fla. 691 (Fla. 1880). 6. H  anson v. Denckla, 78 S.Ct. 1228, 1235 (1958) 7. S  ee Trueman Fertilizer Co. v. Allison, 81 So. 2d 734 (Fla. 1955) and Milton v. Milligan, 2013 WL 828607 (N.D. Fla. 2012). 8. B  uerki v. Lochner, 570 So. 2d 1061, 1062 (Fla. 2d DCA 1990). 9. Id. 10. Id. 11. Id. 12. Id. 13. Id. 14. Id. 15. Id. 16. Id. at 1063. 17. Id. 18. Id. 19. M  arshal-Shaw v. Ford, 755 So. 2d 162 (Fla. 4th DCA 2000). 20. Id. at 164. 21. Id. 22. Id. 23. Id. 24. Id. 25. Id. 26. A priori also recognized in St. Martin’s Episcopal Church v. Prudential-Bache Securities, Inc., 613 So.2d 108, 109 (Fla. 4th DCA 1993) – The court cited State of Delaware v. Florida First National Bank, 381 So. 2d 1075 (Fla. 1st DCA 1979) which held, in dicta, “unequivocally that a beneficiary of a private trust has the power to maintain a lawsuit to enforce the trust.” The Fourth DCA noted “It is not surpris- ing, therefore, that standing to sue – as to property of the trust, anyway – is thus recognized a priori by the rule in favor of the beneficiary.” 27. Restat. 2d of Trusts § 177. 28. C  omments to Restat. 3d of Trusts § 107.