Justia U.S. 11th Circuit Court of Appeals Opinion Summaries

Articles Posted in Trusts & Estates
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Plaintiff filed suit against PNC Bank and PNC Investments for mishandling an investment account that belonged to plaintiff and her deceased mother. The district court sua sponte ordered briefing on the probate exception to federal diversity jurisdiction, concluded that plaintiff was "attempting to circumvent the normal probate process by bringing an individual claim against PNC Bank," and dismissed the case. The district court also held that plaintiff had no standing to sue.The Eleventh Circuit reversed, concluding that neither the probate exception nor standing doctrine divests the district court of jurisdiction over this lawsuit. The court concluded that the district court erred in dismissing the case under the probate exception because it can adjudicate her claims for damages against PNC without probating her mother's will, administering the estate, or disposing of the estate's property. The court also concluded that plaintiff is the real party in interest and has standing to bring her claims. The court remanded for further proceedings. View "Fisher v. PNC Bank, N.A." on Justia Law

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In a case involving an alleged multi-billion-dollar conspiracy to defraud the Venezuelan state-owned oil company known as PDVSA, the Trust filed suit alleging that it had authority to do so as an assignee of PDVSA pursuant to a trust agreement which, through a choice-of-law clause, is governed by New York law. The district court adopted in part the report and recommendation of the magistrate judge and dismissed the action without prejudice under Federal Rule of Civil Procedure 12(b)(1) for lack of Article III standing. The district court determined that the Trust did not properly authenticate the trust agreement and, even if the trust agreement were authenticated and admissible, it was void as champertous under New York law.The Eleventh Circuit assumed without deciding that the Trust made out a prima facie case of authenticity for the trust agreement at the Rule 12(b)(1) proceedings and that the district court erred by ruling that the trust agreement was inadmissible. The court concluded that, based on its review of the record, the district court may have erred procedurally in definitively resolving the question of champerty at the Rule 12(b)(1) stage because that question likely implicated the merits of the Trust's claims. However, the court concluded that the Trust does not make this procedural argument on appeal and therefore has abandoned any procedural obligations to the champerty ruling. On the merits, the court applied the champerty bar to the trust agreement under New York law in light of Justinian Capital SPC v. WestLB AG, 65 N.E.3d 1253, 1255 (N.Y. 2016), and concluded that the Trust's primary purpose in acquiring PDVSA's claims was to bring this action. Accordingly, the court affirmed the dismissal of the complaint. View "PDVSA US Litigation Trust v. Lukoil Pan Americas, LLC" on Justia Law

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M&M Realty entered into a contract with the William Mazzoni Trust in 2011 for the purchase of a plot of land in Boynton Beach, Florida. M&M subsequently filed suit seeking specific performance of the land sale contract and damages from the Mazzoni Trust, as well as damages from William Mazzoni, as co-trustee and agent of the Trust, for tortious interference with the land sale contract.The Eleventh Circuit held that M&M failed to make out a prima facie claim for specific performance or for damages for breach of contract because M&M did not provide evidence that it was ready, willing, and able to perform under the contract -- specifically, that it had the necessary funds to make the purchase. The court also held that William Mazzoni, as a co-trustee of the Defendant trust and signatory as its agent on the contract, is not liable for tortious interference. Accordingly, the court affirmed the district court's judgment granting summary judgment in favor of William Mazzoni and the Mazzoni Trust. View "M & M Realty Partners at Hagen Ranch, LLC v. Mazzoni" on Justia Law

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The administrator brought separate actions against Regions and Fidelity, alleging claims arising from the decedent's transfer of his entire retirement savings account to his sister before his death.The Eleventh Circuit held that the district court properly granted Fidelity's Rule 12(b)(6) motion regarding the Count III breach of contract and Count IV breach of fiduciary duty claims; vacated the district court's Rule 12(b)(1) dismissals of the Count II Georgia UCC claims in both complaints because those rulings were incapable of meaningful review; and affirmed the district court's dismissal of the Count I common law conversion and Count II common law negligence claims because they were preempted by Georgia Code 11-3-420. View "Estate of David Bass v. Regions Bank, Inc." on Justia Law

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The Trusts initiated before FINRA an arbitration proceeding against the eight individuals who had owned Banque Pictet as partners and others, including Pictet Overseas, seeking to recover losses from custodial accounts with Banque Pictet. Pictet Overseas and the Partners then filed an action in federal district court, seeking to enjoin the arbitration, contending that, even if Rule 12200 of the FINRA Code of Arbitration Procedure for Customer Disputes required Pictet Overseas to arbitrate certain claims before FINRA, it did not require Pictet Overseas or the Partners to arbitrate the Trusts' claims.The Eleventh Circuit affirmed the district court's ruling that the Trusts' claims were non-arbitrable and held that FINRA Rule 12200 did not require arbitration. In this case, the Trusts' claims did not arise in connection with Pictet Overseas' or the Partners' business activities. Therefore, the court affirmed the district court's order permanently enjoining the Trusts from arbitrating in a FINRA forum their claims against Pictet Overseas and the Partners. View "Pictet Overseas Inc. v. Helvetia Trust" on Justia Law

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At issue in this appeal was whether a conservation restriction imposed in 2013 on a property owned by the Frank Sawyer Revocable Trust restarted the 12-year statute of limitations of the Quiet Title Act, 28 U.S.C. 2409a, so that NE 32nd Street, LLC, as agent for the trust, can sue to extinguish a spoilage easement granted to the federal government in 1938. The Eleventh Circuit affirmed the district court's dismissal of the complaint and held that the statute of limitations barred a challenge to the 80 year old easement and the 2013 permit did not change the terms of that easement to the detriment of the trust. View "NE 32nd Street, LLC v. United States" on Justia Law

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This appeal arose when the estates of several deceased nursing home patients filed a series of wrongful death suits against a network of nursing homes, which resulted in $1 billion in empty chair judgments against the network. In this case, the Estates appealed the dismissal of claims against Rubin Schron and the bankruptcy court's issuance of a permanent injunction with respect to Schron. The Eleventh Circuit affirmed, holding that the bankruptcy court had jurisdiction to enjoin future claims arising from the 2006 Transaction at issue and that it acted within the scope of its authority under the All Writs Act and the Anti-Injunction Act in issuing the Permanent Injunction; the Permanent Injunction was broad, but its breadth was justified; the court found various claims against Schron implausible as alleged in the Second Amended Complaint; and, given the Estates' inability or unwillingness to remedy the deficiencies in their pleadings, the bankruptcy court exercised proper discretion in dismissing the Second Amended Complaint with prejudice. View "Estate of Juanita Jackson v. Schron" on Justia Law

Posted in: Trusts & Estates
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The United States appeals the district court’s determination that commissions claimed by Defendant F. Gordon Spoor as personal representative of the Louise P. Gallagher Estate and as trustee of the Louise Paxton Gallagher Revocable Trust have priority over a special deferred estate tax lien on property designated by agreement under I.R.C. 6324A. The court agreed with the United States that special estate tax liens on property designated by section 6324A, unlike estate tax liens on the gross estate pursuant to section 6324, are not subject to an executor’s claims for administrative expenses. The court also held that Spoor’s administrative expenses do not take priority over income tax liens imposed pursuant to section 6321. Accordingly, the court reversed and remanded. View "United States v. Spoor" on Justia Law

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This is an appeal of a federal income tax refund suit filed by the Estate of George Batchelor (“Estate”). Counts I and II of the Estate’s three-count complaint involve Batchelor’s personal income taxes for 1999 and 2000. Count III concerns the Estate’s attempt to claim a credit for its 2005 income taxes for payments it made in settlement of various lawsuits against Batchelor. The court concluded that the district court erred in applying res judicata to bar the government’s claims in Counts I and II and reversed the district court's decision. Since the Estate has failed to identify an applicable deduction identified in 26 U.S.C. 691(b), the court found no error in the district court’s determination that the Estate cannot avoid section 642(g)’s bar on double deductions, and therefore affirmed on Count III. View "Batchelor-Robjohns v. United States" on Justia Law

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Imperial Premium Finance LLC was implicated in a life insurance scheme. Imperial’s primary business involved stranger-originated life insurance (STOLI), yet its business was not a STOLI in its purest form: instead of buying a policy on a person's life outright, Imperial provided financing for life insurance premiums in the form of loans whose terms allowed Imperial to foreclose on the policy and become the policy owner if the borrower defaulted. Seeking to evade "insurable interest" requirements, Imperial drafted its loan agreements to require that during the term of the loan the policy be held in irrevocable trust (with a trustee chosen by Imperial) for the benefit of the insured’s relatives. In late 2007, Florida resident Barton Cotton met with an insurance agent to buy a multimillion-dollar life insurance policy and finance the premium payments. Cotton was ultimately referred to Imperial about financing the premium payments. Cotton and an irrevocable trust in his name applied to Lincoln National Life Insurance Company for an $8 million life insurance policy. The beneficiaries of the trust were Cotton’s wife and children. Cotton falsely stated on the insurance application that he was not buying the policy for resale and that he would not use a third party to finance the premium payments. Lincoln issued Cotton a $5 million policy, which became an asset of the Cotton trust. Premium payments were advanced to the trust until Imperial lent the trust $335,000. The trust used that money to repay the advance and to continue making the premium payments. Because of the high interest rate and an “origination fee," after less than two years, Imperial’s $335,000 loan to the Cotton trust had ballooned to more than $557,000. Cotton was diagnosed with esophageal cancer. The loan used to finance the policy reached maturity and became due, and Cotton died two months after that. At the time of his death the trust had not paid back Imperial for the loan, but Imperial had not yet foreclosed on it, which left the trust for the benefit of Cotton’s family as the record owner of the policy. After learning of Cotton’s death, Lincoln launched an investigation which turned up the fact that Imperial had financed the purchase of the policy on Cotton’s life under a STOLI scheme. Lincoln refused to pay the death benefit. In April 2011 the Cotton trustee sued Lincoln for the benefit. Lincoln counterclaimed, alleging fraud, negligent misrepresentation, and civil conspiracy. Imperial asked its outside counsel to represent the trust. During discovery, Lincoln sought to depose Imperial under Rule 30(b)(6) of the Federal Rules of Civil Procedure. Because the topics included in Lincoln’s subpoena touched on subjects related to the criminal investigation, Imperial’s managers and employees exercised their individual Fifth Amendment rights and all refused to testify in the Rule 30(b)(6) deposition in the Lincoln case. Imperial's proffered expert witness was unable to answer questions at the deposition or at trial specific to the facts of the Cotton trust case. The jury later returned a verdict in favor of the trust, finding that though Cotton and others conspired to commit an unlawful act, Lincoln had not relied on or been damaged by the misrepresentations, and therefore not injured by the conspiracy. The court notified the parties that it was considering sanctions against Imperial and its proffered expert due to the witness' poor "performance" and lack of preparation at trial. After a hearing, the court assessed sanctions against Imperial. Imperial appealed that sanctions order. Finding that the district court's findings were not clearly erroneous and its imposition of sanctions was not an abuse of discretion, the Eleventh Circuit affirmed the sanctions order. View "Lincoln National Life Insurance Company v. Imperial Premium Finance Company, LLC" on Justia Law