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Enforcing a Settlement Agreement in Florida

by Clay Roesch | Apr 10, 2019 | Blog, Commercial & Civil Litigation, Fiduciary Litigation | 0 comments

Under Florida law and as a matter of public policy, settlements are highly favored and will be enforced whenever possible.  Settlement agreements are governed by the rules of contracts, and the existence of an enforceable contract is contingent upon the Parties’ agreement to the essential terms of the agreement.  What happens when you think you have a settlement agreement, but the other party refuses to sign a formal written settlement agreement?

Is a formal written agreement required to enforce a settlement in Florida?

Creating an enforceable settlement requires agreement to the essential terms of an agreement.  What constitutes a material or essential term varies from cases to case.  Nevertheless, once the parties reach an agreement on the essential terms, a formal written agreement is not required in order to enforce a settlement.  Numerous courts in Florida, both state and federal, have enforced agreements reached through a series of emails between attorneys.

For example, in Warrior Creek Development, Inc. v. Cummings, 56 So. 3d 915 (Fla. 2d DCA 2011) the attorneys involved negotiated a settlement over e-mail.  Their emails set forth the “essential and material terms” of the agreement between the parties.  The attorneys subsequently drafted a written settlement agreement, which one party refused to sign, stating “the deal is off”.  The Second District Court of Appeals affirmed the trial court’s order enforcing the settlement, finding that the “parties had agreed upon all of the essential and material terms for settlement and that those terms were reflected in the November e-mail.  Similarly, in Miles v. Northwestern Mut. Life Ins. Co., 677 F. Supp. 2d 1312, 1315-1317 (M.D. Fla. 2009) the Court held that a written settlement agreement is a mere formality where the parties act with the intent to follow the settlement and the written agreement is essentially what was already agreed upon.

Negotiating a settlement over email – the considerations

These cases illustrate the risks inherent in negotiating a settlement over email.  A party who wants to avoid being bound in the absence of a written settlement agreement should consider making any offer conditional upon the execution of a mutually agreeable settlement agreement and release.  Conversely, setting out the essential terms of an agreement in a written communication can result in a settlement that is enforceable against a party who has gotten cold feet.

Who Can a Trustee Turn to for Advice?

by Clay Roesch | May 3, 2016 | Blog, Commercial & Civil Litigation, Fiduciary Litigation | 0 comments

Trustees are required to administer a trust in good faith, in accordance with the terms and purposes of the trust, and the interests of its beneficiaries. There are, however, many aspects of trust administration that can leave even sophisticated trustees searching for advice. The Florida Legislature recognized there are situations in which a trustee must rely on an expert in order to fulfill his or her fiduciary duty when it enacted the Florida Trust Code. Florida Statute Section 736.0816(20) provides that:

A trustee may: Employ persons, including, but not limited to, attorneys, accountants, investment advisers, or agents, even if they are the trustee, an affiliate of the trustee, or otherwise associated with the trustee, to advise or assist the trustee in the exercise of any of the trustee’s powers and pay reasonable compensation and costs incurred in connection with such employment from the assets of the trust, and act without independent investigation on the recommendations of such persons.

Because it provides that a trustee may act on an advisor’s recommendation without independent investigation, Section 736.0816(20) should provide a trustee with immunity from mistakes made by his or her advisors. Indeed, prior to the enactment of the Florida Trust Code, the Third District Court of Appeals found that a substantively identical provision of the Florida Probate Code, Florida Statute Section 733.612(21), shielded personal representatives from liability resulting from errors made by their accountants. See Wohl v. Lewy, 505 So.2d 525 (Fla. 3rd DCA 1987). Personal representatives and trustees are held to the same standard of care and, as a result, Section 736.0816(20) should shield a trustee from liability for a mistake made by an advisor.

Nevertheless, a recent decision by the Fifth District Court of Appeals casts doubt on whether a trustee can rely on an advisor’s recommendation. In Harrell v. Badger, 171 So. 3d 764 (Fla. 5^th DCA 2015) a trustee hired an attorney to decant a testamentary trust into a special needs trust. The trustee’s attorney did not, however, follow the requirements of Florida Statute Section 736.04117 in decanting the original testamentary trust. The Trustee argued that, like the personal representative in Wohl, he relied on his professional advisor’s recommendations and therefore should not be liable for the improper decanting. The court rejected that argument.

In light of the decision in Harrell, it is unclear to what extent a trustee may rely on Section 736.0816(20) for protection from liability for erroneous legal, accounting and other negligent professional advice. Unlike personal representatives who are protected by Section 733.612(21), the Harrell decision suggests that trustees are “de facto” insurers of the professionals they hire. Accordingly, trustees should carefully consider who they hire to render them legal and other professional advice.

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In Federal Court on a Trust or Estate Related Matter and Want to Get Out? Princess Lida May Be the Answer.

by Keith Hesse | Nov 19, 2015 | Blog, Commercial & Civil Litigation, Fiduciary Litigation | 0 comments

In the groundbreaking case of Marshall v. Marshall, 547 U.S. 293, 126 S. Ct. 1735, 164 L. Ed. 2d 480 (2006), the United State Supreme Court scaled back the (widely perceived) extensive parameters of the so-called “probate exception” to federal jurisdiction in cases involving estate fiduciaries or touching upon state court probate proceedings.  As a result, more cases that involve probate issues, estate proceedings or the parties thereto are ending up in federal court.  However, even though a plaintiff may successfully fend off a challenge to federal court jurisdiction based on the probate exception – as several have done (at least in part)[1] – merely clearing this jurisdictional hurdle does not assure that such “victorious” litigant will stay in federal court.

A potential counterbalance to more expansive federal court jurisdiction, given the “loosening” of the probate exception, where state probate (or trust) proceedings are in play, is the doctrine of prior exclusive jurisdiction.  Under such doctrine, it is inappropriate for a federal court to exercise jurisdiction where there are two suits, one in state court and one in federal court, and the suits are in rem or quasi in rem.  This is also known as the Princess Lida doctrine.  This does not refer to a Star Wars character, but, rather, to the Supreme Court decision in Princess Lida of Thurn and Taxis v. Thompson, 305 U.S. 456, 59 S. Ct. 275, 83 L. Ed. 285 (1939).  It has been held that this doctrine of prior exclusive jurisdiction has melded with the probate exception in cases involving state probate proceedings and estate administration, which may conflict with federal jurisdiction.  See Selseth v. Darwit, 536 F. Supp. 2d 883 (N.D. Ill. 2008).

In Princess Lida, state court proceedings in Pennsylvania were commenced concerning a trust set up to benefit Princess Lida of Thurn and Taxis, formerly Lida Eleanor Purcell Fitzgerald, emanating from her divorce from George P. Fitzgerald and payments from the divorce settlement.  The Pennsylvania state court maintained jurisdiction of this matter for years, which included the filing and review of accountings.  After several years of having the trust in the Pennsylvania state court, and while the same was still pending, Lida instituted suit in federal court in the Western District of Pennsylvania alleging mismanagement of the trust funds and requesting various relief.  Subsequently, both the state court and the federal court enjoined the parties in the other action from pursuing the same.  The state court’s ruling was affirmed by the Pennsylvania Supreme Court.  Obviously, at a stalemate, with each court (the state and federal) ordering the parties not to pursue the other case, the United States Supreme Court accepted jurisdiction and acted.

The United States Supreme Court held that one court’s exercise of jurisdiction over the administration of a trust precluded a second court from exercising quasi in rem jurisdiction over a later lawsuit brought by the beneficiaries of the trust asserting claims against the trustees for mismanaging the trust.  The Court noted that two courts may have concurrent jurisdiction over cases involving in personam claims, and both may “proceed with the litigation at least until judgment is obtained in one of them which may be set up as res judicata in the other.”  However, the Court held that there cannot be concurrent jurisdiction over in rem or quasi in rem claims.  The Court stated:

[I]f the two suits are in rem, or quasi in rem, so that the court, or its officer, has possession or must have control of the property which is the subject of the litigation in order to proceed with the cause and grant the relief sought the jurisdiction of the one court must yield to that of the other.

We have said that the principle applicable to both federal and state courts that the court first assuming jurisdiction over property may maintain and exercise that jurisdiction to the exclusion of the other, is not restricted to cases where property has been actually seized under judicial process before a second suit is instituted, but applies as well where suits are brought to marshal assets, administer trusts, or liquidate estates, and in suits of a similar nature where, to give effect to its jurisdiction, the court must control the property.

The Supreme Court thus ruled that the Common Pleas Court of Pennsylvania had acquired jurisdiction, and that the federal court for the Western District of Pennsylvania was without jurisdiction of the suit subsequently brought for the same or similar relief, and that the parties in that suit were properly enjoined from pursuing it.

This principle, which has become known as the “Princess Lida Doctrine”, has been applied routinely throughout the country. See Dailey v. National Hockey League, 987 F. 2d 172, 175 (3d Cir. 1993) (acknowledging the continuing validity of the Princess Lida doctrine).  In short, “[t]he Princess Lida doctrine requires abstention based upon principles of comity and in rem jurisdiction.”  Selton v. U.S. Bank Trust Nat. Assn., SD, No. 6:14-cv-1278-ORL-37KRS, 2015 WL 4987706, *4, 2015 U.S. Dist. LEXIS 109487 (M.D. Fla. August 19, 2015).

As indicated, the Princess Lida doctrine applies equally to state and federal courts. See Cartwright v. Garner, 751 F. 3d 752, 761 (6th Cir. 2014) (“The principle that the court first assuming jurisdiction over the property may maintain and exercise that jurisdiction is applicable to both state and federal courts.”).  As a consequence, Princess Lida also applies where no federal court is involved and both the first and second actions are pending in the courts of different states.  In such cases, where a court in one state first assumes in rem or quasi in rem jurisdiction over property, a court in a later-filed action in another state must abstain from hearing claims relating to the same property. In re Rust’s Estate, 17 Pa. D. & C.3d 627 (Pa. Com. Pl. 1979) (expressly holding that Princess Lida applies where two actions are pending in the courts of different states, and that the exercise of in rem or quasi in rem jurisdiction by a court in one state deprives a court in a different state of jurisdiction over a later-filed in rem or quasi in rem action concerning the same subject matter as the first action); Interfirst Bank-Houston v. Quintana Petroleum, 699 SW 2d 864, 878 (Tex. Ct. App. 1985) (applying Princess Lida and holding that “Where the jurisdiction of a court [of another state] has attached, and the proceeding is quasi in rem, as is the administration of a trust, other courts should not interfere with that jurisdiction.”)

Florida courts have likewise adopted the principles enumerated in Princess Lida and noted their applicability to cases involving trusts.  Blake v. Blake, 172 So. 2d 9, 10 (Fla. 3d DCA 1965) (“As between courts of concurrent jurisdiction, it has generally been held that the court which first exercises jurisdiction over a matter retains such jurisdiction to the termination of the cause.”).  Indeed, prior to Princess Lida, the Florida Supreme Court held that “a court which has in its rightful possession or under its control property involved in litigation may exercise jurisdiction over such property to the exclusion of all other courts, and another court of concurrent jurisdiction cannot interfere and wrest from it the jurisdiction first obtained.” Maddox Grocery Co. v. Hay, 100 So. 747, 747 (Fla. 1924).

¹ See, e.g., Jones v. Brennan, 465 F.3d 304 (7th Cir. 2006); May v. J.P. Morgan Chase & Co., 2009 WL 482719 (E.D. Mich 2009).

Defenses to a Foreign Judgment – Is Ineffective Service a Defense to the Domestication and Enforcement of an Out of Country Foreign Judgment

by Clay Roesch | Oct 12, 2015 | Blog, Commercial & Civil Litigation, Fiduciary Litigation | 0 comments

Section 55.601, Florida Statutes, is Florida’s Uniform Out-of-Country Foreign Money-Judgment Recognition Act (the “Act”), and it governs the recognition of out-of-country foreign money judgments. The Act provides that an out-of-country foreign judgment that is final, conclusive and enforceable where rendered is conclusive between the parties to the extent that it grants or denies recovery of a sum of money. See Fla. Stat. § 55.604. There are, however, certain mandatory and permissive exceptions. Specifically, an out-of-country foreign judgment is not conclusive if the judgment was rendered in a system which does not provide impartial tribunals or due process, the foreign court lacked personal jurisdiction or the foreign court lacked subject matter jurisdiction. See Fla. Stat. § 55.605(1). In contrast, a Florida court may exercise its discretion to refuse to recognize an out-of-country foreign judgment if: (i) the defendant did not receive notice of the foreign proceedings in sufficient time to enable it to present a defense; (ii) the judgment was obtained by fraud; (iii) claim for relief is repugnant to Florida’s public policy; (iv) the judgment conflicts with another final order; (v) the foreign proceeding was contrary to an agreement between the parties to settle the dispute out of court – i.e. an arbitration agreement; (vi) the foreign proceedings a seriously inconvenient forum; (vi) the foreign jurisdiction would not recognize a Florida judgment; or (vii) the foreign judgment is one for defamation under laws that do not provide much protection for freedom of speech and press in that case as would be provided by the United States. See Fla. Stat. §§ 55.605(2).

Insufficiency of service of process is not expressly listed as a grounds for non-recognition of an out of country foreign judgment. Moreover, the Act provides that a “foreign judgment shall not be refused recognition for lack of personal jurisdiction if the defendant was served personally in the foreign state.” Fla. Stat. 55.606(1). Nevertheless, ineffectual service in a location other than the foreign state may still serve as a defense to a foreign judgment by forming the basis for an argument that the foreign court lacked personal jurisdiction. See Fla. Stat. § 55.605 (1)(b) (“An out of country foreign judgment is not conclusive if…. the foreign court did not have personal jurisdiction over the defendant.”).

In Florida, a court’s exercise of personal jurisdiction is dependent on strict compliance with the requirements of service of process. See Kolenski v. Flaherty, 116 So. 2d 767, 769 (Fla. 1959) (“[I]t is the fact of valid service–or the fact of invalid service–as shown by the evidence, that is controlling insofar as the question of jurisdiction over the person of the defendant is concerned…”); Abbate v. Provident Nat’l Bank, 631 So. 2d 312, 315 (Fla. 5th DCA 1994) (“Absent strict compliance with the statutes governing service of process, the court lacks personal jurisdiction over the defendant.”).  Importantly, when analyzing personal jurisdiction, a Florida Court should conduct its own analysis of a foreign court’s exercise of personal jurisdiction, irrespective of the foreign court’s conclusions. See Restatement (Third) of Foreign Relations Law § 482 (1987) (“Even if the rendering court had jurisdiction under the laws of its own state, a court in the United States asked to recognize a foreign judgment should scrutinize the basis for asserting jurisdiction in the light of international concepts of jurisdiction to adjudicate.”); Wellington v. Dept. of Revenue ex rel. Kober, 708 So.2d 1040 (Fla. 4th DCA 1998) (holding Iowa court’s statement about personal service was not determinative where judgment was entered by default). As a result, where a there is ineffective service of process, a foreign court should lack personal jurisdiction providing a defense to the enforcement of the judgment in Florida.

Nevertheless, in a 2008 opinion, the Third District Court of Appeals held that insufficiency of service of process did not provide a defense to enforcement under the Act. See Israel v. Flick Mortgage Investors, Inc., 23 So. 3d 1196 (Fla. 3d DCA 2008). In Flick, the defendant argued that the foreign court lacked jurisdiction because it was notified of the foreign lawsuit by registered mail. The Court rejected that argument holding that “[o]n the particular facts and circumstances of this case, this claim must fail.”  Flick, 23 So. 3d at 1198 (emphasis added). In reaching that conclusion, the court reasoned that: (i) Section (2)(a) of the Florida Act is the only provision potentially authorizing an attack on a foreign money-judgment due to insufficiency of service of process; (ii) Section (2)(a) focuses not the manner in which a defendant received notice of a foreign lawsuit, but on whether the defendant received notice in sufficient time to present a defense; (iii) the defendant actually appeared in the foreign proceedings and presented a defense; and (iv) the defendant challenged the foreign court’s personal jurisdiction in the foreign proceedings, but did not raise insufficiency of service of process as a basis for the foreign court’s lack of personal jurisdiction and therefore, waived that defense. As explained below, the reasoning underlying the Flick opinion is flawed.

First, the Flick court’s holding rests on the faulty premise that Section (2)(a) is the only provision of the Florida Act that relates to insufficiency of service of process. See id. at 1198. Florida law requires effective service of process as a prerequisite to the exercise personal jurisdiction over a defendant, see Kolenski, 116 So. 2d at 769; Abbate, 631 So. 2d at 315, and Section (1)(b) of the Florida Act provides that “[a]n out of country foreign judgment is not conclusive if…. the foreign court did not have personal jurisdiction over the defendant.” Fla. Stat. § 55.605(1)(b). Thus, Section (1)(b) of the Act relates to the sufficiency of service of process. See also Restatement (Third) of Foreign Relations § 482 (“Even if the rendering court had jurisdiction under the laws of its own state, a court in the United States asked to recognize a foreign judgment should scrutinize the basis for asserting jurisdiction in the light of international concepts of jurisdiction to adjudicate.”). As a result, the Flick court mistakenly failed to consider whether ineffective service of process precluded a foreign court from obtaining personal jurisdiction and therefore is a ground for non-recognition of a foreign judgment under Section (1)(b) of the Florida Act.

More importantly, however, the Flick court reasoned that actual notice of a foreign lawsuit, as opposed to strict compliance with Florida Statutes governing service of process, is all that is required for recognition of a foreign judgment under the Florida Act. Flick, 23 So. 3d at 1198. That reasoning is contrary to Florida law, which requires valid service of process, not actual notice, for a court to acquire personal jurisdiction over a defendant. See Abbate, 631 So. 2d at 315 (“The plaintiff asserts a harmless error argument, that service of process is designed to assure that a defendant is given notice of the institution of civil proceedings against him and that this was done here. This argument, however, runs counter to the overwhelming law in Florida that strict compliance with the statutes governing service of process is required. Absent strict compliance with the statutes governing service of process, the court lacks personal jurisdiction over the defendant.”) (internal citations omitted).

Finally, the Flick court’s ultimate holding did not rest on the sufficiency or insufficiency of the plaintiff’s service of process rested on the defendant’s waiver of any argument related to ineffective service of process. See id. at 1199.

While Flick is the only Florida Court to squarely address the question of whether ineffective service of process is a defense to enforcement of a foreign judgment, the Fourth District has indicated that a lack of service may provide a defense to enforcement due to a lack of personal jurisdiction. See Chabert v. Bacquie, 694 So.2d 805 (4^th DCA 1997). In Chabert the defendant objected to the recognition of a French judgment arguing that the French court lacked personal jurisdiction over him due to “improper or inadequate service of notice.” Chabert, 694 So. 2d at 811. Considering the defendant’s argument, the Fourth District stated that:

[S]ubsection (1) of section 55.605 of the Act is phrased in mandatory terms: if any of the grounds listed in subsection (1) are found to exist, then the foreign judgment is not conclusive, and a Florida court cannot recognize it. This contrasts with subsection (2) of section 55.605 which is phrased in permissive terms. Hence if Chabert is correct that the French court lacked personal jurisdiction over him under the Hague Service Convention, then under section 55.605(1)(b) we may not accord recognition to the French judgment.

Id. at 811 (emphasis added). The court ultimately overruled the defendant’s objection finding that he had been personally served at the commencement of the foreign suit and therefore the Court could not refuse to recognize the judgment pursuant to Section 55.606, Florida Statutes. Id. at 812. Nevertheless, the Court’s dicta indicated a willingness to consider and accept an argument that the foreign judgment was unenforceable because the court lacked personal jurisdiction due to ineffective service of process.

Courts interpreting other states’ versions of the Uniform Out-of-country Foreign Money-Judgment Recognition Act have reached the same result. In Franco v. Dow Chem. Co., 2003 U.S. Dist. LEXIS 26639, Case No. CV 03-5094 NM (PJWx) (C.D. Cal. Oct. 20, 2003) foreign plaintiffs attempted to domesticate a foreign judgment against Dow Chemical Company (“Dow”). In the foreign lawsuit, the plaintiffs attempted to serve Dow, but mistakenly served an affiliated corporation, Dow Agro Sciences.  See Franco, 2003 U.S. Dist. LEXIS 26639 at *5. The District Court held that the judgment was unenforceable because the foreign court lacked personal jurisdiction. Id at *26-27.

A natural reading of the Act and the Fourth District’s opinion in Chabert support the argument that ineffective service in a foreign litigation is a defense to the enforcement of a foreign judgment in Florida. Notwithstanding the opinion in Flick, a party facing domestication of an out of country judgment in Florida should carefully scrutinize service of process in the underlying lawsuit to determine whether it was defective.