DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
ROSALYN BRONSTEIN and ELLA BRONSTEIN,
Appellants,
v.
BRUCE BRONSTEIN, as the Personal Representative of
the ESTATE OF KATHERINE S. BRONSTEIN,
Appellee.
No. 4D20-2661
[December 22, 2021]
Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Dina Keever-Agrama, Judge; L.T. Case No. 50-2013-CP-
001807-XXXX-NB.
John P. Morrissey of John P. Morrissey, P.A., West Palm Beach, and
Robert B. Scarlett of Scarlett & Croll, P.A., Baltimore, Maryland, for
appellants.
Anya Van Veen, Brett C. Barner and Robb W. Armstrong of Barner &
Barner, P.A., Palm Beach Gardens, for appellee.
WARNER, J.
In proceedings regarding the final distributions from a trust, the
probate court directed that appellate attorney’s fees incurred by the
trustee in a failed appeal could be paid by the trust, and attorney’s fees
incurred in litigating the objections to accountings and the trustee’s
compensation could also be paid by the trust. Two trust beneficiaries
appeal. We reverse in part, concluding that the appeal for which the fees
were incurred provided no benefit to the trust and the trustee, who was
also a beneficiary of the trust, was acting solely for his own benefit.
In April 2013, the decedent Katherine Bronstein passed away leaving
behind her children Bruce, Rosalyn, and Ella. In existence at the time of
her death was the Katherine S. Bronstein Revocable Trust which became
irrevocable upon her death. The trust instrument appointed Bruce to
serve as successor trustee upon the decedent’s death, and named Bruce
and his sisters as beneficiaries. The trust divided the decedent’s assets
between her children in the following proportions: Bruce (40%), Ella (30%),
and Rosalyn (30%).
The sisters filed multiple actions, petitions, and motions against Bruce
in various capacities. In November 2014, the parties entered into a
settlement agreement and mutual release resolving all pending disputes
between the siblings. The agreement covered all the current litigation
between the parties, but the agreement expressly did not release Bruce as
trustee from his obligations involved in closing the estate and trust,
including providing accountings and distribution of monies and assets of
the estate and trust. The agreement contained an attorney’s fee provision
which provided that the prevailing party to “[a]ny action arising out of or
under this Settlement Agreement and Mutual Release” “shall be entitled to
an award of all costs and expenses in such action including but not limited
to court costs, discovery costs, expert witness fees and reasonable
attorneys’ fees for all levels including appellate.” The parties executed the
various releases contemplated by the settlement agreement.
In December 2014, Bruce distributed about 90% of the assets in the
trust, and in 2015, he served three accountings on the sisters. The sisters
then moved to appoint an independent accounting auditor for the estate
and the trust. They alleged Bruce’s accountings were inaccurate or
incomplete. Additionally, the sisters alleged that certain expenses could
not be verified. After a hearing on the various motions, the trial court
denied relief. Bruce moved for attorney’s fees, both pursuant to the
settlement agreement and pursuant to section 736.1005(1), Florida
Statutes (2019), which authorizes the probate court to award fees to an
attorney who has rendered services to the trust. Bruce requested that the
fees be assessed against the sisters’ shares pursuant to section
736.1005(2)(a). The trial court entered an order determining the amount
of fees and assessed the fees equally against each party’s respective shares
of the trust. It did not award prevailing party fees.
Bruce appealed the order contending that pursuant to the settlement
agreement he was the prevailing party, and all of the fees should be
assessed against the sisters. The sisters argued that the litigation
regarding the audit was not covered by the settlement agreement, because
it expressly exempted from its terms the obligations of Bruce as trustee in
closing the estate and trust and providing accountings. This court
affirmed without opinion. See Bronstein v. Bronstein,
227 So. 3d 589 (Fla.
4th DCA 2017) (unpublished table decision).
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Bruce filed a motion for appellate attorney’s fees, requesting fees
pursuant to the settlement agreement and pursuant to section 736.1005.
This court denied the motion for attorney’s fees.
Following the appeal, Bruce served the sisters with two more
accountings of the trust for 2016 and 2017. The 2017 accounting
included the attorney’s fees incurred for Bruce’s appeal of the attorney’s
fees award in the prior proceeding which Bruce sought to charge to the
trust. The sisters objected to both accountings. In 2019, the sisters filed
a motion to compel an accounting of the trust for the period from 2017 to
2019. Bruce then filed a final accounting for all the years and requested
court approval for the trustee’s accounts and final distribution. The
sisters filed objections, particularly to the payment from the trust of the
appellate attorney’s fees from the 2016 failed appeal.
Ultimately, the issues regarding the accountings and objections to the
appellate attorney’s fees were tried before the probate court. The trial
covered both the attorney’s fees as well as other issues of alleged
mismanagement by Bruce as trustee. The trial court entered a detailed
final judgment which granted Bruce’s petition for approval of the final
accounting and distribution. In the final judgment, the court denied the
sister’s objections to the appellate attorney’s fees and the fees incurred in
litigating the petition for final accounting and distribution.
As to the appellate attorney’s fees, the court reviewed the “math” of
what would have occurred had Bruce won the appeal, noting that “at the
end of the day he would have benefitted,” and the sisters’ trust shares
would have decreased as a result. Nevertheless, the court explained the
“prevailing party” provision of the settlement agreement was meant to
lessen the litigation between the sisters and Bruce to preserve the assets
of the trust for all beneficiaries.
So, while Bruce’s pursuit of the appeal indeed would have
ultimately benefitted him financially had he prevailed, it also
was an appeal pursued in good faith in order to enforce the
“prevailing party” provision and its intended purpose; i.e., to
quell trust expense associated with litigiousness, which
ultimately benefits the trust.
Thus, the court allowed the fees and costs associated with the appeal to
remain charged against trust assets. The sisters then filed this appeal.
The sisters make two arguments on appeal. First, they contend this
court’s order denying fees pursuant to Bruce’s motion for appellate
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attorney’s fees was res judicata of the issue, and the court erred in allowing
fees to be paid out of the trust assets. Second, they argue that the court
abused its discretion in determining that the appeal, and thus the fees,
was for the benefit of the trust. While res judicata does not apply, we
conclude that the court abused its discretion in determining that the fees
were incurred to benefit the trust.
As we review the order in the underlying proceeding to the appeal as
well as the original appeal itself, it is apparent that the trial court did not
award prevailing party fees pursuant to the settlement agreement in the
case but awarded the fees to be assessed equally against each share of the
trust pursuant to section 736.1005. On appeal, Bruce argued that the
settlement agreement’s prevailing party provision applied. Our affirmance
of the trial court’s order necessarily agreed with the trial court that the
prevailing party provision did not apply to the litigation over accountings
filed after the settlement agreement. Accountings after the agreement were
expressly excluded from the terms of the settlement. To the extent that
appellate attorney’s fees were sought pursuant to the settlement
agreement, the affirmance necessarily required denial of the fees on
appeal.
Bruce also requested attorney’s fees on appeal pursuant to section
736.1005. We do not have jurisdiction to award fees against the trust
pursuant to that provision. In Garvey v. Garvey,
219 So. 2d 685 (Fla.
1969), the supreme court considered whether an earlier version of Florida
Rule of Appellate Procedure 9.400, authorizing the award of appellate
attorney’s fees on motion, superseded a probate statute which left to the
probate court the discretion to award fees against the estate. The court
held that the probate court had the exclusive jurisdiction pursuant to the
statute to award fees against the estate.
Id. at 686. See also In re Estate
of Udell,
501 So. 2d 1286, 1288 (Fla. 4th DCA 1986). While Garvey dealt
with a probate statute, it is similar to the trust statute. Thus, res judicata
does not apply to the payment of appellate fees from the trust, because
this court did not have jurisdiction to assess those fees against the trust.
The sisters also claim that the probate court’s order authorizing fees
was an abuse of discretion, because the appeal was for the sole benefit of
Bruce. We review an order on fees for an abuse of discretion. In re
Guardianship of Bloom,
295 So. 3d 1255, 1259 (Fla. 2d DCA 2020).
Section 736.0816(20), Florida Statutes (2019), empowers a trustee to
employ attorneys to advise or assist the trustee in the performance of its
administrative duties. This includes the power to defend the trust property
in a judicial proceeding. The section grants the trustee the power to
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“[p]rosecute or defend, including appeals, an action, claim, or judicial
proceeding in any jurisdiction to protect trust property or the trustee in
the performance of the trustee’s duties.” § 736.0816(23), Fla. Stat. (2019).
A trustee’s powers, however, are constrained by a duty of loyalty.
Section 736.0802(1), Florida Statutes (2019), provides that “[a]s between
a trustee and the beneficiaries, a trustee shall administer the trust solely
in the interests of the beneficiaries.” While a trustee may pay from the
trust costs and attorney’s fees incurred in any proceeding the beneficiaries
may contest those fees and costs. See § 736.0802(10), Fla. Stat (2019).
“A trustee has the burden of proving the necessity of all expenses incurred
by him or her, including attorneys’ fees.” In re Guardianship of Bloom, 295
So. 3d at 1259 (quoting Ortmann v. Bell,
100 So. 3d 38, 46 (Fla. 2d DCA
2011)). “When a trustee seeks to charge a trust corpus with an expense
incurred by him, including attorney fees, the burden of proof is upon the
trustee to demonstrate that the expense was reasonably necessary and
that such expense was incurred for the benefit of the trust, and not for his
own benefit nor the benefit of others.” Barnett v. Barnett,
340 So. 2d 548,
550 (Fla. 1st DCA 1976) (emphasis added); accord Ortmann.
Because the probate court found that the appeal would have benefited
Bruce and not the sisters had it been successful, the court should have
disallowed the payment as an expense of the trust. Bruce was not acting
for the benefit of the trust or the beneficiaries, other than himself. He
violated the duty of loyalty.
The court’s alternative explanation for allowing the fees against the
trust was also not proved by the trustee. While the court thought that the
trustee in good faith sought to enforce the prevailing party attorney’s fees
provision of the settlement agreement to deter future litigation, the
agreement expressly excluded any release as to those matters from its
terms. Therefore, the prevailing party provision was not applicable to the
original petition objecting to accountings filed after the settlement
agreement or to future objection issues with respect to the termination of
the trust. It could not serve as a reason in good faith to pursue the
application of the attorney’s fee provision in the agreement.
As to the attorney’s fees incurred by Bruce in defending his accountings
and final distribution against the sisters’ objections, we affirm. A
significant part of the litigation involved disputes over Bruce’s
compensation, issues unrelated to the attorney’s fees allowance from the
prior appeal. The court found that Bruce had not committed any acts of
mismanagement of the trust. He was entitled to charge the trust for the
attorney’s fees and costs in defending his actions as trustee. §
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736.0816(23), Fla. Stat. (2019); Covenant Tr. Co. v. Guardianship of
Ihrman,
45 So. 3d 499 (Fla. 4th DCA 2010).
As their last issue on appeal, the sisters challenge the final distribution
of assets, but that issue is not properly before the court. The trustee
presented his final accounting and distribution of assets, and the sisters
did not file an objection. They only appealed the final judgment rendered
earlier.
For these reasons, we reverse the court’s order allowing the appellate
attorney’s fees to be assessed against the trust and remand for the court
to assess those fees against Bruce’s portion of the trust. We affirm as to
the assessment of the fees for defending against the sisters’ objections to
the trustee’s commission and expenses.
Affirmed in part, reversed in part, and remanded with instructions.
GERBER, J., concurs.
ARTAU, J., concurs in part and dissents in part with opinion.
ARTAU, J., concurring in part and dissenting in part.
While I concur with the majority’s affirmance of the probate court’s
approval as a trust expense of the trustee's attorney’s fees incurred in
defending against his sisters’ objections to his accountings and final
distribution, I dissent from the majority’s reversal of the probate court’s
approval as a trust expense of his previously incurred appellate attorney’s
fees because I conclude that the probate court did not abuse its discretion.
The probate court found that the trustee took the previous appeal in
“good faith” and to benefit the trust by preserving the trust corpus. The
probate court’s findings were based on substantial competent evidence
including the probate court’s assessment of the credibility of the brother’s
testimony regarding his actions as trustee and his good faith pursuit of
the appeal. The sisters do not point to any evidence that demonstrates
that the probate court’s approval of the appellate attorney’s fees as a trust
expense was an abuse of discretion.
The majority concludes that the trustee’s prior appeal of the denial of
his claim for prevailing party attorney’s fees pursuant to the settlement
agreement could not have been pursued in good faith because the
agreement was not applicable to the sisters’ objections to the accountings
filed after the settlement agreement. I agree.
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However, the majority overlooks the fact that the prior appeal also
challenged the denial of the trustee’s alternative statutory claim for
attorney’s fees pursuant to sections 736.1004 and 736.1005, Florida
Statutes, which grant discretion to a probate court to assess attorney’s
fees in “actions for breach of fiduciary duty or challenging the exercise of,
or failure to exercise, a trustee’s powers” against a party’s interest in a
trust if a party “unjustly caused an increase in the amount of attorney fees
incurred by the trustee or another person in connection with the
proceeding.” See §§ 736.1004(1)(a), (2) & 736.1005 (2)(b)7., Fla. Stat.
(2016).
Although the probate court did not include the alternative statutory
claim for attorney’s fees in its reasoning, “an appellate court, in
considering whether to uphold or overturn a lower court’s judgment, is not
limited to consideration of the reasons given by the trial court but rather
must affirm the judgment if it is legally correct regardless of those
reasons[.]” See Dade Cnty. Sch. Bd. v. Radio Station WQBA,
731 So. 2d
638, 644-45 (Fla. 1999) (explaining the “tipsy coachman” rule) (citing
Applegate v. Barnett Bank,
377 So. 2d 1150, 1152 (Fla. 1979) (“The written
final judgment by the trial court could well be wrong in its reasoning, but
the decision of the trial court is primarily what matters, not the reasoning
used. Even when based on erroneous reasoning, a conclusion or decision
of a trial court will generally be affirmed if the evidence or an alternative
theory supports it.”)).
In family trust matters, it is not uncommon for a trustee to also be a
beneficiary. In those circumstances, many reasonable actions taken by a
trustee may have the dual effect of also benefiting the trustee’s share as a
beneficiary. Had the unsuccessful petition been brought by only one of
the sisters against the trustee causing the trust corpus to incur an unjust
increase in attorney’s fees, with its concomitant adverse effect on the other
sister and the trustee, we would be hard-pressed to conclude that a
probate court abused its discretion in approving the trust’s expenditure to
pursue those statutory fees against the unsuccessful sister simply
because the trustee’s beneficial share would benefit from prevailing on the
fee claim. Otherwise, trustees who are also beneficiaries would never be
able to avail themselves of the statute authorizing an attorney's fee award
as a means of preserving a trust corpus against the litigiousness of a party
who “unjustly cause[s] an increase in the amount of attorney fees”
incurred by a trust, even though the statute itself does not exclude
trustees with beneficial interests from seeking such a fee award to preserve
a trust corpus.
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Every action taken by a trustee to preserve a trust corpus has the
potential to benefit the ultimate shares of a trust. Thus, we should not
presume the absence of good faith in determining whether the probate
court abused its discretion simply because the trustee also has a beneficial
interest that necessarily benefits from any preservation of the trust corpus.
Accordingly, I respectfully dissent because in my view it was well within
the probate court’s discretion to determine that the trustee had a
justifiable basis for incurring the appellate fees. It was not unreasonable
for the probate court to determine that the trustee had pursued the appeal
in a good faith effort to preserve the trust corpus by having the fees
incurred in defending against the sisters’ unsuccessful objections to the
accountings assessed only against the sisters and not the trust, even if the
trustee’s beneficial interest in the trust would have been enhanced by the
ultimate success of that appeal. See Canakaris v. Canakaris,
382 So. 2d
1197, 1203 (Fla. 1980) (“In reviewing a true discretionary act, the appellate
court must fully recognize the superior vantage point of the trial judge and
should apply the ‘reasonableness’ test to determine whether the trial judge
abused his [or her] discretion.”); see also § 736.0802(10)(b), Fla. Stat.
(2016) (“If a trustee incurs attorney fees or costs in connection with a claim
or defense of breach of trust which is made in a filed pleading, the trustee
may pay such attorney fees or costs from trust assets[.]”).
* * *
Not final until disposition of timely filed motion for rehearing.
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