Turkish v. Brody

Decision Date30 November 2016
Docket NumberNos. 3D14–38,3D14–1819.,s. 3D14–38
Citation221 So.3d 1206
Parties Arthur S. TURKISH and Shari Turkish, individually and as Trustees of the Ada Turkish Trask 2005 Trust Number One and Ada Turkish Trask 2005 Trust Number Two, Appellants/Cross–Appellees, v. Carole BRODY, Appellee/Cross–Appellant.
CourtFlorida District Court of Appeals

Ross & Girten, and Lauri Waldman Ross and Theresa L. Girten, for appellants/cross-appellees.

Samson Appellate Law, and Daniel M. Samson ; Kluger, Kaplan, Silverman, Katzen & Levine, P.L., and Bruce A. Katzen and Josh M. Rubens, for appellee/cross-appellant.

Before SHEPHERD, ROTHENBERG, and SCALES, JJ.

ROTHENBERG, J.

Arthur S. Turkish ("Arthur") and Shari Turkish ("Shari") (collectively, "Co–Trustees") appeal, and Carole Brody ("Carole") cross-appeals, from orders entered by the trial court relating to the following two adversary proceedings filed by the parties after Ada Turkish Trask's ("Mrs.Trask") estate ("the Estate") was opened: (1) an action filed by Carole against the Co–Trustees, individually and as trustees, alleging breach of fiduciary duty and unjust enrichment ("Trust Litigation"), and (2) an action filed by Arthur, as the personal representative of Mrs. Trask's estate, seeking to enforce three demand promissory notes executed by Carole and her late husband ("Promissory Notes Litigation"). We affirm in part and reverse in part.

I. FACTS AND PROCEDURAL HISTORY

Mrs. Trask died on June 2, 2010. Later that month, the Estate was opened, and Arthur was named as the Estate's personal representative. Mrs. Trask's last will and testament named two of her adult children, Arthur and Carole, as equal beneficiaries and disinherited a third adult child.

A. Trust Number One and Trust Number Two

Prior to her death, Mrs. Trask created the Ada Turkish Trask 2005 Trust Number One ("Trust Number One") and the Ada Turkish Trask 2005 Trust Number Two ("Trust Number Two") on January 27, 2005, naming Arthur and his daughter, Shari, as co-trustees.

1. Trust Number One

Carole and Arthur were the beneficiaries of Trust Number One during Mrs. Trask's lifetime, and upon Mrs. Trask's death, the remaining principal was to be divided equally between Carole and Arthur. Trust Number One vests the Co–Trustees with "absolute discretion" during Mrs. Trask's lifetime to make distributions from the trust's principal to Arthur and/or Carole "in equal or unequal amounts and to either one of them to the exclusion of the other." Trust Number One also permits Arthur, as trustee, to make distributions to himself for his "support, health, education and/or maintenance without the consent of any other Trustee then serving." The primary asset transferred into Trust Number One was a 99% interest in the Ada Turkish Trask Family Limited Partnership ("FLP"), which was valued at $2,299,700 when transferred.

2. Trust Number Two

Mrs. Trask was the sole beneficiary during her lifetime of Trust Number Two. Upon Mrs. Trask's death, the remaining principal was to be divided equally between Arthur and Carole.

B. The Settlement of Mrs. Trask's Gift Tax Liability

The year after Trust Number One and Trust Number Two were created, Mrs. Trask, through counsel, voluntarily disclosed to the Internal Revenue Service ("IRS") that she owed over $3 million in outstanding gift taxes for the years 1991 through 2004. In June 2008, Mrs. Trask and the IRS settled for $1,022,500.1 Mrs. Trask requested that Arthur obtain the money to pay the IRS settlement from Trust Number One, and thereafter, to loan her the money. Without obtaining prior approval from Carole, the Co–Trustees approved the distribution to Arthur; Mrs. Trask executed an unsecured promissory note evidencing the $1,022,500 indebtedness to Arthur, individually; and Mrs. Trask paid the IRS the following day ("IRS transaction").

C. Carole's Objection to the IRS Transaction

In late July 2008, Carole's counsel objected to the IRS transaction, asserting that the transaction was a breach of the Co–Trustees' "responsibility" because the effect was to give over $1 million to Arthur from Trust Number One, which was intended to benefit both Arthur and Carole.

D. Accountings for 2005 through 2007 for Trust Number One and Trust Number Two and the Resolution of Carole's Objections to the IRS Transaction

On August 19, 2009, Carole received revised accountings for the time period covering January 27, 2005 through December 31, 2007, for Trust Number One and Trust Number Two ("2005 to 2007 accountings"), along with a Receipt and Release Agreement ("RRA"). These accountings included a statute of limitations notice consistent with section 736.1008(4), Florida Statutes (2009), which notified Carole that there is a six-month statute of limitations for any claim for breach of trust based on matters adequately disclosed in the accountings or any other written report of the trustees.

In September 2009, in response to Carole's objections to the IRS transaction, the Co–Trustees and Carole executed a Supplemental Release Agreement ("SRA"), which provides that the SRA was supplementing the RRA for the 20052007 accountings. The SRA provides that the parties were settling all claims arising out of the IRS transaction. The SRA accurately reflects the IRS transaction and Carole's objections to the IRS transaction. Specifically, the SRA provides that Arthur, individually, was willing to "assign the Note to Trust Number One in satisfaction of any and all claims against him by all beneficiaries of Trust Number One" arising out of the IRS transaction, and that "each interested party ... waives any right he or she has, might have or has had to object to any action or omission of Arthur Turkish and/or Shari Turkish, individually, or of Arthur Turkish and/or Shari Turkish, as Trustees of Trust Number One." The SRA also provides that "the Trustees, Arthur Turkish and Shari Turkish, have described and provided the value (if known) of the assets of Trust Number One and Trust Number Two as of December 2007 in a Summary of Assets being attached to this Supplemental Release Agreement...." The attached Summary of Assets provides that as of December 31, 2007, Trust Number One held, in part, a 99% interest in the FLP, and sets forth the value of the FLP. The Summary of Assets also reflects the value of Trust Number Two.2 Carole executed both the RRA and the SRA.

E. Accountings for 2008, 2009, and 2010
1. 2008 Accountings

On July 7, 2010, Carole received the accountings for Trust Number One and Trust Number Two for the time period stemming from January 1, 2008 to December 31, 2008 ("2008 accountings"), along with the RRA for those accountings. Along with the 2008 accountings and the RRA, the Co–Trustees submitted a Summary of Assets, which adequately disclosed the value of the assets in Trust Number One and Trust Number Two. The 2008 accountings contained the statute of limitations notice, notifying Carole of the applicable six-month statute of limitations for a breach of trust action based on matters disclosed in a trust accounting or other written report of the trustees.

2. 2009 to 2010 Accountings

On October 11, 2011, Carole received the accounting for Trust Number One and Trust Number Two for the period stemming from January 1, 2009 to June 30, 2010 ("2009 to 2010 accountings").

F. The Adversary Proceedings
1. The Trust Litigation Filed by Carole

On April 6, 2011, Carole sued Arthur and Shari individually and as trustees. The operative complaint asserts, in part, claims for breach of fiduciary duty and unjust enrichment based on their actions as co-trustees of Trust Number One during three separate time periods—January 27, 2005 through December 31, 2007; January 1, 2008 through December 31, 2008; and January 1, 2009 through June 30, 2010—contesting the numerous distributions to Arthur from Trust Number One, including the distribution to Arthur in the amount of $1,022,500 for the IRS transaction in 2008.

The Co–Trustees answered the operative complaint, asserting several affirmative defenses, including that Carole's claims are barred by the RRA and SRA. Both the Co–Trustees and Carole moved for summary judgment. In moving for summary judgment, the Co–Trustees argued that: (1) the distributions, including the distribution for the IRS transaction, were disclosed in the accountings, and therefore, Carole's claims are barred by the applicable six-month statute of limitations for claims brought by a beneficiary against a trustee for breach of trust; (2) the distributions made to Arthur were permitted under the broad terms of Trust Number One; and (3) Carole's claim as to the IRS transaction is barred by the SRA, which supplemented the RRA for the 2005 to 2007 accountings. The trial court denied the motions.

2. The Promissory Notes Litigation filed by Arthur, as Personal Representative of the Estate

In October 1991, Carole and her late husband, Jeffrey Brody, executed two demand promissory notes ($20,000 and $45,000) in favor of Arthur, individually, and in March 1997, they executed a third demand promissory note ($45,000) in favor of Arthur, individually. Following Mrs. Trask's death, Carole learned that each time she asked Arthur to loan her money, Arthur obtained the funds from Mrs. Trask.

In October 1991, Mrs. Trask handwrote the following letter:

October 8th, 1991
To Whom it may Concern:
My son, Arthur Turkish, informed me that my daughter Carole and her husband Jeffrey Brody, were in need of $65,000. As I understand, Arthur tried to get a loan from the banks, but that would have taken too long, as they need the money before the end of October 1991, therefore Arthur had no alternative but to ask me for the money (Carole told Arthur not to mention this to Mother (meaning me)[.]
Accordingly, I am giving Arthur a check today in the amount of $20,000.00 and when the funds are available to me, I will give Arthur the balance of the $65,000.00.
Please be advised, that I will not demand or expect repayment of these monies that I have given and will give to Arthur, who in
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