Baillargeon v. Sewell

• Decision Date: 30 April 2010
• Docket Number: No. 2D08-3828.,2D08-3828.
• Citation: 33 So.3d 130
• Parties: Jan BAILLARGEON, as Personal Representative of the Estate of Frank D'Alessandro, deceased, Appellant,v.Randolph SEWELL and Daphne Sewell, as Class Representatives for persons named and unnamed, Appellees.
• Court: Florida District Court of Appeals

33 So.3d 130

Jan BAILLARGEON, as Personal Representative of the Estate of Frank D'Alessandro, deceased, Appellant,v.Randolph SEWELL and Daphne Sewell, as Class Representatives for persons named and unnamed, Appellees.

No. 2D08-3828.

District Court of Appeal of Florida Second District.

April 30, 2010.

COPYRIGHT MATERIAL OMITTED

Robert L. Donald of Law Offices of Sherman & Donald, Fort Myers, and André J. Patrone of Patrone & Kemp, P.A., Fort Myers, for Appellant.

Daniel L. Wallach of Becker & Poliakoff, P.A., Fort Lauderdale, for Appellees.

WALLACE, Judge.

Two creditors of a decedent filed a statement of claim in an estate administration proceeding on behalf of themselves and a class of persons similarly situated. The personal representative of the estate moved to strike the claim to the extent that it attempted to assert claims on behalf of persons other than the claimants. After a hearing, the circuit court ruled that the filing of the claim was unnecessary because a federal action asserting the class claim was pending against the decedent at the time of his death and because the personal representative of the estate was promptly substituted as a party defendant in the federal action. In addition, the circuit court ruled that a class claim could be filed in an estate administration proceeding. In accordance with these rulings, the circuit court denied the motion to strike the class claim and granted the claimants six months within which to amend their statement of claim to identify the other members of the class by name and address. The personal representative appealed the circuit court's order.

We hold that the pendency of the federal class action at the death of the decedent and the prompt substitution of the personal representative in the pending federal action did not make the filing of a claim unnecessary. We also hold that the filing of class claims in estate administration proceedings is not authorized under the Florida Probate Code (the Code). The circuit court erred in ruling to the contrary on these issues. Accordingly, we reverse the circuit court's order to the extent that it denied the motion to strike the claim filed on behalf of the class and granted the claimants a six-month extension to amend the class claim.

I. THE FACTS AND PROCEDURAL HISTORY

Frank D'Alessandro (the Decedent) died on September 17, 2007, at the age of fifty-two. At the time of his death, the Decedent was a resident of Lee County, Florida. The Decedent was in the real estate business, and he left an estate with substantial assets. The Decedent died testate, and his will named Jan Baillargeon (the Personal Representative) to serve as the personal representative of his estate. After the will was admitted to probate, letters of administration were issued to the Personal Representative on October 12, 2007. The first publication of notice to creditors occurred on October 19, 2007.

When the Decedent died, he was one of several defendants named in a class action that was then pending in the United States District Court for the Middle District of Florida. Randolph Sewell and Daphne Sewell (the Sewells) had filed the class action on May 30, 2007, on behalf of themselves and all others similarly situated against a number of entities and individuals, including the Decedent. After letters of administration were issued to the Personal Representative, she was promptly substituted as a party defendant in the pending action. The Sewells then filed a first amended class action complaint (the Complaint) specifically naming the Personal Representative as a defendant. ¹

The facts which formed the basis for the class action claims, as alleged in the Complaint, may be briefly summarized as follows: In 2003, several entities-including two companies with which the Decedent was associated-devised an investment scheme whereby preleased houses would be sold to investors with the expectation of above-market returns on their investments. The assumption underlying the investment scheme was the ability of the promoters and investors to enter into lease-to-own contracts with prospective tenants who would rent the houses for a relatively brief period and then exercise their options to purchase the property. When this occurred, the investors would pocket a tidy profit. That was the plan; the reality was very different. The real estate bubble burst, the expected tenants did not materialize, and the over-leveraged scheme collapsed. The investors who had already bought into the deal faced the dilemma of making substantial mortgage payments on empty houses or losing the properties to foreclosure.

According to the Complaint's allegations, the participation by the Sewells and the other members of the class in the defendants' investment scheme included the following consequences: (1) the risk of losing their properties in foreclosure proceedings, (2) damages to their credit ratings, and (3) “substantial out-of-pocket expenses relating to the acquisition and financing of their investment properties.” The Complaint asserted claims for violations of the Securities Act of 1933, the Securities Exchange Act of 1934, SEC Rule 10b-5, and the Interstate Land Sales Full Disclosure Act, as well as claims for fraud, breach of contract, breach of the duty of good faith and fair dealing, and deceptive and unfair trade practices. Although the class action was pending when the Decedent died, the district court had not ruled that the action could proceed as a class action under Federal Rule of Civil Procedure 23 and it had not certified a class or classes of claimants.

On January 16, 2008, within three months after the first publication of notice to creditors, the Sewells filed a statement of claim “both individually and on behalf of [a] class of claimants.” In their statement of claim, the Sewells identified the pending federal litigation, summarized the facts that led to the filing of the class action, and asserted that “[t]he amount of the claim is in excess of $150 million.” A copy of the Complaint was attached to the claim. The Sewells provided their names and address and the name and address of their attorney, but they did not list the names and addresses of the other members of the putative class.

The Personal Representative moved to strike the claim to the extent that it was filed as a class claim on the following grounds: (1) the claim did not list the names of the other members of the purported class, (2) the claim did not list the addresses or post office addresses of the other members of the purported class, (3) the claim was not signed and verified by the other members of the purported class, and (4) the Sewells had not been certified as representatives of the purported class by the district court. The absence of class certification notwithstanding, the Personal Representative also asserted that “Florida law does not permit a claimant to file a claim on behalf of other unnamed claimants.”

II. THE PARTIES' ARGUMENTS

At the hearing on her motion to strike, the Personal Representative argued that the Sewells' class claim did not meet the requirements of the Code and the Florida Probate Rules. In particular, the Personal Representative relied on section 733.703, Florida Statutes (2007), and Florida Probate Rule 5.490. Section 733.703(1) states, in pertinent part, as follows: “A creditor shall file a written statement of the claim.” Rule 5.490(a) provides the essential details concerning the formal requirements of the requisite statement of claim:

Form. A creditor's statement of claim shall be verified and filed with the clerk and shall state:

(1) the basis for the claim;

(2) the amount claimed;

(3) the name and address of the creditor;

(4) the security for the claim, if any; and

(5) whether the claim is currently due or involves an uncertainty and, if not due, then the due date and, if contingent or unliquidated, the nature of the uncertainty.

The rule also outlines the circumstances under which a claim already filed may be amended. “If a claim as filed is sufficient to notify interested persons of its substance but is otherwise defective as to form, the court may permit the claim to be amended at any time.” Fla. Prob. R. 5.490(e). Similarly, section 733.704 provides: “If a bona fide attempt to file a claim is made but the claim is defective as to form, the court may permit the amendment of the claim at any time.”

The Personal Representative did not challenge the sufficiency of the Sewells' individual claim.² But she argued that the claim was defective as to the purported class because it failed to state the names and addresses of the class members as required by rule 5.490(a)(3). In addition, the Personal Representative argued that the claim was also defective as to the purported class because the class members had failed to sign and verify the claim as required under the rule. In support of her arguments, the Personal Representative relied on the Fourth District's decision in In re Estate of Gay, 294 So.2d 668 (Fla. 4th DCA 1974). In the Gay case, the Fourth District held that the filing of a class claim was inconsistent with the requirements of section 733.16, Florida Statutes (1971). Id. at 670. Section 733.16 appeared in the former Florida Probate Law. The Fourth District also said that the filing of a class claim was in conflict with the public policy of this state favoring the speedy administration of decedents' estates. Id.

In response to the Personal Representative's arguments, the Sewells made three points. First, they asserted that it was unnecessary for them to file a claim in the estate because the class action was pending at the death of the Decedent and the Personal Representative had been promptly substituted in the pending action as a party defendant. Thus, according to the Sewells, they only filed the statement of claim in the probate case “out of an excess of caution.” In support of their argument that filing a statement of claim in the probate case...