Collinson v. Miller

• Decision Date: 13 April 2005
• Docket Number: No. 2D03-2698.,2D03-2698.
• Citation: 903 So.2d 221
• Parties: Sharon J. COLLINSON, Appellant, v. Philip F. MILLER, III, and Gloria Miller Daigh, Appellees.
• Court: Florida District Court of Appeals

903 So.2d 221

Sharon J. COLLINSON, Appellant, v. Philip F. MILLER, III, and Gloria Miller Daigh, Appellees.

No. 2D03-2698.

District Court of Appeal of Florida, Second District.

April 13, 2005.

John R. Blue and Robert E. Biasotti of Carlton Fields, P.A., St. Petersburg; and Cathy S. Reiman of Cummings & Lockwood, Naples, for Appellant.

Raymond T. Elligett, Jr., of Schropp, Buell & Elligett, P.A., Tampa; and Harold N. Hume, Jr., and J. Matthew Belcastro of Henderson, Franklin Starnes & Holt, P.A., Fort Myers, for Appellees.

ALTENBERND, Chief Judge.

Sharon J. Collinson appeals an order imposing a constructive trust on her homestead property in the principal amount of $568,650, plus prejudgment interest of $227,112. The constructive trust was imposed in favor of Philip F. Miller, III, and Gloria Miller Daigh, two of Mrs. Collinson's three step-siblings. The facts in this case recite like the worst nightmare of a law student preparing for a final exam in trusts and estates. The case presents close issues on the availability and application of constructive trusts, on the statute of wills, and on the scope of the "Deadman's Statute."¹ We have considered these issues carefully. In the final analysis, however, we conclude that the action seeking a remedy of a constructive trust against the property in this case is barred by the statute of limitations.

I. THE FACTS

In 1972, Philip F. Miller, Jr., married Barbara Jenks Miller. At the time of their marriage, each of them had three adult children from prior marriages. Mr. Miller's children included Philip F. Miller, III, and Gloria Daigh, who were the plaintiffs in the trial court and are the appellees in this court. The third adult child of Mr. Miller has chosen not to participate in this litigation. Mrs. Collinson, the defendant in the trial court and the appellant in this court, was Mrs. Miller's daughter. Mrs. Miller had two other adult children who are not parties to this action.

In May 1976, Philip F. Miller, Jr., purchased two adjacent undeveloped waterfront lots on Boca Grande. In September 1976, Mr. Miller transferred ownership of the undeveloped lots from himself, individually, to his wife and himself, as tenants by the entireties. The evidence presented at trial established that Mr. Miller did so based upon his wife's explicit promise that upon her death she would bequeath the two properties to his children, subject to the children paying the estate taxes and administrative expenses associated with the devises. According to the appellees, Mr. Miller did this so that Mrs. Miller could enjoy the properties during her lifetime without his children having to pay any estate taxes upon his death. Mr. Miller was reportedly concerned that if the properties were not devised solely to his spouse, the estate taxes attributable to the properties might require his estate to sell the properties in order to pay the taxes.

The couple built a home on each lot. Until Mr. Miller's death in 1978, the couple lived in the "main house" and used the neighboring residence as a "guest house." When Mr. Miller died, his estate was valued at 3.4 million dollars. Mrs. Miller and Mr. Miller's son, Philip F. Miller, III, acted as co-personal representatives of the probate estate. Together, they executed the estate tax return which reflected that Mr. Miller's interest in the Boca Grande properties passed solely to Mrs. Miller, and thus this transfer avoided any estate tax that may have been imposed due to Mr. Miller's death. Mrs. Miller did not seek an elective share of this estate.² According to the testimony of Philip F. Miller, III, the estate of Mr. Miller passed primarily to the Miller children, and Mrs. Miller was not otherwise a beneficiary of the estate.

In 1982, Mrs. Miller, who continued to reside in the main house after Mr. Miller's death, contacted Mr. Miller's children and offered to sell them the guest house. In a letter dated March 24, 1982, Philip F. Miller, III, responded in pertinent part, "[I]t seems odd to me that you would offer us the opportunity to buy the house which was intended to be given to us in your will. (I realize that we will have to pay the estate taxes attributable to the houses)." Philip proposed Mrs. Miller gift the guest house to the children, subject to the children paying any gift tax attributable to the transaction.

On April 5, 1982, Mrs. Collinson's husband, writing on behalf of Mrs. Miller, responded to this proposal. He wrote:

As it has been explained to me, [Mrs. Miller] intends to provide in her will that the houses (or a value equivalent thereto) net of the marginal estate tax rate will be for you and your sisters. Until that time, she will use the houses or dispose of the guest house or both houses and use the proceeds net of any taxes for her support including the purchase of another residence. If she elected to sell the house or houses, an amount, net of taxes would be carried forward to be distributed to you and your sisters net of applicable estate tax duties. . . .

I believe that [Mrs. Miller's] proposal to you was intended to give you and your sisters an opportunity to buy the house at its recently appraised value before she considers offering it to others. If you are not in a position to buy it, that is understandable. However, I am sure that you will also understand if she decides to sell the guest house now and use the income from the proceeds to help cover the costs of maintaining the main house and her other expenses.

At trial, Philip F. Miller, III, testified that this letter was inconsistent with the agreement between Mr. and Mrs. Miller to the extent it purported to allow Mrs. Miller to sell the properties. Nevertheless, after various negotiations, Philip F. Miller, III, purchased the guest house from Mrs. Miller in November 1983 for $450,000. Initially, as part of the transaction and for title insurance purposes, Philip's two sisters were asked to sign quitclaim deeds regarding any interest they may have in the guest house. Apparently this requirement was thereafter waived and the closing occurred. Although this transaction made it impossible for Mrs. Miller to devise the guest house to her stepchildren upon her death, neither she, Philip F. Miller, III, or the remaining Miller children memorialized any agreement or understanding describing the effect the transaction would have on Mrs. Miller's promise to her husband.

In 1990, Mrs. Miller decided to sell a remainder interest in the main home to her daughter, Mrs. Collinson. She sought the advice of an attorney and an accountant, both of whom advised her that in order to comply with federal tax laws, the transaction had to be commensurate to an arms-length transaction, based upon the fair market value of such a transfer. Mrs. Miller obtained three appraisals for the home. The accountant and attorney used the median appraisal, IRS life expectancy tables, and accepted accounting principles to calculate the fair market value of the remainder interest at $233,655. Mrs. Collinson agreed to purchase the remainder interest from Mrs. Miller for that amount, by paying $4000 at closing and executing a note and mortgage for the balance, with an interest rate of 8.35%, the market rate then promulgated by the IRS. This required Mrs. Collinson to pay Mrs. Miller $27,196.60 each year for fourteen years. Mrs. Collinson made eight annual payments and then prepaid the remaining balance in 1998. In the interim, in 1991, approximately a year after Mrs. Miller transferred the remainder interest to Mrs. Collinson, Mrs. Miller gave each of her three children a gift of $200,000.

In March 1999, Mrs. Miller died. Shortly thereafter, Mr. Miller's children first learned that she had conveyed a remainder interest in the main house to Mrs. Collinson and that Mrs. Collinson had become the sole owner of the home upon Mrs. Miller's death. Mrs. Collinson moved into the home and established it as her homestead property.

Mrs. Miller's will provided for her three stepchildren to receive a specific devise. Based upon notations on certain documents, it appears Mrs. Miller calculated the amount of the devise by (1) taking the value of the main house in 1990, determined from the appraisals of the home at that time in conjunction with the transfer of the remainder interest of the property to Mrs. Collinson; (2) attributing certain capital gains and estate taxes to that amount and subtracting them from the value; and (3) dividing the remainder by three to determine each of the three Miller children's share. It appears that Mrs. Collinson's husband assisted Mrs. Miller in making these calculations, which suggests that Mrs. Collinson was aware that Mrs. Miller had expressed an intent to bequeath the property, or the equivalent of its after-tax fair market value, to Mr. Miller's children. Based upon the calculation, Mrs. Miller bequeathed the sum of $94,860 to each of her three stepchildren. When Mrs. Miller died nine years later, however, the fair market value of the main house had increased to $2,230,000.

Upon learning that Mrs. Miller had failed to devise the main house to them, Philip Miller, III, and Gloria Miller Daigh filed a claim with the estate of Mrs. Miller and then filed this action against the estate and Mrs. Collinson. The initial complaint was amended twice. Count one of the second amended complaint sought a constructive trust "for the benefit of the children of Philip F. Miller over the Real Estate or its equivalent value, net of estate taxes, which was wrongfully diverted to the daughter of Barbara Jenks Miller, and the estate of Barbara Jenks Miller."³ Count two alleged Mrs. Miller tortiously interfered with Mr. Miller's estate and claimed that Mrs. Miller's estate was liable to the Miller children "for all damages resulting" from the tortious interference. Count three alleged that Mrs. Collinson tortiously interfered with an inheritance anticipated from the estate of Mrs. Miller....