Opinion ID: 546191
Heading Depth: 2
Heading Rank: 3

Heading: Recoverability of Prematurely Paid Estate Taxes

Text: 30 Hiatt next argues that as the estate's personal representative she should have been allowed to recover the $890,117 in federal and state estate taxes paid by the estate at her husband's death, or, alternatively, an amount representing the estate's loss of the use of that money. Further, she contends that she should have been awarded the lost appreciation on the parcel of real estate that was sold by the estate in order to pay the estate tax. She argues that if Dale had lived out his expected lifespan, his estate would have owed no estate taxes at the time of his death because of changes enacted in the tax laws since then. According to Hiatt, the premature payment of estate tax constitutes the loss of prospective net accumulations, which is recoverable by the estate under the Florida Wrongful Death Act. The Act defines net accumulations as: 31 the part of the decedent's expected net business or salary income, including pension benefits, that the decedent probably would have retained as savings and left as part of his estate if he had lived his normal life expectancy. Net business or salary income is the part of the decedent's probable gross income after taxes, excluding income from investments continuing beyond death, that remains after deducting the decedent's personal expenses and support of survivors, excluding contributions in kind. 32 Fla.Stat. Sec. 768.18(5) (1986). 33 The district court rejected this claim, stating that payment of estate taxes is simply not a recognized item of damages in the Florida Wrongful Death Act. Hiatt, No. 82-6446, slip op. at 22. The district court went on to state that even if estate taxes were recoverable under the Act they would still be denied in this case because the evidence was too speculative to permit an award. The court specifically noted that it is impossible to foresee what estate tax liability may be imposed under whatever tax laws may be in effect in the year 2000, the year that [Dale Hiatt] would have died but for the tortious conduct of defendant. Id. The district court then stated that while Hiatt's claim for the loss of the use of the money paid in estate taxes was more compelling than the claim for return of the $890,000 paid ... the same considerations that mandate denial of recovery of the taxes paid also mandate denial of recovery for the loss of use of the funds. Id. at 23. 34 Since the district court's decision in this case the Third District Court of Appeal of Florida has had occasion to address this very issue in Lindsay v. Allstate Ins. Co., 561 So.2d 427 (Fla.Dist.Ct.App.1990). In that case, the personal representatives of a decedent's estate contended that lost tax credits was an element of damage under the Florida Wrongful Death Act. At the time of the decedent's death, the estate received a unified credit against her estate tax of $121,800. If she had lived another two years her estate would have been entitled to the maximum $192,800 in tax credits. The court rejected the personal representatives' argument that the $71,000 in lost tax credit was compensable as lost net accumulations, stating: 35 the Florida Wrongful Death Act ... measure[s] the loss to the decedent's estate as a consequence of an early death, without consideration for the consequences of federal estate taxes upon what would otherwise have been available for distribution. The interpretation flows from the statutory term net accumulations as plainly defined in section 768.18(5).... There is no language in the statute which suggests that the legislature intended the impact on the estate caused by federal tax laws, to be a factor in the computation of net accumulations under the Wrongful Death Act. Further, we are not permitted to tack additional words onto a statute for the purpose of aiding a liberal construction. 36 Lindsay, 561 So.2d at 428 (citation omitted). 37 We think that Lindsay clearly controls on this issue and requires affirmance of the district court's holding that the premature payment of estate taxes is not compensable. We also note that at least two other jurisdictions have reached this issue and have held that estate taxes are not recoverable by an estate. See Farrar v. Brooklyn Union Gas Co., 73 N.Y.2d 802, 533 N.E.2d 1055, 537 N.Y.S.2d 26 (1988); Elliott v. Willis, 92 Ill.2d 530, 541-42, 65 Ill.Dec. 852, 858, 442 N.E.2d 163, 169 (1982). 38 We have considered and reject Hiatt's argument that the court in Lindsay failed to follow controlling precedent from the Florida Supreme Court in Delta Air Lines, Inc. v. Ageloff, 552 So.2d 1089 (Fla.1989), and Wilcox v. Leverock, 548 So.2d 1116 (Fla.1989). The court in Ageloff held that net accumulations includes income from investments that the decedent would have made with his anticipated savings if he would have lived his normal life expectancy. 552 So.2d at 1092. In Wilcox, on the other hand, the court held that net accumulations did not include income received from trusts that would continue to accrue beyond the decedent's death. 548 So.2d at 1118. The distinction is that in Wilcox the investment would keep generating income regardless of the decedent's efforts; thus, the wrongful death caused no loss to the estate with respect to that investment. For our purposes here, neither case is precisely on point--that is, neither addresses whether an estate can recover money paid in estate taxes or the loss of the opportunity to invest that money. Nor do we find that the underlying rationale of Ageloff or Wilcox is undermined by the result reached in Lindsay. Nothing in Lindsay, or in our holding here, detracts from the principle espoused in Ageloff or Wilcox that an estate may recover the loss of income that would have been generated and saved from investments that the decedent would have made had he lived his expected normal lifespan. 39 We are also unpersuaded by Hiatt's argument that this court may disregard the Lindsay decision because it was not rendered by Florida's highest court. Of course, in determining the content of state law the federal courts should rely upon the decision of the state's highest court. But where, as here, the state's highest court has not addressed an issue, intermediate state appellate court decisions ... must be taken to reflect a valid interpretation of state law. Bradbury v. Wainwright, 718 F.2d 1538, 1540 (11th Cir.1983) (citations omitted). We must apply the decisions of the state's intermediate appellate courts absent some persuasive indication that the state's highest court would decide the issue otherwise ... whether or not [we] agree[ ] with the reasoning on which the state court's decision is based or the outcome which the decision dictates. Silverberg v. Paine, Webber, Jackson & Curtis, Inc., 710 F.2d 678, 690 (11th Cir.1983) (citations omitted). 40 Accordingly, applying Lindsay, we hold that the district court did not err in holding that the personal representative of Hiatt's estate is not entitled to recover estate taxes paid, the loss of the use of that money, or the loss of appreciation on the land sold to pay the taxes, as part of lost net accumulations under section 768.21(6)(a) of the Florida Wrongful Death Act.