Court Opinion

ID: 9902547
Source: CourtListenerOpinion
Date Created: 2023-11-27 15:19:50.844715+00
Date Added: 2024-06-11T09:21:54.478707
License: Public Domain

FIFTH DISTRICT COURT OF APPEAL
            STATE OF FLORIDA

                 _____________________________

                      Case No. 5D22-1114
                   LT Case No. 2021-CA-12890
                 _____________________________

JENNIFER ROLLER, ANDREA
SOULE, and KATHLEEN DOUD,
as beneficiaries of the
James G. Collins Trust u/a/d
August 30, 1990,

           Appellants,

v.

JUDITH R. COLLINS and CYPRESS
TRUST COMPANY, as successor
trustee of the James G.
Collins Trust u/a/d August
30, 1990,

           Appellees.
________________________________/

On appeal from the Circuit Court for Brevard County.
Michelle L. Naberhaus, Judge.

Stanley A. Bunner, Jr., of Law Office of Stanley A. Bunner, Jr.,
PLLC, Naples, for Appellants.

Scott A. Weiss and R. Daniel Sirois, of Scott A. Weiss, P.A.,
Fort Lauderdale, for Appellees.

                         October 20, 2023

BOATWRIGHT, J.
      Appellants, Jennifer Roller, Andrea Soule, and Kathleen
Doud, appeal the trial court’s order dismissing Count I of their
amended complaint for statutory reimbursement from Appellee,
Judith R. Collins, as beneficiaries of the James G. Collins Trust
(the “Trust”). In particular, Appellants argue that the trial court
erred in dismissing Count I because the Trust is an
accommodation party pursuant to section 673.4191, Florida
Statutes (2021), and because, as beneficiaries of the Trust, they
have standing to sue for statutory reimbursement. We agree that
the trial court properly dismissed Count I of the amended
complaint and affirm.

                                I.

      In 2013, James G. Collins (“Grantor”), as Grantor/Trustee,
executed the Trust, which was a revocable living trust. In 2018,
James G. Collins, individually and as trustee of the Trust, and
Judith Collins (“Collins”), individually, took out a loan from
Northern Trust Company (“Northern Trust”). In doing so, they
executed an amended promissory note with respect to a loan
obligation in the amount of $1,288,000.00 (the “Note”). That same
day, Grantor, individually and as trustee of the Trust, executed a
separate agreement pledging certain securities accounts held in
the Trust as collateral on the Note (the “Pledge Agreement”).
According to Appellants’ amended complaint, the proceeds of the
Note were used for the personal benefit of Grantor and Collins,
with the bulk, if not all, of the proceeds being used for the
betterment and maintenance of their home, located in Melbourne
Beach, Florida. Collins now holds sole legal title to the home,
which is not a Trust asset.

      In 2019, Grantor died, rendering the Trust irrevocable, and
Cypress Trust Company (“Cypress Trust”) became the successor
trustee under the terms of the Trust. Subsequently, Northern
Trust declared the Note to be in default for failure to make the
required monthly payments and demanded the total outstanding
balance of $980,340.78, plus interest. Cypress Trust, acting in its
capacity as the successor trustee, then liquidated the securities
pledged in two of the Trust’s accounts to satisfy the outstanding
amounts owed on the Note in the amount of $988,867.82. No funds
from Grantor’s estate were applied to satisfy the Note, nor were
any of Collins’ individual funds used to satisfy the amounts owed.
In addition, Cypress Trust did not seek any funds from Collins.
The Trust satisfied the Note in full.
                                 2
      As a result of these events, Appellants sought
reimbursement from Collins. Initially, Appellants filed a
complaint that was dismissed without prejudice. Subsequently,
Appellants filed an amended complaint against Collins and
Cypress Trust, with Count I being a claim for statutory
reimbursement pursuant to section 673.4191 and Count II being
an action entitled “judicial instruction.”

       Thereafter, Collins filed a motion to dismiss the amended
complaint, in which she argued that Count I of the amended
complaint should be dismissed for failure to state a cause of action
for statutory reimbursement on two bases. First, she asserted that
section 673.4191 applies only to natural persons and, therefore, is
inapplicable to entities or trusts. Second, she contended that
Appellants lacked standing to bring this action, as they were
merely contingent beneficiaries under the Trust, and they had not
otherwise alleged that they were parties to the contract or
transaction, which would confer standing to sue on behalf of the
Trust. In regards to standing, Collins further asserted that even if
a cause of action under section 673.4191 were available to the
Trust, Cypress Trust, as the successor trustee, would be the only
proper party to bring an action for damages resulting from the
transaction, not the contingent beneficiaries of the Trust.

       After a hearing on Collins’ motion to dismiss, the trial court
dismissed Count I with prejudice and Count II without prejudice.
In its order, the trial court concluded that the Trust was not an
accommodation party under section 673.4191. It also noted that
even if section 673.4191 did apply, it would be Cypress Trust,
acting as successor trustee on behalf of the Trust, that would have
standing to seek reimbursement from Collins, and not Appellants.
Appellants then voluntarily dismissed Count II of the amended
complaint. The instant appeal follows.

                                 II.

      “Appellate courts review an order granting a motion to
dismiss de novo.” Dziegielewski v. Scalero, 352 So. 3d 931, 932 (Fla.
5th DCA 2022) (citing Mlinar v. United Parcel Serv., Inc., 186 So.
3d 997, 1004 (Fla. 2016)). “When considering a motion to dismiss,
courts must confine their review to the four corners of the
complaint.” Thomas v. St. Vincent’s Med. Ctr., Inc., 48 Fla. L.
Weekly D1602 (Fla. 5th DCA Aug. 11, 2023); see also K.C. Quality
                                 3
Care, LLC v. Direct Ins. Co., 357 So. 3d 181, 181 (Fla. 5th DCA
2022) (“It is well-established that when considering a motion to
dismiss a complaint, trial courts are confined to the allegations
contained within the four corners of the complaint . . . .” (citing
Deutsche Bank Nat’l Tr. Co. v. Lippi, 78 So. 3d 81, 84 (Fla. 5th DCA
2012))). “The allegations set forth in the complaint must be
assumed to be true and all reasonable inferences arising therefrom
are taken in favor of the plaintiff.” Dziegielewski, 352 So. 3d at 933
(citing Mlinar, 186 So. 3d at 1004).

                                 A.

      First, Appellants contend that the trial court erred when it
found that the Trust could not constitute an accommodation party
subject to the provisions of section 673.4191. Appellants’
arguments involve the interpretation of section 673.4191.

      When interpreting a statute, Florida courts adhere to the
“supremacy-of-text principle,” meaning that “[t]he words of a
governing text are of paramount concern, and what they convey,
in their context, is what the text means.” Ham v. Portfolio Recovery
Assocs., LLC, 308 So. 3d 942, 946 (Fla. 2020) (quoting Antonin
Scalia & Bryan A. Garner, Reading Law: The Interpretation of
Legal Texts 56 (2012)); see also Richman v. Calzaretta, 338 So. 3d
1081, 1082 (Fla. 5th DCA 2022) (“As our supreme court recently
explained, when interpreting a statute, Florida’s courts ‘follow the
“supremacy-of-text principle” . . . .’” (quoting Ham, 308 So. 3d at
946)). In applying the supremacy-of-text principle, each word in
the text “is to be expounded in its plain, obvious, and common
sense, unless the context furnishes some ground to control, qualify,
or enlarge it.” State v. McKenzie, 331 So. 3d 666, 670 (Fla. 2021)
(quoting Joseph Story, Commentaries on the Constitution of the
United States 157–58 (1833), quoted in Scalia & Gardner, Reading
Law at 69).

       Section 673.4191 is entitled “Instruments signed for
accommodation.” Pursuant to subsection 673.4191(1), an
“accommodation party” is a party to an instrument who “signs the
instrument for the purpose of incurring liability on the instrument
without being a direct beneficiary of the value given for the
instrument.” The party who receives the benefit is the
“accommodated party.” § 673.4191(1), Fla. Stat. (2021). Thus,
“accommodation parties remain directly accountable to the holder
of the instrument and legally responsible, in contribution, to their
                                 4
co-accommodation makers.” Palma v. S. Fla. Pulmonary & Critical
Care, LLC, 307 So. 3d 860, 865 (Fla. 3d DCA 2020) (citing Dobrow
v. Bryant, 427 So. 2d 809, 810 (Fla. 5th DCA 1983)). Subsection
673.4191(5) provides that “an accommodation party who pays the
instrument is entitled to reimbursement from the accommodated
party and is entitled to enforce the instrument against the
accommodated party.”

      Neither chapter 673 nor section 673.4191 defines the term
“person” or “a party” as a trust. However, section 671.201, Florida
Statutes (2021), contains general definitions that apply to chapter
673. See § 671.101(2). Section 671.201(29) defines a “party” as “a
person who has engaged in a transaction or made an agreement
subject to this code.” § 671.201(29), Fla. Stat. (2021) (emphasis
added). Under section 671.201(30), a “person” is defined as “an
individual; corporation; business trust; estate; trust; partnership;
limited liability company; association; joint venture; government;
governmental subdivision, agency or instrumentality; public
corporation; or any other legal or commercial entity.” §
671.201(30), Fla. Stat. (2021) (emphasis added). Thus, a “trust” is
a person or party for the purposes of section 673.4191.

      In confining ourselves to the four corners of the amended
complaint and accepting the allegations of the amended complaint
as true, Appellants sufficiently alleged that section 673.4191
applies to the Trust under the unique facts of this case. First, the
parties did not dispute in the lower court proceedings that the Note
constitutes a negotiable instrument under section 673.4191(1). See
Palma, 307 So. 3d at 864 (applying section 673.4191 to a
promissory note because a promissory note is a negotiable
instrument within the meaning of chapter 673). In addition, the
amended complaint alleges the Note was issued for Collins’
benefit; and as such, Collins could be an accommodated party
within the meaning of section 673.4191(1).

      Grantor, as the then-trustee of the Trust, signed the Note
and the Pledge Agreement. In doing so, Grantor, as trustee,
pledged Trust assets as collateral for the Note and, acting as
trustee, obligated the Trust to repay the debt. Put differently,
Northern Trust could have independently sought contribution
from either the Trust, Grantor, or Collins, and it would have been
Northern Trust’s right to enforce the Note against any of the three
parties, which supports Appellants’ claim that the Trust was an
accommodation party. See § 673.4191(2), Fla. Stat. Further, the
                                 5
amended complaint alleged that the Trust did not receive a benefit.
See § 673.4191(1), Fla. Stat.; see also Lyons v. Citizens Com. Bank
of Tallahassee, 443 So. 2d 229, 231 (Fla. 1st DCA 1983) (“In
determining whether such a person is to be afforded the status of
an accommodation party, several factors are to be considered,
including . . . whether the party received any benefit from the
transaction . . . .” (internal citations omitted)). As a result, it
appears that the Trust could qualify as an accommodation party
under section 673.4191(1). Once the Trust paid the debt owed by
Collins, it had the right to recover the funds from Collins pursuant
to section 673.4191(5). 1

      However, in this action, it is not the successor trustee
seeking reimbursement from Collins on behalf of the Trust.
Rather, Appellants, as the contingent beneficiaries under the
Trust, are suing Collins to require her to reimburse the Trust.
Thus, we must decide whether Appellants have standing to bring
this action against Collins.

                                 B.

      “Generally, one has standing when he has a sufficient
interest at stake in the controversy which will be affected by the
outcome of the litigation.” Wheeler v. Powers, 972 So. 2d 285, 288
(Fla. 5th DCA 2008) (quoting Gieger v. Sun First Nat’l Bank of
Orlando, 427 So. 2d 815, 817 (Fla. 5th DCA 1983)). “However,
standing encompasses not only this ‘sufficient stake’ definition, but
the at least equally-important requirement that the claim be
brought by or on behalf of one who is recognized in the law as a
‘real party in interest,’ that is, ‘the person in whom rests, by
substantive law, the claim sought to be enforced[.]’” Kumar Corp.

1 We note that the trial court’s decision was based on the belief that

both the Grantor and trustee of the Trust were one in the same
under the terms of the revocable trust. As a result, the trial court’s
primary basis for dismissal was that the same person could not
both be an accommodated and accommodation party based on the
unique nature of a revocable trust. We do not decide whether this
analysis is correct because, even if it is, at the time the debt was
paid, the trust had become irrevocable, and Collins, who was
neither a grantor nor the trustee of the Trust, was an additional
party to the transaction (as a comaker). This made section
673.4191 applicable as to Collins and the Trust.

                                  6
v. Nopal Lines, Ltd., 462 So. 2d 1178, 1183 (Fla. 3d DCA 1985)
(citing Author’s Cmt. to Fla. R. Civ. P. 1.210, 30 Fla. Stat. Ann.
304, 306–07 (1967); 3A J. Moore, Moore’s Federal Practice, ¶ 17.02
(2d ed. 1984)).

       As we will explain, Florida law has long recognized that it is
generally the trustee, and not a beneficiary, who is the real party
in interest with authority to bring an action on behalf of the trust.
See Buerki v. Lochner, 570 So. 2d 1061 (Fla. 2d DCA 1990) (holding
that the trustee, the legal title holder to the trust property, would
be the real party in interest to a suit brought to determine the
trust’s assets); see also First Union Nat’l Bank v. Jones, 768 So. 2d
1213, 1215 (Fla. 4th DCA 2000) (holding that a trustee “is merely
the legal entity who is sued when an action is brought against” a
trust). See generally Cady Huss & Elizabeth Hughes, The Real
Party in Interest: Trustees, Actionline Vol. 20, no. 2 (Winter 2018–
2019) (a publication of the Florida Bar Real Property, Probate, and
Trust Law Section discussing the legal principle that the trustee,
rather than the beneficiary, is the real party in interest when
bringing an action on behalf of the trust). Accordingly, Florida Rule
of Civil Procedure 1.210(a) provides that “every action may be
prosecuted in the name of the real party in interest,” and
recognizes that the trustee of an express trust may bring a suit on
behalf of the trust.

       Both rule 1.210(a) and Florida’s court decisions are in
accordance with the longstanding principles governing the
trustee’s authority to act on behalf of the trust. As a general rule,
the trustee may exercise the power conferred upon it by the terms
of the trust and all powers that an owner would have over the trust
property. Jones v. First Nat’l Bank in Fort Lauderdale, 226 So. 2d
834, 835 (Fla. 4th DCA 1969) (providing that the “duties, powers
and liabilities of executors and trustees are ordinarily fixed by the
terms of the . . . trust agreement” (internal citations omitted)).
“From the trust, the trustee derives the rule of his conduct, the
extent and limit of his authority, the measure of his obligation.” Id.
(citing Valley Nat’l Bank of Phoenix v. Hartford Accident & Indem.
Co., 136 P.2d 458 (Ariz. 1943)).

       Likewise, except as otherwise provided in the terms of the
trust, the Florida Trust Code grants the trustee broad duties and
powers. § 736.0105, Fla. Stat. (2021). Under section 736.0815,
Florida Statutes (2021), the trustee is accorded “any other powers
appropriate to achieve the proper investment, management and
                                 7
distribution of the property,” as well as “any other powers
conferred by the [Florida Trust Code].” § 736.0815(1), Fla. Stat.
Specifically, section 736.0816, Florida Statutes (2021), entitled
“Specific powers of trustee,” provides that a trustee may “prosecute
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.; see also McMullin v. Beaver, 905 So. 2d 928, 929 (Fla.
4th DCA 2005) (“By statute, a trustee has the power ‘to prosecute
actions, claims or proceedings for the protection of trust assets and
of the trustee in the performance of his or her duties’ until final
distribution of trust assets.” (internal citations omitted)).

       Finally, except to the extent modified by the Florida Trust
Code or otherwise under Florida law, the common law of trusts
still applies. See § 736.0106, Fla. Stat. (2021). Notably, the
common law provides that the real party in interest in litigation
involving a trust is the trustee. 90A C.J.S. Trusts § 575; 76 Am.
Jur. 2d, Trusts § 601 (stating that the “trustee . . . is the real party
in interest in litigation involving trust property”); see also 76 Am.
Jur. 2d, Trusts § 602 (stating that “a trustee is a necessary party
to assert or defend title to trust property, particularly in an
adjudication of the rights of the beneficiaries in a trust”).

       This common law rule is premised on the fact that “the
trustee has a title (generally legal title) to the trust property,
usually has its possession and a right to continue in possession,
and almost always has all the powers of management and control
which are necessary to make the trust property productive and
safe.” George G. Bogert & George T. Bogert, The Law of Trusts and
Trustees § 869, Westlaw (database updated June 2023). Since “the
trustees are the parties in whom the trust fund is vested and
whose duty it is to maintain and defend it against wrongful attacks
or injury tending to impair its safety or amount,” then, “it is the
duty of the trustee to institute actions, intervene in actions
pending, and, in any other way, in accordance with orderly
procedure, protect the trust property.” 90A C.J.S. Trusts § 578. As
a result, any interference with these interests of the normal
trustee is thus considered a wrong to the trustee and “gives him a
cause of action for redress or to prevent a continuance of the
improper conduct.” Bogert § 869. Therefore, “although the
beneficiary is adversely affected by such acts of a third person, no
cause of action inures to him on that account,” and “the right to

                                   8
sue in the ordinary case vests in the trustee as a representative.”
Id.

       For these reasons, the beneficiary generally is not eligible,
in the absence of special circumstances, to bring or enforce a cause
of action that runs to the trustee. Id. Ordinarily, then, a
beneficiary may not sue a third party “to recover possession of the
trust property,” either “for himself or the trustee,” and a
beneficiary additionally may not sue a third person “for damages
for conversion of or injury to the trust property, or for recovery of
its income, or to compel an agent of the trustee to account, or to
enjoin a threatened injury to trust property by a third person.” Id.

      We are aware that many common law authorities recognize
exceptions to the general rule that only “a trustee may maintain a
proceeding against a third party on behalf of the trust and its
beneficiaries.” Restatement (Third) of Trusts §107. For instance, if
a conflict of interest arises between the trustee and a beneficiary,
then that may confer standing on the beneficiary to sue a third
party in a proceeding related to the trust or trust property. Id. at
cmt. (c)(2) (commenting that if the trustee is unsuitable or unable
to protect the beneficiaries because of the trustee's conflicting
interests, then that may justify an action by a beneficiary against
a third party); see also Bogert § 869 (remarking that where the
trustee has an adverse interest to that of a beneficiary then the
beneficiary may bring an action against a third person).

      However, Appellants do not argue a common law exception
on appeal. Rather they argue that they have standing because they
are the “real party in interest,” by relying on our sister court’s
holding in St. Martin’s Episcopal Church v. Prudential-Bache
Securities, Inc., 613 So. 2d 108 (Fla. 4th DCA 1993). But as we will
explain, we think Appellants read that opinion too broadly.

      In St. Martin’s, a beneficiary of a trust brought an
independent claim against a securities dealer and the trustee,
where a conflict of interest arose with the trustee. Id. at 108–09.
In particular, the beneficiary alleged that the securities dealer and
the trustee who was employed by the securities dealer, colluded to
“churn” an investment account to make unnecessary stock trades
and earn unwarranted commissions which dissipated trust assets.
Id. at 109. The trial court dismissed the action, ruling that the
beneficiary lacked standing. Id.

                                 9
       In reversing the trial court, the district court held that the
beneficiary had standing to bring an independent action against
the securities dealer in regard to trust assets under the “particular
facts” of the case. Id. In its reasoning, the court read rule 1.210(a)
as “one of enlargement, rather than limitation” and stated that
even though the trustee can sue, “it is all but expressly assumed
in this rule that a beneficiary of a trust may sue someone other
than the trustee for something.” Id. As such, the court stated that
under the facts of the case, the beneficiary had standing and could
be considered the real party in interest. Id.

      Based on St. Martin’s, Appellants argue that a beneficiary is
actually the real party in interest to sue a third party on behalf of
the trust. We disagree. Appellants’ position would contradict the
longstanding common law rule that absent certain exceptions, the
real party in interest is the trustee. 90A C.J.S. Trusts § 575.
Instead, we read St. Martin’s as merely honoring a common law
exception to the rule when the trustee has a conflict of interest. See
Restatement (Third) of Trusts § 107; Bogert § 869; see also Kent v.
Kent, 431 So. 2d 279 (Fla. 5th DCA 1983) (holding that
beneficiaries of trust could maintain an independent action for a
constructive trust regarding trust assets when there was a
fraudulent conspiracy between the trustee and a third party to
transfer real estate).

       While St. Martin’s, perhaps imprecisely, uses sweeping
language, its holding is confined to the “particular facts” of the case
as stated by the court. 613 So. 2d at 109. We disagree with
Appellants’ position that St. Martin’s stands for the broad
proposition that the beneficiary is actually the real party in
interest to bring an action against a third party on behalf of the
trust. Rather, we agree with the ruling in Buerki, that generally
the trustee is the real party in interest to bring an action on behalf
of the trust. Buerki, 570 So. 2d at 1061. Absent any argument that
a common law exception applies, Appellants have not
demonstrated that they have standing to bring an action against
Collins for statutory reimbursement.

                                 III.

      In sum, the Trust, as the accommodation party, is the only
party that could bring an action to recover funds from Collins
under section 673.4191. Since Cypress Trust, as successor trustee,
would be considered the real party in interest, it would have been
                               10
the proper party to bring the action on behalf of the Trust. As
Appellants have not raised on appeal any common law exception
that would allow them to proceed against Collins on behalf of the
Trust, we agree with the trial court’s ruling that Appellants did
not establish standing to bring this suit. See City of Miami v.
Steckloff, 111 So. 2d 446, 447 (Fla. 1959) (“It is an established rule
that points covered by a decree of the trial court will not be
considered by an appellate court unless they are properly raised
and discussed in the briefs.”). Therefore, we affirm the order
dismissing the amended complaint.

      AFFIRMED.

WALLIS and EISNAUGLE, JJ., concur.

                  _____________________________

Not final until disposition of any timely and authorized
motion under Fla. R. App. P. 9.330 or 9.331.
               _____________________________

                                 11