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Kelly v. Lindenau

Florida Court of Appeals, Second District

May 17, 2017

JILL KELLY; JEFF FALKENTHAL; and JUDY L. MORS-KOTRBA, as successor trustee, Appellants,
v.
DONNA LINDENAU, Appellee.

         NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED

         Appeal from the Circuit Court for Manatee County; Gilbert Smith, Judge.

          Barry F. Spivey of Spivey & Fallon, P.A., Sarasota, for Appellants Jill Kelly and Jeff Falkenthal.

          Scott H. Carter of Dunlap & Moran, P.A., Sarasota, for Appellant Judy L. Mors-Kotrba.

          David A. Wallace, Morgan R. Bentley, and Amanda R. Kison of Bentley & Bruning, P.A., Sarasota, for Appellee.

          MORRIS, Judge.

         The appellants, Jill Kelly (Jill), Jeff Falkenthal (Jeff), and Judy L. Mors-Kotrba (Judy), as successor trustee, appeal a final judgment reforming a trust and requiring Judy to transfer title to real property to a trust beneficiary, the appellee, Donna Lindenau. Below, Judy petitioned for a declaratory judgment in her capacity as successor trustee of a trust created by the decedent, Ralph Falkenthal (Ralph).[1] Judy alleged that two amendments to the trust were not signed by two witnesses as required by Florida law. Lindenau then filed a counterclaim seeking reformation of the trust in relation to the second amendment. Following a bench trial, the trial court denied the petition for a declaratory judgment, granted Lindenau's counterclaim, and ordered Judy to transfer the subject real property to Lindenau. Because we conclude that the amendments to the trust were not validly executed and, as a result, that reformation of the trust could not occur, we reverse the final judgment.[2]

         I. BACKGROUND

         Ralph created his revocable trust in December 2006 while he still resided in Illinois. The trust was validly executed pursuant to Illinois law. The trust provided that upon his death, the trust assets would be distributed to his wife. In the event that she predeceased him, they would be evenly distributed to his three children, Jill, Jeff, and Judy. Ralph's wife predeceased him, and Ralph subsequently moved to Florida.

         In 2009, Ralph met Lindenau. In 2010, Ralph purchased a house located in Bradenton, and he resided there with Lindenau. Subsequently, Ralph executed a first amendment to the trust on October 25, 2012, the testamentary aspects of which are irrelevant to this appeal.[3] On December 18, 2014, Ralph executed a second amendment that modified the trust to provide for a specific devise to Jeff of a Sarasota residence. The second amendment also provided for a specific devise of the Bradenton residence to Lindenau. No other changes were made to the remaining trust residue. At the time of execution of both the first and second amendments, Ralph resided in Florida. Yet, both amendments were prepared by Ralph's Illinois attorney, and the parties have not disputed Lindenau's assertion that the amendments were prepared in accordance with Illinois law. Even though the amendments were executed in the presence of two witnesses, they were only signed by one of the witnesses.[4]

         Ralph died on February 7, 2015, whereupon the trust became irrevocable. Judy, in her capacity as successor trustee, then filed a petition for declaratory judgment to determine the validity of the first and second amendments. Lindenau filed her counterclaim, which she later amended, seeking a reformation of the trust in relation to the second amendment. Lindenau argued that the error in failing to have two witnesses sign the second amendment was a mistake of law. In the alternative, Lindenau argued for the imposition of a constructive trust in her favor regarding the Bradenton house.

         Jill and Jeff filed a motion for summary judgment, arguing that the amendments were invalid because they were not executed in accordance with Florida law. They also argued that reformation was not appropriate because Lindenau was not seeking to reform trust provisions already contained within the trust but was instead seeking to validate the otherwise invalid amendment. The trial court denied the motion for summary judgment. The case proceeded to a bench trial with the trial court ultimately granting Lindenau's reformation request pursuant to section 736.0415, Florida Statutes (2016), and ordering Judy, as successor trustee, to transfer the Bradenton house to Lindenau within ten days of the final judgment. This appeal followed, and the trial court granted a stay of the transfer of the Bradenton house pending the outcome of this appeal.

         II. ANALYSIS

         There is no dispute that Ralph's intent was to leave the Bradenton house to Lindenau. There is also no dispute that the second amendment was only signed by one of the witnesses. Rather, the dispute focuses on whether an improperly executed trust amendment can be validated through reformation pursuant to section 736.0415. The trial court concluded that section 736.0415 permitted reformation in this case because Lindenau met her burden of proving that "the accomplishment of the settlor's intent was affected by a mistake in law." Because the trial court's conclusion rests on a question of law, we review the ...


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