I enjoy working with other lawyers on unusual cases. Typically, these cases are interesting because the facts are unusual or convoluted, or the law (sometimes even which set of laws to use) is unclear. I unravel these strange situations.
John L. Zoltak started a company that eventually became very successful. When his company was still young, he owned 60% of its stock, his wife owned 20% of the stock and each of their two children owned 10% of its stock. The four of them (and the company) entered into an agreement in New York restricting the transfer of the shares of the company while they were alive and at death. That agreement required all of the shareholders to execute a will requiring their personal representative to sell the shares back to the company at the death of that shareholder.
Then, Mr. Zoltak, his wife and son (who was then second to his father in running the company) moved to Florida and relocated the company to Florida. It became apparent that the company had become so successful that Mr. Zoltak and his wife would be facing massive probate fees and enormous estate taxes. So they engaged a New York firm they had worked with before to devise an estate plan to minimize these expenses.
Among other things, a part of the estate plan, the revocable trust, transferred Mr. Zoltak’s stock to his son. To work, the shares would have to be placed in that trust. The will drafted for Mr. Zoltak poured-over all assets not otherwise disposed of into the trust. It failed to direct the personal representative to transfer the shares back to the company. The will and trust taken together breach the shareholders’ agreement because they transfer the shares to the son instead of back to the company.
The company continued to be run by Mr. Zoltak in a very informal fashion. Corporate formalities were not observed. Mr. Zoltak died in 2014.
His son took over as president of the company and proceeded as if he owned his father’s shares (per the trust language). Eventually, his sister asked for an explanation of how their father’s shares got transferred to her brother. She also had questions about its corporate procedures-i.e. the lack of formal corporate meetings and the fact that certain personal expenses had been passed through the company’s accounts.
Because the sister considered the answers inadequate, in 2017, she petitioned the court in Indian River County, Florida to probate their father’s will. Objections and counter-petitions followed. In June 2018, the probate judge decided that none of the potential beneficiaries were appropriate to name as personal representative and appointed an administrator ad litem (my soon to be client) to probate the will.
Meanwhile, the sister sued her brother, mother and the company and soon added the estate of her father to the lawsuit. That case is still pending. Here is a link to it: Marshall v Zoltak, 312017CA000319 XXXXXX.
What a mess!
Florida has a statute of repose that bars any claims against an estate that are not brought within two years of death. Here, the claims against the estate were not brought in that time period as the estate was not opened until well after that two-year period expired (which is never a legally viable excuse). The shareholders’ agreement did require the representative of the decedent to offer the shares back to the company after death; the argument is that that obligation would not be subject to the two-year statute of repose. That issue remains pending.
All of the distributions to the son made because the son claimed he owned his father’s shares had to be returned to the estate. Since the income from the shares was reported as belonging to the son and not the estate, income tax returns had to be filed for the estate. The returns and the taxes were late and penalties were assessed. (Some of these have been waived by the IRS and requests for waivers of the other penalties remain pending).
Since the father’s shares in the company were transferred to the estate as probate assets, the administrator ad litem was in control of them and became the majority shareholder. As majority shareholder, we proceeded (and continue) to attempt to work out the corporate governance issues.
The failure to consider the shareholders’ agreement and the failure to effect the transfer of Mr. Zoltak’s shares into his trust cost his estate probate fees, fees for the administrator ad litem, fees for the administrator ad litem’s atttorney (me), fees for the attorneys who initiated the probate proceeding, interest and penalties payable to the IRS, and fees for the estate accountants. The damages will exceed several hundreds of thousands of dollars.
Because the New York attorneys who designed the estate plan were responsible for these damages, we sued them for professional malpractice. The case was filed in state court and removed to federal court by the defendants. The defendants immediately moved to dismiss based on the Florida two-year statute of limitations for professional malpractice. Here is the magistrate’s report and recommendation to deny that motion. MacWilliam v Schanker, et al, 19-14354-CIV-Martinez/Maynard (S.D. Fla., May 8, 2020). We expect to recoup most of the estate’s damages through this lawsuit.
Mr. Coburn married his longtime gay partner. Then he changed his will to exclude all gifts to his daughter, naming his husband personal representative and leaving the bulk of his estate to him. Mr. Coburn’s daughter sued to revoke the probate asserting that the will was procured through undue influence and that her father lacked testamentary capacity when he signed the will.
When the litigation escalated, I was asked to become involved. Neither the medical records nor the testimony of the lawyer that drafted the will supported the daughter’s conclusions about testamentary capacity. The lawyer that drafted the will had extensive notes about why Mr. Coburn excluded his daughter from any testamentary gifts.
I was eventually able to persuade Mr. Coburn’s daughter to drop her case without any recovery from the estate. (Some keepsakes were given to her gratuitously).
My client Ms. Smith was a beneficiary of her father’s trust. The trustee of that trust failed to account properly to her. The trustee also failed to pursue debts owed to the estate. We objected and were able to secure the appropriate benefits for Ms. Smith.
I was brought into this case by another lawyer because our client’s decedent was obviously mostly at fault for a single car collision that killed plaintiff’s decedent. Our client’s estate had substantial assets that a judgment could reach. The damages were arguably in excess of $1,000,000 and plaintiff’s decedent would probably appear to the jury as likable, leading them to identify with her.
A claim was sent into the insurance company. It denied coverage, arguably, in bad faith.
The likelihood of a collectable judgment in excess of $1,000,000 concerned our client.
I was called in by the attorney for the estate of the at fault driver, and I had to work out a way to protect the estate’s assets.
I entered into an agreement with plaintiff’s counsel. The agreement called for an arbitration trial to set the amount of damages. In connection with the agreement, plaintiff’s counsel agreed to pursue the insurance policy exclusively to satisfy the arbitration judgment. We agreed to assign our bad faith claim against the insurance carrier to plaintiff. Plaintiff agreed to release the estate of the at-fault driver.
We then went through a day long arbitration trial that resulted in a decision setting the damages well in excess of the available policy limits. Because of our agreement, our client then assigned his bad faith case to plaintiff and was released from any personal liability.
I was brought into this case because plaintiff (the son of the defendant) asserted novel causes of action in attempts to enforce an agreement for the purchase of real estate. The parties had modified a lease to make it into a purchase and sale contract with the lease payments being consideration for the purchase of the real estate. Oral portions (irrelevant because of the parol evidence rule and the statute of frauds) of the agreement were asserted. I obtained dismissals of all the Complaints and Amended Complaints.
The judge held a hearing before she dismissed the last Amended Complaint and plaintiff attended in person. It was apparent from the judge’s questioning that his case was not viable. Plaintiff then abandoned his position and changed what he asserted to have been the agreement between his mother and himself. After that change, the parties worked out their differences and the real estate sale closed.