Doris Corya was a trustee (or co-trustee) of four trusts that failed to provide fiduciary accountings to a beneficiary otherwise entitled to receive accountings under Florida law. The failure to account went back many years – the oldest of the four trusts was established in 1953 (although Florida’s statutory obligation to account may not go back that far). Roy Sanders, a beneficiary, brought an action against Doris to compel the preparation and delivery of the unprepared fiduciary accountings. The trial court found that Doris was obligated to prepare and deliver such accountings, back through the date of the establishment of the trusts (since Doris was a trustee for each since the inception of each).
The appellate court reversed the trial court, requiring accountings only for a four year retroactive period. This was based on the statutory laches provision under Section 95.11(6), Florida Statutes, which reads:
Laches shall bar any action unless it is commenced within the time provided for legal actions concerning the same subject matter regardless of lack of knowledge by the person sought to be held liable that the person alleging liability would assert his or her rights and whether the person sought to be held liable is injured or prejudiced by the delay. This subsection shall not affect application of laches at an earlier time in accordance with law. (emphasis added)
Under Florida law, the failure to provide an accounting is both a breach of trust and a breach of fiduciary duty. Since the statute of limitations to bring an action against a trustee for breach of trust or breach of fiduciary duty is four years, four years is the “time provided for legal actions concerning the same subject matter.” Based on this, the appellate court limited the beneficiary to being able to compel only four prior years of accountings.
While this is a Florida case, states with similar statutory laches provisions may be influenced by the court’s determination. Further, the logic of limiting the duty to account to only those years where a suit for breach of trust or duty can be brought makes logical sense – if the beneficiary can only seek damages for the preceding four years, compelling accountings for years before that is probably not worth the cost and difficulties of preparing accountings for years before that.
The appellate court also implied that the common law concept of laches could apply, if the statutory provision did not. This is relevant both in Florida, and in states that may not have a statutory laches provision. This was determined to be the case, even though the beneficiary did not know that he or she was entitled to receive an accounting.
Most of the multi-year failure to account situations that I have seen arise from a lack of knowledge of the requirement to account by the trustee – and not a nefarious or intentional failure. To the extent this case is followed, it is helpful to those trustees by relieving them and the trust of the cost and burden of preparing many years of accountings once their duty becomes known, especially when historical information may be limited.
While the case will also benefit trustees with more nefarious intent, it is unlikely that such a laches rule would encourage trustees not to account. Most do so because they are required to do so, or to benefit from the shorter statute of limitations that arises in most jurisdictions as to items reported on the accounting. Being relieved of the obligation to have to account for more than 4 preceding years if called out for not accounting would not appear sufficient incentive in and of itself to shift a trustee that would otherwise account to deciding not to account – presumably they would have other motivation to not account before intentionally going down that road.
For a further discussion of this case, please also see the write-up here on Rubin on Rubin on Probate Litigation.
Corya and Sanders v. Sanders, 39 Fla.L.Weekly D2298a (4th DCA Fla., Nov. 5, 2014)