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Some Estate Claims in Florida Not Subject to Creditor Claim Period

Posted on: February 22nd, 2017
Florida probate lawFlorida’s Probate Code provides a short window of time for creditors to make claims against the decedent’s estate following creditor notification, with a statute of limitations extending two years after the decedent’s date of death. Per the statutes, creditors have 30 days following receipt of notification or 90 days after first publication of notice, whichever is later, to file a claim.

A recent appeals court decision involving an estate and a claim against an insurance company for bad faith draws attention to application of statutes of limitations, the degree to which estates are immune to claims, and an insurance company’s powers to refuse defense of an estate. The Third District Court of Appeals ruled in January 2017 that in Estate of Arroyo, et al. v. Infinity Indemnity Insurance, a bad faith insurance claim made against the decedent’s insurance company after the claimant neglected to file a claim within the statute of limitations is valid.

Multiple earlier court decisions occurred leading up to the recent appeals ruling. The incident initiating the chain of events was a car accident. The decedent, Jorge Arroyo, died in a car accident on October 9, 2009 that injured Delia Reyes. Arroyo’s parents petitioned to open the estate and serve as personal representatives as of January 2011. Reyes filed a negligence lawsuit against the estate just one month after Arroyo’s parents began overseeing the estate. However, Reyes neglected to file a claim with the probate court. The estate presented the claim to the decedent’s insurance company, Infinity, but the insurance company rejected claim defense.

The estate offered Reyes a Coblentz agreement, which is only possible when an insurance company declines defending a claim, and Reyes agreed not to proceed with a judgment against the estate. The agreement was executed in January 2013. Reyes sued Infinity, contending Infinity operated in bad faith since the insurance company failed to defend the estate. Infinity asserted that Reyes’s neglect to file the lawsuit in probate court, and the expiration of the statute of limitations, meant the claim was no longer valid. Infinity also challenged that a number of factors, including the Coblentz agreement, relieved the estate from excess judgment. 

In addition to these proceedings, Infinity filed a separate motion to intervene in probate court. The probate court ruled that Arroyo’s parents, the personal representatives, “did not have the authority to enter into the Coblentz agreement in the negligence lawsuit because at the time the personal representatives entered into the Coblentz agreement, the Estate enjoyed absolute immunity from Reyes's claim, and thus, the consent judgment was unenforceable against the Estate.” Additional motions and appeals persisted.

The recent appeals court ruling consolidated the circuit court and probate court cases. The appeals decision found that the probate court’s approval of Infinity’s motion to intervene was in error. The court also found that Infinity’s refusal to defend the estate meant Infinity missed an opportunity to object to the Coblentz agreement. The Coblentz agreement waived the estate’s rights and granted them to Reyes, giving Reyes the right to pursue a bad faith claim. The appeals court reversed all previous decisions, asserting that Infinity was prohibited from earlier intervention, and that the claim was not against the decedent, the estate, or the personal representatives. Instead, the claim was against the policy. 

If the validity of estate claims causes concern during estate administration, consult with a probate lawyer. Contact our firm to schedule an appointment with a lawyer to help with probate in Florida.
 
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