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Florida Remedies for Joint Account Theft

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A growing area of inheritance litigation is sibling feuds over bank accounts jointly titled in the names of a decedent’s children.  Joint account theft is happening more and more in Florida.  In a common fact pattern, one sibling absconds with the account after the parent’s death and refuses to share the account with the other joint account owners. Fortunately, Florida law provides a remedy to the joint account holders who are victimized by this joint account theft in Florida.

Treble Damages For Florida Joint Account Theft

Florida’s Civil Theft statute affords a Plaintiff the opportunity to augment his or her recovery three-fold based on the availability of treble damages and attorney fees.  Pursuant to Section 772.11, Florida Statutes, civil theft claims may be asserted by an individual to impose civil liability upon another for criminal practices (e.g., robbery, crimes of theft, and exploitation of elderly persons).

While enticing on the damages front, it is important to garner an understanding of the intricacies of this statute and its proof and notice requirements before asserting the claim.

Safe-Harbor Provision

Prior to filing a lawsuit alleging civil theft, a party must serve a demand letter alleging the treble damage of the claim.  The recipient of this pre-suit demand letter has thirty (30) days from the date of receipt of the letter to pay the money to avoid further civil liability.  Should the recipient pay the treble damages alleged, a written release of the claim shall be provided by the person making the written demand.

Felonious Intent

An additional prerequisite for a civil theft cause of action is that the Plaintiff must plead and prove that the defendant acted with “felonious intent to steal.”  If the pleading fails to allege “felonious intent to steal,” a civil theft cause of action fails.

Pursuant to section 812.014(1), Florida Statutes, “theft” is defined as follows:

A person commits theft if he or she knowingly obtains or uses, or endeavors to obtain or to use, the property of another with intent to, either temporarily or permanently:

(a) Deprive the other person of a right to the property or a benefit from the property.

(b) Appropriate the property to his or her own use or to the use of any person not entitled to the use of the property.

Proof

Unlike many other civil causes of action which rely upon a preponderance of the evidence standard of proof, civil theft claims in Florida require a showing of “clear and convincing evidence.”  This standard lies somewhere in between the preponderance of evidence and beyond a reasonable doubt standards.  In Slomowitz v. Estate of Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983) the District Court of Appeal for the Fourth District held that:

the clear and convincing evidence [standard] requires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the testimony must be precise and explicit and the witnesses must be lacking in confusion as to the facts in issue. The evidence must be of such weight that it produces in the mind of the trier of fact a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established.

By way of example, civil theft claims are often asserted with claims for conversion, which is defined as the wrongful dominion or control over property to the detriment of the rights of the actual owner. In a conversion claim, the Plaintiff need only establish his or her claim by the “preponderance of the evidence.”

Statutory-Caution on Unsubstantiated Allegations

Civil theft claims should be initiated and handled with caution.  As provided by statute, the defendant is “entitled to recover reasonable attorney’s fees and court costs in the trial and appellate courts upon a finding that the claimant raised a claim that was without substantial fact or legal support.”

As noted above, a party pursuing a civil theft claim for Florida joint account theft should gain a full understanding of this cause of action.  If such a claim is unsuccessful, they may be liable for the other party’s reasonable attorney’s fees and costs.

Case Study: Columbia Bank v. Turbeville

In Columbia Bank v. Turbeville, grandmother and her son opened five bank accounts with approximately $1.2 million of grandmother’s and son’s money. To assist them in managing the accounts, they added granddaughter as a joint account holder for this purpose. Granddaughter contributed none of the funds, and there was no indication that adding her name to the accounts was intended to be a gift to her. After the son died, the accounts were transferred into new joint accounts between grandmother and granddaughter.

At some point, grandmother became suspicious about her granddaughter’s intentions and went to a branch of the bank (where granddaughter did not work) and asked that the funds, at this point over $1.3 million, be transferred into accounts with just grandmother’s name on the accounts. A bank employee told grandmother that she could not transfer the money into accounts with just her name on the accounts, and had to comply with certain other conditions before being able to withdraw funds or close the accounts. The bank employee then said she would freeze the accounts until the granddaughter’s status as a joint account holder was resolved.

Instead of freezing the accounts immediately, the bank employee called granddaughter, who was also an employee of the bank. Granddaughter, at her branch, instructed a teller to prepare a cashier’s check payable to granddaughter in the amount of approximately $670,000. Granddaughter deposited these funds into her own account in her name only.

Grandmother sued the bank for the return of the funds. The bank paid grandmother $1.1 million. The appellate opinion does not give any details as to why the bank apparently paid more than the amount withdrawn, but must have included interest, attorney fees, and possibly other damage amounts – in other words a total and complete victory for grandmother over the bank. At first, this is a surprising result, because banks are strongly protected from the joint account holder of joint bank accounts.

Florida’s Joint Bank Account Statute:

The Florida joint bank account statute provides as follows.

655.78 Deposit accounts in two or more names.—

(1) Unless otherwise expressly provided in a contract, agreement, or signature card executed in connection with the opening or maintenance of an account, including a certificate of deposit, a deposit account in the names of two or more persons may be paid to, or on the order of, either or any of such persons or to, or on the order of, the guardian of the property of any such person who is incompetent, whether the other or others are competent. The check or other order for payment to any such person or guardian is a valid and sufficient release and discharge of the obligation of the institution for funds transferred thereby.

Granddaughter removed funds from the bank account. Under the joint bank account statute, the bank would normally have no liability, because any joint holder may remove funds without the bank having any liability to determine the rights between the joint account holders. The appellate opinion does not explain, but we can speculate. When grandmother went to the bank to remove granddaughter’s name from the accounts, she had an absolute right to do so. The refusal to allow grandmother to change the title of the accounts, coupled with a bank employee tipping off granddaughter about what grandmother was doing, must have created a very strong case for grandmother against the bank.

In settling with the bank, grandmother assigned all of her rights in the amounts removed to the bank, so that the bank could sue the granddaughter for the return of the funds. The trial court granted a motion to dismiss the bank’s three count complaint against the granddaughter (now a former employee of the bank). In reversing, the appellate court gave a detailed road map as to the claims that could be properly brought against the granddaughter, as follows.

Equitable Subrogation

An equitable subrogation claim places one party into the shoes of another so that the substituting party retains the rights and remedies that would otherwise belong to the original party. The claim is appropriate when five elements are met:

  1.  made the payment to protect its own interest,
  2. did not act as a volunteer,
  3. was not primarily liable for the debt,
  4. paid off the entire debt, and
  5. works no injustice to the rights of a third party by its equitable subrogation claim.

The court held that all of the elements were present here. Granddaughter tried to rely on the joint bank account statute, which might have protected the bank from the claims of grandmother, to contend that the bank had no liability and hence no interest to protect (the first element). The court did not elaborate on why it rejected this claim, other than to state that sufficient facts were pled. We can speculate that the bank could have been exposed to liability, in spite of the statute, when its employees acted improperly when grandmother attempted to take sole control of the accounts and her attempts were rejected. The fact that the bank paid out over $1 million to grandmother is pretty good evidence of the bank’s interest and exposure in the matter.

Conversion Claim

When grandmother assigned her claims against granddaughter to the bank, the bank then possessed a conversion claim against granddaughter for the wrongful taking of the funds from the joint account. Even though the joint bank account statute protects a bank from the claims of joint account holders who allege wrongful withdrawals by the other joint account owners, that statute does not protect the joint bank account holders from claims against each other.

The Bank’s allegations are sufficient to demonstrate that [grandmother] owned all of the funds, intending that [granddaughter] have access to the funds only for [grandmother’s] benefit, such that the withdrawal of the funds at issue was an unauthorized act. [Granddaughter] argues that insufficient facts were alleged to support that she failed to return the funds after a demand was made for their return.

Breach of Fiduciary Duty

The bank claimed that granddaughter held a position of trust and confidence with grandmother that included a fiduciary duty not to withdraw or transfer the funds wrongfully. The bank alleged that the granddaughter breached these duties through her actions.

Granddaughter made a creative argument in response – that the breach of fiduciary duty claim cannot be assigned because the services provided to grandmother were “personal services.” The Florida Supreme Court, in Wachovia v. Toomey, 994 So.2d 980 (Fla. 2008) held that a breach of fiduciary duty that is intensely personal cannot be assigned, while more commercial breach claims can be assigned. The appellate court easily concluded that the contractual relationship between Ms. Pueschel and Ms. Turbeville—even if between grandmother and granddaughter—was first and foremost that of a bank employee with a fiduciary responsibility to ensure the safekeeping of Ms. Pueschel’s monies.

The reversal of the dismissal means that the granddaughter will now have to fully defend herself from the allegations raised against her. Ultimately, that could result in a jury trial of the issues raised.

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