No Jumping the Line For Florida Creditor Claim Priority

In Jones v. McKinney, an April 20, 2022 opinion from the Florida Second District Court of Appeal, the Florida probate court was ordered to follow the order of creditor claim priority in the Florida Probate Code and abused its discretion when a judgment creditor was permitted to execute on estate real property.

The Facts of Jones v. McKinney

Loretta Thomas exploited and committed civil theft against Adelaide Tunnell.  Thomas passed away, and her personal representative filed a petition for administration of her estate.  Tunnell filed a statement of claim in Thomas’ estate based upon Thomas’ misdeeds, to which the personal representative objected.  Tunnell then filed a separate lawsuit against Thomas’ Florida estate.  Tunnell prevailed and obtained a judgment against the Estate for over 2.2 million dollars.

Tunnell recorded the judgment in Charlotte County, obtaining a statutory judgment lien on Thomas’ real property – a home that was the Estate’s only asset.  The personal representative of the Estate undertook to sell the home.  Tunnell filed a motion in the Florida probate proceeding asking the court to permit Tunnell to execute on its lien.

In response, the Estate argued that Tunnell’s claim was that of a Class 8 creditor, at the bottom of the priority for payment of claims and expenses set forth in the Florida Probate Code.  The Estate argued that it should be permitted to sell the real property without regard to the judgment lien and apply the proceeds of sale to the payment of expenses and claims according to their statutory priorities.

The Florida probate court ruled in favor of Tunnell, permitting Tunnell to execute on the lien pursuant to section 733.706, Fla. Stat.

In What Order Of Priority Are Creditor Claims Paid In Florida Probate?

Section 733.707, Florida Statutes, sets forth an order of priority for payment of creditor claims filed in a Florida probate estate, and sets forth classes of expenses and obligations that must be paid before the next class:

(1) The personal representative shall pay the expenses of the administration and obligations of the decedent’s estate in the following order:

(a) Class 1.—Costs, expenses of administration, and compensation of personal representatives and their attorneys fees and attorneys fees awarded under s. 733.106(3).

(b) Class 2.—Reasonable funeral, interment, and grave marker expenses, whether paid by a guardian, the personal representative, or any other person, not to exceed the aggregate of $6,000.

(c) Class 3.—Debts and taxes with preference under federal law, claims pursuant to ss. 409.9101 and 414.28, and claims in favor of the state for unpaid court costs, fees, or fines.

(d) Class 4.—Reasonable and necessary medical and hospital expenses of the last 60 days of the last illness of the decedent, including compensation of persons attending the decedent.

(e) Class 5.—Family allowance.

(f) Class 6.—Arrearage from court-ordered child support.

(g) Class 7.—Debts acquired after death by the continuation of the decedent’s business, in accordance with s. 733.612(22), but only to the extent of the assets of that business.

(h) Class 8.—All other claims, including those founded on judgments or decrees rendered against the decedent during the decedent’s lifetime, and any excess over the sums allowed in paragraphs (b) and (d).

To learn more about creditor claims in Florida probate, read the Complete Guide To Creditor Claims In Florida Probate.

Executions and Levies In Florida Probate

Section 733.706 addresses executions and levies on Florida estate property and states:

Except upon approval by the court, no execution or other process shall issue on or be levied against property of the estate. An order approving execution or other process to be levied against property of the estate may be entered only in the estate administration proceeding. Claims on all judgments against a decedent shall be filed in the same manner as other claims against estates of decedents. This section shall not be construed to prevent the enforcement of mortgages, security interests, or liens encumbering specific property. (emphasis added).

Under Florida law, Tunnell’s judgment was of no greater dignity than other claims against Thomas’ estate.  The last sentence of section 733.706 excepting the enforcement of certain liens was of no moment because the lien of Tunnell’s judgment did not encumber a specific property.  Instead, the recorded judgment became a lien generally on any real property of the debtor in the county where it was recorded.  See Section 55.10, Fla. Stat.  Therefore, the creditor claim had no greater preference and had to follow the order of priority set forth in the Florida Probate Code.

The appellate court acknowledged, then dismissed, the Florida probate court’s equitable leanings, stating:

Finally, we acknowledge and empathize with the probate court’s reliance on equitable considerations when authorizing the execution in this case. But “[c]ourts of equity have no power to overrule established law.” This principle is especially important here, given the court’s recognition that approving the execution would disrupt the administration of the Estate by completely draining it of assets. That would be directly contrary to the very purpose of section 733.706, which is meant to protect against such disruptions.  (citations omitted).

The court concluded that Tunnell’s judgment did not fall within section 733.706’s exception from general probate administration procedures and claim priorities and that the Florida probate court abused its discretion by authorizing Tunnell to execute on the judgment pursuant to that statute.

Complete Guide to Florida Probate

Opening the Probate Estate / Initial Steps
Payment of Creditors, Expenses And Beneficiaries
Florida Spousal and Family Rights
beneficiary witness will Oklahoma
Closing the Probate Estate
Probate Litigation and Will Contests
Florida Probate Quick Guides

Complete Guide to Florida Probate

Opening the Probate Estate - Initial Steps
Payment of Creditors, Expenses And Beneficiaries
Florida Spousal and Family Rights