By: David M. Garten, Esq.
ARTICLE: Co-Agents’ Duties And Liabilities Under A Durable
Power Of Attorney
In Rosenkrantz v. Feit, 2011 Fla. App. LEXIS 19915 (Fla. 3rd DCA 12/14/11),
sister
brought a declaratory judgment action against her brother/co-agent[1]
under their mother's durable power of attorney. [2] Sister
sought a declaration of her rights as a co-agent and an accounting. Sister alleged that she was unable to issue
subpoenas to her mother's bank to obtain bank account information, but could
not issue the subpoenas, or obtain this information, without her brother's
concurrence which he refused to give. She alleged that her brother was not
fulfilling his fiduciary role and refused fully to account for their mother's
assets. Sister sought declaratory relief to determine: 1) the extent to which
she could act without the
concurrence of a co-agent who could be acting in derogation of his fiduciary duty; and 2) whether she was entitled to an accounting from the co-agent.
concurrence of a co-agent who could be acting in derogation of his fiduciary duty; and 2) whether she was entitled to an accounting from the co-agent.
HOLDING: The court held that if the allegations are
proven as pled, sister acted properly and prudently in seeking to fulfill her
fiduciary role. As a co-agent, sister had both the right and the duty to seek
an accounting from her brother based upon her allegations of improper
disbursements of their mother’s property.
REASONING: The court reasoned that co-agents
under a durable power of attorney are liable "for failure either to
participate in the administration of assets subject to the power or for failure
to attempt to prevent a breach of fiduciary obligations thereunder." §709.08(9)(d),
F.S. Under §709.08(9)(a), "concurrence of both is required on all acts in
the exercise of power." Further, §709.08(8) provides that an agent is a
fiduciary who must observe the standards of care applicable to trustees as
described in s. 737.302. If the exercise
of the power is improper, the agent is liable to interested persons as described
in § 731.201 for damage or loss resulting from a breach of fiduciary duty by
the agent to the same extent as the trustee of an express trust. Thus, those
acting as co-agents must be guided by the same fiduciary principles applicable
to co-trustees.
It goes without
saying that co-trustees owe to each other, as well as to the beneficiaries of
the trust, the duty and obligation to so conduct themselves as to foster a
spirit of mutual trust, confidence, and cooperation to the extent possible. At
the same time, the trustees should maintain an attitude of vigilant concern for
the proper administration or protection of the trust business and affairs.
Although the court’s reasoning is based
on §709.08, F.S. (2006), the court noted that the same reasoning applies to a
durable power of attorney executed after the effective date of the new Florida
Power of Attorney Act, i.e., 10/1/11.
The new Act provides in part that:
- A principal may designate two or more
persons to act as co-agents, and unless the power of attorney otherwise
provides, each co-agent may exercise its authority independently. §
709.2111(1), Fla.
Stat. (2011).
- If a power of
attorney requires that two or more persons act together as co-agents, one or
more of the agents may delegate to a co-agent the authority to conduct banking
transactions pursuant to the power of attorney. § 709.2111(6).
- An agent may
be required by a co-agent to disclose receipts, disbursements, or trans-actions
conducted on behalf of the principal. § 709.2114(6).
- An agent
(including a co-agent) may petition a court to construe or enforce a power of
attorney, review the agent's conduct, terminate the agent's authority, remove
the agent, and grant other appropriate relief. § 709.2116(1).
- An agent's
exercise of power may be challenged in a proceeding brought on behalf of the
principal on the grounds that the exercise of the power was affected by a
conflict of interest. § 709.2116(4).
_________________________________
PRACTICE
TIPS: Under the new Florida Power of Attorney Act, an agent who does not
participate in or conceal a breach of fiduciary duty committed by another agent,
including a predecessor agent, is not liable for the actions or omissions of
the other agent. However, an agent who has
actual knowledge of a breach or imminent breach of fiduciary duty by another
agent, including a predecessor agent, must
take any action reasonably appropriate in the circumstances to safeguard the
principal’s best interests. Sec.
709.2111, F.S. reads:
709.2111 Co-agents and successor agents.—(1) A principal may designate two or more persons to act as
co-agents. Unless the power of attorney otherwise provides, each co-agent may
exercise its authority independently.
(2) A
principal may designate one or more successor agents to act if an agent
resigns, dies, becomes incapacitated, is not qualified to serve, or declines to
serve. Unless the power of attorney otherwise provides, a successor agent:
(a) Has
the same authority as that granted to the original agent; and
(b) May
not act until the predecessor agents have resigned, have died, have become
incapacitated, are no longer qualified to serve, or have declined to serve.
(3) Except
as otherwise provided in the power of attorney and subsection (4), an agent who
does not participate in or conceal a breach of fiduciary duty committed by
another agent, including a predecessor agent, is not liable for the actions or
omissions of the other agent.
(4) An
agent who has actual knowledge of a breach or imminent breach of fiduciary duty
by another agent, including a predecessor agent, must take any action
reasonably appropriate in the circumstances to safeguard the principal’s best
interests. If the agent in good faith believes that the principal is not
incapacitated, giving notice to the principal is a sufficient action. An agent
who fails to take action as required by this subsection is liable to the
principal for the principal’s reasonably foreseeable damages that could have
been avoided if the agent had taken such action.
(5) A
successor agent does not have a duty to review the conduct or decisions of a
predecessor agent. Except as provided in subsection (4), a successor agent does
not have a duty to institute any proceeding against a predecessor agent, or to
file any claim against a predecessor agent’s estate, for any of the predecessor
agent’s actions or omissions as agent.
(6) If a
power of attorney requires that two or more persons act together as co-agents,
notwithstanding the requirement that they act together, one or more of the
agents may delegate to a co-agent the authority to conduct banking transactions
as provided in s. 709.2208(1), whether the authority to conduct banking
transactions is specifically enumerated or incorporated by reference to that
section in the power of attorney.
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