Motion,Ex Parte: PHILIP VON KAHLE, CURATOR ET AL VS FIDELITY AND DEPOSIT COMPANY OF MARYLAND

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                                Filing # 69628724 E-Filed 03/21/2018 06:01:47 PM

IN THE CIRCUIT COURT OF THE 11TH JUDICIAL CIRCUIT OF FLORIDA
IN AND FOR MIAMI-DADE COUNTY, FLORIDA

PHILIP VON KAHLE, CURATOR, on behalf of CASE NO.: 16-21099-CA-44
THE GOVERNOR OF FLORIDA, for the use and
Benefit of the ESTATE OF VICTOR POSNER,
and for All Other Interested Parties,
Plaintiff,
v.

FIDELITY AND DEPOSIT COMPANY OF
MARYLAND,

Defendant and Third-Party Plaintiff,
v.

BRENDA D. NESTOR,
Third-Party Defendant/Cross-Claim
Plaintiff,

v.

PHILIP VON KAHLE, individually, MICHAEL
MOECKER AND ASSOCIATES, INC., MMA
OPERATIONS, INC., MOECKER REALTY
AUCTIONS, LLC d/b/a SVN MOECKER
REALTY AUCTIONS, and MOECKER
REALTY, INC.,
Cross-Claim Defendants.
/

 

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AS TO DEFENDANT
FIDELITY AND DEPOSIT COMPANY OF MARYLAND’S
NINETEENTH AFFIRMATIVE DEFENSE

Plaintiff Phillip von Kahle, as Curator (the “Curator”) of the Estate of Victor Posner (the
“Estate”), by and through undersigned counsel and pursuant to Florida Rule of Civil Procedure
1.510, hereby moves for summary judgment against Defendant Fidelity and Deposit Company of
Maryland on (“Fidelity”) on Fidelity’s nineteenth affirmative defense, and states:

L Introduction

Over the course of thirteen years, the removed personal representative of the Estate,

Brenda Nestor (“Ms. Nestor’), breached her fiduciary duties to the Estate through mis-

(00492953,D0Cx 10management and self-dealing for personal gain. Although hundreds of millions of dollars flowed
through the Estate under Ms. Nestor’s thirteen year reign, her actions caused the Estate to be
unable to pay its creditors. Faced now with an action to recover on the bond it issued to
guarantee Ms. Nestor’s faithful performance of her duties as personal representative, Fidelity
alleges, inter alia, that “Any Estate funds received by Ms. Nestor personally, which did not
simply constitute the repayment of a loan she made (by which the Estate was not damaged),
constitute reasonable compensation authorized by Section 733.617, Florida Statutes.” See,
Answer at Twelfth defense.

Fidelity’s nineteenth affirmative defense improperly seeks an  after-the-fact
reclassification of Ms. Nestor’s self-dealing payments, to “reasonable compensation.” Yet, Ms.
Nestor testified that she had never received compensation for her services as personal
representative of the Estate, so Fidelity’s defense is contradicted by Ms. Nestor’s own testimony
Fidelity cites to no evidence supporting this defense, and indeed there is none. The defense has
been concocted to justify payments that Ms. Nestor made to herself through various conduits.
Since there is no evidence supporting this defense and there is ample undisputed evidence
proving otherwise, there is no genuine material issue of fact in dispute. Therefore, as a matter of
law, this defense cannot be proven and cannot act as a bar to the Curator’s claims. Thus,
summary judgment should be entered in the Curator’s favor on this defense

i. Undisputed Material Facts and Procedural History

1 On February 11, 2002, following the death of Victor Posner (“Posner”), Ms.

Nestor petitioned for the administration of Posner’s Will, dated June 28, 2001, opened the Estate,

and was named personal representative of the Estate. Ex 24, Last Will and Testament of Victor

(00892952,000x 30 2Posner, Dated June 28, 2001 (“Will”),! No. 02-595-CP-02/DIV.04 (Fla. 11th Cir. Ct. Feb. 11,
2002), Ex. 1, Petition for Administration, No. 02-595-CP-02/DIV.04 (Fla. 11th Cir. Ct. Feb. 11,
2002); Ex. 2, Order Admitting Will to Probate and Appointing Personal Representative, id.; Ex.
3, Letters of Administration;? see also Ex. 4, Second Amended Complaint (“Complaint”) at { 16
and Ex. 5, Fidelity’s Answer and Affirmative Defenses to Second Amended Complaint
(“Answer”) at § 16.

2 On March 6, 2002, upon posting a personal representative’s bond issued by
Fidelity in the amount of $16,000,000, Ms. Nestor obtained the removal of certain restrictions
contained in the Letters of Administration. See Ex 6, Bond; Complaint at ] 19; Answer at {| 19.

3. On July 23, 2002, the Court entered an order permitting Ms. Nestor to sell real
property and allowing her to retain the proceeds thereof in an unrestricted account, on the
condition that she increase the amount of the Bond to $23.1 million. Complaint at § 21; Answer
at§ 21

4 On August 28, 2002, Ms. Nestor filed a surety rider, increasing the amount of the
Bond to $23,100,000 (the “Surety Rider”, together with the bond, are referred to herein as the
“Bond”). Ex. 8, Order Authorizing Sale of Real Property, No. 02-595-CP-02/DIV.04 (Fla. 11th
Cir. Ct. July 23, 2002); see also Ex. 9, Notice of Filing Surety Rider Increasing Bond, No. 02-
595-CP-02/DIV.04 (Fla. 11th Cir. Ct. Aug. 28, 2002); see also Complaint at fj 20-22; Answer at

20-22

+ All references to Exhibits herein, cite to the exhibit numbers in the Curator’s Appendix of
Evidence in support of his motions for summary judgment, filed concurrently herewith (the
“Appendix”

? Pursuant to Sections 90.202(6) and 90.203, Florida Statutes, this Court may take judicial notice
of the Court records referenced in this Motion. The Curator respectfully requests that the Court
do so pursuant to Section 90.203, Florida Statutes.

(00892952,000x 30 35 The Bond states, in pertinent part, “The condition of this obligation is such that if
the principal herein shall faithfully perform his duties as Personal Representative then this
obligation shall be void, otherwise it shall be and remain in full force and effect.” Ex. 6, Bond
dated February 22, 2002; see also Complaint at (19; Answer at 719

6 On April 30, 2015, Ms. Nestor was removed as personal representative of the
Estate for cause as a result of: i) her repeated failure to provide an interim accounting ordered by
the Probate Court and ii) the Probate Court’s additional finding of danger to the Estate (based
upon the “totality of the evidence presented in support of [Ms. Nestor’s] removal at the [rule to
show cause] hearings on April 2 and April 17, 2015”). Ex. 12, Order Removing Personal
Representative and Providing for Appointment of Successor, Case No. 02-595-CP-02/Div.04
(Fla. 11th Cir. Ct. April 30, 2015); Complaint at 29; Answer at | 29.

7. On June 9, 2015, the Curator was appointed as curator of the Estate and directed
by the Probate Court to, inter alia, “perform any duty or function which a successor personal
representative is authorized by law to perform...” Ex. 13, Corrected Order Appointing Curator
Pursuant to Removal of Personal Representative, No. 02-595 at 5 (Fla. 11th Cir. Ct. June 9,
2015); Complaint at ] 30; Answer at { 30.

8. In the Corrected Order Appointing Curator, the Court found that “[t]he removed
personal representative’s failure to observe the standards of care applicable to trustees... and
failure to settle and distribute the estate of the decedent (expeditiously) in accordance with
Florida law and the terms of the decedent’s will, resulted in removal for violation of court orders,
as provided in Florida Statute 733.504(3).” Ex. 13, Corrected Order Appointing Curator;
Complaint at § 30; Answer at 30.

9. On August 12, 2016, the Curator initiated the instant action and now seeks to

recover on the Bond based upon his allegations that Ms. Nestor breached her fiduciary duties to

(00892952,000x 30 4the Estate by, inter alia, (i) failing to settle and distribute the Estate expeditiously, (ii) failing to
settle the Estate efficiently as is consistent with the best interests of the Estate, incurring millions
of dollars of debt and failing to account for and pay the Estate’s creditors’ claims; and (iii) by
putting her own interests ahead of the interests of the Estate and its creditors. See, generally,
Complaint.

10. On August 14, 2017, the Curator moved to file his Second Amended Complaint
which the Court granted on August 15, 2017. Fidelity served its Answer and Affirmative
Defenses to the Second Amended Complaint on August 30, 2017 (the “Answer”).

11. By way of its nineteenth affirmative defense, Fidelity pleads

Any Estate funds received by Nestor personally, which did not
simply constitute the repayment of a loan she made (by which the
Estate was not damaged), constitute reasonable compensation
authorized by Section 733.617, Florida Statutes...Nestor did not
take a statutorily-permitted commission from the Estate for her
services as personal representative, as authorized by Section
733.617, Florida Statutes... Accordingly, if Ms. Nestor personally
received Estate funds, the Estate was not damaged because they
were simply the repayment of loans she made, or should be
reasonable compensation permitted by Section 733.617, Florida
Statutes...
Fidelity’s Nineteenth Affirmative Defense at p. 35

12. On October 19, 2017, the Curator served interrogatories on Fidelity, seeking all
documents and evidence that supported Fidelity’s Affirmative Defenses. A true and correct copy
of the Curator’s Fifth Set of Interrogatories is included as Exhibit 22 in the Appendix.

13. On December 18, 2017, Fidelity entered into a stipulation before Magistrate

Schwabedissen, to provide better answers to the Curator’s Fifth Set of Interrogatories, in which

agreed as follows:

The stipulation is that the curator's motion is granted as follows
On or before January 3rd, 2018, defendant Fidelity and Deposit

(00892952,000x 30 5Company of Maryland shall serve an amended interrogatory
response signed by Fidelity and Deposit Company of Maryland
that sets forth all non-privileged facts and references all non-
privileged documents, if any, that F&D, Fidelity and Deposit
Company of Maryland, reasonably believes support its
affirmative defenses.

See Exhibit 14, Transcript of December 18, 2017 Hearing

14. On February 21, 2018, Fidelity served its third amended responses to the
Curator’s Fifth Set of Interrogatories, an excerpt of which is included as Exhibit 19 in the
Appendix. Fidelity purportedly elaborated further on the facts that it believes support this
defense. Those facts do not preclude summary judgment in the Curator’s favor.

Ul, Legal Standard on a Motion for Summary Judgment

Pursuant to Rule 1.510 of the Florida Rules of Civil Procedure, a Court may grant
summary judgment if “the pleadings, depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there is no genuine issue as to any material fact
and that the moving party is entitled to judgment as a matter of law.” Fla. R. Civ. P. 1.150
(emphasis added).

Under Florida law, summary judgment is proper where, as here, based on an examination
of the evidence, no genuine issue of material fact exists and the movant is entitled to judgment as
a matter of law. See Wakulla Commercial Fisherman’s Ass'n, Inc. v. Florida Fish and Wildlife
Conservation Comm., 951 So. 2d 8 (Fla. 1st DCA 2007); The Florida Bar v. Greene, 926 So. 2d
1195, 1200 (Fla. 2006). Accordingly, the movant for summary judgment has the initial burden
of demonstrating the non-existence of any genuine issue of material fact. See Delandro v.
America’s Mortg. Serv. Inc., 674 So.2d 184, 186 (Fla. 3d DCA 1996).

Once the moving party achieves its burden of demonstrating the absence of any question

of material fact, the burden then shifts to the non-moving party to come forward with evidence

(00892952,000x 30 6showing that a question of material fact exists. See Landers v. Milton, 370 So. 2d 368, 370 (Fla.
1979). The non-moving party may not merely assert that an issue does exist, but must go
forward with evidence sufficient to generate an issue on a material fact. Panzera v. O’Neal, 198
So. 3d 663, 665 (Fla. 2d DCA 2015). “Genuine issue” means a real, as opposed to false or
colorable issue. Jd. citing Byrd v. Leach, 226 So. 3d 866, 868 (Fla. 4th DCA 1969). Here, there
are no genuine issues of material fact with respect to Fidelity’s nineteenth affirmative defense
Thus, the Curator is entitled to judgment as a matter of law as set forth herein.
Iv. Argument
A. Ms. Nestor Did Not Receive Compensation

On summary judgment, all inferences are drawn in Fidelity’s favor. Moore v. Morris,
475 So. 2d 666, 668 (Fla. 1985). However, Ms. Nestor’s testimony cited in Fidelity’s
interrogatory answer giving all facts that support its nineteenth affirmative defense, guts
Fidelity’s defense; she testified during her deposition that she did not receive any compensation
as personal representative of the Estate. Fidelity quotes this exchange in its interrogatory
answer, while simultaneously stating that any distributions to Ms. Nestor from the Estate, could
constitute payment of compensation to her. See Exhibit 19 at pp. 100-101. A party opposing a
motion for summary judgment will not be permitted to alter the position of his previous
pleadings, admissions, depositions or testimony in order to defeat summary judgment. Maryland
Cas. Co. v. Murphy, 342 So. 2d 1051, 1053 (Fla. 3d DCA 1977). As evidenced by Fidelity’s
answer to the Curator’s Fifth Set of Interrogatories, it is unable to point to any evidence
supporting this defense.

Because Ms. Nestor testified that she did not receive compensation as personal
representative, Fidelity cannot now claim that monies that Ms. Nestor received did constitute

compensation. Because there is no evidence that supports this defense, there is no genuine issue

(00892952,000x 30 7of material fact in dispute that monies Ms. Nestor paid herself from the Estate were not
compensation

B. Payments to Ms. Nestor Violated the Probate Code

To the extent that Fidelity seeks to reclassify payments that Ms. Nestor made to herself as
repayment of a loan she had made to the Estate (or its entities), that does not establish a defense
to the Curator’s claims. If anything, it emphasizes that Ms. Nestor’s repayments to herself were
improper. The Florida Probate Code sets forth the priority in which creditors of the Estate are to
be paid:

(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).

(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.—AIl 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).

Fla. Stat. § 733.707(1) (emphasis added).

The Estate’s repayment of Ms. Nestor’s post-death loans to the Estate would not classify
as a “class 1” administrative expense. Rather, repayment of loans made to the Estate would be
classified as a class 7 or class 8 Estate obligation. At present, priority creditors of the Estate (for
example, the Internal Revenue Service, a class 3 creditor) have not been paid. As the Curator

testified at deposition:

(00892952,000x 30 8Q._ Okay, sir. So could you explain to me how that relates to the
claim for interest assessed by the Internal Revenue Service by the
Estate?

A. Well, I believe Miss Nestor may have paid herself back before
that of some of the creditors, being the IRS.

See, Exhibit 20, Deposition Excerpt of the Curator at p. 864:10-15.

Fidelity does not state what loan this money was used to pay down, and cites no evidence
demonstrating authorization from the Probate Court to make preferential transfers to Ms. Nestor
to repay loans she allegedly made to the Estate. This defense is invented from whole cloth, and
is utterly without support in the record.

Vv. Conclusion

There is no genuine issue of material fact that the nineteenth affirmative defense does not
preclude judgment in Plaintiff's favor. Fidelity’s attempt to reclassify money that Ms. Nestor
took from the Estate as ordinary compensation conflicts with Ms. Nestor’s testimony, which is
binding. Fidelity cites to no evidence indicating that repayment of this money to Ms. Nestor was
a proper repayment of a loan. Indeed, it cannot, because to the extent that Ms. Nestor was
making preferential payments to herself, over other creditors of the Estate, that repayment would
violate the Probate Code. Therefore, the Court should enter summary judgment in favor of the
Curator as to Fidelity’s nineteenth affirmative defense.

WHEREFORE, Philip von Kahle, Curator, on behalf of the Governor of Florida,
respectfully requests the entry of an order: (i) granting this motion for summary judgment; (ii)
entering summary judgment in favor of the Curator on Fidelity’s nineteenth affirmative defense;
(iii) awarding entitlement to reasonable attorney’s fees and costs; (iv) reserving ruling on the
amount and reasonableness of the Curator’s attorney’s fees and costs incurred; and (v) granting

such other and further relief that is just and proper.

(00892952,000x 30 9Dated: March 21, 2018.

(00492953,D0Cx 10

BAST AMRON LLP

Co-Special Counsel for the Curator
SunTrust International Center

One Southeast Third Ave., Suite 1400
Miami, Florida 33131

Telephone: 305.379.7904

Facsimile: 305.379.7905

Brett M. Amron (FBN 148342)

E-mail: bamron@bastamron.com
Jeremy S. Korch (FBN 14471)

E-mail: jkorch@bastamron.com
Hayley G. Harrison (FBN 105157)

E-mail: hharrison@bastamron.com

 

-And-

The Cochran Firm — South Florida
Co-Special Counsel for the Curator
657 South Drive, Suite 304

Miami Springs, FL 33166
Telephone: 305.567.1200
Facsimile: 305.856.7747

Scott W. Leeds (FBN 372552)
E-mail: swleeds@cochranfirm.com

By:_/s/ Jeremy S. Korch
Brett M. Amron (FBN 148342)

Jeremy S. Korch (FBN 14471)
Hayley G. Harrison (FBN 105157)
Scott W. Leeds (FBN 372552)

10CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing was filed with the
Clerk of Court via Florida Courts E-Filing Portal which will serve a copy upon the parties listed
on the Service List below on this the 21st day of March, 2018:

SERVICE LIST

 

William H. Strop

Ryan F. Carpenter

Attorneys for Fidelity and Deposit Company of
Maryland

BECKER & POLIAKOFF, P.A.

One East Broward Boulevard, Suite 1800
Fort Lauderdale, FL 33301

Telephone: (954) 987-7550

Facsimile: (954) 985-4176

Email: wstrop@bplegal.com
rearpenter@bplegal.com
sgill@bplegal.com

Maury L. Udell, Esquire

Attorneys for Brenda Nestor
BEIGHLEY, MYRICK & UDELL, PA
150 West Flagler Street, Suite 2050
Miami, FL 33130

Phone: (305) 349-3930

E-mail :notice66@bmulaw.com

 

 

Paul Steven Singerman, Esq.

Kathleen S. Phang, Esq.

BERGER SINGERMAN LLP

Attorneys for Cross-Claim Defendants
1450 Brickell Avenue, Suite 1900
Miami, FL 33131

Telephone: (305) 755-9500

Facsimile: (305) 714-4340

Email: singerman@bergersingerman.com
kphang@bergersingerman.com
lyun@bergermansingerman.com

drt@bergersingerman.com
mdiaz@bergersingerman.com

 

 

By:

(00492953,D0Cx 10

s/ Jeremy S. Korch
Jeremy S. Korch, Esq.

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