Jeff Lieberman, Etc. v. James Sloto, Etc.

• Court: District Court of Appeal of Florida
• Decided: March 5, 2025
• Docket: 3D2024-0884
• Status: Published

Opinion

Third District Court of Appeal State of Florida

Opinion filed March 5, 2025. Not final until disposition of timely filed motion for rehearing.

No. 3D24-0884 Lower Tribunal No. 22-19333-CA-01

Jeff Lieberman, etc., et al., Appellants,

vs.

James Sloto, etc., Appellee.

An Appeal from the Circuit Court for Miami-Dade County, Beatrice Butchko Sanchez, Judge.

Bangor Law, PLLC, and Loretta Bangor (Lake Worth); Sackrin & Tolchinsky, P.A., and Alan D. Sackrin (Hallandale Beach), for appellants.

Boies Schiller Flexner LLP, Bruce A. Weil, and Robert G. Keefe, for appellee.

Before FERNANDEZ, LINDSEY and MILLER, JJ.

FERNANDEZ, J. Plaintiffs/appellants Jeff Lieberman (“Lieberman”) and Lieberman’s

counsel, Sackrin & Tochinsky, P.A. and Alan D. Sackrin (collectively,

plaintiff’s counsel),1 appeal the trial court’s Final Judgment assessing

sanctions against appellants pursuant to section 57.105, Florida Statutes

(2022), as well as the trial court’s order denying appellants’ motion for

rehearing. For the following reasons, we reverse the Final Judgment

awarding 57.105 fees to defendant/appellee James Sloto (“Sloto” or “the

Trustee”).

Mel Stier (“Mel”) was the grantor of the Mel Stier Revocable Trust

Agreement dated May 10, 1999 as Amended and/or Restated (the “Trust”).

Mel established the Trust to leave the Trust’s assets to his son, Harrison

Stier (“Harrison”). One of the Trust’s assets is a 40% ownership interest in

and control over 953 Realty Corporation (“953 Realty”), which owns and

operates commercial real estate properties. Mel died on October 12, 2019.

Sloto is the Successor Trustee of the Trust. He is a licensed attorney

since 1976. Lieberman is the Successor Trust Protector of the Trust. Sackrin

and his law firm, Sackrin & Tolchinsky, P.A. represent Lieberman.

1 Lieberman and plaintiff’s counsel will be referred to collectively as “appellants.”

2 The Trust in question gives the Trust Protector numerous

responsibilities, powers, and discretion. For example, section 4.09 of the

Trust only allows claims against the Trust Protector in the event the Trust

Protector is proven by clear and convincing evidence to have acted in bad

faith. According to section 4.11(a), the Trust Protector can correct

ambiguities that might otherwise require construction or reformation by a trial

court. Section 4.11(a) further provides that any amendment is “binding and

conclusive on all persons interested in the trust” and that the Trust Protector

may not be liable for any consequences of amending or not amending the

Trust. Under section 4.11(k), the Trust Protector may settle any disputes

concerning the interpretation of any provision in the Trust that arise out of

any perceived ambiguity. In addition, the Trust Protector has the right to

remove the Trustee with or without cause, according to section 4.11(e).

Section 4.11(g)(7) provides that the Trust Protector may direct the Trustee

to select or vote for directors . . . or officers of any business. Furthermore,

section 4.11(h)(4) provides that the Trust Protector may also direct the

trustee to retain, appoint, employ, or remove any. . . employees at will.

Specifically, section 4.12 states, in part:

Limitation on Trust Protector Powers

...

3 In exercising and considering whether to exercise any power granted to a Trust Protector under this agreement, the Trust Protector should make a reasonable inquiry into any matter or seek any information that reasonably bear upon the Trust Protector’s decision to exercise the power.

(Emphasis added). On August 18, 2022, Sloto appointed Harrison as

President of 953 Realty. Sloto stated he appointed Harrison as President

based on his observations of Harrison’s interactions with 953 Realty’s

property managers, Harrison’s educational background, and Harrison’s

familiarity with 953 Realty’s business and properties gained from the years

Harrison spent learning from his father, Mel.

On September 6, 2022, Lieberman directed Sloto to remove Harrison

as President of 953 Realty. Lieberman stated he possessed all the

knowledge he needed about Harrison’s qualifications to serve as President

of 953 Realty without performing an investigation or making reasonable

inquiry into the matter. Lieberman has known Harrison since Harrison was

five years old. He believed that in his discretion, Harrison was unqualified to

be President of 953 Realty. Thus, on September 6th, 2022, Lieberman

instructed Sloto to remove Harrison. Harrison, who was twenty-two years old

at the time of his appointment as President, graduated college approximately

three months before his appointment. He never held a paying job prior to his

appointment as President of 953 Realty. Lieberman stated that had Sloto

4 advised Lieberman of his intention to appoint Harrison as President,

Lieberman would have told Sloto not to hire Harrison and to select someone

with substantial experience in managing a commercial real estate company

that was experiencing challenges. Harrison was an at-will employee. Sloto

had the power to remove Harrison with or without cause. Lieberman had the

authority to instruct Sloto to remove Harrison pursuant to several provisions

of the Trust - either by directing a discharge because there was a contract

terminable at will or because Lieberman could order the dismissal of an

officer or director or demand that Sloto abstain from voting for Harrison. Sloto

did not comply with Lieberman’s directive.

On October 7, 2022, Lieberman filed the underlying lawsuit to compel

Sloto to remove Harrison as President of 953 Realty. Sloto moved to dismiss

the complaint or alternatively for a more definite statement, contending that

Lieberman’s allegations were insufficient to put Sloto on notice as to the

basis for Lieberman’s decision to direct Harrison’s removal. Sloto argued that

Lieberman did not allege any facts about Harrison’s performance as

President that occurred during the months before the filing of the motion to

dismiss the complaint. The motion did not allege that Lieberman did not

comply with section 4.12 of the Trust.

5 On December 7, 2022, the trial court held a hearing on Sloto’s motion.

There was no court reporter present, so there is no transcript of the hearing.

The trial court granted Sloto’s motion for a more definite statement and

granted Lieberman leave to file an amended complaint.

Thereafter, Lieberman filed an amended complaint in December 2022.

In the amended complaint, Lieberman alleged there was malfeasance

because Harrison paid a trustee bill for services from the account of 953

Realty instead of out of the account for the Trust. However, Lieberman

maintained that he did not have to prove cause or malfeasance as a

condition for directing Sloto to remove Harrison. Sloto then served

Lieberman with a 21-day safe-harbor letter and an attached motion for

57.105 fee sanctions.

On March 16, 2023, the last day of the 21-day safe-harbor period,

Lieberman filed a second amended complaint, which removed several

allegations from the amended complaint. Sloto thereafter served Lieberman

with another 21-day safe-harbor letter. Lieberman did not withdraw the

second amended complaint within the 21-day safe-harbor period, so Sloto

filed a motion for sanctions pursuant to section 57.105. Sloto argued that

under section 4.12 of the Trust, Lieberman knew that he had to conduct a

“reasonable inquiry” before filing a claim.

6 On April 20, 2023, Sloto filed a motion for summary judgment. He

argued that section 4.12 prohibited Lieberman from directing Harrison’s

removal without “reasonable inquiry,” and that there is no dispute that

Lieberman did not do so. On June 23, 2023, Lieberman filed a Statement of

Facts in Opposition to Sloto’s motion for summary judgment and attached

the Declaration of Jeff Lieberman. In his Declaration, Lieberman stated the

reasons why he believed Harrison was not qualified to be President,

including his lack of experience and because Harrison had just graduated

from college. In addition, Lieberman stated the following:

20. To the extent there is a perceived ambiguity, I have or will be serving and enacting an amendment to Trust Agreement section 4.12 to clarify that section 4.12 is not mandatory and that the Trust Protector need not make a reasonable inquiry into any matter or seek any information that reasonably bears upon the Trust Protector’s decision to exercise a power when the Trust Protector believes he or she has sufficient information to make a reasonably informed decision on whether to exercise a power granted to the Trust Protector. The use of the word “should” connotes permissive, not mandatory, action. I did not need to make reasonable inquiry to seek additional information that would or would have changed my mind that Harrison Stier is not qualified to be President of a multi-million dollar commercial real estate company, especially one with challenges ahead.

On June 21, 2023, Lieberman filed an amendment to section 4.12 of

the Trust which stated, in part:

The use of the word “should” in the last sentence signifies it is not mandatory. If the Trust Protector reasonably believes that he or she has sufficient information independent of any inquiry to

7 decide on the exercise of the Trust Protector’s powers under this Trust Agreement, then the Trust Protector is under no obligation to make any further inquiry or seek any other information that bears upon the Trust Protector’s decision. No inquiry is ever required when the Trust Protector is authorized to order the removal of a person “without cause” or perform any other act “without cause.”

Thereafter, on July 24, 2023, the trial court granted summary judgment

for Sloto on Lieberman’s second amended complaint. The trial court found it

was undisputed that: Lieberman did not “make a reasonable inquiry” before

directing Sloto to remove Harrison as president of 953 Realty and before

filing the lawsuit; that Lieberman did not “seek any information that

reasonably bear upon” his decision before directing Sloto to remove Harrison

before filing the lawsuit; and that Lieberman was unaware of any “instances

of substantial malfeasance” alleged in the second amended complaint when

he directed Harrison’s removal. In addition, the trial court found:

7. The Court concludes that the Trust, including Section 4.12, is clear, unambiguous, and susceptible of only one reasonable interpretation. In particular, the word “should” in Section 4.12 unambiguously means that the Trust Protector must either “make reasonable inquiry” or “seek any information that reasonably bear upon” the Trust Protector’s decision to exercise “any power” granted to the Trust Protector under the Trust. . . .And the “plain and ordinary meaning” of the word “should” in section 4.12 is that the Trust Protector must either “make reasonable inquiry” or “seek any information that reasonably bear upon” the Trust Protector’s decision to exercise “any power” granted to the Trust

8 Protector under the Trust. Should, Merriam- Webster.com Dictionary, Merriam-Webster, https://merriam-webster.com/dictionary tense of shall” that is “used in auxiliary function to express obligation, propriety, or expediency” (emphasis added); see Parrish v. State Farm Fla. Ins. Co., 356 So. 3d 771, 776 (Fla. 2023) (“Dictionaries aid us in establishing the publicly understood plain meaning of a word whose relevant definition is contested, and we look t them when a contractual term is undefined within a contract.”).

8. The Court concludes that [Lieberman’s] purported post hoc amendment to the meaning of the word “should” in Section 4.12 is void and without effect because the meaning of the word “should” in Section 4.12 is unambiguous. The Trust authorizes the Trust Protector to amend the trust to “correct ambiguities” and to “settle any disputes concerning the interpretation of any provision contained” in the Trust “that arise as a result of any perceived ambiguity.” See Trust Agreement § §4.11(a), 4.11(k). Because the meaning of the word “should” in Section 4.12 is unambiguous as a matter of law, [Lieberman] is without authority to amend its meaning.

Lieberman moved to file a third amended complaint, which the trial court

denied.

Thereafter, the trial court conducted an evidentiary hearing on Sloto’s

motions for sanctions pursuant to section 57.105. The trial court received

documentary evidence and hearing testimony from Lieberman and Sackrin.

On November 15, 2023, the trial court entered its order granting Sloto’s

motion for 57.105 fee sanctions. The trial court found that Lieberman knew

9 before filing the initial Complaint, First Amended Complaint, and Second

Amended Complaint that he failed to comply with section 4.12 before

directing Sloto to remove Harrison as President of 953 Realty, and that

Sackrin, at the latest, knew before filing of the Second Amended Complaint

that Lieberman failed to comply with section 4.12 before directing Sloto to

remove Harrison as President of 953 Realty.

Accordingly, the trial court found that the standards for sanctions

pursuant to section 57.105 had been “overwhelmingly met” because

Lieberman and Sackrin acted in bad faith “by filing the Second Amended

Complaint despite knowing that there was no evidence whatsoever that

[Lieberman] had complied with Section 4.12 before directing [Sloto] to

remove Harrison Stier from his position and/or filing the instant lawsuit.”

(Emphasis in original). The trial court thus ruled Sloto was entitled to

reasonable attorneys’ fees and costs as a sanction against Lieberman and

his counsel.

After an evidentiary hearing held in January 2024 to determine the

amount of reasonable attorney’s fees and costs, the trial court entered Final

Judgment awarding Sloto his reasonable attorney’s fees and costs against

Lieberman and his attorneys. Appellants moved for rehearing, which the trial

court denied. This appeal followed.

10 DISCUSSION

Appellants contend that the trial court erred in awarding 57.105

sanctions against Lieberman and his counsel because their argument that

the use of the word “should” in section 4.12 of the Trust is advisory and not

so devoid of merit that it warrants 57.105 fee sanctions. Appellants still

believe that Lieberman had the authority under the Trust to resolve the issue

of the meaning of the word “should.” We agree with appellants.

Generally, an appellate court reviews a trial court’s order awarding

attorney’s fees under section 57.105 for an abuse of discretion. MC Liberty

Express, Inc. v. All Points Servs., Inc., 252 So. 3d 397, 402 (Fla. 3d DCA

2018). However, if the trial court’s decision on a motion for attorney’s fees is

based on an issue of law, the standard of review is de novo. Wells v. Halmac

Dev., Inc., 189 So. 3d 1015, 1019 (Fla. 3d DCA 2016). A trial court’s

interpretation of trust documents is reviewed de novo. Vetrick v. Keating, 877

So. 2d 54, 56 (Fla. 4th DCA 2004).

“[T]he polestar of trust . . . interpretation is the settlor’s intent[.]”

Minassian v. Rachins, 152 So. 3d 719, 725 (Fla. 4th DCA 2014). In

interpreting the terms of a trust agreement, the court looks to the plain

language of the document. Fleck-Rubin v. Fleck, 933 So. 2d 38, 39-40 (Fla.

11 2d DCA 2006). “Where the terms of an instrument are clear and

unambiguous, there is no need for the court to engage in construction of

such instrument.” Barnett First Nat. Bank of Jacksonville v. Cobden, 393 So.

2d 78, 79 (Fla. 5th DCA 1981). “If the trust language is unambiguous, the

settlors’ intent as expressed in the trust controls and the court cannot resort

to extrinsic evidence.” Roberts v. Sarros, 920 So. 2d 193, 195 (Fla. 2d DCA

2006). “However, where there is ambiguity or uncertainty arising from the

language used which obscures the intent of the testator or [grantor],

construction of the instrument is necessary.” Cobden, 393 So. 2d at 79.

“The grantor’s intent should not be determined by resort to isolated words

and phrases, but rather by a construction of the instrument as a whole ....... ”

Pounds v. Pounds, 703 So. 2d 487, 488 (Fla. 5th DCA 1997).

In State v. Thomas, 528 So. 2d 1274 (Fla. 3d DCA 1988), this Court

interpreted the word “should” in a Florida sentencing statute. The Court

stated:

As we perceive it, the State's argument is that “should” is the equivalent of “shall” and that “shall” is mandatory. While we acknowledge that “should” retains its arcane, schoolmarm meaning as a past tense of “shall,” its modern usage is as the weaker companion to the obligatory “ought.” Thus, it is said that “[o]ught should be reserved for expressions of necessity, duty, or obligation; should, the weaker word, expresses mere appropriateness, suitability or fittingness.” B. Garner, A Dictionary of Modern Legal Usage 396 (1987). See University of South Florida v. Tucker, 374 So. 2d 16, 17 (Fla. 2d

12 DCA 1979) (“Use of the word ‘should’ indicates to us that the procedure ... is discretionary rather than mandatory in nature”). See also Cuevas v. Superior Court, 58 Cal. App. 3d 406, 409, 130 Cal. Rptr. 238, 239 (1976) (“The word ‘should’ is used in a regular, persuasive sense, as a recommendation, not as a mandate.”); Starks v. Kentucky Health Facilities, 684 S.W. 2d 5, 7 (Ky. Ct. App.1984) (“Appellant's argument that the statutory use of the word ‘should’ is to be construed as ‘shall,’ inasmuch as should is the past tense of shall, is without merit.”); Texas & P. Ry. Co. v. Consolidated Co., 180 La. 180, 187, 156 So. 215, 217 (1934) (“The word ‘should’ in the rule which the plaintiff invokes is directory. Being directory, a deviation is excusable under proper circumstances.”); Magnuson v. County of Grand Forks, 97 N.W. 2d 622, 624 (N.D. 1959) (“We construe the word ‘should’ as used here to be persuasive rather than mandatory.”); Baldassarre v. West Oregon Lumber Co., 193 Or. 556, 563, 239 P.2d 839, 842 (1952) (“ ‘[S]hould’ frequently implies a command, a duty or an obligation. But this is not always so.”); Roanoke Memorial Hospitals v. Kenley, 3 Va. App. 599, 606, 352 S.E. 2d 525, 529 (1987) (should “may be used to import discretion.”). But even if, arguendo, we were to accept the extremely doubtful synonymy of “should” and “shall,” the simplistic argument that “shall” is necessarily mandatory ignores the well-accepted rule that “[w]hether ‘shall’ is mandatory or discretionary will depend ... upon the context in which it is used and the legislative intent expressed in the statute.” Allied Fidelity Insurance Co. v. State, 415 So. 2d 109, 111 (Fla. 3d DCA 1982). See Ewing v. Kaplan, 474 So. 2d 302 (Fla. 3d DCA 1985).

Id. at 1275-76 (emphasis added). Similarly, in University of South Florida v.

Tucker, 374 So. 2d 16 (Fla. 2d DCA 1979), the Second District Court of

Appeal stated that use of the word “should” in an administrative code rule

indicated “to us that the procedure for [employee] resignations is

discretionary rather than mandatory in nature.” Id. at 17 (emphasis

added).

13 Here, the terms of the Trust in question allowed the Trust Protector to

modify the terms of the Trust. For example, section four gives the Trust

Protector certain powers and discretion. The Trust authorizes the Trust

Protector to fire the Trustee with or without cause; change the beneficiaries

of the trust; amend or modify the Trust; change the law applicable to the

Trust; or even terminate the Trust, among many other powers. The Trust

Protector also has the authority to direct the Trustee to make certain

investments, fire employees, hire or fire officer or directors or abstain from

voting on any corporate matter, and to direct business operations and

management.

The trial court’s order awarding 57.105 fee sanctions held that

Lieberman violated section 4.12 by failing to conduct “any inquiry.” However,

in Lieberman’s Declaration he filed with his Statement of Facts in Opposition

to Sloto’s motion for summary judgment, Lieberman stated he already knew

about Harrison, as Lieberman had known Harrison since he was

approximately five years old. Lieberman explained his history of personal

knowledge of Harrison and Harrison’s qualifications. Lieberman believed that

as a 22-year-old recent college graduate who had never held a job, Harrison

was not qualified to be President of a commercial real estate company, which

was a major trust asset. Lieberman already had the knowledge he needed

14 to make the decision he did, based on his judgment. Lieberman thus did not

need to make any inquiry about Harrison before directing Sloto to remove

Harrison as President.2 The trial court failed to consider Lieberman’s prior

knowledge of Harrison and his qualifications. Here, the trial court erred when

it held the word “should,” used in section 4.12, unambiguously means “must”

and created a duty for the Trust Protector to conduct a “reasonable inquiry”

before exercising his powers under the Trust Agreement.

The complaint in the underlying case was filed by Lieberman as Trust

Protector of the Trust solely to request that the trial court order Sloto to

remove Harrison as President of 953 Realty after Sloto refused to follow

Lieberman’s direction. Lieberman contends that the meaning of the word

“should” in section 4.12 is unambiguously advisory instead of mandatory. But

Lieberman further correctly contends that if “should” is ambiguous, then he

had, as the Trust Protector, exclusive authority and discretion under the Trust

to resolve the ambiguity. The terms of the Trust gave the Trust Protector

power to correct any ambiguities that would require construction or

reformation by a court. The Trust Protector could settle any disputes

concerning the interpretation of any provision in the Trust that arose out of

2 Also, the Trust did not require that the Trust Protector identify any wrongdoing on Harrison’s part before directing that Harrison be removed as President.

15 any ambiguity. Stier’s intent was to avoid involving the courts in resolving

issues that arose under the Trust. As the Trust agreement stated, any

amendment is “binding and conclusive” on “all persons interested in the trust”

unless the “amendment is shown by clear and convincing evidence to have

been made in bad faith by the Trust Protector.” Here, there was no clear and

convincing evidence presented by Sloto to show bad faith on Lieberman’s

part.

Lieberman clarified in the amendment that the word “should” is not

mandatory, and he also clarified that “[i]f the Trust Protector reasonably

believes that he or she has sufficient information independent of any inquiry

to decide on the exercise of the Trust Protector’s powers under this Trust

Agreement, then the Trust Protector is under no obligation to make any

further inquiry or seek any other information that bears upon the Trust

Protector’s decision.” Lieberman further explained in the amendment that if

the Trust Protector can direct that someone be discharged “without cause”,

then no inquiry is required. The Trust Agreement specifically granted

Lieberman as Trust Protector the power to amend. Thus, a valid amendment

to the Trust clarifying the meaning of the word “should” would be binding on

the trustee, beneficiaries, and the court. Accordingly, the trial court should

have given weight to Leiberman’s interpretation of the trust. As the appellate

16 court stated in Minassian, supra, “It was the settlor’s intent that, where his

trust was ambiguous or imperfectly drafted, the use of a trust protector would

be his preferred method of resolving those issues. Removing that authority

from the trust protector and assigning it to a court violates the intent of the

settlor.” Minassian, 152 So. 3d at 727. If the word “should” in the section 4.12

is ambiguous and subject to interpretation, then the Trust Protector was not

required to make a reasonable inquiry into any matter or seek information

which reasonably bore upon his decision to order Trustee Sloto to remove

the person (Harrison) selected by Sloto to be the President of 953 Realty.

Accordingly, the word “should” is either 1) unambiguously advisory

rather than mandatory, or 2) it is ambiguous. Therefore, it was error for the

trial court to conclude that “should” in section 4.12 unambiguously means

“shall.” Because “should” is, at a minimum, ambiguous, the Trust Protector

had the sole authority pursuant to the Trust to interpret or clarify the meaning

of the word “should.” Resolving the ambiguity as Lieberman did with the

amendment defining “should” in section 4.12 to mean non-mandatory

comports with the intent of the settlor. Thus, 57.105 fees were not warranted

here, and the trial court abused its discretion in awarding them to Sloto.

17 For these foregoing reasons, we reverse the Final Judgment awarding

section 57.105 fee sanctions to Sloto, including the Order Granting

Defendant’s Motions for Sanctions Pursuant to Section 57.105.

Reversed.