Can You Enforce an Oral Contract Against the Widow of a Deceased Debtor?

Many of us have lent money to family members at one time or another. In most cases, there is no written contract or agreement specifying repayment terms for such loans. An oral agreement is often thought to be sufficient.

Florida Courts Reject Attempt to Collect on 20-Year-Old Oral Loan Agreement

Of course, when one of the parties to such an agreement dies, it can be difficult for the other party to enforce a purely oral agreement. This is especially true if a creditor seeks to enforce their rights outside of the probate process. A recent decision from the Florida Fifth District Court of Appeals, Riti Financial, LLC. v. Patel, provides a useful illustration of the potential issues that can arise.

This plaintiff in this case was the sole member of a New Jersey limited liability company (LLC). One night in 2004, the plaintiff and his wife had dinner with his wife’s cousin and her husband, a man named Raju. During this dinner, the plaintiff agreed to loan Raju $850,000, which he did through a wire transfer. There was apparently no written agreement regarding this loan or when it would be repaid.

Raju used the $850,000 to purchase a motel in Florida. The plaintiff did not have any recorded security interest in this property. Over the next four years, Raju made what the plaintiff described as “interest payments” on the loan. These payments stopped in 2009. Around this same time, the plaintiff’s LLC became dormant. At no point did the plaintiff pursue Raju for additional payments on his loan.

Raju died in 2013. The motel passed through probate to his wife. The plaintiff did not file a creditor claim against Raju’s estate for the unpaid loan.

Raju’s widows sold the motel in 2017. Two years later, the plaintiff sued the widow, now the defendant, alleging breach of contract among other things. Essentially, the plaintiff alleged he had an oral loan contact with the defendant’s husband, one that the defendant “assured” him would be honored after his death.

In a subsequent deposition, the defendant denied any knowledge or involvement with her late husband’s purported loan from the plaintiff. For his part, the plaintiff admitted in his own deposition that he “cannot say yes or no” as to whether the defendant herself joined the contract. Nor could he recall Raju giving him any concrete date to repay the loan in full.

A Florida judge dismissed the plaintiff’s lawsuit at the summary judgment stage, finding there was “no genuine dispute” that the defendant was ever a party to the original oral loan agreement. The Fifth District affirmed that decision. As the Court of Appeals put it, the plaintiff “had a dinner conversation 20 years ago” with the defendant and her husband about a loan. The plaintiff could not concretely remember the defendant herself ever agreeing to be a co-signer to this purported loan. And the plaintiff never spoke to the defendant about this loan even during the probate of her late husband’s estate. Based on these facts, the Fifth District said “no reasonable jury” could find the defendant responsible for the oral contract.

Contact Florida Estate Litigation Attorney Mark R. Manceri Today

Florida probate laws contain strict time limits for creditors to pursue a claim against a decedent, in part to avoid situations like the one described above. If you are involved in a probate dispute and need legal advice from a qualified Pompano Beach estate and trust litigation lawyer, contact Mark R. Manceri, P.A., today to schedule a consultation.

Source:

https://scholar.google.com/scholar_case?case=6014191241401362359