Estate Claim Must Be Presented Directly to Court-Appointed Representatives
Ohio law requires a claim against an estate to be filed on time and in writing to the estate’s executor or administrator. Delivering the claim to a person not appointed by the probate court who gives it to the executor or administrator does not meet the law’s requirements, the Ohio Supreme Court ruled today.
The Supreme Court ruled 6-1 that James A. Wilson’s delivery of a claim for $200,000 to the personal secretary of a deceased businessman and one of the deceased man’s trustees with the intent that the letter get passed on to his estate’s executor failed to meet Ohio estate law requirements. The executor for the estate of James T. Gorman rejected the claim, and Wilson filed a lawsuit.
Writing for the Court majority, Chief Justice Maureen O’Connor explained the mandatory requirements for R.C. 2117.06(A)(1)(a) make it clear that a claim must be presented directly to the executor or administrator and Wilson cannot point to any provision in the law allowing a creditor to indirectly present the claim to the executor by associates of the deceased.
In a dissenting opinion, Justice William M. O’Neill maintains the majority applies the law too rigidly, questioning if sending a claim by U.S. mail or FedEx would suffice under the decision’s interpretation.
Wilson Sends Letter to Gorman Associates
Gorman contracted with Wilson to buy a 15 percent interest in Wilson’s Marine 1 L.L.C. for $300,000. Gorman died in January 2013 having only made a partial payment for Marine 1, and at the time of death owed Wilson $187,000. In July 2013, the Cuyahoga County Probate Court opened Gorman’s estate and appointed William Lawrence as executor. The estate’s counsel was Joseph A. Goldsmith.
Ten days after the estate opened, Wilson’s attorney sent a letter to Gorman’s personal secretary, Patricia Clark, and Gorman’s accountant and trustee of a Gorman trust, Randall Myeroff. Although the letter was addressed to Clark and Myeroff, not Lawrence or Goldsmith, it sought to present Wilson’s claim for $200,000 to the executor of Gorman’s estate.
Clark forwarded the letter to Goldsmith on the day she received it, and Myeroff forwarded the letter to Goldsmith and Lawrence soon after he received it.
In September, Goldsmith informed Wilson’s attorney that he was aware of the letter being sent, but the act was not sufficient to present Wilson’s claim to the estate. Goldsmith informed Lawrence that the claim would not be considered because it did not follow the Ohio Revised Code requirements for presenting a claim to the executor of an estate, and that the time period for presenting claims against Wilson’s estate had expired.
Wilson then sued Lawrence, in his capacity as executor of Gorman’s estate, in Cuyahoga County Common Pleas Court alleging breach of contract. The trial court judge found the letter was sent to two individuals who were not the personal representatives of Gorman’s estate, and that the letter was not legally sufficient under R.C. 2117.06 for presenting a claim. The trial court granted summary judgment to the estate, and Wilson appealed to the Eighth District Court of Appeals.
The Eighth District ruled that Ohio courts have “softened the standard” for presenting estate claims and the law allows a claim to be deemed “presented” when others connected with the estate receive the claim. The Eighth District reversed the trial court’s decision finding that because Wilson’s claim was forwarded to the executor and the estate’s attorney by the secretary and trustee, it did not matter that it was provided to them by a third party.
Lawrence appealed the decision and the Supreme Court agreed to hear the case.
Court Examines Law
The Court noted that R.C. 2117.06 states: (A) All creditors having claims against an estate, including claims arising out of contract, out of tort, on cognovit notes, or on judgments, whether due or not due, secured or unsecured, liquidated or unliquidated, shall present their claims in one of the following manners: (1) After the appointment of an executor or administrator and prior to the filing of a final account or a certificate of termination, in one of the following manners: (a) To the executor or administrator in a writing.
Chief Justice O’Connor explained the Court first analyzed whether R.C. 2117.06(A)(1)(a) was ambiguous, and noted that when a statute is unambiguous, a Court must apply it without interpretation. The Court majority concluded the law is a “clear and unequivocal command” that creditors present claims to the executor or administrator in writing. The chief justice noted the word “shall” in a statute means “must,” and the Court assumed the General Assembly intended creditors strictly follow the law.
The opinion stated that prior Supreme Court rulings have found the law was adopted to foster expeditious and efficient administration of estates and that the state has a strong interest in settling estates. The Court noted the law places the burden on those making claims to identify the administrator or executor, and does not come to the aid of creditors who fail “through indifference, carelessness, delay, or lack of diligence” to identify the proper person.
Chief Justice O’Connor wrote that Wilson’s contention that substantial compliance with the law should be permitted is unpersuasive because a statute or rule that uses “shall’ in describing an act to be performed generally does not permit substantial compliance.
“And Wilson identifies no other language in the statute that would be evidence of a clear and unequivocal intent to overcome the mandatory nature of the presentment obligation,” she wrote.
Chief Justice O’Connor also noted that while the Eighth District may have found Ohio courts have permitted a “softened standard” for presenting a claim, “no court has the authority to ignore plain and unambiguous” statutes.
The Court reversed the Eighth District’s opinion and remanded the case to the trial court to enter a judgment in favor of Lawrence.
Justices Terrence O’Donnell, Sharon L. Kennedy, Judith L. French, Patrick F. Fisher and R. Patrick DeWine joined the opinion.
Letter Calculated to Reach Executor, Dissent Maintains
In his dissent, Justice O’Neill noted the letter to Clark included the salutation line to the “heirs, administrators or executors” of Gorman’s estate, and that once Clark received the letter she immediately forwarded it to Goldsmith. Justice O’Neill indicated there was nothing in the case record that indicates when Goldsmith received the letter and presumed that it reached him by the deadline required by law.
Justice O’Neill wrote the law does not specify how a claim is “presented” to the executor and that a letter with the salutation “to the executor” that makes it way to the executor by the deadline meets the requirements of the law. He wrote many Ohio courts have allowed claims that were first delivered to the U.S. Postal Service, which is not appointed by the probate court, which then delivered it to the executor or administrator.
“Would sending a written claim by FedEx or a private courier service fail the majority’s rule. And if not, why not?” he wrote.
Justice O’Neill wrote the law’s intent is to set a six-month statute of limitations for filing a claim and to provide notice to the executor or administrator of the claim. In this case there is ample evidence that the estate received the written claim by the deadline, he concluded.
“Must a creditor now track down the executor on the seventh hole of the local country club and physically hand the claim to the executor to establish that the claim was ‘presented’?” he wrote. “I would hold that a creditor satisfies the statute by accomplishing delivery of a claim in any manner reasonably calculated to get it ‘to’ the executor of an estate.”
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