What’s On Their Minds: What Constitutes Proper Presentment of a Claim Against a Decedent’s Estate? James A. Wilson v. William Lawrence, Executor, et al.

“So our issue really is, is substantial compliance or strict compliance necessary here?” Chief Justice O’Connor

On January 11, 2017, the Supreme Court of Ohio heard oral argument in the case of James A. Wilson v. William Lawrence, Executor, et al., 2016-Ohio-0180. At issue in this case is whether R.C. 2117.06 allows for substantial compliance in the presentment requirements of a claim against an estate. The case was accepted on jurisdictional appeal and certified conflict, and the cases were consolidated.

This is the certified conflict:

“Whether R.C. 2117.06 allows for substantial compliance in the presentment requirements of a claim against an estate. If so, whether a plaintiff with a claim against a decedent’s estate can meet his burden under R.C. 2117.06(A)(1)(a) to ‘present’ his claim ‘[t]o the executor or administrator in writing’ when the claimant presents the claim to someone other than the fiduciary, who then submits the claim to the fiduciary within the statutory time-frame under R.C. 2117.06.”

Case Background

In September, 2011, Appellee James Wilson and Decedent Joseph Gorman entered into a contract in which Gorman agreed to purchase a 15% interest in Marine 1, LLC for $300,000, to be paid in a series of payments. The full purchase price was due on September 2, 2012, but Gorman did not maintain the payment schedule prior to his death on January 20, 2013.  At the time of his death, Gorman had paid $113,000, but still owed Wilson a balance of $187,000 plus interest.

Appellant William Lawrence was named executor of Gorman’s estate on July 1, 2013.  On or about July 12, 2013, Wilson sent a letter of notice of his claim to Randall Myeroff, trustee of a Gorman Trust, and to Pat Clark, Gorman’s executive assistant, (referred to during argument as “the secretary”) neither of whom were the personal representatives for the estate. Both recipients forwarded the letter to the attorney for the estate, and one forwarded it directly to Lawrence. The attorney for the estate rejected the claim because of Wilson’s failure to timely present it to the executor of the estate.

In November, 2013, Wilson filed a breach of contract claim against Lawrence for monies due on the unpaid contract. Lawrence moved for summary judgment, arguing that Wilson’s complaint was time barred under R.C. 2117.06. Wilson cross-filed a motion for summary judgment on his breach of contract claim.

In January, 2015, the trial court granted Lawrence’s motion for summary judgment in favor of the estate, holding that Wilson failed to present his claim to the executor as required under R.C. 2117.06. The court held that Wilson’s letters did not constitute proper written notice of a claim to the executor of the estate.

In a split decision, the Eighth District reversed summary judgment in favor of the estate, rejecting Lawrence’s strict interpretation of the statute, and finding that a claim could be deemed presented when received by the executor or the attorney for the estate, even if sent by third parties associated with the decedent. But the appeals court also held there was a question of fact as to whether either the executor or the attorney for the estate had actually received either of Wilson’s letters by the deadline. If they did, then the claim was properly presented.

Key Statutes and Precedent

R.C. 2117.06(A)(1)(a) (After the appointment of an executor or administrator and prior to the filing of a final account or a certificate of termination, “All creditors having claims against an estate . . . shall present their claims in one of the following manners (a) To the executor or administrator in a writing. . . ”)

R.C. 2117.06(B-C) (A claim not presented within six months after the death of the decedent shall be forever barred as to all parties.)

R.C. 2113.15 Appointment of Special Administrator

Fortelka v. Meifert, 176 Ohio St. 476 (1964) (“The purpose and object of the law requiring the presentation of claims against an estate to the executor or administrator is manifestly to secure an expeditious and efficient administration of an estate by promptly providing such a fiduciary with necessary information relating to the existence, amount and character of all indebtedness of the estate.”)

Wrinkle v. Trabert, 174 Ohio St. 233, 188 N.E.2d 587 (1963) (“Where one has a claim against an estate, it is incumbent upon him, if no administrator has been appointed, to procure the appointment of an administrator against whom he can proceed.”)

Peoples Nat’l Bank v. Treon, 16 Ohio App. 3d 410, 476 N.E.2d 372 (2nd Dist. 1984) (Executrix appointed an attorney to represent the estate, but the attorney did not timely notify the executrix of a claim against the estate. The executrix denied the claim. The Second District held that notice to the attorney of record constituted notice to the executrix.)

Hart v. Johnston, 389 F.2d 239 (6th Cir.1968) (Summary judgment to the administrator of an estate was denied where a lender presented notice of a claim and corresponded with the decedent’s accountant rather than the administrator.)

Certified Conflict Case

Jackson v. Stevens, 4th Dist. Scioto, 1980 WL 350961 (Jan. 2, 1980). (there was no properly presented claim where a plaintiff sent a written notice of his claim to a third party who then forwarded it to the executor within the six-month deadline. The statute requires presentment “to the executor or administrator,” and therefore, presentment to a person other than the fiduciary fails to satisfy the statute.)

At Oral Argument

Arguing Counsel

Matthew T. Wholey, Ulmer & Berne LLP, Cleveland, for Appellant William Lawrence, Executor of the Estate of Joseph T. Gorman.

Joseph Triscaro, Triscaro & Associates, Ltd., Solon, for Appellee James A. Wilson

Lawrence’s Argument

This case presents a simple question of statutory interpretation. The court should read and enforce the straightforward and unambiguous mandate in R.C. 2117.06 (A)(1)(a)—that a creditor with a claim against a decedent’s estate shall present such a claim in writing to the executor or administrator of the estate on or before the 6 month deadline in R.C. 2117.06(B). The undisputed evidence in this case is that Wilson failed to do that. His only attempt was a letter through his attorney to Gorman’s trustee and to his executive secretary, neither of whom was the court appointed executor. Sending such a letter to a person other than the court appointed executor does not fulfill the statutory requirement.

If someone does not know who the executor is, although that is easily determined in most counties, there is a provision pursuant to R.C. 2113.15 that permits a creditor to petition the probate court to appoint a special administrator against whom the creditor can proceed. Or a creditor could have just sent a letter to the decedent’s address, and had it been received within six months, it would have been timely, although that statutory provision, 2113.06(A)(1)(c), is not implicated in this case. And Wilson’s letter was not sent to the decedent’s address.

This court needs to articulate a rule of law that can apply in every case. And R.C. 2117.06(A)(1) already does that. It tells creditors they shall present their claim to the executor, not to somebody else. So the question before this court really is whether mere receipt by the executor within the six month limitations period is good enough, or whether creditors should be required to identify the executor and to meet their duty which, by a simple grammatical command, is to present the claim to the executor. The answer is clearly the latter.

Wilson’s Argument

The trustee timely sent Wilson’s creditor letter to the attorney for the estate and to Lawrence, the estate executor, and Gorman’s secretary timely sent the letter to the attorney. Notice to the attorney for the estate is good enough to meet the statutory requirements. So, in this case the executor got two letters before the deadline. The record in this case clearly backs this up. All the statute requires is that there be a writing presented to the executor.  There was in this case. There is nothing in the statute that limits a creditor from presenting a claim through a third party.  There is nothing in the statute that mandates a particular mode, method, or manner of presentment. When a statute is silent as to the mode or manner or method of presentation, receipt is sufficient, which is the case here.

Furthermore, in this case, even though the letter was addressed to the trustee and the secretary, the greeting line says, “to the executor of the estate of Joseph Gorman” and identifies the statute, that a claim is being made, the nature of the claim, and attaches a copy of the contract.

Presentment is governed by a substantial compliance standard. Even if the court looks at this from a strict compliance standard, the duty has been met by the claimant because the executor and the attorney for the estate actually did receive the notice. And even the Fourth District, where the conflict case originated, has now moved away from strict compliance to substantial compliance.

What Was On Their Minds

Substantial Compliance or Strict Compliance?

Is the question here substantial compliance, asked Chief Justice O’Connor? If Wilson had known the executor, and had sent the letter to  the wrong address, in care of another person, would that be sufficient to comply with the statute?

In this case, did the creditor present the claim, asked Justice French? That’s what the statute says, and isn’t that important?

Was the Notice Received Timely?

What were the respective roles of the parties who forwarded the creditor letter, asked Chief Justice O’Connor? Was this letter timely received by the executor? (The parties sharply disagreed on this point. Lawrence argued the court of appeals found a question of fact on this point.  Wilson argued that Lawrence conceded the point at oral argument, and the record backs up the timely receipt despite what the appeals court held.) Was it sent by certified mail? Did the executor know about the claim before the expiration of the 6 months?

Did the executor receive the notice within the 6 months, but just not directly, asked Justice O’Donnell? Both the trustee and the secretary forwarded the letter? To whom was the letter addressed?

Did Wilson take an appeal from the finding by the court of appeals that there are questions of fact as to whether the executor timely received the notice of claim, asked Justice French? (answer: no). So there is still a question of fact on that point? Is there evidence in the record of when either the lawyer or the executor actually received the notice? (answer: no) She then commented, “I’m still hammering on this point-we do not have evidence of when this executor received the notice.”

As long as it gets to the executor, it’s fine, asked Justice DeWine? If so, why does the statute say “present” instead of “shall be received”?

Finding the Executor

How easy is it to find out who the executor of an estate is, asked Justice French, to both counsel.

Was there any doubt as to the proper county where the estate would be opened, asked Chief Justice O’Connor?

Ways to Meet the Statutory Requirements

Couldn’t a creditor just send a letter to the decedent, asked Justice French? Or ask the probate court to appoint a special administrator?

The statute allows for the mailing of a claim to the decedent at the decedent’s address, and if that letter makes its way to the court appointed executor, isn’t that a valid presentment, if done timely, asked Chief Justice O’Connor? Or, if a creditor or his attorney didn’t know if the estate had been opened, could he not have taken steps as a creditor to petition for opening of the estate to allow presentment of a claim? instead, he took a shot in the dark and said, since I know the secretary and the trustee, I’ll send a claim there and hopefully that is going to stick?

The Equities of the Situation

What is the nature of the 15% interest in the Marine One, Ltd, asked Justice O’Donnell? Is it an estate asset? Doesn’t the estate get the interest on $113,000, instead of the $300,000 Gorman agreed to pay? Because the claim wasn’t timely submitted to the executor, should the equity of the situation be disregarded? Should we look just at the service situation?

The equities are not our concern here, are they, asked Chief Justice O’Connor, noting that would be for the trial court if the claim were deemed timely.

How it Looks from the Bleachers

To Professor Emerita Bettman

If it were me, I’d give it to Wilson IF the claim were timely received either by the executor or the lawyer for the estate. Wilson insists that it was, despite the finding of the 8th district that there are material issues of fact on whether the letter was timely received.  If the court were to go that route, I don’t think it would buy that. It would get sent back to determine when the letters were actually received.  But I don’t think a majority is going to buy substantial compliance.  At least three justices—French adamantly so, stickler that she is, followed by Chief Justice O’Connor, and Justice DeWine – seem insistent on strict compliance with the statutory language which requires the creditor to present the claim to the executor. I suspect they will pick up a 4th vote, although everyone else was very quiet.  Justices O’Neill (who was stuck in traffic and arrived late), Kennedy, and Fischer asked no questions.

Still, although the equities are on Wilson’s side, as Justice O’Donnell seemed to suggest, what I think will ultimately sink Wilson here is if he couldn’t figure out who the executor was, he had the option to go to probate court and seek the appointment of a special administrator, and then present his claim. A mistake by his lawyer, perhaps?

To Student Contributor Connie Kremer

Mr. Wholey, on behalf of the executor, Lawrence, concluded oral argument stating that an effective rule of law must be simple and straightforward, and must give effect to the statute. I think the Justices will agree with Mr. Wholey that the most universally applicable rule of law favors the executor’s interpretation. At the end of Mr. Triscaro’s argument for the claimant, Chief Justice O’Connor likened the claimant’s actions to taking a shot in the dark. It seems unlikely to me that the Justices will write a rule of law that rewards and depends upon landing a shot in the dark.

The Justices were not without criticism of Mr. Wholey’s argument. Though there was disagreement regarding the record, Mr. Triscaro stated that the executor timely received notice of the claim against the estate. Unsurprisingly, the question of equity was raised during Mr. Wholey’s argument—assuming the executor of the estate timely receives notice of a claim, equity seems to favor the claimant. However, this line of consideration was short-lived as the Justices prevented Mr. Triscaro from relying on equity as a basis for his argument.

Finally, both sides were questioned regarding the accessibility of the executor designation. The Justices seemed unconvinced by Mr. Triscaro’s argument that the records were difficult to locate, while the Court seemed more accepting of Mr. Wholey’s statements that (1) the records were easy to locate, and (2) even if they weren’t, the statute provides an avenue for collection by a creditor where the estate has not been otherwise opened.

This looks like a win for the executor, requiring direct notice to the executor of an estate to satisfy R.C. 2117.06.

 

 

 

 

 

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