Merit Decision: Strict, Not Substantial Statutory Compliance Required to Properly Present Claim Against Estate. Wilson v. Lawrence.

On April 19, 2017, the Supreme Court of Ohio handed down a merit decision in Wilson v. Lawrence, Slip Opinion No. 2017-Ohio-1410. In a 6-1 opinion authored by Chief Justice O’Connor, the Court held that a claim against an estate must be timely presented in writing to the executor or the administrator. Justice O’Neill dissented. The case was argued January 11, 2017.

Case Background

Joseph Gorman entered into a contract with Appellee James Wilson to buy a 15% interest in Marine 1, L.L.C. for $300,000. Gorman died on January 20, 2013, still owing Wilson $187,000 on the contract.

Appellant, William Lawrence, was named executor of Gorman’s estate on July 1, 2013. Joseph Goldsmith was the attorney for the estate.

On July 11, 2013, Wilson’s lawyer sent a letter to Patricia Clark, Gorman’s personal secretary, and to Randall Myeroff, Gorman’s accountant and trustee of his trust. The letter was addressed to Clark and to Myeroff, not to Lawrence or Goldsmith. The letter purported to present Wilson’s claim to Gorman’s executor for the then about $200,000 owed to Wilson under the contract.  But Wilson never sent the letter to either Lawrence, the executor, nor Goldsmith, attorney for the estate.  According to the record, Clark forwarded the letter to Goldsmith the day she got it, and Myeroff forwarded the letter to both Goldsmith and Lawrence “soon” after he received it. The record contains no dates as to when these letters were forwarded or received by Goldsmith or Lawrence.

On September 24, 2013, Goldsmith informed Wilson’s lawyer by letter that he was aware that the lawyer had sent a letter to Clark and to Myeroff on Wilson’s behalf, but denied the claim as improperly presented to the Executor. The letter also advised that the statutory six month period for presentment of claims against the estate had ended on July 20, 2013, six months after Gorman’s death.

In November, 2013, Wilson filed a breach of contract claim against Lawrence in the Cuyahoga Court of Common Pleas 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, rejecting Lawrence’s strict interpretation of R.C. 2117.06, reversed, and held that Ohio law permits a claim to be deemed presented when “other individuals connected with the estate receive the claim.”  The appeals court certified a conflict between its judgment and that of Jackson v. Stevens, 4th Dist. Scioto, 1980 WL 350961 (Jan. 2, 1980).

This was the certified question:

“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.”

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.)

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.)

Cleveland Ry. Co. v. Brescia, 100 Ohio St. 267, 126 N.E. 51 (1919) (Repeated use of the word “shall” is indicative of legislative intent to make mandatory an element of the statute.)

Beach v. Mizner, 131 Ohio St. 481, 3 N.E.2d 417 (1936) (“[T]he simple wording here involved must be regarded as mandatory when viewed in the light of common acceptation. Reduced to its lowest terms, it unambiguously states that ‘creditors shall present their claims . . . within four months,’ and no apparent purpose could be served by attempting to torture it into something else.”)

Beacon Mut. Indemn. Co. v. Stalder, 95 Ohio App. 441 (9th Dist.1954) (“The right to file a claim involves a question of time, and the purpose of the legislation to effect a speedy administration of estates would be defeated if the court’s officer were compelled to delay the administration until he had received the report of his agent or his various agents. Furthermore, the fiduciary, personally, is accountable for the fixing of the time when a claim has been presented, and this responsibility cannot be delegated to an agent who does not owe the fidelity required of an officer of the court.”)

Fortelka v. Meifert, 176 Ohio St. 476 (1964) (Commencement of personal injury lawsuit against administrator of tortfeasor’s estate, accompanied by timely and proper service of the summons and complaint on the administrator, satisfied presentment requirements of R.C. 2117.06. Case distinguished from Wilson, as claim, in form of lawsuit, was properly served on the executor of the estate, while claim in Wilson was not.)

State v. Hairston, 2004-Ohio-969 (“If [the statute] is ambiguous, we must then interpret the statute to determine the General Assembly’s intent. If it is not ambiguous, then we need not interpret it; we must simply apply it.”)

Merit Decision

Executive Summary

The statute means what it says. You gotta file the claim on time, and in writing to the executor or the administrator.

Analysis

What Does R.C. 2117.06 Say?

Here’s the heart of the matter:

“All creditors having claims against an estate…shall present their claims…To the executor or administrator in a writing…”

Is This Statute Ambiguous?

No.

So Then What?

It doesn’t get interpreted, it just gets applied.

Applying the Statute: Shall Means Must.

The statute unambiguously says that all creditors shall present their claims in writing to the executor or the administrator.  There is nothing in the statutory scheme to suggest that “shall” means anything but “must.” There’s nothing else in the statute that would be evidence of an unequivocal “intent to overcome the mandatory nature of the presentment obligation.” The purpose of this strict requirement is to protect the orderly and proper administration of an estate by a properly appointed probate fiduciary.

One more key point. The functions of an executor or administrator cannot be delegated to agents.

Substantial Compliance with R.C. 2117.06(A) Won’t Fly

The court found Wilson’s argument that substantial compliance with the statute should be permitted was unpersuasive, holding that no court has the authority to ignore plain and unambiguous statutory language.

“If a creditor fails through indifference, carelessness, delay, or lack of diligence to identify the administrator or executor, or to procure the appointment of one so that a claim can be presented, the law should not come to the creditor’s aid,” O’Connor wrote.

Conflict Dismissed as Improvidently Certified

The case was originally accepted both as a jurisdictional appeal and on conflict certification. But the court dismissed the conflict, finding that the material facts in the two cases were different, and the statute at issue in Jackson was a different version of R.C. 2117.06 than the one at issue in this case.

Justice O’Neill’s Dissent

O’Neill would find that Wilson sent his claim, in writing, in a manner reasonably calculated to get it to Lawrence, and that a jury could find he satisfied R.C. 2117.06(A)(1)(a).

O’Neill made these points in his dissent:

  • Even though the letter was sent to Clark, the salutation line was directed to the “heirs, administrators or executors of the Estate of Joseph Gorman, deceased.”
  • Clark immediately forwarded the letter to Goldsmith, attorney for the executor. Myeroff also forwarded the letter to Goldsmith and to Lawrence at about the same time.
  • Although there are no dates in the record about when these letters were received, it is reasonable to assume at least for the purposes of summary judgment they were timely received.

O’Neill thinks the majority reads R.C. 2117.06 too rigidly. To him, if a creditor writes a letter directed to the executor, and the letter gets to the executor before the deadline, it has been properly presented.  He notes that the statute does not set forth any particular method of delivery, it merely requires presentment, which means handing over, as this was.

Reminding his colleagues in the majority that the case is before the court on a grant of summary judgment to the executor, O’Neill would find that the record shows that the letter was forwarded to the executor on or around July 12, 2013, and it is reasonable to infer that it was received before the July 20, 2013 deadline, or at least that is a factual dispute for the jury to resolve. He also notes that the executor never claimed he did not receive the claim.

In sum, O’Neill 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,” and would give Wilson the benefit of the rule in this situation.

Case Syllabus

A claim against an estate must be timely presented in writing to the executor or administrator of the estate in order to meet the mandatory requirements of R.C. 2117.06(A)(1)(a), and under that subdivision, delivery of the claim to a person not appointed by the probate court who gives it to the executor or administrator fails to present a claim against the estate.

Concluding Observations

As she so often does, the Chief cut right to the chase during oral argument, when she asked, “So our issue really is, is substantial compliance or strict compliance necessary here?”

After argument, I predicted a majority would go with strict compliance. It was clear during argument that the Chief and Justices DeWine and French would go that way. I still find one thing curious—there was no record evidence of when the executor did actually receive the letters from the third parties, although given the outcome here, I don’t think that would have made any difference.  Sloppy work by someone, as was failing to present this claim properly to the executor, which didn’t seem particularly difficult in this situation.

The majority pretty much adopted the executor’s argument in this case.

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