Representing Claimants in Probate Estates: Bad Things Can Happen to Good Lawyers

By
Matthew J. Rossiter*

Introduction
If asked, most attorneys will tell you that "a probate claim needs to be filed within six months…". What "six months" means is the reason for this article. Since the United States Supreme Court issued its decision in Tulsa Prof'l Collection Servs., Inc. v. Pope , the issue of the fairness and constitutionality of the limitation periods for filing claims has been discussed and litigated extensively. The topic is neither new nor groundbreaking. However, claimants still file late claims, and courts entertain them. Practitioners need to be refreshed on the severe and often "unfair" consequences of not filing claims in timely fashion. This article examines some basic issues relevant to representing a creditor of a probate estate. It also revisits the constitutional basis for Missouri's statutory scheme.

When to File: RSMo Sections 473.360, 473.363 and 473.444
Section 473.360 is known as the "nonclaim" statute. It is where the claim scheme begins. To be timely, a claim against an estate must be filed with the probate division, and this filing must be within six months of the date of first publication, subject to a possible two month extension if the creditor is given actual notice.

If you represent a Plaintiff in a lawsuit, and the defendant dies, your client needs to file written notice in the probate division. Specifically, section 473.363.1 provides that “[a]ny action pending against any person at the time of his death, which, by law, survives against the personal representative, is considered a claim duly filed against his estate from the time substitution of the personal representative for the deceased defendant, or motion therefor, is made and written notice thereof is filed in the probate division.” These claims must still conform to the timel requirements set forth in section 473.360.

It would be understandable for an attorney to read no further in the Probate Code, and assume that "six months from the date of first publication is all I need to know." However, buried at the bottom of section 473.360(1) is the ominous language: "The six-month period does not extend any other applicable limitation periods". This language actually refers to section 473.444, which expresses the general limitation period for claims against an estate.

Section 473.444 provides that all claims, except the costs and expenses of administration, family and homestead allowances, taxes and other U.S. government claims, are barred unless filed within one year of the decedent’s death. This one-year limitation applies whether or not administration of the decedent’s estate has commenced within that time. Moreover, the limitation applies whether or not a claimant has been given any notice of the decedent’s death, or of the need to file a claim. Thus, a creditor often receives notice of the decedent’s death only after the one-year statute of limitations has already barred its claim.

1. Claim Pleading Requirements: Section 473.380
The Legislature intended to allow non-lawyers to present their claims against estates without having to comply with meticulous rules and formalities. Accordingly, a claim filed in probate court is not held to strict pleading requirements. A claim is sufficient if it serves as reasonable notice to the personal representative of the nature and extent of the claim, and if it is sufficiently specific that a judgment based upon the claim would serve as res judicata to the obligation contained in the claim.

A claim should be in writing, state the nature of the claim, and the amount of the claim, if ascertainable. The claimant or the claimant’s knowledgeable agent should sign the claim. The claim should state that the claimant has given the estate credit for all of the payments and offsets to which it is entitled, and that the amount of the claim is justly due. Finally, if the claim is based upon a written instrument, the original or a copy thereof should be attached.

• Lesson
  Drafting and filing claims is not rocket science. You need to ascertain two dates: death of the decedent, and date of first publication. Thereafter, do not strategize, plot, think, or assume - just file. As you will read, the law shows no mercy for procrastinators.

Missed Deadline: In re Estate of Glover
The rigidity of the limitations periods is illustrated in the case of In re Estate of Glover. In Glover, Carthell Glover, the son of decedent William Glover, brought an action against his stepmother, Rita Glover, for the wrongful death of his father. In November of 1996, while the wrongful death case was still pending, Rita Glover died. Shortly thereafter, on December 16, 1996, the attorney for one Lilly Kell, wrote a letter to Carthell Glover’s attorney, explaining that Kell had filed an application for letters testamentary for Rita Glover’s estate. Kell's attorney further advised that a probate cause number and order of appointment were expected within a few days. The next month, on January 2, 1997, Kell was appointed the personal representative of Rita Glover’s estate. The date of first publication was January 4, 1997. Rita Glover’s attorney filed a Suggestion of Death and a Motion to Substitute in the wrongful death action on January 8, 1997.

On February 4, 1997, Carthell Glover filed a petition to revoke Kell’s independent administration, later amended, alleging that Lilly Kell had paid out excessive and improper attorneys’ fees from the estate. The petition mentioned that there was a $500,000.00 judgment against Kell as Personal Representative, from the wrongful death action. The petition sought to revoke independent administration of the estate by Kell, and to revoke Kell's letters of administration.
On August 6, 1997, seven months and two days after the date of first publication, Carthell Glover filed a copy of the wrongful death petition, a copy of the Suggestion of Death and Motion for Substitution of the parties with the probate division,. The trial court granted Kell’s motion to dismiss on the grounds that Carthell Glover failed to timely file notice before the probate division as mandated by sections 473.360 and 473.363.

On appeal before the Eastern District, Carthell Glover put forth four distinct arguments to overturn the trial court’s dismissal. First, he argued that Section 473.360 was only jurisdictional in a “limited sense.” The court disagreed, citing the Missouri Supreme Court in Missouri Highway and Transp. Com’n v. Myers, and its holding that strict compliance with section 473.360 was mandatory and jurisdictional.

Carthell Glover next argued that because Rita Glover’s estate was an independent administration, no notice to the probate division was necessary, and that actual notice to the personal representative was sufficient. The Court disagreed, noting that there was no distinction between independent and supervised estates in the statutes. Moreover, the court pointed out that, in the past, the Missouri Supreme Court had applied section 473.360 to independent administrations. Thus, the court held that Carthell Glover’s filing of notice with the probate division, which happened seven months and two days after the first publication of the letters testamentary, was not timely.

Carthell Glover’s third argument was based upon equitable estoppel. Specifically, he argued that a December 16, 1996 letter written to him from the personal representative’s attorney should serve to estop the estate from now utilizing the limitations period as a defense. In its analysis, the court noted that the letter did not plainly tell Carthel Glover that he did not need to file a claim in the probate division. Accordingly, the court held that equitable estoppel did not apply.
Finally, Carthell Glover argued that he did not know that he was required to file his claim with the probate division within six months of the publication of the letters testamentary. This argument was rejected, as all people are “conclusively presumed to know the law.” The court affirmed the trial court’s dismissal of the claim.

The Glover holding is especially tough if one considers that all interested parties knew about the wrongful death suit, and the judgment. The probate division sits in the same Circuit and building where the judgment was obtained. One could hardly argue that any interested party would have been prejudiced if the claim were allowed.

• Lesson
  The court’s holding does not preclude equitable estoppel claims in the probate context. The theory might be effectively argued when the opposing party has explicitly informed a creditor that she need not file. However, in most cases, if you are arguing an estoppel theory, you have probably already lost.

Missed Deadline(s): "Brundage" and Small Estates
Missouri statutes set forth the procedures and conditions under which a decedent’s family can collect the assets of certain small estates under $40,000 without administration. A small estate affiant must swear that he or she will liquidate the estate as needed to pay the debts of the decedent and the estate. Of course, a creditor still must heed the limitations period of Section 473.444.

In State Dept. of Social Services v. Brundage, the decedent, Vincent Brundage, died in February of 1998. A small estate affidavit was filed May 11, 1998. His will was admitted to probate on May 18, 1998, but no letters were filed and full administration was not commenced. Notice to creditors was published in a county newspaper on May 30 and June 6, 1998, but no claims were filed. The estate assets were distributed a few weeks later.

On September 17, 1998, the Division of Medical Services (DMS) filed a claim against the small estate for Medicaid assistance paid by the State to the decedent and his spouse. Serious attempts to settle the claim were made, to no avail. Over two years after the decedent’s death, DMS amended its claim and sought to call the claim for hearing. The probate court found that DMS' only remedy was to commence full administration under section 473.020 and file a claim. As the time to open an estate had elapsed, and the time to file a claim had expired, DMS' claim was dismissed.

DMS then filed a petition against the affiant in circuit court, alleging it had a right to recover against the affiant, because he swore to, but nevertheless failed, to pay the debts of the decedent. The court noted that the statutes did not provide any procedures for litigating disputed claims in small estates. The court also found that allowing the claim against the affiant would encourage creditors to be less diligent in pursuing their claims. In fact, the court expressed concern that, by allowing such a claim, it would be granting to creditors a power to escape the statutes of limitations periods established by the probate code. Allowing a claim against an affiant would allow a creditor otherwise time barred by one or more of the limitation sections, to file suit against the small estate affiant. The court found that such a procedure was contrary to the probate court’s purpose of promptly resolving a decedent’s debts and distributing the remaining assets.

Why the Statutory Scheme is "Fair" and Constitutional
Are the Glover and Brundage decisions fair? While harsh, the dual timeliness requirements of 473.360 and 473.444 have been found to be constitutional. It is appropriate to examine that constitutional basis. The Missouri Supreme Court not only affirmed the constitutionality of the statutes, but also declared their fairness.

Hatfield v. McCluney
In Hatfield, Lillian McCluney died on December 11, 1990. Her son filed an application for letters testamentary in May of 1991, and he filed consents to open an independent administration in June of 1991. However, for reasons unknown, the letters testamentary were not issued and the estate was not opened until December 11, 1991, exactly one year after McCluney’s death. The letters were not published until December 18, 1991.

The claimant in the case, Hatfield, was a business associate of McCluney who, at the time of her death, had a valid judgment of over $27,000 against her. Hatfield was aware of McCluney’s death, and was also aware that some of her assets were subject to probate. On January 6, 1992, Hatfield filed two claims with the probate division. The trial court dismissed Hatfield’s claims, citing section 473.444 and its one year time bar.

In an attempt to escape dismissal under section 473.444, Hatfield argued several points. He argued that because the first publication did not occur until exactly one year after McCluney’s death, he was left with only one day to file his claim. This fact rendered the notice requirements of the statute ineffectual and served to deprive him of due process of law.

The Supreme Court interpreted Hatfield’s argument to be that he could not file his claims until the estate was opened. This argument was flawed. The court cited section 473.020, stating that “any interested person” may apply for letters of administration if no such application has been filed within twenty days of the testator’s death. As an interested person, Hatfield could have filed his claims and tolled the statutes of limitations of sections 473.360 and 473.444 as early as January, 1991. Consequently, the court found that Hatfield’s complaint that he had only one day to file was merely “a product of his own lack of diligence in pursuing that claim.” As a result, there was no due process violation.

Hatfield also argued that the estate’s publication, as required under statute, should estop the state from invoking the statute of limitations set forth in section 473.444. He observed that the notice, on its face, gave him and other creditors six months from the date of first publication to file a claim. The court declared that the central flaw to this argument was it failed to recognize that the limitations period of section 473.444 does not rely upon publication. The court also pointed out that the notice was not designed to mislead creditors like Hatfield into delaying their filings. The court affirmed the dismissal of Hatfield's claims.

Tulsa Prof’l Collection Servs., Inc. v. Pope
When a creditor like Hatfield is aware of a decedent's death, he can initiate probate as an interested party. The Pope case dealt with a creditor who did not have knowledge of the decedent’s death. In Pope, the United States Supreme Court held that creditors readily ascertainable through reasonable diligence must receive actual notice before having their claim extinguished by a state nonclaim statute. This determination depended upon the initial determination that such state nonclaim statutes were not ‘self-executing’. Generally, statutes of limitations are considered ‘self-executing’ because of the limited involvement of the state government, and thus do not involve enough state action to implicate the Due Process Clause of the Fourteenth Amendment. In Pope, the Supreme Court held that the state’s significant and intimate involvement in the nonclaim statute, through the probate court, was essential in activating the time bar. Accordingly, the court found that due process protections were necessary.

However, the Supreme Court was clear that personal representatives need not undertake “impracticable and extended searches” to satisfy due process. Rather, they need only exercise reasonable diligence to discover reasonably ascertainable creditors, and may depend upon publication notice to inform all others. In any event, creditors sending regular bills and notice and calling to inquire about past due payments would probably be reasonably ascertainable to a diligent personal representative, and would accordingly be entitled to actual Pope notice. It must be remembered that, under section 473.360, giving actual notice to a creditor may in fact extend the six-month from publication time bar. That is, if a creditor receives notice during the fourth or fifth month following the first publication, that creditor will have two months from the day of notice to file a claim, subject to section 473.444’s bar of all claims brought more than a year after the decedent’s death.

‘Pope’ notice does not prevent a personal representative from opening an estate at the last minute in order to give unascertainable creditors very short notice. This is because Pope does not affect section 473.444’s mandate barring all claims if brought more than one year after the death of the decedent. The Court refused to consider whether state statutes that run from the date of the decedent’s death have any due process implications. Missouri courts have consistently held that section 473.444 is a ‘self-executing’ statute of limitations, and is constitutional. Therefore, there is not sufficient state action to warrant any due process evaluation.

The Claimant's Big Stick: 473.020
As illustrated above, when faced with the delayed opening of an estate, a creditor cannot sit idly by and watch the one-year period pass. A creditor must initiate the probate process and file a claim. The Hatfield court discussed section 473.020, noting that if an estate is not opened within twenty days of the death of the decedent, any “interested person” may apply for letters of administration. The Hatfield court further noted that a creditor qualified as an “interested person” under section 472.010. According to the court, after initiating such proceedings, a creditor would then be able to file a claim with the probate division, thereby tolling the six-month limitation set forth in section 473.363 as well as the one-year from death limitation of section 473.444. The two-step process recommended by the Hatfield court may no longer be necessary, and simply attaching the claim to the petition may suffice.

• Lesson
  Where interested parties are dragging their feet, Section 473.020 is the claimant's best friend. Use it to compel administration, and get your claim filed timely. Of course, a creditor must be diligent in discovering the deaths of his or her debtors. A creditor must learn of and respond quickly to the deaths of debtors, and then utilize section 473.020 to protect its interests.

The Secured Claimant: 473.387
A secured creditor has the option of pursuing a claim against the estate, and being paid out of the estate. However, the statute does not impair that creditor’s separate option of pursuing a remedy in the circuit court.

A secured claim shall describe the security held by the creditor. If the security is recorded, the description shall indicate the date of the lien and the volume, page, and place of recording or filing, along with the names of the parties. The statute permits, but does not require, the creditor to surrender his or her security and be paid out of the estate assets. Additionally, section 473.387 states that the claim should be paid in full if the creditor surrenders his security. If the claimant exhausts the security before receiving payment, payment will be based upon the amount of the claim less the amount realized in exhausting the security. A creditor who has not exhausted her security or does not have the right to exhaust the security shall be paid the full amount of the claim less the value of the security.

Personal Representative as Claimant: Section 473.423
If the creditor is also the personal representative, the claim must still be timely filed with the probate division . Unless all persons adversely affected consent to the claim in writing, the court must appoint an administrator ad litem to appear and manage the defense. The cost of the administrator ad litem is to be charged against the personal representative unless the personal representative can show that the claim arose before the decedent’s death or that the claim relates to the advancement of funds for the benefit of the estate. If such a showing is made, the costs will be charged against the estate as costs of administration.

• Lesson
  Attorney personal representatives must be sure to comply with Section 473.423, especially when fees are the issue. Failure to do so can result in conflicts of interest and ethical violations.

Conclusion
I often tell clients that the solution will be "simple because it has to be simple". When you think of a claim, it has to be simple. Consult sections 473.360, 473.363, and 473.444. If you are concerned that an estate will not be opened, consult section 473.020, and initiate administration. It is just that simple.

* The author thanks Geoffrey Dobran for his diligent research and assistance with the article.