Ohio Supreme Court Rules on Creditors’ Statutory Requirements: Wilson v. Lawrence
Kegler Brown Estate Planning Alert May 15, 2017
The Ohio Supreme Court ruled that a written claim presented to someone other than the court-appointed fiduciary does not comply with Ohio’s law governing the timely presentation of a creditor’s claim.
In the case of Wilson v. Lawrence, Slip Opinion No.2017-Ohio-1410, the Supreme Court determined that a claim, while timely presented to the decedent’s personal secretary, the trustee of his trust and his accountant, who in turn delivered the writing to the court-appointed fiduciary, did NOT meet the statutory requirements governing valid presentation of a creditor’s claim.
R.C 2117.06(A)(1)(a) requires timely presentment of a written claim directly to the court-appointed fiduciary.
Joseph Gorman died on January 20, 2013, before fulfilling certain contractual obligations owed to James Wilson, related to the purchase of membership interests in a limited liability company. The Gorman Estate was commenced on July 1, 2013, with William Lawrence appointed Executor. On July 11, 2013, legal counsel for claimant Wilson sent letters addressed to Gorman’s personal secretary, his accountant and the trustee of his trust, each of whom purported to present a claim against the estate for the remaining balance owed on the contract. While none of the letters was addressed to the executor, each recipient delivered the written notices to estate counsel before July 20, 2013.
After the passing of the statutory 6-month time period for presentation of claims, counsel for the estate contacted counsel for the claimant and informed him that the previously provided letters, although timely forwarded by the recipients, were insufficient to effectuate the filing of an appropriate claim. Therefore, the claim was rejected.
Trial Court + Appellate Decisions
After rejection, the claimant commenced suit in the General Division of Common Pleas Court, alleging breach of contract. After discovery, both parties moved for summary judgment and the trial court ruled in favor of the estate, finding that the presentation of a claim to individuals who are not, in fact, personal representatives was not legally sufficient under the statute R.C. 2117.06.
On appeal, the claimant argued that Ohio courts have softened the standard for presenting claims, while the executor argued in favor of strict statutory compliance. The Eighth District Court of Appeals ruled “that Ohio law permits a claim against an estate to be deemed presented when ‘other individuals connected with the estate receive the claim.’” The court determined “the fact that [the] claim was forwarded to the estate attorney and executor by a third party, who w[as] connected with the decedent, is of no consequence.”
The executor moved successfully to certify a conflict between this decision by the Eighth District and a longstanding decision by the Fourth Appellate District holding that a claim against an estate must be timely presented in writing to the actual executor. The Ohio Supreme Court recognized the conflict and accepted the discretionary appeal.
Finding that the state has a strong interest in the administration of its citizens’ estates, the Supreme Court declared that the requirements of R.C. 2117.06 are a mandatory part of the legislative scheme, and given strict construction, the statute unambiguously provides that “all creditors shall present their claims in writing to the executor or administrator.”
In making its decision, the Court reiterated that the Ohio statutory scheme places the burden on the claimant to present their claim, exemplifying that if a creditor “fails through indifference, carelessness, delay or lack of diligence to identify the fiduciary or procure the appointment of one so that a claim can be presented, the law should not come to the creditor’s aid.”
Creditors are required to monitor their debtors’ individual circumstances. Should a debtor pass away, the creditor must act timely to preserve their claim against the decedent’s estate.