Allen v. Ritter

GRAEFF, J. This appeal arises from a dispute regarding the distribution of the Estate of Roy Harry Allen (the “Estate”). Appellants, Robert L. Allen and Deane Judson Allen (the “Allen Brothers”), challenge the order of the Orphans’ Court for Dorches-ter County requiring that they sign a release of claims against appellee, Sharon Ritter, Successor Personal Representative of the Estate. ⁶²⁰ On appeal, the Allen Brothers raise two issues for our review, which we quote: 1. Does Estates & Trusts Section 9-111 entitle a Personal Representative to demand and receive a sweeping release from the Appellants before she paid over to them the sums of money the Court had determined they were entitled to when it approved the First And Final Administration Account? 2. Did the Orphans’ Court for Dorchester County, Maryland have the authority to order the Appellants to sign a sweeping release of liability to the Successor Personal Representative before they could secure payment of their respective shares of their father’s estate that had been directed by the Orphans’ Court when it approved the Successor Personal Representative’s First and Final Administration Account?

For the reasons set forth below, we shall affirm the judgment of the Orphans’ Court. FACTUAL AND PROCEDURAL BACKGROUND Roy Harry Allen died on January 28, 2005. At the time of his death, Mr. Allen had an estate totaling $298,266.76 and a valid will. Mr. Allen was survived by three children: Virginia Leitch; Deane Judson Allen; and Robert L. Allen.

On October 20, 2005, Virginia Leitch, who was named in her father’s will as the Personal Representative of the Estate, opened the estate. 2 The parties agree that there was much acrimony among the decedent’s three children over the administration of the Estate. 3 Shortly after the Estate was opened by Mrs. Leitch, the Orphans’ Court named Robert L. Allen as Co-Personal Rep ⁶²¹ resentative of the Estate. On February 26, 2008, due to conflict between Mrs. Leitch and the Allen Brothers, and pursuant to an agreement between the parties, Mrs. Leitch and Robert L. Allen were removed as Co-Personal Representatives, and Sharon Ritter was appointed Successor Personal Representative of the Estate. After the appointment of Ms. Ritter, the controversy over the administration of the Estate continued. On April 30, 2008, Ms. Ritter filed a Petition for Reimbursement of Expenses, which the Allen Brothers opposed.

This petition involved expenses related to the care of the decedent in the final weeks of his life. The Allen Brothers opposed payment of approximately $5,000 of these expenses, not on the ground that the expenses were not incurred, but on grounds relating to the timing when the checks cleared. After the court granted the Petition for Reimbursement, the Allen Brothers filed another motion to strike the order. In her opposition to this motion, Mrs. Leitch, the original Personal Representative and a beneficiary of the Estate, alleged that additional expenses and “avoidable disruption to the Estate” were being incurred “by reason of the multiple baseless allegations made by the Allen [Bjrothers.” Mrs. Leitch represented: In due course, Mrs. Leitch will petition this Court pursuant to Rule 6-141, to make an award against the Allen brothers in her favor & in favor of the Estate, of all of the expenses incurred by Mrs. Leitch & the Estate for the bad faith actions, filings & allegations of the Allen brothers who have acted & who continue to act in bad faith & without substantial justification.

As that Rule provides, if parties wish to play games with this Court by acting in bad faith & without substantial justification so as to incur otherwise needless expense & delay for the other party(s), then in due course, those parties should be required to reimburse the other party(s) & the Estate for the expense thus incurred by those other parties & by the Estate. On September 17, 2008, Ms. Ritter filed several additional petitions and a “First and Final Administrative Account” (the “Final Account”) for the Estate, all of which the Allen Broth ⁶²² ers opposed. With respect to the Final Account, the Allen Brothers asserted, among other things, that they excepted to: (1) the payment of Virginia Leitch in reimbursement for expenses paid by her for the care of their father; and (2) the payment of attorney’s fees and commissions to the Successor Personal Representative. On May 5, 2009, after a hearing, the Orphans’ Court approved the Final Account filed by Ms. Ritter.

By correspondence dated June 10, 2009, Ms. Ritter requested that the Allen Brothers and Mrs. Leitch sign a release before she distributed the monies owed to them pursuant to the Final Account. The release contained the following language: KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Deane Allen, hereby acknowledges to have received from Sharon J. Ritter, Personal Representative of the Estate of Roy Harry Allen, deceased, being in full satisfaction of the distribution to the undersigned, as follows: Cash: $71,333.76 and in consideration thereof the undersigned does hereby release, acquit, exonerate and discharge the said Sharon J. Ritter, Personal Representative, as aforesaid, her heirs, executors and administrators of and from all and every action, suit, claim or demand which could or might possibly be brought, exhibited or prosecuted against her, for or on account of her duties as Personal Representative of said estate arising from or in any way related to the administration thereof, and on account of such distribution, or any part thereof, hereby declaring myself fully satisfied, contented, and paid, as above specified. I do hereby verify and affirm under the penalties of perjury that I executed the foregoing Release for the purposes therein contained.[ 4 ] ⁶²³ Mrs. Leitch signed and returned the form to Ms. Ritter and received her distribution. The Allen Brothers, however, refused to sign the releases.

In a letter from their attorney, they questioned Ms. Ritter’s right to require such a release prior to distribution of the estate, and they indicated concern that Mrs. Leitch might institute further suit against them, stating that they did not want to “foreclose any recourse they may have against anyone else in this matter.” On July 21, 2009, counsel for Mrs. Leitch sent a letter to counsel for the Allen Brothers to allay their concern over future litigation and “in the hope that we can bring this estate to its long-overdue conclusion.” Counsel for Mrs. Leitch explained: If, as Sharon understands your position, your clients’ refusals to sign the required releases are based on concerns that Ms. Leitch will pursue further legal action against them, then that concern is misplaced. The Orphans’ Court denied her motion for relief, the appeal time for that order has elapsed and that topic is now res judicata; meaning that such claims cannot be reraised.[ 5 ] Nor, might I add, is Ms. Leitch interested in pursuing any further claims. She presented her case, the Orphans’ Court has ruled and that is the end of it. She simply wishes to complete and close the Estate and subject to that one concern, further disengage from your clients.

Nevertheless, the Allen Brothers did not sign the requested releases. On September 21, 2009, Ms. Ritter filed a Petition for Release with the Orphans’ Court, seeking a release from the beneficiaries prior to distribution of the estate funds. In support, she cited Md.Code (2001 Repl.Vol.), § 9-111 of the Estates and Trusts Article (“E.T.”), which provides: “Upon making a distribution, a personal representative may, but is not required to, obtain a verified release from the heir or ⁶²⁴ legatee.” In the Petition, Ms. Ritter explained the procedural posture of the case and stated: The Personal Representative would like to distribute the estate funds and close this estate and has been ready and able to do so since early June when the time for filing appeals to this Court’s Order of April 28, 2009 had passed. However, the Personal Representative is reluctant to distribute any assets to Robert and Dean[e] Allen because of their apparent refusal to sign the Release and the threat of further lawsuit made by [counsel for the Allen Brothers].

On September 29, 2009, the Orphans’ Court issued a show cause order to the Allen Brothers, ordering them to show cause why they had not provided Ms. Ritter with a release. On October 20, 2009, the Allen Brothers filed an Answer to the Petition for Release and Show Cause Order. The Allen Brothers did not dispute the amount of Ms. Ritter’s proposed cash distribution, but they argued that Ms. Ritter was not entitled to a release. They asserted that, because the court had ordered distribution of the residuary estate, the personal representative was protected “insofar as the distribution [was] concerned.” They argued that the provision in E.T. § 9-111, providing for a release upon making a distribution, addressed a distribution “of tangible property and not a cash distribution of a residuary estate.” Because Ms. Ritter did not distribute tangible property, the Allen Brothers argued, “Section 9-111 is not applicable to this case.” 6 On October 27, 2009, Ms. Ritter filed a Response to Answer to Petition for Release and Show Cause Order, arguing that the Allen Brothers’ reliance on the protection afforded to a ⁶²⁵ personal representative who makes a distribution pursuant to a court order was misplaced because she did not apply for, and the court did not issue, a distribution order in this case.

She also disputed the assertion that E.T. § 9-111 was limited to tangible property. On November 10, 2009, the Allen Brothers filed a Further Answer to Petition for Release and Show Cause Order, asserting several of its earlier arguments, as well as the argument that the Orphans’ Court had no authority to order distributees “to sign a release of the Personal Representative subsequent to [its] signing an order concerning distribution of the assets of an estate.” On November 10, 2009, the Orphans’ Court ordered the Allen Brothers to sign the releases and return them to Ms. Ritter. This timely appeal followed. 7 STANDARD OF REVIEW On appeal from a final judgment of the Orphans’ Court, “the ‘findings of fact of an Orphans’ Court are entitled to a presumption of correctness.’ ” Pfeufer v. Cyphers, 397 Md. 643, 648 , 919 A.2d 641 (2007) (quoting New York State Library School Ass’n v. Atwater, 227 Md. 155, 157 , 175 A.2d 592 (1961)). An interpretation of law, however, is “not entitled to the same ‘presumption of correctness on review: the appellate court must apply the law as it understands it to be.’ ” Id. at 648, 919 A.2d 641 (quoting Comptroller of the Treasury v. Gannett Co. Inc., 356 Md. 699, 707 , 741 A.2d 1130 (1999)).

DISCUSSION The Allen Brothers argue that the Orphans’ Court is a court of limited jurisdiction, and there is no “express grant of ⁶²⁶ power” to the Orphans’ Court “to order distributees to sign a release to a personal representative to secure the distribution that the Orphans’ Court has directed be made to distributees.” They assert that “the question then becomes, does a personal representative have the statutory right to demand a release subsequent to an Orphans’ Court approval of the final account,” which they suggest would authorize the Orphans’ Court to issue such an order “ ‘incident to the fulfillment of the court’s jurisdiction.’ ” The Allen Brothers would answer that question in the negative. Ms. Ritter argues that, although the Orphans’ Court is a court of limited jurisdiction, it “is limited by the subject matter not by the powers that it may exercise within the scope of this subject matter.” She contends that the Orphans’ Court “has whatever powers it needs to exercise in overseeing the administration of a decedent’s estate.” Ms. Ritter asserts that, pursuant to E.T. § 9-111, a personal representative has the right to insist on a release as a condition of making a final distribution, and the Orphans’ Court properly enforced this statutory provision designed to protect a personal representative. A. Right of Personal Representative to Demand a Release We start first with the question whether a personal representative has the right to demand a release prior to paying distributees that which the Orphans’ Court has approved in a Final Administration Account. The statutory provision addressing a release is E.T. § 9-111.

As indicated, § 9-111 provides: “Upon making a distribution, a personal representative may, but is not required to, obtain a verified release from the heir or legatee.” This statute was first enacted in 1969 in Article 93 of the Maryland Code. See 1969 Md. Laws, Chap. 3, 71. 8 It was ⁶²⁷ enacted in response to recommendations made by the Governor’s Commission to Study and Revise the Testamentary Laws of Maryland, which was appointed by Governor Tawes in 1965. See Second Report of Governor’s Commission to Review and Revise the Testamentary Law of Maryland, Article 93 Decedents’ Estates (1968) (hereinafter “Henderson Commission Report ”). 9 In recommending the statutory provision regarding a release, the Henderson Commission noted the practice of personal representatives to obtain a release, stating: “This Section continues the present Maryland practice of not requiring releases, although personal representatives, out of caution, have, in the past, obtained releases in many instances.” Henderson Commission Report, at 144. See also Shale D. Stiller and Roger D. Redden, Statutory Reform in the Administration of Estates of Maryland Decedents, Minors and Incompetents, 29 Md. L.Rev. 85, 115 (1969) (“If the personal representative desires a release, he may get one .... ”); 31 Am.Jur.2d Executors and Administrators § 942 (2002) (“A common practice in distributions of estates is to obtain a receipt and release from distributees.”). 10 The question here is whether, pursuant to E.T. § 9-111, a personal representative has a right not merely to seek, but to require, a release prior to distribution of an estate.

We found nothing in the Henderson Commission Report that sheds direct light on the answer to that question. In construing the terms of the statute, we apply