Lampton v. LaHood

MOTZ, Judge. This case involves a number of questions concerning the rights of creditors of a decedent and the duties of a personal representative of the decedent to those creditors, which were in the first instance resolved by the Orphans’ Court for Charles County. ⁴⁶⁴ (i) The decedent, Terri Lea Hackett, died on May 31, 1989; appellee Thomas G. LaHood was appointed the personal representative of her Estate on July 24, 1989. At the time of her death Mrs. Hackett and her husband (from whom she was then separated) each owned an undivided one-half interest in a condominium in South Carolina. On November 14, 1986, they had executed a note, secured by a mortgage, to appellant, Patricia M. Lampton, in the principal amount of $70,900 with 7% interest per annum.

On August 14 or 15,1989, LaHood called Frank H. DuRant, a South Carolina attorney, to inquire as to the value of the condominium, the amount to be paid on the mortgage, and whether ancillary estate administration in South Carolina was necessary. Apparently, LaHood called DuRant because DuRant’s name “was all over the [condominium] documents” since DuRant had acted as Lampton’s attorney when the Hacketts executed the note and mortgage to her. Both DuRant and LaHood testified as to this pivotal telephone call. DuRant testified that he told LaHood that the present value of the condominium was $55,000 to $60,000, that the approximate balance on the note was $73,000 or $74,000, that payments were delinquent, with the entire balance due in November, 1991, and that ancillary administration in South Carolina was necessary.

According to DuRant, La-Hood then asked: would I be willing to assist him in doing an ancillary administration. I inquired then as [to] what I needed to do to protect Ms. Lampton’s interests in the estate filing in Maryland, specifically was there a necessity that I file any claim with the Maryland courts____was it necessary for me to file a claim to protect my client’s interests under her note and mortgage. To this inquiry, DuRant testified, LaHood replied that he was the personal representative of the estate and it was not necessary for me to do any filing because he ⁴⁶⁵ was aware of the claim and I was a known scheduled creditor ... And it would be paid.

On cross-examination, DuRant testified that he was certain that LaHood had told him in August, 1989, that he need not file a claim for Lampton and that he, DuRant, felt entitled to rely on this assurance from LaHood because: (1) LaHood specifically so stated in their first telephone conversation; (2) LaHood “did not stand to benefit or suffer detriment” by what he told DuRant; and (3) LaHood, as a “member of the Maryland bar and ... the personal representative of this estate, ... [had] a fiduciary duty to the creditors as well as the beneficiaries.” LaHood remembered “little” of this conversation; he could not and did not directly dispute DuRant’s version of it. Rather, LaHood’s “best” recollection of the conversation confirmed its substance: We talked about the Tulsa case, which had been a recent Supreme Court case that had language about the appeal [sic] as a responsibility to ascertain creditors and to give notice to known creditors, give notice of the estate. My best recollection is we had talked about the Tulsa case and Mr. DuRant said, well, I’m a known creditor and I don’t need to file a claim. I may have said, yeah, okay, you may be right.

That’s my best recollection. LaHood sent DuRant a letter dated August 17, 1989, confirming his request that DuRant act for the Estate in South Carolina. DuRant testified that, when he became aware that there might be a “potential conflict with respect to the estate” because the Hackett family “could not get together” with Lampton as to payment and so she might have a deficiency judgment against the Estate, he made LaHood aware of this and notified LaHood in a letter dated November 1, 1989, that “[d]ue to possible conflict of interest” he could not act for the Estate. DuRant also testified that he had numerous telephone conversations with members of the Hackett family and their representatives, including LaHood, “concerning a resolution of this problem.” There are a number of letters, which were introduced as ⁴⁶⁶ exhibits in the Orphans’ Court, that evidence this discussion of “the problem.” It is undisputed that, no later than August 15, 1989, LaHood had actual knowledge that Lamp-ton held the note and mortgage and that the mortgage probably did not fully secure the note, so Lampton had a potential, indeed probable, claim against the Estate.

No correspondence or any other writing evidences either La-Hood’s representations that this claim need not be filed against the Estate or DuRant’s understanding of LaHood’s representations. As late as September 6, 1990, however, LaHood in correspondence, not to DuRant or Lampton but to a trustee of the decedent’s children, acknowledged that the “Estate and Mr. Hackett [will] be responsible for any deficiency on the Lampton note.” DuRant filed suit on August 27, 1990, in South Carolina on behalf of Lampton against Mr. Hackett and LaHood, as personal representative of the Estate, to recover amounts owed on the note. LaHood never answered or responded to the suit. On January 18, 1991, Lampton obtained a judgment against both defendants, jointly and severally, for $90,831.97 and an order that the property be sold.

On January 22, 1991, LaHood filed a non-resident South Carolina estate tax return for the Estate listing one half of the mortgage on the condominium as an obligation of the Estate. When the Estate had made no response to the South Carolina judgment, on May 21, 1991, Lampton filed a claim against the Estate for $90,831.97 and interest from January 1991. On May 29, 1991, LaHood filed and mailed to Lamp-ton a Notice of Disallowance of her claim. On July 15, 1991, Lampton filed a petition in the Orphans’ Court for Charles County 1 to allow her claim and to order LaHood ⁴⁶⁷ “to personally account” to her “for his failure to properly administer” the Estate.

After a hearing, the Orphans’ Court issued a written one sentence order that the “Petition for Allowance of Claim is hereby denied.” Lampton took a direct appeal from that disallowance to this Court. See Md.Cts. & Jud. Proceedings Proc.Code Ann. § 12-501 (1974, 1989 Repl.Vol.). On appeal, Lampton asserts: 1.

Appellant Lampton timely filed her claim with the personal representative directly, pursuant to Section 8-104(b) of the Estates and Trusts Article of the Annotated Code of Maryland. 2. Due process requires that the personal representative give “actual notice” to known, scheduled creditors of the decedent of non-claim filing statutes. 8. The personal representative is estopped from relying on time limitations contained in the statute when he did not himself comply with the statute. 4. The personal representative is estopped from relying on time limitations contained in the statute because of appellant’s justifiable reliance on the personal representative’s assurances and actions. 5.

The personal representative is personally accountable to appellant Lampton for his failure to properly administer the estate. (ü) The gist of Lampton’s first argument is that she filed her claim against the Estate by timely providing the personal representative, LaHood, with actual knowledge of the claim. Maryland law provides three ways in which “claims against an estate of a decedent may be presented.” § 8-104(a) of the Estates & Trusts Article. Within the appropriate statutory time period, a creditor must: (1) deliver a verified, written statement of the claim to the personal representative pursuant to § 8-104(b); (2) file the claim with the register in the correct county, pursuant to § 8- ⁴⁶⁸ 104(c); or (3) if a cause of action survives death, commence an action on any person to whom property has been distributed, pursuant to § 8-104(d).

See Lowery v. Hairston, 73 Md.App. 189, 197 , 533 A.2d 922 (1987). Here it is conceded that the appropriate statutory period is “within nine months of the date of death; ” 2 the date of death was May 31, 1989, so creditor’s claims had to be filed by February 28, 1990. Further, it is conceded that no claim was filed with the register or suit commenced during this period; thus, the methods described in § 8-104(c) and § 8-104(d) were not employed here. Lampton asserts, however, that she “substantially complied” with § 8-104(b) by timely, albeit verbally, providing the personal representative, LaHood, with “actual knowledge” of her claim.

Section 8-104(b) provides: The claimant may deliver or mail to the personal representative a verified written statement of the claim indicating its basis, the name and address of the claimant, and the amount claimed. If the claim is not yet due, the date when it will become due shall be stated. If the claim is contingent, the nature of the contingency shall be stated. If the claim is secured, the security shall be described.

The failure of the claimant to comply with the provisions of this section or with the reasonable requests of the personal representative for additional information may be a basis for disallowance of a claim in the discretion of the court. (emphasis added). Lampton acknowledges that she did not provide the personal representative, LaHood, with a “verified written statement” of her claim, as required by § 8-104(b), but she argues that she, nevertheless, substantially complied with ⁴⁶⁹ § 8-104(b) by verbally providing LaHood with all of the information necessary to state her claim. Furthermore, Lampton argues that LaHood “by his own admissions and correspondence, and his later actions, ... had all the information” so that there was “no need” for her to submit a “verified written statement” of her claim.

LaHood does not assert that he was without timely, actual knowledge of all of the particulars of Lampton’s claim; LaHood simply maintains that this makes no difference and the verbal communications by Lampton’s lawyer do not constitute a statement of her claim in compliance with § 8-104(b). The sole authority cited by Lampton in support of her argument is Lowery v. Hairston, supra. There, plaintiffs filed an action against the personal representative of an estate seeking specific performance of a real estate purchase option. The circuit court dismissed the action, finding that the option constituted a “claim” under § 8-103(a) and that the plaintiffs had failed to file the claim in a timely fashion.

We reversed, holding that three letters from the plaintiffs to the personal representative, which were sent and received by him prior to the statutory deadline for claims, and in which were stated the names and addresses of the claimants, the terms of the option, and their intent and ability to exercise it, constituted substantial and timely compliance with the statute. This holding is, as we noted then, entirely consistent with the “use of the word ‘may’ throughout § 8-104,” indicating that the forms of presentment are “permissive and not mandatory in nature.” 73 Md.App. at 197 n. 2, 533 A.2d 922 . The view that substantial, rather than strict compliance, is all that is necessary, has also been adopted by other courts interpreting similar statutes. See e.g., Peterson v. Marston, 362 N.W.2d 309 (Minn.1985); Quinn v. Quinn, 772 P.2d 979, 981 (Utah App.1989); Strong Bros.

Enterprises, Inc. v. Estate of Strong, 666 P.2d 1109 (Colo.App.1983). See also Matter of Estate of Phillips, 532 A.2d 654 (D.C.App.1987). To permit substantial compliance with these kinds of statutory requirements, does not, however, sanction the ⁴⁷⁰ elimination of such requirements altogether. There must still be compliance with the statute, indeed there must be “substantial compliance” with it.

Lampton does not cite any case, from any jurisdiction, in which a court has held that in the absence of some writing — whether it be a formal claim, or a letter, or a memorandum, or a lawsuit — a claimant has been held to have substantially complied with a claims notice statute like § 8-104. In Lowery and all of the out-of-state cases cited above, the claimant timely notified the personal representative of the claim by a writing of some kind. The Maryland appellate courts have never directly addressed the question of whether a claimant complies with § 8-104 simply by providing a personal representative with “actual knowledge” of a claim within the statutory time period. In Campbell v. Welsh, 54 Md.App. 614 , 460 A.2d 76 , cert. denied, 297 Md. 108 (1983), however, we did implicitly reject such an argument.

There the decedent’s son filed suit in circuit court for specific performance for the sale of certain land owned by his mother and for “such other and general relief as ... may appear ... proper.” 54 Md.App. at 616 , 460 A.2d 76 . The son did not add an alternative claim for money damages until well after the expiration of the statutory time limit. Id. We held that the alleged agreement between the son and his mother for the sale of land was not enforceable because of the Statute of Frauds and then concluded that his alternative claim for money damages was barred because it was not filed within the statutory period.

That holding is relevant here because the son, himself, was the personal representative during six weeks of the statutory period. 54 Md.App. at 624 , 460 A.2d 76 . Presumably, he had actual knowledge, at that time, of his alternative claim for money damages and, indeed, intended to assert such a claim by requesting “other relief” as may be “proper.” Our holding that the son had to file timely a written claim (or suit) actually asserting the right to money damages is, thus, a sub silentio rejection of the argument that imparting actual knowledge to the personal ⁴⁷¹ representative is “enough” or that the personal representative’s actual knowledge of a claim eliminates the need for any further claim by the creditor. Those jurisdictions that have considered the question have, for the most part, similarly rejected the view that actual knowledge of a claim by the personal representative eliminates- a creditor’s statutory obligation to file a timely written claim. See e.g., Harter v. Lenmark, 443 N.W.2d 537 (Minn.1989); In re Estate of Masopust, 232 Neb. 936 , 443 N.W.2d 274 (1989); In re Estate of Feuerhelm, 215 Neb. 872 , 341 N.W.2d 342 (1983); Nathanson v. Superior Court of Los Angeles County, 12 Cal.3d 355 , 115 Cal.Rptr. 783, 789 , 525 P.2d 687, 693 (1974).

As the Supreme Court of Nebraska explained: Mere notice to a representative of an estate regarding a possible demand or claim against an estate does not constitute presenting or filing a claim under [the relevant statute]. If notice were accorded the stature of a claim, the resultant state of flux and uncertainty would frustrate and void the purpose and objectives of the nonclaim statute. In re Estate of Feuerhelm, supra, 341 N.W.2d at 345 . The only exception to the general view that imparting actual, verbal notice of a claim to the personal representative does not eliminate the need to file a timely, written claim in order to prevail against an estate is found in the New Hampshire cases.

The relevant New Hampshire statute permits a claimant to notify an estate of a claim by registered mail but does not require that the notice be written. N.H.Rev.Stat.Ann. § 556:2 (1955). In a long line of cases, New Hampshire courts have interpreted this statute to mean that notice of a creditor’s claim “may be oral or written or a combination of both.” Lunderville v. Morse, 112 N.H. 6 , 287 A.2d 612, 613 (1972); Frost v. Frost, 125 A.2d 656, 657 (N.H.1956); Watson v. Carvelle, 82 N.H. 453 , 136 A. 126 (1926). Not only does Maryland have no similar well established case law but § 8-103, unlike the New Hampshire statute but like the relevant probate statutes of ⁴⁷² most states, specifically provides that a claimant is to present his claim by making a “written” statement.

Indeed, Maryland provides, as many states do not, that the “written statement” be “verified.” 3 This is clearly an indication that the General Assembly did not contemplate that oral statements of claims could satisfy the statutory requirements. (iii) The second argument posed by Lampton is that due process requires that a personal representative give actual notice to known creditors of the decedent and, since LaHood failed to give this notice to her, LaHood cannot deny her claim. Lampton bases this argument on Tulsa Professional Collection Services, Inc. v. Pope, 485 U.S. 478 , 108 S.Ct. 1340 , 99 L.Ed.2d 565 (1988). In Tulsa, the Supreme Court held that the claim of a known creditor of an estate cannot be barred by a state statute which cuts off the filing of claims a certain period after commencement of state probate proceedings.

The Supreme Court reasoned that the deprivation of a claim because of the working of such a statute would constitute “significant state action”: The probate court is intimately involved throughout, and without that involvement the bar is never activated. The nonclaim statute becomes operative only after probate proceedings have been commenced in state court. 485 U.S. at 487 , 108 S.Ct. at 1346 . The Pope Court contrasted this sort of statute with a “self-executing” statute of limitations, which begins to run not from the date of institution of probate proceedings in state court but from ⁴⁷³ the date of death. The Court found that such a self-executing statute of limitations did not violate the Due Process Clause because: The State’s interest in a self-executing statute of limitations is in providing repose for potential defendants and in avoiding stale claims.

The State has no role to play beyond enactment of the limitations period. While this enactment obviously is state action, the State’s limited involvement in the running of the time period generally falls short of constituting the type of state action required to implicate protection of the Due Process Clause. 485 U.S. at 486-487 , 108 S.Ct. at 1346 . (emphasis added) Prior to Pope , § 8-103, like the statute at issue in Pope , did not qualify as a self-executing statute of limitations; rather it provided only that creditors must submit claims within “six months” after the first appointment of a personal representative.” § 8-103(a) (1974). In 1989, however, the General Assembly enacted Chapter 496 of the Laws of 1988 to amend § 8-103 to conform with the standards of statutory self-execution enunciated in Pope.

See Floor Report, House Bill 3, Senate Judicial Comm. (1989). Hence, § 8-103 now does contain a self-executing statute of limitations, i.e., “all claims against an estate ... are forever barred ... unless presented within the earlier of the following dates (1) Six 4 months after the date of decedent’s death; or (2) Two months after the personal representative delivers to the creditor a copy of a notice [of the decedent’s death].” § 8-103(a). A self-executing statute of limitations, like § 8-103(a), does not violate a creditor’s due process rights.

See Pope, supra, 485 U.S. at 486 , 108 S.Ct. at 1345 (“due process does not require that potential plaintiffs be given notice of the impending expiration of a period of limita ⁴⁷⁴ tions”). See also, Texaco, Inc. v. Short, 454 U.S. 516 , 102 S.Ct. 781 , 70 L.Ed.2d 738 (1982); Ohio Casualty Ins. Co. v. Hallowell, 94 Md.App. 444 , 617 A.2d 1134 (1992). 5 (iv) Lampton next asserts that LaHood is estopped from relying on the time limitations in § 8-103 because LaHood did not comply with his own statutory obligations, as personal representative. Specifically, Lampton asserts that, in failing to notify her, a known creditor of the Estate, of the time limitations in § 8-103, LaHood violated § 7-103.1(a), which provides: In general — Promptly after appointment, the personal representative of a decedent’s estate shall (1) Make a reasonably diligent effort to ascertain the names and addresses of the decedent’s creditors; and (2) Mail or otherwise deliver a notice to those creditors whose names and addresses he has ascertained of the time within which their claims may be presented under § 8-103(a) of this article.

Lampton is quite right that § 7-103.1(a) does impose a statutory obligation on the personal representative (he “shall” notify “ascertained” creditors of the “time” within which their claims may be presented under § 8-103(a)), an obligation with which LaHood concedes he did not comply. What Lampton ignores is the fact that § 7-103.1(c)(1) specifically provides: The failure of a creditor to receive notice under this section shall not extend the time within which the creditor may present his claim beyond six months from the date of the decedent’s death. Thus, the General Assembly has expressly stated that a personal representative’s failure to notify a creditor does ⁴⁷⁵ not provide a creditor with any basis for extending the time in which he or she may present a claim. Hence, LaHood’s failure to provide Lampton notice of the requirements of § 8-103(a) did violate § 7-103.1(a), but that failure does not extend Lampton’s time to present a claim.

(v) Lampton makes an additional estoppel argument that is not so easily resolved. She asserts that LaHood, “repeatedly by his assertions, correspondence and actions throughout all of the pertinent time periods surrounding the administration of this Estate,” caused her, “through her attorney and agent, DuRant, to justifiably forebear the filing of any ‘formal’ claim” until after the filing deadline had expired. In Chandlee v. Shockley, 219 Md. 493, 502 , 150 A.2d 438 (1958), the Court of Appeals expressly held “an executor or administrator against whom a claim is asserted by virtue of [the statutory predecessor of § 8-103] may” by his conduct “waive or be estopped to rely on the time limit of the statute.” As the Chandlee Court noted, there is some authority to the contrary. See Chandlee, 219 Md. at 498-501 , 150 A.2d 438 .

This principle is, however, “well settled” in Maryland. See Nyitrai v. Bonis, 266 Md. 295, 299 , 292 A.2d 642 (1972); Hallowell, supra and numerous cases cited and discussed therein. 6 Moreover, it is now well established that “an estoppel may arise even where there is no intent to mislead, if the actions of one party cause a prejudicial change in the conduct of the other.” Knill v. ⁴⁷⁶ Knill, 306 Md. 527, 534 , 510 A.2d 546 (1986). Indeed, all that is needed to create an equitable estoppel is (1) voluntary conduct or representation, (2) reliance, and (3) detriment. Id. at 535 , 510 A.2d 546 .

All three elements are