Vito v. Klausmeyer

JAMES R. EYLER, J. Margaret K. Vito, by her attorney-in-fact, Michael L. Vito, 1 appellant, appeals from an order by the Orphans’ Court for Baltimore County denying her petition to vacate the court’s prior approval of administration accounts in the estate of E. Edward Klausmeyer, Sr., decedent. E. Edward Klausmeyer, Jr., appellee, is the personal representative of the estate. The question before us is whether the beneficiary of a testamentary trust may file exceptions to an administration account after the statutory deadline for doing so when the beneficiary did not receive notice of the filing of the account. We answer that question in the negative and affirm the judgment.

Background On October 26, 2008, E. Edward Klausmeyer, Sr., died testate. He was survived by two children, the parties herein. On December 3, 2008, pursuant to the terms of the will, appellee was appointed personal representative. The will directed that the residuary estate be divided into two equal shares.

The decedent bequeathed one share to appellee and the other share, in trust, to appellant. The will appointed appellee trustee of the trust. In 2009, appellant filed a petition to caveat the decedent’s will. The orphans’ court transmitted issues to the Circuit Court for Baltimore County.

After a period of discovery, appellant dismissed the petition. ³⁷⁸ On April 25, 2011, appellee filed a first administration account. On April 28, 2011, the orphans’ court approved the account, subject to the filing of exceptions. No exceptions were filed. On December 8, 2011, appellee filed a second and final administration account.

By order of the same date, the orphans’ court approved the account, subject to the filing of exceptions. No exceptions were filed. On August 22, 2012, appellant filed in the orphans’ court a petition to vacate (1) the orders approving both administration accounts and (2) an order approving personal representative’s commissions. 2 The petition also contained exceptions to the administration accounts. 3 The petition to vacate the orders approving the administration accounts stated that appellant 4 did not receive notice of the filing of either account. Appellant argued that, because she was not given notice, she should have the right to file exceptions, even though the deadlines for doing so had passed.

Appellee filed an opposition and motion to dismiss the appellant’s petition. On February 25, 2013, the orphans’ court held a hearing, and on March 1, 2013, it filed an opinion and order denying appellant’s petition. While acknowledging that appellant had standing to file exceptions, the court ruled that she was not entitled to notice of the filing of the administration accounts; thus, she was not excused from the statutory requirement that exceptions be filed within 20 days after the filing of each account. 5 ³⁷⁹ Question Presented As rephrased by us, the question is whether appellant was entitled to file exceptions to an administration account after the time period for filing exceptions had expired on the ground that she did not receive notice of the filing of the administration account? 6 Appellant’s Arguments To provide context for appellant’s arguments, we begin with general principles. A personal representative is required to file administration accounts with a certification that he or she mailed a notice of the filing to all “interested persons.” Md.Code (2011 RepLVol.), Estates and Trusts Article (ET) 7-501(a).

A trust beneficiary is not an “interested person” as defined in section l-101(i) and, therefore, is not entitled to notice under section 7-501(a). ET section 7-501(b) and Maryland Rule 6—417(f) require that exceptions to an administration account must be filed within 20 days after approval of the account by the court. Rule 6-417(g) makes clear that, in the absence of fraud, mistake, or irregularity, if timely exceptions are not filed, “the order of the court approving the account becomes final.” Brewer v. Brewer, 386 Md. 183, 198 , 872 A.2d 48 (2005). Appellant acknowledges that she is not an “interested person” as defined in the Estates and Trusts Article.

Relying on Spry v. Gooner, 190 Md.App. 1 , 985 A.2d 606 (2010), she ³⁸⁰ observes that a beneficiary of a testamentary trust has standing to file exceptions to an administration account. Appellant contends, nevertheless, that the beneficiary does not lose the right to file exceptions unless the beneficiary receives notice of the filing of the account. In essence, appellant makes two arguments. Relying on ET sections 7-501 and 7-502, she argues that the orders approving the accounts were not final.

She reasons that such orders become final only if all persons with standing receive notice. In the alternative, appellant argues that, if the orders were final, the lack of notice was a procedural irregularity, analogizing to Md. Rule 2-535, and deprived her of procedural due process. Discussion We re-visit our analysis in Spry, 190 Md.App. 1 , 985 A.2d 606 , to provide some additional context. In that case, beneficiaries of a trust that was a legatee under the decedent’s will filed exceptions to an administration account filed in the decedent’s estate.

The orphans’ court dismissed the exceptions. On appeal, the beneficiaries acknowledged that they were not statutory “interested persons” but argued that under Carrier v. Crestar Bank, 316 Md. 700 , 561 A.2d 227 (1989), they had standing to file exceptions. Id. at 6, 985 A.2d 606 . In Carrier , the Court of Appeals held that the standing to file exceptions to an administration account is governed by common law, not by whether the person filing the exceptions is a statutory “interested person.” Id. at 7, 985 A.2d 606 .

In Spry , we concluded that the legislature, in re-enacting the Estates and Trusts Article in 1990, by its language, made it clear that a beneficiary under a trust is not an “interested person.” Id. at 8 , 985 A.2d 606 ; ET section l-101(i)(3)(“Interested person” includes “[a] legatee in being, not fully paid, whether his interest is vested or contingent”.); ET section l-101(m) (“Legatee means a person who under the terms of a will would receive a legacy. It includes a trustee but not a beneficiary of an interest under the trust.”). We also concluded, however, that the legislature did not overrule the holding in Carrier ³⁸¹ that standing to file exceptions is governed by common law. Id.

Thus, under Spry , appellant has standing to file exceptions. Because she is not a statutory “interested person,” the issue before us, i.e., the effect of lack of notice to a non “interested person,” was not before us in Spry . 1 First, appellant argues that the orders approving the accounts were not final because she did not receive notice. ET section 7-501 provides: (a) Filing an account.—Unless waived by the court for good cause shown, the personal representative shall give written notice to all interested persons of the filing of an account with the court. (b) Exceptions to account.—Exceptions to an account must be filed with the register within 20 days of the approval of the account by the court.

Exceptions may not be filed concerning an item which has become final and binding under § 7-502 of this subtitle. Copies of exceptions shall be mailed by the exceptant to the personal representative. (Emphasis in original.) ET section 7-502 provides: (a) Notice.—The personal representative shall give written notice to each creditor who has filed a claim under § 8-104 of this article which is still open and to all interested persons of a claim, petition, or other request which could result, directly or indirectly, in the payment of a debt, commission, fee, or other compensation to or for the benefit of the personal representative or the attorney for the estate. The notice shall state the amount requested, and set forth in reasonable detail the basis for the request.

It shall also state that a request for hearing may be made within 20 days after the notice is sent. (b) Finality of order.—Unless there was fraud, material mistake, or substantial irregularity in the proceeding, or a ³⁸² request for a hearing is filed within 20 days of the sending of the notice, any action taken by the court on the petition is final and binding on all persons to whom the notice was given. (Emphasis in original.). Appellant urges us to hold that an order approving an account is final only if all who have standing to object are given notice.

We decline to do so. The concepts of notice and standing are different. The former is based on statutory interpretation, and the latter is based on common law. All persons with standing to challenge an action are not necessarily entitled to