Wednesday, October 9, 2019
Opinion Says Dismissal of Probate Petition Had No Effect on Petitioner’s Concurrently Filed Creditor’s Claim
By a MetNews Staff Writer
Div. Two of the Fourth District Court of Appeal has reinstated an action against an estate, holding that one matter—a judge’s rejection of a woman’s petition for the probate of an estate and for letters of administration—had nothing to do with a separate matter: when a suit had to be brought based on the rejection of a creditor’s claim.
The woman, Patricia C. Everett, on June 11, 2014, filed both the petition and her creditor’s claim, the latter alleging that the decedent owed her $90,875. That was two days shy of one year since the death of the decedent, Richard Edson Holdaway, who was 85.
Under Code of Civil Procedure §366.2, Everett’s filing of the creditor’s claim tolled the one-year statute of limitation for suing on the alleged debt “until allowance, approval, or rejection” of the claim.
Failure to Prosecute
On May 7, 2015, according to the minute order, San Bernardino Superior Court Judge John P. Vander Feer decided:
“ON COURTS MOTION, CASE ORDERED DISMISSED WITHOUT PREJUDICE AS TO ENTIRE ACTION. REASON: FAILURE TO PROSECUTE.”
Everett filed a supplemental petition; the decedent’s son, Ontario attorney Richard Everett Holdaway of the firm of Robbins & Holdaway, filed a competing petition. On Oct. 3, 2016, San Bernardino Superior Court Judge Tara Reilly granted Holdaway’s petition.
Holdaway rejected Everett’s creditor’s claim, pursuant to Probate Code §9352, on March 10, 2017, and on May 19, 2017, Everett filed a complaint for damages on the rejected claim. San Bernardino Superior Court Judge Cynthia Ann Ludvigsen on Feb. 1, 2018, sustained a demurrer, without leave to amend, to the complaint for damages, finding that it was time-barred.
Ludvigsen reasoned that when Everett’s initial petition was dismissed on May 7, 2015, the statute of limitation started running anew on an action for damages, and the time within which to sue lapsed two days later.
In his opinion Monday reversing the judgment, Justice Michael J. Raphael wrote:
“As an issue of first impression, we hold that the trial court’s dismissal of Everett’s own petition to be appointed as a representative of the estate did not terminate the tolling of the statute of limitations triggered by her claim. We therefore reverse the judgment, finding that Code of Civil Procedure section 366.2 does not bar Everett’s complaint, and that Everett should have been granted leave to amend her complaint to attempt to cure other deficiencies.”
He said Holdaway’s stance that the limitations period began running again on May 7, 2015, and that it expired two days later, “is tantamount to arguing that the dismissal of Everett’s petition constitutes a ‘rejection’ of her claim pursuant to Probate Code 9352.” The jurist remarked:
“Holdaway cites no case authority requiring that the court’s dismissal of Everett’s petition be equated with the dismissal or rejection of her filed creditor’s claim, and we have discovered none. Both the statutory structure and case authority indicate that the power to reject a claim under Probate Code section 9352 is that of the personal representative appointed by the court, not the court itself.”
No Two-Day Deadline
The statute resumed running when Holdaway denied the claim on March 10, 2017, Raphael said. Although the creditor’s claim was filed only two days before the limitations period would have ended in 2014 had that claim not been filed, that did not mean that Everett had only two days within which to bring an action against the estate following that rejection, he declared, explaining that Probate Code §9353 allows the filing of an action within 90 days after the rejection of a claim.
Holdaway argued that while a creditor normally has 90 days to file suit, that period is cut off by the expiration of the one-year time bar. That contention, Raphael said, is contrary to a 1995 opinion by this district’s Court of Appeal in Anderson v. Anderson, which he embraced.
There, Div. Two was persuaded by a 1987 comment by the California Law Revision Commission that proposed legislation allowing three months for a creditor to sue after rejection of a claim—which was subsequently adopted—would mean that “the creditor has three months within which to bring an action, regardless of the time otherwise remaining on the statute of limitations.”
Former San Bernardino Bar Association President Bryan Hartnell, of the Hartnell law group in Redlands, along with George S. Theios of his office, represented Everett. Hartnell yesterday provided background not reflected by the opinion, relating:
“This was an unusual case. We filed a petition for letters of administration understanding that the other side had priority. We needed an open file to file our creditor’s claim. Both parties agreed to not proceed with the petition filed by our client and their objections. We believed that the money could be better used toward a settlement.”
“At the next to last hearing, the judge said that if it was continued one more time he would dismiss. At the next hearing we asked that the matter be continued as we believed that our settlement efforts would be fruitful. He said no and dismissed our petition. We then refiled. The question was, what of the filed creditor’s claim? Therein was the controversy.
“We think, of course, that the ruling was correct.”
Diane E. Robbins of Robbins & Holdaway was the attornery for Holdaway. Robins, who is city attorney for the City of Montclair, said yesterday:
“We respectfully disagree with the decision. We do not believe that the decision properly reflects the legislative intent and strong public policy in favor of expeditious and final estate administration. It would create terrible uncertainty and cost to estates if any alleged creditor could file a belated petition for probate and a related claim, allow that petition to be dismissed for failure to prosecute, and then wait for months or years to refile the same petition while the estate is left in limbo. We believe that the statute of limitations should apply to bar such untimely claims.”
“We will consider our options for further review of this matter.”
The case is Estate of Holdaway, 2019 S.O.S. 3043.
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