[WSBAPT] Creditor's Claim not filed with Court

Tue May 15 09:43:20 PDT 2018

Mr. Wilson-Hoss, et. al:

Thanks for pointing to some good case law. I ponder whether the Court has ever addressed the definition of “those beneficially interested in the estate.” It seems reasonable to deduce from Wilson that creditors would fall into that category. To see if there was any more guidance, I looked at the case cited therein, In re Estate of Shea, and found this passage: “the power of executors to manage and control an estate exists for the protection of creditors and for the purpose of paying expenses and other proper charges against the estate.” (emphasis theirs). Interestingly, I don’t see where the Court provides any authority for this conclusion.

If I were arguing it in court, I’d likely take the position that “protecting the rights of valid creditors” does not attach to “a fiduciary relationship to those beneficially interested in the estate”, but rather indicates an concession to valid creditors as to the PR “perform[ing] his duties…for the benefit of the legatees [and]…protect[ing] the estate from invalid and doubtful claims.”

Anybody have a good case? Let’s make some case law!

Best wishes,
James

James W. Spencer
Brothers & Henderson, P.S.
2722 Eastlake Avenue East, Suite 200
Seattle, Washington 98102
Phone: (206) 324-4300 x106
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From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Rob Wilson-Hoss
Sent: Tuesday, May 15, 2018 9:15 AM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Creditor's Claim not filed with Court

It is simple once you get through the maze that is Title 11 and the cases about it. Which took me about 35 years. The PR owes a duty to valid creditors and must protect their rights, but not invalid (read, not in compliance with 11.40) creditors. The more recent cases that say, no compliance, no claim, help define "valid creditors:"

Under RCW 11.48.030, an executor is chargeable in this accounts for the whole estate of a deceased. The executor is an officer of the court and in a fiduciary relationship to those beneficially interested in the estate. He is obligated to exercise the utmost good faith and utilize the skill, judgment and diligence that an ordinarily cautious and prudent person would employ in the *528 management of his own affairs. Hesthagen v. Harby, 78 Wash.2d 934, 942, 481 P.2d 438 (1971); In re Estate of Peterson, 12 Wash.2d 686, 733, 123 P.2d 733 (1942). He must perform his duties not only for the benefit of the legatees but must also protect the estate from invalid and doubtful claims, In re Estate of Shea's Estate, 69 Wash.2d 899, 421 P.2d 356 (1966), while protecting the rights of valid creditors. Kerns v. Pickett, 49 Wash.2d 770, 306 P.2d 1112 (1957). It is his duty to settle an estate as quickly as possible but without sacrifice to the estate, National Bank of Commerce v. Peterson, 179 Wash. 638, 644, 38 P.2d 361 (1934), and he is liable for any breach of his responsibility which causes loss to another. Hesthagen v. Harby, Supra. His trust must be fulfilled with conscientious fidelity whether his charge is large or small.
Wilson's Estate v. Livingston, 8 Wash. App. 519, 527–28, 507 P.2d 902, 909 (1973)

Rob

Robert D. Wilson-Hoss
Hoss & Wilson-Hoss, LLP
236 West Birch Street
Shelton, WA 98584
360 426-2999
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From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of James W. Spencer
Sent: Tuesday, May 15, 2018 8:49 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Creditor's Claim not filed with Court

Hivemind:

I agree wholeheartedly with what Mr. Culbertson says below. I do not believe that statutory and case law impute any fiduciary duty to a PR as to estate creditors. I would also agree with Mr. Gorfinkle that the PR MUST reject any claim not properly filed.

The duties of loyalty, good faith and honest judgment, impartiality, and diligence – fiduciary duties of the PR vis-à-vis the beneficiaries – are fairly-well-settled law. I am confident that any assistance provided by the PR to a creditor that deprives beneficiaries of estate assets could be actionable as a breach of fiduciary duty. The PR also has an obligation to preserve and protect from loss the property of the estate.

That obligation to preserve property is where, I believe, the PR can get into trouble while dealing with creditor claims. If the PR’s failure to allow a properly-presented creditor claim, where there is no real defense to nonpayment, leads to litigation, the PR is, arguably, wasting estate property by way of the costs of litigation. This is a breach of duty, but it is a breach of duties owed to the beneficiaries, not to the creditor.

My $.02.

Best wishes,
James

James W. Spencer
Brothers & Henderson, P.S.
2722 Eastlake Avenue East, Suite 200
Seattle, Washington 98102
Phone: (206) 324-4300 x106
e-mail:  jamess at brothershenderson.com<mailto:jamess at brothershenderson.com>
www.brothershenderson.com<http://www.brothershenderson.com/>

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From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Thomas M. Culbertson
Sent: Tuesday, May 15, 2018 8:26 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Creditor's Claim not filed with Court

Phil raises a point that every so often gives me some concern. I’m not aware of any WA authority on the subject of what duties, if any, does a PR owe a creditor. I would like the law to be that there is no duty, except perhaps to a creditor who has properly filed a claim AND the claim has been accepted (or is <$1000 and not timely rejected).  I’m sure we’ve all experienced variations on the following theme – after receiving actual notice, credit card collection agency (undoubtedly one we’re all familiar with) calls saying they are willing to accept 75 cents on the dollar, I ask whether they have filed a creditor’s claim, “no, we don’t plan to do that”, and I say I can’t respond until I talk to my client. Of course I never do respond, they never file a claim, we ignore their follow up communications, and the estate saves a bunch of money. Does anyone think my client or I owe any duty at all to tell them how to get their act together? The collection agency must have  a pretty persuasive marketing department, selling a service that routinely squanders its clients’ claims.

________________________________________
THOMAS M. CULBERTSON  I  Lukins & Annis, PS
717 W. Sprague Ave, Suite 1600, Spokane, WA 99201
(509) 455-9555  I  fax (509) 363-2500  I  tculbertson at lukins.com<mailto:tculbertson at lukins.com>

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Philip N. Jones
Sent: Friday, May 11, 2018 11:51 AM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] Creditor's Claim not filed with Court

I agree with Nestor.  But if the claim is properly filed, I believe that the PR has a fiduciary duty to the creditor(s).  But I have not found any authority to that effect, or at least not much authority.  Anyone have any authority?
Phil Jones
Portland, OR

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of nestor at pplsweb.com<mailto:nestor at pplsweb.com>
Sent: Friday, May 11, 2018 11:38 AM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Creditor's Claim not filed with Court

In my opinion the PR has a duty to the other beneficiaries to reject any claim not properly filed.

Nestor

Nestor Gorfinkel, Attorney at Law
Licensed in Washington & Florida
Florida Civil-Law (International) Notary

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From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Brent Williams-Ruth
Sent: Friday, May 11, 2018 11:21 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] Creditor's Claim not filed with Court

Greetings -

I have a PR, that gave actual notice to a creditor, mailed on April 9, 2018 and stamped received on April 12, 2018.  As of this date, the creditor has only sent an email and a US Mail notice of payment recovery but has not, as of today, filed the claim with the Court.

The estate is small and there are other creditor's claims that were properly filed with the Court that have reduced the residual to an even smaller amount.  The PR (who is also one of three beneficiaries) would like to reject the claim for failing to properly file the claim within 30 days of receiving notice.  Reading through RCW 11.40.70 it clearly states that notice needs to come to the personal representative AND be filed with the Court.

My question really relates to 11.40.070(4) - the waiver of defects, where it says that if written notice was provided the PR may elect to treat the claim as properly filed.

Do Courts expect PR's to waive the defect of not filing the claim? This is a large insurer with a subro department that is seeking money for a claim that they paid out for their insured (and before you ask, my decedent was driving around without insurance for the last couple years of his life) and now want to recover from the Estate.

Thank you for your responses.

Brent

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Brent Williams-Ruth
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