[WSBAPT] in personum jurisdiction under TEDRA

Thu Jun 1 22:51:32 PDT 2023

I think we're missing something -- "the asset involved in an investment 
account." Assume, as is likely, that the account is with an out-of-state 
online brokerage or mutual fund sponsor. The terms of the investment 
entity's contractual account agreement with the account owner provide that 
the entity will recognize the owner's designated beneficiary as the new 
owner of the account upon proof of death of the original owner--the 
decedent here. Or it may be an IRA or an account in an employee benefit 
plan with comparable beneficiary terms in the governing plan document. I 
fail to see that there is a "res" in the state of Washington over which the 
local court has jurisdiction. The decedent's intangible rights under his 
contract with the account provider terminated upon his death.

And in this specific case, the investment entity, pursuant to its 
contractual obligation, has given the beneficiary "possession and control 
of the asset," either by selling the investment(s) and distributing the 
proceeds to the beneficiary or by allowing the beneficiary to open an new 
account with the investments transferred to it. There is no "res" in 
Washington state, and the beneficiary took no action relating to Washington 
state that would support application of the long-arm statute giving a 
Washington court personal jurisdiction over the beneficiary. So any suit 
against the beneficiary would need to be in his/her home state, and its 
courts might not agree that Washington law applies to the beneficiary's 
receipt of the investment account proceeds.

I note that RCW 11.02.005(13) defines "nonprobate asset" as NOT including 
"A payable-on-death provision of a life insurance policy, annuity, or other 
similar contract, or of an employee benefit plan." Arguably, the 
legislature recognized that it lacked authority to override the contractual 
terms of insurance policies, annuities and similar contracts, and employee 
benefit plans. The US Contstitution provides, at Article I, Section 10, 
Clause 1: "No state shall ... pass any ... Law impairing the Obligation of 
Contracts". That would seem equally applicable to a contract specifying the 
pay-upon-death terms of an investment account. So I don't believe the 
estate, in this case, can successfully sue the investment entity (e.g., 
brokerage or mutual fund sponsor) for honoring its contract.

It's also possible that the decedent's investment was a variable life 
insurance policy, or variable annuity contract, that is based on a 
portfolio of stocks, bonds, and mutual funds, or was an IRA sponsored by an 
insurance company and documented as an insurance product. 
(https://www.statefarm.com/finances/retirement-plans-iras/individual-retirement-accounts).

Doug Schafer, in Tacoma.

On 6/1/2023 17:05, Eric Nelsen wrote:
>
> Other thoughts:
>
> First: If you have an in rem judgment as to ownership, that should be 
> given full faith and credit in beneficiary’s state, even if the part 
> ordering the defendant to disgorge the money lacked personal 
> jurisdiction. So, how to enforce?
>
> One option, maybe a relatively easy route? Domesticate the court’s 
> judgment as to ownership in the beneficiary’s state, and pursue execution 
> of the judgment with local counsel. No more long-arm problem; the 
> judgment in rem is certainly valid and entitled to full faith and credit.
>
> But maybe the in rem judgment by itself isn’t directly enforceable 
> against the individual? More complicated but maybe necessary:
>
> If the beneficiary got notice by mail of the proceeding under .110, then 
> they should be collaterally estopped from contesting the court’s ruling. 
> Just because it’s in rem doesn’t mean they aren’t required to appear and 
> defend their interest.
>
> I haven’t done this before, but I think the Estate (or maybe the 
> surviving spouse?) possibly could file a separate civil action against 
> the beneficiary, on a tort of conversion or money had & received or 
> something like that, asserting ownership based on the in rem judgment, 
> and the beneficiary would be estopped from asserting an ownership 
> contrary to the judgment. A money judgment against the beneficiary in 
> that action would essentially duplicate the judgment against them from 
> the TEDRA.
>
> I think long-arm jurisdiction is still tricky though, under RCW 4.28.185 
> <https://app.leg.wa.gov/RCW/default.aspx?cite=4.28.185>. If I brought the 
> suit here, I think I’d argue that the account was “situated” in 
> Washington under 1(c) and the beneficiary’s interference with it was 
> improper. But it could fail; filing the suit in the defendant’s state is 
> probably safer.
>
> Sincerely,
>
> Eric
>
> Eric C. Nelsen
>
> Sayre Law Offices, PLLC
>
> 1417 31st Ave South
>
> Seattle WA 98144-3909
>
> 206-625-0092
>
> eric at sayrelawoffices.com <mailto:eric at sayrelawoffices.com>
>
> *From:*Eric Nelsen
> *Sent:* Thursday, June 1, 2023 4:45 PM
> *To:* WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
> *Subject:* RE: in personum jurisdiction under TEDRA
>
> Arg. I don’t think this issue has been addressed in a reported case yet, 
> but I know I’ve had discussions with other attorneys about it being a 
> potential problem in TEDRA proceedings. This might be an appealable issue.
>
> I think the TEDRA statutes, and especially the notice-by-mail rules in 
> RCW 11.96A.110 <https://app.leg.wa.gov/RCW/default.aspx?cite=11.96A.110>, 
> impliedly assume that no more than in rem jurisdiction is necessary to 
> resolve a TEDRA matter. I think it /could/ be argued that .110 does not 
> establish personal jurisdiction over /any/ party so served, even those 
> residing in-state, much less out of state.
>
> I think it’s a stretch to think that our appellate courts would interpret 
> .110 as a combined in-state and long-arm statute that establishes 
> personal jurisdiction. Even CR 4(d)(4) allowing service by mail to create 
> personal jurisdiction is constrained to the circumstances where a person 
> could otherwise be served by publication under RCW 4.28.100 
> <https://app.leg.wa.gov/RCW/default.aspx?cite=4.28.100>. Those are pretty 
> limited circumstances and the typical TEDRA matter doesn’t fit well 
> within them.
>
> But in rem jurisdiction would mean that the Court can only redirect or 
> reallocate assets, and can’t enter a judgment directly against a party 
> (other than the PR). So if the party is entitled to a share of an estate, 
> the court could impose an offset against their share, but couldn’t impose 
> a judgment in excess of the amount they otherwise would receive from the 
> estate.
>
> That in turn implies more broadly that any TEDRA judgment purporting to 
> place a personal obligation on a party lacks the necessary jurisdiction. 
> That probably includes attorney fees under RCW 11.96A.150.
>
> For this reason, when initiating a TEDRA it might be prudent to 
> selectively serve some parties with service of process under Ch. 4.28 RCW 
> <https://app.leg.wa.gov/RCW/default.aspx?cite=4.28> rather than by mail 
> under .110.
>
> However—personal jurisdiction is also a waivable defense, and I don’t see 
> many TEDRA parties raise jurisdictional issues in their initial filings. 
> From Washington Civil Procedure Deskbook (WSBA) (3d ed. 2014) Chapter 12.6:
>
> Prior to the adoption of the civil rules, if a defendant entered a 
> general notice of appearance, it waived its right to assert the defense 
> that the court lacked jurisdiction over it. _DiBernardo-Wallace v. 
> Gullo_, 34 Wn.App. 362, 364, 661 P.2d 991 (1983). That is no longer the 
> case. Defendants who enter a general notice of appearance retain the 
> ability to argue that the court does not have jurisdiction over them. 
> _Id_. However, CR 12(h)(1) requires that this affirmative defense be made 
> by motion or in the answer or else it is waived. _In re Schneider_, 173 
> Wn.2d 353, 362, 268 P.2d 215 (2011). Engaging in discovery that relates 
> to the defense will not result in waiver. _Crouch v. Friedman_, 51 
> Wn.App. 731, 735, 754 P.2d 1299 (1988). Whether engaging in discovery 
> that does not relate to the defense will waive the defense, even if 
> properly asserted, is not definitively answered by the reported cases.
>
> Sincerely,
>
> Eric
>
> Eric C. Nelsen
>
> Sayre Law Offices, PLLC
>
> 1417 31st Ave South
>
> Seattle WA 98144-3909
>
> 206-625-0092
>
> eric at sayrelawoffices.com
>
> *From:*wsbapt-bounces at lists.wsbarppt.com 
> <wsbapt-bounces at lists.wsbarppt.com> *On Behalf Of *Shannon Jones
> *Sent:* Thursday, June 1, 2023 4:02 PM
> *To:* WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
> *Subject:* [WSBAPT] in personum jurisdiction under TEDRA
>
> Listmates, Is there no authority for in personam jurisdiction under TEDRA 
> of an out-of-state “party” as defined under TEDRA but WA’s long arm 
> statute? The asset involved is an investment account. The deceased lived 
> in WA. The asset was claimed by the surviving spouse as part of the 
> mandated family support award with notice to a potential beneficiary who 
> resides outside WA. The asset was unclaimed when the beneficiary was 
> served with the TEDRA petition, it was still in decedent’s name. Before 
> the hearing, the beneficiary took control and possession of the asset. 
> The court granted the family support award based on the proceeding being 
> “in rem,” and ordered beneficiary to return the asset to the surviving 
> spouse. Beneficiary continues to claim the court had no “in personam” 
> jurisdiction, appealing the court order.
>
> 	
>
> *Shannon R. Jones | Attorney *
>
> Campbell Barnett PLLC
>
> Direct: 253.848.3515
>
> Office: 253.848.3513| Fax: 253.845.4941
>
> 317 South Meridian
>
> Puyallup, WA 98371
>
> shannonj at campbellbarnettlaw.com <mailto:shannonj at campbellbarnettlaw.com>
>
> _campbellbarnettlaw.com <https://campbellbarnettlaw.com/>_
>
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