[WSBAPT] in personum jurisdiction under TEDRA

Fri Jun 2 10:35:52 PDT 2023

Thank you for all for the input. RCW 11.02.005(13) does not apply to the account at issue in my case. And the financial institution was as an interested party was served with the TEDRA petition before the beneficiary contacted them and the financial institution released the asset to the beneficiary. The financial institution even confirmed they had received and reviewed the TEDRA before releasing the asset, but decided to ignore it.

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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>
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From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Philip N. Jones
Sent: Friday, June 2, 2023 10:26 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>; Eric Nelsen <eric at sayrelawoffices.com>
Subject: Re: [WSBAPT] in personum jurisdiction under TEDRA

Doug makes excellent points. I have two points to add to his:

  1.  If there is a dispute between a PR and a beneficiary as to which of them is entitled to the asset, then the court has the power in rem to decide the issue, because the court has the power to decide what is a probate asset and what is not.
  2.  Oftentimes the financial institution is delighted to have the matter presented to a local court, because everyone will end up bound by the result, and that is all that the custodian wants:  the ability to pay the account to the correct owner without fear that some other person will fault the custodian for having done so.  As a result, the custodian will often not raise the issues that Doug describes.
Phil Jones

Philip N. Jones
Duffy Kekel LLP
900 S.W. Fifth Ave. Suite 2500
Portland, OR 97204
pjones at duffykekel.com<mailto:pjones at duffykekel.com>
(503) 226-1371 - office
(503) 853-1482 - cell
(503) 226-3574 - fax

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 Doug Schafer
Sent: Thursday, June 1, 2023 10:52 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>; Eric Nelsen <eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>>
Subject: Re: [WSBAPT] in personum jurisdiction under TEDRA

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><mailto: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<mailto:eric at sayrelawoffices.com>

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 Shannon Jones
Sent: Thursday, June 1, 2023 4:02 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto: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.

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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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