February 05, 2004
IN RE ESTATE OF FRANCISCO COLL MONGE; FRANCISCO DAVID COLL SCHWAB, APPELLANT.
Appeal from the Superior Court of the District of Columbia (FOR-108-00) (Hon. José M. Lopez, Trial Judge)
Before Ruiz and Washington, Associate Judges, and King, Senior Judge.
The opinion of the court was delivered by: Ruiz, Associate Judge
Argued May 7, 2003
Dissenting opinion by Senior Judge KING
Mr. Francisco Coll Monge, a domiciliary of the Commonwealth of Puerto Rico, died in 1999 *fn1 owning real property in the District of Columbia. *fn2 On September 18, 2000, Mr. Francisco David Coll Schwab, the decedent's son, was appointed judicial administrator and executor of Mr. Coll Monge's estate by the Sala Superior de Carolina ("Superior Court of Carolina") in the Commonwealth of Puerto Rico, and was appointed Foreign Personal Representative ("FPR") by the Probate Division of the Superior Court in the District of Columbia on October 20, 2000.
On April 19, 2001, appellee, Susanna Meerschaert, a resident of Minnesota, timely filed two claims against Mr. Coll Monge's estate in the D.C. foreign estate proceeding, the first consisting of an outstanding total balance of $224,261.28 on three separate promissory notes *fn3 and the second consisting of an account balance with the Americana Leadership College, Inc. in the amount of $4,750.00, which Ms. Meerschaert had prepaid for a course of instruction. *fn4 On June 22, 2001, the FPR disallowed the claims she filed in the District of Columbia because they duplicated claims already filed and allowed in the probate proceedings in Puerto Rico. *fn5 On August 16, 2001, Ms. Meerschaert filed a timely complaint in the Probate Division of the Superior Court of the District of C olumbia against the FPR for allowance of both claims against Mr. Coll Monge's estate, pursuant to D.C. Code §§ 20-342, -343, *fn6 -905, *fn7 and -908. *fn8 The FPR responded that Ms. Meerschaert had filed identical claims in three other jurisdictions, namely, Puerto Rico, Arizona, and Iowa, and requested that the probate court direct Ms. Meerschaert to rely on the claims filed in the Puerto Rican court, as the proceeding in the District of Columbia was collateral to the primary probate proceeding in Puerto Rico, where the decedent had been domiciled. *fn9
The parties filed cross-motions for summary judgment. *fn10 In her motion, Ms. Meerschaert argued that the purpose of § 20-343 (d) is to ensure that creditors who, like she, have filed claim s in a D.C. foreign estate proceeding have their claim s satisfied, or finally determined in favor of the FPR, prior to release of real property assets in the District of Columbia to the domiciliary jurisdiction for administration. *fn11 Thus, Ms. Meerschaert claimed, the FPR could not deny her claims on the ground that they duplicated the claims already filed in Puerto Rico. In opposition to her motion and in support of his motion for summary judgment the FPR argued that, because the estate was insolvent, Ms. Meerschaert's claims should not be preferred over the other 106 unsecured creditors who have similarly recognized and outstanding claims in the domiciliary jurisdiction. *fn12 Ms. Meerschaert responded that by filing her claims in the District of C olumbia under § 20-343 (d), she was simply availing herself of an opportunity that the 106 other claimants chose not to pursue, and could no longer pursue, in the D .C. foreign estate proceeding. See § 20-908 (a) (forever barring a disallowed claim unless a verified complaint is filed "not later than 60 days after the mailing of the notice disallowing the claim"). She further argued that the filing of a cla im in another jurisdiction where the estate is being administered does not preclude her from filing here, as there is no longer any statutory or jurisprudential requirement in the District of Columbia that creditors be D.C. residents in order to file a claim in a D.C. foreign estate proceeding, or that the obligation on which the claim is based be incurred in the District of Columbia. See note 11, supra.
By order filed April 16, 2002, the trial court granted Ms. Meerschaert's motion for summary judgment, ruling that, having fulfilled the filing requirements § 20-343 (d), she had a lien on the property. The court noted that prior to the Probate Reform Act of 1980, the predecessor to § 20- 343, see notes 6 and 11, supra, preferred and protected the rights of local creditors over those of out-of-state creditors. See § 18-501 (1940); Sackett, 80 U.S. App. D.C. at 100, 149 F.2d at 826. The trial court further noted that in Sackett the question of whether the claimant was an out-of-state or local creditor was therefore of great significance, as that would determine whether the claimant was covered by § 18-501 (1940). Because the creditor at issue in Sackett was not local (as the statute then required), the Sackett court did not decide whether local creditors who filed would have priority over foreign creditors who were not eligible to file in an ancillary proceeding. The trial court recognized - as did the court in Sackett - that where there were no local creditors and, therefore, § 18-501 (1940) did not control, the "correct rule in the administration of an insolvent estate is to marshall [sic] the assets and distribute them ratably among creditors of the same class, irrespective of their source. . . ." See Sackett, 80 U.S. App. at 100, 149 F.2d at 826. The trial court ruled, however, that considering "the protections provided to creditors under § 20-343," *fn13 Ms. Meerschaert has a lien against the real property located in the District of Columbia with priority over the claims of creditors filed in the domiciliary jurisdiction (Puerto Rico) that must be released before the property is leased, transferred, or sold.
On appeal, the FPR argues that the trial court erred in interpreting § 20-343 (d) as granting a preference to those creditors who file claims in the foreign estate proceeding in the District of Columbia over the other creditors with recognized claims filed in the domiciliary proceeding in Puerto Rico. Relying on District of Columbia v. Gantt, 558 A.2d 1120 (D.C. 1989) and In re Estate of Phillips, 532 A.2d 654 (D.C. 1987), the FPR further argues that the personal representative may not fail to take into consideration any claims of which he has actual knowledge, even if the claimants have not complied with the filing formalities of § 20-905. Thus, the 106 creditors whose claims have been filed and recognized by the FPR in Puerto Rico must be included in the personal representative's - and the trial court's - calculus for the distribution of the estate's assets in the District of Columbia. Because the estate's assets appear to be insufficient to cover all recognized claims, the FPR argues that the probate court must allow for the pro rata distribution of all of the proceeds in the estate, including the real estate in the District of Columbia, to all the recognized creditors, whether or not they filed a claim in the District of Columbia pursuant to § 20-343 (d).
Ms. Meerschaert does not dispute that the FPR had actual knowledge of the claims filed by 106 other creditors, but distinguishes this case from Gantt, noting that Gantt does not address the special protections created by § 20-343 (d) for those creditors who file claims against foreign estates with real property located in the District of Columbia. See § 20-343 (d) (creating a lien against all real property owned by the decedent in the District of Columbia at death in favor of properly filed and valid claims against a foreign estate).
A foreign personal representative is appointed to administer the estate of a decedent not domiciled in the District of Columbia, but which has property located here, without need to obtain letters from the Superior Court of the District of Columbia. *fn14 See D.C. CODE § 20-341(a) (2001). Upon filing a copy of the appointment as personal representative in another jurisdiction, see § 20-341 (b), "[a] foreign personal representative may exercise all the powers of such office and may sue and be sued in the District of Columbia, subject to any statute or rule relating to nonresidents," in connection with the administration of the estate. D.C. CODE § 20-342 (2001). Real property located in the District of Columbia may be leased or transferred by the foreign personal representative if bond is posted equal to the value of the real property, or if "6 months  pass after the first publication required by [§ 20-343 (a)] and (A) no claims are filed with the Register during this time or (B) all claims of creditors have been released or finally determined in favor of the personal representative." D.C. CODE § 20-343 (c) (2001). The statutory question posed in this appeal is whether the foreign personal representative is further required to first satisfy liens created pursuant to § 20-343 (d) before real estate located in the District of Columbia may be used to satisfy other creditors of the estate. Although we think the question is arguable, *fn15 we do not decide it in this case because, as we now explain, whatever protection § 20-343 (d) affords is shared by the creditors whose claims were known to the FPR from filing in the domiciliary probate proceeding in Puerto Rico.
This court has held that in administering an estate a personal representative is obliged to consider all valid claims about which he has actual knowledge, even if creditors fail to comply with the statute's enum erated filing form alities. See Gantt, 558 A.2d at 1125 (noting the discretionary power of the trial court under § 20-905 to allow or disallow a claim about which the personal representative had actual knowledge despite failure to comply with the formalities of § 20-903 (a) and § 20-905); In re Estate of Phillips, 532 A.2d at 656 (recognizing actual notice of claims and, therefore, perceiving no basis for a discretionary denial of claim). Here, it is undisputed that the FPR had actual knowledge of the claims filed in Puerto Rico. The creditors who filed in Puerto Rico could have obtained a lien under § 20-343 - just as Ms. Meerschaert did - by filing their claims as provided in § 20-905. *fn16 That they did not do so is irrelevant in determining priorities, because pursuant to Gantt and Phillips, a personal representative may not disallow a claim against the estate of which he had actual knowledge during the statutory six-month period for failure to comply with all the formalities of § 20-905. Thus, the 106 creditors who filed their claims in Puerto Rico are deemed to have a lien under § 20-343 (d), placing them on the same footing as Ms. Meerschaert. Since the record shows that there is no genuine issue as to any m aterial fact, see District of Columbia v. Helen Dwight Reid Educ. Found., 766 A.2d 28, 32 (D.C. 2001), we accordingly reverse the award of summary judgment to Ms. Meerschaert granting priority to her claims, *fn17 and rem and for further p roceedings. See Sackett, 80 U.S. App. D.C. at 100, 149 F.2d at 826 (noting the discretionary power of the court in which foreign proceedings are pending to transmit local assets to the domiciliary executor or administrator) (citing RESTATEMENT OF CONFLICT OF LAWS § 496 (1934)). *fn18
KING, Senior Judge, dissenting:
Because I disagree with the majority's holding that all creditors who have filed in the domiciliary probate proceeding in Puerto Rico and of whom the personal representative had actual knowledge should be treated as if they had filed in the District of Columbia pursuant to D.C. Code § 20-343 (d) (2001), I respectfully d issent. The majority's holding renders D.C. Code § 20-343 (d) essentially m eaningless. That statute provides that "[u]nless a release of a validly recorded claim has been recorded or the claim has finally been determined in favor of the personal representative, such claim shall constitute a lien against all real property owned by the decedent in the District of Columbia for a period of 12 years from date of death . . . ." The claim is otherwise barred if the complaint is not filed within "60 days [of] mailing of the notice disallowing the claim." D.C. Code § 20-908 (a) (2001). By filing her com plaint, Ms. M eerschaert availed herself of the opportunity the statute afforded her, a course of action the other claimants chose not to pursue.
The majority has broadly interpreted District of Colum bia v. Gantt, 558 A.2d 1120 (D.C. 1989), to hold that the personal representative may not disallow any claim against the estate if the representative has actual knowledge of the claim, even if the claim was filed outside of the District. *fn19 The majority equates Ms. Meerschaert, who underwent the requisite procedural hoops in the District by filing a verified complaint and thereby creating a lien on the property and preserving her claim, to the other claimants who filed only in Puerto Rico. Gantt should not be stretched beyond its relatively narrow holding to permit attribution of actual knowledge to claims not filed in the District. Rather, D.C. Code § 20-343 (d) establishes precisely the right that Ms. Meerschaert undertook to secure - the right to create a lien in th ese circumstances.
The majority also cites commentary from Sackett, Chapman, Brown & Cross v. Osgood, 80 U.S. App. D.C. 99, 149 F.2d 825 (1945). The decision in Sackett hinges upon
D.C. Code § 18-501 (1940), the predecessor statute to § 20-343. The predecessor statute protected local creditors, requiring that only creditors domiciled in the District could make a claim against the estate. The Sackett court found that the predecessor statute did not apply because of the non-local residency status of the creditors in that case. The language in the predecessor statute, however, is no longer relevant or applicable because the revised statute at issue, § 20-343, allows any creditor to file a claim in a foreign estate proceeding. Sackett, therefore, has no applicability to the instant case in which non-local creditors may file claims in the District.
I would affirm the trial court's granting of summary judgment in favor of Ms. Meerschaert. She filed her claims in the District of Columbia, the foreign estate proceeding, successfully creating a statutory lien on the property, placing her in a different and m ore advantageous position than the other claimants, who filed only in Puerto Rico.