Opinion
File No. 2012-3310/A
01-18-2023
In the Matter of the Estate of Donald J. Grew, Deceased.
WILLIAM ILECKI, ESQ. Appearing for Petitioner, Western New York Federal Credit Union ABE OMERHODZIC, ESQ. Appearing for Colleen Hoch, Executrix
Unpublished Opinion
WILLIAM ILECKI, ESQ. Appearing for Petitioner, Western New York Federal Credit Union
ABE OMERHODZIC, ESQ. Appearing for Colleen Hoch, Executrix
HON. ACEA M. MOSEY SURROGATE JUDGE
Donald J. Grew [hereafter, decedent], died on May 24, 2012 at the age of 72. At the time of his death decedent was widowed, survived by his daughter, Colleen M. Hoch [hereafter, Colleen], and his son, Michael Grew [hereafter, Michael]. Decedent's Will dated May 10, 2012 left a specific bequest to Michael and the residuary estate to Colleen. The Will, which nominated Colleen as executrix, was admitted to probate on August 21, 2012, and letters testamentary were issued to Colleen.
Western New York Federal Credit Union [hereafter, WNY FCU] sent a creditor claim to Colleen via certified mail on March 16, 2015, and proof of delivery to her is dated March 20, 2015. WNY FCU subsequently filed a "Claim Against Estate" with this court on December 16, 2015, in the amount of $9,395.46, together with interest from March 16, 2015, for money lent by it to decedent prior to his death. The estate never filed a Notice of Rejection of the Claim, nor did it file a petition to settle the estate with a final accounting.
WNY FCU's claim arises from an unsecured credit card account with decedent, which went into default after his death on May 24, 2012.
On November 23, 2021, approximately six years after the filing of its initial claim, WNY FCU filed a petition to compel Colleen to account. Colleen's attorney filed an answer on March 14, 2022, setting forth reasons why WNY FCU's claim should be denied, including a statute of limitations defense. WNY FCU filed a response on May 24, 2022, opposing the estate's statute of limitation defense and asserting the claim's validity and timeliness.
Issue having been joined, Colleen has now filed a motion to dismiss the claim, contending that it is barred by the six-year statute of limitations (see CPLR 213[2]), and also seeking dismissal of the petition to compel an accounting. Colleen says that WNY FCU would no longer have standing to seek an accounting if it were not a valid creditor of the estate. WNY FCU opposes all relief sought by Colleen, contending that its claim was timely filed within six years of decedent's date of death, and it requests, in effect, that its petition to compel an accounting be granted. (A)
Under CPLR 213(2), a contract claim is governed by the six-year statute of limitations. Generally, the statute of limitations begins to run when a cause of action accrues (see CPLR 203[a]; see also Matter of Reich, 207 A.D.3d 1116 [2022]), that is, "when all the facts necessary to the cause of action have occurred so that the party would be entitled to obtain relief in court" (Hahn Auto Warehouse, Inc. v. Am. Zurich Ins. Co., 18 N.Y.3d 765 [2012]). Furthermore, CPLR 210 provides that a tolling period of 18 months is applicable following the death of the debtor when an "action" against a decedent is involved. An "action" includes a special proceeding under CPLR 105 (see Matter of Osadchey, 53 A.D.2d 960 [1976]). "Moreover, the Court of Appeals has long held that the filing of a verified claim against an estate is 'the commencement of a special proceeding that [tolls] the statute of limitations'" (id., at 960-961).
SCPA 1808(6) states that "with respect to any limitation of time within which an action or proceeding may be brought the presentation of a claim as provided in 1803 shall be deemed the institution of a special proceeding for the collection of the claim."
Decedent died on May 24, 2012. The debt in this matter is based on credit card purchases which decedent made prior to his death. It appears from the July 3, 2012 credit card statement that decedent's outstanding balance owing on that date was $7,327.58. The statement included a payment due date on July 28, 2012 for either a minimum payment or the entire outstanding balance on the account.
Thus, for purposes of this motion, decedent's debt should be deemed to have accrued on July 28, 2012.
After WNY FCU sent the July 3, 2012 credit card statement to decedent's address as notification that the account was in default and subject to applicable interest and late fees, Colleen mailed a letter to WNY FCU on or about July 14, 2012 attaching a copy of decedent's death certificate and a copy of the July 3, 2012 statement. Her letter states in part:
"Mr. Grew passed away on May 24, 2012, enclosed is a copy of the death certificate. Mr. Grew had no known estate to cover these account balances. Any further correspondences can't be received at the above address as of September 15, 2012".
Thus, Colleen received actual notice of decedent's debt within two months of decedent's death. After WNY FCU became aware that an estate had been opened for decedent, it submitted written notice of its creditor claim to Colleen via certified mail on March 16, 2015. Subsequently, WNY FCU filed a "Claim Against Estate" with this court on December 16, 2015. Each of these notices occurred well within six years of decedent's death, and also well within the seven-and-a-half-year extended statute of limitations.
Because the filing of a verified claim against an estate constitutes the commencement of a special proceeding (Matter of Osadchey, supra), the statute of limitations was therefore tolled on December 16, 2015.
(B)
When a claimant has filed a written claim with the fiduciary, the fiduciary must give prompt written notice to the claimant stating whether she allows or rejects the claim in whole or in part. If a fiduciary fails to allow the claim within 90 days of its presentation, it is deemed rejected (see SCPA 1806[3]). After the 90 days has passed, the claimant can seek to compel an accounting in Surrogate's Court or bring a proceeding in another court of competent jurisdiction to determine the claim. See, generally, Matter of Bonnard, 2010 NY Misc. LEXIS 4456, 2010 NY Slip Op 32516(U) [dec. Aug. 30, 2010], citing Matter of Feinberg, 18 N.Y.2d 499, 507 [1966]. And, if no accounting proceeding is pending, a rejected claimant can petition Surrogate's Court to compel the fiduciary to account (see SCPA 1808[5]; see also SCPA 2205[2][a]) .
If estate assets are distributed "prematurely", a fiduciary may, depending on the circumstances, be held personally liable to any creditors for any claim which should have been, but which was not, paid. See severally SCPA 1802.
Here, WNY FCU initially presented its claim to Colleen on March 20, 2015 when she received a copy of it via certified mail. Colleen did not respond to the claim within the 90-day statutory period; thus, the claim was deemed rejected by the estate. WNY FCU then formally filed its claim with this court on December 16, 2015. Again, Colleen did not submit a formal rejection of the claim within the statutory period .
And, of course, Colleen had actual knowledge of decedent's debt in July, 2012.
Thus, WNY FCU is entitled as creditor of the estate to have its claim adjudicated and to compel an accounting proceeding and the fiduciary to account.
(C)
Accordingly, and for the reasons stated above, I hereby deny Colleen's petition to dismiss WNY FCU's claim against the estate. Additionally, I direct that Colleen shall file a formal accounting, together with a petition for judicial settlement thereof, on or before Friday, March 10, 2023 at 5:00pm. Thereafter, a citation shall issue to all necessary parties.
This decision shall constitute the Order of this Court and no other or further order shall be required.