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Evans v. Brittain et al. (9/8/95), 901 P 2d 1138
Notice: This opinion is subject to formal correction
before publication in the Pacific Reporter. Readers
are requested to bring errors to the attention of the
Clerk of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, telephone (907) 264-0607, fax (907) 276-
5808.
THE SUPREME COURT OF THE STATE OF ALASKA
In re the Estate of )
) Supreme Court No. S-6264
GERALD M. EVANS, )
) Superior Court No.
Deceased. ) 4FA-83-276 PR
)
______________________________) O P I N I O N
)
LAW OFFICE OF WILLIAM F. ) [No. 4249 - September 8, 1995]
BRATTAIN II, and SHULKIN, )
HUTTON & BUCKNELL, INC., P.S.,)
)
Appellants, )
)
v. )
)
MERWIN E. ANDERSON, Personal )
Representative of Estate of )
Gerald M. Evans, Deceased, )
)
Appellee. )
______________________________)
Appeal from the Superior Court of the State
of Alaska, Fourth Judicial District,
Fairbanks,
Ralph R. Beistline, Judge.
Appearances: William F. Brattain, Baker,
Brattain & Huguelet, Anchorage, for
Appellants. Winston S. Burbank, Call,
Barrett & Burbank, Fairbanks, for Appellee.
Before: Moore, Chief Justice, Rabinowitz,
Matthews, Compton and Eastaugh, Justices.
MOORE, Chief Justice.
I. INTRODUCTION
Appellants (the lawyers) are the holders of a
promissory note executed by Gerald Evans two years before his
death. The lawyers filed a petition for payment against the
Evans estate. The superior court held their claim time-barred
under AS 13.16.475(a), and entered summary judgment in favor of
the estate. We reverse.
II. FACTS AND PROCEEDINGS
In 1981 Gerald Evans signed a promissory note in favor
of the lawyers. The note represented Evans' share of the expense
of legal work that the lawyers had performed on behalf of a
partnership. Evans died, allegedly without satisfying the debt,
and by a letter dated September 2, 1983, the lawyers filed a
timely notice of a claim against the Evans estate (the estate).
Under Alaska's probate code, an estate can disallow a
claim and initiate a sixty-day period in which the claimant must
petition the superior court for allowance or have the claim
become permanently time-barred. AS 13.16.475(a). The estate's
representative "may mail a notice to any claimant stating that
the claim has been disallowed." Id. The sixty-day statute of
limitations against the claimant begins to run "if the notice
warns the claimant of the impending bar." Id. Under the same
provision of the probate code, the estate in this case had to
determine the validity of all claims within sixty days of
December 12, 1983. Any claim which was not disallowed by the end
of that period would be deemed allowed as a matter of law. AS
13.16.475(a).1
On December 9, the lawyers inquired by letter of the
estate's attorney, Richard Savell, about the status of their
claim. Savell responded by letter (the Savell letter) on
December 22. The Savell letter stated, in relevant part:
I am in receipt of your letter dated
December 9, 1983 inquiring of the status of
the Evans Estate. As I explained to you in
our conversation of December 8, 1983, I will
need more information in order to advise the
personal representative in making a
determination as to your claim.
. . . .
I have requested background
documentation from you so that I can gain the
fullest understanding of the case you handled
[on behalf of Evans] and its settlement. I
have requested to see the notes, security, if
any, and complaint prepared by [the party
that sued Evans and his partners]. I will
also need all pleadings prepared by you, the
final settlement agreement, correspondence
between you and Jerry [Evans], and a record
of attorney time devoted to Jerry's case.
Finally, I should be advised of the total
fees agreed to be paid by all parties,
including the fees from [one of Evans'
partners] on his affirmative recovery from
the [plaintiff], and any and all fees
arrangements made with Jerry before, after or
during the case.
Lest we drop the ball and delay acting
upon the claim while waiting for a response
from you, it would be safer to disallow the
claim pending receipt of the requested
documentation. Of course, the personal
representatives will reconsider any decision
within the next sixty days if the requested
material is provided. After sixty days the
claim will be barred under AS 13.16.475.
I look forward to your cooperation in
complying with my requests so that a
satisfactory resolution of this claim can be
reached.
It was not until May 1993 that the lawyers filed a
petition for payment of their claim. The parties cross-moved for
summary judgment. The estate argued that the Savell letter was a
notice of disallowance. Since the lawyers had not filed their
petition within sixty days after the letter was mailed, the
estate concluded that the claim was time-barred under AS
13.16.475(a).
One of the lawyers, William Brattain, argues that he
never understood the Savell letter to be a disallowance of the
claim. He asserts that he sent Savell some of the documentation
requested in the letter, and that Savell informed him during a
telephone conversation that "there was little point in getting
involved in a drawn out controversy," because the estate was
insolvent due to tax liabilities. Brattain claims he then
assumed, since [he] never received an
unequivocal disallowance of the claim, that
Mr. Savell concluded . . . [that] there was
no point in disallowing the claim since: (1)
it was prima facie valid; (2) there was no
money to pay it; (3) there was little
likelihood that sufficient assets would ever
come into the estate to pay it and, (4)
finally, and not insignificantly, the estate
had no money to defend a full blown hearing
on the merits.
Brattain says that he safeguarded the promissory note on the off-
chance that it might someday be paid. When the lawyers
discovered that the estate had resolved its tax problems and
remained solvent, they filed a petition for allowance.
The affidavit testimony of another lawyer, Jerome
Shulkin, basically confirmed Brattain's account. Shulkin's time
sheets reflect that he spoke to Savell and was told that the
estate might be insolvent. Shulkin affied that he did nothing to
pursue the claim, because he accepted Savell's statement that
"there was no money in the estate to pay claims."2
Savell states that he intended the December 22 letter
to serve as a notice of disallowance, and also recalls orally
informing Brattain that the claim would be disallowed, that the
State Bar might be asked to arbitrate the claim, and that
additional, unspecified Bar involvement was possible. Savell
agrees that he subsequently discussed the estate's potential
insolvency with Brattain, but insists that he also reiterated
during that or another conversation that the lawyers' claim was
disallowed.
A probate master concluded that the Savell letter
constituted a valid notice of disallowance and that the claim was
therefore time-barred under AS 13.16.475(a). The master further
stated that as an "alternative to concluding as a matter of law
that the Savell Letter constitutes plain notice of disallowance
on its face . . . undisputed facts exist which support the
conclusion that [the lawyers] objectively understood the letter .
. . to be a notice of disallowance." That is, the master
considered the claim barred regardless of whether the Savell
letter was a valid notice of disallowance. The superior court
adopted the master's findings and recommendation and granted
summary judgment. The lawyers appeal.
III. DISCUSSION
A. Standard of Review
Summary judgment will be affirmed if the record
presents no genuine issue of material fact and if the moving
party was entitled to judgment on the law applicable to the
established facts. Hernandez-Robaina v. State, 849 P.2d 783, 785
n.2 (Alaska 1993). Whether the Savell letter constituted a
legally adequate notice of disallowance under AS 13.16.475(a) is
a question of law which we review de novo, adopting the rule
which is most persuasive in light of precedent, reason and
policy. Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979).
B. The Savell Letter Was Not a Proper Notice of
Disallowance
1. Case law
The parties agree that a notice of disallowance must be
"clear and unequivocal" if it is to initiate the sixty-day period
after which claims are barred. See Andrea G. Nadel, Annotation,
What Constitutes Rejection of Claim Against Estate to Commence
Running of Statute of Limitations Applicable to Rejected Claims,
36 A.L.R. 4th 684, 688 (1985) (rejection must be "clear,
unequivocal, and leave no room in the creditor's mind that the
claim has been disallowed").
In support of their contention that the Savell letter
was not a sufficient notice of disallowance, the lawyers cite
Hawkes Hospital v. Colley, 442 N.E.2d 761 (Ohio 1982). That
opinion states:
If there has been, concurrent with the
alleged rejection, an agreement to refer; or
if . . . at the time of the alleged
rejection, the administrator does or says
anything from which the claimant may
reasonably infer that the determination to
dispute or reject the claim is not final, but
that it will be further examined or
considered, the administrator may not set up
such a dispute as a rejection.
Id. at 763 (quotation omitted) (citations omitted). Hawkes
Hospital held that the letter at issue violated this standard,
because although the letter stated plainly in its final paragraph
that the claim was rejected, its opening paragraph said that the
claim had been referred to the probate court for a determination
of validity. Id. at 763. Because of this "unmistakable
inconsistency," the court ruled that the letter could not serve
as a notice of disallowance. Id.
The lawyers also cite Lowery v. Hairston, 533 A.2d 922
(Md. App. 1987). In Lowery, the claimants were attempting to
exercise an option granted by the deceased, but their letters to
the estate went unanswered. The claimants' lawyer then wrote the
estate asking for confirmation that the claim was denied. Id. at
924. In the court's view, the estate's response was not a "flat-
out rejection," and could "be read to mean that . . . settlement
may be had in the future." Id. at 927-28. Consequently, the
court held that the letter was "too vague and indefinite to
qualify" as a notice of disallowance. Id. at 927.
The estate downplays the importance of case law on this
subject. It correctly characterizes the cases as fact-specific
in nature and argues that "[n]o case has been found which is
similar enough to Mr. Savell's letter . . . to decide this
dispute." We find some similarities, however, between the case
at bar and the cases cited by the lawyers. Accordingly, while
those cases do not resolve the instant dispute, their analysis is
helpful.
Like the letter in Hawkes Hospital, the Savell letter
is characterized by a tension between its opening paragraph,
which implies that the estate's representative would make a
decision about the claim after the lawyers provided more
information, and its fourth paragraph, which states that "it
would be safer to disallow the claim," and sets forth the statute
of limitations for filing suit. This tension may not rise to the
level of an "unmistakable inconsistency," 442 N.E.2d at 763, but
it violates Hawkes Hospital's principle that an estate's
communication to a claimant will not be considered a rejection of
a claim when the estate does or says anything from which one
might reasonably infer that there has been no final decision and
that the claim will be further considered. Id. In addition,
like the letter in Lowery, the Savell letter does not seem to be
a "flat-out rejection." 533 A.2d at 927. Rather, it appears
mainly to be an invitation to provide more information. In sum,
these out-of-state cases imply that the Savell letter was "too
vague and indefinite to qualify" as a notice of disallowance.
Lowery, 533 A.2d at 927.
2. The Savell letter fails to meet the
"clear and unequivocal" standard
Some passages of the letter arguably support the
estate's assertion that the letter constitutes a notice of
disallowance. Specifically, the fourth paragraph states: "Lest
we drop the ball and delay acting upon the claim while waiting
for a response from you, it would be safer to disallow the claim
pending receipt of the requested documentation." However, the
lawyers' reading of this portion of the letter is not
implausible. They contend that
[t]he phrase " . . . it would be safer to
disallow the claim . . . ." could easily be
interpreted to mean that the writer, in the
ordinary course of events, would not give the
claimant an opportunity to provide additional
information since to do so would necessarily
involve risk to the Estate, but in this case,
(presumably as a professional courtesy) the
writer would make an exception and wait for
the requested information before making a
final determination.
Another passage cited by the estate reads, "Of course,
the personal representatives will reconsider any decision within
the next sixty days if the requested material is provided. After
sixty days the claim will be barred under AS 13.16.475."
(Emphasis added.) The estate argues that by referencing the
sixty-day period which begins to run after a notice of
disallowance, the letter clearly informs the lawyers that their
claim has been denied. The passage seems capable of another
interpretation, however. Since the letter refers to "any
decision" instead of "this decision" or "the disallowance," the
sentence can also be read to indicate that a decision will be
made at some future date.
The overall structure of the Savell letter supports the
proposition that it fails to meet the "clear and unequivocal"
standard that applies to notices of disallowance. The focal
point of the letter seems to be the paragraph in which Savell
asks the lawyers for documentation of the fees underlying the
promissory note. As the A.L.R. Annotation explains:
Where the executor or administrator of an
estate, when presented with a claim, has
requested a bill of particulars or further
information in connection with the claim,
several courts have held that such conduct
. . . did not amount to a rejection of the
claim for purposes of commencing the statute
of limitations . . ., the view being taken
that such behavior was inconsistent with an
unequivocal rejection of the claim, and had
the effect of inducing the claimant not to
bring suit within the statutory period.
Nadel, 36 A.L.R.4th at 688. Moreover, the letter's crucial
opening and closing passages strongly imply that a final decision
on the claim is not contained in the letter, but will occur at a
later date. The first paragraph states that Savell "will need
more information in order to advise the personal representative
in making a determination as to [the lawyers'] claim." The final
paragraph anticipates cooperation with the request "so that a
satisfactory resolution of this claim can be reached."
In sum, the Savell letter does not contain a "flat-
out rejection," but rather contemplates further consideration of
the lawyers' claim after their submission of additional
information to the estate. Because a notice of disallowance must
be clear and unequivocal, we hold that the Savell letter does not
constitute an adequate notice of disallowance.
C. Summary Judgment Was Not Properly Entered on the
Basis that the Lawyers Had Actual Notice of the
Estate's Disallowance of their Claim
1. Actual notice
The trial court adopted an alternative rationale
articulated by the probate master, who found that "undisputed
facts exist which support the conclusion that [the lawyers]
objectively understood the letter . . . to be a notice of
disallowance." If this conclusion were correct, then the
lawyers' claim would be time-barred under AS 13.16.475(a)
regardless of whether the Savell letter constituted a proper
notice of disallowance.3 An examination of the record, however,
reveals that while it may be true that the lawyers had actual
notice that their claim was rejected, it is incorrect to
characterize this conclusion as supported by "undisputed facts."
The master originally based her finding that the
lawyers knew that their claim was rejected on the "undisputed"
fact that Savell had orally informed Brattain of the
disallowance. This portion of the master's findings was
subsequently deleted, however, in implicit recognition of the
fact that Brattain disputed Savell's account of the oral
communication. The amended opinion maintained the position that
the lawyers knew that their claim was denied, but reached this
conclusion inferentially, based on (1) the fact that there was no
further correspondence between the parties after the Savell
letter and (2) the fact that for nearly ten years the lawyers
took no action on their claim.
It was improper for the master to conclude from these
facts that the lawyers must have known that their claim was
rejected. This inference was not a mere recognition of
undisputed testimony, as would be appropriate at the summary
judgment stage. Rather, it was a rejection of Brattain's
affidavit testimony, wherein he asserts that his inaction was a
product of his understanding that Savell had allowed the claim to
lapse into acceptance because the estate had no money to pay the
claim and, under such circumstances, it made no sense to reject
the claim and invite litigation.4
The trial court's finding resulted from the master's
choice between the parties' competing accounts of the facts. On
summary judgment, such a choice was inappropriate and must be
reversed. While actual notice can serve as a substitute for a
properly executed notice of disallowance, the issue of whether
the lawyers had actual notice presents a genuine issue for trial.
2. Inquiry notice
The trial court also adopted the master's conclusion
that because the plaintiffs were lawyers, the Savell letter's
references to a sixty-day time-bar put them on inquiry notice as
to whether their claim had been disallowed. The master reasoned
that "an attorney exercising the reasonable care expected of
counsel should/would have made further inquiry regarding the
status of the claim before the 60-day period had expired."
We reject this inquiry notice theory as inconsistent
with the law applicable to notices of disallowance. It is the
estate's responsibility to compose and dispatch a notice of
disallowance, AS 13.16.475(a), and the law demands that such
notices be clear and unequivocal in order to facilitate
communication and allow the parties to expeditiously reach the
gravamen of a probate claim. See III.B., supra. An "inquiry
notice rationale" would frustrate this purpose, replacing the
current legal regime with one in which an estate would be
encouraged to hint at disallowance in a way which would alert a
competent attorney that her client's claim might be in jeopardy.
Since the law should promote clear communication rather than
obfuscation, we decline to hold that in the absence of a proper
notice of disallowance, inquiry notice is sufficient to initiate
the running of the sixty-day period in which a petition for
allowance must be filed.
IV. CONCLUSION
The Savell letter was not clear and unambiguous, and
thus was not a valid notice of disallowance under AS
13.16.475(a). Additionally, there are material facts at issue as
to whether the lawyers had actual notice in late 1983 that their
claim had been disallowed. Consequently, this case was
improperly resolved on summary judgment, and we REVERSE and
REMAND for further proceedings.
_______________________________
1 The statute provides:
Failure of the [estate's] personal
representative to mail a claimant a notice of
action on a claim for sixty days after the
time for original presentation of the claim
has expired has the effect of a notice of
allowance.
AS 13.16.475.
2 Shulkin's records also reflect that Savell told him that
the claim was disallowed. This conversation did not occur,
however, until March 1985. Consequently, this conversation is of
no relevance to the status of the lawyers' claim, because it
occurred after the date on which unresolved claims against the
estate would have been deemed to be allowed as a matter of law.
AS 13.16.475(a). For a discussion of whether the lawyers had
actual notice that their claim was disallowed within 60 days of
the Savell letter's mailing, however, see III.C., infra.
3 In other circumstances we have held that a statutory
requirement to give written notice need not be satisfied if
actual notice has been provided. Morkunas v. Anchorage Tel.
Util., 754 P.2d 1117, 1120 (Alaska 1988) (provision of actual
notice amounts to substantial compliance with code provision
requiring written notice); In re L.A.M., 727 P.2d 1057, 1060-61
(Alaska 1986) (violation of notice requirement would be harmless
if actual notice existed).
4 As explained in note 1, supra, it is undisputed that a
March 1985 conversation between Shulkin and Savell eventually put
the lawyers on notice that Savell had disallowed the claim. This
fact does not support the lower court's grant of summary
judgment, however. Unless the estate sent the lawyers a notice
of disallowance within sixty days after December 12, 1983, the
claim would be considered allowed as a matter of law under
AS 13.16.475(a). A conversation that did not occur until March
of 1985 is thus of no relevance in determining the status of the
lawyers' claim.