IN RE: Estate of Bennie P. Farren
Andrew P. Farren, as Executor of the Estate of Bennie P. Farren under the Will Of Bennie P. Farren, and in his individual Capacity, Respondent. Patricia A. McGlaughlin, as Successor Trustee of the Hercules Living Trust and Beneficiary of the Hercules Living Trust, Petitioner
Submitted: February 11, 2015 Draft Report: December 9, 2014
Kim E. Ayvazian Master in Chancery
A decedent left his solely-owned residence in Laurel, Delaware and other solely-owned assets to a trust. Under the terms of the trust, decedent's lady friend was granted a life estate in the residence and the funds necessary to pay the monthly bills of the residence. Upon the lady friend's death, her grandson was to receive the residence free and clear of any trust, and any residue was to be divided between decedent's two sons. Under the terms of decedent's last will and testament, his brother was named executor and decedent's son was named successor executor. After the brother renounced his fiduciary appointment, decedent's son was granted letters testamentary by the Sussex County Register of Wills. Thereafter, decedent's ex-wife, who is the mother of his two sons, filed a claim against the estate in the amount of $228, 459.47, purportedly for past due child support with interest thereon. The executor accepted the claim as a just debt of the estate, and on July 10, 2013, filed a petition to sell the real property to pay the decedent's debts under 12 Del. C. § 2701. The lady friend objected to the petition to sell, and filed a petition to remove the son as executor. For the reasons that follow, I recommend in this final report that the son be removed as executor for breach of his fiduciary duties, and that the petition to sell the real property should be dismissed without prejudice.
The decedent, Bennie P. Farren, separated from his ex-wife, Rebecca Courson, in the late 1970s, when his son Andrew was about four years old, and Farren had no further contact with Andrew until Andrew was about 30 years old.Although he never remarried, Farren lived with Patricia McGlaughlin for nearly 30 years and had a close relationship with McGlaughlin's grandson, Jared Smith.Farren met his own two grandsons only once about a year before his death, when Andrew drove his family to Ocean Pines to show them the neighborhood where he had lived as a child. Farren died on September 12, 2012. Andrew attended his father's funeral, but his brother Troy did not attend because he was in Europe on business.
After Andrew assumed the duties of executor of his father's estate, he paid Farren's funeral bill, the estate attorney's fees, and Farren's property taxes. As executor, Andrew rejected a claim for $4, 254.13 plus interest for legal fees that had been incurred by Farren in connection with a Child Support - U.S. Bankruptcy Court Judgment Order dated May 17, 1990, and a Final Order of Custody and Support in the Florida Circuit Court dated July 29, 1986. Andrew rejected this claim because he thought the Florida attorney already would have written off the loss on her books. Andrew accepted his mother's claim of $228, 459.47 for past child support because, in his opinion, it was an outstanding debt that needed to be paid. However, before he accepted this claim, on February 15, 2013, the estate attorney, George B. Smith, Esquire, wrote a letter to McGlaughlin's attorney, A. Dean Betts, Jr., Esquire, stating: "We propose to accept and agree to [Courson's claim] unless you and your client agree to pay all the costs of opposing it." On June 5, 2013, Smith wrote to Betts that the executor had decided to honor Courson's claim in the amount of $228, 459.47, and his only option was to obtain a court order to sell Farren's former residential real estate to pay debts. Smith continued: "Alternatively, [McGlaughlin] may forward funds sufficient to pay the claim, or mortgage the property to generate cash. … If we don't hear from you [within ten days], we will proceed in Chancery."
Andrew filed a petition for sale of the real property on July 10, 2013.Attached to the petition was an estate inventory listing a total of $48, 732.07 in mortgages, notes, and cash owned by decedent at the time of his death, in addition to the real estate improved by a single-family dwelling in Laurel, Delaware valued at $176, 000. The petition listed the following debts: (a) $13, 920 in funeral expenses; (b) $718.62 for Sussex County taxes; and (c) a claim in the form of a judgment for past due child support in the State of Florida for $228, 459.47. In addition, the petition listed $6, 479.98 in estate expenses that had already been paid. On August 19, 2013, McGlaughlin objected to the petition to sell the real property, contending that the only debt that could not be paid out of the liquid assets of the estate was Courson's claim, and this claim was not based upon a foreign judgment. McGlaughlin alleged that the Courson claim was based instead upon a certified copy of an "Arrearage Affidavit" issued by the Circuit Court of the Ninth Judicial Circuit in and for Osceloa County, Florida purporting to show an arrears balance of $24, 300 as of January 18, 2013, and an "Affidavit of Child Support and Interest Owed" prepared by a certified public accountant, which contained double hearsay since the information on which the accountant had relied was provided by Courson, whose information presumably came from the Florida court.
Thereafter, on Feb. 24, 2014, McGlaughlin filed a petition to remove Andrew as executor of his father's estate, alleging that Andrew breached his fiduciary duty to the beneficiaries of the estate by failing to contest and resist paying an unjust and unfounded claim against the estate. On March 20, 2014, Andrew responded to McGlaughlin's petition, alleging in part that McGlaughlin's petition was superfluous, duplicative and a waste of judicial resources, since McGlaughlin's objections to the Courson claim were essentially identical to her objections raised in the other case (C.A. No. 8714-MA). On April 15, 2014, the parties filed cross-motions for summary judgment in C.A. No. 8714-MA. On July 15, 2014, McGlaughlin moved for summary judgment in C.A. No. 9385-MA.
Following briefing on the motions, oral argument took place on December 9, 2014, during which Andrew's counsel conceded that the accountant should not have compounded interest monthly on the child support arrears. I issued a draft report from the bench, recommending that the petition to sell real property be denied because the executor breached his fiduciary duty by accepting a claim in the amount of $228, 459.47, which was not the amount of arrears shown in the certified court documents submitted by the claimant, but was based instead on an illegal calculation of compound interest. Had the executor simply accepted a claim of $24, 300, which was the amount of arrears on January 13, 2013, as certified by the Florida court, there would have been sufficient assets in the estate to pay this debt without having to sell the real estate. Instead, the executor improperly attempted to shift the burden of defending the estate against this claim onto the estate's beneficiary, i.e., the trust, and then accepted the claim without sufficient proof because of his relationship with the claimant. I also recommended that Andrew to be removed as personal representative of the Estate of Bennie P. Farren for breach of his fiduciary duty to the beneficiaries. Andrew took a timely exception to my draft report on December 15, 2014.
Andrew takes exception to my conclusion that Courson was required first to register a Florida support order in Family Court before presenting a claim against the estate. Andrew argues that the amount stated in the affidavit from the Florida court did not include interest, and since the calculation of interest is a simple clerical function that can be undertaken by any court, the absence of such a final calculation by a clerk of the Florida court should not have been an impediment to the claim. Further, Andrew argues that because the time of presentation of claims under 12 Del. C. § 2102 is severely limited, if Courson is first required to register a support order in Family Court, there is a distinct possibility that the subsequent presentation of her claim would be time-barred. In addition, Andrew argues that registration would be a pointless act because Family Court has no enforcement power on claims brought against a decedent's estate. Since equity does not require a useless act to be undertaken, Andrew contends that there should be no requirement that a final order from the State of Florida be registered in Family Court.
Andrew also takes exception to my recommendation of a complete dismissal of the petition to sell lands. Instead, he contends that the matter should have been stayed pending an offer by the claimant to register the Florida order in Family Court, although he is doubtful that the Family Court would accept such a filing since there is no indication that any such registration has occurred since the Family Court's decision in Pierce v. Higgins, 531 A.2d 1221 (Del. Fam. Ct. 1987). Finally, Andrew takes exception to my recommendation that he should be disqualified or removed because of a conflict of interest. Although his argument is not entirely clear, it appears to be based on the fact that Farren named his son as successor executor when he could have just as easily named McGlaughlin or some unrelated third party as his personal representative to avoid a potential conflict. Alternatively, Andrew argues that his father could have re-titled the real estate in a joint tenancy with McGlaughlin to take the residence out of his estate altogether, thus ensuring that McGlaughlin had the right to the real property upon his death. Since Farren did none of those things, Andrew argues that this Court does not have the power to re-write Farren's will simply because of events that Farren might not have anticipated.
McGlaughlin argues that Andrew's exceptions should be summarily dismissed because Andrew failed to follow Court of Chancery Rule 144(a), which requires an exceptant to order a transcript of a Master's bench report from the record. In this case, Andrew did not file a request for the preparation of a transcript of the draft report that I issued from the bench; instead, McGlaughlin requested a complete transcript of the oral argument and bench ruling. For this reason, McGlaughlin argues that Andrew's exceptions should be dismissed as waived under Rule 144(b)(1). In the alternative, if the Court does not dismiss the exceptions as a sanction for Andrew's failure to abide by Rule 144, McGlaughlin argues that the exceptions should be denied because registration of the Florida support order must occur in order to determine (a) whether the Florida Arrearage Affidavit includes all interest and fees owed, (b) which state's law applies, (c) whether interest is available at all, and (d) whether there are any defenses that can be asserted. According to McGlaughlin, Family Court has exclusion and original jurisdiction to hear and determine matters involving child support under Title 13, Chapter 6 of the Delaware Code and 10 Del. C. § 921(3) and (9).
McGlaughlin also argues that Andrew's argument regarding the time requirements of filing claims against an estate is simply a smoke screen because if Courson's claim had been initially rejected by the executor, Courson would have had an additional three months to file in Family Court to register her Florida order for enforcement under 12 Del. C. § 2102(c). McGlaughlin contends that staying the proceedings, rather than dismissing the petition, in order to allow the claimant an opportunity to offer to register the Florida court order in Family Court would be speculative at best, and a dismissal would not prevent Andrew from filing a similar petition to sell real estate in the future should the need arise. Finally, McGlaughlin argues that Andrew's exception to my recommendation that he be removed as ...