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IMO Estate of Lambeth v. Kendall

Court of Chancery of Delaware

July 2, 2018

IMO Estate of Joan K. Lambeth; Jack Reedy
Larry H. Kendall

          Draft Report: June 20, 2018

          Submitted: April 27, 2018

          Elle Van Dahlgren, Esquire Elle Van Dahlgren Law, LLC

          David J. Ferry, Jr., Esquire James Gaspero, Jr., Esquire Ferry Joseph, P.A.

         Dear Counsel:

         In this estate matter, a surviving husband has petitioned this Court for a spousal elective share of his late wife's estate under 12 Del. C. § 906(a). I write to address the executor's motion to dismiss that petition as untimely. For the reasons that follow, I recommend the Court grant the motion and dismiss the husband's petition.

         I. Background[1]

         Joan K. Lambeth ("Lambeth") died on April 26, 2017, leaving a last will and testament dated April 18, 2017.[2] The will named Respondent Larry H. Kendall ("Kendall") as executor.[3] Petitioner Jack Reedy ("Reedy") was Lambeth's surviving husband, having married Lambeth on October 30, 2014.[4] Lambeth's will left approximately $65, 000 in cash and personal property to Reedy, and dispersed the nearly $1.2 million worth of remaining assets among other specified beneficiaries, including Kendall.[5] The will was filed with the Register of Wills on May 10, 2017, and Kendall was appointed personal representative of the estate on May 26.[6] Reedy filed a petition for a spousal elective share on December 26, 2017: exactly eight months after Lambeth's death, and exactly seven months after Kendall was appointed personal representative.[7]

         Reedy admits that "under normal circumstances," Title 12, Section 906 of the Delaware Code would require him to file his petition within six months of Kendall's November 26 appointment as the personal representative.[8] Reedy argues that this deadline should be relaxed in this case. Reedy alleges:

Petitioner represents that he relied to his detriment on the assertion by respondent in the weeks following the Decedent's passing that the estate's attorney confirmed nothing could be done regarding the estate until 8 months had passed after Decedent's death.
This statement reasonably led the Petitioner away from the truth and fraudulently concealed from Petitioner necessary truthful facts regarding the timeframe in which he could make a claim against the estate.
In addition, Petitioner reasonably relied upon the competence and good faith of respondent acting in his fiduciary capacity and understood respondent's statement to mean that he had 8 months to make any claims he had relating to the estate.[9]

         Reedy makes no other allegations regarding the context of this interaction, nor about the specific statements Kendall allegedly made. Kendall filed a motion to dismiss on February 14, 2018, which the parties fully briefed. The matter was submitted for my consideration on April 27, 2018. I issued a draft report on June 20, 2018. No party took exception. This is my final report.

         II. Analysis

         Kendall argues that Reedy's petition for a spousal elective share should be dismissed because it is untimely and thus fails to state a claim under Court of Chancery Rule 12(b)(6).[10] When considering his motion, I accept all well-pleaded allegations in the petition as true, and draw all reasonable inferences in Reedy's favor.[11] In Delaware, such a motion is granted if a plaintiff could not recover under any "reasonably conceivable set of circumstances susceptible of proof."[12] Though Reedy admits the petition was filed late, he seeks an extension. He argues that Section 906(a)'s deadline should not be interpreted strictly and that equity requires the statute of limitations be tolled.

         A. The Deadlines for Seeking an Elective Share and an Extension for Same Are Strictly Enforced.

         Title 12, Section 906(a) of the Delaware Code allows a surviving spouse to file a petition for an elective share of his deceased spouse's elective estate within six months of the appointment of an administrator.[13] If the Court sees fit, and for cause shown, this deadline can be extended if such a request is made within that same statutory period.[14] This right to elect against a will is a statutory remedy that must be exercised within the time allotted by the statute, "otherwise, that right is lost."[15] Section 906 limits the Court's discretion to grant extensions: the Court may not grant extensions after the original six months has elapsed.[16]

         This Court has historically applied Section 906's deadlines strictly. In In re Estate of Mauthe, the surviving husband filed a late petition for an elective share under 12 Del. C. § 906(a).[17] His 12 Del. C. § 2308(b) petition for spousal allowance was also filed late.[18] The Court construed the language of both statutes narrowly, holding, "none of these deadlines has been observed, and accordingly no request for these benefits may now be entertained."[19] The Court also dismissed a late petition for an elective share in In re Estate of Ren Xiong Zheng, over the petitioner's explanation that she lived apart from her husband and was not timely informed of his death or the appointment of a personal representative, and over the petitioner's allegation that she did not pursue an elective share more promptly because she thought she had reached a settlement.[20] In Matter of Estate of Atmore, the Court noted succinctly that a right to take the spousal elective share "must be exercised within six months after the granting of letters by notification to the Register of Wills."[21]

         More generally, in the context of estate matters, this Court applies deadlines strictly.[22] These deadlines serve the important purpose of facilitating the "prompt and orderly administration of estates."[23] The legislature has given surviving spouses six months to choose to either take under the will or take the elective share.[24] Because surviving spouses stand in the front of the line of claimants, that choice must be made within some circumscribed period so that the rest of the estate's beneficiaries and creditors may proceed based on the remaining assets. Without a timely resolution of spousal claims, the rest of the world must wait to learn what assets are left in the estate-all while a strict non-claim statute looms for the estate's other creditors.[25]

         I conclude I cannot read Section 906 leniently, as Reedy requests. Its language creating the statutory right to an elective share clearly requires a petition, or a request for an extension, to be brought within six months of the grant of letters. This Court has repeatedly applied the deadlines for that statutory right strictly. I must do the same.

         B. Reedy Cannot Prevail on Theories of Fraudulent Concealment or Equitable Tolling.

         While Reedy admits his petition is untimely, he asserts that "equity requires that the 6-month limitation be extended to 8 months."[26] Specifically, Reedy argues Section 906's statutory deadline should be tolled under the doctrines of fraudulent concealment and equitable tolling based on Kendall's alleged statement to the effect that "nothing could be done regarding the estate until 8 months had passed after Decedent's death." I conclude these tolling doctrines sourced in equity are not available to Reedy.

         In Tinley, this Court indicated that Section 906's deadline may be a statute of repose, rather than a statute of limitations.[27] Statutes of repose extinguish or terminate both the statutory right at issue and this Court's subject matter jurisdiction.[28] This Court and the United States Supreme Court have explained that statutes of repose are not subject to tolling doctrines sourced in equity.[29] Specifically, "[t]he purpose and effect of a statute of repose … is to override customary tolling rules arising from the equitable powers of courts."[30] "And the object of a statute of repose, to grant complete peace …, supersedes the application of a tolling rule based in equity."[31]

         As explained above, the object of Section 906 is to grant complete peace in the administration of an estate with regard to whether a spouse will take her elective share, thus allowing the rest of the beneficiaries and creditors to proceed with certainty and speed. Treating Section 906 as a statute of repose, as Tinley suggests, furthers this purpose. The holding in ANZ Securities teaches us that statutes of repose are unaffected by tolling doctrines sourced in equity, such as those on which Reedy relies.[32] I am not convinced that Section 906's deadlines can be tolled by doctrines sourced in equity.[33]

         Assuming the period for petitioning for an elective share can be tolled by a tolling doctrine sourced in equity, Reedy fails to plead any such doctrine. Delaware law provides three ways to toll a statute of limitations when the underlying facts of a claim are "so hidden that a reasonable plaintiff could not timely discover them:"[34] (1) fraudulent concealment, (2) an inherently unknowable injury, (3) and equitable ...

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