Court Opinion

ID: 2681110
Source: CourtListenerOpinion
Date Created: 2014-06-27 21:12:38.605799+00
Date Added: 2024-06-11T09:37:29.730146
License: Public Domain

REPORTED

IN THE COURT OF SPECIAL APPEALS

           OF MARYLAND

               No. 0044

        September Term, 2013

        MARGARET K. VITO
         BY MICHAEL L. VITO

                   v.

  E. EDWARD KLAUSMEYER, JR.,
PERSONAL REP. OF THE ESTATE OF
  E. EDWARD KLAUSMEYER, SR.

   Woodward,
   Berger,
   Eyler, James R.
    (Retired, Specially Assigned),

                  JJ.

     Opinion by Eyler, James R., J.

       Filed: March 4, 2014
       Margaret K. Vito, by her attorney-in-fact, Michael L. Vito,1 appellant, appeals from

an order by the Orphans’ Court for Baltimore County denying her petition to vacate the

court’s prior approval of administration accounts in the estate of E. Edward Klausmeyer, Sr.,

decedent. E. Edward Klausmeyer, Jr., appellee, is the personal representative of the estate.

The question before us is whether the beneficiary of a testamentary trust may file exceptions

to an administration account after the statutory deadline for doing so when the beneficiary

did not receive notice of the filing of the account. We answer that question in the negative

and affirm the judgment.

                                        Background

       On October 26, 2008, E. Edward Klausmeyer, Sr., died testate. He was survived by

two children, the parties herein. On December 3, 2008, pursuant to the terms of the will,

appellee was appointed personal representative. The will directed that the residuary estate

be divided into two equal shares. The decedent bequeathed one share to appellee and the

other share, in trust, to appellant. The will appointed appellee trustee of the trust.

       In 2009, appellant filed a petition to caveat the decedent’s will. The orphans’ court

transmitted issues to the Circuit Court for Baltimore County. After a period of discovery,

appellant dismissed the petition.

       On April 25, 2011, appellee filed a first administration account. On April 28, 2011,

the orphans’ court approved the account, subject to the filing of exceptions. No exceptions

were filed. On December 8, 2011, appellee filed a second and final administration account.

       1
           Margaret K. Vito has Alzheimer’s disease and is disabled.
By order of the same date, the orphans’ court approved the account, subject to the filing of

exceptions. No exceptions were filed.

       On August 22, 2012, appellant filed in the orphans’ court a petition to vacate (1) the

orders approving both administration accounts and (2) an order approving personal

representative’s commissions.2 The petition also contained exceptions to the administration

accounts.3

       The petition to vacate the orders approving the administration accounts stated that

appellant4 did not receive notice of the filing of either account. Appellant argued that,

because she was not given notice, she should have the right to file exceptions, even though

the deadlines for doing so had passed. Appellee filed an opposition and motion to dismiss

the appellant’s petition.

       On February 25, 2013, the orphans’ court held a hearing, and on March 1, 2013, it

filed an opinion and order denying appellant’s petition. While acknowledging that appellant

had standing to file exceptions, the court ruled that she was not entitled to notice of the filing

of the administration accounts; thus, she was not excused from the statutory requirement that

       2
       Subsequently, appellant withdrew the petition to vacate the order approving
commissions.
       3
        Appellant alleged self dealing by appellee. The substance of the exceptions is
not material to the issue before us.
       4
           The term appellant includes Michael L. Vito, attorney-in-fact.

                                                2
exceptions be filed within 20 days after the filing of each account.5

                                     Question Presented

       As rephrased by us, the question is whether appellant was entitled to file exceptions

to an administration account after the time period for filing exceptions had expired on the

ground that she did not receive notice of the filing of the administration account? 6

                                   Appellant’s Arguments

       To provide context for appellant’s arguments, we begin with general principles. A

personal representative is required to file administration accounts with a certification that he

or she mailed a notice of the filing to all “interested persons.” Md. Code (2011 Repl. Vol.),

Estates and Trusts Article (ET) 7-501(a). A trust beneficiary is not an “interested person”

       5
         The court also found that by June, 2011, appellant had actual notice of the April
28, 2011 order. The court was “left to wonder why it took so long to file exceptions if the
argument is ‘no notice.’” The court also observed that it “was not persuaded [appellant]
did not have actual knowledge of the fact that the first and second administration
accounts had been filed.” Nevertheless, the court rested its decision on the conclusion
that standing did not carry with it a waiver of the statutory period within which to file
exceptions.
       6
           As phrased by appellant, the questions are:

                        Were the orders approving the administration accounts
                final as to Ms. Vito, a beneficiary of a testamentary trust
                established in the estate, when she received no notice of the
                filing of the administration accounts?

                        Is the failure to provide notice of the filing of
                administration accounts to a beneficiary of a testamentary
                trust established in the estate a violation of procedural due
                process and an irregularity to vacate the orders approving the
                accounts?

                                               3
as defined in section 1-101(i) and, therefore, is not entitled to notice under section 7-501(a).

ET section 7-501(b) and Maryland Rule 6-417(f) require that exceptions to an administration

account must be filed within 20 days after approval of the account by the court. Rule

6-417(g) makes clear that, in the absence of fraud, mistake, or irregularity, if timely

exceptions are not filed, “the order of the court approving the account becomes final.”

Brewer v. Brewer, 386 Md. 183, 198 (2005).

       Appellant acknowledges that she is not an “interested person” as defined in the Estates

and Trusts Article. Relying on Spry v. Gooner, 190 Md. App. 1 (2010), she observes that a

beneficiary of a testamentary trust has standing to file exceptions to an administration

account. Appellant contends, nevertheless, that the beneficiary does not lose the right to file

exceptions unless the beneficiary receives notice of the filing of the account.

       In essence, appellant makes two arguments. Relying on ET sections 7-501 and 7-502,

she argues that the orders approving the accounts were not final. She reasons that such

orders become final only if all persons with standing receive notice. In the alternative,

appellant argues that, if the orders were final, the lack of notice was a procedural irregularity,

analogizing to Md. Rule 2-535, and deprived her of procedural due process.

                                          Discussion

       We re-visit our analysis in Spry, 190 Md. App. 1, to provide some additional context.

In that case, beneficiaries of a trust that was a legatee under the decedent’s will filed

exceptions to an administration account filed in the decedent’s estate. The orphans’ court

                                                4
dismissed the exceptions. On appeal, the beneficiaries acknowledged that they were not

statutory “interested persons” but argued that under Carrier v. Crestar Bank, 316 Md. 700

(1989), they had standing to file exceptions. Id. at 6. In Carrier, the Court of Appeals held

that the standing to file exceptions to an administration account is governed by common law,

not by whether the person filing the exceptions is a statutory “interested person.” Id. at 7.

In Spry, we concluded that the legislature, in re-enacting the Estates and Trusts Article in

1990, by its language, made it clear that a beneficiary under a trust is not an “interested

person.” Id. at 8; ET section1-101(i)(3)(“Interested person” includes “[a] legatee in being,

not fully paid, whether his interest is vested or contingent”.); ET section1-101(m) (“Legatee

means a person who under the terms of a will would receive a legacy. It includes a trustee

but not a beneficiary of an interest under the trust.”). We also concluded, however, that the

legislature did not overrule the holding in Carrier that standing to file exceptions is governed

by common law. Id.

       Thus, under Spry, appellant has standing to file exceptions. Because she is not a

statutory “interested person,” the issue before us, i.e., the effect of lack of notice to a non

“interested person,” was not before us in Spry.

                                               1

       First, appellant argues that the orders approving the accounts were not final because

she did not receive notice. ET section 7-501 provides:

                    (a) Filing an account. – Unless waived by the court for
              good cause shown, the personal representative shall give written

                                               5
              notice to all interested persons of the filing of an account with
              the court.

                     (b) Exceptions to account.– Exceptions to an account
              must be filed with the register within 20 days of the approval of
              the account by the court. Exceptions may not be filed
              concerning an item which has become final and binding under
              §7-502 of this subtitle. Copies of exceptions shall be mailed by
              the exceptant to the personal representative.

(Emphasis in original.)

       ET section 7-502 provides:

                      (a) Notice. – The personal representative shall give
              written notice to each creditor who has filed a claim under
              §8-104 of this article which is still open and to all interested
              persons of a claim, petition, or other request which could result,
              directly or indirectly, in the payment of a debt, commission, fee,
              or other compensation to or for the benefit of the personal
              representative or the attorney for the estate. The notice shall
              state the amount requested, and set forth in reasonable detail the
              basis for the request. It shall also state that a request for hearing
              may be made within 20 days after the notice is sent.

                     (b) Finality of order. – Unless there was fraud, material
              mistake, or substantial irregularity in the proceeding, or a
              request for a hearing is filed within 20 days of the sending of the
              notice, any action taken by the court on the petition is final and
              binding on all persons to whom the notice was given.

(Emphasis in original.).

       Appellant urges us to hold that an order approving an account is final only if all who

have standing to object are given notice. We decline to do so. The concepts of notice and

standing are different. The former is based on statutory interpretation, and the latter is based

on common law. All persons with standing to challenge an action are not necessarily entitled

                                               6
to notice of the contemplated action. We conclude that, when read in context, section

7-502(b) refers to persons to whom notice was required to be given. By negative implication,

persons entitled to notice as “interested persons” are not bound if notice is not given. This

has no bearing on persons to whom notice was not required. Md. Rule 6-417(g) is consistent

with that conclusion. It states that, in the absence of the filing of timely exceptions, “the

order of the court approving the account becomes final.”

       The legislature clearly defined persons to whom notice is required, i.e., “interested

persons.” ET section 1-101(i). While the term does not include a beneficiary of a trust, it

does include a trustee. Section 1-101(i) provides:

                     Interested person. – “Interested person” is:

                     (1) A person named as executor in a will;

                     (2) A person serving as personal representative after
              judicial or administrative probate;

                      (3) A legatee in being, not fully paid, whether his interest
              is vested or contingent;

                     (4) An heir even if the decedent dies testate, except that
              an heir of a testate decedent ceases to be an “interested person”
              when the register has given notice pursuant to § 2-210 or §
              5-403(a) of this article.

                     Interested person includes a person as above defined who
              is (a) a minor or other person under a disability, or (b) the
              judicially appointed guardian, committee, conservator or trustee
              for such person, if any, and if none, then the parent or other
              person having assumed responsibility for such person.

                                               7
                     An heir or legatee whose interest is contingent solely on
              whether some other heir or legatee survives the decedent by a
              stated period is an interested person but only after the other heir
              or legatee has died within that period.

(Emphasis in original.)

       Section 1-101(m) provides:

                     Legatee. – “Legatee” means a person who under the
              terms of a will would receive a legacy. It includes a trustee but
              not a beneficiary of an interest under the trust.

(Emphasis in original.) Our conclusion is consistent with the clear legislative determination

that estates be administered and closed as promptly as possible. If persons not entitled to

notice are entitled to challenge orphans’ court actions after they have become final, the

administration of estates would be seriously adversely affected. Any complaint that appellant

has relating to funding and administration of the trust should be directed to the trustee.

                                              2

       Appellant argues that the orders in question should be vacated because lack of notice

constitutes an “irregularity” and violates her procedural due process rights. Appellee

responds that there was no irregularity; due process was not argued before the orphans’ court

and is thus waived; and to the extent due process is applicable, appellant received the process

which was due.

       Appellant counters that she did raise irregularity and due process at the hearing in

orphans’ court but due to a malfunction of the recording equipment, there is no transcript.

Appellant continues:

                                              8
                      In any case, the violation of Ms. Vito’s due process rights
              is not a separate argument from her argument that there was an
              irregularity in the proceedings. “An irregularity is a failure to
              follow required process or procedure.” Radcliff v. Vance, [],
              360 Md. [277,] 292 [2000]. Certainly, a process or procedure
              that satisfies due process is required in all proceedings before
              the Orphans’ Court. A failure to provide a process that satisfies
              due process requirements is an irregularity in the proceedings.

       We shall address appellant’s arguments. In Radcliff, an “interested person” within the

statutory definition did not receive notice of a petition by the personal representative for an

order approving the payment of estate funds to a creditor. After learning of the order after

it had been entered, the interested person challenged the payment, and the court ordered

repayment of the funds to the estate. The Court of Appeals held that the court had the power

to correct its mistakes. The Court explained:

                     Furthermore, because [the interested person] did not
              receive notice, there was “substantial irregularity in the
              proceeding.” An irregularity is a failure to follow required
              process or procedure. See Early v. Early, 338 Md. 639, 652,
              659 A.2d 1334, 1340 (1995). It is settled that a failure to
              provide a required notice to a party is an irregularity in a
              proceeding in a circuit court under Rule 2-535. See, e.g.,
              Mutual Benefit Soc'y of Baltimore, Inc. v. Haywood, 257 Md.
538, 541, 263 A.2d 868, 870 (1970); Dypski v. Bethlehem Steel
              Corp., 74 Md.App. 692, 699, 539 A.2d 1165, 1169 (1988);
              Alban Tractor Co. v. Williford, 61 Md.App. 71, 79, 484 A.2d
1039, 1043 (1984). By direct analogy, such a failure is an
              irregularity in an orphans' court as well. We hold that the
              irregularity was “substantial” in that the personal
              representative's failure to give notice prevented [the interested
              person] from opposing the motion to pay Radcliff's fees before
              the order to pay was entered.

Radcliff v. Vance, 360 Md. at 292-93.

                                              9
       Radcliff stands for the proposition that if a person does not receive notice required by

law, there is an irregularity sufficient to vacate the order in question. As we have discussed,

appellant was not entitled to notice, and thus there was no irregularity to correct.

       Appellant relies on Knapp v. Smethurst, 139 Md. App. 676 (2001), for her due process

argument. Knapp was a foreclosure action. This Court concluded that a person whose

ownership interest in real property was affected by the foreclosure sale was entitled to notice

even though notice to that person was not required by applicable statutes and rules. We

observed that due process notice requirements have long been applied to mortgage

foreclosures and tax sales. After engaging in an extensive analysis of what constitutes a

property interest that is constitutionally protected, we concluded that because the lien on their

property was affected by the foreclosure, the persons challenging the foreclosure were

entitled to notice. Id. at 704-716.

       In Knapp, we recognized that procedural due process is a flexible concept and requires

only that notice which is due under the circumstances. Id. at 704. Appellant cites no

authority for the proposition that she has a constitutionally protected property interest at stake

or that the orphans’ court order constituted State action. Assuming that due process is

required, it was satisfied by compliance with the statutory scheme. The trustee received

notice, and the trustee was responsible for obtaining funding of the trust and for

administration of the trust. Appellant was not entitled to receive the trust assets from the

estate; she was entitled to distributions from the trust in accordance with the terms of the

                                               10
trust.

         Appellee argues that the record reflects that appellant had actual notice of the orphans’

court order no later than June 2, 2011. Appellee points out that appellant did not file a

petition to vacate the orders until August 22, 2012. Appellee does not argue what conclusion

we are supposed to draw from those facts. We shall not further address this point.

                                                     JUDGMENT OF THE ORPHANS’
                                                     COURT FOR BALTIMORE COUNTY
                                                     AFFIRMED. COSTS TO BE PAID BY
                                                     APPELLANT.

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