Court Opinion

ID: 4279447
Source: CourtListenerOpinion
Date Created: 2018-05-30 15:05:11.883569+00
Date Added: 2024-06-11T09:19:06.499261
License: Public Domain

FILED
                                                                         May 30 2018, 8:50 am

                                                                              CLERK
                                                                          Indiana Supreme Court
                                                                             Court of Appeals
                                                                               and Tax Court

ATTORNEYS FOR APPELLANT                                   ATTORNEY FOR APPELLEE
James M. Lewis                                            Timothy J. Maher
Michael J. Hays                                           Barnes & Thornburg LLP
Tuesley Hall Konopa LLP                                   South Bend, Indiana
South Bend, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

In Re the Estate of James E.                              May 30, 2018
Hurwich,                                                  Court of Appeals Case No.
                                                          71A04-1705-EU-990
Scott D. Hurwich,                                         Appeal from the St. Joseph Probate
Appellant-Plaintiff,                                      Court
                                                          The Honorable Jeffrey L. Sanford,
        v.                                                Special Judge
                                                          Probate Court Cause No.
Stacey R. MacDonald,                                      71J01-0412-EU-56
Appellee-Defendant

Baker, Judge.

Court of Appeals of Indiana | Opinion 71A04-1705-EU-990| May 30, 2018                             Page 1 of 11
[1]   James Hurwich was the father of Scott Hurwich (“Hurwich”) and Stacey

      MacDonald. The Estate of James Hurwich (“the Estate”) was opened in 2004

      following his death. MacDonald administered the Estate until it closed in 2007.

      In 2013, Hurwich petitioned to reopen the Estate, which the probate court

      granted. In 2014, Hurwich filed a complaint against MacDonald, alleging that

      she had mismanaged the Estate’s assets and breached her fiduciary duties.

      MacDonald filed a motion to dismiss Hurwich’s complaint, which the probate

      court granted. Hurwich then filed a motion for leave to amend his complaint,

      which the probate court denied. Meanwhile, a successor personal

      representative administered the Estate, issued a final report, and requested

      closure of the Estate. The probate court then closed the Estate.

[2]   Hurwich now appeals the probate court’s denial of his motion for leave to

      amend his complaint and the procedure the probate court followed when

      closing the Estate. Finding no reversible error regarding Hurwich’s motion but

      that the probate court failed to follow statutory procedure when closing the

      Estate, we affirm in part, reverse in part, and remand.

                                                     Facts
[3]   The Estate was opened in 2004. MacDonald was appointed administrator of

      the Estate, and she administered it unsupervised until it was closed in 2007.

      Apparently, MacDonald failed to distribute approximately 600 items and assets

      belonging to her father before the Estate was closed. On March 6, 2013,

      Hurwich petitioned to reopen the Estate; the probate court granted Hurwich’s

      Court of Appeals of Indiana | Opinion 71A04-1705-EU-990| May 30, 2018   Page 2 of 11
      petition. On June 18, 2013, the probate court appointed Paul Cholis as

      successor personal representative for the Estate. On October 3, 2014, Hurwich

      filed a complaint against MacDonald, under the Estate cause number EU-56,

      alleging that she had mismanaged the Estate’s assets and breached her fiduciary

      duties. On November 14, 2014, MacDonald filed a motion to dismiss

      Hurwich’s complaint under Indiana Trial Rule 12(B)(6), alleging that it had

      been untimely filed after the applicable statute of limitations had run. On June

      12, 2015, the probate court granted MacDonald’s motion and dismissed

      Hurwich’s complaint with prejudice.

[4]   On June 22, 2015, Hurwich filed a motion to reconsider. On July 27, 2015, a

      hearing on the motion to reconsider took place, and the probate court took the

      issue under advisement. Then, on February 9, 2016, while the motion to

      reconsider was still pending, Hurwich filed a motion for leave to amend his

      complaint. In his proposed amended complaint, he alleged that MacDonald

      had committed fraud when, in closing the Estate, she represented that she had

      fully administered the Estate and properly distributed all assets; he also alleged

      that she had taken personal property from the Estate for her own use.

[5]   On May 6, 2016, Cholis filed a petition for instructions for “recovery of assets

      formerly owned by the decedent or in his possession at the time of his death.”

      Appellant’s App. Vol. II p. 42. In this petition, Cholis:

          • Stated that MacDonald testified at her deposition that she had received
            gifts, including paintings, necklaces, diamond rings, and liquor bottles,
            from her father within five years of his death.

      Court of Appeals of Indiana | Opinion 71A04-1705-EU-990| May 30, 2018     Page 3 of 11
          • Stated that MacDonald “testified that she, as the former Personal
            Representative of the estate, did distribute to herself certain items of
            tangible personal property which [Cholis] believe[d] constituted partial
            distributions to her and which should be taken into account by charging
            her with the value of such items so distributed upon the final distribution
            of the remaining tangible personal property; . . .” Id. at 43.
          • Stated that there were “numerous items of tangible personal property”
            located at the decedent’s former residence that Cholis “believe[d] can and
            should be distributed among the three residuary beneficiaries of the
            estate” through an in-kind selection process and a public auction. Id.
          • Requested the probate court to direct him to not attempt to recover items
            of tangible personal property that MacDonald identified as gifts that she
            received from her father before his death. Cholis cited to time limits in
            the probate code for proceedings against personal representatives and to
            case law in which a petition to re-open an estate was time-barred.

[6]   On June 24, 2016, Hurwich filed a response to Cholis’s petition in which

      Hurwich stated that the parties wanted instruction from the probate court about

      how to determine whether the items that MacDonald testified were gifts were

      actually gifts from their father or whether they were self-distributed items.

      Hurwich requested, among other things, that Cholis identify and catalog each

      of the individual items in question. Hurwich also argued that the issue was not

      time-barred.

[7]   A hearing took place on July 27, 2016. On July 29, 2016, the probate court

      denied Hurwich’s motion for leave to amend his complaint, finding that

      Hurwich was not entitled to amend a complaint that had been properly

      dismissed pursuant to the statute of limitations for relief against fraud. The

      probate court also found that Hurwich’s complaint was not a valid cause of

      action because Hurwich filed it as part of the estate administration, rather than

      Court of Appeals of Indiana | Opinion 71A04-1705-EU-990| May 30, 2018     Page 4 of 11
      a separate cause of action, and therefore failed to pay a filing fee or have a

      summons issued. The probate court ordered for Hurwich and another

      beneficiary to have access to the decedent’s home for an in-kind selection

      process of the 600 items located there and for all assets not selected to be sold at

      a public auction. Lastly, the probate court ordered that Hurwich’s claim

      against MacDonald about gifts received before their father’s death was time-

      barred under the statute of limitations.

[8]   Throughout the fall of 2016, Cholis distributed the Estate’s assets as ordered by

      the probate court. On March 10, 2017, Cholis filed a Supplemental Report of

      Distribution (“the Report”) in which he summarized the distribution of the

      Estate’s assets; listed the value of the assets that Hurwich, MacDonald, and

      another beneficiary received; requested that he be discharged as personal

      representative; and requested that the court order the Estate closed. That same

      day, the probate court approved the report and entered an order closing the

      Estate. On March 20, 2017, Cholis served a copy of the Report and the probate

      court’s signed order to Hurwich and other interested parties. On March 30,

      2017, Hurwich filed a motion to correct error, asking the probate court to

      vacate its order approving the Report because there was neither service nor an

      opportunity to object to the Report. On April 10, 2017, the probate court

      denied his motion. Hurwich now appeals.

      Court of Appeals of Indiana | Opinion 71A04-1705-EU-990| May 30, 2018      Page 5 of 11
                                     Discussion and Decision
                    I. Motion for Leave to Amend Complaint
[9]    Hurwich first argues that the probate court erred by denying his motion for

       leave to amend his complaint because he has a “right” to re-plead his claim

       pursuant to Trial Rule 12(B). Appellant’s Br. p. 11. The probate court denied

       Hurwich’s motion for leave to amend his complaint, finding that Hurwich’s

       claim of fraud in his proposed complaint was barred by the six-year statute of

       limitations for relief against fraud and that his complaint was not a valid cause

       of action. Hurwich argues that he has a right to amend under Indiana Trial

       Rule 12(B), that the probate court failed to consider his proposed allegation of

       fraudulent concealment that could toll the statute of limitations, and that the

       probate court misconstrued the nature of his complaint. MacDonald argues

       that Hurwich’s action was time-barred under the probate code and that

       Hurwich did not file a valid action. Although we reach the same outcome as

       the probate court, we disagree with the probate court’s and the parties’ analysis.

[10]   Indiana Trial Rule 12(B)(6) allows a party to move to dismiss a pleading for

       failure to state a claim upon which relief can be granted. Trial Rule 12(B) also

       provides that when a court dismisses a pleading under Rule 12(B)(6), “the

       pleading may be amended once as of right pursuant to Rule 15(A) within ten

       [10] days after service of notice of the court’s order sustaining the motion and

       thereafter with permission of the court pursuant to such rule.” Under Trial

       Rule 15(A), “[a] party may amend his pleading once as a matter of course at

       any time before a responsive pleading is served . . . . Otherwise a party may
       Court of Appeals of Indiana | Opinion 71A04-1705-EU-990| May 30, 2018    Page 6 of 11
       amend his pleading only by leave of court or by written consent of the adverse

       party; and leave shall be given when justice so requires.” To facilitate decisions

       on the merits, “the Indiana Trial Rules generally implement a policy of liberal

       amendment of pleadings, absent prejudice to an opponent.” Kimberlin v.

       DeLong, 637 N.E.2d 121, 128 (Ind. 1994). The probate court has broad

       discretion in granting or denying amendments to the pleadings, and we will

       reverse only if the probate court’s decision is clearly against the logic and effect

       of the facts and circumstances before it or the reasonable deductions to be

       drawn therefrom. Kuehl v. Hoyle, 746 N.E.2d 104, 107 (Ind. Ct. App. 2001).

[11]   According to Hurwich, Trial Rule 12(B) gives him the right to amend his

       complaint. However, Hurwich ignores the part of the rule that limits when a

       pleading may be amended as of right—it must be done within ten days after

       service of notice of the court’s order granting the motion to dismiss. Hurwich

       filed his motion for leave to amend his complaint on February 9, 2016, nearly

       eight months after the probate court granted MacDonald’s motion to dismiss.

       Accordingly, when Hurwich filed his motion for leave to amend his complaint,

       he had no automatic right to do so. And although a court may, under Rules

       12(B) and 15(A), allow a party to amend a pleading after those ten days have

       passed, the court is required to do so only “when justice so requires.” T.R.

       15(A). Hurwich did not argue that justice required an amendment, and we

       decline to make the argument for him. The probate court did not err by

       denying his motion for leave to amend his complaint.

       Court of Appeals of Indiana | Opinion 71A04-1705-EU-990| May 30, 2018      Page 7 of 11
[12]   Hurwich also challenges the probate court’s decision to dismiss his motion with

       prejudice, arguing that a Trial Rule 12(B)(6) dismissal should be without

       prejudice. Hurwich is correct that a dismissal under this rule “is without

       prejudice, since the complaining party remains able to file an amended

       complaint within the parameters of the rule.” In re Scott David Hurwich 1986

       Irrevocable Tr., 59 N.E.3d 977, 984 (Ind. Ct. App. 2016) (citations and internal

       quotation marks omitted). Thus, the probate court erred by dismissing his

       complaint with prejudice. But a dismissal with prejudice is a final judgment, id.

       at 980, and the time to appeal a final judgment is within thirty days after its

       entry is noted in the Chronological Case Summary. Ind. Appellate Rule

       9(A)(1). The probate court dismissed Hurwich’s complaint with prejudice on

       June 12, 2015. Hurwich did not appeal that decision until he filed his notice of

       appeal on May 9, 2017, nearly two years after the dismissal of his complaint.

       His challenge to the probate court’s decision is untimely and unavailing.

                                             II. The Report
[13]   Hurwich next argues that the probate court erred by denying him his statutory

       right to object to the Report. Our primary goal in statutory construction is to

       ascertain and give effect to the intent of the legislature. Meyer v. Beta Tau House

       Corp., 31 N.E.3d 501, 513 (Ind. Ct. App. 2015). We apply a de novo standard

       of review to questions of statutory interpretation. Id.

[14]   Indiana’s Probate Code provides that when an estate is ready to be closed, the

       personal representative must “render a final account and at the same time

       Court of Appeals of Indiana | Opinion 71A04-1705-EU-990| May 30, 2018     Page 8 of 11
       petition the court to decree the final distribution of the estate.” Ind. Code § 29-

       1-17-2(a) (2007). “Upon the filing of any account in a decedent’s estate, hearing

       and notice thereof shall be had as set forth in this section.” I.C. § 29-1-16-6(a)

       (emphases added). The statute explains that

               If the account is for final settlement the court or clerk shall set a
               date by which all objections to such final account and petition for
               distribution must be filed in writing and the clerk shall give notice
               to all persons entitled to share in the final distribution of said
               estate that a final report has been filed and will be acted upon by
               the court on the date set unless written objections are presented
               to the court on or before that date. The personal representative
               shall at the time said account is filed furnish to the clerk the
               names and addresses of all persons entitled to share in the
               distribution of the residue of said estate, whose names and
               addresses are known to the personal representative or may by
               reasonable diligence be ascertained as set forth in the personal
               representative's petition for distribution, together with sufficient
               copies of said notice prepared for mailing. The clerk shall send a
               copy of said notice by ordinary mail to each of said parties at
               least fourteen (14) days prior to such date. . . .

       I.C. § 29-1-16-6(b) (emphases added).

[15]   Hurwich argues that the probate court erred by denying him an opportunity to

       object to the Report. The probate code explicitly mandates notice following the

       filing of any account. It requires that, following the filing of an account for final

       settlement, the personal representative give to the clerk the names and addresses

       of those entitled to share in the distribution of the estate and copies of notice

       prepared for mailing. It also requires that, when an account for final settlement

       is filed, the court or the clerk set a timeframe for objections and give notice to
       Court of Appeals of Indiana | Opinion 71A04-1705-EU-990| May 30, 2018       Page 9 of 11
       those entitled to share in the distribution of the estate that a final report has

       been filed and that the court will act upon it on a certain date unless the court

       receives written objections within the stated timeframe. Here, it is undisputed

       that Hurwich is entitled to share in the distribution of the Estate, that Cholis

       knew Hurwich’s name to furnish to the clerk for notice, and that Cholis did not

       fulfill his duties to ensure that notice was given regarding the Report. It is also

       undisputed that neither the probate court nor the clerk set a timeframe for

       objections or gave notice about the Report or the timeframe for objections. In

       other words, the probate court failed to follow proper statutory procedure when

       closing the Estate.

[16]   MacDonald suggests that this error was harmless and not prejudicial because

       Hurwich had an opportunity to be heard before and during the July 27, 2016,

       hearing. It is true that Hurwich filed a written objection to Cholis’s petition for

       instructions before that hearing. But whether Hurwich objected to those

       instructions has no bearing on and is irrelevant to whether he had an

       opportunity to object to the Report, which was filed more than seven months

       later, on March 10, 2017. The probate code explicitly requires notice and an

       opportunity for objections to accounts for final settlements. Among other

       things, the Report leaves questions about how the assets that MacDonald

       distributed to herself were administered.1 Hurwich had a statutory right to

       1
         Cholis filed a petition for instructions on May 6, 2016. In this petition, he stated that MacDonald “testified
       that she, as the former Personal Representative of the estate, did distribute to herself certain items of tangible

       Court of Appeals of Indiana | Opinion 71A04-1705-EU-990| May 30, 2018                               Page 10 of 11
       receive notice of the filing of the Report and an opportunity to object to it, and

       he was denied this right. As it is apparent that he had reason to object, we find

       that he was harmed by the probate court’s failure to follow the procedure

       described in the probate code.

[17]   We reverse the closure of the Estate and remand for further proceedings giving

       Hurwich the opportunity to object to the Report.

[18]   The judgment of the probate court is affirmed in part, reversed in part, and

       remanded for further proceedings.

       Kirsch, J., and Bradford, J., concur.

       personal property which the [successor personal representative] believes constituted partial distributions to
       her and which should be taken into account by charging her with the value of such items so distributed upon
       the final distribution of the remaining tangible personal property; . . .” Appellant’s App. Vol. II p. 43. In
       other words, Cholis concluded that MacDonald had improperly distributed certain assets from the Estate and
       intended to take that distribution into account during the administration of the Estate. However, it is unclear
       from the Report whether MacDonald’s partial distributions to herself were, in fact, accounted for.

       Court of Appeals of Indiana | Opinion 71A04-1705-EU-990| May 30, 2018                            Page 11 of 11