Estate Administration

Creditors

Estate of Ayala, 19 S.W.3d 477 (Tex. App.—Corpus Christi 2000, pet. denied).

 

Debtor died owing money on a note secured by real property. Creditor filed a claim and a motion to require sale of the property with the clerk of the court who was handling the dependent administration of Debtor’s estate. The personal representative neither allowed nor rejected the claim. The court allowed Creditor’s claim and ordered the sale. However, the court order erroneously stated that the personal representative had allowed the claim. The court later set aside the order and denied Creditor’s subsequent motion to the same effect which also contained the incorrect allegation. Creditor appealed.

The appellate court reversed. The court began by explaining that if the personal representative fails to take action on a claim, it is deemed rejected at the end of the 30 day period in which the personal representative should act. Prob. Code §§ 309 & 310. The creditor must then institute suit within 90 days of the rejection. Prob. Code § 313. The court held that the motion to “require sale” is sufficient to qualify as “instituting suit” on the claim. The Probate Code does not define “instituting suit” and by following the rule that pleadings and motions are to be construed liberally and judged by their substance rather than their titles, the court determined that the motion could constitute a suit. The motion set forth Creditor’s claim, the supporting facts, and asked for relief. The court found that the erroneous statement regarding the personal representative’s action on the claim was harmless. The court also held that the fact that Creditor filed the motion prematurely, that is, before the 30 day period for the personal representative to act had expired, was irrelevant because the Probate Code has no provision barring a claim filed early.

Moral: Creditors should methodically follow the Probate Code provisions to eliminate time-consuming and expensive litigation which may arise when the estates fight claims on the basis of non-compliance with the Probate Code procedures.



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