In re the Estate of Rife , 2014 Ohio 3644 ( 2014 )

[Cite as In re the Estate of Rife, 2014-Ohio-3644.]
IN THE COURT OF APPEALS OF OHIO
SECOND APPELLATE DISTRICT
MONTGOMERY COUNTY
In The Matter Of :
: Appellate Case No. 26072
THE ESTATE OF :
DOROTHY J. RIFE : Trial Court Case No. 02-EST-341285
:
:
: (Probate Appeal from
: (Common Pleas Court)
:
...........
OPINION
Rendered on the 22nd day of August, 2014.
...........
MICHAEL J. MILLONIG, Atty. Reg. #0017228, Michael Millonig, LLC, 7601 Paragon Road,
Suite 103, Dayton, Ohio 45459
Attorney for Appellant, Debra Campbell
JOHN H. STACHLER, Atty. Reg. #0064130, and SEAN H. HARMON, Atty. Reg. #0068706,
Martin, Folino, Harmon & Stachler, 214 West Monument Avenue, Post Office Box 10068,
Dayton, Ohio 45402-7068
Attorneys for Appellees, Hope Rife and Fred Rife
RICHARD RIFE, 2891 Kearns Avenue, Dayton, Ohio 45414
Appellee, pro se
.............
HALL, J.
[Cite as In re the Estate of Rife, 2014-Ohio-3644.]
{¶ 1} Debra Campbell appeals from the trial court’s judgment entry vacating a prior
order approving and settling a final account she had filed as administrator of her deceased
mother’s estate.
{¶ 2} In her sole assignment of error, Campbell contends the trial court’s entry
sustaining a motion to vacate the final account is “against the manifest weight of the evidence
and an error of law.”
{¶ 3} The record reflects that Campbell’s mother, Dorothy Rife, died intestate in 2002.
Campbell was appointed administrator of the estate. In that capacity, she filed a probate form
listing herself and her brother, Richard Rife, as the next of kin. Campbell failed to mention
appellees Hope and Fred Rife, the children of her predeceased brother, Ernie Rife. The estate was
settled and divided equally between Campbell and Richard Rife. The trial court filed a March
2004 entry approving and settling the final account.
{¶ 4} In February 2013, Hope and Fred Rife filed a motion under R.C. 2109.35(B) to
vacate the order approving and settling the final account. They argued that they were entitled to
share in the proceeds of the estate as lineal descendants of Ernie Rife. Following a hearing, a
magistrate sustained the appellees’ motion. In a July 29, 2013 decision, the magistrate found that
the appellees were entitled to have the order approving and settling the final account vacated for
good cause under R.C. 2109.35(B). The magistrate concluded that the statutory requirements had
been satisfied and that Campbell’s laches affirmative defense had not been established. Campbell
filed objections challenging the magistrate’s rejection of her laches defense. On January 7, 2014,
the trial court overruled the objections, adopted the magistrate’s decision, and vacated the 2004
order approving and settling the final account. On appeal, Campbell contends the evidence
presented at the hearing before the magistrate established the elements of laches. She argues that
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the trial court’s contrary conclusion is against the weight of the evidence and contrary to law.
{¶ 5} To provide some context, we begin our analysis with a review of the statute
under which the appellees sought to vacate the 2004 order. As set forth above, the appellees
brought their motion under R.C. 2109.35, which authorizes vacating an order settling a
fiduciary’s account under certain circumstances. In relevant part, it provides: “The order may be
vacated for good cause shown, other than fraud, upon motion of any person affected by the order
who was not a party to the proceeding in which the order was made and who had no knowledge
of the proceeding in time to appear in it[.]”1 R.C. 2109.35(B).
{¶ 6} Here the trial court found that Hope and Fred Rife were affected by the March
2004 order, that they were not parties to the proceeding that produced it, that they had no
knowledge of the proceeding in time to participate, and that good cause existed to vacate the
order. In support, the trial court reasoned:
There is no dispute that Movants are persons affected by the March 4
Order. Nor is there any real dispute that Movants were not parties to the
proceeding in which the March 4 Order was made. R.C. 2109.35(B) provides that
“[a] person affected by an order settling an account shall be considered to have
been a party to the proceeding in which the order was made if that person was
served with notice of the hearing on the account * * *, waived that notice,
1
Although R.C. 2109.35(B) lacks a statute of limitation for moving to vacate a settlement order, it provides that “[n]either the
fiduciary nor the fiduciary’s surety shall incur any liability as a result of the vacation of an order settling an account in accordance with this
division, if the motion to vacate the order is filed more than three years following the settlement of the fiduciary’s account showing complete
distribution of assets[.]” Notably, the statute also provides that this “three-year period shall not affect the liability of any heir, devisee, or
distributee either before or after the expiration of that period.” Here the appellees did not seek to hold Campbell liable in her capacity as a
fiduciary. Rather, as the trial court recognized, they sought to hold her liable as an heir or distributee of Dorothy Rife’s estate. (Doc. #39 at 8).
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consented to the approval of the account, filed exceptions to the account, or is
bound by section 2109.34 of the Revised Code.” Movants testified that they did
not receive notice of the hearing on the Final Account, did not waive notice of the
hearing on the Final Account, did not consent to approval of the Final Account,
and did not file exceptions to the Final Account. This testimony was not
contradicted by any other evidence.
With respect to the third finding, which is disputed, Movants showed they
had no knowledge of the hearing on the Final Account in time to appear in it. As
indicated above, R.C. 2109.35(B) provides that a court may vacate an order
approving a final account if the moving party “had no knowledge of the
proceeding [in which the order was made] in time to appear in it.” Movants
testified that they had no knowledge of any Estate proceedings, including the
hearing on the Final Account. This testimony was consistent with [Campbell’s]
testimony that she did not serve Movants with notice of any Estate proceedings
and did not have any discussions with Movants regarding any Estate proceedings.
Significantly, this testimony was not inconsistent with evidence showing that
Movants were generally aware that Dorothy died owning personal and real
property and that [Campbell] and Richard [Rife] distributed some of Dorothy’s
personal property to relatives and charity.
Turning to the fourth required finding, which is also disputed, Movants
showed good cause to vacate the March 4 Order. Construing previous versions of
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R.C. 2109.35, several appellate courts have held or strongly suggested that good
cause exists when the court approves a final account while operating under a
mistake of fact. * * * There is no dispute that Movants were entitled to inherit
from Dorothy but were not listed on the Form 1.0. Thus, in entering the Order, the
Court was operating under a mistake of fact regarding the identity of those entitled
to inherit from Dorothy.
(Doc. #39 at 6-8).
{¶ 7} With regard to laches, which was the subject of Campbell’s objections below and
is the focus of her assignment of error, the trial court reasoned:
Assuming arguendo that nine years constitutes an unreasonable delay or
lapse of time, [Campbell] failed to show that Movants lacked an excuse for the
delay or had actual or constructive knowledge of the injury or wrong. First, the
evidence failed to show that Movants had actual knowledge of the alleged injury
or wrong—i.e., [Campbell’s] alleged failure to administer the Estate in accordance
with R.C. 2105.06(A). There is no dispute that neither the Court nor [Campbell]
served formal notice of any Estate proceedings on Movants and there is no
evidence that either [Campbell] or Richard [Rife] informally mentioned or
discussed any Estate proceedings with Movants. Second, the evidence failed to
show that Movants, using reasonable care or diligence, would have been aware of
the alleged injury or wrong. Rather, the evidence merely showed that Movants
were aware that Dorothy died owning personal and real property and that
[Campbell] and Richard [Rife] informally distributed some of Dorothy’s
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household goods to relatives and charities. Given the availability of estate
planning devices to avoid probate, Movants’ awareness of these circumstances did
not constitute constructive knowledge of [Campbell’s] alleged failure to properly
administer the Estate. Third, Movants’ lack of actual or constructive knowledge,
even if it were not dispositive, would excuse any delay.
Finally, [Campbell] failed to show that she will suffer material prejudice as
a result of any delay. While there was evidence that [Campbell’s] recollection of
her administration of the Estate may have faded over the past ten years, such
recollection may be supplemented by the record, which includes [Campbell’s]
filings as administrator. These filings include the Final Account, which the parties
stipulated accurately reflects [Campbell’s] administration of the Estate. Further,
while there was evidence that [Campbell] and Richard [Rife] changed their
positions by spending the personal property that they received, and renovating,
selling, and spending the proceeds of the sale of the real property that they
received, there was no evidence that such changes were made in reasonable
reliance on Movants’ words or conduct. Indeed, given that Movants had no
knowledge of any Estate proceedings, it would have been unreasonable for
[Campbell] and Richard [Rife] to rely on Movants’ failure to file exceptions to the
Final Account. * * *
(Id. at 9-10).
{¶ 8} Upon review, we see no basis for reversing the trial court’s rejection of
Campbell’s laches defense. “The affirmative defense of laches recognizes that a claim could be
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‘stale’ even though filed within the statute of limitations. When a claim is brought within the
statute of limitations, the doctrine of laches may still bar the claim if ‘special circumstances’
render the delay in enforcing the claim inequitable.” (Citations omitted) Gordon v. Reid, 2d Dist.
Montgomery No. 25507, 2013-Ohio-3649, ¶ 15. “Stated simply, laches is an equitable doctrine
that bars a party from asserting an action when there is an unexcused delay that prejudices the
opposing party. ‘The elements of laches are (1) unreasonable delay or lapse of time in asserting a
right, (2) absence of an excuse for such a delay, (3) knowledge—actual or constructive—of the
injury or wrong, and (4) prejudice to the other party.’ Each element must be established for laches
to apply.” (Citations omitted) Id. at ¶ 16. “Whether laches should bar an action is a fact-sensitive
determination. Accordingly, we review the trial court’s application of the doctrine of laches for
an abuse of discretion. An abuse of discretion means ‘that the court’s attitude is unreasonable,
arbitrary or unconscionable.’ ” (Citations omitted) Id. at ¶ 17; see also Reid v. Wallaby’s Inc.,
2d Dist. Greene No. 2011-CA-36, 2012-Ohio-1437, ¶ 34 (reviewing the trial court’s application
of laches for an abuse of discretion).2
{¶ 9} As set forth above, the trial court assumed, arguendo, that the appellees’ delay in
challenging the 2004 order approving and settling the final account was excessively long. The
trial court then found, however, that the appellees had a valid excuse for the delay, that they
lacked actual or constructive knowledge of the injury or wrong, and that Campbell would not be
prejudiced by vacation of the 2004 order.
2
In their appellate brief, the appellees argue at length that an abuse-of-discretion standard applies to the trial court’s analysis of
their motion to vacate under R.C. 2109.35. While that may be true, Campbell’s assignment of error and appellate argument focus on the trial
court’s rejection of her laches affirmative defense. Therefore, we have looked to case law addressing the standard of review for the application
of laches rather than case law addressing the standard of review for claims brought under R.C. 2109.35.
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{¶ 10} On appeal, Campbell addresses each element of laches. With regard to the length
of the delay (the first element), she maintains that the appellees were not required to have “formal
notice” or to have counsel advise them of their rights before taking some action. She claims the
appellees “both had full knowledge of the decedent’s estate administration for an eleven year
period and did nothing.” (Appellant’s brief at 9). She asserts that “[a]n eleven year period should
be sufficient grounds for this Court to find unreasonable delay on the part of the Appellees in
filing their motion.” As a result, she contends the trial court should have found the first element
of her laches defense satisfied. We note, however, that the trial court did find the first element
satisfied. It assumed, arguendo, that the delay at issue was unreasonably long.3 It rejected her
laches defense based on a failure of proof regarding the other elements. (Doc. #39 at 9).
{¶ 11} Campbell also challenges the trial court’s finding that the appellees lacked actual
or constructive knowledge of the injury or wrong (the third element). She reasons that such
knowledge was established through testimony that they were aware of their grandmother’s death
and of the fact that she owned a house and personal property. Campbell further argues that the
trial court erred in finding a valid excuse for the appellees’ delay (the second element) due to
3
We need not decide whether the delay here was unreasonably long because the trial court ruled against Campbell on the other
elements of her laches defense. We do note, however, that the delay in a laches case is not measured from when the challenged action
occurred. Rather, it is measured from when the injured party has actual knowledge or is deemed to have had at least constructive knowledge
of the injury. Portage Cty. Bd. of Commrs. v. Akron, 109 Ohio St.3d, 2006-Ohio-954, 846 N.E.2d 478, ¶ 82 (“Thus, the party relying on
the defense of laches must demonstrate at least constructive knowledge of the injury on the part of the affected party as a starting point of the
delay that it asserts.”); Stevens v. National City Bank, 45 Ohio St.3d 276, 285, 544 N.E.2d 612 (1989) (recognizing that laches involves a delay
in asserting rights after receiving knowledge or notice); Ellis v. Patonai, 9th Dist. Wayne No. 06CA0012, 2006-Ohio-5054, ¶ 13, citing Cox v.
Garrett, 2d Dist. Greene No. 81-CA-69, 1982 WL 3782 (Aug. 23, 1982), at *2 (“Generally, the delay [in a laches case] is measured from the
point in time at which the complaining party, having actual or constructive knowledge of the violation[,] * * * reasonably could have
instituted suit.”). The trial court here found that the appellees both lacked actual or constructive knowledge of their injury until shortly before
they sought relief under R.C. 2109.35.
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their lack of actual or constructive knowledge. Even if the appellees did lack such knowledge,
she argues that their lack of knowledge cannot be used to excuse their delay. Campbell reasons:
“If lack of knowledge could satisfy the requirement for no excuse for a delay, then the latter
would not be a separate requirement. There must be separate facts and circumstances concerning
the element of delay.” (Appellant’s brief at 10). Finally, she claims the trial court erred in finding
no prejudice to her (the fourth element). She argues that prejudice was shown because she and
Richard Rife sold their mother’s house and spent all of the estate proceeds in reliance on the
appellees’ years of inaction.
{¶ 12} Having reviewed the record, we find no merit in Campbell’s argument that the
trial court erred in rejecting her laches defense. The trial court’s judgment is neither against the
weight of the evidence nor contrary to law. At a minimum, the evidence supports the trial court’s
finding that the appellees lacked actual or constructive knowledge of the injury or wrong. Here
the pertinent injury or wrong was the appellees’ exclusion from the prior proceedings, due to
Campbell’s failure to list them as heirs, which resulted in them not sharing in the probate estate.
Both appellees testified that they never received actual notice of the probate proceedings. (Tr. at
27, 33-34). Appellee Hope Rife did recall once driving past her deceased grandmother’s house
and seeing “a bunch of stuff out.” She stopped and was told to take what she wanted because the
rest was going to charity. (Id. at 34). As for Fred Rife, he claimed Campbell advised him that he
and his sister “would not be getting anything.” (Id. at 30). With regard to Campbell’s argument
that constructive knowledge existed based on the appellees’ general awareness of their
grandmother’s death and her ownership of assets, the trial court concluded otherwise. It reasoned:
* * * [T]he evidence failed to show that Movants, using reasonable care or
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diligence, would have been aware of the alleged injury or wrong. Rather, the
evidence merely showed that Movants were aware that Dorothy died owning
personal and real property and that [Campbell] and Richard [Rife] informally
distributed some of Dorothy’s household goods to relatives and charities. Given
the availability of estate planning devices to avoid probate, Movants’ awareness of
these circumstances did not constitute constructive knowledge of [Campbell’s]
alleged failure to properly administer the Estate. * * *
(Doc. #39 at 9).
[Cite as In re the Estate of Rife, 2014-Ohio-3644.]
{¶ 13} We do not find the trial court’s resolution of the “knowledge” issue to be
unreasonable, arbitrary, or unconscionable. The trial court drew a reasonable distinction between
the appellees knowing that the decedent died owning some property and knowing that she had a
probate estate from which they were entitled to share. The appellees’ actual knowledge of the
former did not constitute constructive knowledge of the latter.4 Moreover, Campbell’s failure to
establish the appellees’ actual or constructive knowledge of the injury or wrong is fatal to her
laches defense. As noted above, “[e]ach element must be established for laches to apply.”
Gordon at ¶ 16. Because the record supports the trial court’s finding that Campbell failed to
establish the “knowledge” element, we need not decide whether the trial court also correctly
analyzed the other elements.
{¶ 14} Campbell’s assignment of error is overruled, and the trial court’s judgment is
affirmed.
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FROELICH, P.J., and DONOVAN, J., concur.
Copies mailed to:
Michael J. Millonig
John H. Stachler
4
The case law cited in Campbell’s brief fails to persuade us otherwise. She cites 1937 and 1956 New York cases, a 1937 New
Hampshire case, a 1953 Illinois case, and a 1984 Montana case. Even setting aside the fact that these cases are from other jurisdictions, none of
them say anything contrary to our analysis herein. Campbell also cites a 1952 Montgomery County trial court decision in Fletcher v. Stanton,
69 Ohio Law Abs. 161, 124 N.E.2d 495 (C.P. 1952), and this court’s affirmance of that decision in Fletcher v. Stanton, 69 Ohio Law Abs.
174, 124 N.E.2d 493 (2d Dist. 1953). In Fletcher, this court upheld the trial court’s refusal to allow the plaintiff to challenge the settlement of
an executor’s final accounting that she had approved twenty-five years earlier. See Fletcher, 124 N.E.2d at 498. Fletcher is distinguishable
from the present case because here the appellees did not approve Campbell’s 2004 final account.
12
Sean H. Harmon
Richard Rife
Hon. Alice O. McCollum