In re Estate of Rotilio

[Cite as In re Estate of Rotilio, 2013-Ohio-2878.]
STATE OF OHIO, BELMONT COUNTY
IN THE COURT OF APPEALS
SEVENTH DISTRICT
IN RE: ) CASE NO. 11 BE 9
)
ESTATE OF VIGO J. ROTILIO )
)
) OPINION
)
)
CHARACTER OF PROCEEDINGS: Civil Appeal from the Court of Common
Pleas, Probate Division, of Belmont
County, Ohio
Case No. 10 ES 476
JUDGMENT: Affirmed in part. Reversed in part.
Remanded.
APPEARANCES:
For Estate of Vigo J. Rotilio and Atty. John A. Vavra
Michael V. Rotilio, Individually: 132 West Main Street
St. Clairsville, Ohio 43950
For Patty J. Rotilio: Patty J. Rotilio, Pro Se
129 Wagner Avenue
Bellaire, Ohio 43906
JUDGES:
Hon. Cheryl L. Waite
Hon. Joseph J. Vukovich
Hon. Mary DeGenaro
Dated: June 24, 2013
[Cite as In re Estate of Rotilio, 2013-Ohio-2878.]
WAITE, J.
{¶1} Appellant, Patty J. Rotilio, cared for her ailing parents. After her
mother’s death, her father had a stroke and upon his recovery executed a power of
attorney to allow her to take certain actions regarding his property, among other
things. While her father was hospitalized in 2009, Appellant transferred three parcels
of her father’s land. The first two she transferred to herself and her father with
survivorship rights, the third she transferred to herself and her brother, Michael V.
Rotilio, Appellee, also with survivorship rights. She and her brother are their father’s
only heirs. Appellant executed the transfers before her father died intestate.
Appellant’s brother was appointed administrator of the estate. Appellee, as the
administrator of the estate and in his individual capacity, filed a complaint for
recovery of assets under R.C. 2109.50 against Appellant. After a hearing, the
probate court invalidated the transfers, found Appellant guilty, ordered the return of
the land to the estate, and imposed a 10% penalty and attorney’s fees on Appellant
using authority found in R.C. 2109.52.
{¶2} Ohio Revised Code section 2109.50, by its terms, does not apply to real
property. Application of this section was not proper in this instance. Although the
probate court does have the power under other statutes to invalidate the transfers
and return the property to the estate, the 10% penalty and attorney’s fees should not
have been assessed against Appellant. The probate court’s judgment is reversed in
part and the matter remanded for further proceedings.
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Factual and Procedural History
{¶3} At some point in 2006, Vigo J. Rotilio had a stroke. Due to his inability
to fully care for himself, he executed a durable general power of attorney on February
21, 2006, listing first his daughter and then his son, and giving both of them the ability
to take care of his needs. The power of attorney was broad and allowed his children
to address both medical and financial needs, including the transfer of real estate. His
daughter, Appellant, Patty J. Rotilio, appears to have then assumed sole
responsibility for the care of her father. She lived with him at his Wagner Ave.
property, routinely signed documents for him, and assisted with his medical care. At
the time the power of attorney was executed, Appellant had been living with her
parents for at least a decade. According to her testimony, in December of 2008,
Appellant asked her brother to attend a financial planning seminar with her to learn
about options for the management of their father’s property if he required additional
or different medical services through Medicare. (Tr., pp. 19-20.) Appellant and her
brother attended the seminar, but apparently did not discuss further estate planning
until July of 2009. According to Appellant, in July of 2009 she reminded her brother
about the seminar and that if their father had “too much” property in his name he
would not quality for Medicare and that the laws pertaining to Medicare included a
five-year look back period for property transfers. (Tr., p. 20.)
{¶4} On July 20, 2009, Appellant transferred the Wagner Ave. property to
her father and herself by general warranty deed with survivorship rights. According
to Appellant’s testimony at the probate court hearing on the complaint for
concealment of estate assets subsequently filed by her brother, her brother was at
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the meeting with the attorney for the execution of transfer, but left angrily part way
through the meeting. (Tr., pp. 16-17.) On July 22, 2009 Appellant transferred a
second parcel of her father’s property, Winding Hill, to herself and her brother, her
father’s only surviving heirs, with survivorship rights. There appear to be other
properties owned by Mr. Rotilio which were not transferred on either date, and
devolved to the estate. (Tr., p. 27.) Mr. Rotilio was not present during either of the
2009 transfers, because he was hospitalized. On July 24, 2009 Mr. Rotilio died
intestate.
{¶5} According to Appellee Michael Rotilio, he did attend the seminar.
Appellee testified that there was no discussion of estate planning between the
siblings post-seminar, until he got a phone call from Appellant asking him to come to
a lawyer’s office in early July so that they could transfer the various properties out of
their father’s name. (Tr., p. 28.) According to Appellee, Appellant wanted to transfer
all the properties into her name. Rather than allow this, Appellee asked that the
Winding Hill property be transferred into his name only. Appellee maintained that he
only wanted the Winding Hill property “which I have taken care of for the last ten to
fifteen years.” (Tr., p. 26.) When Appellant would not agree to transfer the Winding
Hill property solely to him, Appellee refused to sign anything and, although the lawyer
told them they needed to settle the transfers between them, he left the office.
Appellee wanted the Winding Hill property, which adjoins his own property, even
though Appellant has a mobile home located on this property. According to Appellee,
there is also a house on the Winding Hill property that is falling apart and needs to be
razed. Appellee testified that he did not learn that his sister had completed the two
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July, 2009 transfers of their father’s property until April of 2010 when he looked “on
line at the property taxes.” (Tr., pp. 29-30.)
{¶6} On October 5, 2010 Appellee filed an application to be appointed as
administrator of his father’s estate. According to the application the deceased died
intestate with two surviving children, Appellee and Appellant, his sister. Appellant
was notified of a hearing on the application for appointment and did not contest the
appointment. Appellee was appointed administrator of the estate on October 29,
2010. On December 29, 2010 he filed a complaint against his sister for
embezzlement, concealing, or conveying assets of the estate, in both his personal
capacity and as administrator of the estate.
{¶7} A hearing on the complaint was held on February 25, 2011. At the
conclusion of the hearing, the probate court verbally stated that: “Patty J. Rotilio did
convey, improperly, assets belonging to the estate through an improper use of a
power of attorney which did not contain a provision allowing self-dealing, and even if
it did, the Court would question the reliability of that manner of transfer.” (Tr., p. 33.)
Argument and Law
{¶8} R.C. 2109.50 allows any person “interested in the estate” to file in the
probate court with jurisdiction over the estate a complaint seeking the return of any
“moneys, chattels, or choses in action,” believed to belong to the estate that the
claimant suspects to have been “concealed, embezzled, or conveyed away” by the
individual named in the complaint. (The statute was amended, effective, January 13,
2012, to substitute “personal property” for “chattels,” the two terms are
interchangeable.)
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{¶9} “Chose in action” is defined as “a proprietary right in personam, such as
a debt owed by another person, a share in a joint-stock company, or a claim for
damages in tort.” Pilkington N. Am., Inc. v Travelers Cas. & Sur. Co., 112 Ohio St.3d
482, 2006-Ohio-6551, 861 N.E.2d 121, ¶19 citing Black’s Law Dictionary 258 (8th
Ed.2004). While the Ohio Supreme Court “has recognized that the phrase applies to
the right to bring an action in tort and in contract” the Court has “never addressed the
question of when a chose in action becomes an enforceable right.” A chose in action
does not, however, include real property. It is “personalty which, unlike real property,
passes on death to the holder’s executor.” Id. at ¶20-21. Hence, R.C. 2109.50 is
designed to facilitate the recovery of portable objects, fungible goods and money,
quickly and across county lines, when necessary. When such a complaint is filed the
court is required to compel the individual named in the complaint to appear in court
and be examined under oath concerning the subject matter of the complaint.
{¶10} Once a hearing is held, if the individual identified in the complaint is
found guilty, then section 2109.52, titled “[j]udgment on the complaint,” requires the
probate court to render judgment for the amount of the money or the value of the
personal property concealed, embezzled, conveyed away or held in possession,
assess damages, or order the return of the item or restoration in kind. The statute
also allows assessment of a ten percent penalty, the amount of which is determined
by the value of the goods to be returned, the restitution, or the amount of damages
found by the court. In order for a person to be found guilty under this section and
have the penalty and costs assessed, a majority of Ohio districts have found that the
violation must involve “wrongful or culpable conduct on the part of the person
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accused.” Longworth v. Childers, 180 Ohio App.3d 162, 2008-Ohio-4927, 904
N.E.2d 904, ¶20, quoting Ukrainiec v. Batz, 24 Ohio App.3d 200, 202, 493 N.E.2d
1368 (9th Dist.1982). Wrongdoing or culpability is necessary because:
R.C. 2109.50 is a quasi-criminal statute. It requires a finding of guilty or
not guilty and mandates that certain sanctions be imposed on a guilty
defendant, including assessment of a ten percent penalty. See R.C.
2109.52. Thus, to prove concealment, complainant must show more
than possession of estate assets. If such were the only proof
necessary, all questions of disputed title could be brought under the
concealment statute thereby making the statutory provisions for
declaratory judgment (R.C. 2721.05) and exceptions to the inventory
(R.C. 2109.33) superfluous. Further, the estate would be enriched by
ten percent of each claim however innocent the possession.
Ukrainiec at 202. If the court finds the party guilty, the total monetary value of a
judgment rendered under this section is to be reduced by the value of any goods
specifically restored or returned in kind. Even though the value of the judgment is
thus reduced, the total amount of the judgment, including penalty and costs (which
include attorney’s fees) would not be satisfied by merely restoring the goods. Penalty
and costs are not cancelled by the restoration of the goods. The probate court
ordered both restoration of the properties to the estate and also ordered that
Appellant be assessed a ten percent penalty and pay court costs and attorney’s fees.
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{¶11} A probate court is a court of limited jurisdiction and “probate
proceedings are restricted to those actions permitted by statute and by the
Constitution.” State ex rel. Lipinski v. Cuyahoga Cty. Court of Common Pleas,
Probate Div., 74 Ohio St.3d 19, 22, 655 N.E.2d 1303 (1995). A probate court does
have the authority under R.C. 2109.50 and 2109.52 “to recover certain assets
wrongfully concealed, embezzled, or conveyed away before the creation of the
estate.” (Emphasis omitted.) Goldberg v. Maloney, 111 Ohio St.3d 211, 2006-Ohio-
5485, 855 N.E.2d 856, ¶33. But the court’s power to invalidate an inter vivos transfer
of property is not limited by R.C. 2109.50 and .52; a probate court may do so in a
declaratory action, and such actions are properly brought in probate court to facilitate
the settling of an estate by resolving “as many issues as is possible in a single
proceeding.” Id. at ¶36, Lipinski at 22 (“a declaratory judgment may be brought in the
probate court to determine the validity of inter vivos transfers where the property
transferred would revert to the estate if the transfers are invalidated”). In addition to
actions seeking declaratory judgments, parties may also bring suit for the fraudulent
conveyance of real estate and seek to invalidate the transfer in this manner. It is
clear that probate courts have both the ability to invalidate inter vivos transfers and
the ability to determine whether real estate is part of an estate. However, it is equally
clear that a probate court may not do so under R.C. 2109.50 and .52, which explicitly
limit the remedies and required penalties to “moneys, chattels [personal property],
and choses in action” and does not apply to “real property,” “interests in land,” “real
estate” or any other formulation that would cover the transactions complained of by
Appellee.
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{¶12} Our review of cases relying on R.C. 2109.50 and .52 reveal numerous
instances involving bank accounts, stock certificates, annuities, and, occasionally, the
monetary proceeds of a sale of real estate. Only Fox v. Stockmaster, 3rd Dist. Nos.
13-01-37, 13-01-35, 2002-Ohio-2824, and In re Estate of Holmes, 8th Dist. No.
62749, 1993 WL 204572 (June 10, 1993), address real property, however R.C.
2109.50 is not applied in either case to resolve the disposition of the real estate
concerned. In Fox, the causes of action included fraud perpetrated on the decedent,
fraudulent transfer of real estate, conversion of the decedent’s assets, and tortious
interference with a right to inherit, among other things. In a twenty-nine page
opinion, the trial court ultimately voided a purchase option agreement, voided trust
amendments, reformed a warranty deed, ordered payment of attorney’s fees, and
found the defendant guilty of concealment of assets. The culpable behavior that led
to the decision continued over many years and involved making decedent a virtual
prisoner in his own home and requiring him to sign his assets over to his caretakers.
The portion of the opinion that addressed the actual transfer of real estate did not rely
on R.C.2109.50. This section was instead used to resolve the issue of funds
improperly withdrawn from a trust.
{¶13} In Holmes the probate court initially dismissed a concealment suit that
identified both real estate and personal property, because the real property did not
belong to the estate, but did not hold the hearing required by R.C. 2109.50 as to the
personal property. The appellate court affirmed the dismissal as to the realty and
remanded for a hearing on the personal property. The court did not address the
applicability of R.C. 2109.50 to the real property in this instance because it was not
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an estate asset. Neither of these cases supports the application of R.C. 2109.50 to
cases involving real property.
{¶14} In the matter before us, the conveyances identified in the complaint
involved only real property, not accounts, stock certificates or other personal
property, choses in action, or the proceeds of the sale of real estate. The transfers
were made by Appellant pursuant to a valid power of attorney that allowed for real
estate transactions. The actual transfers were made to Appellant, the decedent, and
Appellee. Appellee testified that he knew Appellant intended to make the transfers;
his objection was not to the transfers themselves, but to the fact that she did not
intend to transfer property solely to him, as he preferred. Appellee also indicated that
he became aware of the transfers because of publicly available information on the
county website. These facts reflect none of the concealment or transportation issues
R.C. 2109.50 is designed to address. The obvious difference between cases
concerning disposal of real property and those discussing fungible goods is clearly
the reason that multiple code sections were enacted to redress the improper transfer
of different types of property.
{¶15} According to the record, Appellant did not seek to sell the property for
her own benefit or otherwise dispose of it. The transaction itself was not concealed
and was apparently recorded and publicly available for review. It is also apparent
from the record that the power of attorney did not authorize self-dealing, and the
transactions appear invalid due to Appellant’s fiduciary relationship to the decedent.
Under these circumstances, Appellee had remedies pursuant to R.C. 2101.24(A)(1)(l)
or 2721.03, among others and should have filed his complaint under one of these,
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more appropriate sections. That said, the probate court did have the power to
invalidate the transfers and redistribute the property, but not by means of R.C.
2109.50, which does not apply to real property.
{¶16} Based on the record before us, we affirm the trial court’s decision to
require Appellant to restore the real property to the estate. It was, however, error to
apply R.C. 2109.52 to this proceeding, and we reverse the trial court’s imposition of a
penalty and costs pursuant to this section. Because the matter originated due to the
necessity to settle an estate, this matter must be returned to the probate court for
purposes of distribution of that estate.
{¶17} We must at this juncture note that Appellee’s decision to proceed under
R.C. 2109.50 rather than the more appropriate statutes available was both
inappropriate and unnecessarily punitive. Appellee’s decision to pursue personally
and as administrator what he evidently believed to be the harshest possible remedy,
rather than the best available means, to resolve this familial dispute should generally
be viewed with extreme disfavor. Similarly, the parties’ apparent reluctance to
resolve these proceedings outside of an adversarial setting is disappointing.
{¶18} Both parties in this matter have engaged in behavior that serves only to
unnecessarily diminish the value of their shared inheritance. As this Court indicated
during oral argument, where, as here, parties have equal rights to the property left by
their father, the simplest, best, and most cost-effective method of resolution is an
agreement between the parties. The parties are the decedent’s only heirs; neither
has an advantage over the other in their claims to the property. Both parties have
squandered an opportunity to reach a mutually beneficial agreement that would allow
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them to divide the property between them according to their interests, instead of by
court order and existing boundary lines.
Conclusion
{¶19} The probate court possessed the power to order that the real property
in question was an estate asset, and we affirm the decision to order these three
parcels be returned to the estate. However, R.C. 2109.50 does not provide a cause
of action to recover real property. The judgment of the probate court under R.C.
2109.50 to assess a penalty and costs to Appellant is vacated. The matter is hereby
remanded to the court to determine distribution between the heirs. Any future
judgment by the probate court must credit Appellant for any payment of property
taxes assessed on the disputed property after her father’s death. Judgment of the
trial court is affirmed in part and reversed in part and the matter remanded for further
proceedings in accordance with this decision.
Vukovich, J., concurs.
DeGenaro, P.J., concurs in judgment only.