Probate Court Effect on a Pending Lawsuit
Under Arizona law, a party involved in a pending court action against a person who dies need not file a creditor’s claim with the probate estate. What happens if the party chooses to present a claim to the estate anyway and it is disallowed? In the case of In re Estate of Bolton 315 P.3d 1241 (Ariz. Ct. App. 2013), the Court of Appeals considered that issue.
Facts of the Case
In May 2011, Mutual Pharmaceutical Inc. and United Research Laboratories, Inc. (Mutual Parties) sued Mr. Bolton in Pennsylvania court. Mr. Bolton had sold mutual parties patent rights to technology for converting liquid drugs to powder. They charged that the rights actually belonged to St. John’s University, where Bolton worked when he developed the technology.
Bolton died in Arizona in October, 2011. One Mr. Goldman was appointed personal representative of the Estate. Mutual Parties substituted Goldman as successor-in-interest to Bolton in the Pennsylvania court proceeding. They also presented a Notice of Claim to Goldman in January, 2012.
The Estate disallowed the probate claim soon after it was filed on the ground that “no presentation of claim was required.” Mutual Parties did not institute new proceedings in another court or move for a probate allowance. Seven months later, the Estate filed a motion to confirm disallowance of the claim, which the probate court granted. Mutual Parties appealed.
No Claim Necessary When a Lawsuit is Pending
In Arizona, the creditor of someone who died generally must file a claim with the personal representative or file an action against him. If the claimant chooses to file a probate claim, the personal representative may allow or disallow the claim. If the personal representative disallows the claim, the claimant can file an action against him within 60 days. Alternatively, he can petition the probate court for allowance of the claim. If he does neither, the claim is barred.
A claimant with a lawsuit pending against the decedent before his death is not required to present a probate claim. Thus mutual parties were not required to present a claim.
No Procedural Consequences When Unnecessary Claim Filed
Mutual parties mailed written notice of a claim to the personal representative anyway. The claim noted the pending proceedings. It was denied. The Estate’s disallowance stated that Arizona law does not require presentation of a claim for an already pending suit.
The Estate now argues that the statutory exemption is no longer effective. It claims that if a party to a lawsuit presents an unnecessary probate claim, it loses the exemption. It relied on re Estate of Van Der Zee, 265 P.3d 439 (App.2011). However, the Court found that ruling only applied where no separate lawsuit was pending.
The Court found that the Probate Code exempted claimants with pre-death lawsuits from the claim procedures. However, a claimant with a pre-death lawsuit can present notice in probate. This action does not trigger procedures applicable to those without lawsuits pending.
The Estate next argues that the Mutual Parties’ voluntary claim requires their compliance with sub-section (3) of the applicable statute. However, the Court found that the cases it relies on do not apply to this case. The Court concluded that the plain language of the statute provides that a claimant with a pending claim in another court need not present a probate claim. If the claimant does present the claim to the estate, the presentation does not nullify the exemption provided by the statute.
The Court of Appeals reversed the judgment against Mutual Parties and remanded for proceedings consistent with this decision.