Indiana: Executrix Hid Assets

Executors are Fiduciaries

SISTER GAVE FALSE ACCOUNTINGS

Indianapolis, Indiana

May 30, 2018

The St. Joseph Probate Court must reopen an estate that led to years-long litigation between two siblings after the court failed to follow proper statutory procedure when closing the estate, the Indiana Court of Appeals ruled Wednesday.

After James Hurwich died in 2004, his daughter, Stacey MacDonald, administered the estate until it closed in 2007. However, MacDonald failed to distribute approximately 600 items from the estate, so her brother, James Hurwich, petitioned to reopen the estate in 2013.

The St. Joseph Probate Court granted Hurwich’s petition and appointed Paul Cholis as successor personal representative. Hurwich then filed a complaint against his sister in October 2014, alleging she had mismanaged the estate’s assets and breached her fiduciary duty.

MacDonald moved to dismiss her brother’s complaint as untimely, and the probate court agreed. Hurwich moved to amend his complaint in February 2016, further alleging that MacDonald committed fraud by representing that she had fully administered the estate, and that she had taken personal property for her own use. The probate court denied Hurwich’s motion to amend his complaint, finding, among other issues, that the complaint was time-barred.Cholis then distributed the assets, filed a distribution report and requested that the estate be closed. The probate court approved the report and closed the estate the same day, prompting the appeal of In Re the Estate of James E. Hurwich, Scott D. Hurwich v. Stacey R. MacDonald, 71A04-1705-EI-990.

On appeal, Hurwich first challenged the denial of his motion to amend his complaint, arguing he had a “right” to replead his claim pursuant to Indiana Trial Rule 12(B). But the Indiana Court of Appeals disagreed, with Judge John Baker writing that Rule 12(B) requires a motion for leave to amend a complaint to be filed within 10 days of service of notice of the grant of a motion to dismiss. Hurwich’s motion was filed eight months after the probate court granted MacDonald’s motion to dismiss, Baker wrote.

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Hurwich also challenged the dismissal of his complaint with prejudice, and the appellate panel agreed that dismissal under Trial Rule 12(B)(6) is done without prejudice. However, Hurwich did not appeal the dismissal with prejudice — a final appealable order — until two years after the dismissal, making his appeal on that point “untimely and unavailing,” Baker said.

But the appellate court ruled in Hurwich’s favor on the second issue he raised on appeal – whether the probate court followed the proper procedure for closing the estate when it denied his statutory right to object to the distribution report. Baker pointed to Indiana Code section 29-1-16-6(b), which requires courts to set a timeframe for objections and to give notice to parties entitled to a share of the distribution when an account for final settlement is filed.

“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,” Baker wrote. “It is also undisputed that neither the probate court nor the clerk set a timeframe for objections or gave notice about the Report of the timeframe for objections. In other words, the probate court failed to follow proper statutory procedure when closing the Estate.”

The case was remanded for further proceedings.