Beach First Nat'l Bank v. Estate of Gurnham (In re Estate of Gurnham)

• Citation: 754 S.E.2d 875,407 S.C. 194
• Decision Date: 26 February 2014
• Docket Number: No. 27360.,27360.
• Court: United States State Supreme Court of South Carolina
• Parties: In the Matter of ESTATE OF Margaret Dever HOVER Gurnham, a/k/a Margaret D. Hover. Beach First National Bank, Respondent, v. The Estate of Margaret Gurnham, a/k/a Margaret D. Hover and/or Brian Hover, Its Personal Representative, Appellants. Appellate Case No. 2012–207047.

407 S.C. 194

754 S.E.2d 875

In the Matter of ESTATE OF Margaret Dever HOVER Gurnham, a/k/a Margaret D. Hover.Beach First National Bank, Respondent,

v. The Estate of Margaret Gurnham, a/k/a Margaret D. Hover and/or Brian Hover, Its Personal Representative, Appellants.Appellate Case No. 2012–207047.

No. 27360.

Supreme Court of South Carolina.

Heard Dec. 4, 2013.

Decided Feb. 26, 2014.

Jonathan Brent Kiker, of Kiker Law Firm and Richard Bryan Allen, both of Hilton Head Island, for Appellants.

William Weston Jones Newton, of Jones Simpson & Newton, PA, of Bluffton, James B. Richardson, Jr., Esquire, of Columbia, for Respondent.

BEATTY, Justice.

Brian Hover (Hover), who is the son of Margaret Dever Hover Gurnham and the Personal Representative of her Estate, appeals the circuit court's order confirming the probate court's grant of summary judgment in favor of Beach First National Bank (Bank) to enforce a deficiency judgment against the Estate. Hover asserts the Bank's claim, which arose following a foreclosure action, was untimely and, thus, barred by section 62–3–803¹ of the South Carolina Probate Code (Probate Code). We hold the Bank's claim is barred as it was presented outside the time limits of the nonclaim statute. Accordingly, we reverse the grant of summary judgment in favor of the Bank.

I. Factual / Procedural History

On March 24, 2005, Margaret Gurnham executed a promissory note (the Note) in the amount of $750,000 and obtained an equity line of credit for $260,000 as an advance against the Note. Hover, as Trustee of the “Margaret D. Hover Irrevocable Qualified Personal Residence Trust, dated May 22, 2000 (Residence Trust),” secured payment of this debt by executing: (1) a first mortgage, which was assigned to Hudson City Savings Bank, for the Note with a maturity date of April 1, 2035; and (2) a second mortgage to the Bank for the credit line. Both mortgages covered real property located on Hilton Head Island that was owned by Gurnham and conveyed to Hover as Trustee of the Residence Trust.

On December 8, 2005, Gurnham died testate. On February 23, 2006, Gurnham's estate was opened in probate court with Hover being appointed as Personal Representative. Hover properly notified creditors by publication ² in The Beaufort Gazette on March 2, 9, and 16, 2006. Hover continued to make payments on the Note and mortgages, but ceased to do so after March 29, 2008.

On July 15, 2008, Hudson City Savings Bank commenced an action in the circuit court seeking foreclosure of the real property that was the subject of the first mortgage. On August 18, 2008, the Bank, as a named defendant in the foreclosure action, answered and filed a cross-claim against Hover as PersonalRepresentative of the Estate for foreclosure of the second mortgage and, if necessary, a deficiency judgment. The next day, the Bank filed in probate court a Statement of Creditor's Claim for $247,168.23 (“as of July 29, 2008”) against the Estate.

After Hover defaulted in the foreclosure proceedings, the circuit court entered judgment of foreclosure and sale of the real estate by order dated October 9, 2008. On December 11, 2008, following the sale of the real estate, the court entered a deficiency judgment against Hover as Personal Representative of the Estate in the amount of $259,620.63.

On December 30, 2008, while the Estate was still open, the Bank filed in probate court a Supplemental Statement of Creditor's Claim for the full amount of the deficiency judgment.

On July 29, 2009, Hover filed a Notice of Disallowance of the Bank's claim on the ground that it was not timely filed and was, therefore, barred under section 62–3–803³ of the Probate Code. In response, the Bank filed a Petition for Allowance of the Creditor's Claim, alleging the claim was timely presented under section 62–3–803(b)(2) and that the deficiency judgment constituted an allowance of the claim under section 62–3–806(c). ⁴ Additionally, the Bank asserted causes of action based on waiver, res judicata, estoppel, fraud, constructive fraud, negligent misrepresentation, and breach of contract. In support of these causes of action, the Bank asserted that “Brian Hover and/or others carefully kept both the first mortgage and second mortgage accounts current until well after the passage of the usual six (6) months for filing of claims had passed.” The Bank further noted that Hover, in the “official inventory filed March 7, 2007 [with the probate court], did not disclose any debt to [the Bank], thus indicating an intent opposite to [Hover's] representations to [the Bank].”

Both parties moved for summary judgment. Following a hearing, the probate court granted summary judgment in favor of the Bank. In so ruling, the court initially noted there was no dispute as to the facts of the case or the validity of the deficiency judgment entered in circuit court. Consequently, the court found the entry of this judgment in circuit court constituted an allowance of the Bank's claim in probate court pursuant to section 62–3–806(c). Based on this ruling, the court declined to address the parties' remaining issues, particularly “whether the Claim was timely presented under other provisions of the Probate Code or is barred by the statute of limitations.”

Following the denial of his motion to alter or amend, Hover appealed the probate court's order to the circuit court. The circuit court confirmed the probate court's order, but clarified that Hover was not individually liable as he “was not an individual Defendant” in the action. Hover then appealed to the Court of Appeals. This Court certified the appeal pursuant to Rule 204(b) of the South Carolina Appellate Court Rules.

II. Discussion

A. Arguments

Hover argues the circuit court erred in confirming the probate court's grant of summary judgment to the Bank as the creditor claim was untimely and “forever barred” by the Probate Code's “claims-barring process.” Specifically, Hover asserts the claim arose prior to Gurnham's death and, therefore, section 62–3–803(a) mandated that the Bank present its claim no later than one year after Gurnham's death on December 8, 2005. Given the fact that the Bank first attempted to present its claim in probate court on August 19, 2008, Hover maintains the claim was not timely presented. Alternatively, Hover avers the Bank's untimely filing divested the circuit court of subject matter jurisdiction to issue the order for the deficiency judgment, thus rendering the judgment invalid.

Finally, Hover urges this Court to reverse the circuit court's order as a matter of policy because a decision in favor of the Bank would “moot the entire claims-barring process established by the South Carolina General Assembly.” Hover explains that “[b]y creating a date certain by which all creditors' claims have to be resolved, the claims-barring statute assures the determination of ownership within a reasonable time so that the decedent's property becomes marketable.”

B. Standard of Review

The parties presented this case in the posture of a motion for summary judgment; thus, it is governed by Rule 56(c) of the South Carolina Rules of Civil Procedure. This rule provides a motion for summary judgment shall be granted “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Rule 56(c), SCRCP. “An appellate court reviews the granting of summary judgment under the same standard applied by the trial court pursuant to Rule 56, SCRCP.” Brockbank v. Best Capital Corp., 341 S.C. 372, 379, 534 S.E.2d 688, 692 (2000).

Because the facts of this case are undisputed, the resolution of this appeal is limited to the legal determination of whether the Bank's claim against the Estate was enforceable under the applicable provisions of the Probate Code. Accordingly, the analysis of this case is controlled by rules of statutory construction.

“ ‘Questions of statutory interpretation are questions of law, which we are free to decide without any deference to the court below.’ ” Grier v. AMISUB of S.C., Inc., 397 S.C. 532, 535, 725 S.E.2d 693, 695 (2012) (quoting CFRE, L.L.C. v. Greenville County Assessor, 395 S.C. 67, 74, 716 S.E.2d 877, 881 (2011)). “The cardinal rule of statutory interpretation is to ascertain and effectuate the intention of the legislature.” Sloan v. Hardee, 371 S.C. 495, 498, 640 S.E.2d 457, 459 (2007). “When a statute's terms are clear and unambiguous on their face, there is no room for statutory construction and a court must apply the statute according to its literal meaning.” Id. In interpreting a statute, “[w]ords must be given their plain and ordinary meaning without resort to subtle or forced construction to limit or expand the statute's operation.” Id. at 499, 640 S.E.2d at 459. Further, “the statute must be read as a whole and sections which are a part of the same general statutory law must be construed together and each one given effect.” S.C. State Ports Auth. v. Jasper County, 368 S.C. 388, 398, 629 S.E.2d 624, 629 (2006).

C. Two Avenues for Secured Creditors1. Statutory Progression

Pursuant to the general statutory scheme of the Probate Code, all claims against a decedent's estate and his successors must be presented after a personal representative is appointed and within the time limits prescribed by section 62–3–803, which our appellate courts have designated as a “nonclaim statute.” SeeS.C.Code Ann. § 62–3–104 (2009) (“No proceeding to enforce a claim against the estate of a decedent or his successors may be revived or commenced before the appointment of a personal representative. After the appointment and until distribution, all proceedings and actions to enforce a claim against the estate are governed by the procedure prescribed by this article [§§ 62–3–101 et seq.].”); In re Estate of Tollison, 320 S.C. 132, 135, 463...