Green v. Nassif

• Decision Date: 21 June 2012
• Docket Number: Sept. Term, 2011.,No. 57,57
• Parties: Carlton M. GREEN, Personal Representative of the Estate of Walter L. Green, et al. v. Helen NASSIF.
• Court: Maryland Court of Appeals

426 Md. 258

44 A.3d 321

Carlton M. GREEN, Personal Representative of the Estate of Walter L. Green, et al.

v.Helen NASSIF.

No. 57, Sept. Term, 2011.

Court of Appeals of Maryland.

April 20, 2012.

Reconsideration Denied June 21, 2012.

Walter W. Green (Law Office of Walter W. Green, College Park, MD), on brief, for petitioner/cross-respondents.

Roy I. Niedermayer (Patricia M. Weaver, Glenn M. Cooper and Wayne D. Eig of Paley, Rothman, Goldstein, Rosenberg, Eig & Cooper, Chtd., Bethesda, MD), on brief, for respondent/cross-petitioner.

Argued before BELL, C.J., HARRELL, GREENE, ADKINS, BARBERA, ALAN M. WILNER (Retired, Specially Assigned), DALE R. CATHELL (Retired, Specially Assigned), JJ.

ADKINS, J.

In this case, we put to an end decades of litigation by a personal representative attempting to secure an unfair portion of a multi-million dollar estate for himself and his sister. The decedent, Walter L. Green, died in 1993. The personal representative, Carlton M. Green, who is also the son of the decedent and a legatee under the will, litigated a number of issues in the orphans' court against the decedent's widow, Helen Nassif. Anticipating an adverse ruling, Green filed a complaint for declaratory judgment in the circuit court, which ruled in his favor. Nassif appealed, and the Court of Special Appeals reversed. Both parties petitioned for certiorari.

For the reasons described below, we shall affirm in part, reverse in part, and vacate in part the Court of Special Appeals and hold that (1) “enforceable claims,” as used in Maryland Code (1974, 1991 Repl.Vol.), Section 1–101(n) of the Estates and Trusts Article,¹ means claims that in fact reduce the assets in the estate or are allowed by the court; (2) assets in a spouse's elective share are valued, when paid in kind by legatees, as of the date of distribution, and when paid in cash pursuantto Section 3–208(b), as of the date of the spouse's election to take a statutory share; (3) ordinarily, and under the circumstances present here, legatees cannot exercise the option to pay a spouse's elective share in cash 13 years after the decedent's death; (4) elective spouses share in income on assets in the net estate; and (5) there is no justiciable issue in this case regarding the Maryland Uniform Principal and Income Act, Maryland Code (1974, 2001 Repl.Vol.), § 15–501 et seq. of the Estates and Trusts Article.

FACTS AND LEGAL PROCEEDINGS

Walter L. Green (“decedent”) died on March 9, 1993, leaving an estate of more than $28 million to his wife, Helen Nassif, and his two children, Anne D. Fotos and Carlton M. Green (“Green”). Instead of receiving her bequest in the Will, Nassif elected on May 3, 1993, to take a statutory share of the estate pursuant to Section 3–206(a). Accordingly, her bequest in the Will, which provided that she would receive a one-third share of the adjusted gross estate less certain expenses, was nullified pursuant to Section 3–208(a).²

Green was appointed personal representative (“PR”) of the estate, and began settling numerous claims. The estate's assets, and the claims against it, were complex. We quote the Court of Special Appeals' reported opinion, Nassif v. Green, 198 Md.App. 719, 722–723, 18 A.3d 1018, 1020–21 (2011), which itself quotes the PR's brief in that court:

The four inventories in the Maryland probate estate totaled $28,494,093 and consisted of thirty-five real properties, located in Prince George's County, Montgomery County, WicomicoCounty and Worcester County; three closely held corporations, which owned real property in Florida and the District of Columbia, owned and operated a motel in Salisbury, Maryland, managed a chicken farm in Salisbury, Maryland, and owned an undeveloped shopping center site in Bowie, Maryland. At the time of decedent's death he operated a general partnership that owned a 100 room hotel near Busch Gardens in Tampa, Florida; he owned and managed a stock portfolio that consisted of eighty publicly traded corporations; two stock brokerage accounts; he owned and operated a partnership owning fifty (50) subsidized apartments in Elwood, Indiana; and what caused the major problems in this Estate, he owned a 50% interest in a general partnership known as West Laurel Partnership that owned and operated a 205 room Best Western Hotel and a 37.5% interest in West Laurel Corporation that owned the hotel restaurant in Laurel, Maryland. Other assets in the Maryland Estate consisted of thirteen other partnerships; eighteen separate bank accounts; thirteen escrow accounts; and various mortgages, deeds of trust, and notes receivable. In addition to the Maryland probate estate, the decedent individually owned real property interests in Delaware, Iowa, Florida, Indiana and Pennsylvania which were the subject of ancillary administrations in those states.

Further complicating the administration of this Estate, at the time of the decedent's death, the economy was in the midst of the savings and loan crisis. The Resolution Trust Corporation ... had been appointed receiver of many federal savings banks that failed, including Second National Savings Bank to which decedent had personal liability on outstanding loans exceeding $12 million. Like the savings and loans, the hotel business was suffering. The $4.5 million second trust loan pertaining to the 205 room Best Western Hotel and restaurant in the hotel was in default at decedent's death.

In all, the claims against the estate exceeded $26 million. Many of the larger claims related to loans that the decedent had personally guaranteed, where the primary obligor was a corporation or other business organization in which he had an interest. Thus, the liability of the estate was conditional and dependent upon the capacity of the business entity to pay the debt.

Green was able to reduce or settle many of the claims, and the estate was ultimately diminished by only $102,869. Nevertheless, he claims that he is entitled, under the law in effect when the decedent died, to deduct $13,204,136 in claims from the estate before calculating Nassif's elective share. The Court of Special Appeals summarized the statutory scheme then in effect:

In general, the parties agree that the law in effect at the time of decedent's death applies. Instead of property left by a will, a surviving spouse could “elect to take a one-third share of the net estate if there is also a surviving issue....” ET § 3–203. The section did not expressly address the electing spouse's right to receive income from estate assets. Net estate was defined as “the property of the decedent exclusive of the family allowance and enforceable claims against the estate.” ET § 1–101(n). The election to take an elective share had to be filed no later than 7 months after appointment of a personal representative under a will. ET § 3–206. An electing spouse could withdraw the election at any time within 30 days after the expiration of time for filing claims against the estate. Id. ... Subsection (b) provided, in part:

If there is an election to take an intestate share, contribution to the payment of it shall be prorated among all legatees. Instead of contributing an interest in specific property to the intestate share, a legatee may pay the surviving spouse in cash, or other property acceptable to the spouse, an amount equal to the fair market value of the interest in specific property on the date the election to take an intestate share was made by the spouse.

In 1969, the law relating to the administration of estates underwent a substantial change. Since 1993, the date of decedent's death, the law has been amended. Some of the changes are relevant to the issues presented, particularly as they relate to ET [Sections] 3–203 and 3–208. We shall discuss the relevant statutes in greater detail when we discuss the issues.

Nassif, 198 Md.App. at 725–26, 18 A.3d at 1022. We too will later discuss the legislative changes as we examine the issues.

Before distributing Nassif's elective share, Green filed a complaint for declaratory judgment in the Circuit Court for Prince George's County (“Circuit Court”),³ seeking a declaration that (1) his calculation of enforceable claims totaling in excess of $13 million was correct; (2) those claims were properly deductible from Nassif's statutory share; and (3) Green and Fotos could pay Nassif her statutory share in cash, pursuant to Section 3–208(b)(2), in “an amount equal to the fair market value of the interest in the specific property on the date the election to take an elective share was made by [Nassif].”

When Green filed his complaint for declaratory judgment on July 21, 2006, the estate was already the subject of a pending action in the Orphans' Court for Prince George's County.⁴ The two actions proceeded in parallel, and on November 30, 2006, the Orphans' Court issued 117 findings of fact, 23 conclusions of law, and nine orders regarding how the PR should administer the estate. Among its conclusions were that (1) “enforceable claims” were to be calculated as claims “paid as of the date of distribution;” (2) Nassif was entitled to share in income on estate property; (3) the Maryland Uniform Principal and Income Act, Sections 15–501et seq., applied to distributions and income of the estate; and (4) the legatees' decision to pay Nassif in cash was untimely and void. Green appealed to the Circuit Court, where the case took a different number than the declaratory judgment action.⁵

After Green moved for summary judgment in the declaratory judgment action, the Circuit Court partially consolidated the cases on October 23, 2007. ⁶ On March 28, 2008, the Circuit Court granted in part and denied in part the motion for summary judgment, and the case proceeded to trial.

Following a two-month trial, the Circuit Court issued a memorandum and opinion on June 30, 2009. The court reached different conclusions on the issues that had been decided in the Orphans' Court, holding that (1) $13,204,136 in claims,...