Interinsurance Exchange v. Narula

• Decision Date: 04 April 1995
• Docket Number: E013717,Nos. E012417,s. E012417
• Citation: 33 Cal.App.4th 1140,39 Cal.Rptr.2d 752
• Court: California Court of Appeals Court of Appeals
• Parties: The INTERINSURANCE EXCHANGE OF the AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA, Plaintiff and Appellant, v. Devendra Singh NARULA, as Personal Representative, etc., Defendant and Respondent. ESTATE OF Manjit Singh, Deceased. Devendra Singh NARULA, as Personal Representative, etc., Petitioner and Respondent, v. The INTERINSURANCE EXCHANGE OF the AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA, Objector and Appellant.

Page 752

39 Cal.Rptr.2d 752

33 Cal.App.4th 1140

The INTERINSURANCE EXCHANGE OF the AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA, Plaintiff and Appellant, v. Devendra Singh NARULA, as Personal Representative, etc., Defendant and Respondent.

ESTATE OF Manjit Singh, Deceased.

Devendra Singh NARULA, as Personal Representative, etc., Petitioner and Respondent, v. The INTERINSURANCE EXCHANGE OF the AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA, Objector and Appellant.

Nos. E012417, E013717.

Court of Appeal, Fourth District, Division 2, California.

April 4, 1995.

Certified for Partial Publication. ^*

Rehearing Denied April 26, 1995.

[33 Cal.App.4th 1142] Davis and Drum and Joel Drum for appellant.

Cummins & White, Kent M. Bridwell and Robert S. Horwitz, Warren & Herman and Judith Warren-Yaconelli, for respondent.

OPINION

HOLLENHORST, Associate Justice.

[[ ]]Plaintiff appeals from the judgment entered after the trial court sustained defendant's demurrer to Plaintiff's complaint without leave to amend.[[ ]]

PROCEDURAL BACKGROUND (E012417)

On April 16, 1992, Plaintiff initiated this action against Devendra Singh Narula, personal representative of the estate of Manjit Singh, deceased ("Defendant"). ¹ Following Defendant's challenge to the initial pleadings, Plaintiff filed its amended complaint (the "Complaint") on September 1, 1992. Plaintiff seeks damages on its rejected claim against the estate. Defendant demurred to the Complaint and the trial court sustained the demurrer without leave to amend. The case was dismissed on December 17, 1992, and Plaintiff initiated its [[ ]] appeal[[ ]].

STANDARD OF REVIEW

Where a trial court sustains a demurrer without leave to amend, we review such action under the abuse of discretion standard. (Hendy v. Losse (1991) 54 Cal.3d 723, 742, 1 Cal.Rptr.2d 543, 819 P.2d 1.) If there is a reasonable possibility that the pleading can be cured by an amendment, the trial court's ruling will be reversed. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58.)

On review, we examine the Complaint's factual allegations to determine whether they state a cause of action on any available legal theory. (Saunders v. Cariss (1990) 224 Cal.App.3d 905, 908, 274 Cal.Rptr. 186.) We treat the demurrer as admitting all material facts which were properly pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967, 9 Cal.Rptr.2d 92, 831 P.2d 317.) However, we will not assume the truth of contentions, deductions, or conclusions of fact or law (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125, 271 Cal.Rptr. 146, 793 P.2d 479) and we may disregard any allegations that are contrary to the law or to a fact of which judicial notice may be taken. (Fundin v. Chicago Pneumatic Tool Co. (1984) 152 Cal.App.3d 951, 955, 199 Cal.Rptr. 789.)

FACTS ²

In March 1991, Plaintiff and Manjit Singh ("Decedent") entered into a stipulation for entry of judgment in the amount of $4,498.94, based upon an automobile accident occurring on June 14, 1989. Pursuant to the stipulation, Decedent was to pay Plaintiff $50 per month. If there was a default in payments, a default judgment for the unpaid balance could be entered against Decedent. Decedent made one payment before he died on May 21, 1991.

Defendant is Decedent's duly appointed personal representative. Testamentary letters were issued to Defendant in August 1991. The time for filing a creditor's claim against the Estate expired in December 1991. On January 21, 1992, Plaintiff was notified of the death of Decedent. On February 10, 1992, Plaintiff filed a claim against the Estate in the amount of $4,482.54. The claim was rejected.

ISSUES ON APPEAL

By way of its Complaint, Plaintiff seeks to recover losses incurred as a result of the estate's rejection of its claim. The trial court sustained Defendant's demurrer to the Complaint without leave to amend because Plaintiff failed to follow the procedures prescribed by the Probate Code for filing an untimely claim. On appeal, Plaintiff challenges the trial court's ruling on the demurrer and raises the issue of whether or not California's Probate Code complies with constitutional due process.

[[ ]] ^**

ARGUMENT

Plaintiff challenges the constitutionality of California's Probate Code to the extent that it pertains to the administration of creditor claims against the estate of a decedent. Plaintiff contends that the "United States Supreme Court has unequivocally established that a personal representative of an estate must attempt to identify creditors of a decedent." (Tulsa Professional Collection Services v. Pope (1988) 485 U.S. 478, 108 S.Ct. 1340, 99 L.Ed.2d 565.) Moreover, Probate Code section 9103 ³ which allows for the filing of a late claim does not cure the defect resulting from the personal representative's failure to identify a given creditor.

In response, Defendant points out that the Probate Code was amended in 1990 to give "the creditor more latitude in filing late claims." (Clark v. Kerby (1992) 4 Cal.App.4th 1505, 1511, 6 Cal.Rptr.2d 440. ⁴ ) She argues that Plaintiff cannot be heard to complain that its constitutional rights were violated because it failed to follow the procedural alternative available, i.e., section 9103. Based upon our review of the facts, as set forth in the Complaint, and the applicable law, we agree with Defendant.

A. The Tulsa Decision:

In its 1988 Tulsa decision, the United States Supreme Court held that the "nonclaim" provisions of Oklahoma's Probate Code were invalid. According to that statute, creditors of a decedent were allowed only two months in which to submit claims against the decedent's estate. Subject to a couple of limited exceptions, claims not presented within that narrow window were thereafter barred. At the same time, creditors were not entitled to actual notice of the estate administration under Oklahoma law. The only requirement was that the executor or executrix publish notice for two weeks in a local newspaper. Thus, even a creditor who was actually known to the estate representative might not receive effective notice of its looming deadline. (Tulsa Professional Collection Services v. Pope, supra, 485 U.S. 478, 481, 489, 108 S.Ct. 1340, 1342-43, 1347, 99 L.Ed.2d 565.) The Court opined that since estate representatives often acquire a beneficial interest in the estate, they are likely to harbor a personal incentive not to provide actual notice for the benefit of creditors. (Id., at p. 489, 108 S.Ct. at p. 1347.)

The Tulsa Court recognized that the state "undeniably has a legitimate interest in the expeditious resolution of probate proceedings." (Tulsa Professional Collection Services v. Pope, supra, 485 U.S. 478, 489, 108 S.Ct. 1340, 1347, 99 L.Ed.2d 565.) The Court further observed that "[t]he entire purpose and effect of the nonclaim statute is to regulate the timeliness of such claims and to forever bar untimely claims...." (Id., at p. 488, 108 S.Ct. at p. 1346.) However, given the likelihood that known or easily identified creditors would not respond in time to preserve their claims, the Tulsa Court concluded that additional assurances of fair notice were required as a matter of federal due process. (Id., at pp. 489-491, 108 S.Ct. at pp. 1347-48.) Specifically, the Court held that known or "reasonably ascertainable" creditors were entitled to actual and timely notice of the estate proceeding. Whether or not a creditor is "reasonably ascertainable" depends in turn upon whether that creditor's identity would be uncovered with "reasonably diligent efforts" on the administrator's part. (Id., at p. 491, 108 S.Ct. at p. 1348.) Notably, in reaching this conclusion, the Tulsa Court observed that a few states, including California, "already provide for actual notice in connection with short nonclaim statutes." (Id., at p. 490, 108 S.Ct. at p. 1347.)

In sum, the Tulsa decision "establishes that as a matter of due process, state 'nonclaim' statutes providing a short claimsfiling [sic ] period cannot cut off the rights of known or reasonably ascertainable creditors who did not receive actual notice of commencement of probate proceedings." (Clark v. Kerby, supra, 4 Cal.App.4th 1505, 1510, 6 Cal.Rptr.2d 440.)

B. The Probate Code Provisions:

In 1990, California's Probate Code was amended to more fully address the concerns discussed in Tulsa. (Clark v. Kerby, supra, 4 Cal.App.4th 1505, 1511, 6 Cal.Rptr.2d 440.) These revisions, which became operative on July 1, 1991, not only attempt to ensure that creditors receive constitutionally sufficient notice, subject to the practicalities of estate administration (§ 9050), but they also give creditors more latitude in filing late claims. (Ibid.)

Section 9050 provides: "(a) Subject to Section 9054, if a general personal representative has knowledge of a creditor of the decedent, the personal representative shall give notice of administration of the estate to the creditor. The notice shall be given as provided in Section 1215. For the purpose of this subdivision, a personal representative has knowledge of a creditor of the decedent if the personal representative is aware that the creditor has demanded payment from the decedent or the estate. [p] (b) The giving of notice under this chapter is in addition to the publication of the notice under Section 8120."

However, section 9053, subdivision (d) states that "[n]othing in this chapter imposes a duty on the personal representative to make a search for creditors of the decedent." We interpret this section to include the notice obligations as provided for in Tulsa. However, to the extent that these sections, by themselves, fail to satisfy constitutional due process, the Legislature enacted sections 9103, 9352, and 9392.

Section 9103 allows creditors, who were not given proper notice and who were not aware of the estate administration, leave to file a late claim under specified conditions. Any type of claim is eligible; however, the late-claim...