Singer Asset Finance Co. v. Estate Of Richard H. Rutherford

Decision Date01 June 2007
Docket Number2050500.
Citation34 So.3d 1253
PartiesSINGER ASSET FINANCE COMPANY, L.L.C.v.ESTATE OF Richard H. RUTHERFORD.
CourtAlabama Court of Civil Appeals

[34 So.3d 1253 1254]

Dayna R. Burnett and Charles N. Parnell III of Parnell & Crum, P.A., Montgomery, for appellant.

J. Sanford Mullins and Peter M. Wright of Sirote & Permutt, PC, Birmingham, for appellee.

THOMAS, Judge.

Singer Asset Finance Company, L.L.C. (“Singer”), filed a claim against the estate of Richard H. Rutherford, stating that pursuant to a perfected security agreement between Rutherford and Mutual BanCorp (“Mutual”), which was later assigned to Singer, the estate owed Singer $35,000. The representative of the estate countered that Singer's claim was barred by the nonclaims statute, § 43-2-350, Ala.Code 1975, and was, therefore, unenforceable. The Jefferson Probate Court agreed with the representative of the estate and denied Singer's claim.

Singer appealed to the Jefferson Circuit Court; the circuit court entered a summary judgment for the estate. Singer appeals, arguing that it was a reasonably ascertainable creditor who was not given actual notice of the issuance of letters of administration for the estate, and, therefore, it says, the nonclaims statute did not bar its claim.

We are releasing today an opinion in another appeal by Singer; in that appeal, Singer sought review of judgment dismissing its claims against Connecticut General Life Insurance Company (“CGLIC”). See Singer Asset Fin. Co. v. Connecticut General Life Ins. Co., 975 So.2d 375 (Ala.Civ.App.2007). The facts underlying both appeals are essentially the same and are undisputed.

Richard Rutherford was injured in an Atlantic City, New Jersey, casino, and, in settlement of his claim against the casino, he agreed to a structured settlement with North River Life Insurance Company (“North River”), the insurer of the casino. The agreement, among other things, provided that Rutherford would receive five periodic payments. The payments were to be made according to the following schedule:

$15,000.00 payable on April 1, 1990;
$15,000.00 payable on April 1, 1995;
$20,000.00 payable on April 1, 2000;
$35,000.00 payable on April 1, 2005; and
$50,000.00 payable on April 1, 2010.

[34 So.3d 1253 1255]

In accordance with its rights under the settlement agreement, North River subsequently purchased a guaranteed investment annuity contract from CGLIC to fund its obligation to make the periodic payments to Rutherford.

On April 30, 1998, Rutherford entered into a security agreement with Mutual, assigning to Mutual two of the periodic payments in return for an immediate cash payment. The assigned payments were the April 1, 2000, payment for $20,000, and the April 1, 2005, payment for $35,000. On the same day, Mutual provided written notice of the assignment to CGLIC and North River. Mutual then assigned its rights to the two periodic payments to Singer on or about May 11, 1998. On May 19, 1998, Mutual filed a UCC-1 financing statement with the office of the Alabama Secretary of State. CGLIC made the April 1, 2000, payment to Singer.

On May 24, 2002, Rutherford died. Almost a year later, on April 1, 2003, the UCC-1 financing statement previously filed by Mutual was amended to reflect that Singer was the assignee of Mutual's interest in the security agreement. On April 2, 2003, the day after the UCC-1 financing statement was amended to add Singer as the assignee, and almost a year after Rutherford's death, letters of administration were issued to Roy F. King, Jr., serving as the general county administrator for Jefferson County. Rutherford's wife had predeceased him in May 1996, leaving Rutherford's son, Christopher, as Rutherford's sole heir.

King had been contacted by Margaret Lathum, an attorney, who claimed that she had represented Rutherford and his wife before they died, as well as their only son, Christopher, who was then in prison. Lathum told King that Christopher was trying to get his father's estate probated and asked King if he would serve as the administrator. King agreed and asked Lathum for any information she had about the assets, liabilities, and debts of the estate. King claimed that Lathum gave him the following information: that Rutherford had been a plaintiff in pending asbestos litigation and that there was a check from an insurance company for the “Death Benefit of Richard Rutherford in the amount of $46,704.65. That check had actually been issued by CGLIC and represented the commuted amount of the remaining settlement proceeds.1

Publication notice to creditors was made on April 5, April 12, and April 19, 2003. Lathum subsequently delivered to King the check from CGLIC, which was dated January 7, 2003, and King deposited the check into the bank account for the estate. King claimed that other than the check made payable to the estate and the information Lathum had provided him regarding the pending asbestos claim that Rutherford had previously filed, he received no information, from either Christopher Rutherford or Lathum, regarding the assets or liabilities of the estate.

On November 12, 2003, after deducting all the estate debts, court costs, and administrative fees, and after receiving the check from CGLIC and a settlement sum from the law firm handling the asbestos claim, King paid over substantially all of the remaining estate assets to the sole heir, Christopher Rutherford.

[34 So.3d 1253 1256]

Singer claims that it first received notice that the estate had been administered and that the check representing the commuted proceeds from the settlement agreement had been paid to the estate on November 9, 2004, almost a year after King had distributed the assets of the estate to Christopher Rutherford. On November 12, 2004, Singer, as the assignee of the right to receive $35,000 from CGLIC on April 1, 2005, filed a proof of claim with the Jefferson Probate Court. King filed a contest of claim on December 21, 2004, asserting that Singer's claim was barred by the nonclaims statute. Following a hearing, the probate court denied the claim asserted by Singer and entered a judgment in favor of the estate. Singer appealed the probate court's decision to the circuit court for a de novo hearing. After a hearing on a summary-judgment motion filed by King, the circuit court entered a summary judgment in favor of the estate.

Singer timely appeals, raising three issues: (1) whether Singer was a “reasonably ascertainable” creditor under § 43-2-61, Ala.Code 1975; (2) whether King exercised due diligence in searching for reasonably ascertainable creditors of the estate; and (3) whether Singer's claim was a claim of title allowing Singer to assert its claim as an exception to the nonclaims statute.

Although Singer raises three issues for this court to consider, the first two issues are interconnected and will be treated, for the purposes of this opinion, as one issue, namely, whether Singer was a reasonably ascertainable creditor under § 43-2-61. Because of our disposition of that issue, we pretermit any discussion of whether Singer's claim was a claim of title, which is an exception to the nonclaims statute.

Standard of Review

This court recently stated our well-settled standard of review of a summary judgment in Hunt v. Atrex, Inc., 963 So.2d 122, 123 (Ala.Civ.App.2007):

We review a summary judgment de novo, applying the same standard as was applied in the trial court. A motion for a summary judgment is to be granted when no genuine issue of material fact exists and the moving party is entitled to a judgment as a matter of law. Rule 56(c)(3), Ala. R. Civ. P. A party moving for a summary judgment must make a prima facie showing “that there is no genuine issue as to any material fact and that [he] is entitled to a judgment as a matter of law.” Rule 56(c)(3), Ala. R. Civ. P. The court must view the evidence in a light most favorable to the nonmoving party and must resolve all reasonable doubts against the movant. Hanners v. Balfour Guthrie, Inc., 564 So.2d 412 (Ala.1990). If the movant meets this burden, “the burden then shifts to the nonmovant to rebut the movant's prima facie showing by ‘substantial evidence.’ Lee v. City of Gadsden, 592 So.2d 1036, 1038 (Ala.1992).'

(Quoting Bailey v. R.E. Garrison Trucking Co., 834 So.2d 122, 123 (Ala.Civ.App.2002).)

Issues

Alabama's nonclaims statute provides, in pertinent part:

“All claims against the estate of a decedent, other than the claims referred to in subsection (a) of this section [i.e., claims ‘held by the personal representative of the decedent or by an assignee or transferee of the personal representative, or in which the personal representative has an interest’], whether due or to become due, must be presented within six months after the grant of letters, or within five months from the date of the first publication of notice, whichever is the later to occur, provided however,

[34 So.3d 1253 1257]

that any creditor entitled to actual notice as prescribed in section 43-2-61 must be allowed thirty days after notice within which to present the claim, and if not presented within that time, they are forever barred and the payment or allowance thereof is prohibited.”

§ 43-2-350(b), Ala.Code 1975. Section 43-2-61, Ala.Code 1975, states which creditors are entitled to actual notice and the required manner of giving notice:

“Notice ... must be given:
(1) By first-class mail addressed to their last known address, or by other mechanism reasonably calculated to provide actual notice, to all persons, firms, and corporations having claims against the decedent, who are known or who are reasonably ascertainable by the personal representative within six months from the grant of letters; and
(2) By publishing a notice once a week for three successive weeks in a newspaper of general circulation published in the county in which the letters were granted or, if none is published in the county, in the one published nearest to the courthouse thereof or in an adjoining county.”

(...

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