June 20, 2019

Indiana Supreme Court Waves Red Flag on Race to Become Estate Special Administrator

After a tragic car accident killed young parents, a race to the courthouse ensued. Various family members petitioned different courts for appointment as special administrator to pursue a wrongful death claim, and each was promptly appointed. In the absence of a governing rule or statute, the Indiana Supreme Court held that due process requires trial courts to issue notice and hold a hearing before appointing a special administrator.

Background

Earlier this month, the Indiana Supreme Court decided In the Matter of the Unsupervised Estate of Orlando C. Lewis, Jr., v. Toliver. When a tragic car accident killed a young married couple, the decedents left behind a two-year daughter, K.L. The husband, Orlando Lewis, Jr. (Orlando), was also survived by his six-year-old son, J.T. After the accident, K.L. was placed with her aunt, Kathy Calloway, who was appointed her temporary guardian. J.T., who is medically disabled, is supported by his mother, Shana Toliver.

Just three days after the accident and a week before the funeral, Orlando’s father, Orlando Lewis Sr., petitioned the Johnson County Superior Court for appointment as special administrator of Orlando’s estate, so that he could pursue damages for the wrongful death of his late son. Four days after the accident (i.e., a day after Mr. Lewis’s petition), Ms. Toliver petitioned the Marion Superior Court for appointment as special administrator of Orlando’s estate. The respective courts granted the petitions the day after each was filed. Mr. Lewis promptly filed a wrongful death action on behalf of his son’s estate in Monroe Circuit Court, and Ms. Toliver filed a wrongful death action for the estate in Marion County.

About a month later, both Ms. Toliver and Ms. Calloway sought to intervene in the Johnson County proceedings in which Mr. Lewis was appointed special administrator. Both argued that they should be appointed special administrator since they are the legal and court appointed guardians for Orlando’s children. They further argued that Mr. Lewis had been absent from both J.T.’s and K.L.’s lives. The trial court rescinded its appointment of Mr. Lewis as special administrator and appointed Ms. Toliver and Ms. Calloway as co-special administrators. Importantly, the trial court also held that its rescission of its prior appointment was not a “removal” of a special administrator, which must conform with certain statutory requirements, including a hearing in which the special administrator can present evidence on why he should not be removed. Rather, the trial court explained its decision was simply a reconsideration of its earlier appointment.

The Indiana Supreme Court’s Analysis

After the Indiana Court of Appeals affirmed the trial court, the Supreme Court accepted Mr. Lewis’s petition to transfer. The Court held that the trial court acted within its discretion in reconsidering its appointment of Mr. Lewis as special administrator, observing that the special administrator controls the estate’s “potentially [ ] multimillion-dollar claim” and is positioned to receive remuneration both for himself and the lawyers pursuing the wrongful death claim.

First, the Court reasoned that it is well established that a court may reconsider an order or ruling until it enters judgment. The Court also explained that:

  1. The trial court did not give notice to beneficiaries or other interested parties before appointing Mr. Lewis.
  2. Ms. Toliver and Ms. Calloway acted reasonably promptly in seeking appointment.
  3. Ms. Toliver and Ms. Calloway were the legal guardians of the beneficiaries of the wrongful death action.

The Indiana Supreme Court affirmed the trial court’s decision to replace Mr. Lewis as special administrator without following the statutory removal requirements.

Going Forward

In its opinion, the Indiana Supreme Court criticized the Probate Code’s provisions on the appointment of special administrators. Specifically, the Court noted that the statute does not require notice to beneficiaries or other interested parties and affords no right of appeal to someone aggrieved by the court’s appointment. The Court offered a judicially created remedy to these problems by encouraging courts to afford notice to beneficiaries or their legal representatives and hold a hearing before appointing a special administrator, “[a]lthough the statute does not require it[.]” This, the Court says, will protect the beneficiaries’ due process rights.

This may be an issue the Indiana General Assembly resolves through future statutory amendments. In the meantime, at least one probate court has already implemented these notice and hearing suggestions.

Estate administration and litigation are constantly evolving areas of law. Questions on estate administration and disputes should be directed to legal counsel.

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