In Gates v. Reilly, Case No. SJC-10088 (Mar. 24, 2009), the Supreme Judicial Court discussed the one-year statute of limitations applicable to claims by creditors of an estate and the grounds for obtaining relief therefrom.
The decedent owned a school in Marblehead and the land on which the school is located. The plaintiffs, who are two of the decedent's eight nieces and nephews, work at the school and claim that the decedent promised to leave them the school and the land upon her death. Unbeknownst to the plaintiffs, the decedent had transferred a portion of the land to a realty trust during her lifetime, and in her will she left her remaining interest in the land and the school to her eight nieces and nephews, including the plaintiffs, in equal shares.
The plaintiffs objected to the allowance of the decedent's will, but their objection was stricken. Thereafter, the plaintiffs initiated a superior court action as creditors of the estate, asserting claims based on the decedent's alleged promise. The executors of the decedent's will moved to dismiss the superior court action on the grounds that it was filed more than one year after the decedent's death (one year and thirty-three days, to be exact) and was time-barred under G.L. c. 197, § 9. The superior court granted the motion except with respect to the plaintiffs' equitable claims for specific performance and restitution, and the plaintiffs then filed for relief from the dismissal under G.L. c. 197, § 10.
Section 10 allows a creditor of an estate who has failed to comply with § 9's one-year limitations period to file a bill in equity seeking judgment for the amount of the claim against the estate. To obtain this relief, the creditor must demonstrate that (1) justice and equity require it, and (2) the creditor is not chargeable with culpable neglect in not prosecuting the claim within the oneyear period. The SJC explained that to be successful the creditor must show "both that justice and equity require recognition of a meritorious claim and that failure to bring the claim was not due to carelessness or lack of diligence."
Here, the SJC found that the justice and equity required affording the plaintiffs relief under § 10. First, the claims are sufficiently grounded in law and fact to be deemed meritorious. Second, the defendants failed to show that they were somehow prejudiced by the filing of the claims just thirtythree days after the one-year limitations period expired, particularly where the defendants were on notice of the claims within the one-year period. Third, the equitable claims that were not dismissed are based on the same underlying facts as those that were dismissed, and so those facts would be litigated anyway.
The SJC also found that the plaintiffs' failure to bring the claims within the one-year period was not the result of their culpable neglect. In so doing, the SJC rejected the defendants' argument that the plaintiffs were guilty of culpable neglect in waiting for the outcome of the will contest before filing the superior court action. The SJC explained that it was the plaintiffs' attorney - - and not the plaintiffs themselves -- who failed to file suit within one year, and that failure was the result of the attorney's misunderstanding of the controlling law and thus not attributable to the plaintiffs. "We continue to adhere as a general matter to the proposition that agency principles do not strictly apply to equitable proceedings brought under § 10, where a creditor's attorney is responsible for missing the one-year statute of limitations…; however, the attorney's conduct may be attributable to the client where the attorney exhibits 'disregard of professional responsibilities' as opposed to 'a misunderstanding of the controlling law.'"