Merit Decision: Creditor Must Bring Claim Against Debtor Spouse’s Estate Before It Can Sue Surviving Spouse Under Necessaries Statute. Embassy Healthcare v. Bell.
“R.C. 3103.03(A) and the admission agreement leave no question that Robert was the debtor and that his estate remains primarily responsible for his liabilities. Embassy was therefore required to seek recourse first against Robert’s estate before seeking payment from Cora.”
Justice French, majority opinion
“Because the necessaries statute permits a claim to be made directly against the married person who failed to provide necessaries, the statute of limitations set forth in R.C. 2117.06 for “claims against an estate” has no application. It is that simple.”
Justice DeWine, dissenting opinion
On December 12, 2018, the Supreme Court of Ohio handed down a merit decision in Embassy Healthcare v. Bell, Slip Opinion No. 2018-Ohio-4912. In a 5-2 opinion written by Justice French, the court held that a creditor must present its claim for unpaid necessaries to the decedent’s estate before it can bring a claim against the surviving spouse under Ohio’s necessaries statute. Justice Fischer dissented, and Justice DeWine dissented with an opinion. The case was argued December 12, 2018.
Embassy Healthcare (“Embassy”) operates a nursing home where Robert Bell stayed before he died. Robert signed an admission agreement with Embassy on January 9, 2014. The terms of that agreement make Robert responsible for payment in full for any amounts owed to the facility. Cora also signed the agreement as the “Responsible Party,” which is defined in the agreement as the one liable for services rendered to Robert to the extent of Robert’s income, asserts or resources to which she, as Responsible Party, had legal access. But the agreement also expressly states that nothing in the agreement shall be construed to require Cora, as Responsible Party, to be personally liable for payment for services rendered to Robert.
Robert died on May 22, 2014. On November 25, 2014, six months and three days after Robert died, Embassy sent a letter to Cora seeking payment from Robert’s estate for an outstanding bill of $1678. The letter was addressed to the Estate of Robert Bell, c/o Cora Bell, Fiduciary, and addressed to her as Personal Representative of the Estate. And the body of the letter stated that Cora “was not personally liable for the account.”
No estate had been opened, however. And Embassy never sought to have an estate administrator appointed to present a claim for unpaid services to Robert’s estate. Instead, on June 29, 2015, Embassy sued Cora under Ohio’s necessaries statute in Franklin Municipal Court in Warren County, seeking payment from her for Robert’s unpaid expenses. The magistrate granted summary judgment to Cora on the ground that Embassy failed to prove Robert could not pay for Embassy’s services to him, a prerequisite under the necessaries statute. The trial court upheld the magistrate’s decision on a different ground—that Embassy first had to seek payment from Robert’s estate and had failed to do so within the time allowed. Embassy appealed.
The Twelfth District Court of Appeals reversed, in a split decision. The majority held that the necessaries statute creates a claim against a debtor’s spouse independent of the statute of limitations for claims against an estate, and that Cora had not affirmatively proven that Robert had sufficient Medicare coverage to pay for Embassy’s services, creating a question of fact on that issue. The dissenting judge would affirm summary judgment for Cora. He would find that Embassy, which had the burden of proof under the necessaries statute, failed to prove that Robert was unable to pay for his necessary medical expenses.
Propositions of Law Accepted for Review
- The plain language of R.C. 2117.06(C) mandates a claim under R.C. 3103.03 for necessaries supplied to a decedent must be presented to the estate and failure to do so bars the claim against both the estate and the spouse.
- By definition, a creditor who fails to timely present its claim to the decedent’s estate cannot prove, as a matter of law, the decedent is unable to pay the claim such that a claim cannot be brought against the spouse under R.C. 3103.03.
Key Statutes in this Appeal
R.C. 3103.03 Ohio’s Necessaries Statute (“Each married person must support the person’s self and spouse out of the person’s property or by the person’s labor. If a married person is unable to do so, the spouse of the married person must assist in the support so far as the spouse is able.”)
R.C. 2117.06(C) (“Except as provided in section 2117.061 of the Revised Code, a claim that is not presented within six months after the death of the decedent shall be forever barred as to all parties including, but not limited to, devisees, legatees, and distributees.”)
Other Key Precedent
Pierce v. Johnson, 136 Ohio St. 95 (1939) (The word “creditor” in R.C. 2117.06 means “all persons having rights of action against the decedent.”)
Hausser v. Ebinger, 161 Ohio St. 192 (1954) (Under the necessaries statute, the non-debtor spouse’s obligation is secondary to that of the debtor spouse.)
Wrinkle v. Trabert, 174 Ohio St. 233 (1963) (“where one has a claim against an estate, it is incumbent upon him, if no administrator has been appointed, to procure the appointment of an administrator against whom he can proceed.”)
Ohio St. Univ. Hosp. v. Kincaid, 48 Ohio St. 3d 78 (1990) (“Where a husband is unable to provide for his own support, pursuant to R.C. 3103.03 a wife must aid in the support of her husband to the extent that she is able . . . implicit in our decision, without saying more, is that medical expenses are necessaries and, as such, are included as part of any definition of ‘support.’”)
Lewis v. Steinreich, 73 Ohio St.3d 299 (1995) (“The presentment requirements of R.C. 2117.06 apply only to those claims which may be allowed as debts payable out of the assets of an estate.”)
Osborne v. Osborne, 114 Ohio App.3d 412 (2d Dist.1996) (“Obligations incurred by a deceased during his or her lifetime become debts of his or her estate after death by operation of law.”)
Wilson v. Lawrence, 2017-Ohio-1410 (“a claim against an estate must be timely presented in writing to the executor or administrator of the estate in order to meet the mandatory requirements of R.C. 2117.06(A)(1)(a) . . . .”)
Ohio’s Necessaries Statute
R.C. 3103.03 codifies the common-law necessaries doctrine. In the bad old days, that meant that a husband was liable to third parties for food, shelter, clothing and medical services provided to his wife. For those ignorant of history, back in those bad old days, a married woman could not own property, enter into contracts, or get her own credit. Thus the need for the necessaries doctrine.
As enlightenment slowly dawned, the necessaries statute was amended to be gender neutral, imposing the duty to provide necessaries on both spouses.
This statute is part of the probate code section on presentment of claims against an estate. It requires all creditors having claims against an estate, including claims arising out of contract, tort, cognovit notes or on judgments, to present their claims within six months of the death of the decedent, or the claims shall be forever barred.
As a creditor, Embassy was required to present its claim for unpaid necessaries to Robert’s estate pursuant to R.C. 2117.06 before it could sue Cora as surviving spouse under the necessaries statute. Because Embassy failed to present its claim or ask for the appointment of an administrator within six months of Robert’s death, Cora was entitled to summary judgment.
Obligations of Married Persons Under the Necessaries Statute
Under R.C. 3103.03, the necessaries statute, the debtor spouse has primary liability for his/her own debts. The necessaries statute does not impose joint liability on a married person for the debts of his/her spouse. Only if the married person is unable to provide for his/her own necessaries does the obligation of the other spouse kick in. So the liability of the non-debtor spouse is secondary. Think of that person as being like a guarantor.
What That Means in This Case
The admission agreement between Embassy and Robert clearly states that Robert is responsible for payment in full of all amounts owed to Embassy. While Cora signed the agreement as Responsible Party, the agreement also clearly states that the responsible party is not “personally liable for payment for services rendered by the Facility to the Resident.” That means Embassy had to first try and collect this debt from Robert’s estate.
How Does Embassy Collect Robert’s Debt?
Embassy argued it could go straight to an action against Cora under R.C. 3103.03, the necessaries statute. No, it can’t said the majority. That position goes against the plain language of R.C. 2117.06, which requires that all creditors with claims against an estate arising out of a contract shall present their claims in accordance with R.C. 2117.06. So, as a creditor with a contract claim against Robert, Embassy should have presented its claim to Robert’s estate within six months, in accordance with the statute. It didn’t. It can’t just opt out of that requirement and head for the necessaries statute. When no estate has been opened, a creditor can seek appointment of an estate administrator. Embassy didn’t do that either. It is out of luck.
The court of appeals judgment is reversed. Cora should have been granted summary judgment.
Justice DeWine’s Dissent
To Justice DeWine, the statute of limitations in R.C. 2117.06 is irrelevant. The necessaries statute allows a claim to be made directly against the married person who failed to provide the necessaries for her debtor spouse. Here, that meant Embassy properly sued Cora under the necessaries statute for Robert’s debt. Before it can win that case, Embassy has to show that Robert was unable to pay. That did not happen yet. And there is no particular way that has to be proven.
The majority’s mandatory requirement that creditors must first present a claim against the debtor spouse’s estate is both unduly burdensome and in this case and others like it, a vain and pointless act.
“Nothing in R.C. 2117.06 mandates that a creditor who potentially has a claim against an estate must present that claim or forgo another independent source of recovery,” wrote DeWine. He goes on to list a parade of hypotheticals in cases that go beyond necessaries, and accuses the majority of working a “substantial rewrite of a large chunk of debtor-creditor law.” He would hold that R.C. 3103.03 does not require that a claim for necessaries (or any other creditor claim) must always first be presented to a decedent’s estate.
Justice Fischer also dissented without opinion. He did not join Justice DeWine’s dissent.
Both student contributor Carson Miller and I thought Cora Bell should win, although he was more optimistic than I that she would. I wrote this, after argument:
“It just doesn’t sit right with me that Embassy Healthcare clearly blew it here by failing to open an estate and/or file a claim…Yes, Embassy still has to prove Mr. Bell’s inability to pay, and a few other minor things, like were these really necessaries (no one disputes this point), but averting the probate requirements? If I were in charge, I’d make timely filing a claim with the estate a condition precedent to a necessaries filing as a policy matter.” And so the court did, as a matter of statutory interpretation.
I also wrote, “I think the Chief and Justice DeGenaro were put off by Embassy’s argument that it was the creditor’s choice either to open (if necessary) an estate and file a claim or to pursue an independent claim under the necessaries statute.”
And Carson wrote,
“Ultimately, there was enough skepticism from the Justices towards Embassy’s proposition—that a creditor could, at its own discretion, sue a surviving spouse at any time without making any effort to recover from the decedent—for me to predict that the court will find for Bell and overturn the lower court’s decision.”
I found Justice French’s analysis straightforward and clear. And I agree with her that the decision “addresses only the statutory language and factual situation before us in this appeal” and not the many scenarios spun by Justice DeWine in his dissent.