United States v. O'Brien

356 F.Supp.3d 518

UNITED STATES of America, Plaintiff,

v.Timothy O'BRIEN, et al., Defendants.

Case No.: PWG-17-1007

United States District Court, D. Maryland, Southern Division.

Filed December 3, 2018

Ann Elizabeth Nash, Olga L. Tobin, United States Department of Justice, Washington, DC, for Plaintiff.

Diane V. Marshall, Ft. Washington, MD, pro se.

MEMORANDUM OPINION AND ORDER

Paul W. Grimm, United States District Judge

The United States has sued Timothy P. O'Brien in his individual capacity as Special Administrator of the insolvent Estate of Louis C. Pate (the "Estate"), and Diane V. Marshall, in her individual capacity as Representative of the Estate. Count I seeks to collect "Mr. Pate's unpaid federal income taxes, penalties, and interest assessed against Mr. Pate for the 2004 tax periods and ... the 2007-2009 tax periods" through a judgment against O'Brien or, alternatively, against Marshall. Am. Compl. 1–2 & ¶¶ 11–16, ECF No. 10.¹

O'Brien has moved to dismiss the claim against him. ECF No. 28. I agree with him that "[a] Special Administrator, like Mr. O'Brien, is not a proper defendant to a lawsuit against an estate because a Special Administrator lacks the authority to defend a lawsuit or litigate actions on behalf of an estate." Def.'s Mem. 1, ECF No. 28-1.² Accordingly, I will grant his Motion to Dismiss.

Background

Following Louis Pate's death on September 5, 2012, his Estate was opened with the Register of Wills for Prince George's County. Def.'s Mem. 2; Pl.'s Opp'n 2. The Orphans' Court³ for Prince George's County appointed O'Brien as Special Administrator to the Estate on November 7, 2013, when it removed Willie Mae Pate Roary as personal representative. Appointment Order, ECF No. 28-3; Def.'s Mem. 2; Pl.'s Opp'n 2. In that capacity, O'Brien filed a Petition for Authorization to Pay Income Tax Liabilities on March 31, 2016, and on May 16, 2016, the Orphans' Court "authorized and directed" him to pay federal taxes of $7,243.69 and state taxes of $4,666.41. Order, ECF No. 28-4; Def.'s Mem. 2–3; Pl.'s Opp'n 3.

The Orphans' Court closed the Estate, which was insolvent, on May 17, 2016. Def.'s Mem. 3; Pl.'s Opp'n 3. No successor personal representative had been appointed; O'Brien still was serving as Special Administrator. Orphans' Ct. Docket 1, ECF No. 28-2. As authorized and directed, O'Brien paid $7,243.69 in federal taxes from the Estate on November 21, 2016. Account Tr. 3, ECF No. 35-2; Disbursements, ECF No. 35-3. The United States alleges that, as of August 7, 2017, the total amount still due for Pate's federal income taxes, including penalties and statutory interest, for 2004, 2007, 2008 and 2009 is $229,974. Am. Compl. ¶¶ 12, 15. As noted, the United States seeks to collect this amount from O'Brien or, alternatively, Marshall. Id. at 1–2 & ¶¶ 11–16.

Standard of Review

Pursuant to Rule 12(b)(6), a complaint is subject to dismissal if it "fail[s] to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). A complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), and must state "a plausible claim for relief," Ashcroft v. Iqbal , 556 U.S. 662, 678–79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. Rule 12(b)(6)'s purpose "is to test the sufficiency of a complaint and not to resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Velencia v. Drezhlo , No. RDB-12-237, 2012 WL 6562764, at *4 (D. Md. Dec. 13, 2012) (quoting Presley v. City of Charlottesville , 464 F.3d 480, 483 (4th Cir. 2006) ).

At this stage of the proceedings, I accept the well pleaded facts in the United States's Amended Complaint as true, see Aziz v. Alcolac , 658 F.3d 388, 390 (4th Cir. 2011). Also, I may take judicial notice of relevant state court filings. See Fed. R. Evid. 201(b)(2).

The Role of Special Administrators

Maryland's Estates & Trusts law provides that the state court may appoint a special administrator "whenever it is necessary to protect property prior to the appointment and qualification of a personal representative or upon the termination of appointment of a personal representative and prior to the appointment of a successor personal representative." Md. Code Ann., Est. & Tr. § 6-401(a) ; see also Md. R. 6-454(a) ("When necessary to protect property before the appointment and qualification of a personal representative or before the appointment of a successor personal representative following a vacancy in the position of personal representative, the court shall enter an order appointing a special administrator."). Put differently, the special administrator fills in when there is no personal representative for an estate. See Est. & Tr. § 6-401(a).

The special administrator's duties are to "collect, manage, and preserve property and account to the personal representative upon his appointment." Est. & Tr. § 6-403 ;⁴ see also Md. R. 6-454(d) ("The special administrator shall collect, manage, and preserve property of the estate and shall account to the personal representative subsequently appointed. The special administrator shall have such further powers and duties as the court may order."). The special administrator's duties incorporate "all duties unperformed by a personal representative imposed under Title 7, Subtitles 2, 3, and 5 of [Estates & Trusts]."^{[5 ]} Est. & Tr. § 6-403 ; see also Md. R. 6-454(d) ("The special administrator shall assume any unperformed duties required of a personal representative concerning the preparation and filing of inventories, accounts and notices of filing accounts, and proposed payments of fees and commissions.").

Although the duties of the special administrator are defined by reference to the personal representative's duties, the statutory provisions pertaining to the special administrator's powers do not reference the personal representative's powers. See Est. & Tr. § 6-403 ; Md. R. 6-454(d). Rather, the special administrator "has all powers necessary to collect, manage, and preserve property," as well as "the other powers designated from time to time by court order." Est. & Tr. § 6-403 ; see also Md. R. 6-454(d).

In sharp contrast to § 6-403's general language about the special administrator's powers, Subtitle 4 (which is absent from the list of Subtitles that define the duties of a special administrator) enumerates many specific powers of the personal representative, Est. & Tr. §§ 7-401 – 7-404, including the power to "prosecute, defend, or submit to arbitration actions, claims, or proceedings in any appropriate jurisdiction for the protection or benefit of the estate, including the commencement of a personal action which the decedent might have commenced or prosecuted," with exceptions not relevant here. Est. & Trusts § 7-401(y)(1). Additionally, "[t]he personal representative may petition the court for permission to act in any matter relating to the administration of the estate," in response to which "[t]he court may pass any order it considers proper." Est. & Tr. § 7-402.

Parties' Arguments

O'Brien argues that, as Special Administrator, he "is not a proper defendant to a lawsuit against the estate," because a special administrator, unlike a personal representative, "is not authorized to defend an estate in litigation (unless expressly authorized by a court to do so)." Def.'s Mem. 5. He insists that "[a] Special Administrator's role ... is closely circumscribed by statute [Est. & Tr. 6-403 ] to protect and preserve estate property until a Personal Representative is appointed." Id. at 6. In O'Brien's view,

[b]y contrast to the statutory duties of a Personal Representative, which expressly includes prosecuting or defending litigation, see E.T. § 7-401(y), the statutory duties of a Special Administrator [under Est. & Tr. 6-403 ] do not include defending or prosecuting a lawsuit. Due to these limited powers, a Special Administrator expressly lacks the authority to make decisions on behalf of an estate in the context of defending or prosecution litigation. As a result, a Special Administrator lacks the capacity to act or make decision on behalf of an estate in the context of defending litigation."

Id. at 7.

The United States counters that "[s]tate probate law does not expressly and absolutely limit the powers of the special administrator to participate in litigation on behalf of the estate." Pl.'s Opp'n 4. As the United States sees it, "state probate law broadly gives special administrators the power to ‘collect, manage, and preserve property of the estate.’ " Id. at 5 (quoting Md. R. 6-454). In its view, Md. Rule 6-454(d)"adds responsibilities to the duties of the special administrator in administering the estate," rather than limiting his or her powers. Id. The United States notes that Gibber on Estate Administration , a treatise on Maryland probate law, "advises that ‘it may be prudent for the special administrator to obtain the court's order prior to acting upon matters which are not routine," because "[t]he limitations on the right to manage or preserve property of the estate are undefined." Id. (quoting Gibber on Estate Admin. § 11.6 (2013) ). And, relying on Gibber , the United States argues that "a special administrator does have the authority to engage in some litigation," insofar as the special administrator "has the authority to bring an action in the Circuit Court for return of assets to the estate or to determine title to assets claimed to belong in the estate." Id. at 6. It argues that "[i]t would certainly be an odd result for the special administrator to file tax returns [as O'Brien did] and then never pay them from the assets of the estate prior to the closing of the probate proceeding without even trying to get court...