Court of Chancery Denies Motions Seeking to Alter or Change its January 2014 Ruling that had Dismissed Petition for Being Untimely-Filed Under Delaware’s Pre-Mortem Validation Statute

IMO Restatement of Declaration of Trust Creating the Survivor's Trust Created Under the Ravet Family Trust C.A. No. 7743-VCG (June 4, 2014)

On January 29, 2014, the Delaware Court of Chancery, per Vice Chancellor Glasscock, dismissed the Petitioner’s case as untimely based on notice given under Delaware’s Pre-Mortem Validation Statute. That ruling was significant because it was the first Delaware ruling, and perhaps even the first nationally, that dismissed a case based on notice pursuant to a pre-mortem validation statute. Only a small handful of states have pre-mortem validation statutes. The January 29, 2014 ruling was a bench ruling, meaning that no written opinion followed. But after the January 29 bench ruling, the Petitioner moved for post-judgment relief seeking to have the Court amend, alter or reconsider the judgment.  The court denied those motions for the reasons explained below and in the attached letter opinion issued June 4, 2014.

On January 29, 2014, at the conclusion of an evidentiary hearing, Vice Chancellor Glasscock issued a bench ruling dismissing Petitioner’s petition as time-barred by 12 Del. C. § 3546, commonly referred to as the Pre-Mortem Validation Statute. Delaware’s Pre-Mortem Validation Statute allows settlors to provide notice of a trust to all interested parties and if the noticed parties do not contest the trust within 120  days of notice, they are barred from ever contesting it. According to the Pre-Mortem Validation Statute, notice is given when notice is received by the interested party and that, absent evidence to the contrary, it is presumed that the interested party received notice if that notice is delivered to that person’s last known address. The key language of the statute reads:

(a) A judicial proceeding to contest whether a revocable trust or any

amendment thereto, or an irrevocable trust was validly created may

not be initiated later than the first to occur of:

(1) One hundred twenty days after the date that the trustee

notified in writing the person who is contesting the trust of the

trust’s existence, of the trustee’s name and address, of whether

such person is a beneficiary, and of the time allowed under this

section for initiating a judicial proceeding to contest the trust

provided, however, that no trustee shall have any liability under

the governing instrument or to any third party or otherwise for

failure to provide any such written notice. For purposes of this

paragraph, notice shall have been given when received by the

person to whom the notice was given and, absent evidence to

the contrary, it shall be presumed that delivery to the last

known address of such person constitutes receipt by such person.

More than 150 days prior to when Petitioner first attempted to file his Petition, the Co-trustees sent packages providing notice of the trust to the Petitioner by way of first class mail to Petitioner’s home and Petitioner’s P.O. Box, and by certified mail to both those addresses. Petitioner admitted that those addresses were correct and also that he was frequently home in the days after the mailings were sent. Petitioner also admitted that he checked his P.O. Box at least weekly. The Vice Chancellor found that Petitioner’s testimony was not credible when Petitioner denied receipt of any of the following: the unreturned first class mailings sent to both his home address and his P.O. Box, the four certified mail notices sent to his home address and P.O. Box, and a Federal Express package subsequently sent to his home address. Notably, the first notices for the certified mail were left at Petitioner’s home and P.O. Box about 150 days before he filed his Petition. Petitioner also presented evidence that he was away from home when the Federal Express package arrived (which wasn’t until 121 days before he filed his Petition) and that he didn’t arrive home from that five-day trip until 119 days before he filed his Petition. Still, even on his return, Petitioner maintained that he never saw the Federal Express package at any point. Based on its finding that the Petitioner’s myriad denials of receipt of notice were not credible, and on its finding that the Pre-Mortem Validation Statute is a statute of repose with a hard and fast deadline, the Court dismissed the Petition with prejudice. (With the permission of the court reporter, the bench ruling on January 29, 2014 is linked to below. If you would like to purchase a copy of the entire transcript, please contact Court Reporter Jeanne Cahill at (302) 255-0521 or Jeanne.Cahill@state.de.us.)

In the post-judgment briefing, the Petitioner contended that in interpreting 12 Del. C. § 3546, the court erred by “giving the Co-trustees the benefit of the statute’s presumption of receipt even though the Cotrustees had no evidence to prove that their alleged first class mailings were actually delivered to Petitioner’s home or P.O. Box.” Responding to that argument, the Court  explained that “[d]espite the Petitioner’s suggestion, however, I determined in my bench ruling that ‘the evidence [presented at trial was] overwhelming . . . that there was delivery . . . .’ To the extent the Petitioner suggests I misunderstood the statute’s presumption of receipt to require only that notice be mailed, as opposed to delivered, therefore, that argument must fail.”

In rejecting another of Petitioner’s arguments, the Court explained that “I construed only the language of the statute, determining that, to the extent the statute could be interpreted, as the Petitioner argued, to create a presumption of delivery (or receipt) rebuttable by 'evidence to the contrary,' such evidence must at a minimum be credible evidence.” (emphasis in original). The Court explained that he found, and continued to find, that there was no such evidence presented.

Further, it is notable that the court did not address a statutory construction argument that had also been raised. In that regard, the court stated “[i]mportantly, I addressed the parties’ interpretations of the statutory presumption in the alternative: I did not determine whether 'evidence to the contrary' modified mailing to the last known address or receipt, but explained that under any standard, evidence must be credible, and that such evidence is lacking here.” (emphasis in original).

Petitioner also maintained that he discovered some “new evidence” after the judgment, which he contended warranted relief from the judgment. The “newly discovered” evidence presented by the Petitioner consisted of two first class envelopes, postmarked March 26, 2012, which date falls about a month after February 23, 2012, the first date that Respondents’ counsel testified he sent the first set of notice letters to Petitioner. Notably, Petitioner found those envelopes in his own files. The court found that Petitioner’s production of the March 26 envelopes provided an insufficient basis for relief from judgment for at least two reasons. First, the court found that “despite the Petitioner’s contention that, ‘[a]s the envelopes had fallen between hanging file folders [in a box he used as a file cabinet] and out of sight, they could not in the exercise of reasonable diligence have been discovered for use at the January 29, 2014 hearing,’ I believe that with any minimal diligence the Petitioner would have discovered the March 26 mailings, which had been in his possession for almost two years prior to the January hearing.” And perhaps more importantly, even if it were to admit the “new” evidence, the court concluded that it would not have changed the result. In fact, the court found that Petitioner’s claim that he received that later set of mailings, but never opened them, only further diminished Petitioner’s credibility.

January 29, 2014 Bench Ruling --->  http://www.gfmlaw.com/sites/default/files/pdfs/Ravet%20entry%20attachment.pdf