IMO the Estate of James L. Simmons, Sr.

COURT OF CHANCERY OF THE STATE OF DELAWARE ABIGAIL M. LEGROW MASTER IN CHANCERY NEW CASTLE COUNTY COURTHOUSE 500 NORTH KING STREET, SUITE 11400 WILMINGTON, DE 19801-3734

Submitted: November 18, 2015 Final Report: February 11, 2016

John H. Williams, Jr., Esquire Law Office of John Williams, P.A. 1225 N. King Street, Suite 700 Wilmington, DE 19801

Ms. Karen P. DeRamus 134 Killoran Drive New Castle, DE 19720

Ms. Renee D. Simmons 810 E. Basin Road New Castle, DE 19720

Ms. Pamela A. Cottingham 157 Whitburn Place Newark, DE 19702

Re: IMO the Estate of James L. Simmons, Sr.; Simmons v. DeRamus, et al. C.A. No. 9965-ML

Dear Parties and Counsel:

The petitioner, who is the executor of the captioned estate, filed this action

to require the beneficiaries of the estate to (1) repay certain amounts allegedly paid

to them in error by the executor and (2) execute a deed conveying to the executor

the beneficiaries’ interest in the decedent’s real estate. The executor contends the C.A. No. 9965-ML February 11, 2016 Page 2

defendant beneficiaries received more than they were entitled to receive from the

estate because the executor mistakenly treated as estate assets funds from a jointly

titled bank account. The executor also contends that a portion of the payment to

the beneficiaries was made to purchase their interest in the decedent’s real property

and that the beneficiaries therefore should be required to execute a deed

documenting that conveyance. The beneficiaries filed a counterclaim asserting that

the funds in the jointly titled account should be distributed to all the residuary

beneficiaries and that the executor has not fully distributed the estate assets. This

is my final report after trial.

BACKGROUND

The decedent, James L. Simmons, Sr. (the “Decedent”), died on October 20,

2011. The Decedent’s last will and testament left the residue of his estate in equal

shares to his six children: James L. Simmons, Jr. (“James”),1 Richard E. Simmons

(“Richard”), Renee D. Simmons (“Renee”), Karen P. DeRamus (“Karen”), Pamela

A. Simmons (“Pamela”), and Anna D. Simmons (“Anna”).2 The will named James

as executor of the Decedent’s estate, and James was granted letters testamentary on

November 14, 2011.3

1 Because several parties share the same last name, I use first names for the sake of clarity. No disrespect is intended. 2 Plaintiff’s Exhibit (“PX”) D. 3 PX D, K. C.A. No. 9965-ML February 11, 2016 Page 3

At the time of his death, the Decedent had the following assets: (1) a home

located at 437 Robinson Drive, Wilmington DE 19801 (the “Property”), (2) a

checking account at Citizens Bank, with a date of death balance of $1,578.06 (the

“Checking Account”), (3) a savings account at PNC Bank in the name of the

Decedent and Richard, with a date of death balance of $113,209.69 (the “PNC

Savings”), (4) a savings account at Citizens Bank in the name of the Decedent and

James, with a date of death balance of $101,166.56 (the “Citizens Savings”), and

(5) a Buick LaCrosse sedan.4 The Decedent also had a life insurance policy

naming Richard as the beneficiary. According to an appraisal obtained by James,

the Property was valued at $38,000 as of November 28, 2011.5 The Decedent’s car

was worth $14,025.00. On the inventory filed with the Register of Wills, no value

was attributed to the personal property in the Decedent’s home. The respondents,

who are Karen, Renee, and Pamela, have not challenged the appraisal of the

Property or the value attributed to the car.

The record reflects that the PNC Savings was jointly titled to “[the

Decedent] or Richard,” while the Citizens Savings was jointly titled to the

Decedent and James.6 The Decedent created both accounts in 1976 and asked

James and Richard to sign paperwork related to the account on which they were

4 PX C (Amended Inventory dated May 16, 2012). 5 PX B. 6 PX I, H. C.A. No. 9965-ML February 11, 2016 Page 4

listed as account holders. The Decedent told James about the Citizens Savings

when it was opened but did not say anything else about it in the three decades

before his death. The Decedent did not tell Richard about the PNC Savings or

even explain to Richard the purpose of the paperwork he signed. Thirteen years

later, the Decedent executed his will leaving his estate in equal shares to his

children.

Neither James nor Richard made deposits to the savings accounts during the

Decedent’s lifetime, nor did they withdraw any funds from the accounts before the

Decedent’s death. The account agreement for the Citizens Savings indicates that

the bank presumes that “any joint account established with us is a joint tenancy

with right of survivorship.”7 The agreement goes on to explain the meaning of a

survivorship account.8

James did not initially retain counsel to advise him regarding the

administration of the estate. Failing to realize the potential significance of the

jointly held accounts, James listed the Citizens Savings as an estate asset on the

inventory he filed pro se with the Register of Wills (the “Initial Inventory”). James

also paid the Decedent’s funeral expenses and certain other estate expenses from

the Citizens Savings. In December 2011, believing that the administration of the

7 PX J. 8 Id. C.A. No. 9965-ML February 11, 2016 Page 5

estate nearly was completed, James distributed what he believed to be the net

estate assets to the six beneficiaries. Each of the respondents received a check for

$22,270.83, representing one-sixth of the remaining balancing in the Citizens

Savings Account, one-sixth of the value of the Property, and one-sixth of the value

of the Decedent’s car.9

A dispute then arose between the siblings regarding their obligation, if any,

to execute deeds transferring the property to James. As a result, James sought the

advice of counsel, who discovered that the two savings accounts were jointly titled.

James, with the assistance of counsel, then filed an amended inventory dated May

16, 2012 (the “Amended Inventory”).10 The Amended Inventory listed both

savings accounts as jointly owned property passing to the surviving owner upon

the Decedent’s death. James simultaneously filed a first and final accounting (the

“Accounting”).11 The Accounting listed total estate assets of $15,603.06 and total

estate expenses of $15,577.04.12 Put differently, the savings accounts were listed

on the Amended Inventory, but were not treated as estate assets because they were

survivorship accounts passing to James or Richard upon the Decedent’s death.

9 Anna received the Decedent’s car in lieu of some of the cash to which she otherwise was entitled. 10 PX C. James first filed an amended inventory dated January 31, 2012, which did not list the PNC Savings. RX 1. I believe that this error arose because James, or at least his counsel, was not aware of the PNC Savings. References herein to the “Amended Inventory” refer to the May 16, 2012 inventory, which was the last inventory filed for the estate. 11 PX F. 12 Id. C.A. No. 9965-ML February 11, 2016 Page 6

Notice of the Accounting was sent to all beneficiaries on June 14, 2012.13

None of the beneficiaries filed exceptions within the three month period indicated

on the notice and required by 12 Del. C. 2302(d). Shortly after the three month

period expired, Karen sent letters to the Register of Wills posing various questions

and objections regarding the estate’s administration. On October 12, 2012, Karen,

Pamela, and Renee filed an action against Richard regarding the PNC Savings (the

“PNC Action”). 14

In the PNC Action, Karen, Pamela, and Renee alleged that the Decedent

titled the PNC Savings jointly with Richard with the intent that Richard would

distribute those funds to the Decedent’s children in accordance with his will. The

parties proceeded to take discovery, after which a stipulation of dismissal was filed

with, and granted by, the Court.15 The parties to the PNC Action agreed to

dismissal of the claims with prejudice.

James filed this action on September 2, 2014, seeking repayment of the

funds paid to respondents from the Citizens Savings and seeking an order requiring

the respondents to execute a deed conveying to James their interest in the Property.

The respondents answered the complaint and also filed a counterclaim, alleging, in

13 PX N. The estate expenses included funeral expenses, debts of the Decedent, and attorneys’ fees. 14 DeRamus v. Simmons, 2014 WL 589376, at (Del. Ch. Feb. 14, 2014) (ORDER). 15 PX L. C.A. No. 9965-ML February 11, 2016 Page 7

essence, that James had not properly administered the estate because he failed to

distribute certain estate assets, including the PNC Savings, the life insurance, the

Checking Account, the remaining funds in the Citizens Savings, and the

Decedent’s personal property. The counterclaims were filed before the

respondents stipulated to the dismissal of their claims in the PNC Action.

Trial in this action was held on November 18, 2015. During trial, James

testified, along with Richard. The respondents called only one witness, Claudette

Thomas, who was a friend of the Decedent. According to Claudette, she attended a

gathering with the family in the early 1990s and heard the Decedent state that “Jr.”

(i.e., James) was the boss and he was supposed to take care of the girls. Claudette

never discussed with the Decedent his assets or anything specific about his estate

plans.

ANALYSIS

The parties seek resolution of a number of distinct, but related, issues

regarding the administration of the Decedent’s estate. James claims that, because

the PNC Savings and the Citizens Savings were survivorship accounts, they were

not estate assets. For that reason, James takes the position that the debts in the

estate almost completely consumed the estate assets and that the Decedent’s only

remaining assets were the Property and the personal property contained therein,

along with a few dollars left in the Checking Account. James therefore contends C.A. No. 9965-ML February 11, 2016 Page 8

that the respondents received well more than they were entitled to in the December

2011 distribution and that the Court should enter judgment in favor of James in the

amount of the overpayment. James also contends that the respondents agreed to

sell James their share of the Property and were paid for the same, and the Court

therefore should order the respondents to execute a deed conveying their interests

to James. Finally, James asks the Court to shift his attorneys’ fees and costs to the

respondents.

The respondents, on the other hand, contend that both the PNC Savings and

the Citizens Savings were assets of the estate and should have been distributed to

the beneficiaries. The respondents contend that James has not fully distributed the

estate assets, and they seek an order of this Court requiring him to do so. As they

did in the PNC Action, the respondents maintain that James was named as a joint

owner on the Citizens Savings because the Decedent wanted to protect the funds

from his daughters’ husbands and boyfriends, but the Decedent always intended

James to distribute the balance in accordance with the will.

The primary issue to be resolved in this case is the proper treatment of the

two savings accounts, because most of the remaining issues are dependent on the

Court’s determination regarding those accounts. James argues that the respondents

are collaterally estopped from disputing the issue of ownership of the PNC

Savings, since that issue was resolved by the stipulated dismissal, with prejudice, C.A. No. 9965-ML February 11, 2016 Page 9

of the PNC Action. In other words, James argues that the dismissal with prejudice

of the PNC Action bars the respondents from attempting to re-litigate that issue in

a subsequent case. I agree. In the PNC Action, the respondents alleged, as they do

here, that the PNC Savings was a mere convenience account, established as such

by the Decedent to protect the funds from interference by the respondents’

husbands or boyfriends. By stipulating to the dismissal of that action with

prejudice, the respondents are estopped from raising that issue in this action.16

As to the Citizens Savings, the respondents again allege, in essence, that the

Decedent intended to create a “convenience account,” rather than a true joint

tenancy with a right of survivorship.17 In support of that argument, the respondents

point out that the Decedent never indicated James could use the account, and the

Decedent’s statements suggested that he titled the account jointly to protect the

funds from being dissipated by influential people in the respondents’ lives. The

respondents’ argument that this was a convenience account is supported by the

16 “Where a question of fact essential to the judgment is litigated and determined by a valid and final judgment, the determination is conclusive between the same parties in a subsequent case on a different cause of action. In such situation, a party is estopped from relitigating the issue again in a subsequent case.” Tyndall v. Tyndall, 238 A.2d 343, 346 (Del. 1968); see also, Messick v. Star Enter., 655 A.2d 1209, 1211 (Del. 1995) (quoting Taylor v. State, 402 A.2d 373, 375 (Del. 1979)). 17 The respondents did not actually use the term “convenience account,” but that is the essence of their argument. Pleadings filed by self-represented litigants are judged by a less stringent standard than those filed by attorneys. Johnson v. State, 442 A.2d 1362, 1364 (Del. 1982); see also, infra note 22. C.A. No. 9965-ML February 11, 2016 Page 10

record, but that cannot overcome the language in the account agreement that

governed the Citizens Savings.

The account agreement unambiguously provided that joint accounts would

be treated as survivorship accounts and explained the effect of such treatment.18

Although a joint tenancy is not favored under Delaware law, if the account

agreement or bank form associated with the account unambiguously demonstrates

an intent to create a joint tenancy, this Court may not inquire further into extrinsic

evidence regarding a depositor’s intention in creating the account.19 In Walsh v.

Bailey, the Delaware Supreme Court held that an account agreement that both

specifically referred to a joint tenancy and explained the consequences that flow

from that relationship was unambiguous in its meaning.20 Absent clear and

convincing evidence of mistake on the part of the depositor, the Court may not

vary the terms of the agreement by inquiring into extrinsic evidence of the parties’

intent.

Walsh and its progeny resolve the question of legal title to the funds in the

Citizens Savings, but those cases do not bar equitable claims to the funds.21

Although respondents do not articulate their argument as such, they substantively 18 PX J. 19 Walsh v. Bailey, 197 A.2d 331, 333 (Del. 1964); see also, Messersmith v. Del. Trust Co., 215 A.2d 721, 722-23 (Del. Ch. 1965). 20 197 A.2d at 332-33. 21 Dillon v. Dillon, 1987 WL 11282, at (Del. Ch. May 19, 1987) (Allen, C.); Messersmith, 215 A.2d at 724. C.A. No. 9965-ML February 11, 2016 Page 11

argue that even if legal title to the funds in the Citizens Savings passed to James,

he held those funds in trust to distribute in accordance with the terms of the

Decedent’s will.22 This Court has used its equitable powers to impose a resulting

trust in similar circumstances, namely where: (1) a depositor created a joint

account for purposes of convenience; (2) the depositor subsequently executed a

will; and (3) the will would be nearly meaningless if the jointly held property did

not constitute part of the estate.23 That is the case here.

At the time of his death, the Decedent held assets valued at approximately

$270,000. The two joint accounts constituted approximately 80 percent of those

assets. The Decedent’s will reflects an intent to distribute his assets equally among

his children. In fact, James’ actions in treating the Citizens Savings as an estate

asset on the Initial Inventory reflect James’ understanding of that intent. If a

resulting trust is not imposed on the Citizens Savings, the Decedent would have

benefited James in gross disproportion to the other beneficiaries, effectively

leaving most of his children a mere token of his total assets. In my view, following

22 Court of Chancery Rule 8 makes clear that a party need not plead a particular theory or “cause of action” in support of a claim. Rather, it is enough that a party plead (1) a short and plain statement of the claim showing that the pleader is entitled to relief and (2) a demand for judgment for the relief sought. Ct. Ch. R. 8(a); see 5 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure (Civil) §§ 1216, 1219 (3d ed. 2015). The respondents have done this by alleging that James did not properly distribute the Decedent’s assets and that they are entitled to more than James contends was owed to them. This Court’s rules also make clear that pleadings shall be construed so as to achieve “substantial justice.” Ct. Ch. R. 8(f). 23 In re Estate of Waller, 1993 WL 1500994, at (Del. Ch. May 25, 1993); Dillon, 1987 WL 11282, at -4. C.A. No. 9965-ML February 11, 2016 Page 12

the precedent established in Dillon and Waller, James became the trustee of a

resulting trust for the Citizens Savings and should be required to distribute those

assets to the Decedent’s intended beneficiaries.24 Although the funds in the

Citizens Savings are not estate assets, they are held in a resulting trust for the

beneficiaries named in the Decedent’s will.

Having resolved the issue of the joint accounts, I next turn to proper

distribution of the estate, which addresses both the respondents’ counterclaims and

James’ claim that the respondents should repay a portion of their distribution. As

neither the PNC Savings nor the Citizens Savings were assets of the estate, the

Accounting is accurate. The flip side of that conclusion, however, is that the three

month statutory period to challenge an accounting does not bar the respondents’

counterclaim regarding the Citizens Savings, because those funds were not estate

assets and should not have been reflected on the Accounting.25 The remaining

estate assets, namely the Checking Account and the car, were consumed by estate

debts. The Property was not an asset of the estate, but rather passed directly to the

six children upon the Decedent’s death. Therefore, there was only $26.02 left in

24 Were the issue before me, I likely would reach the same conclusion regarding the PNC Savings, i.e., that Richard was the trustee over a resulting trust for that account. Because that issue is barred from reconsideration by principles of estoppel, however, and because Richard is not a party to this action, I do not believe this Court can issue any order respecting the PNC Savings. 25 12 Del. C. § 2302(d) establishes a three month period in which to take exceptions to an estate accounting. C.A. No. 9965-ML February 11, 2016 Page 13

the estate to distribute to the beneficiaries.26 As trustee of the resulting trust,

however, James also was required to distribute the Citizens Savings funds in

accordance with the Decedent’s will. Each of the respondents therefore was

entitled to a distribution of $16,865.39, representing a one-sixth share of the

Citizens Savings ($16,861.09)27 and one-sixth of the remaining assets in the estate

($4.30).

James paid each respondent $22,270.83, so the respondents are not entitled

to any additional funds and James is entitled to an order requiring the respondents

to repay the amount of the overpayment. James contends that the additional funds

were to purchase the respondents’ interest in the Property. If that was the case,

however, James did not pay enough, because each respondent was entitled to

$6,333.33 for her interest in the Property, totaling $23,198.72. Because James did

not completely pay the respondents for their interest in the Property, I do not

believe this Court should enter an order requiring the respondents to execute a deed

transferring their interests to James. Rather, this Court should enter an order

requiring each respondent to repay to James $5,405.44.

26 PX F. 27 James may argue that he used some of the funds in the Citizens Savings to pay the debts of the estate. That may be true, but not determinative, because there were other assets in the estate, namely the car and the Checking Account, from which the debts could have been satisfied. By choosing to use the funds in the Citizens Savings to pay estate debts, James effectively purchased for himself the Decedent’s car. That he later transferred title to the car to Anna cannot affect the other beneficiaries’ claim to the funds held in the resulting trust. C.A. No. 9965-ML February 11, 2016 Page 14

Under Delaware law, title to the Property passed to the Decedent’s six

children upon his death. If the parties cannot negotiate a resolution regarding title

to the Property, any of the owners are free to file a partition action. If James’

judgments against the respondents are not satisfied before partition, any remaining

balance could be satisfied from the proceeds of a partition sale.

Two remaining issues require resolution. First, James conceded at trial that

the Decedent’s personal property remains in the estate and must be distributed to

the six beneficiaries named in the will. As the respondents raised that issue in their

counterclaim, this Court’s order should reflect that the respondents are entitled to a

portion of the personal property. Second, James’ contention that this Court should

shift attorneys’ fees to the respondents is baseless. James did not articulate any

theory for shifting fees in this case, and I can think of none. I therefore

recommend that the Court deny James’ claim for attorneys’ fees. C.A. No. 9965-ML February 11, 2016 Page 15

CONCLUSION

For the foregoing reasons, I recommend that the Court enter an order (1)

requiring each respondent to repay to James $5,405.44, (2) requiring James to

distribute the Decedent’s remaining personal property, and (3) denying James’

claims regarding title to the Property and attorneys’ fees. This is my final report

and exceptions may be taken in accordance with Court of Chancery Rule 144.

Sincerely,

/s/ Abigail M. LeGrow Master in Chancery