Filing a creditor claim on time in California is critically important. The timely filing of a creditor claim tolls the one-year statute of limitations to bring claims against a decedent, and the creditor then has 90 days to file suit after the creditor claim is rejected. The deadline to file suit is regardless of how long after the expiration of the one-year statute such rejection occurs.
In Estate of Holdaway, an October 2019 opinion from the California Court of Appeal, Fourth Appellate District, Division Two, the court explained the applicable timeline for filing suit after rejection of a creditor claim.
The Facts of Estate of Holdaway
In Holdaway, decedent Richard Edson Holdaway died in June 2013. Petitioner, Patricia, filed a creditor’s claim against the estate. Patricia’s claim was timely filed. The timeline of the events that followed is:
- June 11, 2014: Patricia files creditor claim
- March 2015: case dismissed for failure to prosecute
- December 2015: Patricia filed another petition for probate with the trial court under the same case number as the previous petition
- May 2016: Decedent’s son, Richard Everett Holdaway, filed a competing petition for probate. Holdaway’s petition was granted and Patricia’s was dismissed. Holdaway was appointed as personal representative of decedent’s will, and the will was admitted to probate.
- March 10, 2017: Holdaway formally rejected Patricia’s creditor claim against the estate
- May 19, 2017: Patricia filed her complaint challenging the rejection of the creditor claim.
Holdaway demurred to the complaint, arguing that it was time barred under California Code of Civil Procedure section 366.2. The California probate court agreed with Holdaway and sustained the demurrer.
On appeal, Patricia argued that her complaint was not time-barred because the statute of limitations was tolled from June 11, 2014 when Patricia filed her creditor’s claim, until the claim was formally rejected by Holdaway on March 10, 2017. Patricia filed her complaint within 90 days of March 10, 2017, and therefore the filing was timely. The California appeals court agreed with Patricia.
What Is The Statute Of Limitations To File A Claim Against A Decedent?
One year. Upon a person’s death, California Code of Civil Procedure section 366.2 “provides for an outside time limit of one year for filing any type of claim against a decedent.”
The Timely Filing of A Creditor Claim Tolls The One-Year Limitations Period
The one-year limitations period is tolled by, among other things, the timely filing of a creditor’s claim. Pursuant to California Probate Code section 9352:
(a) The filing of a claim or a petition under Section 9103 to file a claim tolls the statute of limitations otherwise applicable to the claim until allowance, approval, or rejection.
“Thus, if a claim is timely filed in the probate proceedings, it remains timely filed even though the representative or court acts on a claim by allowing, approving or rejecting the claim outside the limitations period.” Here, there was no dispute that Patricia filed her claim within the one year limitations period of section 366.2. Because Patricia timely filed her creditor claim, the claim remained timely until action was taken on the claim by the court or personal representative. Patricia’s claim was rejected on March 10, 2017.
In response to Holdaway’s argument that dismissal of Patricia’s petition in March 2015 terminated the tolling of the statute of limitations worked by her creditor claim, the California appeals court stated:
There is some superficial appeal to Holdaway’s argument that the dismissal of Everett’s petition also terminated the tolling worked by her claim, as the court dismissed her petition to administer the estate due to her own counsel’s failure to discharge an order to show cause. Moreover, that petition was the first and only petition pending at the time. However, the view that the dismissal of the sole pending petition in a probate case terminates the tolling worked by a timely filed creditor’s claim would apply as well where the dismissal was of someone else’s petition due to their lack of diligence. We thus believe more is required to dismiss a creditor’s claim than the dismissal of the petition for probate, whoever has filed it. A timely filed creditor’s claim tolls the Code of Civil Procedure section 366.2 statute of limitations until it is acted on by the personal representative in accord with Probate Code section 9352, or perhaps until the trial court employs its supervisory powers to articulate a specific reason why that claim (as opposed to any petition seeking appointment as personal representative) is dismissed.
After Rejection Of A California Creditor Claim, The Claimant Has 90 Days To File Suit
California Probate Code § 9353 allows a period of 90 days for a creditor to bring suit after the rejection of the claim. Therefore, Patricia’s filing 9 days after the formal rejection of her creditor claim was timely and within the statute of limitations under California law.
The California appeals court rejected Holdaway’s argument that the additional 90-day limitations period does not toll or extend the one-year time period in section 366.2 (giving Patricia only two days to file suit after the rejection of her creditor claim. The court recited the state of the law:
Under the current statutory scheme, the filing of a claim tolls the underlying statute of limitations until the creditor’s claim has been rejected, and after rejection, “‘the creditor has three months within which to bring an action, regardless of the time otherwise remaining on the statute of limitations.’