By Fred Franke
Franke, Sessions & Beckett LLC
The Court of Special Appeals has delivered a useful reminder that the procedural rules governing appeals from the Orphans’ Court are unique and dissimilar to those governing Circuit Court actions. This is particularly true when determining whether an order is final for the purposes of an appeal and who is the aggrieved party to institute such an appeal. In this case, the procedural rules dictated the substantive results of the case.
The substantive issue involved in the matter of Estate of Kirsch, 2017 WL 2464517 (unreported) was whether a family partnership agreement with restrictions on transfer would void a bequest of the partnership interest to the decedent’s significant other and residuary heirs, or force that interest back to her family. The restrictions to transfer followed a commonplace pattern permitting only gratuitous transfers to certain family members but also giving those family members a right of first refusal in the event of any bona fide offer to purchase the interest by a third party. That latter provision, of course, is necessary in order to sidestep the common law rule against unreasonable restraints on the alienation of property.
The federal court, in a companion action, upheld the partnership restrictive transfer provisions. The personal representative, who was the significant other of the decedent and the intended beneficiary of her partnership interests, pivoted and claimed to have received a bona fide offer to purchase from himself individually. Obviously, this was an attempt to sidestep the general provisions prohibiting the transfer of the interest to a non-family member.
The Orphans’ Court directed the personal representative to distribute the partnership interests to the decedent’s brother who was her heir-at-law as an intestate distribution. The significant other, in his capacity as personal representative but not individually, made a timely appeal of the court’s order directing the distribution.
The Court of Special Appeals dismissed the appeal. First, the Court held that the personal representative is not the aggrieved party and has no basis upon which to appeal a direction to distribute. The purported intended legatee is the party in interest, not the personal representative. Buchwald v. Buchwald, 175 Md. 103 (1938); Surratt v. Knight, 162 Md. 14 (1932).
The personal representative’s fallback argument was that the order was not a final order. If this were true, then the significant other as the intended legatee instead of as personal representative could still perfect an appeal. Otherwise, the time to appeal had closed.
The Court in Estate of Kirsch delineates how finality is defined in Orphans’ Court matters as opposed to the broader world of civil litigation. “In probate proceedings, ‘the need for judicial adjudicative intervention is frequently intermittent and only on a very ad hoc basis.’ For this very reason, the definition of a ‘final judgment’ in an Orphans’ Court proceeding is unlike the definition used in ordinary civil litigation. The proper time to challenge the distribution of an asset is when the Orphans’ Court orders the distribution, not when all accounts are ultimately settled.” Est. of Kirsch, quoting Banashak v. Wittstadt, 167 Md.App. 627 (2006)(internal citations omitted). This is quite different from the definition of final judgment in ordinary civil litigation. Judge Moylan “drew a distinction between ordinary civil litigation, which typically ends in a decisive (or ‘apocalyptic’) judgment that resolves all claims involving all parties, and the ‘fundamentally different legal environment of Orphans’ Court litigation, in which ‘adjudicative decisions as to bits and pieces of the larger enterprise may be the only court judgments ever rendered.'” Estate of Kirsch quoting, again, Banashak. In Kirsch, many subsiding issues remained between the parties but the order for distribution nevertheless constituted a final order for the purposes of the appeal.