Wrongful Death Claims & Dram Shop Laws

From Citizens Voice:

The husband of the triathlete killed by an alleged drunken driver while jogging in Harveys Lake in June has filed suit against the driver as well as two area businesses he alleges were negligent in serving alcohol to a drunken man.

The lawsuit, filed by Factoryville resident Brian A. Jones, targets Michael Scavone, 50, who police say had a blood-alcohol more than two and a half times the legal limit for driving hours after he allegedly struck and killed triathlete Paula Jones as she jogged along Lakeside Drive last month.

The wrongful death lawsuit also names American Legion Post 672 in Dallas as well as businesses and people associated with Grotto Pizza in Harveys Lake, which Jones contends violated state liquor laws by serving alcohol to Scavone after he was visibly drunk.

From the National Conference of State Legislatures:

Thirty states have statutory provisions that allow licensed establishments such as restaurants, bars, and liquor stores to be held liable for selling or serving alcohol to individuals who cause injuries or death as a result of their intoxication.

Twenty-two of the 30 states statutorily limit the liability to cases where the establishment sold or served alcohol to an obviously intoxicated individual or a person under the legal drinking age. The 22 states are Alaska, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Idaho, Indiana, Kentucky, Maine, Michigan, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Dakota, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Wisconsin and Wyoming.

Statutes in Louisiana exempt licensed establishments from liability except in the cases where they serve a person under the legal drinking age. Nevada and South Dakota exempt licensed establishments from liability.

In short, when a drunk driver kills someone, the estate may or may not be able to bring a wrongful death claim against the bar/institution that served the alcohol depending on the state and the facts and circumstances of each case.

A wrongful death claim may or may not be brought against a third party who served alcohol depending on the state's dram shop laws.
A wrongful death claim may or may not be brought against a third party who served alcohol depending on the state’s dram shop laws.

Insolvent Estates & Probate Clawback of Non-probate Assets

Non-probate assets can be "clawed back" when a probate estate is insolvent.
Non-probate assets can be “clawed back” when a probate estate is insolvent.

Consider this scenario:

John owns some investment property worth about $300,000.00.  He executes a “Deed Upon Death” to his son, Tim, which, upon John’s death automatically passes ownership of the investment property to Tim outside of probate.  When John dies, he leaves behind a probate estate worth about $150,000.00, but debts of $300,000.00.  John’s estate is insolvent- but it wouldn’t have been if there hadn’t been a Deed Upon Death.

Do John’s creditors just have to cut their losses and move on? Was John’s use of the Deed upon Death clever enough to evade his creditors and pass his property along to Tim?

Normally, when a probate estate is administered, creditors have a period of time to file claims against an estate.  However, when assets pass automatically outside of probate, those assets are generally beyond the reach of creditors.  Common non-probate transfers include real property that passes through joint tenancy, payable-on-death (“P.O.D.”) designations on bank and investment accounts, and Deeds Upon Death of real property.

That said, there are circumstances where an estate can “claw back” assets that passed outside of probate.

Nevada Revised Statutes 111.779:

Except as otherwise provided in NRS 21.090 and other applicable law, a transferee of a nonprobate transfer is liable to the probate estate of the decedent for allowed claims against that decedent’s probate estate to the extent the estate is insufficient to satisfy those claims.

Litigation brought under this section must be brought “within 60 days after final allowance of the claim by the probate court or within 1 year after the decedent’s death, whichever is later.” NRS 111.779(10)(a).

As to real property transferred by Deed Upon Death, Nevada Revised Statutes 111.689 governs:

To the extent the grantor’s probate estate is insufficient to satisfy an allowed claim against the estate or a statutory allowance to a surviving spouse or child, the estate may enforce the liability against property transferred pursuant to a deed upon death.

Litigation must be initiated under this section within 18 months of the death of the decedent.  NRS 111.689(3).

Nevada’s probate clawback is not unique.  Most states have a similar provision (See Missouri, .  For example, the Uniform_Probate_Code (“UPC”) enacted by 17 states, includes the following provision (UPC 6-102(b)):

Except as otherwise provided by statute, a transferee of a nonprobate transfer is subject to liability to any probate estate of the decedent for allowed claims against decedent’s probate estate and statutory allowances to the decedent’s spouse and children to the extent the estate is insufficient to satisfy those claims and allowances. The liability of a nonprobate transferee may not exceed the value of nonprobate transfers received or controlled by that transferee.

From the Official Comments to UPC 6-102:

Added to the Code in 1998, this section clarifies that the recipients of nonprobate transfers can be required to contribute to pay allowed claims and statutory allowances to the extent the probate estate is inadequate. The maximum liability for a single nonprobate transferee is the value of the transfer. Values are determined under subsection (b) as of the time when the benefits are “received or controlled by that transferee.” This would be the date of the decedent’s death for nonprobate transfers made by means of a revocable trust, and date of receipt for other nonprobate transfers. Two or more transferees are severally liable for the portion of the liability based on the value of the transfers received by each.

Simply put, non-probate transfers are not a very effective method of evading creditors.