Whether this case is right or wrong, it’s a good little practice pointer/reminder.

A creditor contacted an estate to make a claim. She gave it her address, phone number, and email address. It replied to her by email.  Later, the estate denied the claim. It notified her only by certified mail, return receipt requested. The letter was returned unclaimed. (If you don’t see where this is going then you do need to read the rest of it.)

When she learned of the disallowance she filed a petition. She argued that because she wasn’t given notice of disallowance, her claim – per the normal statutory procedure – was allowed. The estate pointed out that the statute (14-3806) says to give notice of disallowance by “mail.” The trial court dismissed the petition.

Of course the Court of Appeals was going to find a reason to reverse. Whenever courts have to wonder whether you were really trying to give notice, or not really trying to give notice, or really trying not to give notice, you’re likely to lose. The court finds a U.S. Supreme Court case (Jones 2006) to the effect that notice by certified mail isn’t due process if its returned unclaimed. Since the estate had reason to know that the creditor hadn’t received notice, it should have done something else.

The estate did not contend that the creditor deliberately did not pick up the certified letter, perhaps because it couldn’t prove it. That’s the problem with certified/return-receipt mail: you never can. The letter is a two-edged sword; its purpose is to prove that a letter was received but it can also prove that it wasn’t. We all know that some people never pick up certified mail, so as to avoid the bad news it often brings; but the same people who boast of that when it makes them seem clever will deny it when it doesn’t.

The court rules, however, that the failure to give actual notice does not result in allowance of the claim. It holds instead that the time for responding to the disallowance runs from the date the creditor had actual knowledge of it. Dismissal of the petition is therefore reversed and the parties will litigate whether the claim should be allowed.

(link to opinion)