Reversing a lower court, a Kansas appeals court rules that a Medicaid recipient's family cannot enforce a promissory note against her estate in the name of equity because the statute of limitations for enforcing the note has passed. In re Estate of Area (Kan. Ct. App., No. 110,768, May 29, 2015).
Ms. Area lived in Horton, KS. in June of 1995, 5 of her 7 children agreed to lend her $53,750 to build a house. Ms. Area signed a promissory note, agreeing to repay the loan, which was due in full by July 1, 2005, however, Ms. Area had never made any payments on the loan. In November 2010, she moved into assisted living and began receiving Medicaid benefits.
Ms. Area died intestate [meaning she did not have a will] in July of 2011 and the state successfully petitioned to administer her estate in order to recoup the Medicaid benefits. Ms. Area's children petitioned the estate for repayment of the promissory note. The estate denied the claim because the five-year statute of limitations had passed, and the children appealed. The trial court ruled that the note was valid under the principle of equity, and that the loan should be repaid. The estate appealed.
The Kansas Court of Appeals reverses, holding that because the statute of limitations for enforcing the note had passed, the note was no longer valid. The court rules that there was "no authority for the district court to rule that as a matter of public policy different rules apply to note and mortgage agreements involving familial relationships."
For the full text of this decision, go to: http://www.kscourts.org/Cases-and-Opinions/opinions/CtApp/2015/20150529/110768.pdf