Brody v. Deutchman (In Re Rhea Brody Living Trust)
321 Mich. App. 304
| Mich. Ct. App. | 2017Background
- Rhea Brody created an inter vivos trust (the Rhea Trust) holding 98% of Brody Realty and interests in Macomb Corporation; Rhea’s daughter Cathy petitioned the probate court alleging trustee Robert (Rhea’s husband) breached fiduciary duties.
- Cathy sought removal of Robert as successor trustee, accounting, rescission/reformation of transactions (sale of Brody Realty’s Brittany Park interest and an option agreement in favor of son Jay), and damages under the Estates and Protected Individuals Code (EPIC).
- The probate court declared Rhea disabled under the trust, removed Robert as trustee, reformed the Brittany Park sale, and set aside an option agreement; Robert and Jay appealed/cross‑appealed.
- Robert and Jay argued the probate court lacked subject‑matter jurisdiction (business court mandatory), and that Cathy lacked standing as a contingent beneficiary of a revocable trust.
- The Court of Appeals held the probate court had jurisdiction under EPIC, found Cathy had standing as an “interested person,” affirmed removal and setting aside the option, but reversed the probate court’s reformation of the Brittany Park contract and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject‑matter jurisdiction (business vs probate court) | Cathy: action under EPIC, so probate court has exclusive jurisdiction | Robert/Jay: dispute involves business transactions, so business court mandatory under MCL 600.8035 | Probate court jurisdiction proper; EPIC actions excluded from business‑court definition and EPIC statutes control as the more specific grant |
| Standing to sue as contingent beneficiary | Cathy: as an “interested person”/beneficiary under MCL 700.1105 she may invoke court under MCL 700.7201 | Robert/Jay: contingent beneficiary of a revocable trust lacks standing | Cathy has standing; contingent beneficiary fits EPIC definition of interested person and may seek trustee removal |
| Breach of fiduciary duty by trustee (sales/options favoring Jay) | Cathy: Robert breached by effectuating sales/options that shifted or favored Jay and failing to appoint an independent co‑trustee as required | Robert/Jay: trustee powers and DPOA authorized transactions; no breach or factual dispute | Summary disposition proper as no genuine issue: probate court did not err finding breach (failure to appoint co‑trustee; transactions shifted interests) |
| Remedies: reformation of Brittany Park sale and rescission of option | Cathy: equitable relief under MCL 700.7901 allows reformation or other relief to remedy breach | Robert/Jay: court lacked power to reform contract; relief exceeded statutory/remedial authority | Reformation of Brittany Park contract was improper (no basis for reformation); setting aside the option agreement was proper; remand for appropriate remedies and unresolved factual issues |
Key Cases Cited
- Reed v. Yackell, 473 Mich. 520 (discusses courts’ subject‑matter jurisdiction and source of jurisdiction)
- Clohset v. No Name Corp., 302 Mich. App. 550 (standards for subject‑matter jurisdiction and when a court may exercise jurisdiction)
- Tkachik v. Mandeville, 487 Mich. 38 (scope and limits of equitable powers)