850 N.W.2d 607
Mich. Ct. App.2014Background
- Siblings (plaintiff and defendant) are beneficiaries of two trusts created by their parents; defendant was successor trustee for both after parents’ deaths in 2005 and 2009.
- Defendant provided annual and final accountings for the Donald Trust and the Family Trust between 2010–2011; some amended/supplemental accountings omitted the one-year notice.
- The accountings originally included a statutory notice that a beneficiary must bring a breach-of-trust action within one year of a report.
- Plaintiff sent a July 14, 2011 letter raising questions but requesting distributions continue; plaintiff later filed a five-count complaint on October 31, 2012 alleging breach of fiduciary duty, conversion, commingling, breach of impartiality, and fraud.
- Defendant moved for summary disposition under MCR 2.116(C)(7), (8), and (10) asserting the one-year statute of limitations under the Michigan Trust Code (MCL 700.7905(1)(a)) barred the claims; the probate court granted the motion and plaintiff appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiff’s claims are outside MTC breach-of-trust and thus not subject to the MTC one-year limitations period | Claims sound in tort/fiduciary duty or company law, not breach of trust; some account supplements occurred within one year | Allegations arise from trustee duties and were disclosed in trust accountings that included the one-year notice, so MCL 700.7905(1)(a) bars suit after one year | Court held claims allege breaches of trust and were disclosed by reports with the one-year notice; claims time-barred under MCL 700.7905(1)(a) and summary disposition was proper. |
| Whether the one-year limitations period requires trust termination or a final report to start running | One-year should not begin until trust is final or final report issued; supplemental reports reset limitations | Statute runs from sending a report that adequately discloses a potential claim and informs beneficiary of the time to file; neither trust termination nor a final report is required | Court held statute does not require trust termination or a final report; period begins when an adequate report with notice is sent. |
| Whether amended or supplemental accountings without the one-year notice tolled or restarted the limitations period | Amended/supplemental reports lacking the notice restart or toll the limitations | Earlier report that included the notice adequately disclosed the claims; later supplements contained no new claim-disclosing information and did not revive limitations | Court held earlier reports (June 16, 2011 final account) adequately disclosed possible claims and included the notice; later supplements without new disclosures did not extend the period. |
| Whether some alleged company-based claims (M & D) could be pursued outside trust law to avoid the MTC limitations | Plaintiff argued misuse of company assets should be pursued as company/member claims, not trust claims | Defendant argued beneficiary claims based on trustee conduct fall under MTC breach-of-trust provisions | Court observed misuse of company funds as a member’s claim belongs outside trust law; but plaintiff pled trustee violations tied to beneficiary interests so MTC applied to alleged trust-related misconduct. |
Key Cases Cited
- Bint v. Doe, 274 Mich. App. 232 (relevant standard for reviewing MCR 2.116(C)(7) challenges)
- McAuley v. Gen. Motors Corp., 457 Mich. 513 (principles of statutory interpretation; appellate review standards)
- Whitman v. City of Burton, 493 Mich. 303 (statutory construction rule: give effect to legislature’s intent)
- In re Lundy Estate, 291 Mich. App. 347 (appeals from probate court: record-based review; standard of review for factual findings and dispositional rulings)
- Sutton v. Cadillac Area Pub. Sch., 117 Mich. App. 38 (specific statute controls over general statute when both serve common purpose)