Hoffenblum v. Hoffenblum
308 Mich. App. 102
| Mich. Ct. App. | 2014Background
- Plaintiffs (three children) had UTMA custodial accounts; defendant (their father) was the custodian and withdrew $18,305.43 in Oct–Nov 2004.
- Defendant says withdrawals reimbursed medical expenses he paid (including out-of-network psychiatric bills) and were made on advice of his financial advisor.
- Divorce judgment and later orders allocated responsibility for the children’s medical expenses between the parents; at least some orders required a parent to pay out-of-network expenses.
- Plaintiffs discovered the accounts empty in 2005, then sued for conversion; the district court found for defendant (no wrongful conversion, no demand shown, no treble damages).
- The circuit court reversed on wrongful dominion and on scienter, and remanded for reconsideration of whether a pre-suit demand was made; the district court on remand reaffirmed no demand and denied treble damages; the circuit court affirmed that order.
- The Court of Appeals: (1) affirms that defendant wrongfully exerted dominion under UTMA because withdrawals substituted for parental/court-ordered support obligations, (2) holds demand was not required as a matter of law, (3) affirms denial of treble damages, and remands for judgment for plaintiffs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendant wrongfully exerted dominion over UTMA funds (conversion) | Withdrawals were wrongful because UTMA property is vested in minors and custodian cannot use funds to substitute for parental/support obligations | Withdrawals reimbursed legitimate medical payments; MCL 554.539(1) permits custodian to expend for minor’s benefit | Held wrongful: MCL 554.539(3) prohibits expenditures that substitute for a person’s obligation to support the minor; reimbursements here replaced parental/court-ordered obligations, so conversion occurred |
| Whether a pre-suit demand for return was required | No demand was required where defendant wrongfully and intentionally withdrew custodial funds for his own use | Demand required because the funds were in custodian’s possession and plaintiff did not prove a demand was made | Held no demand required as a matter of law when defendant wrongfully acquired and appropriated the funds (demand unnecessary) |
| Whether treble damages were required/appropriate | Plaintiffs sought treble damages under MCL 600.2919a for conversion | Defendant relied on his good-faith reliance on financial-advisor advice, arguing treble (punitive/penal) damages are improper | Held denial of treble damages affirmed: award of treble damages is discretionary; district court reasonably found lack of malicious/dishonest intent given advisor reliance |
| Whether appeal should be dismissed for missing transcripts | Plaintiffs had not provided one transcript; defendant urged dismissal | Plaintiffs provided principal transcript(s) and the record did not show May 21, 2012 proceedings requiring transcrip | Held dismissal not warranted; Court reviewed issue — transcript omission did not preclude review and any additional waiver argument would be cumulative |
Key Cases Cited
- Aroma Wines & Equip., Inc. v. Columbia Distribution Servs., Inc., 303 Mich. App. 441 (discussing conversion elements and statutory interpretation)
- People v. Couzens, 480 Mich. 240 (UTMA gifts are indefeasibly vested in the minor)
- Trail Clinic, P.C. v. Bloch, 114 Mich. App. 700 (demand unnecessary where property wrongfully appropriated and used for defendant’s benefit)
- Hank v. Lamb, 310 Mich. 81 (demand required where defendant rightfully acquired possession and later refused surrender)
- Manley v. Detroit Auto Inter-Ins. Exchange, 127 Mich. App. 444 (parental duty to provide necessaries including medical care)
- Alken-Ziegler, Inc. v. Hague, 283 Mich. App. 99 (treble damages intended to punish dishonest defendants)