Pamela J Zeller Trust v. Pnc Financial Services Group Inc
328086
| Mich. Ct. App. | Oct 20, 2016Background
- Pamela and Charles Zeller married in 1975; Pamela created the Pamela J. Zeller Trust in 1990 and named herself trustee; in 1999 she gave Charles a durable power of attorney.
- In 2003 Pamela entered an agency agreement with National City Bank (later PNC) to manage her assets, including the trust; the agreement allowed PNC to rely on directions from persons specifically authorized in writing by the principal.
- Pamela and Charles divorced in 2011; during the divorce Pamela testified that Charles had directed transfers of roughly $800,000 from the trust to his accounts between 2000 and 2010.
- After the divorce Pamela sued Charles and PNC alleging unauthorized transfers (conversion, breach of contract). PNC moved for summary disposition under MCR 2.116(C)(10); Charles moved under MCR 2.116(C)(7) asserting res judicata.
- The trial court granted summary disposition for PNC (holding PNC was authorized to rely on Charles’s written power) and for Charles on res judicata grounds (finding trust withdrawals were actually litigated in the divorce). Pamela appealed; the Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PNC exceeded authority by following Charles’s directions to transfer trust assets | Zeller: agency agreement didn’t authorize PNC to distribute trust assets on Charles’s orders | PNC: Pamela’s durable power of attorney expressly authorized Charles to withdraw and gift trust assets; PNC could rely on written authorization per the agency agreement | Court: PNC entitled to judgment as a matter of law; power of attorney authorized withdrawals/gifts to Charles and PNC could rely on it |
| Whether the “gifts” clause in the power of attorney authorized self-gifting by Charles | Zeller: “gifts” clause applies only to tax-driven annual gifting, not self-gifts | PNC/Charles: clause has two clauses; first grants power to withdraw and gift to any person, including the agent | Court: plain language grants two powers; Charles could withdraw and gift to himself; Pamela’s textual argument rejected |
| Whether Pamela’s conversion and breach claims against PNC survive summary disposition | Zeller: PNC liable for conversion/breach for executing transfers outside authority | PNC: acted within contractual authority and in good faith reliance on written authorization | Court: claims fail because PNC acted within the contract and relied on written authorization |
| Whether res judicata bars Pamela’s claims against Charles | Zeller: trust asset issues weren’t decided in divorce, so res judicata doesn’t apply | Charles: divorce proceedings litigated and disclosed trust withdrawals; decree resolved those property issues | Court: res judicata applies; withdrawals were actually litigated and divorce decree covered disclosed trust assets |
Key Cases Cited
- Gorman v. American Honda Motor Co., Inc., 302 Mich. App. 113 (review of summary disposition standard)
- Klapp v. United Ins. Group Agency, Inc., 468 Mich. 459 (contract interpretation; unambiguous terms enforced as written)
- Davis v. LaFontaine Motors, Inc., 271 Mich. App. 68 (discern intent from contract language)
- Henderson v. State Farm Fire & Cas. Co., 460 Mich. 348 (construe contract terms in context and by common meaning)
- Rory v. Continental Ins. Co., 473 Mich. 457 (enforce plain contract language when unambiguous)
- Odom v. Wayne Co., 482 Mich. 459 (standard for MCR 2.116(C)(7) review)
- Pierson Sand & Gravel, Inc. v. Keeler Brass Co., 460 Mich. 372 (de novo review of res judicata application)
- Adair v. State, 470 Mich. 105 (elements and scope of res judicata)
- Bowie v. Archer, 441 Mich. 23 (jurisdictional effect of retained jurisdiction to enforce divorce decree)