TREVOR LE GASSICK, as Trustee of the JAMES A. BELLAMY TRUST and as Personal Representative of the ESTATE OF JAMES A. BELLAMY v. UNIVERSITY OF MICHIGAN REGENTS and ANDREW D. MARTIN
No. 344971
STATE OF MICHIGAN COURT OF APPEALS
November 19, 2019
FOR PUBLICATION; Washtenaw Circuit Court LC No. 18-000395-CZ
If this opinion indicates that it is “FOR PUBLICATION,” it is subject to revision until final publication in the Michigan Appeals Reports.
Before: BORRELLO, P.J., and K. F. KELLY and SERVITTO, JJ.
Plaintiff, Trevor Le Gassick as Trustee of the James A. Bellamy Trust and as Personal Representative of the Estate of James A. Bellamy, appeals as of right the trial court‘s order granting summary disposition to defendants, University of Michigan Regents and Andrew D. Martin, by holding that plaintiff did not have standing to challenge defendants’ compliance with the terms of the trust distribution to the University. For the reasons stated below, we reverse.
I. BASIC FACTS1
Professor James A. Bellamy, a recognized expert in classical Arabic literature,
On August 6, 1998, after his retirement, Professor Bellamy executed an estate plan establishing the Bellamy Trust and a pour-over will which he subsequently amended on several occasions. On August 5, 2011, by operation of the Second Amendment, plaintiff began serving as cotrustee along with Professor Bellamy. On September 23, 2011, Professor Bellamy executed a Third Amendment, directing the trustee to distribute to the University the amount necessary “to endow a full professorship, named after the Grantor, in the field of medieval classical Arabic literature” as further set forth in any then-existing gift agreement between the University and the Grantor. Professor Bellamy also directed the distribution of at least $300,000 directly to plaintiff, with any remaining sums split between “provid[ing] fellowship support for the graduate students studying with the holder of the James A. Bellamy professorship,” as further set forth in any then-existing gift agreement, and the American Oriental Society.
According to the complaint, Professor Bellamy allegedly “had a desire to gift a substantial portion of his money at his death to the University if used by the University to continue his work” and “regularly talked to Plaintiff as his friend and colleague regarding his gifting intentions.” In 2011, with the aid of counsel, Professor Bellamy entered into negotiations with the University and, on October 13, 2011, agreed to execute a gifting agreement (Gift Agreement). The Gift Agreement provided material terms that the funds were to be used for a “medieval classical Arabic literature” professorship and, if there was no one qualified in the University, that the University was required to hire an outside applicant. The Gift Agreement provided that the Dean of the College of Literature, Science, and the Arts (currently defendant Andrew D. Martin) “shall be responsible for carrying out the intended purpose of the Fund and excess amount,” and the University was required to loyally honor Professor Bellamy‘s wishes.
Professor Samer Mahdy Ali joined the Department of Near Eastern Studies in 2014. Plaintiff alleged that Professor Ali specialized in late medieval Arabic literature, a period “starkly different” from the classical specialty taught by Professor Bellamy. In 2015, Professor Ali was appointed associate, not full professor. Further, he purportedly acknowledged that he was not an expert in classical Arabic literature and “that his main interest has been and will continue to be in late medieval Arabic literature (the post- mid-` Abbasid period).”
Professor Bellamy died on July 21, 2015, at the age of 89. In addition to being Professor Bellamy‘s colleague, friend, and cotrustee, plaintiff also served as personal representative of Professor Bellamy‘s estate. In February 2016, plaintiff, as trustee, distributed, and the University accepted
On December 11, 2017, the University announced the appointment of Professor Ali to Professor Bellamy‘s position. Plaintiff maintained that Professor Ali was “not qualified to teach classical Arabic literature at the University” and, in any event, was not a full professor. Plaintiff contended that the University was required to conduct a search for a properly qualified professor to fill the position, which it failed to do. When the University initially posted the Bellamy position, it did not adhere to the gift contract requirements for a “full” professorship in “medieval classical Arabic literature“, but rather merely sought an associate professor in “Pre-Modern Arabic Culture.” Consequently, plaintiff allegedly objected to the accuracy of the posting in light of the requirements of the Gift Agreement. Thereafter, the University withdrew the posting and instead announced the appointment of Professor Ali.
On April 23, 2018, plaintiff filed suit, alleging (1) breach of contract, namely the University‘s failure to use the funds consistent with the terms of the Gift Agreement, and seeking damages or specific performance; (2) breach of fiduciary duty, on account of the University‘s failure, as trustee of the charitable trust established by Professor Bellamy‘s gift, to comply with the terms and conditions of the resulting charitable trust; (3) violation of the Uniform Prudent Management of Institutional Funds Act,
On June 12, 2018, defendants moved for summary disposition, arguing that plaintiff lacked standing. Defendants maintained that the distribution of the $3,500,000 created a separate charitable trust over which plaintiff was not the trustee. They also submitted that
After oral argument, the probate court held that, under
II. APPLICABLE LAW
“A decision on a motion for summary disposition and the interpretation of a statute are reviewed de novo.”2 ADR Consultants, LLC v Mich Land Bank Fast Track Auth, 327 Mich App 66, 74; 932 NW2d 226 (2019). Issues involving statutory interpretation present questions of law that are reviewed de novo. Meisner Law Group, PC v Weston Downs Condo Ass‘n, 321 Mich App 702, 714; 909 NW2d 890 (2017). “The primary goal of statutory interpretation is to give effect to the intent of the Legislature.” Briggs Tax Serv, LLC v Detroit Pub Sch, 485 Mich 69, 76; 780 NW2d 753 (2010). The most reliable evidence of legislative intent is the plain language of the statute. South Dearborn Environmental Improvement Ass‘n, Inc v Dep‘t of Environmental Quality, 502 Mich 349, 360-361; 917 NW2d 603 (2018). If the language of the statute is clear and unambiguous, it is presumed that the Legislature intended the meaning plainly expressed in the statute. Gardner v Dep‘t of Treasury, 498 Mich 1, 6; 869 NW2d 199 (2015). The court‘s interpretation of a statute must give effect to every word, phrase, and clause. South Dearborn, 502 Mich at 361. Further, an interpretation that would render any part of the
The proper construction of a trust also presents a question of law subject to de novo review. Hegadorn v Dep‘t of Human Servs Dir, 503 Mich 231, 245; 931 NW2d 571 (2019). When interpreting trust language, the court‘s goal is to determine and give effect to the trustor‘s intent. Id. Interpretation begins with an examination of the trust language, and if there is no ambiguity, the trust terms are interpreted according to the plain and ordinary meaning. Id.
III. TRUST LAW AND STANDING
The Michigan Trust Code (MTC),
(2) The following are the underlying purposes and policies of [the MTC]:
(a) To make more comprehensive and to clarify the law governing trusts in this state.
(b) To permit the continued expansion and development of trust practices through custom, usage, and agreement of the parties.
(c) To foster certainty in the law so that settlors of trusts will have confidence that their instructions will be carried out as expressed in the terms of the trust. [
MCL 700.8201(2) .]
“It is a general principle of trust law that a trust is created only if the settlor manifests an intention to create a trust, and it is essential that there be an explicit declaration of trust accompanied by a transfer of property to one for the benefit of another.” Osius v Dingell, 375 Mich 605, 613; 134 NW2d 657 (1965).4 The settlor must have the capacity to create a trust and must indicate an intention to create the trust.
(1) A trustee, without authorization by the court, may exercise all of the following:
(a) Powers conferred by the terms of the trust.
(b) Except as limited by the terms of the trust, all of the following:
(i) All powers over the trust property that an unmarried competent owner has over individually owned property. (ii) Any other powers appropriate to achieve the proper investment, management, and distribution of the trust property.
(iii) Any other powers conferred by this article.
(2) The exercise of a power is subject to the fiduciary duties prescribed by this article. [
MCL 700.7816 .]
In addition to the general power delineated above, the trustee also has specific powers as set forth in
Without limiting the authority conferred by [
MCL 700.7816 ], a trustee has all of the following powers:*
*
(e) To satisfy a settlor‘s written charitable pledge irrespective of whether the pledge constitutes a binding obligation of the settlor or was properly presented as a claim, if in the trustee‘s judgment the settlor would have wanted the pledge completed under the circumstances.
*
*
*
(x) To prosecute, defend, arbitrate, settle, release, compromise, or agree to indemnify an action, claim or proceeding in any jurisdiction or under an alternative dispute resolution procedure. The trustee may act under this subdivision for the trustee‘s protection in the performance of the trustee‘s duties.
In light of the above statutory provisions, we conclude that plaintiff had standing to challenge the charitable distribution to the University when defendants purportedly failed to satisfy the purpose and terms of the Bellamy Trust and the Gift Agreement. Professor Bellamy attained international recognition in the field of medieval classical Arabic literature. Specifically, he was called upon to decipher and translate “the Paris Louvre Namara inscription of 328 A.D.” as well as interpret and explain passages in the Qur‘an, particularly addressing mysterious letters that preceded some of the chapters. Consequently, Professor Bellamy sought to ensure that his work would continue and deemed his particular field of Arabic studies necessary to a world-class university program. In conjunction with that belief, he created a trust and pour-over will to effectuate the continuation of his work. Indeed, his charitable contribution expressed his wishes as reflected in the Gift Agreement to fund a full professorship in his field as well as student fellowship. The MTC was created to foster certainty “that settlors of trusts will have confidence that their instructions will be carried out as expressed in the terms of the trust.”
Furthermore, we note that general principles of standing are applicable to trusts. In In re Pollack Trust, 309 Mich App at 155,5 this Court adopted the following standing principles:
We hold that Michigan standing jurisprudence should be restored to a limited, prudential doctrine that is consistent with Michigan‘s longstanding historical approach to standing. Under this approach, a litigant has standing whenever there is a legal cause of action. Further, whenever a litigant meets the requirements of MCR 2.605, it is sufficient to establish standing to seek a declaratory judgment. Where a cause of action is not provided at law, then a court should, in its discretion, determine whether a litigant has standing. A litigant may have standing in this context if the litigant has a special injury or right, or substantial interest, that will be detrimentally affected in a manner different from the citizenry at large or if the statutory scheme implies that the Legislature intended to confer standing on the litigant.
In the present case, plaintiff as the trustee and personal representative of the Bellamy Trust and Estate had obligations to address in good faith, and upon learning the distribution terms of the Gift Agreement did not execute Professor Bellamy‘s intent, he had the right and obligation to file suit,
IV. CHARITABLE TRUSTS AND STANDING
Defendants nonetheless assert that once the distribution occurred, a charitable trust was established with the University serving as the trustee, and therefore, plaintiff lacked standing to enforce the charitable trust pursuant to
(1) A charitable trust may be created for the relief of poverty, the advancement of education or religion, the promotion of health, scientific, literary, benevolent, governmental, or municipal purposes, any purpose described in section 501(c)(3) of the internal revenue code,
26 USC 501 , or other purposes the achievement of which is beneficial to the community.(2) If the terms of a charitable trust do not identify a particular charitable purpose or beneficiary, the court may select 1 or more charitable purposes or beneficiaries. The selection shall be consistent with the settlor‘s intention to the extent it can be ascertained.
(3) The settlor, a named beneficiary, or the attorney general of this state, among others, may maintain a proceeding to enforce a charitable trust. The right of the settlor of a charitable trust
to enforce the trust is personal to the settlor and may not be exercised by any of the following: (a) The settlor‘s heirs, assigns, or beneficiaries.
(b) The settlor‘s fiduciary, other than the trustee of the charitable trust the enforcement of which is being sought.
(c) An agent of the settlor acting pursuant to a durable power of attorney, unless the right to enforce the trust is expressly conferred on the agent by the power of attorney.
Pursuant to
As noted, in giving effect to every word, phrase, and clause in a statute, and avoiding interpretations rendering any part of the statute surplusage or nugatory, this Court gives undefined statutory terms their plain and ordinary meanings. South Dearborn, 485 Mich at 361. Merriam-Webster Collegiate Dictionary defines “other” as “a different or additional one.” Merriam-Webster‘s Collegiate Dictionary (11th ed). It defines “among” as “in the number or class of.” Merriam-Webster‘s Collegiate Dictionary (11th ed). From these definitions, it is evident that the phrase “among others” refers to persons other than the Attorney General, the settlor, or the beneficiaries of the charitable trust, as the statutory text names those persons explicitly. Therefore, defendants’ attempt to limit charitable trust enforcement to those persons is without merit. However, although the plain text of the statute unequivocally recognizes that additional persons may validly seek to enforce a charitable trust, it provides no further guidance addressing who those additional persons might be.
To determine individuals that qualify as “among others,” we interpret a statute in accordance with its plain language to give effect to the intent of the Legislature. South Dearborn, 502 Mich at 360-361; Briggs Tax Serv, LLC, 485 Mich at 76. We may not choose any rational construction, but “must choose the construction which implements the legislative purpose perceived from the language and the context in which it is used.” Frost-Pack Distrib Co, 399 Mich at 683. Prudently, in this instance, the Legislature clearly expressed that the purpose of the MTC was to “foster certainty in the law so that settlors of trusts will have confidence that their instructions will be carried out as expressed in the terms of the trust.” We acknowledge that plaintiff is not the settlor or trustee of the charitable trust despite its creation through the Bellamy Trust and Gift Agreement. Nonetheless, the “among others” language of
Although we render this holding by examination of the plain language of the statute, its purpose, and the powers and authority of the trustee, we note that our conclusion is further buttressed by the Reporter‘s Commentary to the Uniform Probate Code. See In re Lundy Estate, 291 Mich App 347, 355; 804 NW2d 773 (2011). The Reporter‘s Commentary explains that:
[t]he inclusion of the phrase “among others” in subsection (3) is intended to recognize the rights of persons with a special interest in the trust to enforce the trust. Notwithstanding the seeming breadth of this provision, it is not an invitation to any member of the public or anyone conceivably affected by the trust to bring suit. [Martin & Harder, p 553.]
Rather, “more than a mere allegation of the possession of a special interest is required before standing to enforce a charitable trust will be found by the courts,” and the courts must “evaluate each circumstance and determine whether the party alleging possession of a special interest in fact has a sufficient special interest to pursue the case.” Id. The Reporter‘s Commentary sets forth possible factors relevant to establishing a special interest:
In general, the plaintiffs must be identifiable beneficiaries or potential beneficiaries in the organization. The plaintiffs must have a specific interest that will be directly affected by the charity‘s failure to carry out its purpose or by a breach of fiduciary duties. The plaintiff must be a member of an identifiable class of beneficiaries of the charity and not merely a member of the general public who is concerned that the charity be run properly. Courts have been willing to let such beneficiaries sue the charity to protect the “special interest” in a manner analogous to a suit by a beneficiary of a private trust, but the remedy sought must be a benefit to the charity itself and not money damages for the plaintiffs. [Id. (quotation marks and citation omitted).]
The Reporter‘s Commentary lists factors that may be most likely to cause a court to grant standing to private persons as follows:
(a) the extraordinary nature of the acts complained of and the remedy sought by the plaintiff; (b) the presence of fraud or misconduct on the part of the charity or its directors; (c) the state attorney general‘s availability or effectiveness; and (d) the nature of the benefitted class and its relationship to the charity. [Id. at 554 (quotation marks and citation omitted).]
The Reporter‘s Commentary provides guidance regarding the factors that allow an individual to qualify as “among others” to challenge a charitable trust. Applying those factors to the present case, we also conclude that plaintiff has standing because he is “among others” entitled to challenge the charitable trust. Plaintiff alleged that Professor Bellamy sought to continue his work through the creation of the Bellamy Trust and Gift Agreement by funding a full professorship in his area of expertise. Although $3,500,000 was transferred to the University to fulfill Professor Bellamy‘s wishes, plaintiff alleged that defendants did not comply with the terms, but appointed an associate professor of a different specialty. Thus, plaintiff, as trustee and personal representative, distributed funds in accordance with his obligations, but nonetheless had to ensure that the distribution meet the terms of the Gift Agreement. In light of the extraordinary amount of the transfer, the allegation that the settlor of the charitable trust made
In summary, we conclude that the purpose of the MTC, the trustee‘s power to prosecute and enforce the trust, and the general rules of standing allow plaintiff to proceed with this litigation. Further, the involvement of a charitable trust and the limitations on enforcement found in
Reversed and remanded. We do not retain jurisdiction. Plaintiff, the prevailing party, may tax costs.
/s/ Stephen L. Borrello
/s/ Kirsten Frank Kelly
/s/ Deborah A. Servitto
