Brody v. Deutchman (In re Rhea Brody Living Trust)

321 Mich.App. 304

910 N.W.2d 348

IN RE RHEA BRODY LIVING TRUST, Dated January 17, 1978, as amended.

Robert Brody, Intervenor–Appellant/Cross–Appellee,

v.Cathy B. Deutchman, Petitioner–Appellee/Cross–Appellee,andMichael Barton, Special Fiduciary, Intervenor,

and

Jay Brody, Intervenor–Appellee/Cross–Appellant.

No. 330871

Court of Appeals of Michigan.

Submitted September 6, 2017, at Detroit.

Decided September 12, 2017, 9:25 a.m.

Hertz Schram PC (by Kenneth F. Silver and Daniel W. Rucker ) for Cathy B. Deutchman.

Giarmarco, Mullins & Horton, PC (by William H. Horton and Christopher J. Ryan ) for Robert Brody.

Kemp Klein Law Firm (by Alan A. May, Joseph P. Buttiglieri, and Richard Bisio ) for Jay Brody.

Before: O'Brien, P.J., and Jansen and Murray, JJ.

Per Curiam.

In this case involving the Rhea Brody Living Trust (the Rhea Trust), Rhea's husband, Robert Brody, appeals as of right the probate court's order granting partial summary disposition to Rhea and Robert's daughter, Cathy B. Deutchman. In relevant part, the order resolved claims relating to two family businesses, Brody Realty No. I, LLC, and Macomb Corporation, declared Rhea Brody disabled pursuant to the terms of the trust, and removed Robert as successor trustee of the trust. Jay Brody, Rhea and Robert's son and the brother of Cathy, cross-appeals.¹ We affirm in part, reverse in part, and remand for further proceedings.

I. PROBATE COURT JURISDICTION

On appeal, Robert and Jay ask this Court to vacate the probate court's orders for lack of subject-matter jurisdiction. According to Robert and Jay, the trust action included a "business or commercial dispute" as defined in MCL 600.8031(1)(c) and was therefore within the mandatory jurisdiction of the business court under MCL 600.8035. We disagree.

Neither Robert nor Jay raised the jurisdictional issue in the lower court. However, "[s]ubject-matter jurisdiction cannot be waived and can be raised at any time by any party or the court." In re Contempt of Dorsey , 306 Mich. App. 571, 581, 858 N.W.2d 84 (2014), vacated in part on other grounds 500 Mich. 920, 888 N.W.2d 61 (2016). " ‘Whether the trial court had subject-matter jurisdiction is a question of law that this Court reviews de novo.’ " Bank v. Mich. Ed. Ass'n–NEA , 315 Mich. App. 496, 499, 892 N.W.2d 1 (2016), quoting Rudolph Steiner Sch. of Ann Arbor v. Ann Arbor Charter Twp. , 237 Mich. App. 721, 730, 605 N.W.2d 18 (1999). "We review de novo questions of statutory interpretation, with the fundamental goal of giving effect to the intent of the Legislature." Bank , 315 Mich. App. at 499, 892 N.W.2d 1.

"Subject-matter jurisdiction is conferred on the court by the authority that created the court." Reed v. Yackell , 473 Mich. 520, 547, 703 N.W.2d 1 (2005) (CORRIGAN, J., dissenting), citing Detroit v. Rabaut , 389 Mich. 329, 331, 206 N.W.2d 625 (1973). The probate court is a court of limited jurisdiction and derives its power from statutes.

Manning v. Amerman , 229 Mich. App. 608, 611, 582 N.W.2d 539 (1998). Specifically, MCL 700.1302 grants the probate court "exclusive legal and equitable jurisdiction" over matters concerning "the validity, internal affairs, or settlement of a trust; the administration, distribution, modification, reformation, or termination of a trust; or the declaration of rights that involve a trust, trustee, or trust beneficiary." Additionally, MCL 700.1303(h) provides for concurrent legal and equitable jurisdiction over claims by or against a fiduciary or trustee.

A business court's jurisdiction is established by MCL 600.8035, which provides that "[a]n action shall be assigned to a business court if all or part of the action includes a business or commercial dispute."

MCL 600.8035(3). Under MCL 600.8031(1)(c), a "business or commercial dispute" means, among other things, "[a]n action involving the sale, merger, purchase, combination, dissolution, liquidation, organizational structure, governance, or finances of a business enterprise." Notwithstanding the broad definition of "business or commercial dispute" found in MCL 600.8031(1)(c), the Legislature specifically excluded proceedings under the Estates and Protected Individuals Code (EPIC), MCL 700.1101 et seq ., in MCL 600.8031(3)(e).

Robert and Jay first argue that this action fell within the mandatory jurisdiction of the business court because it involved "the rights or obligations of ... members ... or managers" of a company, MCL 600.8031(2)(b), an action "arising out of contractual agreements or other business dealings," MCL 600.8031(2)(c), and an action "involving the sale, ... purchase, ... or finances of a business enterprise," MCL 600.8031(1)(c)(iv ). Accordingly, they contend, Cathy was required to bring the action in the circuit court for business court assignment. This argument lacks merit. Matters brought under EPIC are specifically excluded from the definition of "business or commercial dispute" by MCL 600.8031(1)(e). Cathy sought Robert's removal as trustee of the Rhea Trust, and reversal of the damage she alleged that Robert had already caused to the interests of the trust. Cathy's petition seeking Robert's removal as trustee, delivery of all accountings of trust property to an appointed trustee, temporary court supervision of the trust, an order rescinding transactions Robert had entered into as trustee, and damages for the Rhea Trust, was brought under various provisions of the EPIC. To the extent the petition involved transactions of the Brody family businesses or existing contracts, these matters arose only tangentially to the central issue of Robert's breach of fiduciary duty as trustee of the Rhea Trust. Cathy's petition clearly fell within the range of matters specifically excluded from the definition of "business or commercial dispute" under the business court statute.

Next, Robert and Jay argue that, regardless of the nature of Cathy's petition, her claims fell within the mandatory jurisdiction of the business court under MCL 600.8035(3), which states, in part, that "[a]n action that involves a business or commercial dispute that is filed in a court with a business docket shall be maintained in a business court although it also involves claims that are not business or commercial disputes, including excluded claims under section 8031(3) ." (Emphasis added.) Robert and Jay ask this Court to interpret this language as requiring every case affecting or affected by a business matter, including a trust case, to be brought before the business court. We decline to do so.

When this Court interprets a statute, our goal is to give effect to the Legislature's intent as determined by the statutory language. Bukowski v. Detroit , 478 Mich. 268, 273, 732 N.W.2d 75 (2007). "In order to accomplish this goal, this Court interprets every word, phrase, and clause in a statute to avoid rendering any portion of the statute nugatory or surplusage." Id . at 273–274, 732 N.W.2d 75. Here, we find Robert and Jay's proposed construction of the second sentence of MCL 600.8035(3) inconsistent with the plain language of the statute. Specifically, we note that the Legislature employed in its jurisdictional mandate the phrases "an action ... filed in a court with a business docket" and "shall be maintained in a business court." Id. (emphasis added). These phrases indicate a legislative intent to retain cases originally filed in the business court for the entirety of the proceedings, regardless of whether the business dispute also involves, or comes to involve, excluded subject matter. This simple reading of the statutory language is consistent with the Legislature's stated purpose in establishing the business court, which is to "[a]llow business or commercial disputes to be resolved with expertise, technology, and efficiency," MCL 600.8033(3)(b), and "[e]nhance the accuracy, consistency, and predictability of decisions in business and commercial cases," MCL 600.8033(3)(c). To read this section as requiring every action affecting a business to be originally filed in the business court or transferred to the business court upon the inclusion of matters affecting a business would be to read language into the statute that simply does not exist and to brush aside the Legislative goal of accuracy and efficiency by imposing on the business courts mandatory jurisdiction over a seemingly endless variety of nonbusiness-related matters.²

Further, Robert and Jay's proposed construction of the business court statute would create a direct conflict between the mandatory jurisdiction of the business court over all matters affecting or involving a business with the exclusive jurisdiction of the probate court to consider probate and trust matters. "If two statutes lend themselves to a construction that avoids conflict, that construction should control." Parise v. Detroit Entertainment, LLC , 295 Mich. App. 25, 27, 811 N.W.2d 98 (2011) (quotation marks and citation omitted). The construction of MCL 600.8035(3) proposed by Robert and Jay would render the probate court without jurisdiction to consider any trust matter that also involved or affected, however tangentially, a business transaction. We cannot reconcile this construction with the Legislature's grant of exclusive jurisdiction to the probate court over trust matters. Nor can we reconcile the proposed construction of MCL 600.8035(3) with the Legislature's stated purpose for its broad grant of exclusive jurisdiction on the probate court, which is "to simplify the disposition of an action or proceeding involving a decedent's, a protected individual's, a ward's, or a trust estate by consolidating the probate and other related actions or proceedings in the probate court." MCL 700.1303(3).

Finally, to the extent the probate court's grant of exclusive jurisdiction over trust matters in MCL 700.1302 and MCL 700.1303 conflicts with the broad inclusion of trust-related matters within the exclusive jurisdiction of the business court under MCL 600.8035(3), we conclude that the more...