Costello v. Richland Animal Rescue (In re Michael Eyde Tr.)

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In re MICHAEL EYDE TRUST

WILLIAM JOSEPH COSTELLO, Trustee, Appellant, v. RICHLAND ANIMAL RESCUE, INC., CAROL PALINSKI HILDEBRAND, ELIZABETH DALY UNIS, JULIE BAKER, and ATTORNEY GENERAL, Appellees.

In re MICHAEL EYDE TRUST.

WILLIAM JOSEPH COSTELLO, Trustee, Appellant, v. RICHLAND ANIMAL RESCUE, INC., CAROL PALINSKI HILDEBRAND, ELIZABETH DALY UNIS, and JULIE BAKER, Appellees.

Nos. 355947, 356500

Court of Appeals of Michigan

January 27, 2022

UNPUBLISHED

Clinton Probate Court LC No. 20-030844-TV

Before: O'Brien, P.J., and Stephens and Letica, JJ.

Per Curiam In Docket No. 355947, appellant, William Joseph Costello trustee of the Michael Eyde Trust (the Trust), appeals as of right an order denying Costello's motion for summary disposition, in which he had alleged a lack of subject-matter jurisdiction over an objection raised by appellee Richland Animal Rescue, Inc. (Richland), to a change of situs of the Trust from Michigan to Illinois. In Docket No. 356500 Costello purports to appeal as of right^[1] a later order requiring him to provide immediately the Eyde estate's tax form (form 706) to the beneficiaries listed in the Trust, i.e., Julie Baker, Christopher Joseph Palinski (Christopher), Carol Palinski Hildebrand, Elizabeth Daly Unis, and Richland. We reverse in part and remand.^[2]

I. DOCKET NO. 355947

In Docket No. 355947, Costello, primarily relying on Trust documents and statutory law, argues that the trial court erred by concluding that it had subject-matter jurisdiction over the proceedings. This Court reviews de novo whether a court has subject-matter jurisdiction and also reviews de novo issues of statutory construction and decisions regarding motions for summary disposition. Elba Twp v. Gratiot Co Drain Comm'r, 493 Mich. 265, 278; 831 N.W.2d 204 (2013); Piccione v. Gillette, 327 Mich.App. 16, 18-19; 932 N.W.2d 197 (2019). Also subject to de novo review is "the proper interpretation of a trust." In re Estate of Stan, 301 Mich.App. 435, 442; 839 N.W.2d 498 (2013).

In general, "[s]ubject matter jurisdiction in particular is defined as the court's ability to exercise judicial authority over that class of cases; not the particular case before it but rather the abstract power to try a case of the kind or character of the one pending." Campbell v. St John Hosp, 434 Mich. 608, 613-614; 455 N.W.2d 695 (1990) (quotation marks and citations omitted). "When a court is without jurisdiction of the subject matter, any action with respect to such a cause, other than to dismiss it, is absolutely void." Fox v. Bd of Regents of Univ of Mich, 375 Mich. 238, 242; 134 N.W.2d 146 (1965). "Probate courts are courts of limited jurisdiction. Const 1963, art 6, § 15. The jurisdiction of the probate court is defined entirely by statute." In re Wirsing, 456 Mich. 467, 472; 573 N.W.2d 51 (1998).

MCL 700.7203(1) states that the probate court "has exclusive jurisdiction of proceedings in this state brought by a trustee or beneficiary that concern the administration of a trust as provided in section 1302(b) and (d)." MCL 700.1302 states, in part:

The court has exclusive legal and equitable jurisdiction of all of the following:

(b) A proceeding that concerns 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, including, but not limited to, proceedings to do all of the following:

(i) Appoint or remove a trustee.

(ii) Review the fees of a trustee.

(iii) Require, hear, and settle interim or final accounts.

(iv) Ascertain beneficiaries.

(v) Determine a question that arises in the administration or distribution of a trust, including a question of construction of a will or trust.

(vi) Instruct a trustee and determine relative to a trustee the existence or nonexistence of an immunity, power, privilege, duty, or right.

(vii) Release registration of a trust.

(viii) Determine an action or proceeding that involves settlement of an irrevocable trust.

(d) A proceeding to require, hear, or settle the accounts of a fiduciary and to order, upon request of an interested person, instructions or directions to a fiduciary that concern an estate within the court's jurisdiction. [Emphases added.]

However, MCL 700.7205(1) provides:

If a party objects, the court shall not entertain a proceeding under section 7203 that involves a trust that is registered or that has its principal place of administration in another state, unless either of the following applies:

(a) All appropriate parties could not be bound by litigation in the courts of the state where the trust is registered or has its principal place of administration.

(b) The interests of justice would otherwise be seriously impaired. [Emphasis added; citation omitted.]

Given the language of MCL 700.7205(1), an important question to be answered is whether the Trust did, in fact, have its principal place of administration in another state by virtue of what Costello did before any proceedings were initiated.

MCL 700.7105(1) states, "Except as otherwise provided in the terms of the trust, this article governs the duties and powers of a trustee, relations among trustees, and the rights and interests of a trust beneficiary." (Emphasis added.) Costello argues that the terms of the Trust (discussed shortly, infra) allowed him to transfer the principal place of administration of the trust to Illinois without following the notice requirements set forth in MCL 700.7108. MCL 700.7108 states:

(1) Without precluding other means for establishing a sufficient connection with the designated jurisdiction, terms of a trust designating the principal place of administration are valid and controlling if any of the following apply:

(a) A trustee's principal place of business is located in or a trustee is a resident of the designated jurisdiction.

(b) A trust director's principal place of business is located in, or a trust director is a resident of, the designated jurisdiction.

(c) All or part of the administration occurs in the designated jurisdiction.

(2) A trustee is under a continuing duty to administer the trust at a place appropriate to its purposes, its administration, and the interests of the qualified trust beneficiaries.

(3) Without precluding the right of the court to order, approve, or disapprove a transfer, the trustee, in furtherance of the duty prescribed by subsection (2), may transfer the trust's principal place of administration to another state or to a jurisdiction outside of the United States.

(4) The trustee shall notify the qualified trust beneficiaries in writing of a proposed transfer of a trust's principal place of administration not less than 63 days before initiating the transfer. The notice of proposed transfer must include all of the following:

(a) The name of the jurisdiction to which the principal place of administration is to be transferred.

(b) The address and telephone number at the new location at which the trustee can be contacted.

(c) An explanation of the reasons for the proposed transfer.

(d) The date on which the proposed transfer is anticipated to occur.

(e) In a conspicuous manner, the date, not less than 63 days after the giving of the notice, by which a qualified trust beneficiary must notify the trustee in writing of an objection to the proposed transfer.

(5) The authority of a trustee under this section to transfer a trust's principal place of administration without the approval of the court terminates if a qualified trust beneficiary notifies the trustee in writing of an objection to the proposed transfer on or before the date specified in the notice.

(6) In connection with a transfer of the trust's principal place of administration, the trustee may transfer some or all of the trust property to a successor trustee designated in the terms of the trust or appointed under section 7704.

(7) The view of an adult beneficiary must be given weight in determining the suitability of the trustee and the place of administration.

Appellees contend that Costello needed to follow this statute and that the lack of 63 days of notice, as required by MCL 700.7108(4), rendered his attempt to transfer the principal place of administration from Michigan to Illinois ineffective.^[3] Costello relies, instead, on MCL 700.7105(1) and on the following language from the article of the Trust labeled "administrative powers":

Trustee has the power to perform every act that a reasonable and prudent investor would perform incident to the collection, preservation, management, use, and distribution of the trust assets to accomplish the desired result of administering the trust legally and in the best interest of the trust beneficiaries, without the approval of any court or beneficiary. . . . Trustee possesses . . . the authority to:

7.31 Situs of Trust. Change the situs and principal place of administration of any trust under this Agreement by notice to each current beneficiary; if a trust under this Agreement is registered, it may be registered in Ingham County, Michigan, in the jurisdiction in which the trust is being administered, or in a jurisdiction in which any trustee resides . . . .

"When construing a trust, a court's sole objective is to ascertain and give effect to the intent of the settlor. Absent ambiguity, the words of the trust document itself are the most indicative of the meaning and operation of the trust." In re Stillwell Trust, 299 Mich.App 289, 294; 829 N.W.2d 353 (2012) (quotation marks and citation omitted). "[I]ntent [of the settlor] is gauged from the trust document itself, unless there is ambiguity." In re Kostin, 278 Mich.App. 47, 53; 748 N.W.2d 583 (2008). In In re Estate of Reisman, 266 Mich.App. 522, 527; ...