Edmund William Ross II Irrevocable Tr. v. Breer (In re Edmund William Ross II Irrevocable Tr.)

In re EDMUND WILLIAM ROSS II IRREVOCABLE TRUST.

EDMUND WILLIAM ROSS II IRREVOCABLE TRUST, by ANNETTE M. LEROUX, Trustee, Appellee, v. CORRINE BREER, Appellant and WILLIAM J. ROSS III, Appellee. In re WILLIAM JAMES ROSS IV IRREVOCABLE TRUST. WILLIAM JAMES ROSS IV IRREVOCABLE TRUST, by ANNETTE M. LEROUX, Trustee, Appellee, v. CORRINE BREER, Appellant, and WILLIAM J. ROSS III, Appellee. In re EDMUND WILLIAM ROSS II IRREVOCABLE TRUST. EDMUND WILLIAM ROSS II IRREVOCABLE TRUST, by ANNETTE M. LEROUX, Trustee, and RICHARD CONNORS, Appellees/Cross-Appellants, v. CORRINE BREER, Appellant/Cross-Appellee, and WILLIAM J. ROSS III, Appellee. In re WILLIAM JAMES ROSS IV IRREVOCABLE TRUST. WILLIAM JAMES ROSS IV IRREVOCABLE TRUST, by ANNETTE M. LEROUX, Trustee, and RICHARD CONNORS, Appellees/Cross-Appellants, v. CORRINE BREER, Appellant/Cross-Appellee, and WILLIAM J. ROSS III, Appellee. In re EDMUND WILLIAM ROSS II IRREVOCABLE TRUST. EDMUND WILLIAM ROSS II IRREVOCABLE TRUST, by ANNETTE M. LEROUX, Trustee, Appellant, v. CORRINE BREER, WILLIAM J. ROSS III, and RICHARD CONNORS, Appellees.

In re WILLIAM JAMES ROSS IV IRREVOCABLE TRUST.

WILLIAM JAMES ROSS IV IRREVOCABLE TRUST, by ANNETTE M. LEROUX, Trustee, Appellant, v. CORRINE BREER, WILLIAM J. ROSS III, and RICHARD CONNORS, Appellees.

In re EDMUND WILLIAM ROSS II IRREVOCABLE TRUST.

EDMUND WILLIAM ROSS II IRREVOCABLE TRUST, by ANNETTE M. LEROUX, Trustee, Appellee, v. CORRINE BREER, Appellant and WILLIAM J. ROSS III and RICHARD CONNORS, Other Parties. In re WILLIAM JAMES ROSS IV IRREVOCABLE TRUST. WILLIAM JAMES ROSS IV IRREVOCABLE TRUST, by ANNETTE M. LEROUX, Trustee, Appellee, v. CORRINE BREER Appellant and WILLIAM J. ROSS III and RICHARD CONNORS, Other Parties.

Nos. 349679, 349680, 349917; 351355; 351823, 349926; 351356; 351839, 351981, 351982, 354298, 354303

Court of Appeals of Michigan

September 16, 2021

UNPUBLISHED

Oakland Probate Court LC Nos. 2006-307607-TV, 2006-307608-TV 2006-307607-TV, 2006-307608-TV, 2006-307607-TV 2006-307608-TV, 2006-307607-TV, 2006-307608-TV.

Before: Michael F. Gadola, P.J., and Kathleen Jansen and Colleen A. O'Brien, JJ.

Per Curiam.

These 12 consolidated appeals arise out of two highly contentious trust proceedings in the probate court, which ultimately resulted in an award of sanctions against the trustee Annette M. Leroux (the "trustee"), and her attorney, Richard Connors, in favor of Corrine Breer.^[1] The court also entered an order partially suspending the trustee and appointing a special fiduciary. Breer, the trustee, and Connors claim various appeals and cross-appeals from the probate court's orders.^[2]We affirm in part, vacate in part, and remand for further proceedings.

I. FACTUAL AND PROCEDURAL BACKGROUND

These contentious trust cases arise out of familial litigation following a divorce. As explained by the probate court:

William James Ross III [the "settlor"] and Annette LeRoux [i.e., the trustee] have two children: Edmund William Ross II and William James Ross IV. On December 30, 1987, two separate Trusts were created: (1) the Edmund William Ross II [Irrevocable Trust]; and (2) the William James Ross IV [Irrevocable Trust] (the "Ross Trusts" [or "subject trusts"]). William James Ross III was the settlor and the initial trustee of both trusts. Annette LeRoux . . . is one of the Successor Trustees of the trusts. . . . Leroux is [the settlor's] ex-wife. Corinne Breer ("Breer") is [the settlor's] elderly mother.

In 2006, following her divorce from the settlor, the trustee initiated two cases in the probate court-one for each of the subject trusts-by filing petitions for an accounting, to remove the settlor as the acting trustee, and to surcharge him for alleged breaches of trust. As noted by the probate court:

On January 25, 2009, [the probate court] entered a Settlement Order resolving all matters. One of the provisions of the settlement was the removal of [the settlor] as the initial trustee of the Ross Trusts and the appointment of a Successor Trustee. Comerica Bank became the Successor Trustee. On March 16, 2009, a Judgment was entered against [the settlor].^[3] Consequently, collection proceedings began in multiple states: Michigan, Florida[, ] and Illinois, as well as courts with different subject matter jurisdiction, including a bankruptcy court in Florida and a Florida appellate court. LeRoux's claims against Breer have been previously dismissed twice by Florida courts.

In February 2019, the trustee, acting through her counsel, Connors, filed a petition seeking reinstatement of these cases and the issuance of a subpoena directing Breer to appear before the probate court to be examined under oath concerning the assets then in the settlor's possession. As relevant here, the February 11, 2019 petition alleged that the trustee had become the acting trustee of both trusts in July 2013, after Comerica "resigned" that position, and that the settlor had recently transferred two checks, made payable to him in a total amount exceeding $37, 000, to Breer, in hopes of avoiding the trustee's collection efforts against the settlor. In reaction, Breer filed an emergency motion seeking, among other things, leave to intervene in these cases. Following a hearing, the probate court granted Breer leave to intervene, holding that she would thereafter be "a party to the post-judgment proceedings."

Initially, it appeared that a settlement of the instant litigation between Breer and the trustee was imminent. On April 8, 2019, the parties stipulated to the entry of a judgment against Breer under MCR 2.405. At a hearing the next day, the parties informed the probate court of their settlement, and the trustee's counsel, Connors, indicated that the trustee no longer had any known claims against Breer. Thus, there was "nothing more that Ms. Breer [wa]s required to be in this case for," and the trustee moved to have her "dismissed as a party." Also, when the probate court asked Connors whether his request for the issuance of a subpoena against Breer was "off the table," Connors replied: "Oh, absolutely." However, Connors also foreshadowed the events that would follow by suggesting that the trustee might yet "be bringing additional requests for discovery, maybe on [Breer], maybe not[.]"

On April 10, 2019, the probate court entered an order awarding a judgment against Breer consistent with the parties' stipulation. In addition, the probate court dismissed Breer as a party and dismissed the trustee's February 11, 2019 "petition regarding . . . Breer[.]"

On April 19, 2019, however, the trustee moved to compel discovery, which would ultimately be the impetus of the sanction proceedings now at bar. In pertinent part, that motion to compel stated:

2. This case stems from a Judgment from this Court against the Judgment Debtor [the settlor], . . . because [the settlor] stole money from his son's Trusts while he was the Trustee.

3. Petitioner domesticated the Judgment in . . . Florida in approximately September 2009.

4. As part of the discovery process in the Florida case, Petitioner secured a Break Order from the Florida Court ordering the Sheriff to execute on the personal property of [the settlor] from the residence where he was then living. As part of the execution of that Break Order certain papers and documents were seized by the Sheriff.

5. Pursuant to an Agreed Order the [trustee] and [the settlor] agreed that [the settlor's] attorneys would review the documents and mark those that they claimed were entitled to a privilege and allow [the trustee] access to the remaining documents.

6. The documents for which [the settlor] claimed a privilege [were] submitted to a Special Magistrate for an in camera review and a determination whether they were entitled to a privilege exemption.

7. The Special Magistrate issued his Report No. 1 on March 25, 2019 . . . and recommended that the Court overrule [the settlor's] claim of privilege on all but nine (9) documents. The Florida Court entered its Order accepting and confirming the Special Magistrate's Report No. 1 on April 16, 2019 . . . . The Order provided that [the settlor] was to produce the documents to [the trustee] within 15 days.

8. [The trustee] has received the documents from [the settlor] and they contain a copy of the William Z. Breer Trust, Under Agreement Dated December 13, 2004, as Amended And Restated. William Z. Breer was the step father of [the settlor] and the husband of Corinne H. Breer. See attached EXHIBIT "A", copy of the Trust. Mr. Breer died in May 2014.

9. Mr. Breer's Trust provided that a trust was to be established for the benefit of [the settlor] and funded with assets from Mr. Breer's estate.

10. The Trustee of Mr. Breer's Trust is William A. Beluzo, Jr. ("Beluzo").

11. A trust was established by Corinne H. Breer on January 22, 2016 and known as the Corinne M. Breer Irrevocable Trust f/b/o William J. Ross III U/A/D January 22, 2016. See attached EXHIBIT "B", copy of Trust. The Trust named Frank D. Paolini as the Trustee.

* * *

15. The subject matter of the pending action is the existence of, and location of, any assets of the Judgment Debtor, not exempt from execution.

16. Based upon the recently discovered Trust Agreement of Mr. Breer, it is reasonable and necessary to conduct discovery and take the deposition of Mr. Beluzo to determine if [the settlor] received money or property from Mr. Breer upon his death, or if any assets are being held in trust for [the settlor]. It is also necessary to determine if any money or property placed into the Corinne H. Breer Irrevocable Trust were assets from Mr. Breer's Trust.

WHEREFORE, [the trustee] respectfully requests that this honorable Court:

1. Issue an Order compelling William A. Beluzo, Jr. to appear for a deposition at a time and place to be negotiated . . . .

...