New Prods. Corp. v. Miller (In re Helen Tenney Miller Tr.)

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In re HELEN TENNEY MILLER TRUST.

NEW PRODUCTS CORPORATION, Plaintiff-Appellant, v. GREG L. MILLER, Individually and as Co-Trustee and Co-Personal Representative, VALORIE MILLER, Individually and as Co-Trustee and Co-Personal Representative, BETHANY MILLER MORGAN, CINDY MILLER KING, and MODERN PLASTICS CORPORATION, Defendants-Appellees.

No. 360048

Court of Appeals of Michigan

June 29, 2023

UNPUBLISHED

Berrien Probate Court LC No. 2019-000349-TV

Before: GLEICHER, C.J., and RICK and MALDONADO, JJ.

PER CURIAM.

This appeal arises from a civil case filed in probate court that was consolidated with the supervised administration of the Helen Tenney Miller Trust (the Miller Trust). After a bench trial, plaintiff, New Products Corporation, appeals by right the amended judgment entered by the Berrien Probate Court in favor of defendants, Greg L. Miller and Valorie Miller individually and as the cotrustees of the Miller Trust and co-personal representatives of the Helen Tenney Miller Estate, Bethany Miller Morgan, Cindy Miller King, and Modern Plastics Corporation. New Products raises numerous claims of error, but we conclude that each is without merit. Thus, we affirm.

I. BASIC FACTS

The facts giving rise to this litigation started with a now-deceased man named Walter Miller. Walter was a businessman who, years before any of the parties to this litigation were born, founded two businesses: Modern Plastics Corporation and New Products Corporation. Walter also had two sons, Stanley and Victor, both of whom are now deceased. Stanley eventually took control of New Products from his father, and Victor did the same with Modern Plastics. Stanley later passed control of New Products to his daughter, Cheryl. Cheryl has acted on behalf of New Products at all times relevant to this litigation. Victor married a woman named Helen, but she went by her middle name, Tenney. Tenney is likewise deceased. Victor and Tenney had five children who survived to adulthood: Greg, Valorie, Bethany, Heidi, and Cindy. Their sixth child, Randy, died when he was two years old. Victor and Tenney formed a trust (hereinafter: "the Miller Trust"), and they formed a corporation called Lee Five Enterprises. The corporation's name derived from the fact that all five of their surviving children had the middle name of Lee. The Miller Trust owned 100% of the shares of Lee Five. Lee Five owned 95% of the shares of Modern Plastics. This litigation revolves around a piece of real property, known as 489 North Shore Drive, that was owned by Modern Plastics.

In June 2006, LaSalle Bank made a loan to Modern Plastics secured with a mortgage on 489 North Shore Drive. LaSalle Bank's successor, Bank of America, instructed Modern Plastics to cease operations in 2008, following Victor's death. Heidi caused Modern Plastics to cease operations and began to wind up the corporation's affairs. In December 2008, just days before her death, Heidi entered into an agreement to sell 489 North Shore Drive to Ox Creek Development, LLC, for $650,000, but the sale did not go through. Tenney acted on behalf of Modern Plastics following Heidi's death, and Modern Plastics filed for bankruptcy protection in January 2009. In March 2013, Bank of America assigned its note and mortgage to New Products in exchange for $225,000. In January 2014, the bankruptcy court allowed the bankruptcy trustee to abandon 489 North Shore Drive despite New Products' objection. In August 2014, Tenney-purportedly as the trustee of the Walter Miller Trust-executed a quitclaim deed transferring Parcel 9 to New Products; Parcel 9 was surrounded by the parcels that made up 489 North Shore Drive, but which was not owned by Modern Plastics. Tenney, acting on behalf of Modern Plastics, later entered into an agreement with New Products that gave New Products the option to purchase the remaining parcels of 489 North Shore Drive. In July 2015, Tenney signed annual statements for Modern Plastics that had been due from 2009 through 2015. Tenney also assigned any claims that Modern Plastics or Lee Five might have had related to the real property to New Products.

Tenney died in January 2017. Greg applied to the probate court for informal probate of Tenney's estate in April 2017. In June 2017, and again in May 2018, Cheryl caused New Products to send letters that warned Tenney's beneficiaries that they should not allow Modern Plastics and Lee Five to become involuntarily dissolved for failing to file annual reports. New Products expressed its belief that, should that happen, the beneficiaries would become partners in an unincorporated entity and would be personally liable for all the preexisting debts and obligations of the two corporations. Cheryl's protests notwithstanding, the state involuntarily dissolved Modern Plastics and Lee Five in July 2018 for failing to file annual reports for three consecutive years.

In May 2019, Greg and Valorie Miller, as trustees of the Miller Trust, petitioned the probate court to exercise its jurisdiction and supervise the Miller Trust's administration. Specifically, they alleged that they had already disbursed approximately $1,000,000 in assets from the trust but had become aware that New Products intended to assert claims against the Miller Trust and its beneficiaries. They believed that New Products' claims had no legitimacy but asked the probate court to supervise the remaining distributions. They simultaneously petitioned for an order approving their proposed final distributions. The probate court assigned Case No. 2019-000349-TV to that petition.

In August 2019, New Products sued Greg, Valorie, Bethany, and Cindy. New Products sued Greg and Valorie in their individual capacities as well as their capacities as the trustees of the Miller Trust and personal representatives of the Miller Estate. It sued Bethany and Cindy as beneficiaries of the Miller Trust. The probate court assigned Case No. 2019-000631-CZ to that complaint. New Products filed an amended complaint in November 2019. New Products added Modern Plastics as a defendant without serving it with a summons. New Products alleged six claims. It alleged that Greg and Valorie breached their fiduciary duty to maintain the Miller Trust's property by failing to protect the real property located at 489 North Shore Drive and by distributing the Miller Trust's assets without first resolving New Products' claim (Count I). It also alleged that the Miller Trust and Miller Estate was liable for the debts owed on the property (Count II). New Products alleged that Tenney, when she was alive, and Greg breached their duties as officers of Modern Plastics to maintain the property (Count III). New Products also restated its claim for reimbursement of protective advances (Count IV), for specific performance of its option to purchase 489 North Shore Drive (Count V), and for a declaration that the option to purchase 489 North Shore Drive had been extended (Count VI).

The probate court granted New Products' motion for summary disposition on Counts V and VI, which are not at issue on appeal. It held a trial on the remaining four claims and entered a judgment of no cause of action on those four claims. New Products then appealed by right in this Court.

II. BREACH OF DUTIES

New Products argues that the probate court erred by determining that Greg and Valorie did not breach any duty that they might have owed to New Products as the trustees of the Miller Trust and the personal representatives of the Miller Estate. We disagree.

A. STANDARD OF REVIEW

This Court reviews de novo whether the probate court properly interpreted and applied the relevant statutes and court rules. Franks v Franks, 330 Mich.App. 69, 86; 944 N.W.2d 388 (2019). Whether a fiduciary owes a particular duty to another under a given set of facts is a question of law that this Court reviews de novo. See Prentis Family Foundation v Barbara Ann Karmanos Cancer Institute, 266 Mich.App. 39, 43; 698 N.W.2d 900 (2005). This Court, however, reviews the findings underlying a probate court's decision for clear error. See In re Redd, 321 Mich.App. 398, 403; 909 N.W.2d 289 (2017). A finding is clearly erroneous when this Court is left with the definite and firm conviction that the probate court was mistaken. Id.

B. ANALYSIS

While there are circumstances in which trustees and personal representatives of estates can be liable to creditors of the respective trusts and estates, there is no such liability in this case because New Products was a creditor of Modern Plastics, and New Products was a creditor of neither the Miller Trust nor the Miller estate. Modern Plastics owned 489 North Shore Drive; not the trust or the estate. Therefore, Greg and Valorie did not owe any duties to New Products.

1. DUTIES TO CREDITORS

While trustees and estates personal representatives do not act as fiduciaries to the creditors of their respective trusts and estates, there are situations in which trustees and personal representatives do owe duties and can be liable to said creditors.

The Estates and Protected Individuals Code (EPIC), MCL 700.1101 et seq., defines fiduciaries to include, in relevant part, personal representatives and trustees. See MCL 700.1104(e). EPIC also defines the persons to whom a fiduciary owes a heightened duty of care:

A fiduciary stands in a position of confidence and trust with respect to each heir, devisee, beneficiary, protected individual, or ward for whom the person is a fiduciary. A fiduciary shall observe the standard of care described in [MCL 700.7803] and shall discharge all of the duties and obligations of a confidential and fiduciary relationship, including the duties of undivided loyalty; impartiality between heirs, devisees, and beneficiaries; care and prudence in actions;

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