Spitza v. Spitza (In re Spitza Testamentary Tr.)

UNPUBLISHED

Antrim County Probate Court LC No. 19-013833-TT

Before: Redford, P.J., and K. F. Kelly and Letica, JJ.

Per Curiam

This case involves a dispute between former cotrustees of the James Spitza Testamentary Trust. Petitioner, Debra Spitza, prevailed on a petition in the probate court to remove respondent, Maxine Spitza, as cotrustee and to surcharge her for damage to the trust brought about by alleged breaches of her fiduciary duties. Respondent appeals as of right from the probate court's order requiring her to pay the attorney fees and costs incurred by petitioner in bringing the petition, as well as a trustee fee arising from petitioner's investigation of respondent's alleged breach of fiduciary duties. Respondent also challenges the probate court's order which, after a hearing at which neither respondent nor her attorney was present, removed her as cotrustee and surcharged her $132, 000. We affirm.

I. RELEVANT FACTS AND PROCEEDINGS

The trust was established by James A. Spitza's Last Will and Testament. Respondent and petitioner are the decedent's widow and daughter respectively, and respondent is petitioner's stepmother. The will named respondent as the decedent's personal representative and trustee, and gave her a life estate in the decedent's residuary estate in trust. Sometime thereafter, petitioner and respondent entered into a settlement agreement, which provided for the control and use of three parcels of real property: one gravel pit and two additional parcels. The two additional parcels

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contained a substantial amount of standing timber. Under the settlement agreement, "[petitioner] will be responsible for retaining a consulting forester, cruising the property with him and soliciting bids, with the consultant's assistance, and letting a contract to the best offer." The settlement agreement also made petitioner and respondent cotrustees.

In December 2019, petitioner filed a petition in probate court claiming that, without petitioner's knowledge, respondent had breached her fiduciary duty, as well as the settlement agreement, by executing a "Standing Timber Contract" with Lon Sparks Timber, LLC, to conduct logging on the two forested parcels. According to the contract, respondent had sold the timber for $32, 000, and the proceeds from the sale went directly into the IOLTA account of respondent's attorney, Gregory Bell.

Bell filed an appearance on behalf of respondent in January 2020. After several adjournments, one of which was attributable to the COVID-19 pandemic, a hearing on the petition was held on July 21, 2020. At the outset, it was noted that attorney Josie Lewis had called the court and left a message explaining that respondent had called her the night before, upset, and wanted to possibly hire her. Lewis said that she had not had an opportunity to review respondent's file and was not sure she was going to take the case. Lewis reported that Bell had had a medical issue and had closed his office. Petitioner's attorney confirmed as much, stating that when he called Bell's work telephone number, he heard a message saying that the number was no longer accepting calls. He further noted that he had been e-mailing Bell almost daily because Bell asked for a teleconference to resolve the remaining two issues, but he had heard nothing in the two weeks leading up to the hearing. The probate court observed that Bell had not contacted the court, no substitute attorney had filed an appearance, the case had been pending for a considerable time, multiple adjournments had been entered at the parties' request while good-faith efforts were made to resolve the dispute, and there was no motion to adjourn. The court decided not to delay the matter any further, but to take the testimony of the available witnesses and "see where we're at."

Ralph Kingsley, the owner of Ralph's Excavating, testified about the cost of cleaning up the properties after the forestry operations. He said that he inspected the properties and that it was a "mess," with "tree limbs, branches[, ] and tress all over the place." He estimated that it would take approximately two months and would cost approximately $1, 000 a day, $60, 000 total, for equipment and labor to clean up the properties. Asked if that was typical for the industry, Kingsley indicated that he had given petitioner "a little better price" because he knew her and the decedent.

Carl Eklund, Jr., a forestry consultant and owner of a logging company, testified that he was familiar with the two properties at issue. Eklund explained that the loggers "just high graded it, took all the high value timber and there's really not much left of any value." He also confirmed Kingsley's testimony that the property was left a "mess." He said that in better timber harvests, the harvesters would remove, chip, or pile up the wood debris instead of leaving it behind to be cleaned up later; cleaning up after a logging event was very labor intensive. On a scale of 1 to 10, with 1 being the worst, Eklund estimated that the loggers left the property at a 1 or 2, and he said that there would not be another timber sale there for 50 years.

Petitioner asked Eklund to determine the value of timber that had been removed from the properties. Eklund said that he typically looked at properties after they had been cut and that he had been doing this kind of work for about 30 years. He explained that his manner of calculating

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the value of the timber involved determining the volume of wood per acre, the number of acres, and the market value of the wood at the time. He spent approximately four hours on the property counting the stumps that were cut. Eklund testified that the $32, 000 contract price was "grossly under" what would be a fair price for the timber removed; it might be 20% to 25% of the timber's value. Eklund estimated the timber's value at $104, 325. Eklund testified that Lon Sparks sold the timber from the trust to Buskirk Lumber, and although Buskirk would not reveal what it paid Lon Sparks, "[t]hey concurred that that value [$104, 325] was pretty close to what he got paid."

Petitioner's testimony about the timbering activity was consistent with the allegations in the petition. Petitioner also requested that the court order respondent pay for her fees as trustee associated with her time spent dealing with the timber issue in addition to her attorney fees. The probate court found that respondent had breached her fiduciary duties to the trust beneficiaries under various provisions of the Estates and Protected Individuals Code (EPIC), MCL 700.1101 et seq. Consequently, the probate court removed respondent as cotrustee and named petitioner as sole trustee. The court also found respondent liable to the trust beneficiaries for $132, 000, which included $60, 000 in cleanup costs and $72, 000 for the difference between the contract price and the estimated value of the timber. The probate court entered an order reflecting its findings and scheduled another hearing to determine the amount of petitioner's trustee fee and attorney fees. Petitioner thereafter filed documents supporting the amount of her trustee fee and attorney's fees.

On August 21, 2020, newly retained counsel for respondent filed an appearance and via a stipulated order was substituted in place of Bell. At a September 2020 hearing, the probate court awarded petitioner's requested attorney fees and costs and trustee fee, for which the court indicated that respondent would be personally liable. Subsequently, petitioner submitted an order reflecting the probate court's ruling from the bench under the seven-day rule. See MCR 2.602(B)(3). Respondent objected to the order because it indicated that respondent would be personally liable for petitioner's attorney fees and trustee fee, despite the probate court's silence regarding whether petitioner or the trust would be liable for the fees. Respondent submitted a proposed order indicating that those fees would be charged to the trust. A hearing to settle this dispute was held and the probate court entered the order prepared by petitioner. Because petitioner's order did not indicate that it was a final order, as required by MCR 2.602(A)(3), the probate court entered a consent order indicating that it was a final order that resolved all issues and closed the case. Respondent now appeals.

II. DISCUSSION

A. ADJOURNMENT

Respondent argues that the probate court abused its discretion by allowing the July 21, 2020 hearing to proceed once reliable evidence indicated that respondent's counsel had abandoned her case. Consequently, respondent argues, the probate court deprived her of a reasonable opportunity to obtain and be represented by counsel. We disagree.

Respondent did not raise this issue or move for an adjournment in the probate court. Therefore, this issue is unpreserved. City of Fraser v. Almeda Univ, 314 Mich.App. 79, 104; 886 N.W.2d 730 (2016). We may "overlook preservation requirements if the failure to consider the issue would result in manifest injustice, if consideration is necessary for a proper determination of

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the case, or if the issue involves a question of law and the facts necessary for its resolution have been presented." Jawad A Shah, MD, PC v. State Farm Mut Auto Ins Co, 324 Mich.App. 182, 192-193; 920 N.W.2d 148 (2018) (quotation marks and citations omitted). "This Court, however, exercises its discretion sparingly and only where exceptional circumstances warrant review." In re Conservatorship of Murray___, Mich App___, ___;___ N.W.2d (2021) (Docket No. 349068); slip op at 4. The circumstances that led to respondent not being represented at a hearing that resulted in her removal as cotrustee and...