in Re John D Dospoy Revocable Living Trust ( 2015 )

STATE OF MICHIGAN
COURT OF APPEALS
In re JOHN D. DOSPOY REVOCABLE LIVING
TRUST.
KEVIN DOSPOY, UNPUBLISHED
July 14, 2015
Petitioner/Appellant,
and
MARK DOSPOY, DOUGLAS DOSPOY, and
AARON DOSPOY,
Petitioner/Appellees,
v No. 321304
Hillsdale Probate Court
JOHN D. DOSPOY REVOCABLE LIVING LC No. 14-035056-TU
TRUST, by Successor Trustee JOHN JEFFREY
DOSPOY,
Respondent.
Before: SERVITTO, P.J., and BECKERING and BOONSTRA, JJ.
PER CURIAM.
Petitioner Kevin Dospoy (“Kevin”) appeals by right the probate court’s order granting
petitioners Mark Dospoy (“Mark”), Douglas Dospoy (“Douglas”), and Aaron Dospoy’s
(“Aaron”) petition for interpretation and enforcement of a trust provision pursuant to
MCR 5.501(C) and ordering that Successor Trustee John Jeffrey Dospoy (“the trustee”) shall
prepare a purchase agreement and sell real property owned by the John D. Dospoy Revocable
Living Trust (“the trust”) to Mark, Douglas, Aaron, and Michael Dospoy. We reverse in part and
remand in part for further proceedings.
-1-
I. PERTINENT FACTS AND PROCEDURAL HISTORY
The trustee assumed the duty to administer the trust after settlor John Dospoy’s
(“Dospoy”) death. On March 6, 2013, Kevin, Mark, and Douglas1 met attorney Zachary Rusk at
the office of the trustee’s attorney, Sara Lisznyai. At that meeting, Rusk read aloud the
provisions of the trust, including section 3.02, which states:
3.02 – DISTRIBUTION OF RESIDUE. Upon my death the assets in this Trust
shall be divided as follows: (1) All horses and horse related equipment I give to
in equal shares to [sic] my sons Douglas L. Dospoy and Mark Dospoy; (2) All of
the remaining assets shall be divided equally between my sons, John Jeffrey
Dospoy, Kevin J. Dospoy, Michael E. Dospoy, Douglas L. Dospoy, Mark Dospoy
and my grandson, Aaron Dospoy. My sons Douglas L. Dospoy, Mark Dospoy
and/or my grandson, Aaron Dospoy shall have the option of taking a portion of
real estate contained in this trust as their share and shall also have the option to
purchase any additional real estate by doing so within six months from being
notified of this provision. In the event any of my Children predecease me his
share shall pass to his issue, per stirpes and in default thereof, to my issue per
stirpes.
The record does not reveal that Mark, Douglas, or Aaron exercised his option under
section 3.02 to purchase trust real estate within six months of the March 6, 2013 meeting; nor
does the record contain any evidence that any intent to exercise an option was communicated to
the trustee during that time. On October 8, 2013, petitioners received a letter from Lisznyai,
informing them that the six-month option had expired and requesting consent for the trustee to
sell trust real estate to Kevin. Mark, Douglas, and Aaron alleged that they immediately
contacted the trustee following receipt of the letter, and asked the trustee to sell them the trust
real estate and to create a purchase agreement so they could obtain financing. The trustee did not
prepare a purchase agreement. After several months, Mark, Douglas, and Aaron petitioned the
probate court to interpret section 3.02 of the trust as providing that their six-month option to
purchase the trust real estate did not begin until they received Liszynai’s letter. They argued
that, because the trustee did not provide them with written notice pursuant to MCL 700.7814,
their six-month option did not begin at the March 6, 2013 meeting. The probate court agreed and
ordered the trustee to sell the trust real estate to Mark, Douglas, and Aaron. They further
requested that Michael Dospoy also be allowed as a purchaser of the trust real estate, and the
probate court ordered that he could be added to the purchase agreement. This appeal followed.
1
In their petition filed with the probate court, Mark, Douglas, and Aaron initially alleged that
Aaron had also attended this meeting. However, at oral argument before the probate court,
Aaron’s counsel indicated that this was a drafting error and that Aaron did not attend the
meeting. Kevin’s petition indicated that Mark and Douglas attended the meeting, but did not
state that Aaron had attended. All parties agree on appeal that Aaron did not attend the March 6,
2013 meeting.
-2-
II. STANDARD OF REVIEW
Where a probate court sits without a jury, this Court reviews its findings of fact for clear
error. In re Estes Estate, 207 Mich App 194, 208; 523 NW2d 863 (1994), lv den 448 Mich 940(1995); MCR 2.613(C) (“Findings of fact by the trial court may not be set aside unless clearly
erroneous.”). “A finding is clear error when, although there is evidence to support it, the
reviewing court is left with the definite and firm conviction that a mistake has been committed.”
Id. This Court reviews questions of law de novo. In re Estate of Bem, 247 Mich App 427, 433;
637 NW2d 506 (2001). “We review de novo a probate court’s construction and interpretation of
the language used in a . . . trust.” In re Stillwell Trust, 299 Mich App 289, 294; 829 NW2d 353
(2012), lv den 494 Mich 868 (2013), recon den 495 Mich 868 (2013). We also review de novo
questions of statutory interpretation. In re Draves Trust, 298 Mich App 745, 759; 828 NW2d 83
(2012).
III. ANALYSIS
Kevin argues that the trial court erred in interpreting section 3.02 of the trust as requiring
that written notice be provided to Mark, Douglas, and Aaron, in order to commence the six-
month period for the exercise of the option to purchase, and further erred in ordering that the
trustee prepare a purchase agreement for Mark, Douglas, and Aaron. We agree that neither
section 3.02 of the trust nor the Michigan trust code requires written notification, and agree that
the trial court erred in its analysis. However, with respect to Aaron, the record does not reflect
whether or when he received (or should be deemed to have received) notice of his rights under
section 3.02 of the trust, and we accordingly remand for further proceedings on that issue.
“A trust is a right, enforceable solely in equity, to the beneficial enjoyment of property
the legal title to which is vested in another.” Rossman v Marsh, 287 Mich 720, 727; 286 NW 83(1939). The Michigan trust code, MCL 700.7101 et seq., applies to trusts. MCL 700.7102.
Except in certain circumstances, “the terms of a trust prevail over any provision” of the Michigan
trust code. MCL 700.7105(2). “In resolving a dispute concerning the meaning of a trust, a
court’s sole objective is to ascertain and give effect to the intent of the settlor. The intent of the
settlor is to be carried out as nearly as possible.” In re Kostin, 278 Mich App 47, 53; 748 NW2d
583 (2008) (citations omitted).2 This Court applies the general rules used to interpret wills when
interpreting trusts. See In re Maloney Trust, 423 Mich 632, 639; 377 NW2d 791 (1985). The
settlor’s intent must be determined from the trust instrument itself, and “[t]he law is loath to
supplement the language of [a trust] with extrinsic information.” Id. Intent is determined from
the plain language used, as gathered from the entire trust instrument. See In re Raymond, 483
Mich 48, 52; 764 NW2d 1 (2009); Union Guardian Trust Co v Nichols, 311 Mich 107, 114; 18
2
Kevin argues on appeal that the probate court erred by considering extrinsic evidence when it
considered Dospoy’s intent in construing the trust. However, the record reflects that the probate
court gleaned the settlor’s intent from the language of the trust itself, which is proper. See In re
Maloney Trust, 423 Mich 632, 639; 377 NW2d 791 (1985), In re Kremlick Estate, 417 Mich
237, 240; 331 NW2d 228 (1983). Although we find that the probate court erred in its
interpretation of the trust, we do not find that it improperly considered extrinsic evidence.
-3-
NW2d 383 (1945). “This Court must attempt to construe the instrument so that each word has
meaning.” In re Kostin, 278 Mich App at 53. To determine the meaning of a word in a trust
provision, this Court may refer to a dictionary. In re Gerald L Pollack Trust, ___ Mich App ___,
___; ___ NW2d ___ (2015), slip op at 10. If no ambiguity exists in the trust language, the trust
must be enforced as written. See Mich Trust Co v Grand Rapids Hotel Co., 265 Mich 328, 338;
251 NW 414 (1933).
In this case, the parties do not dispute that Dospoy’s trust was a valid trust. Rossman,
287 Mich at 727. The relevant provision of section 3.02 of the trust states as follows:
My sons Douglas L. Dospoy, Mark Dospoy, and/or my grandson, Aaron Dospoy
shall have the option of taking a portion of real estate contained in this trust as
their share and shall also have the option to purchase any additional real estate by
doing so within six months from being notified of this provision.
Furthermore, section 5.02(1) of the trust gave the trustee the power to convey trust real estate
“for any period and upon any terms and conditions whatsoever to any person . . . .”
According to Black’s Law Dictionary (9th ed), p 1167, “to notify” means “[t]o inform (a
person or group) in writing or by any method that is understood.” Therefore, the plain meaning
of section 3.02 does not require written notice; rather, it merely requires notice “by any method
that is understood.” Id. Because there is no ambiguity, the plain language used must be given
effect. Mich Trust Co, 265 Mich at 338. Furthermore, it was clear from the plain language of
the trust that Dospoy’s intent was that if Mark, Douglas, or Aaron did not purchase trust real
estate within those six months, the trustee had the power to sell the trust real estate pursuant to
section 5.02(1). Mich Trust Co, 265 Mich at 338.
The parties agree that Mark and Douglas were notified of their rights under section 3.02
of the trust at the March 6, 2013 meeting. Mark and Douglas do not dispute that, at this meeting,
the trust was read to them and they were informed of their six-month option to purchase the trust
real estate. Although it is not clear whether they were provided with written notification, the
trust does not require such notification; rather, they only needed to be informed “by any method
that is understood.” Six months from March 6, 2013 was September 6, 2013. Therefore,
according to section 3.02 of the trust, their option to purchase the trust real estate expired on
September 6, 2013. Mich Trust Co, 265 Mich at 338. The record is devoid of evidence that
Mark or Douglas purchased, attempted to purchase, or indicated a desire to purchase the trust
real estate before September 6, 2013. Rather, the record indicates that they did not take steps to
exercise their option until after they received Lisznyai’s October letter.
The probate court appeared to rely on MCL 700.7814(2)(b) or (c) in holding that because
Mark, Douglas, and Aaron were not provided with written notice of section 3.02 of the trust until
they received Lisznyai’s letter, the six-month time period for purchasing the trust real estate did
not begin to run until October 2013. This was clear error. MCL 700.7814(2)(b) states that “[a]
trustee shall[,] . . . within 63 days after accepting a trusteeship, notify the qualified trust
beneficiaries of the acceptance, of the court in which the trust is registered, if it is registered, and
of the trustee’s name, address, and telephone number.” MCL 700.7814(2)(b).
MCL 700.7814(2)(c) states that
-4-
[a] trustee shall[,] . . . within 63 days after the date the trustee acquires knowledge
of the creation of an irrevocable trust, or the date the trustee acquires knowledge
that a formerly revocable trust has become irrevocable, whether by the death of
the settlor or otherwise, notify the qualified trust beneficiaries of the trust’s
existence, of the identity of the settlor or settlors, of the court in which the trust is
registered, if it is registered, and of the right to request a copy of the terms of the
trust that describe or affect the trust beneficiary’s interests.
[MCL 700.7814(2)(c).]
We interpret statutes according to their plain meaning. Joseph v Auto Club Ins Ass’n,
491 Mich 200, 206; 815 NW2d 412 (2012). The plain meaning of MCL 700.7814(2)(b) is that
the trustee must, within 63 days of accepting the trusteeship, notify beneficiaries of that
acceptance and of various details regarding registration of the trust. Id. The plain meaning of
MCL 700.7814(2)(c) is that the trustee must, within 63 days of a revocable trust becoming
irrevocable, notify the beneficiaries of the existence of the trust, of the identity of the settlor or
settlers, and of various details regarding registration of the trust. Id. Neither
MCL 700.7814(2)(b) nor (c) applies to the issue of whether any petitioner was notified of his
rights under section 3.02 of the trust such that the six-month option to purchase trust real estate
began to run. Rather, MCL 700.7814 establishes certain duties of a trustee, a breach of which
may provide a trust beneficiary with a cause of action against the trustee. Although, pursuant to
MCL 700.7105(2)(i), a trust provision cannot override the requirements of MCL 700.7814(2)(b)
and (c), section 3.02 of the trust does not attempt to or actually override MCL 700.7814(2)(b) or
(c). Rather, section 3.02 merely establishes, among other things, when Mark, Douglas, and
Aaron’s right to purchase the trust real estate begins and ends. Neither the probate court nor any
party provided an explanation regarding why the application of MCL 700.7814 would compel
the conclusion that notification of this right did not occur at the March 6, 2013 meeting.3
In sum, section 3.02 affords Mark, Douglas, and Aaron the option to purchase trust real
estate within six months of being notified of their option to do so. The probate court erred in
applying MCL 700.7814, instead of section 3.02, to the question of when their option to
purchase the trust real estate began. MCL 700.7105(2). Mark and Douglas were notified of their
option on March 6, 2013, and failed to exercise it within six months of that date; therefore,
subject to the caveat described below, the trustee could sell the property to anyone pursuant to
section 5.02(1). Mich Trust Co, 265 Mich at 338.
3
Further, even if MCL 700.7814 applied to section 3.02, the statutory provisions cited, unlike
other sections of the Michigan trust code, do not explicitly provide for notice in writing. See,
e.g., MCL 700.7108(4). Such exclusion of an explicit writing requirement, when that
requirement is present in other statutory sections, should be construed as intentional, and this
Court should not read provisions into a statute not intended by the Legislature. See Farrington v
Total Petroleum, Inc, 442 Mich 201, 210; 501 NW2d 76 (1993) (“Courts cannot assume that the
Legislature inadvertently omitted from one statute the language that it placed in another statute,
and then, on the basis of that assumption, apply what is not there.”); see also Polkton Charter
Twp, 265 Mich at 103.
-5-
However, with regard to Aaron, all parties agree that Aaron was not present at the March
meeting. The record is devoid of evidence regarding whether or when Aaron was notified (or
should be deemed to have been notified) of his rights under section 3.02 of the trust. Although
Kevin provides an affidavit (from himself) stating that all petitioners were provided with a copy
of the trust at least one year prior to Dospoy’s death, section 3.02 is found in Article III of the
trust, entitled “Duties Upon My Death.” Thus, reading section 3.02 in light of the entire trust
instrument, Union Guardian Trust Co v Nichols, 311 Mich at 114, section 3.02 imposes a duty
upon the trustee to provide notification of rights arising under section 3.02 upon the death of the
settlor, which duty the trustee attempted to fulfill at the March meeting.4 However, Aaron’s
absence from that meeting requires consideration of whether or when the trustee carried out that
duty with respect to Aaron. The record reflects that the trial court took no evidence, and made
no findings, in that regard, including, for example, regarding whether the trustee provided
notification to Aaron in another communication, and regarding whether the circumstances of
Aaron’s age, family or living relationships with Mark or Douglas, communications between
Aaron and Mark or Douglas, or other appropriate considerations, were such that the trustee’s
duty should be deemed to have been fulfilled with respect to Aaron as of the March meeting,
notwithstanding that Aaron was not personally present at that meeting. On remand, the trial
court should consider those and any other appropriate issues and issue further findings with
respect to Aaron.
Reversed with respect to Mark and Douglas. Remanded for further proceedings with
respect to Aaron. We do not retain jurisdiction.
/s/ Deborah A. Servitto
/s/ Jane M. Beckering
/s/ Mark T. Boonstra
4
Indeed, to hold otherwise would require us to find that the option to purchase had expired prior
to the settlor’s death, as the parties would have been “notified” upon their receipt of the trust
amendment over one year before John’s death. Such a result is clearly contrary to the intent of
the settlor, and we decline to adopt a construction that leads to such a result. Kostin, 278 Mich
App at 53.
-6-