in Re Twining Estate

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
In re ESTATE OF MICHAEL N. TWINING.
FRED TICE, Personal Representative of the Estate UNPUBLISHED
of MICHAEL N. TWINING, March 12, 2019
Appellee,
v No. 344204
Oceana Probate Court
MELVIN TWINING, LC No. 2016-000169-DE
Appellant,
and
KRISTEN RICHARDS, Conservator/Guardian of
the Minor Children, also known as KRISTIN
RICHARDS,
Appellee.
Before: RIORDAN, P.J., and MARKEY and LETICA, JJ.
PER CURIAM.
Melvin Twining appeals by right the probate court’s order directing him to pay a portion
of insurance proceeds he received upon the death of his son, decedent Michael N. Twining, to
decedent’s estate. We affirm.
I. BACKGROUND
The parties’ respective claims to the insurance proceeds at issue in this matter revolve
around two other lawsuits. During their marriage, decedent and Kristin Richards had two
children who remained minors at all times relevant to this matter. In 2012, the circuit court for
Muskegon County entered a divorce judgment which, in pertinent part, required decedent to
make monthly child support payments to Kristin. In order to provide security for the payment of
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his support obligations in the event of his death, the judgment also ordered decedent to
“irrevocably designate the minor children of the parties as the beneficiary on any and all life
insurance policies presently outstanding upon his life, until his duty to support shall cease.” At
the time, decedent had a group life insurance policy issued by Prudential Insurance Company of
America which provided for payment of death benefits in the amount of $400,000 upon his
death.
Following decedent’s death in 2016, both Melvin and Kristin asserted entitlement to the
insurance benefits payable by Prudential. Prudential initiated an interpleader action in the
federal district court for the western district of Michigan seeking a determination as to who was
entitled to the insurance proceeds. Pursuant to a Rule 681 offer of judgment made by Kristin on
behalf of the minor children and accepted by Melvin, the federal court ordered that Melvin and
the minor children would each receive approximately one-third of the insurance proceeds.
Shortly thereafter, on December 27, 2017, Kristin filed a statement and proof of claim
with the probate court in the amount of $62,365.80 for “child support due to failure to properly
designate beneficiary of life insurance policies pursuant to Judgment of Divorce; $670.60 per
month for 93 months.” The personal representative of the estate then filed a petition alleging
that Melvin’s receipt of in excess of $120,000 in insurance proceeds violated the judgment of
divorce and resulted in unjust enrichment at the expense of decedent’s estate in the amount of the
unpaid child support obligations. Melvin opposed the petition on both procedural and
substantive grounds. The probate court ultimately rejected Melvin’s objections and ordered
Melvin to pay $62,365.80 to the estate to satisfy Kristin’s creditor claim.
II. STANDARD OF REVIEW
Issues involving the proper interpretation of court rules present questions of law which
this Court reviews de novo. Progress Mich v Attorney General, 324 Mich. App. 659, 665; ___
NW2d ___ (2018). We review a probate court’s dispositional rulings for an abuse of discretion.
In re Temple Marital Trust, 278 Mich. App. 122, 128; 748 NW2d 265 (2008). An abuse of
discretion occurs when the probate court “chooses an outcome outside the range of reasonable
and principled outcomes.” Id. The probate court’s factual findings are reviewed for clear error.
In re Koehler Estate, 314 Mich. App. 667, 673-674; 888 NW2d 432 (2016). “A finding is clearly
erroneous when a reviewing court is left with a definite and firm conviction that a mistake has
been made, even if there is evidence to support the finding.” Id. at 674 (quotation marks and
citation omitted).
III. MCR 5.101
On appeal, Melvin first argues that the probate court erred by allowing this matter to
continue as a probate proceeding because the dispute had to be litigated as a civil action pursuant
to MCR 5.101(C)(1). We agree that the probate court erred in this regard, but conclude that the
court’s error does not warrant reversal.
1
See FR Civ P 68.
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We construe court rules in the same manner as statutes. In re Brown, 229 Mich. App. 496,
500; 582 NW2d 530 (1998). “If the plain and ordinary language of a court rule is clear, judicial
construction is neither necessary nor permitted.” Id. At issue in this appeal is the proper
interpretation of MCR 5.101, which provides:
(A) Form of Action. There are two forms of action, a “proceeding” and a
“civil action.”
(B) Commencement of Proceeding. A proceeding is commenced by
filing an application or a petition with the court.
(C) Civil Actions, Commencement, Governing Rules. The following
actions must be titled civil actions and commenced by filing a complaint and are
governed by the rules applicable to civil actions in circuit court:
(1) Any action against another filed by a fiduciary or trustee.
(2) Any action filed by a claimant after notice that the claim has been
disallowed.
(D) Records are public except as otherwise indicated in court rule and
statute.
In distinguishing civil actions from proceedings, MCR 5.101(C) uses the mandatory term
“must.” See Vyletel-Rivard v Rivard, 286 Mich. App. 13, 25; 777 NW2d 722 (2009) (“The term
‘must’ indicates that something is mandatory.”). Because the mandatory nature of this provision
is evident from its unambiguous language, judicial construction is unnecessary. In re Brown,
229 Mich. App. at 500. Therefore, to the extent that the underlying dispute in this matter was
either an “action against another filed by a fiduciary or trustee,” or an “action filed by a claimant
after notice that the claim has been disallowed,” MCR 5.101(C) requires, without qualification,
that the action be titled as a civil action and commenced by filing a complaint.
As he did before the probate court, Melvin maintains that this matter fell within the scope
of MCR 5.101(C)(1), i.e., an “action against another filed by a fiduciary or trustee.” We agree.
This action was initiated by a petition filed by the personal representative of the estate. A
personal representative is undoubtedly a fiduciary, In re DeCoste Estate, 317 Mich. App. 339,
353; 894 NW2d 685 (2016), citing MCL 700.3703(1), so the action was “filed by a fiduciary”
for purposes of MCR 5.101(C)(1). By filing the petition, the personal representative sought to
compel Melvin to turn over insurance proceeds awarded by the federal court. The life insurance
policy involved a nonprobate transfer, see MCL 700.6101, such that the proceeds awarded to
Melvin in the federal interpleader case were not property of the estate. We therefore construe the
petition as one involving “an action against another filed by a fiduciary or trustee.”
Consequently, pursuant to the unambiguously mandatory language of MCR 5.101(C)(1), the
personal representative was obligated to commence this matter as a civil action by filing a
complaint, rather than a probate proceeding initiated by a petition. The probate court erred by
concluding that the petition was properly filed under MCR 5.101.
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Nevertheless, this Court does not reverse an erroneous decision when the resulting error
was harmless. Chastain v Gen Motors Corp, 254 Mich. App. 576, 586; 657 NW2d 804 (2002).
In deciding whether to disturb a judgment or order, this Court considers whether failing to do so
appears inconsistent with substantial justice. Id. Melvin argues that, as a result of the probate
court’s error, he was denied rights and defenses that would have been available in a civil action,
namely, res judicata, failure to file a timely creditor claim, and failure to plead or prove fraud
with particularity. We disagree.
First and foremost, Melvin has cited no authority for the proposition that he was barred
from raising these defenses based upon the probate court’s decision to permit the matter to
continue as a proceeding. Thus, Melvin effectively abandoned review of this issue. Innovation
Ventures v Liquid Mfg, 499 Mich. 491, 518; 885 NW2d 861 (2016). In any event, MCR 5.119(B)
provides that “[a]n interested person may object to a pending petition orally at the hearing or by
filing and serving a paper which conforms with MCR 5.113.” And assuming, arguendo, that
Melvin was somehow prevented from raising these defenses by the court rules or governing
statutes, in this case, the probate court clearly permitted Melvin to raise any defenses he wished
to assert before it ruled on the petition.
Indeed, while Melvin’s briefing before the probate court did not use the term “res
judicata,” as a practical matter, it appears that he raised that defense in response to the petition.
The doctrine of res judicata bars subsequent litigation in a second action where the claim arises
from the same transaction and was, or could have been, litigated in an earlier action. Peterson
Novelties, Inc v City of Berkley, 259 Mich. App. 1, 11; 672 NW2d 351 (2003). “Res judicata
requires that (1) the prior action was decided on the merits, (2) the decree in the prior action was
a final decision, (3) the matter contested in the second case was or could have been resolved in
the first, and (4) both actions involved the same parties or their privies.” Id. at 10. Melvin
argued that Kristin’s claim had been litigated and settled in the earlier federal case because her
response to the interpleader complaint referred to the life insurance provision in the judgment of
divorce. Thus, according to Melvin, the settlement of the federal case effectively resolved any
issues concerning the interplay between the judgment of divorce and the insurance proceeds.
The probate court rejected Melvin’s argument, finding that the federal court declined to hear any
arguments regarding the judgment of divorce. In other words, the effect of the divorce judgment
could not have been resolved in the federal case, thereby negating the application of res judicata
as a bar to the later petition. Accordingly, Melvin’s contention that he was denied a res judicata
defense based upon the procedural posture of the case lacks merit.
Melvin’s argument concerning his inability to challenge the timeliness of the creditor
claim is similarly unpersuasive. The probate court permitted Melvin, through his attorney, to
place his objections on the record at a hearing and to file a supplemental brief detailing his
position. In his brief, Melvin raised four distinct arguments in opposition to the relief requested
in the petition. Of those arguments, only one concerned the effect of MCR 5.101; the balance of
the arguments were substantive attacks on the viability of the petition. Despite being given the
unqualified opportunity to raise available defenses, Melvin did not challenge the claim as
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untimely. Given Melvin’s failure to present this issue to the probate court,2 we decline to
address the substantive merits of this defense. Loutts v Loutts, 298 Mich. App. 21, 23; 826 NW2d
152 (2012) (stating that issues first raised on appeal need not be addressed).
Lastly, although Melvin correctly observes that fraud must be pleaded with particularity
in Michigan, MCR 2.112(B), he also acknowledges that the estate did not pursue recovery of the
insurance proceeds based upon fraud. Accordingly, the heightened pleading standard required
for claims of fraud has no applicability in this case. While the probate court admittedly referred
to decedent’s “fraudulent” act of changing the beneficiary of his life insurance policy in violation
of the judgment of divorce, the propriety of the probate court’s references to fraud is not properly
before this Court. In his statement of the questions presented for review, Melvin identified two
distinct, narrow issues: whether the probate court erred in applying MCR 5.101(C)(1) by
allowing this matter to go forward on the petition, and whether the probate court’s failure to
consider the existence of an annuity rendered its decision against the great weight of the
evidence. We do not ordinarily consider issues beyond the scope of the statement of questions
presented. City of Fraser v Almeda Univ, 314 Mich. App. 79, 99 n 4; 886 NW2d 730 (2016),
citing MCR 7.212(C)(5) and Bouverette v Westinghouse Electric Corp, 245 Mich. App. 391, 404;
628 NW2d 86 (2001).
On appeal, Melvin raised the issue of fraud only in the context of identifying the defenses
he was deprived as a result of the probate court’s erroneous application of MCR 5.101(C)(1).
However, he does not explain, nor can we discern, how the probate court’s mistaken procedural
ruling caused it to discuss fraud, rather than unjust enrichment, in its opinion and order. To the
contrary, had the probate court correctly determined that this matter had to be commenced as a
civil action, Melvin would still have been unable to raise the deficient pleading of fraud as a
defense because the estate never asserted a claim of fraud. Instead, to the extent that Melvin
wished to challenge the probate court’s ambiguous references to fraud, he should have moved for
reconsideration below or asserted a separate claim of error concerning the court’s finding.
IV. SURVIVOR BENEFIT ANNUITY
Next, Melvin argues that the probate court’s failure to consider the existence of an
annuity that he alleges would have satisfied decedent’s outstanding support obligations rendered
the probate court’s dispositional ruling against the great weight of the evidence. We disagree.
In support of his contention that such an annuity exists, Melvin relies upon a single-page
retiree account statement that includes a section captioned, “SURVIVOR BENEFIT PLAN
(SBP) COVERAGE[.]” The probate court considered social security and survivor benefits,
ruling that
the Judgment of Divorce makes no provision for after-acquired social security or
death benefits. A modification or reduction of the child support obligation by
2
Melvin’s related argument that the personal representative breached his fiduciary duties was,
likewise, not presented to the probate court and need not be addressed on appeal.
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such benefits would be inconsistent with the agreement of the parties. Rather than
modifying the child support obligation, I deem it more appropriate to preserve the
status quo pursuant to the terms of the Judgment of Divorce. To the extent the
children are entitled to receive social security or death benefits, same shall be
considered supplemental to the child support obligation secured by the terms and
provisions of the Judgment of Divorce.
We find no error in the probate court’s handling of the annuity.
Kristin’s claim arose from the terms of the judgment of divorce, which required decedent
to “irrevocably designate the minor children of the parties as the beneficiary on any and all life
insurance policies presently outstanding upon his life, until his duty to support shall cease.”
(Emphasis added.) Melvin himself asserted before the probate court that “the annuity was
created by the Decedent to cover any potential support obligations.” We infer from this
statement that the annuity was established after decedent’s support obligations were established;
that is, after entry of the judgment of divorce. Because it does not appear that the annuity was
“presently outstanding” at the time the judgment of divorce was entered, the terms of the
judgment are not applicable to the annuity. In contrast, the Prudential life insurance policy was
in place at the time the parties divorced and is, therefore, subject to the requirements of the
judgment of divorce.
Affirmed.3
/s/ Michael J. Riordan
/s/ Jane E. Markey
/s/ Anica Letica
3
Apart from the probate court’s purported failure to consider the annuity, we have not been
asked to review the probate court’s ultimate determination that the estate was entitled to recover
the amount of unpaid child support obligations from Melvin’s insurance proceeds. This opinion,
therefore, should not be read as opining on the propriety of the probate court’s interpretation of
the divorce judgment or controlling caselaw.
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