Court Opinion

ID: 3169218
Source: CourtListenerOpinion
Date Created: 2016-01-13 16:08:32.280219+00
Date Added: 2024-06-11T12:47:15.722269
License: Public Domain

STATE OF MICHIGAN

                           COURT OF APPEALS

In re SCHWEIN Estate.

SANDY MEAD, Personal Representative for the                        FOR PUBLICATION
Estate of DAVID SCHWEIN                                            January 12, 2016
                                                                   9:00 a.m.
              Petitioner-Appellee,

v                                                                  No. 324305
                                                                   Ingham Probate Court
KEVIN BARTON, TERRI ANDERSON, and                                  LC No. 13-002609-DE
MEREDITH BARTON,

              Respondents-Appellants.

Before: RONAYNE KRAUSE, P.J., and GADOLA and O’BRIEN, JJ.

GADOLA, J.

        This case implicates the procedural requirements under the Estates and Protected
Individuals Code (EPIC), MCL 700.1101 et seq., and the Michigan Court Rules, for a personal
representative to assert a claim arising before the decedent’s death against the estate.
Respondents appeal as of right the probate court’s opinion and order concluding that (1) Sandy
Mead’s claim against the estate for reimbursement of attendant care services she provided to
decedent before his death was not barred by MCL 700.3803(1), MCL 700.3804(3), or
MCR 5.307(D), (2) Mead overcame the presumption that she provided the services gratuitously,
and (3) the six-year statute of limitations governing contract claims did not bar her claim. For
the reasons below, we reverse and remand for further proceedings consistent with this opinion.

                      I. BASIC FACTS AND PROCEDURAL HISTORY

        Decedent, David Lee Schwein, died on September 10, 2013. Decedent’s heirs were his
four daughters, Sandy Mead, Barbara Whatley, Donna Rogers, and Terri Anderson, and the three
children, Meredith Barton, Kevin Barton, and Philip Barton, of his predeceased daughter, Gail
Barton. After decedent’s death, Mead filed a petition asking the court to appoint her as personal
representative of the estate. The probate court granted Mead’s request and issued letters of
authority on September 27, 2013. On October 15, 2013, Mead published a notice to creditors in
the Lansing State Journal.

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        On July 31, 2014, Mead filed a petition asking the court to allow a claim and to grant her
authority to distribute the estate’s assets, which totaled $1,043,355.56. In her petition, Mead
alleged that in 1980, decedent was catastrophically injured in a motor vehicle accident and
suffered a traumatic brain injury. As a result of his injuries, decedent became wheelchair bound
and eventually required 24/7 attendant care services. Mead alleged that except for limited respite
assistance, she provided all of decedent’s attendant care services between August 1, 1998 and
September 10, 2013. According to Mead, on April 30, 2013, decedent initiated a lawsuit against
State Farm Mutual Automobile Insurance Company (State Farm), seeking payment of personal
protection insurance (PIP) benefits to reimburse Mead for her services. Mead explained that
after decedent’s death, the estate settled decedent’s claims against State Farm for $962,530.
Mead alleged that she was owed $1.5 million for the attendant care services she provided over a
15-year period, and as the only remaining creditor of the estate, she was entitled to priority
distribution over decedent’s other heirs. Mead asked the court to approve a distribution of the
settlement award, granting her $608,711.47 for the services she provided and granting the law
firm Molosky & Co. $353,818.53 for representing decedent and the estate in the State Farm
action.

        Respondents objected to Mead’s petition, arguing that Mead’s claim against the estate
was barred because she failed to comply with the timing requirements of MCL 700.3803(1),
MCL 700.3804(3), and MCR 5.307(D) for presenting a claim against the estate. Respondents
also argued that Mead failed to overcome the presumption that she provided the attendant care
services gratuitously, she failed to present evidence that she was owed $1.5 million for the
services rendered, and her claim was partially barred by the six-year statute of limitations
governing contract claims.1

1
  Respondents attached a copy of decedent’s complaint in the State Farm action to their
objection, which included two counts against State Farm: one for breach of contract and one for
violation of the Michigan Consumer Protection Act, MCL 445.901 et seq. Under the breach of
contract claim, decedent alleged that State Farm failed to pay benefits to which he was entitled
under his no-fault insurance policy, including, but not limited to, the following:
             a. All reasonable charges for reasonably necessary products, services, and
       accommodations for his care, recovery, and/or rehabilitation;

               b. Reasonably necessary attendant care services . . . ;

            c. Reasonably necessary nursing care services performed by family
       members and friends . . . ;

               d. Reasonably necessary transportation benefits . . . ;

               e. Reasonably necessary . . . modifications to his residence;

               f. Other personal protection benefits in accordance with the applicable No
       Fault provisions, including but not limited to, mechanisms of assistance;

                                                -2-
        Mead replied that her claim was timely because she provided notice to the interested
persons within seven days of the settlement award becoming an asset of the estate. She
contended that the entire $962,530 settlement award was intended to cover her attendant care
services, which State Farm would not have agreed to pay if there was any plausible defense that
she provided the services gratuitously. Finally, Mead argued that the six-year statute of
limitations governing contract claims did not apply because she was asserting a claim to recover
statutory PIP benefits, rather than asserting a claim for breach of contract.

        Respondents replied that in the State Farm action, the United States District Court for the
Eastern District of Michigan held that decedent was precluded from seeking statutory PIP
benefits from before April 29, 2012, under the one-year-back rule.2 In light of the federal court’s
ruling, respondents argued that Mead should be estopped from seeking payment for any services
she provided before April 29, 2012. They further argued that Mead admitted in her deposition
that State Farm paid for decedent’s 24/7 attendant care services between February 2012 and
decedent’s death in 2013. Respondents argued that Mead had no evidence that the State Farm
settlement award was only intended to reimburse Mead for the attendant care services she
provided because the federal court also allowed decedent to pursue a claim against State Farm
for its potential violations of the Michigan Consumer Protection Act, MCL 445.901 et seq.,
occurring between July 31, 1998 and March 28, 2001.

        Respondents attached a copy of Mead’s deposition to their reply, in which Mead stated
that she began caring for decedent in 1998 when her mother died, but she worked full-time at
other employment between 2000 and 2012. Mead explained that decedent had two in-home
caregivers who assisted him several hours each day while she was at work. Mead testified that
decedent began paying her some money for her services in 2006, but they first talked about
formal payment in 2011 when she and decedent discovered that State Farm should have been
paying for more attendant care services. Mead admitted that she never had a contract with
decedent, and she did not keep a log of any hours worked until February 2012 when State Farm
began paying for 24/7 attendant care.

       After considering the parties’ arguments, the probate court issued an opinion and order on
Mead’s petition. The probate court first determined that Mead’s claim was not barred by the
court rules or the statutory time limits governing the presentation of claims against an estate.
The court found that Mead’s claim was not a “claim of the personal representative” because she
provided the services “before her official appointment as personal representative.” Rather, the
court characterized her claim as a known creditor’s claim against the estate. The court concluded
that because Mead did not send herself written notice as a known creditor, which was required
under MCL 700.3801(1) and (2), the time period for filing her claim had not expired.

               g. Case management services and appropriate or applicable therapies;

               h. Interest on overdue benefits payments.
2
  See MCL 500.3145 (stating that a claimant in an action to recover PIP benefits “may not
recover benefits for any portion of the loss incurred more than 1 year before the date on which
the action was commenced.”).

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        Regarding the presumption of gratuity, the court acknowledged that Mead was decedent’s
daughter, so the presumption was that she provided the services gratuitously. However, the court
found that “[t]he services rendered reached far beyond ‘household services’ and included
services typically performed by someone with at a minimum, nurse training and/or experience.”
The court stated that decedent’s other caregivers were paid, and it appeared that “decedent
brought his claim against State Farm to recover benefits he believed he was entitled to, and with
the proceeds it is also reasonable to believe that he intended on paying whoever provided those
attendant care services,” apparently referring to Mead. The court concluded that Mead overcame
the presumption of gratuity and found that an implied contract in fact existed between Mead and
decedent. Finally, the court held that the six-year statute of limitations governing contract claims
did not bar Mead’s claim because the implied contract was a contract of continuous performance.
Accordingly, the trial court allowed Mead’s claim and granted her request to distribute the assets
of the estate.

                                 II. STANDARD OF REVIEW

        We review legal questions involving the proper interpretation and application of a statute
de novo. Peterson v Magna Corp, 484 Mich. 300, 306; 773 NW2d 564 (2009). Appellate courts
presume that the Legislature intended the meaning expressed by the plain, unambiguous
language of a statute. Id. at 307. When interpreting statutes, courts should give effect to every
phrase, clause, and word included. Id. “If the statutory language is certain and unambiguous,
judicial construction is neither required nor permitted, and courts must apply the statute as
written.” Id. Court rules are subject to the same rules of construction as statutes. In re Leete
Estate, 290 Mich. App. 647, 655; 803 NW2d 889 (2010).

       III. CLAIMS BY A PERSONAL REPRESENTATIVE AGAINST THE ESTATE

       Respondents first argue that the probate court erred by concluding that Mead’s claim was
not barred by the timing requirements set forth in EPIC and the Michigan Court Rules. We
agree.

        Under Michigan law, a personal representative of an estate is not precluded by his or her
official status from being a creditor of the deceased or asserting a claim against the estate. See
Eagen v Brainard, 231 Mich. 481, 482-484; 204 N.W. 98 (1925). However, a personal
representative owes a fiduciary duty to the heirs of the estate. MCL 700.3703(1). “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.” MCL 700.1212(1). A
personal representative may not take advantage of his or her office to procure unfair advantage
or influence because of the fiduciary relationship between a personal representative and the
decedent’s heirs. See De Coo v Woodworth, 96 Mich. 362, 366; 55 N.W. 987 (1893); see
generally In re Baldwin Trust, 274 Mich. App. 387, 401; 733 NW2d 419 (2007).

       Several different statutory provisions in EPIC are relevant to resolving the issues
presented in this case. MCL 700.3801 governs the responsibility of a personal representative to
provide creditors with notice of the opportunity to present a claim against the estate, and
provides in pertinent part the following:

                                                -4-
               (1) Unless notice has already been given, upon appointment a personal
       representative shall publish . . . a notice as provided by supreme court rule
       notifying estate creditors to present their claims within 4 months after the date of
       the notice’s publication or be forever barred. A personal representative who has
       published notice shall also send, within the time prescribed in subsection (2), a
       copy of the notice or a similar notice to each estate creditor whom the personal
       representative knows at the time of publication or during the 4 months following
       publication . . . . For purposes of this section, the personal representative knows a
       creditor of the decedent if the personal representative has actual notice of the
       creditor or the creditor’s existence is reasonably ascertainable by the personal
       representative based on an investigation of the decedent’s available records for
       the 2 years immediately preceding death and mail following death.

              (2) Notice to a known creditor of the estate shall be given within the
       following time limits:

              (a) Within 4 months after the date of the publication of notice to creditors.

               (b) If the personal representative first knows of an estate creditor less than
       28 days before the expiration of the time limit in subdivision (a), within 28 days
       after the personal representative first knows of the creditor.

Once a personal representative provides notice to creditors of an estate under MCL 700.3801,
MCL 700.3803(1) governs the time limits in which a creditor must present a claim which arose
before the decedent’s death in order to prevent the claim from being barred. The statute states
the following:

               (1) A claim against a decedent’s estate that arose before the decedent’s
       death . . . is barred against the estate, the personal representative, the decedent’s
       heirs and devisees, and nonprobate transferees of the decedent unless presented
       within 1 of the following time limits:

               (a) If notice is given in compliance with section 3801 . . . within 4 months
       after the date of the publication of notice to creditors . . . .

               (b) For a creditor known to the personal representative at the time of
       publication or during the 4 months following publication, within 1 month after the
       subsequent sending of notice or 4 months after the date of the publication of
       notice to creditors, whichever is later.

              (c) If the notice requirements of section 3801 . . . have not been met,
       within 3 years after the decedent’s death.

MCL 700.3804 governs how a creditor must present a claim, and provides the following:

               (1) A claimant must present a claim against a decedent’s estate in either of
       the following ways:

                                                -5-
               (a) By delivering or mailing a written statement to the personal
       representative indicating the claim’s basis, the claimant’s name and address, and
       the amount claimed, or by filing with the court a written statement of the claim in
       the form prescribed by supreme court rule and delivering or mailing a copy of the
       statement to the personal representative. The claim shall be considered presented
       on receipt of the claim statement by the personal representative or the filing of the
       claim statement with the court, whichever occurs first. . . .

               (b) By commencing a proceeding to obtain payment of a claim against the
       estate in a court in which the personal representative may be subjected to
       jurisdiction. The commencement of the proceeding shall occur within the time
       limit for presenting the claim. The presentation of a claim is not required in
       regard to a matter claimed in a proceeding against the decedent that is pending at
       the time of death.
                                             * * *
               (3) A claim by the personal representative against the estate shall be in the
       form prescribed by supreme court rule. The personal representative must give a
       copy of the claim to all interested persons not later than 7 days after the time for
       the claim’s original presentation expires. The claim must contain a warning that
       the personal representative’s claim will be allowed unless a notice of objection is
       delivered or mailed to the personal representative within 63 days after the time for
       the claim’s original presentation expires. This subsection does not apply to a
       claim for compensation for services rendered or for reimbursement of expenses
       advanced by the personal representative.

Finally, MCR 5.307(D) provides, “A claim by a personal representative against the estate for an
obligation that arose before the death of the decedent shall only be allowed in a formal
proceeding by order of the court.”

        On appeal, respondents argue that the notice requirements of MCL 700.3801 do not apply
to Mead because, as the personal representative, she had actual notice of the opportunity to file a
claim against the estate. They argue that the time period for presenting her claim should have
begun when she published the notice to general creditors, such that she had four months to
present her claim after October 15, 2013. See MCL 700.3803(1)(a). In contrast, Mead argues
that she was a “known creditor” to herself as the personal representative, and because she did not
“send” herself notice in compliance with MCL 700.3801(1), she had three years to assert her
claim against the estate under MCL 700.3803(1)(c). There is no dispute that Mead had actual
knowledge of the notice because she posted the notice to general creditors in the Lansing State
Journal on October 15, 2013. Rather, the question is whether EPIC requires a personal
representative to formally “send” herself notice in order to trigger the time limits for presenting a
claim against the estate.

       MCL 700.3801 does not specifically address when the time period begins to run for
presentation of a claim by a personal representative against the estate. EPIC clearly
contemplates that there is some applicable time period because MCL 700.3804(3) states that a
personal representative “must give a copy of the claim to all interested persons not later than 7
                                                -6-
days after the time for the claim’s original presentation expires.” (Emphasis added.) It is also
clear that in EPIC, the Legislature imposed specific obligations on personal representatives to
faithfully execute their duties for the benefit of the estate’s successors,3 and imposed liability and
damages when a personal representative fails to perform her duties on behalf of the estate.4

        Below, the probate court ruled that Mead was a “known creditor” for purposes of
MCL 700.3801(1) because she was aware of the existence of her claim. The court concluded
that because Mead did not send herself a copy of the notice to creditors, MCL 700.3803(1)(c)
provided that she had three years to present her contract claim against the estate. Under the
probate court’s interpretation of MCL 700.3801(1), however, Mead would derive a benefit, i.e.,
having three years to present her claim against the estate under MCL 700.3803(1)(c) rather than
four months under MCL 700.3803(1)(a) or (b), as a result of her own failure to provide proper
notice to herself as a “known creditor.” Further, in order to provide proper notice under the
probate court’s interpretation, Mead would be required to mail or personally serve herself with a
copy of the notice that she drafted and then published as a general notice to creditors of the
estate. See MCR 5.208(B)(1) (“Within the time limits prescribed by law, the personal
representative must cause a copy of the published notice or a similar notice to be served
personally or by mail on each creditor of the estate whose identity . . . is known to . . . the
personal representative.”).

        Statutes should be construed to avoid absurd results. People v Tennyson, 487 Mich. 730,
741; 790 NW2d 354 (2010).5 We decline to adopt an interpretation of MCL 700.3801(1) that
would include a personal representative within the definition of “known creditor” because the
statutory definition does not plainly apply, and because such an interpretation would either
require a personal representative to perform the nonsensical task of mailing or personally serving
herself with a copy of the notice that she had already published, or allow a personal
representative to benefit from her nonfeasance in not serving notice upon herself. Rather,
considering the statutory scheme as a whole, we conclude that Mead’s claim should be treated
the same as every other general creditor of the estate, requiring her “to present [her] claims

3
    MCL 700.1212(1).
4
  See MCL 700.3712 (“If the exercise or the failure to exercise a power concerning the estate is
improper, the personal representative is liable to interested persons for damage or loss resulting
from the breach of fiduciary duty to the same extent as a trustee of an express trust.”); see also
MCL 700.1308.
5
  The absurd results rule “demonstrates a respect for the coequal Legislative Branch, which we
assume would not act in an absurd way.” Public Citizen v US Dep’t of Justice, 491 U.S. 440, 470;
109 S. Ct. 2558; 105 L. Ed. 2d 377 (1989) (KENNEDY, J., concurring). “[A] result is only absurd if
it is quite impossible that the Legislature could have intended the result . . . .” Univ of Mich
Regents v Titan Ins Co, 487 Mich. 289, 346; 791 NW2d 897 (2010) (MARKMAN, J., dissenting)
(quotation marks and citations omitted), overruled by Joseph v Auto Club Ins Ass’n, 491 Mich.
200; 815 NW2d 412 (2012).

                                                 -7-
within 4 months after the date of the notice’s publication or be forever barred,”
MCL 700.3801(1).

        The probate court further concluded that Mead’s claim was not “a claim of a personal
representative” because her claim arose before she was issued her letters of authority, so she was
not required to follow the additional procedures outlined in MCL 700.3804(3) and
MCR 5.307(D) to bring her claim. Neither MCL 700.3804(3) nor MCR 5.307(D) include the
phrase “a claim of a personal representative,” but rather govern claims “by the [or a] personal
representative against the estate,” MCL 700.3804(3) (emphasis added). In this case, Mead’s
contract claim against the estate was a claim by the personal representative because Mead was
the personal representative at the time she asserted her claim against the estate.

        Moreover, MCR 5.307(D) states that it applies to claims “by a personal representative
against the estate for an obligation that arose before the death of the decedent.” (Emphasis
added.) Under the probate court’s interpretation, MCR 5.307(D) would be meaningless. There
could be no such thing as a claim by a personal representative that arose before the decedent’s
death because the letters of authority for a personal representative are not issued until after a
decedent’s death. See MCL 700.3103. Likewise, the last sentence of MCL 700.3804(3) states
that “[t]his subsection does not apply to a claim for compensation for services rendered or for
reimbursement of expenses advanced by the personal representative.” Reading this sentence in
the context of the entire statutory subsection makes clear that the language is designed to exclude
from its timing requirements claims by a personal representative for reimbursement of expenses
advanced or services rendered in her official capacity as personal representative of the estate,
while applying those requirements to claims by a personal representative that arose before the
decedent’s death. Therefore, the preceding language in MCL 700.3804(3) contemplates a claim
by a personal representative against the estate other than a claim for services rendered or
expenses advanced in the personal representative’s official capacity.

         In sum, the presentation period for Mead’s claim was four months after the notice’s
publication under MCL 700.3801(1), and MCL 700.3804(3) and MCR 5.307(D) apply to Mead’s
claim. Mead published the notice to creditors on October 15, 2013, so the presentation period
for her claim expired on February 15, 2014, and Mead was required to give a copy of her claim
to all interested persons by February 22, 2014. However, she did not file her request to allow the
claim until July 31, 2014, several months after the statutory presentation period had expired. The
probate court erred by allowing Mead’s claim because she failed to provide the interested
persons with notice of the claim not later than seven days after the time for the claim’s original
presentation expired. Further, by treating Mead as a “known creditor,” the probate court
permitted her to gain an unfair advantage over other potential creditors and the other heirs of the
estate by failing to carry out what would have been her own fiduciary duty as personal
representative (the act of serving herself with the notice to creditors that she herself crafted and
published). It is at best difficult to imagine that the Legislature intended that a personal
representative who has actual notice would (1) be required to serve notice upon herself and (2)
be in position to give herself up to three years to present a claim by failing to exercise a fiduciary

                                                 -8-
duty, when general creditors, some of whom might never receive actual notice, have only four
months to do so.6

        Reversed and remanded for further proceedings consistent with this opinion. We do not
retain jurisdiction.

                                                          /s/ Michael F. Gadola
                                                          /s/ Amy Ronayne Krause
                                                          /s/ Colleen A. O'Brien

6
  In light of our conclusion that Mead’s claim against the estate was barred under EPIC and the
Michigan Court Rules, we need not address respondents’ remaining arguments that Mead’s
claim was barred by collateral estoppel, the one-year-back rule, and the six-year statute of
limitations governing contract claims, or that Mead failed to overcome the presumption of
gratuity or provide adequate evidentiary support to substantiate the amount of her claim.

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