Court Opinion

ID: 4408105
Source: CourtListenerOpinion
Date Created: 2019-06-19 09:05:42.07409+00
Date Added: 2024-06-11T13:32:33.131434
License: Public Domain

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 KEVIN AND LAVONNE VANDINE
TRUST.

LAVONNE VANDINE, TRUSTEE of the KEVIN                              UNPUBLISHED
AND LAVONNE VANDINE TRUST,                                         June 18, 2019

               Appellee,

v                                                                  No. 344336
                                                                   Kent Probate Court
MONICA VANDINE and MISTY JO WELLS,                                 LC No. 17-202038-TV

               Appellants.

Before: K. F. KELLY, P.J., and FORT HOOD and REDFORD, JJ.

PER CURIAM.

        Petitioners-appellants, Monica VanDine and Misty Jo Wells, appeal as of right from the
probate court’s order granting summary disposition under MCR 2.116(C)(8) in favor of
respondent-appellee, Trustee Lavonne VanDine, and dismissing petitioners’ action seeking the
removal of Lavonne VanDine as trustee and the immediate distribution, after an accounting, of
the assets of The Kevin and Lavonne VanDine Trust. We vacate the probate court’s order
granting summary disposition and remand to the probate court for proceedings consistent with
this opinion.

                                      I. BACKGROUND

        This case commenced when petitioners filed an objection to fiduciary accounting, a
petition to remove the trustee, and a request for surcharge of fiduciary. Petitioners, who are
Kevin VanDine’s daughters and trust beneficiaries of the VanDine Family Trust, alleged that
Lavonne VanDine breached the terms of the trust agreement by (1) improperly transferring real
property out of the VanDine Family Trust and into a separate trust, and (2) failing to provide
petitioners with required annual accountings and other information related to trust
administration. Petitioners further alleged that, upon their father’s death on March 11, 2012, the

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trust agreement expressly and unambiguously required that all trust property “be held,
administered, and distributed” to the beneficiaries named in the trust agreement.

         Kevin and Lavonne VanDine entered into the trust agreement on February 8, 2010. The
initial trust principal consisted of certain real estate located at 4130 52nd Street, Grandville,
Michigan (the Property). Petitioners alleged that, on January 28, 2016, Lavonne VanDine, while
acting as trustee, improperly conveyed the Property via quitclaim deed out of the VanDine
Family Trust and into the Lavonne VanDine Revocable Living Trust, a new, separate trust that
Lavonne VanDine created. In May 2017, more than five years after their father’s death,
petitioners alleged that they received an unsolicited letter from Lavonne VanDine’s attorney
announcing a trust distribution and enclosing a release for their signature. At this point,
petitioners sought counsel, who, in turn, responded to the May 2017 letter demanding a full
accounting or settlement based upon the actual value of the Property. Lavonne VanDine
declined to provide a detailed accounting but later, in August 2017, sent petitioners a signed
Final Account of Fiduciary reflecting expenses, losses, and disbursements in the amount of
$191,449.91, a loan from Lavonne VanDine to the trust in the same amount, and a present value
of trust assets of $7,950.08. Although the Final Account of Fiduciary did not state any proposed
distribution, Lavonne VanDine also provided each petitioner with a distribution check, which
petitioners refused to accept because of their objection to the trust accounting.

        In Count I of their petition, petitioners claimed that Lavonne VanDine engaged in self-
dealing or conversion of trust assets by transferring the Property into her own trust. In Count II,
petitioners sought an accounting, stating their objection to the August 28, 2017 Final Account of
Fiduciary because of the lack of any comprehensive accounting of trust finances, particularly
income, expenses, taxes, fiduciary fees, and attorney fees, as well as any activities associated
with the preservation of trust assets. In Count III, petitioners sought a surcharge to be imposed
on the fiduciary equal to the sum paid in trustee’s fees, as well as an amount equal to the alleged
diminution in value of the trust property stemming from the alleged failure to properly manage
trust property and self-dealing.

        Lavonne VanDine admitted that she conveyed the Property to the VanDine Family Trust
on October 14, 2010. However, Lavonne VanDine maintained that the Property was in her
family for generations and that she placed the home into the trust so that she could pay Kevin’s
medical bills. Lavonne VanDine also admitted that (1) when her husband died, the VanDine
Family Trust became irrevocable; (2) Lavonne VanDine was required to send annual accountings
to the trust’s beneficiaries if the value of the estate was above $100, but maintained that this was
completed in 2017 (although, evidently, not for the preceding years following her husband’s
death); (3) to appease petitioners, she freely offered them a gift of $6,500; and (4) although the
Property was owned by the VanDine Family Trust, Lavonne VanDine, as trustee, subsequently
conveyed the home to a separate trust. Lavonne VanDine maintained that §2.2 of the trust
agreement allowed her to transfer the Property (which she claimed was the trust’s sole asset)
without restriction during her lifetime. In response to the claim for accounting, Lavonne
VanDine maintained that the August 28, 2017 Final Account of Fiduciary was sufficient to fulfill
her fiduciary duties. In response to the claim for surcharge, Lavonne VanDine denied that the
VanDine Family Trust “suffered any loss whatsoever.”

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         Lavonne VanDine subsequently filed a motion for summary disposition under MCR
2.115(C)(5), (C)(8), and (C)(10), arguing that petitioners did not have a present interest in the
trust and that, during her lifetime, she had the absolute right to manage the trust principal as
required for her support, comfort, and welfare. As pertinent to this appeal, petitioners countered
that after Kevin VanDine’s death, the trust property, in accordance with the trust instrument,
should have been distributed to the beneficiaries after necessary expenses arising from Kevin
VanDine’s illness and death were paid. The probate court denied Lavonne VanDine’s motion
for summary disposition under MCR 2.116(C)(5) and (C)(10). However, under MCR
2.116(C)(8), the probate court agreed that §2.2 of the VanDine Family Trust unambiguously
provided that, although the trust became irrevocable upon Kevin VanDine’s death, as the
surviving settlor-spouse, Lavonne VanDine was entitled to maintain control and management of
all trust assets without restriction, which allowed her to transfer the Property to a separate trust.
Accordingly, the probate court determined that petitioners were only entitled to a distribution
after Lavonne VanDine’s death, if there was any trust balance to distribute. The probate court
also determined that petitioners, as trust beneficiaries, were entitled to an accounting.

        Subsequently, the probate court denied petitioners’ motion for reconsideration. Again,
the probate court held that, under §2.2, the living settlor-spouse, regardless of the other spouse’s
death, was entitled to pay to themselves for his or her own benefit, without restriction, such part
of the net income and principal of the trust as he or she directed. The probate court reaffirmed its
decision that petitioners had no right to distribution of the trust principal while Lavonne VanDine
was alive. Petitioners now appeal as of right.

                                 II. STANDARDS OF REVIEW

        This Court reviews de novo a probate court’s decision regarding a motion for summary
disposition. Corley v Detroit Bd of Ed, 470 Mich. 274, 277; 681 NW2d 342 (2004). In this case,
the probate court granted summary disposition under MCR 2.116(C)(8).

               MCR 2.116(C)(8) permits a trial court to grant summary disposition when
       an opposing party has failed to state a claim on which relief can be granted. Thus,
       a motion under this rule tests the legal sufficiency of a claim. The motion may
       not be supported or opposed with affidavits, admissions, or other documentary
       evidence, and must be decided on the basis of the pleadings alone. The trial court
       reviewing the motion must accept as true all factual allegations supporting the
       claim, and any reasonable inferences or conclusions that might be drawn from
       those facts. A motion for summary disposition under MCR 2.116(C)(8) may be
       granted only when a claim is so clearly unenforceable as a matter of law that no
       factual development could possibly justify recovery. [Gormon v American Honda
       Motor Co, Inc, 302 Mich. App. 113, 131-132; 839 NW2d 223 (2013) (citations
       omitted).]

        This Court also reviews de novo the probate court’s interpretation of a trust agreement as
it presents a question of law. Bill & Dena Brown Trust v Garcia, 312 Mich. App. 684, 693; 880
NW2d 269 (2015) (quotation marks and citation marks omitted).

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       Our goal in interpreting trust language is to determine and give effect to the
       trustor’s intent. [This Court] begins by examining the language of the trust itself,
       and if there is no ambiguity, we interpret it according to its plain and ordinary
       meaning. [Hegadorn v Dep’t of Human Servs Director, ___ Mich ___, ___; ___
       NW2d ___ (2019) (Docket Nos. 156132, 156133, 156134); slip op at 9-10
       (citation omitted).]

A mere disagreement between the parties regarding the interpretation of a trust does not mean
the trust is ambiguous. Brown Trust, 312 Mich. App. at 693. However, if judicial review of the
instrument does not yield the intent of the settlors in drafting the instrument, “in other words, if
the document evidences a patent or latent ambiguity,” the intent of the settlors can be established
by reference to “two external sources[.]” In re Butterfield’s Estate, 405 Mich. 702, 711; 275
NW2d 262 (1979).

       An ambiguity is “patent” if the uncertainty as to meaning “appears on the face of
       the instrument, and arises from the defective, obscure, or insensible language
       used”. An ambiguity is “latent” “where the language employed is clear and
       intelligible and suggests but a single meaning, but some extrinsic fact or
       extraneous evidence creates” the possibility of more than one meaning. [Id. n 6,
       quoting Black’s Law Dictionary (4th ed).]

       When confronted with an ambiguous document, the two sources we may consult are (1)
the circumstances with respect to the drafting of the trust instrument and (2) rules of
construction. Id. If there is no ambiguity, we resolve disputes regarding the interpretation of the
document according to the “four corners of the instrument.” Id.

                                         III. ANALYSIS

       On appeal, we are asked to consider whether the probate erred in concluding that the trust
instrument unambiguously protected Lavonne VanDine’s right to manage the trust property
following Kevin VanDine’s death.

       Kevin and Lavonne VanDine’s trust instrument, provides, in pertinent part as follows:

                                           ARTICLE II

                                  LIFETIME MANAGEMENT

       2.1     Amendment and Revocation. We may, without the consent of anyone,
       revoke this agreement in whole or in part or amend it in any respect. No
       amendment shall materially change the trustee’s duties, immunities, or
       compensation without the trustee’s prior written approval. The trust property
       affected by any such revocation shall be distributed as directed.

       2.2     Income and Principal. During our life, the trustee shall pay to us or for
       our benefit, or as we otherwise direct, such part or all of the net income and
       principal of this trust as we direct. However, during any period in which we, in
       trustee’s opinion, are incapable of managing our own affairs, trustee shall pay to
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       or use for the benefit of us, our descendants, and others partly or wholly
       dependent on us, the net income and principal that trustee determines is required
       for our support, comfort and welfare, in our accustomed manner of living, or for
       any other purposes trustee believes to be for our best interests.

       2.3    Death. Upon the death of the first of us to die, this agreement shall be
       irrevocable. All property then a part of the trust and all property thereafter added
       to the trust shall be held, administered and distributed by the trustee in
       accordance with Article III.

                                           ARTICLE III

       3.1      Taxes, Debts and Expenses. The trustee may pay from this Family Trust,
       and shall pay at the direction of the personal representative of my estate: (1)
       estate, inheritance and other death taxes (except generation-skipping taxes and
       taxes attributable to any power of appointments), including any interest or
       penalties thereon, which become payable by reason of my death as a result of
       property passing under this trust or otherwise; (2) debts that are legally
       enforceable against my estates; (3) the expenses of my last illness, funeral, burial
       or other disposition of my body; and (4) the administration expenses of my
       estates.

       3.2    Family Trust. The balance of the Family Trust shall be held, administered
       and distributed as provided in this section.

               (a) The balance shall be divided into five equal shares. One share shall
       be distributed to each of Lavonne’s children and one share shall be divided
       between Kevin’s daughters. No provision has been made for Kevin’s sons, not
       out of any lack of love or affection, but for reasons we deem personal. [Emphasis
       added.]

       The parties appear to agree that, at least during their lifetimes and while neither one was
otherwise incapacitated, under §2.2, Kevin and Lavonne VanDine maintained a right to direct the
payment of income and principal of the trust. However, what the parties disagree on, and the
issue giving rise to this appeal, is what authority Lavonne VanDine possessed following the
death of her husband to manage and transfer the corpus of the trust.

        As an initial matter, we disagree with the foundational principle underlying the probate
court’s bench ruling, that being that the language of the trust instrument was unambiguous.
Instead, we are of the view that the trust instrument presents a patent ambiguity that inhibits our
interpretation to discern the intention of the settlors. The probate court grounded its ruling in its
correct interpretation of § 2.2 of the trust instrument, which clearly manifests the intention of the
co-settlors that during their lifetimes, a “part or all of the net income and principal of the trust”
be paid to them as they directed. Conversely, §2.3 of the trust instrument states that “[u]pon the
death of the first of us to die, this agreement shall be irrevocable. All property then a part of the
trust and all property thereafter added to the trust shall be held, administered and distributed by
the trustee in accordance with Article III.” (Emphasis added.) Article III, §3.2 directs that after

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estate, inheritance and death taxes, as well as debts and the expenses of illness and burial are
paid from the Family Trust, the balance of the Family Trust is to be distributed into five equal
shares to Lavonne VanDine’s children, with each receiving one share, and Kevin VanDine’s
daughters, with one share being divided between them. Viewing the instrument as a whole, the
inartful drafting of §2.2 and §2.3 yields a clear uncertainty in the meaning of the instrument and
the intentions of the co-settlors. Butterfield, 405 Mich. at 711 n 6. This is particularly with
regard to whether Kevin and Lavonne VanDine intended that the surviving spouse would have
unrestrained access to manage the trust property during their lifetime. Put another way, the trust
instrument as drafted is not susceptible to only one interpretation, supporting our conclusion that
it is ambiguous. See Michigan Twp Participating Plan v Pavolich, 232 Mich. App. 378, 382; 591
NW2d 325 (1998) (recognizing that if a contract “fairly admits of but one interpretation, it may
not be said to be ambiguous or fatally unclear.”) In our view, the lack of clarity in the instrument
arises from “the defective, obscure, [and] insensible language” that was employed in drafting the
instrument. Id. While we are mindful of our obligation to interpret the trust instrument in a
manner that carries out the intention of the co-settlors as “nearly as possible,” In re Kostin, 278
Mich. App. 47, 53; 748 NW2d 583 (2008), our ability to do so here is undermined by the
ambiguous drafting of the trust instrument. Our analysis is specifically hindered by the fact that
the instrument does not clearly address the authority of each of the co-settlors to manage the trust
property during their lifetimes once their spouse predeceased them. Accordingly, remand is
necessary for the probate court to hear testimony1 from (1) Lavonne VanDine, (2) the attorney
that drafted the trust instrument and assisted the couple with their estate planning, as well as (3)
any others that the probate court and the parties deem necessary, to allow the probate court to
clearly ascertain the intentions of both Lavonne and Kevin VanDine with regard to the
disposition of the trust property once the other spouse predeceased them. MCR 7.216(A)(5), (9).
The probate court may also consider documentary evidence on this issue.2 Once the probate
court has the benefit of a full evidentiary record, it may reconsider its order granting summary
disposition in favor of Lavonne VanDine.

                                       IV. CONCLUSION

         We vacate the probate court’s order granting summary disposition in favor of Lavonne
VanDine and remand this case to allow the probate court to hear testimony and consider
additional evidence to allow the probate court to ascertain the intentions of the settlors of the
trust instrument with regard to the disposition of the trust property by the surviving spouse.

1
 As noted earlier in this opinion, Lavonne VanDine also sought summary disposition pursuant to
MCR 2.116(C)(10) (no genuine issue of any material fact).
2
  The record reflects that the probate court suspended discovery following its bench ruling at
issue in this appeal. The probate court may decide to reopen discovery to fully canvass the issue
of Kevin and Lavonne’s VanDine’s intentions with respect to their management of the trust
corpus during their lifetime following the passing of the other spouse.

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We do not retain jurisdiction.

                                       /s/ Karen M. Fort Hood
                                       /s/ James Robert Redford

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