One Court of Justice

On October 27, 2009, the Michigan Court of Appeals issued a published opinion in In re Estate of Graves, No. 286674, authored by Judge Alton Davis, affirming summary disposition against an attorney for reimbursement to the estate, after his client, the court-appointed conservator, absconded with the funds.  The Court concluded that the probate court had subject matter jurisdiction over those claims because they concerned a conservatorship and sought return of funds to the estate.  It also held that the special fiduciary’s oral release of Attorney Ford did not bar the fiduciary’s subsequent  claims and that Ford violated state law by issuing the checks to the conservator in her personal name, rather than in her capacity as representative of the estate.

After her son was injured in a car accident, Pershus Graves filed a civil action arising out of the accident and petitioned to be appointed as conservator for her son, Calvin Graves.  William R. Ford was her attorney.  The probate court issued letters of conservatorship to Ms. Graves, containing instructions and restrictions on the use, deposit, withdrawal, and verification of funds received for the estate.  Her attorney, Ford, received a notice of his duties as well, requiring him to accompany Ms. Graves to the bank to ensure that she deposited the funds in a fiduciary account, that the depository understood and accepted the fiduciary limitations of the account, and that a verification of deposit was filed with the court within 5 days.

Ms. Graves ultimately settled the lawsuit for $6,122.70.  The same day Ford received the settlement, he issued to Pershus Graves two checks totaling $6,122.70 and claims to have told Ms. Graves it was to be kept in a separate account.  But he did not accompany her to the bank or comply with the requirements in the notice.  Ms. Graves cashed the checks at Comerica Bank.

After several notices from the court, Graves was removed as conservator and Richard Siriani was appointed as a special fiduciary.  He petitioned to surcharge Ford and Graves.  Ford claims that Siriani released him before the hearing, which is why he did not attend.  At the hearing, Graves agreed to sign a promissory note to repay the money, but she never did, and could not be arrested because her whereabouts became unknown.  The Court entered an order to that extent, but did not address Ford’s release.

After Ford complied with the court order to produce copies of the checks he had written to Graves in her individual name, the conservator filed a new petition against Ford, for failing to take appropriate and necessary measures to ensure the checks were property deposited.  Summary disposition was granted against Ford.

On appeal, Ford contended that the claims were essentially for professional negligence and therefore outside the jurisdiction of the probate court.  The Court of Appeals disagreed, noting that the court, by statute, had exclusive subject matter jurisdiction over “a proceeding that concerns a guardianship, conservatorship or protective proceeding” and had concurrent jurisdiction over cases involving protected fiduciaries to “hear and decide a claim by or against a fiduciary or trustee for the return of property.”  MCL §§ 700.1302(c), .1303(1)(h-i).

The Court also rejected Ford’s argument that res judicata barred the claims for three reasons:  First, there was no final decision on the merits, since the probate court never addressed Ford’s release in its order.  Second, the earlier hearing was part of the same ongoing action and not a separate case.  Third, the second petition was based on a change in known facts—since the first petition was filed without knowledge of how the checks were written.

Finally, the Court of Appeals concluded that the probate court had authority to surcharge Ford under MCR 8.122 because his clients included not only Ms. Graves but also the estate.  The court is authorized to surcharge for unauthorized acts.  Ford was not authorized to issue checks to Pershus Graves personally, only Calvin Graves or his conservator.  Ms. Graves was the conservator, but Ford did not write the checks to her in her capacity as such.