Hart v. Comerica Bank
| Decision Date | 24 February 1997 |
| Docket Number | No. 95-CV-76089-DT.,95-CV-76089-DT. |
| Citation | 957 F.Supp. 958 |
| Court | U.S. District Court — Eastern District of Michigan |
| Parties | Clyde W. HART and Jane Hart Conserva, individually and on behalf of the Estate of Walter O. Briggs Trust Under Will f/b/o Jane B. Hart, Plaintiffs, v. COMERICA BANK, Boris Vasileff, Basil M. Briggs, Patricia Gormely Prince, and Miro, Miro & Weiner, P.C., Jointly and Severally, Defendants, and COMERICA BANK and Boris Vasileff, Third-Party Plaintiffs, v. Clyde W. HART, Counter-Defendant, Basil M. Briggs, Cross-Defendant, Jane B. Hart and Ann C. Hart, Third-Party Defendants, and MIRO, WEINER & KRAMER, P.C., (f/k/a Miro, Miro & Weiner, P.C.), Counter-Plaintiff and Third-Party Plaintiff, v. Clyde W. HART and Jane Hart Conserva, individually and on behalf of the Estate of Walter O. Briggs Trust Under Will f/b/o Jane B. Hart, Counter-Defendants, and Jane Briggs Hart, Third-Party Defendant. |
Elizabeth N. McKenna, Plymouth, MI, for plaintiffs.
David Miller, James A. Smith, Morton H. Collins, Detroit, MI, for defendants.
I. INTRODUCTION AND PROCEDURAL BACKGROUND
This matter is before the Court on various pending Motions filed by several of the parties in this multi-party, multi-claim lawsuit. Plaintiffs Clyde W. Hart and Jane Hart Conserva ("Cammie Conserva") commenced this action on December 18, 1995, as amended by their December 22, 1995 Amended Complaint.
A. Plaintiffs' Claims.
In the Amended Complaint, Plaintiffs allege the following:
Count I: Breaches of Trust and Fiduciary Duty against Defendants (1) Comerica Bank (Corporate Co-Trustee of the Jane Hart Trust and, with Trust assets as security, lender to various Hart family members and their friends); (2) Boris Vasileff (Comerica Officer and Trust Executive assigned to the Jane Hart Trust); (3) Basil "Mickey" Briggs (Of counsel lawyer at Defendant Miro, Weiner & Kramer, former counsel to the Co-Trustees of the Jane Hart Trust, and investment partner of Jane Hart, his aunt); (4) Patricia Gormley Prince (counsel who performed legal work for the Co-Trustees and wife of Vasileff's boss, Thomas Gormley); and (5) Miro, Weiner & Kramer ("Miro");
Count II: Professional Negligence against Defendants (1) Briggs, (2) Prince, and (3) Miro;
Count III: Common Law Fraud against Defendants: (1) Comerica, (2) Vasileff, (3) Briggs, (4) Prince, and (5) Miro;
Count IV: Negligent Misrepresentation against Defendants (1) Comerica, (2) Vasileff, (3) Briggs, (4) Prince, and (5) Miro;
Count V: Innocent Misrepresentation against Defendants (1) Comerica, (2) Vasileff, (3) Briggs, (4) Prince, and (5) Miro;
Count VI: Exemplary Damages against Defendants (1) Comerica, (2) Vasileff, (3) Briggs, (4) Prince, and (5) Miro;
Count VII: Aiding and Abetting Breaches of Trust and Fiduciary Duty against (1) Comerica, (2) Vasileff, (3) Briggs, and (4) Prince;
Count VIII: Common Law Respondeat Superior, alleging that Comerica is responsible for the actions of Vasileff and that Miro is responsible for the actions of Briggs;
Count IX: Conversion against Comerica.
B. Defendants' Various Cross-Claims, Counterclaims, and Third Party Complaints.
In response to Plaintiffs' Amended Complaint, the Defendants have filed various claims:
(1) Defendants Comerica and Vasileff have filed (a) a counterclaim against Plaintiff Clyde Hart (Co-Trustee of the Jane Hart Trust, a son of Jane Hart, and a remainder beneficiary of the Jane Hart Trust); (b) a cross-claim against Defendant Briggs; and (c) a Third Party Complaint against Ann C. Hart (Co-Trustee of the Jane Hart Trust, a daughter of Jane Hart, and a remainder beneficiary of the Jane Hart Trust) and Jane Hart (lifetime income beneficiary of the Jane Hart Trust and investment partner with Briggs);
(2) Defendant Miro has filed (a) a counterclaim against Plaintiffs Clyde Hart and Cammie Conserva (daughter of Jane Hart and a remainder beneficiary); and (b) a Third Party Complaint against Jane Hart.
C. The Motions Currently before the Court.
(1) Defendant Miro's (a) Motion to Dismiss, alleging lack of diversity jurisdiction; (b) Motion to Dismiss or for Summary Judgment, in which Defendant Briggs joins, as to Plaintiffs; and (c) Motion for Summary Judgment against Jane Hart on its Third Party Complaint.1
(2) Defendant Prince's Motion for Summary Judgment as to Plaintiffs;
(3) Defendants Comerica and Vasileff's Motion for Summary Judgment as to Plaintiffs;
(4) Defendants Comerica and Vasileff's Motion for Summary Judgment as to Jane Hart and Briggs.2
II. FACTUAL BACKGROUND
The will of Walter O. Briggs, effective upon his death in 1952, created trusts for each of his five children. Jane Hart, his daughter, is the lifetime income beneficiary of one of these trusts — the Jane Hart Trust. The Jane Hart Trust Document provides that upon her death, the Jane Hart Trust will be distributed per stirpes to her children — Plaintiffs Clyde Hart and Cammie Conserva are 2 of her 8 children, all of whom are remainder beneficiaries.
Although in its original form, the Jane Hart Trust Document contained no provision which permitted the Trust principal to be invaded during Jane Hart's lifetime, it was invaded during the 1980's and 90's3, and it has since been amended to permit Trust principal assets to be used for making or securing loans for Trust beneficiaries. With respect to Trust management, the Trust Document states that the Jane Hart Trust shall have three Co-Trustees, a majority of which are needed to act on its behalf.
Since 1988, Ann Hart, Clyde Hart, and Comerica have been the Co-Trustees.4 Briggs was Counsel to the Co-Trustees from 1970 through mid-1994, when Prince replaced him.5
Jane Hart began making investments with Briggs in the early 1980's pursuant to a partnership, which eventually included Ann Loeb Bronfman and was later re-named HBL Limited Partnership.6 Briggs was the counsel and sole general partner, while Hart and Bronfman were limited partners, although Briggs acted on their behalf pursuant to powers of attorney for each of them. In 1987, HBL invested in the River Place Inn project, which included renovating, in partnership with the Stroh family, an existing building on the Detroit River for the purpose of creating a luxury hotel in downtown Detroit. Construction cost overruns occurred, and as a result, in 1989, the HBL partners had to borrow nearly $3,000,000 from First Chicago Bank. When these loans came due, in late 1991, Briggs, on behalf of HBL, initiated efforts to borrow $2,500,000 from Comerica Bank for repayment of this prior loan. The Comerica loan, which was eventually secured in part with Jane Hart Trust assets, is one of the major issues in this litigation.
Throughout the 1980's and early 1990's, Jane Hart Trust assets were used to make loans, or were pledged as security for loans, to, or at the request of, Hart family members,7 even though the Jane Hart Trust Document did not authorize invasion of the Trust principal during Jane Hart's life. However, when Co-Trustee Counsel Briggs suggested that Co-Trustee Comerica accept Trust assets as security for the $2,500,000.00 Comerica loan to pay down HBL's debt to First Chicago, Comerica insisted upon specific Court approval of the transaction. Thus, Briggs, as Counsel to the Co-Trustees, drafted a Petition to Amend the Trust to permit the Co-Trustees to make loans and to permit Trust assets to serve as security for loans to, and for the benefit of, the Jane Hart Trust beneficiaries. Included in the Amendment were provisions which state that:
The propriety of any such loan or security arrangement and the types of loans or security arrangements made shall be solely within the absolute discretion of the Co-Trustees ... [T]he Co-Trustees shall not incur any responsibility or liability as a result of any such loan or security arrangement, whether or not such loan or security arrangement constitutes an investment which may be legally made by the Trustee under any statute, rule of law, or otherwise.
The Co-Trustees, including Plaintiff Clyde Hart, signed the Amendment and the beneficiaries signed Consents to the Petition. The Probate Court, consistent with the Petition to Amend, entered a February 10, 1992 Order amending the Trust. Plaintiffs, however, now contend that the information in the Petition was inaccurate and false and that they were defrauded into signing it by Briggs and Comerica. Moreover, they claim that Prince later erroneously informed the Co-Trustees and the remainder beneficiaries that, when the Probate Court entered this Order, it knew of Comerica's conflict of interest in making loans based on pledged Trust assets.
On February 11, 1992, the Co-Trustees signed a Pledge and Limited Guaranty to secure the $2,500,000 Comerica loan to Jane Hart and Briggs for the HBL debt to First Chicago. Although Bronfman was obligated to First Chicago as an HBL Limited Partner, Jane Hart allegedly insisted that Bronfman not be obligated on the $2,500,000 Note to Comerica because she had previously provided substantial collateral for other HBL loans.8 Besides Jane Hart Trust assets, Briggs also secured the Comerica loan with his own life insurance policies.
During this same period of time, Briggs, through Jane Hart's power of attorney and with the approval of the Co-Trustees, borrowed $45,000 from the Trust on behalf of Jane Hart and allegedly deposited these funds into Jane Hart's checking account with Bryn Mawr Trust Company. Jane Hart claims that she did not know of or consent to this loan, apparently another instance of Briggs' alleged fraud.9 Moreover, in June 1992, the Co-Trustees...
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