Indep. Bank v. Hammel Assocs., LLC.

• Decision Date: 02 July 2013
• Docket Number: Docket No. 306813.
• Citation: 301 Mich.App. 502,836 N.W.2d 737
• Parties: INDEPENDENT BANK v. HAMMEL ASSOCIATES, LLC.
• Court: Court of Appeal of Michigan — District of US

301 Mich.App. 502

836 N.W.2d 737

INDEPENDENT BANK

v.HAMMEL ASSOCIATES, LLC.

Docket No. 306813.

Court of Appeals of Michigan.

Submitted March 6, 2013, at Detroit.

Decided July 2, 2013, at 9:00 a.m.

Dawda, Mann, Mulcahy & Sadler, PLC, Bloomfield Hills, (by Wayne S. Segal, Alfredo Casab, and Earl R. Johnson), for plaintiff.

Wood, Kull, Herschfus, Obee & Kull, P.C., Farmington Hills, (by Brian H. Herschfus), for defendants.

Before: CAVANAGH, P.J., and SAAD and SHAPIRO, JJ.

SAAD, J.

Plaintiff, Independent Bank, appeals by delayed leave granted, the trial court's order that granted summary disposition to defendant James D. Lee Revocable Living Trust. For the reasons set forth in this opinion, we reverse and remand for furtherproceedings consistent with this opinion.

I. FACTS AND PROCEEDINGS

This case arises out of a commercial loan issued by Independent Bank to defendant Hammel Associates, LLC, for $199,547.87 on March 16, 2009. Defendant Norbert Boes and attorney David Wood, as attorney-in-fact for James D. Lee, signed a promissory note for the loan. On the promissory note, Boes and Lee were identified as members/managers of Hammel Associates. On the same date, Boes, Lee, and the James D. Lee Revocable Living Trust signed commercial guaranty documents in which each “absolutely and unconditionally guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower to Lender, and the performance and discharge of all Borrower's obligations under the Note and the Related Documents.” Again, Wood signed the guaranty on Lee's behalf, and also on behalf of Lee's trust.

Hammel defaulted on the loan on an unspecified date, and Lee died on May 25, 2009. On May 31, 2009, the Livingston County Daily Press and Argus published a notice to creditors drafted by Wood. The notice stated that Lee had died and that “[t]here is no probate estate.” It further notified creditors that all claims against the trust should present claims to Wood as “[t]rustee.” On June 1, 2009, Wood sent a “Notice to Known Creditors” to a vice president of Independent Bank in Troy. The notice contained the loan number for the commercial loan guaranteed by Lee and the trust and stated that Wood had attached the notice published in the Livingston County Daily Press and Argus. The notice to known creditors identified Wood as “Successor Trustee.” On August 11, 2009, Wood sent a substantially similar notice to known creditors to senior vice president and general counsel Mark L. Collins at Independent Bank in Ionia.

On August 18, 2009, Collins submitted a “Statement and Proof of Claim.” The document identified the deceased as James Davis Lee and, under “Description of Claim,” the document referred to “obligation pursuant to commercial guaranties of James D. Lee and James D. Lee Revocable Living Trust, as amended and restated November 20, 1997; both guaranties dated March 16, 2009 with respect to the indebtedness of Hammel Associates LLC to Independent Bank in connection with Loan No. 4345004283–1087[.]” (Some capitalization changed for consistency.) The statement further indicated that the amount due on the claim as of August 18, 2009, was $199,603.30.

On January 15, 2009, Wood mailed to Independent Bank a “Notice of Disallowance of Claim.” The top of the page of the notice referred only to the “ Estate of James Davis Lee, Deceased” and, importantly, did not identify or otherwise indicate that the disallowance was by or from the James D. Lee Revocable Living Trust. (Emphasis added.) The disallowance stated that Independent Bank's statement of claim was disallowed “in whole.”

On September 1, 2010, Independent Bank filed a complaint against Hammel, Boes, the estate of James D. Lee, and the James D. Lee Revocable Living Trust, seeking to collect the commercial debt secured by the promissory note and commercial guaranties. On October 12, 2010, the estate and trust filed a motion for summary disposition pursuant to MCR 2.116(C)(7) and argued that Independent Bank's claims against the estate and trust are barred by the statute of limitations. Defendants asserted that no estate exists and that Wood sent a notice of disallowance of claim for the trust, not the estate, on January 15, 2010. Because IndependentBank failed to file its complaint within 63 days after the disallowance was mailed or delivered, the trust argued that the claim was untimely pursuant to MCL 700.7611(a).

In response, Independent Bank acknowledged that it “has been advised” that no probate estate was opened for Lee and that its claim against the estate should be dismissed without prejudice on the ground that it was not ripe for review, though an estate could be opened at some time in the future. However, Independent Bank further argued that its statement and proof of claim preserved claims against both the estate and trust but, importantly in its opinion, the notice of disallowance of claim sent by Wood cited only the estate and “[n]owhere on the Notice of Disallowance of Claim is the Lee Trust cited.” (Emphasis omitted.) Because the trust had failed to file a disallowance as to the trust, Independent Bank argued that the period of limitations had not run on its claim against the trust.¹

At the hearing on the motions, the trial court ruled from the bench that Independent Bank had acknowledged that no estate was opened and, regardless of whether there was “a conflict in the identification in the forms,” Independent Bank was nonetheless obligated to file a claim against the trust within 63 days. Accordingly, the court granted summary disposition to the trust and dismissed the claims against the estate.

II. DISCUSSION

Independent Bank argues that the trial court erred by granting summary disposition to the trust because the disallowance of claim indicated that it pertained to the estate only and Independent Bank's complaint against the trust was, therefore, not barred by the statute of limitations.

The trial court stated that it decided to grant the trust's motion pursuant to MCR 2.116(C)(7), (8) and (10). However, because the trial court ruled that Independent Bank's claim was untimely, and because the court relied on documents outside the pleadings, it appears that the court granted summary disposition pursuant to MCR 2.116(C)(7). As this Court explained in Hoffman v. Boonsiri, 290 Mich.App. 34, 39, 801 N.W.2d 385 (2010):

This Court reviews de novo a trial court's decision on a motion for summary disposition under MCR 2.116(C)(7) (claim is barred by statute of limitations). DiPonio Constr. Co., Inc. v. Rosati Masonry Co., Inc., 246 Mich.App. 43, 46–47, 631 N.W.2d 59 (2001). When reviewing a motion for summary disposition under MCR 2.116(C)(7), the trial court must accept the nonmoving party's well-pleaded allegations as true and construe the allegations in the nonmovant's favor to determine whether any factual development could provide a basis for recovery.

This case also involves the interpretation and application of various statutes. We also review these issues de novo. Id.

The goal in interpreting a statute is to ascertain the Legislature's intent. Shinholster v. Annapolis Hosp., 471 Mich. 540, 548–549, 685 N.W.2d 275 (2004). The first step in doing so is looking to the language used. Id. at 549 . Effect must be given to each word, reading provisions as a whole, and in the context of the entire statute. Green v. Ziegelman, 282 Mich.App. 292, 301–302, 767 N.W.2d 660 (2009). If the language is clear and unambiguous, the statute must be applied as written. Id. at 302 . [Hopkins v. Duncan Twp., 294 Mich.App. 401, 410, 812 N.W.2d 27 (2011).]

The Estates and Protected Individuals Code (EPIC) applies to this case. EPIC became effective April 1, 2000, and it applies to a “governing instrument executed by a decedent dying after that date.” MCL 700.8101(1) and (2)(a). Provisions of the Michigan Trust Code (MTC), MCL 700.7101 through 700.7913, became effective on April 1, 2010, and are contained in amendments of and additions to article VII of EPIC. MCL 700.8204. The MTC applies to trusts created before its enactment, but does not impair accrued rights or affect an act done before its effective date. MCL 700.8206(1)(a) and (2). The parties agree that the statutory provisions at issue are substantively the same in EPIC and the MTC, and we agree.

In both the former EPIC provision, MCL 700.7504, as enacted by 1998 PA 386, and the MTC, MCL 700.7608, if there is no estate, a trustee must nonetheless comply with the publication and notice requirements that apply to estates under MCL 700.3801. The parties agree that Wood complied with these obligations. Independent Bank also properly complied with statutory requirements that it submit a statement and proof of claim. The statement shows that Independent Bank was seeking to preserve any rights to payment from both the estate, which is the successor to Lee, and the trust because both Lee and his trust entered into the guaranty agreements.

At the heart of this dispute is the following question—was the disallowance of claim Wood sent in response to Independent Bank's statement and proof of claim a disallowance by the trust? For a claim to be properly disallowed by the trust, Wood had to comply with former MCL 700.7507(a), as amended by 2000 PA 54, which was identical to MTC provision MCL 700.7611(a), both of which provide:

The trustee may deliver or mail a notice to the claimant stating that the claim has been disallowed in whole or in part. If, after allowing or disallowing a claim, the trustee changes a decision concerning the claim, the trustee shall notify the claimant. The trustee shall not change a decision disallowing a claim if the time for the claimant to commence a proceeding for allowance expires or if the time to commence a proceeding on the claim expires and the claim has been barred. A claim that is disallowed in whole or in part by the trustee is barred to the extent not allowed unless the claimant commences a proceeding...