McCauley v. O'Dovero (In re JCP Tr.)

• Decision Date: 14 July 2022
• Docket Number: 352366,354065,356469
• Court: Court of Appeal of Michigan — District of US
• Parties: In re JCP TRUST. v. PETER E. O'DOVERO, PETER J. O'DOVERO, and JEAN M. TEMPLE, Appellants. CONNIE LYNN McCAULEY, JAMES R. O'DOVERO, and JOSEPH A. O'DOVERO, as Trustees of the JCP TRUST, Appellees, In re JCP TRUST. CONNIE LYNN McCAULEY, JAMES R. O'DOVERO, and JOSEPH A. O'DOVERO, as Trustees of the JCP TRUST, Plaintiffs/Third-Party Defendants- Appellees, and LOIS O'DOVERO, Intervening Plaintiff, v. PETER E. O'DOVERO, PETER &LOIS, LLC, formerly known as O'DOVERO PROPERTIES, LLC, HUMBOLDT PROPERTIES, LLC, and O'DOVERO PROPERTIES,Defendants/Third-Party Defendants-Appellants, and T &C MARKETS MI, INC., Third-Party Plaintiff.

In re JCP TRUST.

CONNIE LYNN McCAULEY, JAMES R. O'DOVERO, and JOSEPH A. O'DOVERO, as Trustees of the JCP TRUST, Appellees,
v.
PETER E. O'DOVERO, PETER J. O'DOVERO, and JEAN M. TEMPLE, Appellants.

In re JCP TRUST. CONNIE LYNN McCAULEY, JAMES R. O'DOVERO, and JOSEPH A. O'DOVERO, as Trustees of the JCP TRUST, Plaintiffs/Third-Party Defendants- Appellees, and LOIS O'DOVERO, Intervening Plaintiff,
v.
PETER E. O'DOVERO, PETER &LOIS, LLC, formerly known as O'DOVERO PROPERTIES, LLC, HUMBOLDT PROPERTIES, LLC, and O'DOVERO PROPERTIES,Defendants/Third-Party Defendants-Appellants,

and T &C MARKETS MI, INC., Third-Party Plaintiff.

Nos. 352366, 354065, 356469

Court of Appeals of Michigan

July 14, 2022

UNPUBLISHED

Marquette Probate Court LC Nos. 17-337180-TV, 17-337181-CZ

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Before: SAWYER, P.J., and SERVITTO and RICK, JJ.

PER CURIAM.

These consolidated appeals^[1] involve litigation concerning a family trust dispute and arise out of a probate proceeding and a related civil action. The parties' primary dispute regarded the ownership of certain real properties situated in and around Marquette, Michigan ("the disputed properties"). In Docket Nos. 352366 and 352367, collectively,^[2] appellants Peter E. O'Dovero (PEO), Peter J. O'Dovero (PJO), Jean M. Temple (Jean), Peter &Lois, LLC, formerly known as O'Dovero Properties, LLC, Humboldt Properties, LLC, and O'Dovero Properties ("appellants") appeal as of right the probate court's opinion and order, following a bench trial, in favor of trustees-appellees Connie Lynn McCauley ("Connie"), James R. O'Dovero ("James"), and Joseph A. O'Dovero ("Joseph") (collectively, the "trustees"). In Docket Nos. 353970 and 354065, appellants appeal as of right the probate court's order holding, among other things, that appellants were not entitled to an automatic stay pending the appeals in Docket Nos. 352366 and 352367. In Docket Nos. 356467 and 356469 appellants appeal by leave granted^[3] the probate court's order quashing certain nonparty subpoenas and refusing to rule, in postjudgment proceedings, on appellants' petition to remove the trustees for alleged breaches of their fiduciary duties.^[4]

Finding no error warranting reversal, we affirm.

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I. BACKGROUND

These cases arise out of a multimillion-dollar property dispute involving the JCP Trust- an irrevocable, inter vivos trust that was established in September 1991 by appellant PEO and his wife, intervening plaintiff Lois E. O'Dovero (Lois),^[5] for the benefit of their nine living children: PJO, Jean, Connie, James, Joseph, Gerald D. O'Dovero, John A. O'Dovero, Jay D. O'Dovero, and Paul D. O'Dovero.^[6] A dispute began when the trustees attempted to terminate PEO, doing business as O'Dovero Development, as the manager of numerous properties that were allegedly owned by the JCP Trust either legally, beneficially, or in both respects, because of suspicions that PEO was mismanaging the properties or attempting to divert money from the JCP Trust to himself. At the time of trial, legal title to most of the disputed properties either was or had been held by a "nominee" partnership, O'Dovero Properties, over which PEO was essentially the managing partner. Following a seven-day bench trial, the probate court ruled in the trustees' favor, holding that the JCP Trust held title (i.e., legal ownership), beneficial ownership, or both with regard to most of the buildings, lands, and rents associated with the 21 disputed properties. The probate court also granted the JCP Trust a constructive trust over the associated rights in the disputed properties, along with other relief. These consolidated appeals ensued.

A. DISPUTED PROPERTIES

For ease of reference, the 21 disputed properties will be referred to as they were by the probate court, as follows:

• Econo Foods [or "Econofoods"] - 1401 O'Dovero Drive, Marquette, MI

• Sears - 1495 O'Dovero Drive, Marquette, MI

• MI Works- 1498 O'Dovero Drive, Marquette, MI

• GKC MQT - 1351 O'Dovero Drive, Marquette, MI

• Secretary of State - 1301 O'Dovero Drive Marquette, MI

• New Fish &Wildlife - 3090 Wright Street, Marquette, MI

• Karr Medical - 3045 Wright Street, Marquette, MI

• SOB - 106 Coles Drive, Marquette, MI

• MRS - 290 Rublein, Marquette, MI

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• Kroncich - 843 W. Washington Street, Marquette, MI

• Mini-Storage (Spears)- 841-843 W. Washington Street, Marquette, MI

• Ridge Street Suites (RSS) - 1009 W. Ridge Street, Marquette, MI 49855

• Peak Fitness - 625 County Road, Marquette, MI • M&G Party Store - 235 E. Hwy U.S. 41, Negaunee, MI

• Mather Building - 536 Mather Avenue, Ishpeming, MI

• Michigamme Land

• Humboldt Properties

• 230 Rublein, Marquette, MI

• 237 E. Hwy U.S. 41, Negaunee, MI

• Negaunee Vacant Land I

• Negaunee Vacant Land II

B. PARTIES' DISPUTE AND COURT PROCEEDINGS

In May 2017, the trustees initiated the trust proceeding (LC No. 17-337180-TV) by filing a petition seeking a declaration of the JCP Trust's rights in the disputed properties. In June 2017, PEO filed a petition to terminate the trust. In August 2017, the trustees initiated the related civil action (LC No. 17-337181-CZ) by filing a complaint which they subsequently amended. In their first amended complaint, the trustees sought various forms of relief, including (1) a determination of the JCP Trust's rights in the disputed properties pursuant to MCL 600.2932; (2) an order quieting title to those properties in the JCP Trust; (3) various forms of injunctive relief; (4) an accounting from the pertinent appellants; (5) imposition of a constructive trust; and (6) disgorgement of any inequitable gains by the pertinent appellants. In April 2018, appellants Jean and PJO filed a petition to remove and surcharge the trustees for alleged breaches of various fiduciary duties. In July 2018, the civil action and probate proceeding were consolidated at the stipulation of the parties.

C. JCP TRUST AND PARTNERSHIP AGREEMENT

In this matter, the parties disputed the relevance, interpretation, and application of the JCP Trust, the partnership agreement forming O'Dovero Properties, and related amendments.

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1. JCP TRUST

The JCP Trust was drafted by attorney Thomas Vicary and established in September 1991 by appellant PEO and Lois. The original JCP Trust agreement provides, in pertinent part:

JCP Trust Dated: September 19, 1991

TRUST AGREEMENT made by [PEO] and LOIS . . . as "Grantors" and CONNIE . . ., JAMES . . ., and GERALD . . . as "Trustees." .... The terms Grantors' "child," "children" and "issue" shall mean [the grantors' then-living] children, any other children born to the Grantors, and their issue, but shall not include adopted children, or their issue.

The principal purpose of the trust is to receive gifts from the Grantors for the benefit of the Grantors' family as herein provided.

The Grantors realize that the right may be reserved to revoke or amend this trust, but that right is expressly waived and this trust is not subject to alteration, amendment or revocation by the Grantors. Provided that all of the Grantors' then living children by written instrument delivered to the Trustees may amend this agreement in whole or in part, so long as no amendment creates any beneficial rights in the Grantors, and the Grantors, or the surviving Grantor, consent in writing to such amendment.

1. TRUST PROPERTY

The Grantors hereby transfer to the Trustees the sum of $10.00, receipt of which is hereby acknowledged, as the original trust estate. Additional property may be added to the trust estate at any time by any person .... All such original and additional property is referred to herein collectively as the "trust estate."

No individual Trustee shall participate in the exercise of any tax election which affects his or her interests or the interests of any person to whom he or she is legally obligated .... In all other respects, all actions of the Trustees shall be by majority agreement....

* * *

2. FAMILY TRUST

The Trustees shall hold, manage and distribute the net income and principal of the Family Trust as follows: ....

* * *

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4. SPECIAL LIMITATIONS AND POWERS

(a) Limitation on Powers - Notwithstanding anything herein contained to the contrary, except clause (b), the following limitations on powers shall apply only during the lifetimes of the Grantors or either of them:

(1) No powers enumerated herein or accorded to Trustees generally pursuant to law shall be construed to enable the Granters, the Trustees, or any other person to purchase; exchange, or otherwise deal with or dispose of all or any part of the principal or income of the trust for less than an adequate consideration in money or money's worth, or to enable the Grantors to borrow all or any part of the corpus or income of the trust, directly or indirectly, without adequate interest or security.

(2) No person, other than the Trustees acting in a fiduciary capacity, shall . . . reacquire or exchange any property of the trust by substituting other property. [Emphasis added.]

In March 1996, PEO's and Lois's living children executed a first amendment of the JCP Trust, with the signed consent of the grantors, PEO and Lois. The first amendment did not alter any of the provisions that are pertinent here. In March 2000, PEO and Lois's living children executed a second amendment of the JCP Trust, again with the signed consent of the grantors, PEO and Lois. As pertinent here, the second amendment provided:

1. The third paragraph of the preamble or recitals at the top of the first page of the trust instrument is amended by striking from the end of the last sentence of that paragraph the words: "and the Grantors, or the surviving Grantor, consent in writing to such amendment."

2. Except as hereby amended, the

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