Papazian v. Goldberg (In re Mardigian Estate)

• Decision Date: 21 June 2018
• Docket Number: Calendar No. 1,Docket No. 152655
• Citation: 502 Mich. 154,917 N.W.2d 325
• Parties: IN RE MARDIGIAN ESTATE. Mark S. Papazian, Executor for the Estate of Robert Douglas Mardigian, Appellee, v. Melissa Goldberg, Susan V. Lucken, Nancy Varbedian, Edward Mardigian, Grant Mardigian, and Matthew Mardigian, Appellants, and JP Morgan Chase Bank, NA, Appellee.
• Court: Michigan Supreme Court

502 Mich. 154

917 N.W.2d 325

IN RE MARDIGIAN ESTATE.

Mark S. Papazian, Executor for the Estate of Robert Douglas Mardigian, Appellee,

v.Melissa Goldberg, Susan V. Lucken, Nancy Varbedian, Edward Mardigian, Grant Mardigian, and Matthew Mardigian, Appellants,andJP Morgan Chase Bank, NA, Appellee.

Docket No. 152655

Calendar No. 1

Supreme Court of Michigan.

Argued December 6, 2017

Decided June 21, 2018

Young & Associates, PC (by Rodger D. Young and J. David Garcia ) for Mark S. Papazian.

Miller, Canfield, Paddock and Stone, PLC (by Clifford W. Taylor, Gerald J. Gleeson, II, Paul D. Hudson, and Dawn M. Schluter ) for Edward Mardigian, Grant Mardigian, and Matthew Mardigian.

Ahern & Kill, PC (by Joseph A. Ahern and Amanda A. Kill ) for Melissa Goldberg.

Bendure & Thomas (by Marc E. Thomas ) for Nancy Varbedian and Susan V. Lucken.

Robert E. Edick for amici curiae, the Attorney Grievance Commission.

Barron, Rosenberg, Mayoras & Mayoras, PC (by Andrew W. Mayoras ) and the Law Office of Kurt A. Olson, PC (by Kurt A. Olson ) for amici curiae, the Probate and Estate Planning Section of the State Bar of Michigan.

BEFORE THE ENTIRE BENCH (except Wilder, J.)

Markman, C.J. (for affirmance).

At issue is whether the rebuttable presumption of undue influence is applicable when the decedent's attorney breaches Michigan Rule of Professional Conduct (MRPC) 1.8(c), which generally prohibits an attorney from preparing an instrument giving the attorney or his or her close family a substantial gift. Appellants argue that a breach of MRPC 1.8(c) automatically renders an instrument void, while the appellee attorney argues that, rather than an invalidation of the instrument, a rebuttable presumption of undue influence arises in these circumstances. After considering the applicable provisions of the Estates and Protected Individuals Code (EPIC), MCL 700.1101 et seq ., and the underlying principles of probate law, it becomes clear to us that a rebuttable presumption applies to these circumstances. And, as we will explain, creating a new per se rule as appellants advocate would not only be contrary to the fundamental principles of probate law and longstanding precedents of this state but would also run afoul of EPIC. Moreover, the adoption of MRPC 1.8(c) has no effect on this conclusion because a breach of this rule, like breaches of other professional conduct rules, only triggers the invocation of the attorney disciplinary process; it does not breach the statutory law of EPIC. For these reasons, we conclude the Court of Appeals correctly held that, in the instant circumstances, existing statutes and caselaw give rise only to a rebuttable presumption of undue influence.

I. FACTS AND HISTORY

On August 13, 2010, the decedent, Robert Mardigian, executed an amended trust that was prepared by appellee Mark Papazian, and on June 8, 2011, the decedent executed a will prepared by Papazian. The amended trust and will operated to leave the bulk of the decedent's estate to Papazian, who was a close friend of the decedent, and to Papazian's children. On January 12, 2012, the decedent died.

Following the decedent's death, Papazian filed an action in the probate court and sought to introduce the amended trust and will. Appellants, who consist of the decedent's brother, two nephews, two nieces, and girlfriend, challenged the introduction of these documents, moving for summary disposition and requesting that the probate court void all gifts to Papazian and his children as a matter of law. Specifically, they argued that the gifts were contrary to public policy under MRPC 1.8(c).¹ The probate court eventually granted summary disposition in favor of the appellants and declined to admit the amended trust and will, explaining that it was "disinclined to enforce" documents that were prepared contrary to the MRPC.

Papazian appealed, arguing that Michigan did not recognize a per se bar on testamentary gifts to unrelated attorneys and that a breach of MRPC 1.8(c) supplied a basis only for invoking the attorney disciplinary process, not for automatically voiding a trust or will. In a split decision, the Court of Appeals reversed the probate court's order granting summary disposition in favor of appellants. Relying on this Court's decision in In re Powers' Estate , 375 Mich. 150, 134 N.W.2d 148 (1965), the majority held that it was "required to remand for further proceedings, in which [Papazian] will be required to overcome the presumption of undue influence arising from the attorney-client relationship in order for the devises left to him and his family to be enforced." In re Mardigian Estate , 312 Mich. App. 553, 559, 879 N.W.2d 313 (2015). Pointing to the fact that Powers had been decided before this Court adopted MRPC 1.8(c), Judge SERVITTO dissented and would have affirmed the probate court's ruling that the gifts to Papazian and his family were void as against public policy. Id . at 570, 879 N.W.2d 313 ( SERVITTO , J., dissenting).

Thereafter, appellants sought leave to appeal in this Court. We ordered oral argument on whether to grant the application or take other action and directed the parties to address whether this Court should overrule Powers . In re Mardigian Estate , 499 Mich. 973, 880 N.W.2d 785 (2016). Subsequently, we granted the application for leave to appeal and directed the parties to address whether the rebuttable presumption set forth in Powers sufficiently protected a decedent and what role this Court's later adoption of MRPC 1.8(c) should play in the consideration of the issue. In re Mardigian Estate , 500 Mich. 1030, 897 N.W.2d 177 (2017).

II. STANDARD OF REVIEW

A trial court's decision regarding a motion for summary disposition is reviewed de novo. Haksluoto v. Mt. Clemens Regional Med. Ctr. , 500 Mich. 304, 309, 901 N.W.2d 577 (2017). In addition, the resolution of this case requires the interpretation of statutes, which we also review de novo. Id .

III. ANALYSIS

For the reasons that follow, both the historical framework under which we have analyzed gifts to attorneys and the current statutory framework, which codified the historical framework, require us to uphold Powers and its rebuttable presumption of undue influence, notwithstanding the later adoption of MRPC 1.8(c).

A. HISTORICAL FRAMEWORK

One of the underlying purposes and policies of EPIC is "[t]o discover and make effective a decedent's intent in distribution of the decedent's property," MCL 700.1201(b) (emphasis added), but this purpose long predates EPIC and is entrenched deeply within the history of this state's probate law. Discovering and giving effect to this intent has been viewed as the foundational standard of probate law for centuries. See, e.g., In re Blodgett's Estate , 197 Mich. 455, 461, 163 N.W. 907 (1917) (citing seventeenth-century jurist Lord Coke for the proposition that a testator's intent constitutes " 'the polar star to guide judges in their determination' "). See also id . at 461, 163 N.W. 907, quoting 4 Kent, Commentaries on American Law (14th ed.), p. 534 (" 'The intention of the testator is the first and great object of inquiry; and to this object technical rules are, to a certain extent, made subservient.' "); Palms v. Palms , 68 Mich. 355, 378, 36 N.W. 419 (1888) (opinion by CHAMPLIN , J.) ("In construing wills, it is well settled that the intent of the testator must be ascertained and carried into effect so far as it legally can be done."); In re Churchill's Estate , 230 Mich. 148, 155, 203 N.W. 118 (1925) ("In the construction of wills the cardinal canon, the guiding polar star, is that the intent of the testator must govern ....").

At the same time, however, " '[u]ndue influence' exercised upon one who executes a will may become the basis for finding the will invalid if that influence took from the testator his right to freely exercise his discretion in disposing of his property." In re Sprenger's Estate , 337 Mich. 514, 521–522, 60 N.W.2d 436 (1953) (emphasis added).² This is because undue influence is "something which destroys the free agency of the testator at the time when the instrument is made, and which, in effect, substitutes the will of another for that of the testator." In re Williams' Estate , 185 Mich. 97, 120, 151 N.W. 731 (1915) (quotation marks and citation omitted). The burden of establishing undue influence has historically reposed with the party asserting it. In re Sprenger's Estate , 337 Mich. at 522, 60 N.W.2d 436 (stating that undue influence "must be proved by the person seeking to have the will declared invalid"). And as this Court has explained:

To establish undue influence it must be shown that the grantor was subjected to threats, misrepresentation, undue flattery, fraud, or physical or moral coercion sufficient to overpower volition, destroy free agency and impel the grantor to act against his inclination and free will. Motive, opportunity, or even ability to control, in the absence of affirmative evidence that it was exercised, are not sufficient. [ In re Karmey Estate , 468 Mich. 68, 75, 658 N.W.2d 796 (2003) (quotation marks and citation omitted).]

Additionally, there are occasions in which a rebuttable presumption of undue influence can arise:

The presumption of undue influence is brought to life upon the introduction of evidence which would establish (1) the existence of a confidential or fiduciary relationship between the grantor and a fiduciary, (2) the fiduciary or an interest which he represents benefits from a transaction, and (3) the fiduciary had an opportunity to influence the grantor's decision in that transaction. [ Id . at 73, 658 N.W.2d 796 (quotation marks and citation omitted).]

This rebuttable presumption has been said to apply to cases in which "a patient makes a will in favor of his physician, a client in favor of his lawyer, or a sick person in favor of a priest or spiritual adviser, whether for his own personal advantage, or for the advantage of some interest of which he is a representative." In re Hartlerode's Estate , ...