Estes v. Titus

• Citation: 273 Mich. App. 356,731 N.W.2d 119
• Decision Date: 21 December 2006
• Docket Number: Docket No. 261968.
• Parties: Jan Kay ESTES, Personal Representative of the Estate of Douglas Duane Estes, Plaintiff-Appellant, v. Jeff Edward TITUS, Defendant-Appellee, and Julie L. Swabash, f/k/a Julie L. Titus, Appellee.
• Court: Court of Appeal of Michigan (US)

731 N.W.2d 119

273 Mich. App. 356

Jan Kay ESTES, Personal Representative of the Estate of Douglas Duane Estes, Plaintiff-Appellant, v. Jeff Edward TITUS, Defendant-Appellee, and Julie L. Swabash, f/k/a Julie L. Titus, Appellee.

Docket No. 261968.

Court of Appeals of Michigan.

Submitted November 8, 2006, at Grand Rapids.

Decided December 21, 2006, at 9:10 a.m.

Released for Publication March 14, 2007.

Butler, Durham & Toweson—P.L.L.C. (by H. van den Berg Hatch), Parchment, for Jan K. Estes.

Kreis, Enderle, Callander & Hudgins, P.C. (by Russell A. Kreis and Jeffrey M. Wesselhoff), Kalamazoo, for Julie L. Swabash.

Before: O'CONNELL, P.J., and WHITE and MARKEY, JJ.

MARKEY, J.

In this wrongful death action, plaintiff appeals by leave granted the trial court's order denying her motion to add defendant's former spouse as a party for purposes of conducting an evidentiary hearing to inquire into the fairness of the property division approved in a divorce judgment entered while this action was pending. Plaintiff argues that, to the extent the marital property settlement exceeded a fair and equitable division, it was a fraudulent transfer within the meaning of the Uniform Fraudulent Transfer Act (UFTA), MCL 566.31 et seq. We agree and reverse.

Two days into the 1990 firearm deerhunting season, Douglas Estes and another hunter were found shot to death in the Fulton State Game Area in Kalamazoo County. More than a decade later, a police cold-case homicide investigation resulted in the arrest and conviction of defendant Jeff Titus for two counts of first-degree murder. He was sentenced on August 20, 2002, to mandatory life in prison. This Court affirmed defendant's convictions.¹

Plaintiff Jan Estes, who was Douglas Estes's wife and is the personal representative of his estate, filed this wrongful death action, MCL 600.2922, on September 23, 2002.

Julie Titus, defendant's spouse, filed for divorce on November 12, 2002. Kalamazoo Circuit Judge Patricia N. Conlon entered a divorce judgment dissolving the Tituses' marriage on March 10, 2003.² Defendant and Julie agreed on the terms of the divorce judgment, which awarded Julie custody of the couple's 17-year-old daughter. Regarding defendant's child-support obligation, the judgment provided:

IT IS FURTHER ORDERED AND ADJUDGED that due to the fact the Defendant is currently incarcerated in a state prison, has not contributed support for the minor child preceding or during, nor is it anticipated he will contribute hereafter, the award of property herein made is intentionally not congruent or equal and the award of additional property to the Plaintiff is in lieu of his child support obligation, considering the term of the contemplated incarceration and the age of the child and, accordingly, no award is made.

Indeed, Julie was awarded substantially all the marital assets.

On March 24, 2003, plaintiff filed a motion under MCR 2.209(A)(3) to intervene in the divorce proceedings for the purpose of arguing that the property-settlement provisions constituted a fraud upon defendant's creditors, such as herself, and were inequitable. Judge Conlon denied the motion on May 19, 2003, without an evidentiary hearing on the merits of plaintiff's claims of fraud and inequity. Plaintiff did not appeal this ruling.

On the same day that Judge Conlon denied plaintiff's motion to intervene in the Titus divorce proceedings, plaintiff filed a motion in the trial court in this case to enjoin defendant from transferring, selling, encumbering, or disposing of any marital assets pending the outcome of the wrongful death action. Plaintiff argued that defendant, in an attempt to avoid any collection on a potential wrongful death judgment, improperly agreed to transfer almost all his marital assets to Julie in the divorce proceedings. Plaintiff noted that her motion to intervene in the divorce proceeding, was then pending before the family division of the circuit court, and she argued that injunctive relief was necessary to ensure that she could collect any judgment arising from this action. Defendant, acting in propria persona, filed an objection to plaintiff's motion on the bases that the property division in the divorce judgment was not an improper transfer of property and that the trial court lacked the authority to set aside the divorce judgment in a separate proceeding. The trial court granted plaintiff's motion for a preliminary injunction, enjoining defendant from transferring, encumbering, or disposing of any marital assets awarded to him.

On October 7, 2004, four months after a bench trial, the trial court issued its final opinion and order in this case. The trial court concluded that defendant was liable for the wrongful death of plaintiff's decedent, Douglas Estes. On October 22, 2004, the trial court entered a judgment against defendant, awarding plaintiff $550,000.

On January 20, 2005, in an attempt to collect her judgment, plaintiff asked the trial court to subpoena Julie to appear for discovery regarding the marital assets and to show cause why she should not be made a party to this case pursuant to MCL 600.6128. Plaintiff also requested that the trial court enjoin Julie from transferring any property that defendant might have an interest in and conduct a hearing to determine defendant's rights to the marital property. Plaintiff contended that defendant's transfer of marital property to Julie pursuant to the divorce judgment was fraudulent with respect to the plaintiff under MCL 566.34 and 566.35 because the property settlement was made with the actual intent to defraud plaintiff, was made without defendant's receiving reasonable equivalent value in exchange for the transfer, and was made when defendant reasonably should have believed that he would incur debts beyond his ability to pay when they came due. Plaintiff also asserted that the division of the marital property was inequitable and deprived her of the ability to collect any substantial portion of her judgment.

The trial court issued a restraining order and an order to show cause on January 21, 2005, requiring Julie to appear at a hearing to be held on February 7, 2005. Specifically, the trial court issued a subpoena requiring Julie to appear before it and testify regarding assets in her possession in which defendant had an interest. The court also scheduled the February 7, 2005, hearing for Julie to show cause why she should not be made a third party to this case. Finally, the trial court enjoined Julie from transferring, disposing of, or interfering with any property in which defendant had or might have an interest, pending further order of the court.

Through counsel, Julie filed an answer and memorandum on February 3, 2005, in response to plaintiff's motion regarding her. Julie argued that plaintiff lacked standing to file a motion in the trial court to set aside the divorce judgment, that plaintiff did not timely file her motion to set aside the judgment as required by MCR 2.612, and that the trial court had no authority to overrule the family division of the circuit court in its determination that the divorce judgment was fair and equitable. Julie requested that the trial court quash the subpoena issued against her, dismiss the restraining order, and deny plaintiff's motion to add her as a third party to this action.

The trial court heard arguments of counsel at the scheduled show-cause hearing and expressed its reasoning regarding plaintiff's motions from the bench:

In essence, the plaintiff in this case is asserting that the distribution of property in the divorce case works a fraud on her as a creditor. These claims are based on a series of statutes cited within the motion, including MCL 566.34 and 566.35, the fraudulent conveyance statute.

* * *

Now the property is divided in what appears to be, based on both the judgment and arguments here today, an unequal fashion....

Here, although the defendant in this case and in the divorce may have voluntarily signed off on the judgment, at least on its face there appears to be reasons for the unequal distribution authorized by the Court as it relates to the interests of the parties involved in the divorce case.

And while it was certainly foreseeable that he might have become liable in an ultimate civil judgment as a result of the death in the case before this Court, this also appears to be, at least on its face, a reasonable resolution of the marriage where one person is serving a life sentence and the other is seeking a divorce.

The Court . . . without prejudice . . . dissolves the restraining order, quashes the subpoena, declines to add Ms. Estes [sic: Julie] as a party in this case, as the Court has not been directed to any case or court rule that—or statute—that would justify that relief on the facts I've just outlined and declines to authorize further proceedings against Ms. Estes [sic: Julie] as it relates to the assets over which she attained control through the divorce proceedings.

I'm doing this without prejudice as I'm acting on the information available to me at this time. While I can understand the so-called equitable level why the plaintiff would be pursuing this relief, I'm not persuaded at the legal level that this Court has any authority to, in effect, undo a judgment entered by this court in another case through another judge; and that's really what I'm being asked to do.

The trial court effectuated its ruling through an order entered on February 16, 2005, which is the subject of the instant appeal. The order denied plaintiff's request to add Julie as a party defendant, dissolved the court's January 21, 2005, restraining order, and quashed the judgment-creditor discovery subpoena. Plaintiff moved for reconsideration, appending to her motion the affidavit of an attorney who opined that the Titus divorce judgment was unfair and inequitable and did not comply with the standards of Michigan law. The court denied the motion on March 11, 2005,...