IN RE EST OF JUNE LOUISA CUMMIN
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STATE OF MICHIGAN
COURT OF APPEALS
In re Estate of JUNE LOUISA CUMMIN, Deceased.
EDWARD MURPHY, Personal Representative of
the Estate of JUNE LOUISA CUMMIN,
Deceased,
FOR PUBLICATION
August 23, 2005
9:00 a.m.
Petitioner-Appellee,
v
No. 253594
Clare County Probate Court
LC No. 00-013321-SE
BETH A. HEGYI,
Respondent-Appellant.
Official Reported Version
Before: Hoekstra, P.J., and Jansen and Kelly, JJ.
PER CURIAM.
Respondent appeals as of right the probate court's order "that the proceeds of the sale of
decedent's real property by respondent are subject to a constructive trust for the benefit of
decedent's estate." The probate court concluded that respondent, decedent's daughter,1 breached
her common-law fiduciary duty to decedent when, as attorney-in-fact, she conveyed decedent's
real property to herself at a time when decedent, who suffered from dementia, could not freely
consent to the details of the transaction. The probate court also determined that the Estates and
Protected Individuals Code (EPIC), MCL 700.1101 et seq., precluded respondent's self-dealing
when she was acting as decedent's fiduciary. We affirm in part and vacate in part.
I. Breach of Common-Law Fiduciary Duty
In a prior appeal, respondent appealed the probate court's ruling that respondent's breach
of her common-law fiduciary duty in conveying decedent's property to herself created a
constructive trust for the benefit of decedent's estate. In re Cummin Estate, 258 Mich App 402;
1
Petitioner is decedent's son and the personal representative of her estate.
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671 NW2d 165 (2003). In that appeal, respondent asserted that (1) the probate court erred in
holding that she had breached her common-law fiduciary duty by conveying decedent's property
to herself, (2) the probate court erred in permitting petitioner to raise the issue of undue influence
for the first time in opening argument, and (3) the probate court erred in failing to grant a motion
for directed verdict.
In addressing the first issue on appeal, whether the probate court erred in concluding that
respondent breached her common-law fiduciary duty by transferring the property to herself
despite decedent's instructions that she do so, the lead opinion reviewed the probate court's
decision by applying the common-law principle that an agent may personally engage in a
transaction with the principal with "'"consent of the principal after a full disclosure of the details
of the transaction."'" Cummin, supra at 407-408, quoting In re Susser Estate, 254 Mich App
232, 234; 657 NW2d 147 (2002), quoting VanderWall v Midkiff, 166 Mich App 668, 678; 421
NW2d 263 (1988). Accordingly, the lead opinion stated that "the probate court erred as a matter
of law in failing to acknowledge that an agent may engage in self-dealing if the principal
consents and has knowledge of the details of the transaction." Cummin, supra at 409. In
keeping with this principle, the lead opinion determined that it was necessary to remand the case
because the Court could not discern
whether the probate court concluded that decedent freely consented to the
transaction. Although the probate court found credible respondent's and her
husband's testimony that decedent wanted respondent to have the property, the
probate court also found that that [sic] respondent acted in a manner "incongruous
with an individual who was simply attempting to comply with her mother's
wishes." Additionally, the probate court's opinion referenced "changes in
circumstances" that prohibited enforcing the transaction. We, however, find no
evidence on the record that decedent revoked the power of attorney or changed
her mind regarding the disposition of the property after instructing respondent to
transfer it. [Id. at 410.]
The lead opinion additionally stated that
the probate court erred as a matter of law by concluding that the passage of time
and the change in decedent's mental status affected respondent's authority to
transfer the property. The power of attorney that decedent executed was a durable
power of attorney and, therefore, was still valid after decedent became
incompetent. Accordingly, if decedent consented to the transaction with
knowledge of its details, the timing of the transaction does not prevent its
enforcement. [Id. at 409-410 (citations omitted).]
The lead opinion expressly concluded that given that the subject power of attorney was a
durable power of attorney, "if decedent consented to the transaction with knowledge of its
details, the timing of the transaction does not prevent its enforcement." Id. at 410.
On remand, the probate court issued a written opinion stating:
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Respondent and her husband testified at trial decedent had frequently
requested respondent to transfer decedent's real estate to herself. This Court finds
respondent and her spouse's testimony as to these requests, made prior to
decedent's admission into the nursing home, to be credible. However, respondent
went on to testify her mother made similar requests after her admission to the care
facility due to stroke-induced dementia. This testimony, in light of other
testimony at trial which described decedent's deteriorating mental condition, is not
credible. . . . .
On December 10, 1996, respondent assigned to herself decedent's real
property by quit claim deed, reserving in decedent a life estate. The deed was
executed nearly two years after decedent began living in Tendercare, the care
facility in Clare, Michigan. The transfer was made many months after decedent
was no longer lucid. It is incongruent to suggest decedent was mentally capable
to knowingly participate in the details concerning estate planning when she was
obviously incompetent. She could not recognize close family members, couldn't
feed herself, and could not carry on conversations.
The court of appeals has opined that an agent may engage in self-dealing
if the principal consents and has knowledge of the details of the transaction. The
principal herein, decedent, could not have consented to this transfer. Nor did she,
at the time, possess the necessary cognitive ability to possess knowledge of the
transfer's details. . . .
This Court is fully cognizant that a durable power of attorney is valid after
a principal becomes incompetent. But, when an attorney-in-fact employs a POA
months, if not years after her principal has lost nearly all, if not all, of her mental
abilities due to the onset of severe dementia, to enrich herself the transaction
cannot stand. This decedent, at the time the deed was executed by respondent on
December 10, 1996, could not freely consent to anything let alone the conveyance
of her real property. Simply stated she was totally incompetent and thus
incapable of consenting to this transfer with full knowledge of its details.
[Emphasis added.]
In this appeal, respondent argues that the probate court erred in its conclusion that
respondent breached her fiduciary duty. "This Court reviews for clear error a trial court's factual
findings and reviews de novo questions of law, including issues of statutory construction."
Cummin, supra at 406; see also Thomas v New Baltimore, 254 Mich App 196, 201; 657 NW2d
530 (2002). The law of the case doctrine provides that "'if an appellate court has passed on a
legal question and remanded the case for further proceedings, the legal question thus determined
by the appellate court will not be differently determined on a subsequent appeal in the same case
where the facts remain materially the same.'" Kalamazoo v Dep't of Corrections (After Remand),
229 Mich App 132, 135; 580 NW2d 475 (1998), quoting CAF Investment Co v Saginaw Twp,
410 Mich 428, 454; 302 NW2d 164 (1981). "Likewise, a trial court may not take any action on
remand that is inconsistent with the judgment of the appellate court." Kalamazoo, supra at 135.
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The additional findings of fact made by the probate court on remand support the
conclusion that respondent breached her fiduciary duty to decedent by transferring decedent's
property to herself when decedent, although she lucidly consented to the transfer generally, never
consented to the details of the transfer and was incompetent at the time of the transfer to consent
to the details. In the prior decision, the lead opinion stated that "if decedent consented to the
transaction with knowledge of its details, the timing of the transaction does not prevent its
enforcement." Cummin, supra at 410. The lead opinion drew attention to the probate court's
reference to the decedent's changed mental status and ruled that this change did not affect the
durable power of attorney, nor could a change in mental status affect "respondent's authority to
transfer the property" if she had authority to make the transfer previous to the change. Id. at 409410. Nonetheless, the lead opinion stated that it could not determine "whether the probate court
concluded that decedent freely consented to the transaction." Id. at 410. Thus, the Court ordered
the probate court to clarify whether the decedent consented to the transfer with full knowledge of
the details while she was competent because, if she did, respondent had authority to make the
transfer even though decedent subsequently became incompetent. On remand, the probate court
clarified that, while decedent consented to the transfer generally while she was competent, by the
time the transaction took place, decedent was no longer competent and, therefore, could not
comprehend the details of the transaction and could not freely consent to them. In other words,
decedent was never apprised of the details of the transaction even though she did, before
becoming incompetent, consent to a transfer generally. Therefore, we conclude that respondent
breached her common-law fiduciary duty to decedent by transferring decedent's property to
herself when decedent was never apprised of the details of the transaction and, accordingly,
never freely consented to them. Therefore, the probate court did not err in creating a
constructive trust for the proceeds of the property for the benefit of the estate under the theory of
common-law fiduciary duties.
II. Self-Dealing Under the EPIC
As a "wholly separate and independent basis" for setting aside the transfer, the probate
court determined that MCL 700.1214 of the EPIC "necessitates setting aside respondent's selfdealing." Respondent argues that this was in error. Because we affirm the probate court's order
creating a constructive trust on the basis of the common-law fiduciary duty, it is not necessary
for us to reach this issue. Nonetheless, we vacate this portion of the probate court's ruling
because it is in clear contravention of this Court's prior law of the case.
Although not raised by either party in the first appeal, and despite reversing and
remanding on the common-law fiduciary duty issue, the lead opinion stated that "MCL 700.1214
of EPIC prohibits self-dealing by fiduciaries, except in limited circumstances that are not present
in this case." Cummin, supra at 408. However, MCL 700.8101(2)(d) provides that EPIC "does
not impair an accrued right or an action taken before [April 1, 2000,] in a proceeding." The lead
opinion stated that "because respondent's accrued right as owner of the property would be
impaired by invalidating the transaction or imposing a constructive trust, subsection 8101(2)(d)
precludes applying ยง 1214 to invalidate respondent's transfer of property. See In re Smith
Estate, 252 Mich App 120, 127-128; 651 NW2d 153 (2002)." Cummin, supra at 408 (emphasis
added). Nonetheless, this Court remanded the case for further findings of fact and a ruling on the
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common-law fiduciary duty grounds. Thus, while the lead opinion determined that EPIC could
not be applied to validate the transfer, it determined that the common-law breach of fiduciary
duty could, if the facts supported it.
On remand, the probate court stated that it "could find no legal justification for limiting
the provisions of EPIC which precludes [sic] self-dealing by fiduciaries. Here, no vested or
accrued rights exist." Thus, the probate court's ruling in regard to this issue clearly contravenes
this Court's prior law of the case. Therefore, we vacate this portion of the ruling.2
Affirmed in part and vacated in part.
/s/ Kathleen Jansen
/s/ Kirsten Frank Kelly
Hoekstra, P.J. I concur in the result only.
/s/ Joel P. Hoekstra
2
Although it does not affect our decision in this appeal, we disagree with the lead opinion's
conclusion that respondent had accrued or vested rights in the property at issue before the EPIC
took effect. We agree with Judge Schuette's partial dissent that "the prohibition against selfdealing (MCL 700.1214) is not superseded by the application of MCL 700.8101(2)(d) because
no accrued or vested right exists under the facts and circumstances of this case." Cummin, supra
at 411. In the first place, respondent never had any interest in the rental money that she collected
before the property was transferred to her. Further, under the facts and circumstances of this
case, Smith does not support the conclusion that respondent had accrued or vested rights in the
property that she transferred to herself while acting as decedent's fiduciary. Regardless, the lead
opinion, though published, is not binding authority because the majority of judges reached a
decision, but did not agree on the underlying reason and no point of law was established by the
decision. People v Bender, 208 Mich App 221, 228-229; 527 NW2d 66 (1994). The concurring
judges concurred in result only, with one judge specifically rejecting the lead opinion's rationale.
Therefore, that rationale is without precedential value.
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