IN RE LAFAVE ESTATE
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STATE OF MICHIGAN
COURT OF APPEALS
IN RE LAFAVE ESTATE.
KATHERINE LAFAVE, Personal Representative
of the Estate of Neal B. LAFAVE, Deceased,
UNPUBLISHED
February 13, 2007
Appellee,
v
No. 264839
Wayne Probate Court
LC No. 2004-679037-DE
Wayne Circuit Court
LC No. 05-514780-AV
DEARBORN FEDERAL CREDIT UNION
FINANCIAL,
Appellant.
Before: Kelly, P.J., and Davis and Servitto, JJ.
PER CURIAM.
Dearborn Federal Credit Union Financial (“DFCU”) appeals by leave granted the probate
court order denying its petition for the appointment of a special personal representative; DFCU
also appeals the circuit court order denying leave to appeal the probate court’s protective order
granted in favor of Katherine LaFave. We affirm.
The decedent, Neal B. LaFave, died unexpectedly of a heart attack on June 14, 2004, at
age 56. He was divorced, had three adult children, and was intestate. Petitioner Katherine
LaFave (“petitioner”), the decedent’s daughter, was appointed personal representative on July 7,
2004. On July 30, 2004, DFCU filed a claim as a creditor for $18,077.19, plus interest. Several
other creditors also filed claims; the claims against the estate eventually totaled $50,307.40. On
October 25, 2004, petitioner filed an inventory valuing the estate’s net assets at $22,090.45. She
also filed claims for $10,502.25 for funeral and burial expenses, $5,215.80 in attorney expenses
for the estate, and $607.20 in fiduciary fees. On September 30, 2004, DFCU petitioned for
payment of its claim. Petitioner was deposed on November 4, 2004, where she refused to answer
any questions regarding assets other than those identified in the estate inventory, questions about
decedent’s asset transfers or trusts, or questions about joint assets. DFCU moved to compel
discovery, and petitioner moved for a protective order limiting the scope of discovery. The
probate court concluded that no objections to the estate inventory had been filed, and there was
no action pending that would permit DFCU’s proposed discovery.
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Petitioner filed a petition for adjudication of testacy and complete estate settlement; the
schedule of distributions included payment of $2,093.82 to DFCU. DFCU objected, again
asserting that petitioner had refused to answer questions at the deposition and scheduled a second
deposition. Petitioner moved for a protective order, and the probate court concluded that
DFCU’s discovery requests sounded like a fishing expedition designed to use estate money to
determine whether there was a potential fraudulent conveyance claim in circuit court, which was
prohibited by MCR 5.131. DFCU asserted that petitioner had admitted at the second deposition
that she and her siblings had received some transfers, life insurance, and 401(k) plan benefits
from the decedent; that decedent’s annual income was more than $100,000; and that petitioner
had feigned lack of knowledge of any assets or transfers. DFCU argued that payment of one
daughter’s credit card bills and tuition and contributions to his life insurance and 401(k) plans
during the decedent’s lifetime constituted fraudulent transfers. DFCU moved to appoint a
special personal representative. Petitioner asserted that any transfers were nominal or Christmas
and birthday presents; that although one of her siblings was on one of decedent’s accounts, he
was not paying her bills; and the tuition payments had been reimbursed by the decedent’s
employer. She asserted that the decedent had been current on all payments for all of his debts at
the time of his death.
The probate court denied DFCU’s petition for appointment of a special personal
representative and granted petitioner’s motion for a protective order. The probate court
concluded that the decedent appeared to have been solvent when he died, but that his estate
became insolvent by operation of the exempt property allowance, the funeral bill, and the costs
of administration. Furthermore, the probate court found that DFCU had not identified any
improper transfers and had not shown the decedent to have been insolvent when he issued any
checks. DFCU appealed to the circuit court, which concluded that DFCU was improperly trying
to pursue a fraudulent conveyance action, so the circuit court denied the application to appeal.
This Court granted leave to appeal.
DFCU argues that the probate court abused its discretion granting petitioner’s motion for
a protective order. We disagree.
We review for an abuse of discretion a decision regarding a motion for a protective order
to limit discovery. PT Today, Inc v Comm’r of Office of Financial and Ins Services, 270 Mich
App 110, 151; 715 NW2d 398 (2006). An abuse of discretion occurs when the trial court
chooses an outcome that falls outside the permissible principled range of outcomes. Woodard v
Custer, 476 Mich 545, 557; 719 NW2d 842 (2006). This Court reviews a probate court’s
findings of fact for clear error. In re Estate of Reisman, 266 Mich App 522, 526 n 4; 702 NW2d
658 (2005). Interpretation of a court rule is a question of law that this Court reviews de novo.
ISB Sales Co v Dave’s Cakes, 258 Mich App 520, 526; 672 NW2d 181 (2003).
The probate court held that MCR 5.131(B) limited the scope of discovery because DFCU
admitted that the purpose of discovery was to obtain information to pursue an action under the
uniform fraudulent transfer act (UFTA), MCL 566.31 et seq., in circuit court. Under MCL
566.35(1), a transfer by a debtor is fraudulent with respect to a creditor who had a claim before
the transfer was made if the debtor made the transfer without receiving a reasonably equivalent
value in exchange, and the debtor was insolvent at the time of the transfer or became insolvent as
a result of the transfer. Under MCL 566.32(1), a debtor is insolvent if the sum of his debts is
greater than the sum of his assets. MCL 566.31(b) defines “asset” as property of a debtor,
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excluding the extent to which the property is encumbered by a valid lien. Property is “anything
that may be the subject of ownership.” MCL 566.31(j). The UFTA defines “debt” as liability on
a claim, and a “claim” is a right to payment. MCL 566.31(c), (e).
The decedent had a 401(k) account with a balance of approximately $45,000. The 401(k)
account was not part of the estate inventory, but it was the subject of ownership while the
decedent was alive. The estate inventory listed the estate’s total assets as $22,090.45, and at
least some portion of the decedent’s $100,000 annual salary likely constituted property under
MCL 556.31(j). Depending on its terms, the decedent’s life insurance policy may also have
constituted property for purposes of the UFTA. Accordingly, although the exact amount was not
determined, the sum of the decedent’s assets was at least $67,090.45. As noted, according to the
schedule of distributions and payment of claims, the decedent’s claims amounted to a total of
$51,907.40. Therefore, although the exact balance of the decedent’s debts and assets at the time
of the alleged transfers is unknown, the sum of his assets at the time of the transfers was greater
than the sum of his debts. Although his estate was insolvent, decedent himself was not insolvent
while he was alive. While we are mindful of the fact that the exact numbers and dates are not
known, mere conjecture does not entitle DFCU to discovery. Davis v Detroit, 269 Mich App
376, 380; 711 NW2d 462 (2006). In general, Michigan’s public policy strongly supports broad
and deep discovery, but this does not extend to permitting parties to engage in fishing
expeditions. Id.; In re Estate of Hammond, 215 Mich App 379, 386-387; 547 NW2d 36 (1996).
DFCU points out that it specifically alleged fraudulent transfers in its objection to
petitioner’s motion for a protective order. However, DFCU only identified approximately
$6,500 worth of payments that might have been fraudulent. Even if we were to presume that
these payments were, in fact, not made in exchange for reasonably equivalent value, they still
would not have made the decedent insolvent at the time they were made. MCL 566.35(1). We
emphasize the point that the probate court made: the evidence shows that decedent’s estate
became insolvent only by operation of debts incurred after the decedent’s death. Decedent was
not insolvent during his lifetime. Therefore, DFCU had no grounds for pursuing discovery
beyond what appears to be an impermissible fishing expedition, and the probate court did not
abuse its discretion in granting petitioner a protective order.
DFCU also contends that the probate court abused its discretion in denying DFCU’s
petition for the appointment of a special personal representative because a special personal
representative is necessary for the unsecured creditors to recover assets that were fraudulently
conveyed. We disagree. The appointment of a personal representative is within the trial court’s
discretion. In re Kramek Estate, 268 Mich App 565, 575; 710 NW2d 753 (2005). And again,
DFCU’s argument assumes that the decedent was insolvent when he made certain transfers. The
personal representative has the exclusive right to recover property that has been “transferred by
the decedent by any means that is in law void or voidable as against the decedent’s creditors, and
subject to prior liens . . . so far as necessary for the payment of the decedent’s unsecured
debts[.]” MCL 700.3710. DFCU claims that a special personal representative was necessary
because petitioner refused to pursue recovery of any fraudulently transferred property. However,
because the decedent was not insolvent when he made the alleged transfers, the UFTA is not
implicated and a special personal representative was not needed to preserve the estate or to
secure its proper administration. The probate court did not abuse its discretion in denying
DFCU’s petition. MCL 700.3614(b).
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We need not address DFCU’s argument that remanding to a different judge is necessary.
Affirmed.
/s/ Kirsten Frank Kelly
/s/ Alton T. Davis
/s/ Deborah A. Servitto
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