THOMAS M SHOAFF V ESTATE OF DUANE BALDWIN
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STATE OF MICHIGAN
COURT OF APPEALS
THOMAS M. SHOAFF,
UNPUBLISHED
July 1, 2008
Plaintiff-Appellee,
v
ESTATE OF DUANE BALDWIN, DUANE V.
BALDWIN TRUST and THOMAS E. WOODS,
as Personal Representative of the Estate of Duane
Baldwin and as Trustee of the Duane V. Baldwin
Trust,
No. 270693
Ingham Circuit Court
LC No. 99-090282-CZ
Defendants-Appellants,
and
GARY D. BALDWIN, as Former Personal
Representative of the Estate of Duane Baldwin,
MARY JO BALDWIN, as Former Trustee of the
Duane V. Baldwin Trust, JACOBS
MANAGEMENT, LLC, FFM CO, INC., DGM
CORPORATION, AGRICON, LLC,
STOCKBRIDGE LIMITED PARTNERSHIP #1,
STOCKBRIDGE LIMITED PARTNERSHIP #2,
STOCKBRIDGE LIMITED PARTNERSHIP #3,
STOCKBRIDGE PARTNERSHIP #4 and
STOCKBRIDGE LIMITED PARTNERSHIP #5,
Defendants/CrossPlaintiffs/Counterplaintiffs.
Before: Donofrio, P.J., and Sawyer and Murphy, JJ.
PER CURIAM.
Defendants appeal from orders of the circuit court awarding plaintiff title and possession
of certain property pursuant to the execution of judgment, along with an award of costs and
attorney fees associated with the execution of that judgment. We reverse.
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This appeal concerns post-judgment proceedings. Plaintiff had obtained a judgment,
awarding him in excess of $1.3 million, including prejudgment interest, arising out of a business
transaction with decedent in the 1990s. The transaction involved a sod farm in Florida.
Plaintiff’s participation was to provide guarantees for bank loans, eventually totaling $700,000,
to the business venture. Decedent had agreed to indemnify and hold plaintiff harmless in the
event of the failure of the venture to meet its obligations, resulting in plaintiff having to repay the
loans under the guarantee. Decedent had represented sufficient assets to cover the obligations.
Unknown to plaintiff at the time, decedent had five years previously transferred the bulk of his
assets to the various defendant companies (referred to below and in this opinion as the “entity
defendants”), isolating those assets from his creditors.
The sod farm failed in 1998 without making any payments on the loans, and within a few
months, decedent died suddenly from a heart attack. Decedent’s estate was worth less than
$15,000. Pursuant to the guarantee, plaintiff paid the loans. Thereafter, plaintiff petitioned for
the estate to be reopened and he pursued an action based upon the indemnity agreement, as well
as other claims. Plaintiff was to obtain a consent judgment against the estate and trust and,
following a trial in circuit court, was able to have the various property transfers from decedent to
the entity defendants set aside under the Uniform Fraudulent Conveyances Act, MCL 566.11 et
seq. Defendants appealed and this Court affirmed in an unpublished opinion per curiam. Shoaff
v Estate of Duane V Baldwin (Docket Nos. 248606, 248609, and 255460, issued February 3,
2005).
In April 2006, the circuit court entered an order transferring title to the property to
plaintiff to satisfy the judgment. The order provided the property was to be valued at $1.8
million, plaintiff was to pay any liens on the property that had a higher priority than plaintiff’s
judgment and, if the equity in the property after payment of the superior liens exceeded the
amount of plaintiff’s judgment, plaintiff was to file a satisfaction of judgment with the court and
pay into the probate court the difference between the remaining equity and the amount necessary
to satisfy plaintiff’s judgment to be administered as part of the Baldwin estate.
The post-judgment proceedings have resulted in three separate appeals that were
submitted to this panel, with this appeal being the primary one. We will begin our analysis by
considering what is certainly the most significant issue in this case: whether the plaintiff could
execute on his judgment against the property in circuit court or whether plaintiff had to pursue
his claim in probate court as a creditor of the estate. This issue is significant because it appears
that the obligations of the estate exceed the value of the property and that plaintiff’s claim may
be subordinate to other claims that have a greater priority for payment under the Estates and
Protected Individuals Code (EPIC). MCL 700.1101 et seq. Defendants argue on appeal that,
once the circuit court set aside the conveyances to the entity defendants, title reverted to decedent
and, therefore, became assets of the estate to be administered pursuant to EPIC. We agree and
reverse the circuit court.
Whether plaintiff could execute directly on the property to enforce his judgment under
MCL 600.6104 or whether the property became an asset of the estate and had to be administered
under EPIC presents a question of statutory construction which we review de novo. ISB Sales
Co v Dave’s Cakes, 258 Mich App 520, 526; 672 NW2d 181 (2003). MCL 700.3812 restricts
the execution under a judgment on estate property:
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An execution shall not issue upon nor shall a levy be made against estate
property under a judgment against a decedent or personal representative. This
section shall not be construed to present the enforcement of a mortgage, pledge,
or lien upon property in an appropriate proceeding.
Thus, the question becomes whether this property was estate property.
defendants that it was.
We agree with
The original judgment in this matter set aside the conveyances from the decedent to the
entity defendants:
IT IS FURTHER ORDERED AND ADJUDGED that all transfers of
property, real, personal or mixed, to the Entity Defendants are hereby set aside to
the extent necessary to satisfy Plaintiff’s claim under this Judgment and Plaintiff’s
Partial Consent Judgment against Defendants [sic] Estate of Duane V. Baldwin
and the Defendant Duane V. Baldwin Trust. Attached to this Judgment as Exhibit
“A” is a list of real property, the transfers of which, are hereby set aside for the
benefit of Plaintiff to satisfy his Judgment against defendants together with
interest, costs and attorney fees.
That judgment was affirmed by this Court, Shoaff, slip op at 18, which also noted that the
property reverted to decedent:
Pursuant to the final judgment, plaintiff may now execute against the
property held by the entity defendants, deemed alter egos of Duane Baldwin, to
the extent necessary to satisfy his claim. Any recorded liens or taxes will have to
be satisfied first according to law and, then, to the extent that any of the property,
i.e., sham entity, is liable for any debts of the debtor, such property shall be
included in his [decedent’s] assets and is not exempt from liability for his debts.
In our view, the conclusion is inescapable: if the conveyances are set aside (which they were),
then the property reverts to previous state: ownership by Duane V. Baldwin. Because he is
deceased, the property becomes an asset of his estate. The property, as well as the debt owed
plaintiff under the judgment, must be administered as part of the estate in accordance with the
provisions of EPIC, including the provision of MCL 700.3812 precluding execution against the
property.
Indeed, we note with interest that plaintiff himself recognized that this property was an
asset of the estate and that the estate had to liquidate the asset and pay plaintiff’s claim at a
proceeding in the probate court. On February 16, 2005, two weeks after the issuance of this
Court’s opinion in this matter, a hearing was held in the probate court on plaintiff’s petition to
remove defendant Woods as the personal representative for failure to marshal the assets after the
circuit court had set aside the conveyances and to pay plaintiff’s claim. The following exchanges
occurred between plaintiff’s attorneys and the probate judge:
MR. ZACK: Circuit Court issued a judgment setting aside the
conveyances. We asked Mr. Woods to then take charge of the real estate as
personal representative of the estate as called for in the Probate Court.
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***
THE COURT: Right. So as I understand it, you have a Circuit Court
judgment against the estate?
MR. ZACK: Correct.
THE COURT: And you’ve taken no steps to collect on that judgment,
true?
MR. ZACK: We are precluded from executing on the real estate.
THE COURT: How?
MR. ZACK: By the Probate Code, Your Honor. There is a ---THE COURT: You have a Circuit Court judgment against an estate.
Now, there’s no stay on appeal. So you could engage in whatever collection
proceedings in Circuit Court you’d like.
MR. ZACK: There is a section of the Probate Court --THE COURT: Code?
MR. ZACK: Probate Code, that states that you cannot execute against
estate assets.
THE COURT: Give me the cite.
MR. ZACK: Your Honor, it’s 700.3812.
THE COURT: One moment. Is the real property an asset of the estate or
the trust?
MR. ZACK: It is an asset of the estate.
***
THE COURT: So as I understand it, your objection to Mr. Woods boils
down to the fact that there is property out there that belongs to the estate that the
estate has not taken possession of, so to speak.
MR. ZACK: Correct.
THE COURT: Which would allow, apparently, the real estate to be then
poured into the trust, which would allow you to execute against it.
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MR. ZACK: Or, if it were in the estate, it would allow the personal
representative to sell the real estate so that it could be used to pay the judgment
credit.
THE COURT: Is that it?
MR. ZACK: Yes.
***
MR. ZACK: Okay. When the decedent died, if you looked at the record
title to the real estate, the real estate was in the name of these limited partnerships.
THE COURT: Okay.
MR. ZACK: Judge Houk’s second judgment set aside the conveyances to
those entities.
THE COURT: From the decedent to the LLP’s [sic].
MR. ZACK: Correct, which we interpreted as meaning those conveyances
were a nullity.
THE COURT: And he did that after the decedent died?
MR. ZACK: Yes.
THE COURT: So how is it that Judge Houk had jurisdiction to decide
anything regarding what was in or outside of the estate?
MR. ZACK: He didn’t decide what was in or outside of the estate. He
decided whether or not the decedent had made fraudulent conveyances –
***
THE COURT: Well, what does that mean?
MR. ZACK: That means that the title to the real estate then reverted back
to the decedent; therefore, it became part of his estate.
***
THE COURT: What is it that Mr. Woods was supposed to do that he
didn’t do?
MR. ZACK: Take possession of the real estate, inventory it as a probate
asset, begin to liquidate those assets to pay the debts of the estate.
***
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MR. BENDER: Well, I think Mr. Zack is correct by having the Court, if
you please, order that those assets become part of the estate, subject to the
fiduciary’s responsibilities to liquidate and distribute those assets, number one.
***
THE COURT: . . . All you want done is – all you want done, unless you
want to spend more money on attorneys, all you want done is for this Court – it’s
my understanding, all you want done is for me to say that property, given Judge
Houk’s ruling the Court of Appeals affirmance, is a piece of the estate and
instruct the personal representative, what, to sell it and deposit the proceeds in a
restricted account?
MR. BENDER: Correct, and pay the creditors, the rightful creditors of the
estate and trust.
Indeed, this hearing resulted in the probate court issuing an order instructing the personal
representative to take possession of the property, sell it, and pay the creditors consistent with the
provisions of EPIC:
IT IS FURTHER ORDERED that the Personal Representative is
instructed to inventory as Duane V. Baldwin Estate property the property that the
Circuit Court declared is available for creditors; and
IT IS FINALLY ORDERED that the property the Circuit Court declared
is available for creditors shall be sold and the proceeds distributed according to
the laws governing deceased Estates.
In fact, defendants argue that we should use the above statement in the probate court
proceeding as the basis for applying the doctrine of judicial estoppel to prevent plaintiff from
maintaining a contradictory position now. See Opland v Kiesgan, 234 Mich App 352, 362; 594
NW2d 505 (1999). While it may well be that it would be appropriate to apply judicial estoppel
to this case, we decline to determine whether, in fact, we should do so. Rather, it is sufficient to
merely conclude that plaintiff’s analysis of the situation in the probate court proceeding is the
correct one—the property became part of the estate once the circuit court set aside the
conveyances and the property is exempt from execution while it remains in the estate. Rather, as
indicated by the probate judge in that proceeding, and later in his order, the burden is upon the
personal representative to administer the estate, which presumably means selling the assets and
using the proceeds to pay the claims against the estate consistent with EPIC.
Clearly what occurred here was not plaintiff having an epiphany of law, realizing that his
collection efforts belonged in the circuit court rather than the probate court, but one of fact, with
plaintiff realizing there was not going to be sufficient resources to satisfy not only his claim and
those with a higher priority under EPIC. Therefore, plaintiff suddenly is looking to engage in
collection in circuit court in an attempt to jump to the head of the line and receive first priority in
having his claim paid. We will not support such blatant forum shopping.
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Plaintiff does argue that we are obligated under the law of the case doctrine to uphold the
trial court because of our statement in the prior appeal that “plaintiff may now execute against
the property held by the entity defendants . . . .” Shoaff, slip op at 18. This argument, however,
ignores two important points. First, it ignores the statement in the very next sentence of our
earlier opinion that “such property shall be included in his [decedent’s] assets and is not exempt
from liability for his debts.” Id. This statement reflects that the property became assets of the
estate and, as discussed above, must therefore be administered by the estate under the provisions
of EPIC. And this statement is as relevant to application of the law of the case doctrine as the
previous sentence. But more fundamentally, plaintiff ignores the fact that the law of the case
doctrine only applies to issues actually decided in the prior appeal. Grievance Administrator v
Lopatin, 462 Mich 235, 260; 612 NW2d 120 (2000). The issue whether plaintiff could directly
execute on his judgment against the property in circuit court or had to present his claim to the
personal representative in the administration of the estate was simply not an issue addressed in
the prior appeal. Thus, the statement in the prior appeal does not represent a holding that must
be respected under the law of the case doctrine. Rather, it is merely some unfortunately
imprecise language merely meant to reflect that the issue whether the property properly belonged
to the entity defendants or was available to satisfy the decedent’s debts is resolved and the
property is now available to satisfy those debts. The statement did not establish how those debts
were to be satisfied.
Plaintiff similarly attempts to attach such meaning to the statement in the 2002 circuit
court judgment that the conveyances were “set aside for the benefit of Plaintiff to satisfy his
Judgment against defendants . . . .” Plaintiff would have us read that language in the judgment to
mean that plaintiff was granted first priority against the property, even to the extent of having
been granted the status of a judgment lien. First, plaintiff offers no argument on how the circuit
court would have such authority to alter the priorities established under EPIC. Second, we see
no such command in the judgment. The judgment did not award the property to plaintiff, but
simply set aside the conveyances to the entity defendants. Indeed, as this Court observed in
George v Sandor M. Gelman, PC, 201 Mich App 474, 477; 506 NW2d 583 (1993), a judgment
by itself does not establish a lien against property. The statement above, along with other
statements in the judgment, merely reflects the reason for setting aside the conveyances—i.e.,
that the conveyances were improperly made to insulate the property from the decedent’s current
and future creditors, that plaintiff was harmed by those fraudulent conveyances, and therefore the
conveyances had to be set aside so that the properties were available to be used to satisfy
plaintiff’s claims. The statement does not establish that plaintiff was somehow entitled to
circumvent EPIC in doing so.1
For the above reasons, we conclude that the trial court erred in allowing plaintiff to
execute on the property to enforce its judgment in circuit court. The circuit court should have
acknowledged that, consistent with the probate court’s order, the property was to be administered
1
In fact, this ultimately brings us back to where our analysis started: that MCL 700.3812
restricts the execution under a judgment on estate property. MCL 600.6104(3) only allows the
trial court to order satisfaction of the judgment out of property not exempt from execution.
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by the personal representative on behalf of the estate consistent with EPIC and that plaintiff had
to pursue its claim under the judgment against the estate in the probate court, recognizing the
priorities and procedures set forth in EPIC. Accordingly, we set aside the circuit court orders of
April 17, 2006, conveying the properties to plaintiff and direct that title to the properties be
returned to the estate.
Next, plaintiff argues that the trial court erred in awarding the court officer $18,000 in
fees related to assisting in the execution of the judgment. In light of our conclusion on the first
issue, we find this issue to be moot. Because there could be no execution on the properties, there
can be no fee by the court officer to which defendants are obligated in this action to pay.
Similarly, because defendants are not obligated to pay the court officer’s fee, and it appears that
any fee previously paid to the court officer was paid by plaintiff, defendants did not suffer any
actual injury by any improper actions by the court officer to entitle defendants to treble damages
under MCL 600.2559(6).
Finally, defendants argue that the trial court erred in its April 20, 2006, order awarding
attorney fees and costs to plaintiff. Defendants, however, state in their brief that if we reverse
the April 17 order transferring title and possession of the properties, then the issue of the award
of attorney fees “may be considered withdrawn or moot.” Accordingly, we will consider this
issue withdrawn.
For the above reasons, we conclude that the trial court erred in transferring title and
possession of the property to plaintiff. The effect of the circuit court judgment in this matter was
to return ownership of the properties to the decedent and thus became assets of the estate.
Plaintiff should have pursued his claim against the estate in the probate court. The order of the
circuit court transferring title and possession to plaintiff, as well as the previous temporary
restraining order, is vacated. Title and possession of the properties is returned to the estate to be
administered by the personal representative in a manner consistent with EPIC. If plaintiff wishes
to pursue his claim under the judgment, he shall do so in the probate proceedings in a manner
consistent with EPIC.
Reversed. Defendants may tax costs.
/s/ Pat M. Donofrio
/s/ David H. Sawyer
/s/ William B. Murphy
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