JAMES R ROTH CHARITABLE REMAINDER UNITRUST V DAVID LIEBERMAN
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STATE OF MICHIGAN
COURT OF APPEALS
JAMES R. ROTH CHARITABLE REMAINDER
UNITRUST, JONATAHAN ROTH
CHARITABLE REMAINDER UNITRUST,
JONATHAN R. ROTH and JAMES R. ROTH,
UNPUBLISHED
January 19, 2010
Plaintiffs-Appellants,
v
DAVID LIEBERMAN, SEYBURN KAHN GINN
BESS & SERLIN, P.C., STEVEN B. HAFFNER
and STEVEN B. HAFFNER & ASSOCIATES,
P.C.,
Nos. 286867; 288374
Oakland Probate Court
LC No. 2007-313515-CZ
Defendants-Appellees.
Before: Wilder, P.J., and O’Connell and Talbot, JJ.
PER CURIAM.
In Docket No. 286867, plaintiffs appeal as of right from the probate court’s order
granting summary disposition in favor of defendants. Plaintiffs argue that the probate court erred
when it concluded that plaintiffs’ claims were barred by the applicable statutes of limitations. In
Docket No. 288374, plaintiffs appeal from the probate court’s order granting the Haffner
defendants’ motion for sanctions and attorney fees. In this appeal, plaintiffs argue that the trial
court erred in concluding that plaintiffs should have known that their claims were time-barred
before filing their complaint. We affirm in both cases.1
The background of this case involves a complicated intra-family dispute, resulting in
litigation in probate court, which was completed in November, 2007, by consent judgment.
Plaintiffs allege defendants committed attorney malpractice and fraud, and breached fiduciary
duties to plaintiffs by maintaining representation of plaintiff trusts, of which plaintiffs are
1
This Court consolidated plaintiffs’ appeals on November 3, 2008. Roth v Lieberman,
unpublished order of the Court of Appeals, entered November 3, 2008 (Docket Nos. 286867 and
288374).
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beneficiaries, while aiding and abetting plaintiffs’ brother and cousin in an alleged self-dealing
property sale transaction, binding plaintiff trusts.
In Docket No. 286867, plaintiffs first argue that the probate court erred when it
concluded that plaintiffs’ claims were barred by the statute of limitations. On appeal, a trial
court’s decision to grant or deny summary disposition is reviewed de novo. Kuznar v Raksha
Corp, 481 Mich 169, 175; 750 NW2d 121 (2008). In reviewing a motion for summary
disposition under MCR 2.116(C)(7), this Court also accepts the plaintiff’s well-pleaded
allegations as true and construes them in the plaintiff’s favor. Id. at 175. Further, this Court
reviews all evidence presented to the trial court and if the evidence demonstrates that one party is
entitled to judgment as a matter of law, or that there is no genuine issue of material fact
regarding the running of the period of limitations, summary disposition is appropriate. Id.
Additionally, questions of law, including statutory interpretation, are reviewed de novo. Id. at
176.
The statute of limitations period for a malpractice claim is two years from the time claim
accrues or “within 6 months after the plaintiff discovers or should have discovered the existence
of the claim, whichever is later.” MCL 600.5805(6); MCL 600.5838(2). Further, MCL
600.5835(1) specifies that a malpractice claim accrues “at the time that person discontinues
serving the plaintiff in a professional or pseudoprofessional capacity as to the matters out of
which the claim for malpractice arose.” Plaintiffs’ complaint was filed June 14, 2007.
Plaintiffs presented evidence that defendants, David Lieberman and Steven B. Haffner,
billed plaintiff trusts through 2007, and argued that this evidence established that Leiberman and
Haffner maintained a professional legal relationship with plaintiffs less than two years before
plaintiffs filed their complaint. Defendants argued that the invoices were for indemnification
payments arising out of an indemnification provision of the trust instruments requiring the trusts
to indemnify any trustee for costs and fees associated with any cause of action. The trial court
rejected plaintiff’s contention, and we agree. We will consider the sets of invoices in turn.
One set of invoices are addressed from Lieberman to “Jeffrey Roth, Trustee, James R.
Roth CRUT & Jonathan Roth CRUT.” They are accompanied by a cover letter from Safford &
Baker to Jaffe, Raitt, Heuer & Weiss (“Jaffe Raitt”), stating, “David Lieberman asked me to
forward these invoices to your payment by the Trusts.” Lieberman argued, and the trial court
concluded, that these invoices were sent from Jeffrey’s personal attorneys (Safford & Baker) to
James’s attorney (Jaffe Raitt) for indemnification from the trusts for Jeffrey’s personal legal
expenses incurred during the litigation instigated by plaintiffs. Lieberman also argued that he
represented interests adverse to plaintiffs during the intra-family litigation and, therefore, it is
only logical that invoices to plaintiff trusts for work during that time were for indemnification
rather than for services rendered to plaintiffs. The trial court agreed with this argument as well.
On appeal, plaintiffs’ argue that it is not possible to conclusively determine whether the invoices
are for work done for Jeffrey, personally, or for the trusts, leaving a genuine issue of material
fact regarding Lieberman’s last date of service for the trusts.
There is some evidence on the record that Jaffe Raitt represented plaintiffs during the
probate litigation. There is no documentary evidence on the record of Safford & Baker’s
representation of Jeffrey, this point is not disputed by plaintiffs. The invoices are from a period
of time entirely within the period of litigation. There is no indication on the invoices of work
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done specifically for the trusts and, more importantly, plaintiffs do not specifically claim that the
invoices show work done for the trusts. Further, the invoices were sent from Safford & Baker to
Jaffe Raitt and they reveal more than a dozen conferences between Lieberman and Safford &
Baker. Finally, an independent trustee’s report from the original probate litigation concluded
that the trusts were paying Lieberman during the litigation pursuant to the indemnification
provisions of the trusts.
While plaintiffs claim there is a genuine issue of material fact simply because there is no
explicit statement on the invoices that the payments made were pursuant to indemnification, the
circumstantial evidence strongly supports Lieberman’s and Jeffrey’s assertion that Lieberman
represented interests adverse to plaintiffs and that the trusts were liable to indemnify Jeffrey for
attorney fees. Indeed, plaintiffs have not presented any evidence that counters these suggestions
or that actually suggests Lieberman did work for the trusts during this time period. Plaintiffs’
only evidence is these invoices, which is easily rebutted by logical inferences arising out the
facts and circumstances of the case which plaintiffs are not able to rebut. See Bergen v Baker,
264 Mich App 376, 387; 691 NW2d 770 (2004) (“Circumstantial evidence can be evaluated and
utilized in regard to determining whether a genuine issue of material fact exists for purposes of
summary disposition.”). We conclude, therefore, that the probate court did not err in this respect.
The second set of invoices are addressed directly to the trusts. Each invoice contains a
line item for each year from 1997 to 2007. Through 2005, each charge is for preparation of tax
returns.2 For 2006, the charge is for “Discussions with Special Trustee and meetings with Plante
and Moran.” For 2007, the charge is for, “Court appearances and preparation.” The arguments
with respect to these invoices is nearly identical to the first invoices. Plaintiffs merely claim that
the invoices are not conclusive. Lieberman argues the circumstances make plain that the work
done after the probate litigation began was not for plaintiff trusts, their adversaries in the
litigation. Lieberman also avers that the work in 2006 and 2007 was a result of a court mandate
in the probate litigation to explain his accounting techniques, though there is no proof of this. As
above, we conclude that plaintiffs have not presented any actual evidence that Lieberman was
working for the trusts during this time period, and that the circumstantial evidence drawn from
the mere ambiguity of the invoices is insufficient to create a genuine issue of material fact on this
issue.
There are also bank statements and canceled checks evidencing payments from the trusts
to Haffner from September 1, 2005, to October 5, 2006. Haffner argues that the payments were
for indemnification for services provided for Jeffrey. Similarly, Haffner represented interests
adverse to plaintiffs during the litigation, including deposing plaintiffs during that litigation. The
independent trustee’s report also indicates that the trusts were making indemnification payments
to Haffner during the probate litigation. Plaintiffs have not offered any evidence to rebut the
conclusive inferences drawn from these circumstances, other than the ambiguity of the invoices,
which we conclude insufficient to create a genuine issue of material fact.
2
Lieberman is also a certified public accountant.
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Plaintiffs next argue that the proper limitations period for their claim against Lieberman
is the six-month discovery period prescribed by MCL 600.5838(2): “within 6 months after the
plaintiff discovers or should have discovered the existence of the claim.” Plaintiffs concede that
this limitations period is not applicable for Haffner. Plaintiffs argue that Lieberman acted “as
though he were a neutral party” during the probate litigation, preventing plaintiffs from
discovering his role in Jeffrey’s self-dealing.
MCL 600.5838(2) provides both an objective and subjective test regarding a plaintiff’s
knowledge of a cause of action. Levinson v Trotsky, 199 Mich App 110, 112-113; 500 NW2d
762 (1993). That is, the six-month discovery period can be triggered by a plaintiff’s actual
knowledge or if plaintiff “had reason to know” of the existence of a claim. Id. Further, a
plaintiff need only be aware of a “possible cause of action” to begin the six-month period.
Gebhardt v O’Rourke, 444 Mich 535, 544; 510 NW2d 900 (1994).
The independent trustee’s report, filed December 7, 2006, notes that the trusts had paid
legal fees on behalf of Jeffrey to Lieberman. Further, the report specifically notes that
Lieberman’s fees from 2004, before plaintiffs’ petition against Jeffrey was filed, were related to
the probate litigation. This report should have put plaintiffs on notice that Lieberman may have
been involved in Jeffrey’s plan, giving rise to a possible cause of action against Lieberman.
Gebhardt, 444 Mich at 544. This is particularly true because plaintiffs have already conceded
that they were aware at this time of a possible cause of action against Haffner; when they advised
through the independent trustee’s report that Lieberman and Haffner were both being paid by the
trusts for work done for Jeffrey, this constitutes discovery of facts providing reasonable notice of
a possible claim against Lieberman. Because the report was filed more than six months before
plaintiffs filed their complaint on June 14, 2007, plaintiffs’ argument fails.
Plaintiffs next argue that their claims for fraud and breach of fiduciary duty were not
subject to the two-year statute of limitations the probate court applied when it granted
defendants’ motions for summary disposition. Plaintiffs have waived review of this argument by
utterly failing to address this argument in any way before the probate court.
Waiver is the intentional relinquishment of a known right. The usual
manner of waiving a right is by acts which indicate an intention to relinquish it, or
by so neglecting and failing to act as to induce a belief that it was the intention
and purpose to waive. A party who waives a right is precluded from seeking
appellate review based on a denial of that right because waiver eliminates any
error. [Cadle Co v City of Kentwood, 285 Mich App 240, 254-255; ___ NW2d
___ (2009) (quoting Book Furniture Co v Chance, 352 Mich 521, 526-527; 90
NW2d 651 (1958), and People v Carter, 462 Mich 206, 215; 612 NW2d 144
(2000)).]
Defendants argued the inapplicability of other statute of limitations periods, should the
probate court consider alternative arguments to their primary argument regarding the two-year
malpractice statute of limitations, which defendants argued subsumed all of plaintiffs’ claims.
Plaintiffs neither responded to these arguments in their response to defendants’ motions, nor
mentioned the possible application of other statues of limitations during the hearing on the
motions. In fact, plaintiffs’ counsel plainly laid out the framework for analysis they wished the
probate court to engage in and this framework included no mention of any statute of limitations
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period other than the two-year malpractice period, and the attendant six-month discovery rule
period. Plaintiffs’ total neglect and failure to act with respect to this argument in front of the
probate court indicates a clear intention to “relinquish or abandon” their right to raise this
argument. Carter, 462 Mich at 215; Cadle Co, 285 Mich App at 254-255. We need not address
these arguments.
Finally, in Docket No. 288374, plaintiffs argue that the trial court erred when it awarded
fees and costs, as a sanction, to the Haffner defendants. MCL 600.2591 provides that costs and
fees shall be awarded if a court finds that a party’s claim or defense was frivolous. Frivolous is
defined as one or more of:
(i) The party's primary purpose in initiating the action or asserting the defense was
to harass, embarrass, or injure the prevailing party.
(ii) The party had no reasonable basis to believe that the facts underlying that
party's legal position were in fact true.
(iii) The party's legal position was devoid of arguable legal merit.
600.2591(3)(a).]
[MCL
Likewise, MCR 2.114(E) and MCR 2.625(A)(2) mandate an award of costs and fees upon a
finding of a frivolous claim. The sanctions may be levied against the attorney, the represented
party, or both. MCR 2.114(E).
Plaintiffs’ attempt to argue that Haffner has not been vindicated by his successful
pleading of an affirmative defense (statute of limitations) and, therefore, “it would be
outrageous,” for Haffner to be awarded fees and costs, given the various improper conduct
plaintiffs have alleged. The allegations against Haffner are irrelevant; the relevant issue with
respect to sanctions is whether plaintiffs knew or should have known their claims would be timebarred when they brought their complaint. Plaintiffs argue that this was a complicated issue,
citing the length of the probate court’s discussion. In fact, the most complicated part of the
probate court’s analysis was sorting through the factual allegations. We concluded above that
the probate court rightly found that plaintiffs’ were not represented by defendants at any time
since the probate litigation. Thus, plaintiffs must have known that their presentation of invoices
and bank statements was misleading rather than meritorious. MCL 600.2591(3)(a)(ii) (“no
reasonable basis to believe that the facts underlying that party's legal position were in fact true”).
Plaintiffs have not addressed this inadequacy of their factual presentation in their brief on appeal.
We conclude that the trial court did not clearly err when it granted sanctions in favor of the
Haffner defendants.
Affirmed.
/s/ Kurtis T. Wilder
/s/ Peter D. O’Connell
/s/ Michael J. Talbot
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