IN RE ADAIR ESTATE (Per Curiam Opinion)
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STATE OF MICHIGAN
COURT OF APPEALS
In re Estate of RONALD ADAIR.
COLDWELL BANKER SCHMIDT REALTORS,
UNPUBLISHED
July 12, 2011
Petitioner-Appellant,
v
ELIZABETH CAROLINE RINKEVICH, Personal
Representative of the ESTATE OF RONALD
ADAIR,
No. 297343
Montcalm Probate Court
LC No. 2007-029917-DE
Respondent-Appellee.
Before: SHAPIRO, P.J., and O’CONNELL and OWENS, JJ.
PER CURIAM.
Following the closing of the estate of decedent Ronald Adair, Coldwell Banker Schmidt
Realtors (CBSR) filed a petition under MCL 700.3959 to reopen the estate. As good cause to
reopen the estate, CBSR asserted: (1) that a sale of estate land had taken place during the
pendency of the estate; (2) that under a listing agreement with the personal representative of the
estate CBSR was entitled to a commission on that sale; (3) that CBSR had timely presented its
claim; and (4) the the estate wrongly failed to pay the commission due. The probate court denied
the petition on the grounds that CBSR had not presented its claim to the estate within four
months as required by § 3803(2)(a) of the Estates and Protected Individuals Code (EPIC), MCL
700.1101 et seq. We affirm.
A probate court’s denial of a petition to reopen an estate is reviewed for an abuse of
discretion. In re Hammond Estate, 215 Mich App 379, 386; 547 NW2d 36 (1996); see also In re
Weber Estate, 257 Mich App 558, 560; 669 NW2d 288 (2003) (“A probate court’s substantive
decisions, including whether to close a probate hearing, are reviewed for an abuse of
discretion”). “An abuse of discretion occurs when the trial court's decision is outside the range
of reasonable and principled outcomes.” Moore v Secura Ins, 482 Mich 507, 516; 759 NW2d
833 (2008). However, underlying issues that entail statutory construction constitute questions of
law, which are reviewed de novo on appeal. Weber Estate, 257 Mich App at 561. Also, “[t]he
proper interpretation of a contract is a question of law, which this Court reviews de novo.”
Wilkie v Auto-Owners Ins Co, 469 Mich 41, 47; 664 NW2d 776 (2003). A court abuses its
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discretion when it makes an error of law. Kidder v Ptacin, 284 Mich App 166, 170; 771 NW2d
806 (2009).
The lots in this case were originally purchased by the decedent by land contracts. In
order to obtain funding to build a house on one of the lots, the decedent assigned his interest in
the land contracts to a bank as security for the loan. The decedent died before completing
construction. In June 2008, the bank became involved in foreclosure proceedings regarding the
lake house and a notice of lis pendens was filed and recorded. Two months later, in August, the
estate and CBSR entered into a one-year exclusive listing agreement to sell the lake house.1 In
December 2008, the land contract vendor executed warranty deeds conveying title of the lake
lots (not the house lot) to the bank after the bank exercised its rights under the land contract
assignments and paid the vendor the amounts owing under the contracts.
In April 2009, the bank, the personal representative, and Gregg Steffes, who was the only
heir-beneficiary aside from the personal representative, entered into a settlement agreement
providing in part that the personal representative would execute all of the necessary documents
to immediately transfer title to the bank with respect to the lake house, including a deed in lieu of
foreclosure. Further, if the estate was unable to make a preliminary $180,000 payment by May
20, 2009, the agreement provided that the bank could record the deed in lieu of foreclosure. The
agreement also provided that the estate could regain ownership by paying the bank $725,000 on
or before June 30, 2009.
The estate failed to make the $180,000 payment and, on May 22, 2009, the bank recorded
its deed as to the lake house. In June, the parties amended the settlement agreement. The new
terms provided for the estate to make an initial payment of $130,000 to the bank and reduced the
total amount necessary to reacquire the property to $675,000.
On June 30, 2009, several transactions occurred: the bank was paid the $675,000 and
quitclaimed the real property to the estate; the estate, by a quitclaim deed, conveyed the lake
house and lots and another property to Steffes for an amount less than $100; and, Steffes sold the
lake house to a third party purchaser.
On July 28, 2009, counsel for CBSR sent a letter to the estate’s counsel that asked for
details of the real estate transactions and acknowledged a prior phone discussion regarding the
conveyances and, on August 6, 2009, counsel for the estate mailed a letter to CBSR’s counsel
explaining what had transpired.
On October 21, 2009, the estate filed a petition for complete estate settlement, with no
notice to CBSR. Two days later, CBSR filed a statement and proof of claim in the probate court
seeking payment of the sales commission relative to the estate’s conveyance of the lake house
and other lots to Steffes on June 30, 2009. On or about November 13, 2009, an order for
1
The separate lake lots are not mentioned in the listing agreement, but CBSR did engage in an
effort to sell the lake lots and the lake house.
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complete estate settlement was entered. CBSR did receive notice of this order. On December
11, 2009, CBSR filed its petition to reopen the estate.
It is uncontested that in order to timely assert a claim against a decedent’s estate based on
a contract with the personal representative arising after the decedent’s death, the claim must be
presented “within 4 months after performance by the personal representative is due.” MCL
700.3803(2)(a). CBSR presented its claim on October 23, 2009. Thus, in order to be timely,
performance by the personal representative, i.e. payment of the commission, must have been due
no earlier than June 23, 2009. CBSR argues that the four month period began on June 30, 2009,
when the lots were reacquired by the estate, transferred to Steffes, and then sold to a third party.2
Respondent maintains that when the bank obtained title to the lake lots in December 2008 upon
default and the vendor’s execution of warranty deeds, the listing agreement terminated as to any
sales commission relative to a future sale of those lots. Respondent similarly argues that when
the bank acquired title to the lake house in May 2009, the listing agreement terminated as to any
sales commission relative to a future sale of the lake house. Respondent views the breaks in the
chains of title wherein the bank became fee simple owner as events that nullified the listing
agreement for purposes of subsequent transactions, ceasing all obligations and rights under the
agreement and requiring a new listing agreement before any commission could be due on a
future sale. CBSR responds that the May 2009 deed in lieu of foreclosure was conditional,
created only a defeasible estate, and simply constituted security against indebtedness. It argues,
therefore, that the listing agreement was not terminated by the deed transfer and instead
remained in effect through the June 30, 2009 transactions.3
The probate court’s ruling did not expressly indicate that the deeds terminated the
agreement, but such a finding is implicit where the court essentially determined that the deed in
lieu of foreclosure gave rise to a sales commission claim, which started the clock running on the
four-month claim’s period, and that CBSR’s claim was therefore untimely.
The listing agreement executed by CBSR and the estate, provided in pertinent part:
Seller agrees to pay an administration fee of $195.00 and 6% of the sales
price due and payable if: the property is sold or traded by Broker or by Seller or
anyone else during the listing period (including sales pursuant to options granted
or contracts executed during the listing period) . . . . The brokerage fee shall be
paid promptly after it is earned and in no event later than the closing of the sale of
the property.
2
CBSR does not alternatively argue that it was entitled to a sales commission in December 2008
and May 2009 or that the failure to pursue a timely claim should be excused because of the
estate’s failure to provide notice of the transactions and probate proceedings.
3
It is the transfer to Steffes upon which CBSR seeks a commission, not the sale by Steffes to the
third party, even though the quitclaim deed to Steffes reflected nominal consideration in the
amount of $100.
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The “seller” under the agreement was the estate and the term “sale” was defined as including
“any exchange or trade to which the Seller consents.” The agreement referred to a “sale or
transfer of the property.”
The listing agreement clearly envisions and encompasses a standard real estate sale in
which a buyer pays a sum certain for the property and CBSR exacts its six-percent sales
commission. However, words like “trade” and “exchange” can also encompass a transaction
other than a cash sale. The deeds at issue here that gave the bank title to the lake lots and house
had the effect of alleviating or reducing the estate’s debt and halting foreclosure proceedings, so
some level of consideration was indeed received.4 Furthermore, a “transfer” of property
certainly occurred when the deeds were conveyed to the bank.5 We conclude that, given the
language in this listing agreement, the requirement to pay a commission was implicated when the
deeds were executed and recorded resulting in conveyances of the property at issue to the bank in
December 2008 and May 2009.6 Accordingly, we hold that performance by the personal
representative was due in December 2008 relative to the warranty deeds covering the lake lots
and then again in May 2009 relative to the lake house deed in lieu of foreclosure. Thus, CBSR’s
proof of claim submitted in October 2009 was outside the four-month period and so barred under
MCL 700.3803(2)(a). Furthermore, given that the December 2008 and May 2009 deeds
triggered the right to performance under the listing agreement and that the subject matter of the
agreement, the lake property, was no longer owned by the estate, the agreement terminated and
could not cover the subsequent conveyances on June 30, 2009. Thus, “good cause” did not exist
to reopen the probate estate and there was no abuse of discretion.
CBSR relies on our Supreme Court’s early decision in Stahl v Dehn, 72 Mich 645, 649650; 40 NW 922 (1888), along with the associated principle that a party may show by parol
evidence that a deed absolute in form was, in fact, made as security for a loan and created an
equitable mortgage. Ellis v Wayne Real Estate Co, 357 Mich 115, 118; 97 NW2d 758 (1959);
McArthur v Robinson, 104 Mich 540, 549-550; 62 NW 713 (1895); McMillan v Bissell, 63 Mich
66, 69; 29 NW 737 (1886); Schultz v Schultz, 117 Mich App 454, 457; 324 NW2d 48 (1982);
4
Although it was the land contract vendor who executed the warranty deeds with respect to the
lake lots, the listing agreement speaks of a sale or trade “by Broker or by Seller or anyone else.”
(Emphasis added).
5
This is consistent with CBSR’s position at oral argument that the estate-to-Steffes conveyance
gave rise to a right to a commission even though the conveyance was to an heir because while it
may not have constituted a sale, it was still a “transfer” as contemplated by the listing agreement.
6
We find support in out-of-state caselaw for our position that foreclosure-related deeds, such as
the deed in lieu of foreclosure, can implicate the right to a sales commission under a listing
agreement. See Ellingson Agency, Inc v Baltrusch, 228 Mont 360; 742 P2d 1009 (1987);
Felbinger & Co v Traiforos, 76 Ill App 3d 725; 394 NE2d 1283 (1979); John Whiteman & Co v
Fidei, 176 Pa Super 142; 106 A2d 644 (1954). Also, CBSR fails to address the impact of the
lake lot deeds on the listing agreement in its appellate brief, and therefore any claim for a
commission on those lots is waived.
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Grant v Van Reken, 71 Mich App 121, 125; 246 NW2d 348 (1976). Contrary to CBSR’s
argument, the estate and the bank regarded the deed in lieu of foreclosure as effecting an
absolute sale or transfer, “with simply an option on the part of the [estate] to repurchase.” Stahl,
72 Mich at 649-650 (“where it appears that the parties really intended an absolute sale, and a
contract allowing the vendor to repurchase, such intention must control”). The deed in lieu of
foreclosure was not made in security for a loan and was not a mortgage; a mortgage already
existed. The deed in lieu of foreclosure was executed after default. It did not extinguish by
merger the existing mortgage, so the mortgage continued, and the deed did not clog the estate’s
equity of redemption because new consideration was provided, i.e., waiver of a deficiency claim.
See C Phillip Johnson Full Gospel Ministries, Inc v Investors Financial Services, LLC, 418 Md
86, 99-100; 12 A3d 1207 (2011). Additionally, the deeds here were not true defeasible deeds
that created typical reversionary interests. See Ditmore v Michalik, 244 Mich App 569, 582; 625
NW2d 462 (2001); MCL 554.61. Instead, the estate simply held a right or option to repurchase
the property at a later date; there was an absolute conveyance of a fee simple interest.
CBSR also argues that the trial court erred in finding that the estate did not exercise the
option to repurchase the property, and that the estate did so. Contrary to CBSR’s argument, the
probate court simply pointed out that, absent exercise of the option, which was a possibility, the
bank would continue to own the property, making May 22, 2009 the triggering date for a sales
commission; therefore, May 22 should also be the trigger date even if the estate exercised the
option. The probate court did not find that the estate failed to exercise the option.
CBSR additionally argues that the probate court erred by making factual findings,
weighing the evidence, and summarily assessing respondent’s objections to reopening the estate
absent an evidentiary hearing, where the pleadings and documentary evidence created a material
factual dispute regarding whether the probate estate should be reopened. CBSR maintains that
the probate court should have treated the allegations in the petition to reopen the estate as true,
akin to the summary disposition standard under MCR 2.116(C)(8). In support of its position,
CBSR cites an unpublished opinion per curiam of this Court. However, that case did not entail
any discussion or analysis regarding the proper procedure to employ when addressing a petition
to reopen an estate. Rather, this Court, in reciting the facts, merely mentioned that the probate
court had reopened the estate before delving into a title dispute, and its substantive discussion
only addressed the issue of title to real property. In the instant case, the probate court proceeded
in a fashion that was consistent with MCL 700.3959 and the court rules. We have not been
directed to any authorities that impose summary disposition principles associated with MCR
2.116 on probate proceedings to reopen an estate. Moreover, CBSR voiced no opposition to the
manner in which the probate court proceeded and to how it handled the petition and arguments.
CBSR was ready and willing to have the probate court decide the petition at the initial hearing,
so CBSR’s argument here was waived.
CBSR also argues that judicial estoppel bars respondent’s objections to reopening the
estate, where the estate indicated that it was the property owner, not the bank, when it moved the
probate court to approve the sale of estate assets. Judicial estoppel is a tool to be used by courts
to impede litigants from playing fast and loose with the legal system, and it estops a party who
has successfully and unequivocally asserted a position in a prior proceeding from asserting an
inconsistent position in a subsequent proceeding. Paschke v Retool Industries, 445 Mich 502,
509; 519 NW2d 441 (1994). Here, the petition for approval of sale of assets does indicate that
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the assets, real and personal property, belonged to the estate when, in fact, the property at issue
had all been deeded to the bank. However, the petition and accompanying brief did expound on
the enormous debt owed to the bank. Further, the focus of the petition to approve a sale of assets
was not on ownership, nor was the motion concerned with a title dispute accompanied by an
unequivocal assertion that the estate and not the bank was the owner. Moreover, under the
circumstances, it would be illogical to find that the bank did not hold title to the lake properties
based on judicial estoppel, where it is indisputable that the bank did hold title.
CBSR also argues that the probate court failed to support its ruling in fact or law and that
respondent also failed to advance her position in fact or law. While the probate court’s factual
findings and legal conclusions were brief, it had the benefit of substantial written and oral
arguments and there was a factual and legal basis for its ruling—it found that the claim was
untimely under MCL 700.3803(2)(a) because a claim accrued when the deed in lieu of
foreclosure was recorded in May of 2009. Further, respondent provided a legal and factual basis
to sustain her position.
Finally, CBSR complains that the estate violated its promise under the listing agreement
to refer to CBSR “all inquiries about the property received during the listing period.” However,
this argument is made in connection with the June 30, 2009, transactions, which, for the reasons
stated above, were irrelevant. CBSR does not contend that it was entitled to notice of the
execution and recording of the December 2008 or May 2009 deeds, as those events, in CBSR’s
opinion, did not implicate a right to a sales commission. On the issue of notice under the court
rules, once CBSR filed a claim in the probate court, it became a claimant and an “interested
person” for purposes of examination of a fiduciary’s account, MCR 5.125(C)(6)(e), and the
petition for an order of complete estate settlement, MCR 5.125(C)(8)(c), entitling CBSR to
notice of associated court filings, MCR 5.310 and 5.311. However, any assumed notice failures
that might be attributed to the estate during the proceedings below cannot serve as a basis to
circumvent our holding, given that the notice failures are harmless, MCR 2.613(A), where
CBSR’s claim was untenable and untimely as a matter of law.
Affirmed.
/s/ Douglas B. Shapiro
/s/ Peter D. O’Connell
/s/ Donald S. Owens
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