IN RE EST OF CALVIN GRAVESAnnotate this Case
STATE OF MICHIGAN
COURT OF APPEALS
In the Matter of THE ESTATE OF CALVIN
GRAVES, a Protected Individual.
THE ESTATE OF CALVIN GRAVES,
October 27, 2009
Oakland Probate Court
LC No. 2003-287878-CY
WILLIAM R. FORD,
Before: Davis, P.J., and Whitbeck and Shapiro, JJ.
Defendant William R. Ford appeals as of right an order granting summary disposition in
favor of the Estate of Calvin Graves, brought by the court-appointed special fiduciary,
surcharging Ford personally for monies that Ford failed to ensure were properly deposited in a
fiduciary account for Calvin Graves’ benefit. We affirm.
Calvin Graves, born on March 5, 1997, was injured in an automobile accident on January
20, 2000. Preshus Graves, Calvin Graves’ mother and next friend, commenced a civil action
arising out of that accident, apparently on both of their behalfs. Preshus Graves filed a petition
with the probate court to be appointed as conservator for Calvin Graves. Defendant Ford was
Preshus Graves’ attorney. The probate court issued letters of conservatorship to Preshus Graves
containing the following restriction:
Funds to be received may not be used without prior written authority of
this Court. Funds are to be deposited in an account; certificate of deposit; money
market certificate; or a combination of these, in a bank; credit union; or savings
and loan association insured by an instrumentality of the federal government
which accepts these conditions: The funds may not be withdrawn from the
depository until further order of this Court. Ownership of the funds must be in the
conservator as fiduciary for the minor. The depository must complete a form
entitled “Verification of Deposit in Fiduciary Account” and “Agreement on
Withdrawal of Funds” and mail this form to this Court within five days from
initial receipt of funds. The depository will thereafter, at least annually and as
requested, furnish this Court a Verification of Funds on Deposit form. No real
estate asset of the estate may be sold without further order of the Court.
Preshus Graves, through Ford as her attorney, filed an acceptance of appointment and bond of
fiduciary, and Preshus Graves was appointed as Calvin Graves’ conservator. Ford received a
“Notice to Attorney of Duties Under Conservatorship of a Minor” that included the following
Upon receipt of funds, you must accompany the fiduciary of the estate to
the bank, credit union, or savings and loan association of their choice to deposit
the funds in an insured account or certificate of deposit which identifies the
account as being a fiduciary account. You are to see that the fiduciary furnishes
the depository a copy of the Letters of Authority setting forth any limitations of
powers and that the depository understands and accepts the funds with these
limitations. You are further to see that the representative of the depository
executes a Verification of Deposit in Fiduciary Account Form, which must be
returned to this Court within 5 days from the deposit.
Preshus Graves also received a “notice to fiduciary of duties” that similarly specified that
“ownership of the funds must be in the conservator as fiduciary for the minor.”
Preshus Graves subsequently petitioned the probate court, through Ford as her attorney,
to approve a settlement in the underlying personal injury lawsuit. The probate court approved
the settlement in the amount of $3,300.00 for a PIP claim and $6,000.00 for a third party claim,
minus $3,177.30 for attorney fees and costs, for a total of $6,122.70. On the same day, Ford
issued two checks from his client trust account, for $2,200.00 and $3,922.70, payable directly to
Preshus Graves individually. Preshus Graves cashed both checks at Comerica Bank. Neither
check was ever deposited into any sort of restricted account or any other sort of account for
Calvin Graves’ benefit. Ford contends that he told Preshus Graves that the money was to be kept
in a separate account, but he did not accompany Preshus Graves to the bank or communicate
with the bank in any way. Preshus Graves admitted that Ford gave her a Verification of Deposit
form, but she did not complete or return it. The probate court, after sending Ford and Preshus
Graves repeated notices that they had failed to file an inventory and failed to file a verification of
funds, removed Preshus Graves as Calvin Graves’ conservator.
The probate court appointed Richard J. Siriani as special fiduciary. Siriani immediately
filed a “petition to surcharge Preshus Graves and William R Ford” for $6,000.00 plus fees, costs,
and interest.1 Ford’s response was essentially to blame Preshus Graves: he denied any
wrongdoing, and he stated that he told her “that the money would have to be separately
maintained and accounted for,” that “upon learning of this situation” he told her to return the
documents showing proof of deposit, that she promised to do so, and that “since that time,
despite numerous calls or letters Ms. Graves has not responded.”
The trial court held a hearing on May 12, 2004. Ford alleges that he and his client,
Preshus Graves, arrived at the probate court fully prepared to participate in the hearing, but Ford
told Siriani prior to the hearing – off the record – that he had made Preshus Graves aware of her
duties, whereupon Siriani told Ford that Ford would be released. Ford then chose to leave rather
than accompany Preshus Graves to the hearing. At the hearing, Siriani told the probate court that
he had “released Mr. Ford,” and Preshus Graves agreed to sign a promissory note to repay the
money. The trial court did not enter any order pertaining to Ford.
Preshus Graves did not actually sign the promissory note. The trial court issued at least
one show cause order and eventually issued a bench warrant for Preshus Graves’ arrest. The
record suggests that Preshus Graves’ whereabouts may have become unknown.
In any event, more than half a year later, Siriani filed a notice of deficiency stating that
the estate had not received any assets. On September 7, 2005, Siriani filed a motion to compel
Ford to produce copies of the checks that he issued to Preshus Graves, “to determine whether or
not there is any liability of individuals or institutions to reimburse the Estate for the net
settlement.” The trial court issued an order compelling production of the checks, which Ford
protested but with which he eventually complied. Siriani then filed a new petition to surcharge
Comerica Bank,2 Preshus Graves, and Ford. The claims against Ford were similar to the claims
made in the 2004 petition: generally, that Ford failed to take appropriate and necessary measures
to ensure that the checks were deposited into a properly restricted account.
The parties all filed motions for summary disposition against each other. In relevant part,
Ford asserted that the claims against him were barred pursuant to the doctrine of res judicata
because he had been released on May 12, 2004. Ford also asserted that the probate court lacked
jurisdiction, arguing that the only possible basis for the claims against him sounded in
professional negligence and that “there was never any basis to surcharge” him in the first place.
On March 31, 2008, in a thorough opinion, the probate court rejected Ford’s arguments and
entered summary disposition in favor of Siriani against Ford and denied Ford’s motion. The
probate court then dismissed the bench warrant for Preshus Graves. Ford moved for
reconsideration, which the probate court denied, observing that “the facts still remain that on
May 28, 2003, even though the Letters of Conservatorship were restricted, Mr. Ford issued two
checks to Preshus Graves, individually,” and those checks were never properly deposited.
As noted, the settlement checks at issue actually totaled $6,122.70.
The claims against Comerica Bank are irrelevant to this appeal and will not be discussed.
Ford now appeals. This Court’s review of motions for summary disposition is de novo.
Maiden v Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999).
Ford first argues that the trial court lacked subject matter jurisdiction. Specifically, Ford
argues that the trial court could only have held him liable on the basis of professional negligence,
which he asserts is outside the probate court’s jurisdiction. We disagree.
The probate court’s jurisdiction is determined by the pleadings. In re Hatcher, 443 Mich
426, 437-438; 505 NW2d 834 (1993). By statute, the probate court has exclusive subject matter
jurisdiction over “a proceeding that concerns a guardianship, conservatorship, or protective
proceeding.” MCL 700.1302(c). Additionally, the probate court has concurrent subject matter
jurisdiction in cases involving protected individuals to “hear and decide a claim by or against a
fiduciary or trustee for the return of property;” and “hear and decide a contract proceeding or
action by or against an estate, trust, or ward.” MCL 700.1303(1)(h-i). The purpose of the
concurrent jurisdiction is “to simplify the disposition of an action or proceeding involving a
decedent’s, a protected individual’s, a ward’s, or a trust estate by consolidating the probate and
other related actions or proceedings in the probate court.” MCL 700.1303(3). This is a case that
concerns a conservatorship and in which the probate court is hearing and deciding an action by
the estate for the return of property, and it is within the context of an already-existing probate
case that is more efficiently and simply resolved by keeping it in the probate court.3
Ford next argues that the claims against him are barred by res judicata. We disagree.
“For the doctrine [of res judicata] to apply (1) the former suit must have been decided on
the merits, (2) the issues in the second action were or could have been resolved in the former
one, and (3) both actions must involve the same parties or their privies.” Energy Reserves, Inc v
Consumers Power Co, 221 Mich App 210, 215-216; 561 NW2d 854 (1997). Here, there was no
decision on the merits in any prior action. The May 12, 2004, hearing that Ford relies on did not
culminate in any order addressing Ford in any way. Ford’s liability was simply not addressed by
the court at all, and if Ford did not attend the hearing, it was solely because he chose not to.
Furthermore, whatever transpired at the May 12, 2004, hearing was part of the same, ongoing
action regarding the administration of Calvin Graves’ estate, and res judicata is not applicable
within the same action. Harvey v Harvey, 237 Mich App 432, 437; 603 NW2d 302 (1999);
Vandenberg v Vandenberg, 253 Mich App 658, 663; 660 NW2d 341 (2002). Finally, the first
petition was based only on the known fact that Calvin Graves’ settlement proceeds had not been
properly deposited. Because Ford did not disclose significant facts pertaining to the checks he
“An attorney may receive property that belongs to his or her client or a third party. In such
cases, the attorney has a duty to notify all interested parties, safeguard the property, and promptly
distribute the property to the rightful owners. See MRPC 1.15.” Kasben v Hoffman, 278 Mich
App 466, 472; 751 NW2d 520 (2008). The “rightful owner” here was Calvin Graves, not his
mother. As we discuss, by making the checks payable to Preshus Graves, personally instead of
as Calvin’s conservator, Ford gave the money to the wrong person. Nevertheless, as we discuss
infra, in our view, Ford’s liability here was not premised on professional negligence.
issued to Preshus Graves,4 res judicata would be inapplicable because of a change in the known
facts. Labor Council, Michigan Fraternal Order of Police v City of Detroit, 207 Mich App 606,
608; 525 NW2d 509 (1994).
Finally, Ford argues that there exists no authority under which the probate court could
sanction him because he did not violate any order, statute, rule or other law.5 We disagree in
We do agree that Ford did not violate any court order that we can identify. The “notice to
attorney of duties” is a clear directive from the court, unambiguously explaining what
responsibilities it expected the recipient to carry out. However, it is a notice, not an order. We
find it inconceivable that Ford would have been unaware of the probate court’s expectations.
However, because the document is a notice and not clearly a court order, Ford’s failure to carry
out his responsibilities thereunder does not constitute violation of a court order.
Ford was Preshus Graves’ attorney, but because she was a personal representative, Ford’s
“client” effectively includes the estate, not just the fiduciary thereof in her personal capacity.
See Steinway v Bolden, 185 Mich App 234, 237-238; 460 NW2d 306 (1990). As a consequence,
the attorney would be subject to a proceeding to surcharge pursuant to MCR 8.122 by a
replacement fiduciary. Id., 236-238. A conservator is also a fiduciary of an estate, subject to the
same obligations and standards as a trustee. MCL 700.1104(e); MCL 700.5416. The court is not
permitted to impose a surcharge on a personal representative for any acts that were authorized at
the time they were carried out. MCL 700.3703(2). By implication, the court is permitted to
impose a surcharge for unauthorized acts. And the fulcrum of Ford’s liability is that he engaged
in an unauthorized act by issuing Calvin Graves’ money to a person other than Calvin Graves or
Calvin Graves’ conservator. Notwithstanding the fact that Preshus Graves was Calvin Graves’
conservator at the time, the checks were not made out to her in that capacity. Therefore, they
were simply made out to an unauthorized third party, resulting in Calvin Graves’ estate losing
the money altogether.
Specifically, that the checks had not even been properly made out: as noted, instead of making
them payable to Preshus Graves as Calvin Graves’s conservator, Ford made them payable to
Preshus Graves personally. The trial court reasonably found that Ford’s failure to disclose this
fact constituted a failure to fully inform the court and was misleading to the court. However, the
probate court did not, as Ford appears to believe, ever suggest that it found Ford to have engaged
in any intentional deception.
Ford additionally argues that Siriani was responsible for Ford not being dismissed at the May
12, 2004, hearing. Apparently, Ford met Siriani outside the courtroom prior to the hearing, and,
despite being fully prepared to participate in the hearing – in which his client did participate and
signed the promissory note – allegedly entered into some agreement, off the record, to the effect
that Siriani “released” him. Ford concludes that Siriani precluded him from making a record or
asking the trial court to dismiss him. However, it is clear that he voluntarily chose not to
participate in the hearing.
In summary, there was no genuine question of material fact that Ford gave Calvin
Graves’ settlement money to the wrong person, that he failed to execute his duty to refrain from
disgorging Calvin Graves’ money to unauthorized third parties, and that as a consequence the
money was never received into Calvin Graves’ estate. The probate court’s conclusion that Ford
was liable for the surcharge against him was correct.
/s/ Alton T. Davis
/s/ William C. Whitbeck
/s/ Douglas B. Shapiro