IN RE MILLER OSBORNE PERRY TRUST (Per Curiam Opinion)
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STATE OF MICHIGAN COURT OF APPEALS In re MILLER OSBORNE PERRY Trust. SUSAN PERRY, Trustee for the MILLER OSBORNE PERRY Trust, FOR PUBLICATION February 19, 2013 9:10 a.m. Appellant, v No. 309725 Ingham Probate Court LC No. 12-000191-TV MARK D. PERRY, Appellee. Before: FITZGERALD, P.J., and METER and M. J. KELLY, JJ. PER CURIAM. Susan Perry, acting as the trustee for the Miller Osborne Perry Trust, appeals by right the probate court s finding that Mark D. Perry s suit for declaratory relief did not constitute a challenge to the Trust within the meaning of the Trust s forfeiture clause otherwise known as a terror clause. On appeal, Susan Perry argues that the trial court clearly erred because, after it found that Mark Perry would not have had probable cause to challenge the Trust within the meaning of MCL 700.7113, it had to find that his suit triggered the terror clause. As such, she further maintains, the probate court should have determined that Mark Perry forfeited his distributions under the Trust. Because we conclude that Mark Perry s suit for declaratory relief did not constitute a challenge to the Trust as stated in the Trust s Terror clause, we affirm. I. BASIC FACTS Miller Osborne Perry established the Trust in January 1993. Susan Perry is Miller Perry s daughter and Mark Perry s aunt. In November 2006, Miller Perry amended the trust to give the majority of his estate to Susan Perry; he established that 75% would go to Susan Perry, 12.5% to Mark Perry and the remaining 12.5% would go Mark Perry s half-sister, Debra C. Pinedo. He also added Section 4.4, which provided that any beneficiary who challenges the admission of the Trust to probate or any of the Trust s provisions would forfeit his or her benefits under the Trust: -1- If any beneficiary under this trust or any heir of mine, or any person acting, with or without court approval, on behalf of a beneficiary or heir, shall challenge or contest the admission of this trust to probate, or challenge or contest any provision of this trust, the beneficiary or heir shall receive no portion of my estate, nor any benefits under this trust. However, it will not be a challenge or contest if my personal representative, trustee or a beneficiary seeks court interpretation of ambiguous or uncertain provisions in this trust. Miller Perry died in March 2010, at 102 years of age. After discovering evidence that his aunt may have had a questionable influence over Miller Perry during his final years, Mark Perry petitioned the probate court for declaratory relief. Specifically, he asked the trial court to determine whether he had probable cause to challenge the Trust s 2006 amendments under MCL 700.7113. In his petition, Mark Perry stated that his petition should not . . . be construed as contesting the validity of the trust, but rather only seeks a declaratory judgment pursuant to MCR 2.605 on the existence of probable cause if [he] were to bring such an action. (emphasis added). In response to Mark Perry s petition, Susan Perry denied that she had had an undue influence on her father. She also asked the probate court to find that Mark Perry s request for declaratory relief constituted a contest of the Trust under Section 4.4, thus triggering the terror clause. After a hearing on the issue, the probate court denied Mark Perry s request for a declaratory judgment, but also found that his petition was not a contest or challenge under Section 4.4. II. JURISDICTION As a preliminary matter, we note that Mark Perry argues on appeal that Susan Perry is not an aggrieved party under MCR 7.203(A) because she appealed as the Trust s trustee and, in that capacity, she did not suffer a concrete or particularized injury. See Federated Ins Co v Oakland Co Rd Comm n, 475 Mich 286, 290-291; 715 NW2d 846 (2006). For that reason, he maintains that this Court lacks jurisdiction to hear her appeal. It is not clear that Susan Perry appealed solely as the Trust s trustee and not also in her personal capacity. In any event, because Susan Perry has a duty to ensure that the Trust is properly administered according to its terms and for the benefit of all beneficiaries and may be liable for failing to protect the Trust s assets, including as provided under the terror clause, MCL 700.7801, MCL 700.7812, MCL 700.7901, MCL 700.7902, we conclude that she has a sufficient pecuniary interest to meet the requirements stated under MCR 7.203(A). III. THE TERROR CLAUSE A. STANDARD OF REVIEW This Court reviews de novo the proper interpretation of both statutes and trusts. In re Reisman Trust, 266 Mich App 522, 526; 702 NW2d 658 (2005). However, this Court reviews a trial court s factual findings underlying its conclusions of law for clear error. MCR 2.613(C). -2- B. ANALYSIS Terror clauses, such as that found under the Trust s Section 4.4, are generally valid and enforceable. See Farr v Whitefield, 322 Mich 275, 280; 33 NW2d 791 (1948). However, the Legislature amended the Michigan Trust Act to limit the scope of terror clauses: A provision in a trust that purports to penalize an interested person for contesting the trust or instituting another proceeding relating to the trust shall not be given effect if probable cause exists for instituting a proceeding contesting the trust or another proceeding relating to the trust. MCL 700.7113. The probate court found that Mark Perry would not have probable cause under that statute to challenge the validity of the Trust s amendments. Accordingly, if Mark Perry s request for declaratory relief constituted a challenge to the Trust, as defined under Section 4.4, then Mark Perry forfeited his interest under the Trust by challenging it without probable cause to do so. However, we do not agree that his petition for declaratory relief constituted a challenge to the Trust under Section 4.4. When interpreting the meaning of a trust, this Court must ascertain and abide by the intent of the settlor. In re Kostin, 278 Mich App 47, 53; 748 NW2d 583 (2008). We must look to the words of the trust itself. Id. Courts must, however, construe no contest clauses strictly. See Saier v Saier, 366 Mich 515, 520; 115 NW2d 279 (1962). Thus, this Court may only forfeit Mark Perry s distributions if his actions come strictly within the express terms of the terror clause at issue. Id. (quotation marks, citation, and emphasis omitted). Under Section 4.4, Miller Perry did not provide that a beneficiary would forfeit his or her right under the Trust if the beneficiary filed any legal action however tangentially related to the Trust. Instead, he provided that only a beneficiary who contests or challenges the Trust s admission to probate or who challenges a provision will forfeit his or her rights under the Trust. With his suit, Mark Perry stated that he was not challenging the Trust itself. Moreover, in his allegations, he did not ask the probate court to pass judgment on any term within the Trust, did not allege that the terror clause was actually invalid, and did not seek monetary relief. He did, however, ask the probate court to order that the existence of probable cause renders unenforceable the terror clause in his prayer for relief. Because he stated in the body of his petition that he was not actually challenging the trust and the terror clause is a provision in the trust the probate court would have no authority to grant the requested relief. Thus, this request did not transform his petition into a legal challenge to the Trust. When the petition is examined as a whole, it is clear that Mark Perry asked the probate court to examine his evidence and determine whether that evidence would give him probable cause as that phrase is understood under MCL 700.7113 if he were to challenge the Trust. That is, he essentially posed a hypothetical scenario to the probate court and asked it to advise him about the probable application of a statute MCL 700.7113 to his proposed scenario. For that reason, Mark Perry likely failed to allege a justiciable controversy. See Shavers v Attorney General, 402 Mich 554, 588-589; 267 NW2d 72 (1978) (stating that courts should not decide hypothetical issues; rather, declaratory relief is only appropriate where the plaintiff has -3- sufficiently alleged an actual justiciable controversy).1 Nevertheless, whether the probate court had the authority to make the probable cause determination is not now before us. The only question is whether the trial court properly found that Mark Perry s petition did not amount to a challenge that would trigger the terror clause. When his petition is read as a whole, it is clear that Mark Perry did not actually challenge the Trust in any of the ways specified under the terror clause. Therefore, the trial court did not err when it denied Susan Perry s request to have Mark Perry s interest forfeited. Affirmed. /s/ E. Thomas Fitzgerald /s/ Patrick M. Meter /s/ Michael J. Kelly 1 MCL 700.7113 nullifies the operation of a terror clause ( shall not be given effect ) as to challenges for which there was probable cause for instituting the challenge. Hence, MCL 700.7113 does not operate to nullify a terror clause s operation until there is an actual challenge and then only if there was probable cause to bring the challenge. Because probable cause necessarily turns on the evidence that the challenging party had at the time he or she instituted the challenge, a trial court cannot properly make a probable cause determination until after the challenge has been made. -4-
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