CHRISTOPHER J WEBB V BARBARA M WEBB
Annotate this Case
Download PDF
STATE OF MICHIGAN
COURT OF APPEALS
In the Matter of the JERVIS C. WEBB Trust.
CHRISTOPHER J. WEBB,
UNPUBLISHED
January 24, 2006
Petitioner-Appellant,
v
No. 263759
Oakland Probate Court
LC No. 2003-289748-TV
JERVIS H. WEBB, Trustee, and JOYCE W.
CLARK, Former Trustee,
Respondents-Appellees.
In the Matter of the JERVIS B. & MAUREEN C.
WEBB Trust.
CHRISTOPHER J. WEBB,
Petitioner-Appellant,
v
SUSAN M. WEBB, Trustee, BARBARA J.
WEBB, Trustee, and JOYCE W. CLARK, Former
Trustee,
Respondents-Appellees.
-1-
No. 263900
Oakland Probate Court
LC No. 2004-291906-TV
CHRISTOPHER J. WEBB,
Petitioner-Appellant,
v
BARBARA M. WEBB, Personal Representative of
the Estate of GEORGE H. WEBB, Deceased,
No. 263901
Oakland Probate Court
LC No. 2004-291905-CZ
Respondent-Appellee.
Before: Sawyer, P.J., and Wilder and H. Hood*, JJ.
PER CURIAM.
In these consolidated cases, petitioner alleges that the trustees of his father's and
grandparents' trusts breached their fiduciary duties by retaining stock held in the family’s closely
owned corporation, the Jervis B. Webb Company, and by failing to diversify the assets of the
trusts and invest in stocks that paid higher dividends. The parties filed cross-motions for
summary disposition and the probate court granted partial summary disposition for respondents.
The court granted partial summary disposition under MCR 2.116(C)(7), based on the statute of
limitations. Additionally, the court granted summary disposition under MCR 2.116(C)(10),
holding that there was no genuine issue of material fact that respondents did not breach their
fiduciary duties by retaining the family stock and failing to diversify the trusts' assets. Petitioner
appeals as of right. We affirm.1
This case involves two different trusts and three separate actions that arise out of the two
trusts. The two trusts primarily consist of stock in the Jervis B. Webb Company ("the
Company"), which was founded by Jervis B. Webb in 1919. The Company has grown
significantly over the years, but remains a closely owned corporation and its leadership has
passed between generations of the Webb family. Almost all of the Company's stock is held by
family members or their trusts.
*
Former Court of Appeals judge, sitting on the Court of Appeals by assignment.
1
We find no merit to respondents' argument that this Court does not have subject-matter
jurisdiction over respondents Jervis H. Webb, Susan Webb, and Barbara Webb, because they
were not named as respondents in the trial court. As current or former trustees of the trusts at
issue, they are each interested persons, MCL 700.1105, and, therefore, are properly respondents
in these appeals in their representative capacities. We decline to consider petitioner's Exhibits 25, and 8-9, attached to his brief on appeal because those documents were not presented in the
trial court. Isagholian v Transamerica Ins Corp, 208 Mich App 9, 18; 527 NW2d 13 (1994).
-2-
Jervis B. Webb and his wife, Maurene,2 founded the Company. Their children, Jervis C.
Webb, George Webb, and Joyce Clark, comprise the second generation. Petitioner is the son of
Jervis C. Webb. Petitioner and his six siblings, along with six children of George and Joyce,
comprise the third generation.
There has been a long history of family members working for the Company. Petitioner
worked for the Company after graduating from law school and served as a vice president and
general counsel for the Company until November 2002.
In 1946, Jervis B. and Maurene Webb established a trust naming their three children,
Jervis C., George, and Joyce, as co-trustees. That trust (hereinafter referred to as the "1946
trust") was funded solely with the Company's stock.
In 1989, Jervis C. Webb, petitioner's father, created a trust for the benefit of his children
who had jobs with the Company (hereinafter referred to as the "1989 trust"). Jervis C. Webb
named his siblings, George and Joyce, as the trustees.
At issue in this case are petitioner's claims that the trustees of both trusts breached their
fiduciary duties. The probate court concluded that petitioner’s claims were barred by the threeyear limitations period prescribed in MCL 600.5805(10) and, therefore, granted summary
disposition under MCR 2.116(C)(7). The court additionally held that there was no genuine issue
of material fact that the trustees did not breach their fiduciary duties by retaining the Company
stock and failing to diversify the trusts' assets and, therefore, granted summary disposition under
MCR 2.116(C)(10).
This Court reviews a trial court’s decision on summary disposition de novo. Spiek v
Dep't of Transportation, 456 Mich 331, 337; 572 NW2d 201 (1998). Summary disposition may
be granted under MCR 2.116(C)(7) when a claim is barred by the statute of limitations. As
explained in Turner v Mercy Hospitals & Health Services of Detroit, 210 Mich App 345, 348;
533 NW2d 365 (1995),
[a] defendant who files a motion for summary disposition under MCR
2.116(C)(7) may (but is not required to) file supportive material such as affidavits,
depositions, admissions, or other documentary evidence. MCR 2.116(G)(3);
Patterson v Kleiman, 447 Mich 429, 432; 526 NW2d 879 (1994). If such
documentation is submitted, the court must consider it. MCR 2.116(G)(5). If no
such documentation is submitted, the court must review the plaintiff ’s complaint,
accepting its well-pleaded allegations as true and construing them in a light most
favorable to the plaintiff.
"If the pleadings or other documentary evidence reveal no genuine issues of material fact, the
court must decide as a matter of law whether the claim is statutorily barred." Holmes v Michigan
Capital Medical Ctr, 242 Mich App 703, 706; 620 NW2d 319 (2000).
2
According to respondents, "Maurene" is the correct spelling of petitioner's grandmother's name,
but her name is incorrectly spelled as "Maureen" on the trust agreement.
-3-
A motion under MCR 2.116(C)(10) tests the factual support for a claim. Summary
disposition should be granted if, except as to the amount of damages, there is no genuine issue of
material fact and the moving party is entitled to judgment as a matter of law. Babula v
Robertson, 212 Mich App 45, 48; 536 NW2d 834 (1995).
The trial court held that petitioner’s claims were governed by the three-year period of
limitations prescribed in MCL 600.5805(10). MCL 600.5827 addresses when a claim accrues
for purposes of determining when the statute of limitations begins to run:
Except as otherwise provided, the period of limitations runs from the time
the claim accrues. The claim accrues at the time provided in sections 5829 to
5838 [MCL 600.5829 to MCL 600.5838], and in cases not covered by these
sections the claim accrues at the time the wrong upon which the claim is based
was done regardless of the time when damage results.
Sections 5829 to 5838 do not apply to this case. Therefore, pursuant to MCL 600.5827,
petitioner's claim accrued at the time the alleged wrong was committed, regardless of when
damages resulted, unless the discovery rule applies. The parties disagree whether the discovery
rule can be applied to extend the period of limitations to claims involving breaches of fiduciary
duty. We agree with the trial court that the discovery rule does not apply to this case.
In Boyle v General Motors Corp, 468 Mich 226, 228-229, 231-232; 661 NW2d 557
(2003), the Supreme Court reversed this Court's determination that the discovery rule applies to
fraud claims. The Supreme Court's decision was based on MCL 600.5827, as well as its prior
decisions in Thatcher v Detroit Trust Co, 288 Mich 410; 285 NW 2 (1939), and Ramsey v Child,
Hulswit & Co, 198 Mich 658; 165 NW 936 (1917), where the Court refused to apply the
discovery rule in fraud cases.3 In Boyle, supra at 231-232, the Court stated:
The discovery rule has been adopted for certain cases. For example, in
Johnson v Caldwell, [371 Mich 368; 123 NW2d 785 (1963),] the Court held that
the discovery rule applies to actions for medical malpractice. This Court has not,
however, overruled Ramsey and Thatcher, or held that the discovery rule applies
to actions for fraud or intentional misrepresentation. Moreover, after Ramsey and
Thatcher were decided the Legislature enacted MCL 600.5827, which provides:
"Except as otherwise expressly provided, the period of limitations runs
from the time the claim accrues. The claim accrues at the time provided in
sections 5829 to 5838, and in cases not covered by these sections the claim
accrues at the time the wrong upon which the claim is based was done regardless
of the time when damage results."
Under MCL 600.5827 a claim accrues when the wrong is done, unless §§ 5829 to
5838 apply. Plaintiff does not claim that any of those sections apply.
3
Thatcher also involved a claim for breach of fiduciary duty by a trustee which was barred by
the statute of limitations.
-4-
The Court of Appeals erred in holding that the discovery rule applies to
the accrual of actions for fraud. That holding directly contradicts Ramsey and
Thatcher and ignores the plain language of MCL 600.5813 and 600.5827.
Plaintiffs' cause of action accrued when the wrong was done, and they had
six years thereafter to file a complaint. Because plaintiffs failed to do so, their
cause of action is barred. [Footnotes omitted.]
Although Boyle involved a fraud claim, the principle applies here as well: the language
of MCL 600.5827 is clear and unambiguous that a claim accrues when the wrong is committed,
not when it is discovered, unless it falls within §§ 5829 to 5838. Thus, because the claim here
does not fall within §§ 5829 to 5838, the proper test for determining when petitioner’s claim for
breach of fiduciary duty accrued is not when he knew or should have known of the alleged
breach, but when the alleged wrong was committed, causing the alleged harm. Boyle, supra at
231 n 5.4
On the basis of the undisputed documentary evidence presented below, it is apparent that
petitioner was clearly aware of both trusts and their holdings of the Company's stock for many
years before these actions were filed. Because any alleged harm arising from respondents’
alleged breaches of their fiduciary duties occurred more than three years before these actions
were filed, the trial court properly granted summary disposition under MCR 2.116(C)(7).
We find no merit to petitioner's argument that his claims are not subject to the statute of
limitations. Our Supreme Court has clarified that statutes of limitation apply to claims for breach
of fiduciary duty that are cognizable at law. See Thatcher, supra at 416-417. Thus, MCL
600.5805 was properly applied to petitioner's claims.
In addition, petitioner’s reliance on MCL 700.7307(4) for the proposition that he had five
years to file his claims is misplaced. Subsection (4) of that statute was not added until the statute
was amended, effective September 1, 2004. Statutes of limitation generally are not given
retroactive effect unless such an intent clearly and unequivocally appears from the context of the
statute itself. Gorte v Dep't of Transportation, 202 Mich App 161, 167; 507 NW2d 797 (1993).
No such intent appears here and, therefore, MCL 700.7307(4) may not be applied retroactively.
Petitioner next argues that the trial court erred in holding that there was no genuine issue
of material fact with respect to petitioner’s claims that the trustees breached their fiduciary duties
by retaining the Company stock and not diversifying the trusts' assets.
4
To the extent that this Court has held that a claim for breach of fiduciary duty accrues when the
beneficiary knew or should have known of the breach, see Bay Mills Indian Community v
Michigan, 244 Mich App 739, 751; 626 NW2d 169 (2001), we believe those cases have been
overruled by Boyle. However, an exception to this rule exists for claims of fraudulent
concealment. See The Meyer & Anna Prentis Family Foundation, Inc v Barbara Ann Karmanos
Cancer Institute, 266 Mich App 39, 45-48; 698 NW2d 900 (2005); MCL 600.5855. Petitioner
has not argued that MCL 600.5855 applies in this matter.
-5-
We must refer to the trust instruments to determine the powers and duties of the trustees
and the intent of the settlors regarding the purpose of the trusts. In re Butterfield Estate, 418
Mich 241, 259; 341 NW2d 453 (1983). In addition, relevant statutes and case law define a
trustee’s duties. In re Green Charitable Trust, 172 Mich App 298, 312; 431 NW2d 492 (1988).
Whether there has been a breach of duty and any resulting liability is dependent upon the facts of
each case. Id.
Generally, trustees must meet the standard of care of a prudent person when dealing with
trust property. In re Green Charitable Trust, supra at 312. This rule is codified at MCL
700.7302 (formerly MCL 700.8135):
Except as otherwise provided by the terms of the trust, the trustee shall act
as would a prudent person in dealing with the property of another, including
following the standards of the Michigan prudent investor rule. If the trustee has
special skills or is named trustee on the basis of representation of special skills or
expertise, the trustee is under a duty to use those skills.
To be prudent means to act with care, diligence, integrity, fidelity, and sound business judgment.
In re Messer Trust, 457 Mich 371, 380; 579 NW2d 73 (1998). In addition, a trustee is bound by
the fiduciary duties of honesty, loyalty, good faith, and restraint from self-interest. In re Green
Charitable Trust, supra at 313.
The prudent investor rule may require a trustee to diversify a trust's investments. That
rule is summarized in Restatement Trusts, 3d (Prudent Investor Rule) (1990), § 227(b), p 8, as
follows:
In making and implementing investment decisions, the trustee has a duty
to diversify the investments of the trust unless, under the circumstances, it is
prudent not to do so.
While there may generally be a duty to diversify investments, a settlor may always authorize a
trustee not to diversify. Baldus v Bank of California, 12 Wash App 621, 628; 530 P2d 1350,
1355 (1975).
Liability for lack of diversification is based upon a breach of a fiduciary's
duty to prudently manage the estate. In re Estate of Janes, 165 Misc 2d 743; 630
NYS2d 472 (1995). To determine whether such a breach of duty occurred, the
Court must evaluate the fiduciary's actions along with relevant factors which
5
MCL 700.813, repealed by 1998 PA 386, provided as follows:
Except as otherwise provided by the terms of the trust, the trustee shall
observe the standards in dealing with the trust assets that would be observed by a
prudent man dealing with the property of another, and if the trustee has special
skills or is named trustee on the basis of representations of special skills or
expertise, he is under a duty to use those skills.
-6-
affected or ought to have affected the fiduciary's decisions; for instance, the
performance of the market, the corpus of the estate (both in size and
composition), the situation and needs of the beneficiaries, potential tax
consequences, the time (investment) horizon of the estate, the terms of the
governing instrument . . . and the intent of the settlor . . . .
In this extensive and non exhaustive list, the terms of the governing
instrument are highly important because the terms of the instrument itself can set
the stage for the weight to be applied to the other factors, and can completely
reframe the fiduciary's perspective in monitoring the interplay between them. [In
the Matter of Will of Charles G Dumont, 4 Misc 3d 1003(A); 791 NYS2d 868
(NY Sur, 2004).]
An examination of the trust provisions in these cases reveal that the settlors of both trusts
relieved the trustees of any duties to diversify assets and follow the prudent man investor rule
with respect to the Company's stock.
The 1946 trust specifically gave the trustees the authority to retain the Company stock
even if it might be imprudent to do so:
6. The Trustees shall invest and reinvest the trust estate in such
investments as they deem proper. They shall not be required to dispose of stock
in the Jervis B. Webb Company, or any company succeeding to part or all of the
business of Jervis B. Webb Company, and they may retain the same or may make
loans to or additional investments in any such company regardless of whether
they consider it a prudent investment for trustees. Stock dividends and stock
rights are to be treated as corpus. Any action of the Trustees, including voting
stock or deciding on investments or sales, shall be valid if taken by a majority. . . .
[Emphasis added.]
The 1989 trust similarly allowed the trustees to retain the Company stock, and further
expressed the settlor's intent that the purpose of the trust was to retain the Company's stock so
that his children, who were employed by the Company, would thereby benefit.
Five of Settlor's seven children and the spouse of a sixth are employed by
the Jervis B. Webb Company. Settlor believes it would enhance the interest of
these six children and their spouses in the Webb Companies as that term is
defined below and would strengthen the companies if the six children were to
acquire a beneficial interest in them on the terms set forth below. Settlor owns
stock in the companies and wants to use it to set up such a beneficial interest.
Accordingly, Settlor by these presents assigns, transfers, conveys and delivers to
the Trustees the property described in the schedule attached hereto and made a
part hereof. The Trustees agree to hold the same on the following terms and
conditions.
***
(b) Powers of Trustee.
-7-
(i) The Trustees specifically are authorized to retain all shares of stock in
any Webb companies without regard to any rule or requirement of diversification
of investments, and even if such stock does not pay dividends or pays only a small
dividend. For purposes of this trust, the term "Webb companies" shall include
Jervis B. Webb Company and any corporation now or hereafter affiliated with or
growing out of Jervis B. Webb Company, and "stock of Webb companies" shall
include stock received as a result of a change in capital structure, liquidation,
partial liquidation, reorganization, split-up, spin-off, dissolution or merger
involving Jervis B. Webb Company or any other Webb Company.
(ii) Subject to (i), above, the Trustees shall have the power to invest and
reinvest the trust assets in such stocks, bonds and other securities and properties
as they may deem advisable, including unsecured obligations, undivided interests,
interests in investment funds, mutual funds, legal and discretionary common trust
funds, leases, properties which are outside of the State of Michigan and
partnerships, all without diversification as to kind or amount and without being
restricted in any way by any statute or court decision (now or hereafter existing)
regulating or limiting investments by fiduciaries; and to register and carry any
property in their own names or in the names of their nominee or to hold it
unregistered.
(iii) In addition to the powers granted above and elsewhere in this
Agreement and to all powers granted by law to trustees generally, the Trustees
shall have the powers and authority set forth in Article 8 of the Revised Probate
Code, being Public Act 642 of Michigan, 1978, which Article is incorporated
herein by reference, as it exists on the date of this Agreement. [Emphasis added.]
Although both trusts vested the trustees with the discretion to sell the Company's stock,
they also vested the trustees with the authority to retain the stock even if it would not be prudent
to do so, without regard to the rules of diversification, and even if the stock did not pay
dividends. The 1989 trust also made it clear that the settlor intended that the trustees should
retain the Company stock so that the family could maintain control of the Company and continue
to have employment opportunities with the Company.
The trial court properly determined that both trusts relieved the trustees of any duty of
diversification. Because both trusts allow the trustees to retain the stock even if it would not be
prudent to do so, there is no genuine issue of material fact that the settlors of both trusts intended
that the trustees would not be subject to the prudent investor rule with respect to the Company
stock. Accordingly, petitioner cannot rely on that rule to argue that respondents breached their
fiduciary duties as trustees by holding onto the stock.
Respondents acknowledge that a court of equity may intervene and change the terms of a
trust if some unusual exigency arises that was not contemplated by the settlor. Young v Young,
255 Mich 173, 179-180; 237 NW 535 (1931). Here, however, petitioner has not demonstrated
that such an exigency existed.
In light of the plain language of the trust instruments that clearly demonstrate that the
trustees may retain the Company stock even if it would not be prudent to do so, the trial court did
-8-
not err in concluding that petitioner failed to establish a genuine issue of material fact with
regard to his claims that the trustees breached their fiduciary duties by retaining the Company
stock and failing to diversify the trusts' assets.
Affirmed.
/s/ David H. Sawyer
/s/ Kurtis T. Wilder
/s/ Harold Hood
-9-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
