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Michigan’s New Discovery Rules Part 5

Conclusions and Impressions

1.  Upping Your Game

The impact of these new rules can hardly be overstated. Those who dabble in litigation will need to think seriously about whether they want to put in the effort to stay in the game.  Relying on your paralegal to catch all this?  Good luck.

2.  Types of probate cases that will be impacted

Some types of probate proceedings will be unaffected by these changes. These would presumably include things like:

  • Uncontested petitions to formally open or close a decedent’s estate.
  • Uncontested petitions to allow an accounting.
  • Uncontested petitions to appoint a guardian or conservator.
  • Uncontested petitions for protective orders, including protective orders related to Medicaid planning. (It will be interesting to see if the attorney general’s office demands initial disclosures, and what local courts make of those if they are demanded.)

On the other hand, we can anticipate that these new rules will routinely impact the following types of probate proceedings:

  • Contested petitions to appoint or modify a guardianship or conservatorship.
  • Fiduciary litigation, including petitions to remove and/or surcharge a Trustee or Personal Representative.
  • Contests regarding the validity of a Will or Trust (codicil or amendment).
  • Petitions to recover assets (in which context we will have to remind ourselves that if we include a count of conversion or other traditional circuit court action, doing so will trigger the required initial disclosure).

3.  Multiple Parties

Unlike traditional civil litigation, probate cases often involve many parties, each with their own counsel. Some of the discovery rule limits previously discussed will play out differently in these cases. For instance, a seven hour deposition cap may be problematic where four lawyers are asking questions for four different parties.  I suspect in those cases, the courts will either routinely grant extensions or the multiple litigants will schedule multiple depositions of the same deponent.

4.  The Court Reporter Employment Act of 2020

The obvious solution to the limits on interrogatories is to take more depositions.  I’m ok with that.  I’ve always believed that allowing people to think about their response and have their attorney assist them in framing the response is much less useful than putting the question to them, and probing their response with follow up questions.  But depositions are more expensive.

5.  Cost and Prejudice

These new rules will require more cost to get a case started, particularly the preparation of the required initial disclosure. Our firm, for instance, which has historically attempted to handle both high end will and trust contests along with cases involving the protection of vulnerable adults, will find it harder to take on the low-recovery exploitation cases.  In low dollar exploitation cases, we might anticipate being challenged by motions seeking to contain our discovery efforts based on the limited amount of assets at issue. In other words, I see these rules as harmful to the types of people we often represent, particularly cases involving the exploitation of vulnerable adults of modest means.

6.  Fishing Expeditions

What is and isn’t a “fishing expedition” is often subjective. We initiate litigation at times in which the primary basis for the action is the (what we think is reasonable) belief of our client that there was no way this older person would have done what they are claimed to have done but for the overreaching of a close friend or family member, often combined with that person’s declining capacity.  These are often difficult case to litigate, and the evidence that ultimately carries the day, or at least gets us through summary disposition and to a settlement, is only available after extensive discovery is completed.  Under this new regime, I worry that we will we be unable to put provide sufficient detail in an initial disclosure to survive that long.

7.  Getting Homered

These changes give the trial courts greater power to conclude that discovery requests are unjustified, too expensive, or intrusive. Call me cynical, but that kind of discretion can be used to favor certain firms and lawyers over others.

8.  More Harm than Good

While I am glad to have new tools to beat back the civil litigators who play in probate court with their abusive discovery techniques, in the end, for reasons stated above, I fear these changes will ultimately do more harm than good to the clients we commonly represent.

Michigan’s New Discovery Rules Part 4

In addition to the limitations imposed by the definition of the scope of discovery, the new rules specifically limit certain discovery tools, and more thoroughly address the discoverability of electronically stored information (“ESI”).

Specific Limitations

The new MCR 2.306(A)(3) and 2.306(3) place a seven hour limit on the deposition of a party.

The new MCR 2.309(A)(2) limits the number of interrogatories allowed (without court order) to 20. Each substantive subpart of an interrogatory will be counted separately.

Electronically Stored Information

The term “ESI” is defined at the new MCR 2.310(A)(2) as “electronically stored information, regardless of format, system, or properties. The new MCR 2.310(A)(1) includes ESI in the definition of “documents.”

The new MCR 2.302(B)(6) provides rules regarding the right to demand electronically stored information, rules that again balance the cost and accessibility of such records against their potential value and the reasonableness with which they can be recovered. In the new rule MCR 2.313(D), penalties can arise for the failure of a party or their counsel to take reasonable steps to preserve ESI that might be relevant to a case, which penalties can include jury instructions which direct that the jury presume the missing information was unfavorable to the offending party.

In addition, in cases involving significant ESI discovery issues, a court can require (or party can request) and ESI status conference and discovery plan. MCR 2.401(J).  Pursuant to the new MCR 2.401(J)(3), the attorney who attends this conference must be “sufficiently versed in matters relating to their clients’ technological systems” or have an outside expert present as well.

Tighter Reins

In addition to discovery changes discussed above, additional rule changes are designed to impose tighter controls on litigation and to provide courts with greater oversight. The new tools include more detailed scheduling conference and pretrial conference orders, as well as a rule requiring parties to work together on discovery plans.

A revised MCR 2.401(B) provides trial courts with an extensive 18 point checklist of issues to be addressed at the initial scheduling conference. A similarly detailed checklist is provided for courts’ to use when conducting the final pretrial conference.

In addition, a court can order, or a party can request, that the parties work together and stipulate to a discovery plan. MCR 2.401(C).  Such a plan must address “all disclosure and discovery matters.”

Other Notable Changes

The new MCR 2.301(B) clarifies that discovery requests must be issued so that the responding party has the time allowed for a response to pass before the close of discovery. That means, it isn’t good enough to issue a discovery request before the close of discovery.  This issue comes up often.

Obligations to supplement discovery, including the initial required disclosure are detailed in the new MCR 2.302(E)(1)(a), and penalties for failing to supplement are addressed in a new MCR 2.313(C).

New rules have been inserted that provide a process to non-parties who receive subpoenas to challenge the reasonableness of those requests. MCR 2.305

A new rule MCR 2.411 provides a process for mediation of discovery disputes.

Michigan’s New Discovery Rules Part 3

Required Disclosure

The changes to the scope of discovery are dramatic; but the impact of those changes pales in comparison to the new rules regarding required disclosures.

What

Under these new rules, specifically MCR 2.302(A)(1), in every civil action that is filed, the party filing the action (or a counterclaim) must also serve a “Required Initial Disclosure” which provides the opposing party with:

(a) the factual basis of the party’s claims and defenses;

(b)  the legal theories on which the party’s claims and defenses are based, including, if necessary for a reasonable understanding of the claim or defense, citations to relevant legal authorities;

(c)  the name and, if known, the address and telephone number of each individual likely to have discoverable information—along with the subjects of that information—that the disclosing party may use to support its claims or defenses, unless the use would be solely for impeachment;

(d) a copy—or a description by category and location—of all documents, ESI, and tangible things that the disclosing party has in its possession, custody, or control and may use to support its claims or defenses, unless the use would be solely for impeachment;

(e)  a description by category and location of all documents, ESI, and tangible things that are not in the disclosing party’s possession, custody, or control that the disclosing party may use to support its claims or defenses, unless the use would be solely for impeachment. The description must include the name and, if known, the address and telephone number of the person who has possession, custody, or control of the material;

(f)  a computation of each category of damages claimed by the disclosing party, who must also make available for inspection and copying as under MCR 2.310 the documents or other evidentiary material, unless privileged or protected from disclosure, on which each computation is based, including materials bearing on the nature and extent of injuries suffered;

(g) a copy (or an opportunity to inspect a copy) of pertinent portions of any insurance, indemnity, security equivalent, or suretyship agreement under which another person may be liable to satisfy all or part of a possible judgment in the action or to indemnify or reimburse for payments made to satisfy the judgment, including self-insured retention and limitations on coverage, indemnity, or reimbursement for amounts available to satisfy a judgment; and

(h)  the anticipated subject areas of expert testimony.

The new MCR 2.302(A)(2) and (3), place additional requirements on attorneys initiating No-Fault and Personal Injury actions.

When

In a civil action, pursuant to the new MCR 2.302(A)(5), this disclosure must be filed within 14 days from the date that the opposing party answers or 14 days after they appear, if a party files an appearance after an initial answer is filed.

Who

In a civil action, pursuant to the new MCR 2.302(A)(5), this disclosure must be served on all parties who appear.

Required Disclosures in Probate Proceedings

In probate proceedings, the initial required disclosure is not mandatory. Rather, it becomes mandatory if one of two things occur:  (1) an interested person files and serves a demand for it, or (2) a court orders it after someone objects or contests the petition that has been filed.  MCR 5.131(2).  In other words, it is not always required, but it is readily available and will presumably be called for in most contested probate proceedings.

In terms of “who,” pursuant to the new MCR 5.131(B)(1), all interested persons are considered parties to a probate proceeding. And then, pursuant to our new MCR 5.131(B)(2)(a)(ii), when required, the disclosure must be served on all interested persons who object or contest the petition.  When the initial disclosure is a product of a Court order, as opposed to a party demand, the Court itself may define the parties entitled to receive them.

Timing for initial disclosures in probate proceedings are defined in the new MCR 5.131(B)(2)(c). Essentially the disclosure must be served within 14 days after the first hearing, or 21 days after the Court orders them in those cases where the disclosure is a product of a Court order.  In addition, in probate proceedings, an objecting party and respondent must serve disclosures within 14 days after the petitioner’s disclosures are due, or 28 days after a demand or objection is filed.

Michigan’s New Discovery Rules Part 2

Proceeding or Civil Action

The distinction between a “probate proceeding” versus a “civil action” which happens to be initiated in a probate court, remains unaltered. MCR 5.101.

For the uninitiated, a probate proceeding is initiated by filing a petition. A civil action is initiated by filing a complaint.  Whether and when it is proper to file a civil action in probate court depends on a variety of factors, a discussion of which is outside the scope of this article.  Suffice to say, such instances occur regularly, and experienced probate litigators often file both types of actions in the same matter.  While probate litigators have always needed to be mindful of where they stand in terms of a proceeding or civil action, these rules make that distinction even more critical in the context of conducting discovery.

Proportional Discovery

Technically, there continues to be a difference between the “scope of discovery” available in a probate proceeding vis a vis a civil action. I say “technically” because in practice the distinction is rarely given any significance.

In a probate proceeding, the scope of discovery remains: “limited to matters raised in any petition or objections pending before the court.” Currently found at MCR 5.131(B). As of 1/1/20, to be found at MCR 5.131(B)(3).

The real change comes from the rewrite of MCR 2.302(B)(1) which defines the scope of discovery in civil actions. The shorthand version of that rule has long been: anything not privileged that is “reasonably calculated to lead to the discovery of admissible evidence.”  It now says:

… any non-privileged matter that is relevant to any party’s claims or defenses and proportional to the needs of the case, taking into account all pertinent factors, including whether the burden or expense of the proposed discovery outweighs its  likely benefit,  the complexity of the case, the importance of the issues at stake in the action, the amount in controversy, and the parties’ resources and access to relevant information.   Information within the scope of discovery  need not  be admissible in evidence to be discoverable.

The new rules also provide a process for parties to have a court address whether particular discovery requests are, or are not, justified by the factors laid out above.

This change essentially shifts the burden of proving the necessity or appropriateness of a discovery request from the party (or non-party) receiving it, onto the party issuing it. The practice for many litigators now is to flood the opposing party with extensive requests and let them file a motion for protective order, from which platform they can argue that the requests are overly broad or unduly burdensome.

FOOTNOTE: While one could suggest that these new proportional balance rules are not applicable to discovery in probate proceedings, I believe, as a practical matter, this is not the case. Although the above-cited language comes from the definition of the “scope of discovery” in civil actions, and, as indicated above, the scope of discovery for probate proceedings is separately defined by its own rule, the new probate rules also state that all the discovery rules for civil actions apply to probate proceedings except for the rules regarding required disclosures. MCR 5.131(B)(1). Accordingly, it seems unlikely that a trial judge would entertain the argument that discovery requests in a probate proceedings can continue to operate outside the bounds of proportionate justification that the Supreme Court has seen fit to place on all other forms of discovery.

Michigan’s New Discovery Rules Part 1

Litigation of all types will soon be more complicated and more expensive, probate litigation included. This development comes about because of the extensive revisions to the Michigan Court Rules relating to civil discovery which take effect January 1, 2020.  For those who litigate primarily, these changes will require you to up your game.  For those who litigate less frequently, these changes will invite you to consider whether to stay in the game at all.

It would not be wrong to say that, as a practical matter, the new “required initial disclosure” rules will convert Michigan from a notice pleading state to a something arguably more onerous than code pleading state. At the same time, the availability of discovery tools are being reined in, both by specific limitations on their use, and by a new concepts of proportionality.

I have a lot to say about this topic. I’ve divided my thoughts into five parts (this being the first) and will post these parts over the course of this week. In those five parts I will attempt to provide a broad overview of these new rules, with a focus on the manner in which these rules apply to actions arising in probate courts.

To read the new rules, click here.

If you are especially interested in this topic, I will be leading a discussion on it as part of my annual “Litigation Update” at the ELDRS conference in Crystal Mountain, which takes place October 2-4. Click here for information on the conference, and to register.

I’ve got a feeling

The big news at our firm is that James P. Spica is joining Chalgian and Tripp as of September 1.

The big news in my personal life is that I turned 60 years-old a few weeks back.

Looking for Adventure

Jim is leaving the silk stocking firm of Dickinson Wright, a firm that is well over 100 years-old, and which has more than 400 lawyers; to join what is little more than a startup – albeit a rather successful one, if I do say so myself.

Why would he make such a move? You ask.

I asked.

He said: adventure.

Dang.

I’ve been feeling my age lately, and wondering if the days of tilting at windmills were behind me. Then suddenly a colleague and contemporary shows me the light.  Having Jim join the firm is awesome in so many ways, but on a personal note, his sense of adventure is reinvigorating.

Synergy

Jim is a creative lawyer of the scholarly variety. His love is writing, analyzing, and making new law.  He’s had a hand in every major development in Michigan trust law for more than decade:  our modified rule against perpetuities, decanting statutes, and divided and directed trustees – to name a few.

We are good (very good I think) at mining the unexplored and cutting edge regions of probate law, estate planning, elder law, and special needs.

The idea of combining these two energies, of bringing Jim’s creativity into these new arenas – down to the people, as it were – is beyond exciting.

Of All the Gin Joints in All the World

I’ve known Jim for years. Through our professional activities we’ve shared dinner and conversation more than once. But I didn’t really know or understand Jim until recently.  And now that I do, I’m feeling a bit like Humphrey Bogart at the end of Casablanca; a feeling that this may be the beginning of a beautiful friendship.

Not Making This Up

In a recently released unpublished opinion, a panel of the Michigan Court of Appeals has held that a trust can own real property as a joint tenant with rights of survivorship. Only two members of the panel signed on to the decision, a third dissented.

In the case of Schaaf v Forbes (click on the name to read the case), a deed was created whereby the trustee of a trust was made a joint tenant with other individuals, with rights of survivorship.  The trial court concluded that the deed was invalid because a trust cannot be made a party to such a deed, for the reason that a trust has no measuring life.

On appeal, the COA goes to great lengths to find statutory authority to reverse the trial court’s finding and to conclude that a trust can in fact be a joint tenant on such a deed.  They do not explain how such a deed would operate.

The dissenting judge (very politely) points out that the outcome offered by the majority of the panel is not only a stretch with respect to the statutes they rely upon, but provides a ridiculous outcome. Click here to read the dissent.

Let’s Talk About Medicaid Changes

Chalgian and Tripp will be putting on a series of conversations about recent changes to Medicaid planning rules, including the impact of the Hegadorn decision, the status of SBO Trusts, and the latest considerations regarding homestead treatment and protective orders.

There will be a program in Saginaw (August 20), with the discussion led by David Shaltz and Joe Weiler; and a program in Southfield (August 29), with the discussion led by David Shaltz and Sara Schimke.  A third program is being planned for Jackson, although the date has not been confirmed.  The plan is for David Shaltz and Amy Tripp to lead the conversation in Jackson.

To sign up for the Saginaw program: click here.

To sign up for the Southfield program: click here.

To get on the waiting list for the Jackson program, send an email with your contact information to clouser@mielderlaw.com.

These programs are for lawyers and other professionals involved in Medicaid planning. Seating will be limited. There is no charge. Registration is required.

I hope you will join us.

Drafting Trap Proves Litigator’s Life Line

The Michigan Trust Code provides for a fairly strict statute of limitations to contest the validity of a trust agreement that “was revocable at the settlor’s death.”  Most estate planning lawyers presumably operate on the assumption that this protection applies to the revocable trust agreements they routinely draft for their clients. But as this (unfortunately) unpublished Court of Appeals decision explains, whether or not a trust was revocable at the settlor’s death may depend on what the trust says about the incapacity of the settlor while alive.

MCL 700.7604 says that a trust contest must be started within two years from the date of the death of the settlor, if the trust was revocable when they died. The statute also provides a six month statute of limitations if the trustee provides sufficient notice, the requirements of which notice are defined in the law.  Click here to read MCL 700.7604.

In Linda Dice v Esther G. Bennett Revocable Trust (click on the name to read the case) a trust was contested two years and nine months after the death of the settlor.  The trustee moved for summary disposition based on the statute of limitations for such contests as provided for in MCL 700.7604.  The trial court granted that motion.  But the litigants appealed and the COA reversed.  The decision of the COA exposes a litigation opportunity that I expect few trust drafters or probate litigators have considered.

The Esther G. Bennett Revocable trust agreement included a settlor incapacity provision that said:

In the event two  registered  physicians, one of whom should be the Grantor’s  personal physician,  deliver an instrument  to  the  Successor  Trustee certifying that the Grantor during her lifetime has become incapable of managing her own affairs, the Grantor shall cease to be the Trustee, and the successor trustee shall, upon giving its acceptance of trust, become sole Trustee without requiring action or permission of any nature or kind whatsoever from the Grantor, and shall possess and be subject to those rights, duties and obligations which it would assume if it had been named as the initial trustee hereunder. Until two registered  physicians shall  certify that  Grantor has  again become  capable of managing Grantor’s own affairs, any attempt by Grantor to exercise any reserved rights and powers under this Trust, including but not by way of limitation, the right  of modification,  revocation, amendment, withdrawal or  principal and/or receipt or direction of income, or the sale of principles of this trust estate, or change of beneficiary of any insurance policy subject to this Trust, shall be void and during such period of time this Trust shall be irrevocable and not amendable.

In analyzing this case, he COA notes that the definition of revocability in the MTC is a default definition, and can be overridden by the terms of the trust itself. Here the Court concluded that the facts of this case, and the language of this trust agreement, caused this trust to have become irrevocable upon the settlor’s incapacity and, accordingly, the statute of limitations set forth in MCL 700.7604 did not apply.

Interestingly, in this case, a fact issue remains as to whether the medical reports obtained through discovery were sufficient to meet the requirement that two doctors certified the settlor’s incapacity. But that’s an issue for another day.  For the purposes of this blog post, it is enough to say to our readers who draft trust agreements:  It’s probably a good idea to look at the language you include in your settlor incapacity provisions and consider whether a modification may be warranted.  And to the litigators who handled this case: Bravo.  I doubt that many of your colleagues would have recognized this opportunity or pursued it was well.

Probate Appeals: By the Numbers

If you like statistics, you might find this interesting.

With the assistance of a law clerk, we cataloged every case appealed from a probate court between June 1, 2016 and May 30, 2019 (three years), to see what we could find out.

We came up with 144 cases. For the purposes of this blog post, I decided to ignore 26 of those cases. I ignored some cases because, although they arose from a probate court decision, the issues involved were not traditional probate questions.  That is, they were only tangentially probate cases.  I also decided to disregard the mental health commitment cases.  Although these are probate matters, the issues they raise on appeal are so distinct from the other types of probate cases, that it just seemed helpful to leave them out.

As to the remaining cases, here’s what we found:

Publication

90% of probate cases are unpublished (just 12 published out of 118 cases in three years)

Nature of Dispute

58.4% of the cases appealed involved issues related the administration of a trust or decedent’s estate. This category includes a variety of issues that come up in the context of administration, including, for example: efforts to remove or surcharge a fiduciary, fee disputes, and litigation involving property rights or values.

20.3% involved the validity of a will, trust or other testamentary document.

12.7% were guardianship or conservatorship matters that related to the need for, or the appointment of, a fiduciary.

The remaining 8.5% dealt with administrative issues in guardianship or conservatorship matters.

Outcome

Most cases are affirmed. Of course, just because a trial court decision was not affirmed doesn’t mean the trial court was reversed. A case that was not affirmed may have been reversed, remanded, vacated, affirmed in part and reversed in part, etc.. But rather than try to slice things too finely, I simply calculated the likelihood of complete affirmation.

72% of all cases are affirmed in full on appeal.

The likelihood of affirmation seems to vary somewhat with the type of matter. Among trust and estate administrative matters, the likelihood of affirmation is slightly higher than average: 76%.  For cases involving the validity of a testamentary document, affirmation occurs only about 62.5% of the time.  For guardianship and conservatorship cases, the Court of Appeals affirmed 68% of the cases decided during the three years reviewed.

Conclusions

Only a small percentage of probate cases are published: 10%.

A significant majority of the time, the trial court’s decision is affirmed in whole: 76%.

This post deals only with cases in the Court of Appeals. While a few of these cases were taken up by the Michigan Supreme Court, I did not track those.

Thanks to our awesome clerk, Asma Ali, for her excellent work in compiling information and assisting me with this project.