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Reflections from a Costly Goose Chase

The crux of this unpublished opinion is whether the cost of litigation initiated by a conservator that turns out to be a big waste of money, should be paid out of the estate.

In In Re Conservatorship of Marilyn Burhop the probate court appointed a local lawyer (“Jones”) as conservator over a vulnerable adult (click on the name to read the case).  Jones learned that prior to her appointment, the ward, Marilyn, transferred nearly $500,000 to certain acquaintances (the “Sirchias”).  In addition, Marilyn changed her estate plan to benefit the Sirchias exclusively.

After some preliminary investigation, Jones decided to sue the Sirchias to recover the funds and to initiate litigation to set aside the estate planning changes. After incurring about $175,000 in legal and fiduciary fees, Jones settles. Curiously, perhaps conveniently, the COA fails to share the details of the settlement – such as whether the conservator recovered anything. But reading between the lines, it seems that Jones simply dropped the case.  The issue then became whether the massive fees that Jones and her attorneys charged to pursue this litigation should be allowed as expenses of the estate, when, in the end, the estate received no benefit.  The trial court allowed the fees in their entirety, and the order allowing those fees is what was appealed and affirmed.

Here’s what I think:

Seek Instruction

The way this case begins is all too common. These days, conservators are often appointed to protect a vulnerable adult from financial exploitation, which exploitation may have already begun.  Accordingly the question of whether the conservator should simply protect what’s left or pursue recovery of what may have been improperly removed is typical.  In this case, Jones apparently did some preliminary investigation before initiating litigation, but what Jones did not do, and what I think was her initial mistake, was to ask the probate court for instruction.

In our firm, when handling these matters, we commonly to seek court instruction at the outset. We ask the court to authorize the conservator to pursue litigation and also to enter into an engagement with our firm.  In that process we present the court with the proposed engagement letter.  We don’t do this in every case, but I am thinking we will start doing it more often.

Certainly, it seems to me that, before Jones was $175,000 into the litigation, she should have gone before the court and asked whether this matter should continue to be pursued and at what cost. Perhaps the court would have told her not to pursue the litigation at all, perhaps the court would have found that a contingency fee arrangement would have been more appropriate, or perhaps the decision to drop the matter would have been made at an earlier date?  We won’t know, because court instruction was apparently never requested.

Asset Recovery v Estate Plan Changes

In this opinion, the COA fails to address what I think is a critical distinction. The appropriateness of a conservator seeking to recover misappropriated funds is one thing, challenging estate planning documents is quite another.

With respect to misappropriated funds, such funds would become property of the conservator, would provide additional resources to benefit the ward during her remaining life, and failure to pursue recovery in a timely manner would present the possibility that a statute of limitations would be missed or that the funds would be dissipated and become unrecoverable.

Challenging the estate planning documents is different. Assuming the changes are strictly with respect to testamentary disposition, setting them aside would not increase the resources available to provide for the ward’s needs, and in most cases there would be no statute of limitations to worry about.  In fact, our laws are structured so that such changes are disclosed to the real parties in interest upon death (or in the case of a trust, upon incapacity) and the real parties in interest are empowered to protect their own interests at their own cost.  If there is any argument that a conservator would have a reason to engage in litigation over the validity of estate planning documents, it would be with respect to MCL 700.5428 which imposes duties on the conservator to manage resources in manner that does not disrupt the known estate plan.  Accordingly, for instance, if there are specific gifts, beneficiary designations or joint accounts, in deciding what resources to dissipate on the needs of the ward, the conservator must take into account the impact of those decisions on the overall estate plan of the ward.  But this issue was not raised in this case, and if it were, the appropriate approach would seemingly be to seek court instruction regarding the use of resources.

To my thinking, the decision of this conservator to spend money litigating the validity of the estate planning documents in this case is highly questionable.

Disregarding Valentino

There is an old rule that says a fiduciary is entitled to fees when what they have done has benefitted the estate. The 1983 Michigan Court of Appeals case In Re Valentino Estate, 128 Mich App 87 (1983) is often cited for this rule.  This opinion holds that Valentino was superseded by EPIC.  Well, that’s news to me.  First, I would be interested in knowing whether there is any published authority for that conclusion, I know of none and they cite none.  Further, it is worth noting that as recently as 2010, with the adoption of the Michigan Trust Code, the concept of a benefit to the estate being a basis for allowing fees was seemingly recognized in MCL 700.7904.  While that law relates to a non-fiduciary’s claim for recovery of fees from a trust, the commentary cites cases much older than Valentino for this rule.


A common litigation strategy is to simply outspend your opponent until they wilt. In this case, the COA asserts that the Sirchias did just that.  The COA says the Sirchias engaged in a “scorched earth” litigation strategy, noting that no less than sixteen motions for summary disposition were filed (and denied).  The suggestion is that Jones may have had a case, but only relented because she was running out of money to spend on the litigation.  Seems plausible.  But where in the law does it say that in deciding whether to initiate litigation the conservator should assume that the opposing party will play nice? Rather, I think, this is all the more reason that Jones should have sought court instruction before starting this fight, should have limited the scope of litigation to asset recovery, or retained counsel on a contingency basis.

A Duty to Litigate

In passing the COA in this opinion says that Jones would have been negligent “under the circumstances” not to have pursued this litigation. Um.  Not a published decision so I guess I will leave that conclusion alone.

The Specter of Bleak House

Let’s step outside our bubble for a minute and look at this from the perspective of the Sirchias. The estate of someone they apparently had a close relationship with is diminished by $175,000.  Their inheritance is diminished by $175,000.  They presumably had to spend a similar amount defending themselves against claims that, in the end, were dropped.

Many people (who are not probate lawyers) perceive the probate court as a place where the property of the dead and dying is consumed by a hungry pack of lawyers and court officials. It’s an unflattering image that dates back centuries. Without passing judgment on anyone involved in this sordid affair, you can’t help but acknowledge, I think, that this case sort of feeds into that perception.


I’ve gone on long enough.

Many many conservatorship cases arise where something is amiss and prior conduct may give rise to the possibility of financial exploitation of the ward. Whether the conservator tries to remedy those wrongs and recover the missing assets, or to simply move forward and do their best with what they have control over, is often a decision they need to make.

I don’t mean to beat up on the conservator in this case, or to suggest that she didn’t act in good faith. Jones may well have been justifiably outraged by the actions of the Sirchias in the period prior to her appointment as conservator. But even giving this conservator the benefit of every doubt, in the end, it is hard to say that the ridiculously unfavorable outcome of this case could not have been ameliorated, perhaps avoided, had other reasonable decisions been made along the way.

Prolonged Fees Fight Offers Lessons and Concerns

Cases about legal fees are always curious, and who pays whose legal fees is almost always an issue in probate litigation.  This new unpublished Court of Appeals opinion is the second appeal in the same matter.  The facts are complicated and somewhat hard to follow – but for those of us who handle these issues, I think the case is sufficiently interesting to make the exercise worthwhile.

Click here to read: In Re Estate of Charlotte Westman.

Basically it seems an attorney was appointed PR of his mother’s estate. He hired a large metro-Detroit firm to represent him as PR. In that capacity he was involved in extensive litigation.  As a result of the litigation the trial court found that over $100,000 of legal fees charged to the estate did not benefit the estate and that he was personally responsible for those fees.  The law firm he hired then brought an action against him to have their fees secured against his share of his mother’s trust.  He contested that action – but lost in the trial court. In the first appeal, the COA held that the law firm could not secure their fees against the trust because they only represented him in the estate, but that the client/son could potentially be sanctioned for the pleadings he filed without representation in which he opposed the law firm’s efforts to collect.  That issue was remanded. On remand, the trial court decided that he would be sanctioned and coincidentally that the amount of the sanction would be the same amount as the law firm’s claim – $20,000+.   So, to be clear, a law firm that represented a former PR was able to file an action in the estate proceeding to recover legal fees it incurred in its own efforts to secure fees from a former client, and even though the law firm was unsuccessful in its efforts to obtain that secured position, the probate court could nonetheless require the former client to pay the law firm for its costs based on sanctions imposed under MCR 2.114, leaving the former client still responsible for the $100,000+ obligation incurred by him while PR, and an additional $20,000+ imposed upon him as a sanction.  This sanction is the subject of this second COA decision.

The client makes a number of seemingly reasonable arguments as to why this process and outcome may not be appropriate under Michigan law. Among other things, the client argues that:

  • He engaged the firm as PR and did not contractually agree to be personally responsible for the disallowed fees.
  • This is basically an action in contract between himself and the law firm, which law firm is not an interested party or creditor in the estate proceeding, and therefore is using an improper forum.
  • That, even if this were a proper forum, the fact that he was not allowed to engage in discovery to defend himself would make the trial court’s decision void.

None of these arguments prevail and the COA affirms the decision of the trial court.

The legal analysis and conclusions of the COA are far more detailed than I have time or inclination to present.  Sure, the law firm is entitled to be paid.  And I understand (and often appreciate) that trial courts tend to do what they can to make sure that the lawyers who advocate in front of them get paid. But, I have to say that I am left with the feeling that if I wasn’t a lawyer, I might think the system was rigged.


Playing the Sanctions Game in Probate Court

The Court of Appeals recently issued an unpublished opinion in three combined appeals all relating to the Estate of Robert Winfield Cederquist (click here to read the opinion).  The case provides a good launching spot from which to review the rules related to sanctions for frivolous pleadings and wasteful litigation in the course of probate matter.

The opinion ominously introduces the case as follows: “The now-decimated estate at the heart of this suit has been the subject of extensive litigation in the probate court…” And the COA goes on to explain that the total value of this estate when the litigation started was about $500,000, while the appellant is seeking to recover legal fees and costs in excess of $600,000.  That’s right – more legal fees than assets in the entire estate – and those are the fees of just one of the parties.

The party that prevailed in the trial court (the appellant) sought to recover the fees they spent on the case by having the trial court determine that this case was frivolous, and therefore that the losing party was obligated by statute to pay their legal fees. The trial court did not award the fees, and the aggrieved party appealed. The COA affirmed the trial court.

Very importantly, the appellant sought sanctions only under the statute (not the court rule, as discussed below) and under only one prong of the statute. The statute is MCL 600.2591(click here to read the entire statute).  This statute mandates that a trial court sanction the losing party (and their attorney) in any case in which the court finds that the action was “frivolous.”  The statute then defines “frivolous” as one of the following:

(i) The party’s primary purpose in initiating the action or asserting the defense was to harass, embarrass, or injure the prevailing party.

(ii) The party had no reasonable basis to believe that the facts underlying that party’s legal position were in fact true.

(iii) The party’s legal position was devoid of arguable legal merit.

This appellant sought relief only under the first of those prongs. The trial court found, and the COA affirmed, that appellant failed to establish that at the time the original pleadings were filed the primary purpose was to harass, embarrass or injure the respondent.

Abusive Discovery. The case includes a discussion of wasteful and excessive discovery in the course of litigation and the relevance of such conduct in determining whether such sanctions apply. My shorthand characterization of their conclusion is that:  While abusive discovery may be evidence of a bad intent, if is not determinative.  Further, the COA looks at the “defense” that a party cannot assert that the discovery was unnecessary (and therefore evidence of a frivolous action) when that party did not move to have the discovery stricken (i.e., seek protective orders) during the course of discovery.  The COA rejects that defense, and says that abusive discovery can be evidence, but that wasteful discovery alone does not mean that the “primary purpose” at the time the case was started was to harass, injure or embarrass.

The Court Rule Option. The COA notes that the case is limited to the issue raised: the application of MCL 600.2591(3)(a)(1); and that appellant did not assert on appeal that the action, when filed, was without any factual basis or legal merit (the other two options available under the statute), nor did appellant pursue sanctions under the court rule, MCR 2.114.

The relevant provisions of MCR 2.114 are:

(C) Signature.

(1) Requirement. Every document of a party represented by an attorney shall be signed by at least one attorney of record. A party who is not represented by an attorney must sign the document.

(2) Failure to Sign. If a document is not signed, it shall be stricken unless it is signed promptly after the omission is called to the attention of the party.

(3) An electronic signature is acceptable provided it complies with MCR 1.109(D).

(D) Effect of Signature. The signature of an attorney or party, whether or not the party is represented by an attorney, constitutes a certification by the signer that

(1) he or she has read the document;

(2) to the best of his or her knowledge, information, and belief formed after reasonable inquiry, the document is well grounded in fact and is warranted by existing law or a good-faith argument for the extension, modification, or reversal of existing law; and

(3) the document is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.

(E) Sanctions for Violation. If a document is signed in violation of this rule, the court, on the motion of a party or on its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the document, including reasonable attorney fees. The court may not assess punitive damages.

(F) Sanctions for Frivolous Claims and Defenses. In addition to sanctions under this rule, a party pleading a frivolous claim or defense is subject to costs as provided in MCR 2.625(A)(2). The court may not assess punitive damages.

Click here to read MCR 2.114 in its entirety.

As this case demonstrates, it is important to appreciate the differences between the statute and court rule in the context of sanctions. For one thing, while sanctions are mandatory for violation of either the court rule or statute, the mandatory sanctions under the statute are the costs and fees of the prevailing party.  Under the court rule the sanction is “an appropriate sanction” which may include legal fees and costs.  The court rule applies separately to each and every document filed (and signed) with the court.  The statute only applies to the pleading that initiated the case: the initial petition or complaint.


Clients always want to recover their fees in cases they win, or where assertions are made without any reasonable basis in fact or law. Michigan law allows for that result in many of those situations. But what clients think is frivolous or wasteful is much different from how the law defines it. [I have written before about managing client expectations on this point.  Click here to read “I love you but…” ]  What this case helps us understand is that when parties seek to recover costs and fees as sanctions, they must be mindful of the very precise language of the statutes and court rules that apply, and must carefully tailor their pleadings accordingly.

Playing with Knives

There’s a saying among litigators. It goes like this: Lawyers play with knives but never get cut.

The idea (or image) is two lawyers facing each other holding knives, with their clients in between. When the case is over, the clients are bloodied but the lawyers remain unscathed. It’s a coarse image – but there is a truth in it that allows the saying to survive.

Litigation is a mean game – at times brutal. It is common for clients to dislike (at times, vehemently dislike) the opposing party’s attorney. And it is sometimes hard for clients to understand how the lawyers in the case remain collegial throughout the process. They wonder: Why is my lawyer talking to that other lawyer about his/her kids or their practice? Why doesn’t my lawyer see what an a-hole s/he is?

But lawyers are like that. Civility and professional courtesy is part of our creed, or way of thinking. It is an integral part of how the system works (See “The Romance of the Law” below).

However there can be rare cases where the lawyers are cutting each other. Lawyers don’t like these cases, and Judges like them even less. Yet, in certain situations, if the attorney is going to adequately represent their client, it can’t be avoided.

In my practice this dynamic can come up in contested guardianship/conservatorship matters.

It is common in these matters to have a vulnerable adult who can be manipulated – and who will voice the preferences of whoever they are physically in the presence of (or under the control of) at the time. As a result, the person(s) or faction that has the most physical access to the vulnerable adult while the litigation is pending can often assert that they are acting in a manner consistent with the desires of the vulnerable adult, even though the truth is that: were the vulnerable adult allowed to spend sufficient time with the other parties, that vulnerable adult’s views would change to align with those parties. The upshot is that s/he that controls the vulnerable adult can take the vulnerable adult to a lawyer who can claim to represent the vulnerable adult, advocate for the objectives of the controlling faction, and use the vulnerable adult’s money to pay the costs of litigation.

Of course, an attorney should not do this. They should carefully assess whether their purported client has the capacity to retain legal counsel at all; and if so, take steps to separate the client from members of the faction to determine whether or not the expressions of the vulnerable adult client are in fact their own preferences, or simply the result of manipulation of the controlling faction. Where the attorney fails to protect their client in this way, the attorney representing the non-controlling faction may be forced to raise the issue to the court.

Although Michigan courts have yet to directly address this topic, some interesting work has been done in California. A report from the Estate Planning, Trusts and Probate Law section of the California State Bar; includes the following:


The existing statutory law concerning the appointment of an attorney by the court for a proposed conservatee who appears with a lawyer who contends that he or she is the proposed conservatee’s lawyer, is very unclear. Probate Code §§ 1470 and 1471 provides statutory authorization for the court to appoint an attorney to represent a proposed conservatee when the conservatee lacks counsel to represent himself or herself. Neither code section addresses a situation where a lawyer contends that he or she represents a proposed conservatee, but the court has serious doubts about whether the proposed conservatee has the capacity to hire the would-be attorney as the proposed conservatee’s attorney. The right to choose one’s counsel is a right with which courts are reluctant to interfere.

Unfortunately, it is common for the perpetrator of elder fiduciary abuse (“perp”) to arrange for a lawyer to represent a proposed conservatee in opposing the appointment of a conservator, or in seeking to have the perp appointed as the conservator. See, e.g., Conservatorship of Chilton, 8 Cal.App.3d 34, 86 Cal. Rptr. 860 (Second Dist. 1970), where (according to the Court of Appeals) Attorney Arditto really was the lawyer for the perp, although he pretended to be the lawyer for the proposed conservatee. Arditto litigation in opposition to the conservatorship, and took other steps that were supportive of the financial abuser, who also entered into a subsequently voided marriage with the incompetent.

The case of Conservatorship of Chilton, 8 Cal.App.3d 34, 86 Cal. Rptr. 860 (Second Dist. 1970) stands for the proposition that the lawyer who appears “for” the proposed conservatee, to oppose a conservatorship, can be acting in reality for the perpetrator against the best interests of the manipulated and incompetent proposed conservatee.


Emphasis added. Click here to read the report.

These situations seem to be a natural byproduct of the increasing number of contested guardianship/conservatorship matters. At this stage, Michigan courts don’t seem comfortable addressing this issue – and the attorney who makes accusations about opposing counsel can be seen as crossing that critical line by using their knife to slash fellow counsel. But litigation can be a rough sport – and when these situations arise, there may be no other options.