Fighting Over Rosa Parks’ Coat

The Michigan Court of Appeals released what will presumably be the final statement on litigation involving the estate of Rosa Parks, the deceased civil rights icon who died a resident of Wayne County in 2005. Click here to read the unpublished opinion.

The case is lengthy, and details much of the history of the litigation. In the end, it came down to a battle over her coat.  Not just any coat, but the coat she wore on the day she made history by refusing to give up her seat on a bus to a white person in Montgomery, Alabama.

The Readers Digest version is that Ms. Parks had no children. A Foundation offered a will which favored the Foundation.  Ms. Parks’ heirs challenged the will, but settled the case by agreeing to a share of the proceeds from the sale of the historically significant items she possessed, as well as the licensing value of Ms. Parks’ likeness.  As part of that agreement, one niece agreed to contribute the coat Ms. Parks wore on that fateful day in 1955 to the items to be sold.  She never produced the coat and later claimed she did not know its whereabouts.  Hence the litigation continued.

So, is there anything to be learned from this case (other than people will fight about pretty much anything)? Maybe:

  1. If you lose in probate court, it’s not cool to reframe the case and file it in circuit court, no matter how much you don’t like the probate judge. The probate judge decided that the Foundation was entitled to an offset for the missing coat, and advised the Foundation to initiate an action to determine the coat’s value. The Foundation went and filed a civil action in circuit court for breach of the settlement agreement. The circuit court bounced it back to probate court. The COA agreed with the circuit and probate court that the gravamen of the case was the administration of the estate and properly in probate court. The Foundation got sanctioned for forum shopping.
  2. There are limits to when you can get a jury in probate court. Sanctions are equitable and damages are legal. The COA agreed that this case was about sanctions, therefore equitable, and therefore the probate court correctly denied the right to a jury.
  3. Some things are really hard to value, and if the party seeking to establish a value fails to do so, they can lose big time. This part of the case is probably the most troubling. The Foundation was essentially instructed to bring an action to establish the value of the missing coat so that the heirs could be appropriately sanctioned. The Foundation produced an 84 page appraisal which offered a variety of methods for valuing the coat, using comparables such as Jesse Owen’s gold medal and the dress Marilyn Monroe wore when she sang the birthday song to President Kennedy. The heirs offered no evidence. The trial court concluded that the appraisal was unconvincing, and that therefore, the Foundation had failed to meet its burden to establish a value, and therefore, that no sanction would be allowed. The COA affirmed that result too.  Seems extreme. Perhaps the Foundation had reason to want to get to circuit court.

And that’s how it ends. Worth a read perhaps only because of who it involves.

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No Love for Contingency Contractor

In the combined cases of In Re Estate of Lujan and In Re Estate of Gulick (click on name to read opinion), the Court of Appeals upholds the trial court’s decision that a third-party contractor, Probate Asset Recovery LLC (“PAR”), is not entitled to a contingency fee for finding abandoned real properties (which have equity value) and for bringing that information to the attention of the Public Administrator. It’s a lengthy decision, and unpublished.

Essentially, PAR claims it is doing a public service by finding homes that need probate administration and notifying the PA before the property goes into foreclosure. PAR argues that a 1/3 contingency of the equity in such properties is fair compensation because their business model requires them to investigate many homes that turn out to be not worth pursuing for every home that they find which justifies opening an estate.  PAR says that if they can’t operate in this manner, they will go out of business and the solvent homes they now find will end up foreclosed, and Michigan families will lose out.

The COA counters that: Only lawyers are authorized to get paid contingency fees, and your business model isn’t our problem. Rather the trial court’s job is to look at what the reasonable value of your services were with respect to the property of this estate.  In these cases, the trial court determined that the reasonable value of your services was $45 per hour, and that decision is affirmed.

This Wayne County case comes in the context of significant bad publicity surrounding public administrators in the Metro Detroit area, and PAR’s role in particular. That context may have something – perhaps a lot – to do with the outcome and tone of this decision.  (To see one such report involving PAR and this issue, click here.)

For our purposes, the case would be helpful in situations in which a beneficiary is challenging the fees paid to a non-lawyer agent. In addition to affirming the rule that such arrangements need to be reasonable, this case provides support for the propositions that: (1) the trial court can directly reform contracts between the PR and the non-lawyer agent; and (2) in determining reasonableness of such arrangements, the trial court only concerns itself with the value provided to the estate and not the agent’s business model or public utility.

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SBO Believers Hear Heartbeat

In June 2017, I wrote about the combined cases of Hegadorn and Ford under the title Bloody Thursday. As discussed in that post, these combine Court of Appeals cases supported the Michigan Department of Health and Human Services conclusion that resources held in a “solely for the benefit” trust are countable assets for the purposes of determining eligibility for long term care Medicaid benefits.  In other words, a long favored Medicaid planning tool was officially dead.

However, since that time the Elder Law and Disability of Rights Section of the State Bar has been working to overturn that decision. On March 7, 2018, the Michigan Supreme Court agreed to hear the case.  This is a big first step, but by no means a guarantee that the SBO Trust will be revived.  In fact, the Order granting leave to appeal specifically cites two issues on review: (1) whether the COA’s conclusion that the assets in an SBO trust are countable resources for Medicaid eligibility purposes is correct; and (2) whether DHHS could retroactively apply the change in policy that resulted in the denial of eligibility in these cases.  Note, on this second point, DHHS has argued that they did not change policy but rather only clarified existing policy.  To read the MSC Order allowing the appeal, click here.

So, the MSC could (1) affirm the COA decisions completely, (2) hold that the SBO trust is a valid planning tool and return it to use, or (3) say that the policy is fine but that it was applied unjustly in these two instances.

Those who have never accepted the demise of the SBO trust have new hope. The application for leave was written and will continue to be advocated by the pride of Ishpeming, and premier elder law attorney, James Steward.  SBO believers could have no better captain at the helm.

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