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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.

Civil Actions versus Proceedings in Probate Court

When starting a new litigation matter in probate court, a threshold issue is to determine whether the matter should be characterized as a probate “proceeding” or a “civil action.” There are significant differences between the two, including what court or courts it can be filed in; and what type of pleading, a petition or a summons and complaint, must be prepared.

Generally, a claim against a third party filed by a Trustee or Conservator would be a civil action; whereas things like surcharging a fiduciary, construing or modifying a trust, or seeking to invalidate a will or trust, would be a proceeding. The primary source distinguishing between the two is MCR 5.101.

This distinction is the issue in a newly released unpublished case from the Court of Appeals. In this case, a seasoned Oakland County public fiduciary, John Yun, was appointed conservator over the estate of a demented person who had apparently been exploited by a Mr. Hartman.  The conservator filed a petition for surcharge seeking recovery of assets that Hartman allegedly converted to himself before the conservatorship was created.  Mr. Yun followed the requirements of notice for a proceeding by mailing a copy of the petition and notice of hearing to Hartman.  Hartman did not show up for the hearing, and the trial court entered an order finding that he was liable for nearly $200,000.  Mr. Yun then brought a motion to have the order converted to a judgment.  Hartman objected, claiming that the process by which the order against him had been entered was defective as it should have been filed as a civil action and not a proceeding; and accordingly that he should have been served with a summons and complaint and not a petition.

Click here to read In Re Doreen Seklar.

In its opinion, the COA reviews the distinctions between a proceeding and civil action and concludes that the probate court was correct in allowing the order to enter through the proceedings process. In reaching this conclusion the COA relies on the proposition that Hartman was a “fiduciary.”  In fact, the protected person had created a power of attorney appointing Hartman as her agent, and a revocable trust nominating Hartman as successor Trustee.  These documents were all set aside by the probate court in its initial hearing.  But what troubles me about the case is that the COA holds that a person nominated as a successor trustee is a fiduciary for purposes of MCR 5.101.  It says:

Further, Hartman meets the definition of a fiduciary. First, the March 14, 2014, revocable trust named Hartman a successor trustee.

That seems like a stretch. And while I appreciate expediency, I worry that such rationale could be applied in similar and dissimilar situations with unanticipated outcomes.  While in this case, Hartman no doubt was aware of his nomination as a successor Trustee, apparently having had a large role in obtaining the estate planning documents, people are frequently nominated to such roles without ever being advised.  It seems potentially problematic to me to have a case that holds that a person who never accepted or acted in a nominated fiduciary role is a fiduciary for the purposes of being subject to a probate proceeding.

I am certainly not challenging Mr. Yun’s approach. He is highly experienced in this type of work, and he got the job done and did so very efficiently.  However, another approach to this case could have been to have the probate court order Hartman to account, and/or to simply have sued Hartman for conversion, fraud and other civil causes of action by filing a summons and complaint.

In any event this case highlights an issue that comes up regularly in probate litigation matters. For those interested in the topic, it’s worth a read.

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.

Conclusion

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.

Show Me the Money

money

There’s a new published probate court case arising out of two matters in Jackson County. The case holds that if you don’t have any money, and even if you are on public benefits, you still have to pay an inventory fee so long as the estate has resources – but maybe not the filing fee. Not that interesting (to me), but it is a published probate opinion, so for what it’s worth, click here to read the case.

Two Quickies

  1. The End of MCR 5.801(B)

The worst Court Rule ever, which requires some probate matters to be appealed to Circuit Court and some to the Court of Appeals, is about to be fixed. The Michigan House and Senate have passed legislation which would send all final orders of the probate court to the Court of Appeals.   The Governor is expected to sign.

Forever we have had a bizarrely complicated rule which required you to try and figure out what type of order you had, in order to figure out where you could appeal to. Worst of all, final orders appointing a conservator were appealed to the Court of Appeals, whereas final orders regarding the appointment of a guardian were appealed to the Circuit Court.  I, and I am sure many others, have had cases in which both guardianship and conservatorship actions were commenced, after which one action would be appealed to the Court of Appeals and one to the Circuit Court.  It made no sense.

2. California’s Assisted Suicide Law Takes Effect

Today is the day California’s citizens begin to have the right to legal assisted suicide. Until California joined the movement, only Oregon, Vermont and Washington had assisted suicide laws.  Montana allows assisted suicide based on case law.

California is obviously the big dog in this pack. One might speculate that the addition of California changes the dynamics, and may signal the beginning of a trend. How soon before public opinion shifts and we see these laws come to the Midwest? For the record, it has been 26 years since Michigan’s own Dr. Jack Kevorkian made this issue a mainstream topic.