In re Beatrice Rottenberg Living Trust

833 N.W.2d 384, 300 Mich. App. 339
CourtMichigan Court of Appeals
DecidedApril 4, 2013
DocketDocket No. 297984
StatusPublished
Cited by64 cases

This text of 833 N.W.2d 384 (In re Beatrice Rottenberg Living Trust) is published on Counsel Stack Legal Research, covering Michigan Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Beatrice Rottenberg Living Trust, 833 N.W.2d 384, 300 Mich. App. 339 (Mich. Ct. App. 2013).

Opinion

JANSEN, P.J.

Respondent, Joan R. Lipsitz (Joan), appeals by right the probate court’s order of April 29, 2010, granting partial summary disposition in favor of petitioner, Mark F. Rottenberg (Mark), on the ground that it was beyond genuine factual dispute that Dr. Everett Newton Rottenberg (Dr. Rottenberg) had not gifted to Joan the right to demand repayment of certain loans that he had made during his lifetime.1 For the reasons set forth in this opinion, we vacate the probate court’s order and remand for further proceedings.

I. BASIC FACTS

Joan, Mark, and Lisa Friedman (Lisa)2 are siblings. They are the only children of the late Dr. Rottenberg and the late Beatrice Rottenberg (Mrs. Rottenberg).

Joan and her husband, Robert Lipsitz, were officers and stockholders of five different corporations (collectively, “the ranch entities”).3 Together, the five ranch entities made up the Double JJ Ranch and Golf Resort in Oceana County, Michigan.

Dr. Rottenberg made several loans to the ranch entities by personal check during the 1990s and the [343]*343early 2000s, apparently totaling significantly more than $2 million. Some of these loans were repaid during Dr. Rottenberg’s lifetime. Other loans were never repaid to Dr. Rottenberg.

Each of the checks written by Dr. Rottenberg was made payable to one of the ranch entities. None of the checks was made payable to Joan or her husband. A few of these checks contained the word “loan” on the memo line. However, the memo line was left blank on the majority of the checks. None of the later checks appears to have been accompanied by a promissory note or any other separate evidence of indebtedness. Neither Joan nor her husband executed personal guarantees promising to repay any of the loans from Dr. Rottenberg.

Dr. Rottenberg died testate on April 23, 2005.4 Under the terms of Dr. Rottenberg’s will, certain items of tangible, household personalty were devised to Mrs. Rottenberg. However, the residue of Dr. Rottenberg’s estate poured over into the Everett Newton Rottenberg Living Trust (ENR Trust). The trust instrument specified that, upon the death of Dr. Rottenberg, the cotrustees of the ENR Trust would be Mrs. Rottenberg, Mark, and Joan. Upon the death, resignation, or incapacity of Mrs. Rottenberg, Mark and Joan were to remain as cotrustees of the ENR Trust.5

[344]*344Under the terms of the ENR Trust instrument, two distinct subtrusts were established upon the death of Dr. Rottenberg: (1) a Marital Trust and (2) a Residuary Trust.6 The Marital Trust was further divided into (1) a Marital Trust for Spouse and (2) a Terminable Interest Marital Trust for Spouse. Suffice it to say that Mrs. Rottenberg was, for all practical purposes, a lifetime income beneficiary of the two marital subtrusts.7

Mrs. Rottenberg died testate on April 16, 2008. Under the terms of Mrs. Rottenberg’s will, most or all of her estate poured over into her own trust, the Beatrice Rottenberg Living Trust (BR Trust). The trust instrument specified that Mark and Joan were to serve as cotrustees of the BR Trust upon Mrs. Rottenberg’s death.

On July 18, 2008, each of the five ranch entities filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Western District of Michigan.

II. PROCEDURAL HISTORY

The instant proceedings began on April 14, 2006, when Mark filed a petition in the Oakland County [345]*345Probate Court to remove Joan as a cotrustee of the BR Trust and surcharge her for various alleged violations of her fiduciary duties. On May 2, 2006, Joan responded by filing a petition to remove Mark as a cotrustee of the BR Trust and surcharge him.

On October 12, 2007, Mark filed a subsequent petition to compel an accounting by Joan, including a full disclosure of all loans made by Dr. and Mrs. Rottenberg to the ranch entities. Mark claimed that, in addition to $400,000 in loans from Mrs. Rottenberg, Dr. Rottenberg had loaned more than $2 million to the ranch entities during his lifetime and many of these loans remained unpaid. Mark alleged that Joan had destroyed or concealed certain evidence, including evidence of the loans, and that she had also removed documents and money from Dr. Rottenberg’s residence upon his death without accounting for it.

Joan asserted that many of the loans made by Dr. Rottenberg, especially his earlier loans, had already been repaid. Consistent with Joan’s assertion, the probate court record contains evidence establishing that the ranch entities repaid at least $1,809,248.22 to Dr. Rottenberg between 2002 and 2004. These repayments were apparently for principal and interest on various earlier loans made by Dr. Rottenberg, including some that were evidenced by a promissory note dated February 22, 2003. Joan asserted that, upon his death, Dr. Rottenberg had gifted to her the right to seek repayment of the remaining loans that he had made to the ranch entities.

Mark then filed an amended petition. Among other things, Mark asserted that Joan and her husband had been commingling corporate funds among the five ranch entities. Mark alleged that Dr. Rottenberg had loaned more than $1.7 million to the ranch entities [346]*346between January 2, 1992, and March 23, 2000. He alleged that Dr. Rottenberg had loaned an additional $1.19 million to the ranch entities between January 23, 2002, and November 26, 2004, but that Joan had “concealed” the existence of these loans. Mark pointed to Joan’s deposition of July 11, 2007, at which Joan acknowledged that Dr. Rottenberg had expected to be repaid.8 Mark argued that Joan and her husband were “falsely claiming there were only $400,000 in outstanding loans,” and suggested that the loans from Dr. Rottenberg to the ranch entities were repayable to either Mrs. Rottenberg or the BR Trust.

Joan also filed an amended petition. Among other things, Joan alleged that Mark had wasted or misused BR Trust proceeds without providing an accounting.

On or about May 28, 2008, the probate court removed both Mark and Joan as cotrustees of the BR Trust and appointed John Yun as sole, successor trustee of the BR Trust.

In an affidavit dated August 31, 2009, Joan admitted that her father had loaned substantial amounts to the ranch entities during his lifetime. However, Joan averred that by the time of Mrs. Rottenberg’s death, the total amount remaining due on these loans was much less than the face value of the loans.

On August 12, 2009, Mark filed a petition for a default judgment and sanctions, claiming that Joan had concealed or destroyed evidence of many of the loans from Dr. Rottenberg, that Joan had given false testimony regarding these loans at her depositions, and that Joan was withholding significant sums that were payable to the BR Trust. Mark alleged that Joan had violated her duty of [347]*347loyalty in several ways during her tenure as a cotrustee and asserted that she had never properly provided an accounting. Mark asserted that there was at least $1.85 million, plus significant interest, due and owing to the BR Trust in the form of outstanding, unpaid loans from Dr. Rottenberg to the ranch entities.

Joan objected to Mark’s petition.

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Cite This Page — Counsel Stack

Bluebook (online)
833 N.W.2d 384, 300 Mich. App. 339, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-beatrice-rottenberg-living-trust-michctapp-2013.