Attorney fees & costs from a trust under MCL 700.7904(1); The “American Rule”; Distinguishing Becht v Miller; Equity; In re Temple Marital Trust (Unpub)

The court held that the probate court did not abuse its discretion in denying appellant-Nazem’s request for attorney fees and costs under MCL 700.7904(1). Thus, it affirmed the order denying Nazem’s petition (Nazem is the trustee’s sister and had previously served as a co-trustee). The case originated from the proposed final distribution of the trust. Nazem’s challenge resulted in the probate court substantially reducing the proposed charge against her share from $35,137.50 to $6,350.00. On appeal, the court noted that when “interpreting MCL 700.7904(1) by its plain language, it is clear that the Legislature’s intent was to provide an exception to the ‘American Rule’ of attorney fees in cases of trust administration.” It concluded the case was “distinguishable from Becht, because appellant failed to show that her actions benefited ‘the entire estate.’” Appellant argued “that she illuminated improper conduct by the Ashcraft brothers and preserved Trust property from undue depletion, thus benefiting the Trust.” The trial court disagreed and found on the record that appellant’s actions “did not meet the threshold of MCL 700.7904(1) for enhancing, preserving, or protecting Trust property when it denied her petition for attorney fees.” The trial court further noted that “‘it’s not a classic case where your efforts found property that was not in the Trust and was brought back into the Trust or you found some misappropriation of some other action that was taken by the Trustee, that enhanced or preserved the entire property.’” Appellant further contended that she was “entitled to attorney fees because she enforced the settlor’s original intent of equal distribution, but this alone is insufficient to establish that she actually enhanced, preserved, or protected Trust property.” The trial court was “similarly within its discretion to deny the petition for attorney fees and costs under the plain meaning of the statute.” Even if a petitioner “demonstrates that they have enhanced, preserved, or protected trust property, the plain language of ‘as justice and equity requires’ indicates that the Legislature intended to provide probate courts full discretion in granting or denying attorney fees under MCL 700.7904(1).” The court found “appellant failed to establish a violation of the statute, or any other error or abuse of discretion,” and was not entitled to relief.