Order Granting Vexatious Appeal Sanctions Remanded, Appeals Court Instructed To Provide Reasoning
The Michigan Supreme Court has remanded a probate dispute to the Court of Appeals, ordering the three-judge appellate panel to explain why it awarded a party vexatious appeal sanctions under the Michigan Court Rules.
The Court of Appeals awarded vexatious appeal sanctions in In re Gladys V. Ragsdale Trust (COA Docket No. 358720), a “contentious probate dispute” that has been litigated for the past several years in the Michigan courts. The parties in the case, Valeria Tostige and Mark Ragsdale, are siblings. The case primarily involves a dispute over the assets of Mark and Valeria’s mother, Gladys Ragsdale (Gladys), and her estate.
In July 2024, Valeria filed a motion for sanctions with the Court of Appeals under MCR 7.216(C)(1)(a), claiming that Mark had pursued a vexatious appeal. In a succinct order, the Court of Appeals granted the motion and remanded the case to the Wayne County Probate Court to determine the amount of Valeria’s actual damages.
Mark appealed that order to the Michigan Supreme Court. Instead of granting leave to appeal, the high court recently issued an order remanding the case to the Court of Appeals “for explication of the reasons for awarding sanctions for a vexatious appeal” (MSC Docket No. 167598). Notably, the Michigan Supreme Court retained jurisdiction in the case – something that does not frequently occur.
Background
In 2006, Gladys loaned her daughter, Valeria, about $40,000 to buy a restaurant. Then in 2007, Gladys established the “Gladys V. Ragsdale Trust,” of which she was the trustee. Valeria repaid Gladys $7,200 on the restaurant loan. But in 2008, Valeria began having business troubles and stopped making payments. In 2009, Gladys became mentally incapacitated and Mark succeeded her as trustee of the trust.
The Wayne County Probate Court oversaw the supervised administration of the trust. In addition, various other lawsuits were filed related to the probate court proceeding, including:
Mark sued Valeria in 2012 to collect on the debt stemming from Gladys’s restaurant loan to Valeria. Because Valeria did not respond to the suit, the trial court entered a default judgment against her.
Valeria filed for bankruptcy, which resulted in an adversary proceeding between her and Mark in federal bankruptcy court. Valeria claimed that Mark committed a fraud by falsely representing that Gladys had assigned to the trust her personal interest in the promissory note evidencing her loan to Valeria. The bankruptcy court declined to resolve the issue, leaving it for the probate court to decide.
Valeria sued Mark and the trust in probate court in 2015, asserting claims for fraud and breach of fiduciary duty. She alleged that Mark misrepresented in his 2012 lawsuit against her that Gladys had assigned to the trust her interest in the loan. The probate court granted summary disposition to Mark and the trust. That decision was appealed and the Court of Appeals, in Tostige v Ragsdale (Docket No. 334094), affirmed summary disposition on the fraud claim against Mark but reversed summary disposition on the breach of fiduciary duty claim, and remanded the case. On remand, the probate court granted summary disposition to Valeria with respect to liability on her claim for breach of fiduciary duty, leaving the issue of damages for an evidentiary hearing.
In the meantime, Valeria filed a motion to remove Mark as trustee and to surcharge him, claiming that he had made material misrepresentations in his 2012 lawsuit against her. The probate court considered all these issues in the supervised trust administration case, in lieu of maintaining Valeria’s 2015 lawsuit as a separate proceeding, and the issues were litigated in 2019 during an evidentiary hearing. The probate court issued an opinion and order in February 2020 removing Mark as trustee, surcharging him and finding that Valeria was not entitled to damages on her breach of fiduciary duty claim because she had failed to mitigate her damages. In November 2020, the probate court issued an opinion determining the amount of the surcharge and, in December 2020, it issued an order for the opinion. Meanwhile, Mark filed a motion for sanctions against Valeria, which the probate court denied in an opinion and order entered in January 2021.
Mark, however, did not file a claim of appeal following the entry of any of the above-referenced probate court orders. Instead, he only filed the present appeal from the probate court’s September 8, 2021 order allowing the first and final accounting, permitting the payment of $4,600 in fiduciary fees to John M. Chase III (the second successor trustee) and directing the release of the remaining trust assets according to a schedule of distributions.
During the appeal process, Valeria twice filed motions to dismiss for lack of jurisdiction. She claimed the issues that Mark raised on appeal did not concern the September 8, 2021 order from which he appealed, but rather previous final orders from which Mark did not file a timely appeal.
The Court of Appeals denied Valeria’s motions to dismiss. See, In re Gladys V Ragsdale Trust (unpublished order of the Court of Appeals, November 18, 2021) and In re Gladys V Ragsdale Trust (unpublished order of the Court of Appeals, June 9, 2022).
Appeals Not Timely Filed
In its June 2024 opinion, the Court of Appeals said that although Mark properly appealed “as of right” the probate court’s September 8, 2021 order, he “challenge[d] a variety of other final orders that are outside of the proper scope of this appeal.” Judge Kristina Robinson Garrett, Judge Kirsten Frank Kelly and Judge Noah P. Hood were on the panel that issued the unpublished opinion.
“This primarily include[d] the February 14, 2020 order removing Mark as trustee, ordering a surcharge, and ruling that appellee Valeria … was not entitled to damages on her claim for breach of fiduciary duty,” the Court of Appeals wrote. “But it also includes the December 14, 2020 order determining the amount of the surcharge and the January 4, 2021 order denying Mark’s motion for sanctions.”
Valeria maintained the Court of Appeals lacked jurisdiction over the issues Mark raised on appeal. She essentially argued the issues were not properly before the court because they did not involve the September 8, 2021 order – the final order from which Mark filed his claim of appeal.
“[T]he issues Mark raises on appeal pertain to earlier final orders from which Mark could have filed a timely appeal, but did not,” the appeals court observed. “When understood in this light, we agree with Valeria’s argument.”
While the Court of Appeals had jurisdiction over the appeal from the September 8, 2021 final order, “because Mark has raised no issue concerning that order, we conclude that the issues he has raised are not properly before the court,” the panel explained. “His appellate arguments relate to earlier final orders (i.e., a final order affecting the rights or interests of an interested person in a proceeding involving a decedent’s estate, a postjudgment order awarding or denying attorney fees and costs, etc.) from which he could have filed a timely appeal, but failed to do so. Therefore, the issues that Mark raises on appeal are not properly before this Court and will not be considered by this Court.”
In making its ruling, the Court of Appeals noted that MCR 5.801(A)(1) provides that an order appealable as of right includes “’a final order, as defined in MCR 7.202(6)(a), affecting the rights or interests of a party to a civil action commenced in the probate court under MCR 5.101(C)[.]’ MCR 7.202(6)(a) defines a final order in a civil case to include, among other things, ‘the first judgment or order that disposes of all the claims and adjudicates the rights and liabilities of all the parties, including such an order entered after reversal of an earlier final judgment or order,’ MCR 7.202(6)(a)(i), and ‘a postjudgment order awarding or denying attorney fees and costs under court rule or other law,’ MCR 7.202(6)(a)(iv). See also MCR 5.802(A) (providing that chapter 7 of the Michigan Court Rules generally governs appeals from the probate court).’”
Further, the Court of Appeals explained that MCR 5.801(A)(2) says an order appealable of right also includes “a final order affecting the rights or interests of an interested person in a proceeding involving a decedent estate, the estate of a person who has disappeared or is missing, a conservatorship or other protective proceeding, the estate of an individual with developmental disabilities, or an inter vivos trust or a trust created under a will.”
Here, Mark filed a claim of appeal from the September 8, 2021 order allowing Chase’s first and final accounting, authorizing the payment of fiduciary fees to Chase and directing the release of the remaining assets of the trust pursuant to a schedule of distributions, the Court of Appeals pointed out. “Because the September 8, 2021 order allowed an account and authorized the payment of fees, the order was a final order for which an appeal of right is allowed under MCR 5.801(A)(2)(x). On September 29, 2021, Mark filed a timely claim of appeal from the September 8, 2021 order. … This Court, therefore, has jurisdiction with respect to the September 8, 2021 order and any issues related to that order.”
However, “Mark has not raised any issues on appeal concerning the September 8, 2021 order,” the Court of Appeals emphasized. “Instead, his appellate arguments concern earlier final orders from which he did not file a timely appeal: a February 14, 2020 order resolving the issues of damages, breach of fiduciary duty, and removal of Mark as successor trustee, among others.” Therefore, “[f]or this reason, although we have jurisdiction over this case, the issues are not properly before us.”
The Court of Appeals continued by explaining why each of the issues that Mark raised on appeal stemmed from a different final order from which he did not file a timely claim of appeal. Because Mark “failed to file a timely claim of appeal from any of these final orders that predated the September 8, 2021 order,” the panel said, “the issues he … raises are, therefore, not properly before the Court. We decline to address them and affirm.”
At the conclusion of its opinion, the Court of Appeals briefly addressed Valeria’s request for vexatious appeal sanctions. The panel noted that Valeria had asked the court – in her brief – to sanction Mark for pursuing a vexatious appeal and to remand the case to the probate court to determine damages. The Court of Appeals denied Valeria’s request, explaining that it is improper to include a request for sanctions in an appellate brief. Rather, such a request must be filed in a separate motion, the panel stated.
Accordingly, Valeria then filed a separate motion for vexatious appeal sanctions. The Court of Appeals granted the motion for sanctions in an August 2024 order that said: “Appellee’s motion for costs and sanctions resulting from a vexatious appeal under MCR 7.216(C)(1)(a) is GRANTED. This case is REMANDED to the trial court to determine the amount of appellee’s actual damages as a result of this appeal, including but not limited to actual attorney fees incurred; and to enter judgment against appellant in the amount of appellee’s actual damages plus an additional award of punitive damages to be determined by the trial court, not to exceed the amount of plaintiff-appellee’s actual damages. MCR 7.216(C)(2). We do not retain jurisdiction.”
Mark appealed the order granting sanctions. The Michigan Supreme Court, in lieu of granting leave to appeal, issued its own order remanding the case and instructing the Court of Appeals to set forth its reasoning for awarding sanctions. The high court instructed the Court of Appeals to “forward its decision on remand to the Clerk of this Court within 56 days after the date of this order.” The justices also retained jurisdiction in the case. (Justice Kimberly A. Thomas did not participate in the decision.)
Legal Lesson
According to Lansing appellate attorney Liisa Speaker, there is a lesson for probate lawyers to learn from the Ragsdale case.
“Regardless of what the appellate courts decide on the grounds for sanctions, the lesson for practitioners is that, in the probate context, you need to appeal often,” Liisa emphasized.
“There are at least 33 different ways to have an appeal by right under MCR 5.801,” she pointed out. “You cannot wait until a later order to appeal an earlier decision that could have been appealed by right at that time.”
Check out the white paper Liisa Speaker and the Appellate Advocates at Speaker Law Firm developed to help probate attorneys navigate the world of appellate procedure: “Don’t Let Your Client Miss An Appeal By Right”
