## Facts

- Leslie and Edith Green created a charitable trust in 1969 funded in part with an interest in a 315-acre property known as Turtle Lake Farms.
- After amendments, the charitable beneficiaries included St. Peter’s Home for Boys and Episcopal Church entities connected to the Cathedral Church of St. Paul.
- Trustees included Leslie and Edith Green, Comerica Bank–Detroit, and attorney Miles Jaffe.
- Leslie Green died in 1973; his will created a marital trust for Edith, with Comerica as trustee, funded with his interest in the property.
- Edith Green died in 1983; her estate residue, including her interest in the property, passed to the charitable trust; Comerica served as personal representative of her estate.
- After Edith’s death, ownership interests in the property were divided among the charitable trust, the marital trust, and Edith’s estate.
- Comerica and Jaffe concluded liquid assets were insufficient to satisfy estate obligations and determined a sale of the property interests was warranted.
- Comerica used an appraiser (Leo Majzels) as a “consultant” for an asking-price range; Jaffe testified they initially avoided a formal appraisal to prevent “capping” the sale price.
- The homestead portion was sold to Maurice Cohen for $3.25 million, within the consultant’s suggested range.
- Jaffe represented Cohen in the transaction and had represented Cohen previously, but did not disclose the prior attorney-client relationship to the beneficiaries.
- Although Jaffe acknowledged a conflict and stated he would not act as trustee regarding Cohen’s offer, he did not formally resign as trustee.
- The Attorney General and beneficiaries objected, alleging conflicted conduct and breach of fiduciary duties in the appraisal and sale process.
- The probate court removed Comerica and Jaffe as trustees, removed Comerica as personal representative, and imposed a $1.9 million surcharge; Comerica and Jaffe appealed.

## Issues

1. Whether Comerica and Jaffe breached fiduciary duties in arranging and approving the appraisal and sale of trust-related property, including through conflicted representation and incomplete disclosure.
2. Whether those conflicts and conduct justified removal of Comerica and Jaffe as trustees and removal of Comerica as personal representative.
3. Whether the probate court properly imposed a $1.9 million surcharge for losses attributable to the fiduciaries’ misconduct.

## Decision

- The Michigan Court of Appeals affirmed in substantial part the probate court’s rulings.
- The court held that the fiduciaries’ conflicted roles and lack of full disclosure in connection with the sale supported findings of breach of fiduciary duty.
- The court upheld removal of Comerica and Jaffe as trustees and removal of Comerica as personal representative as appropriate protective remedies.
- The court approved imposition of a substantial surcharge based on the breach and resulting harm.

## Legal Principles

- A trustee’s duties are determined by the trust instrument, applicable probate statutes, and governing case law; breach and resulting liability are assessed on the specific facts.
- Trustees must act with undivided loyalty to beneficiaries and avoid divided loyalties and conflicts of interest in transactions involving trust assets.
- Trustees and personal representatives must provide complete disclosure of conflicts relevant to beneficiary interests, particularly where the fiduciary also represents an adverse or interested party.
- A fiduciary’s attempt at partial recusal is insufficient if the fiduciary retains office and remains positioned to influence a conflicted transaction.
- Probate courts may remove trustees who have violated or threatened to violate the trust, or who are otherwise unsuitable, to protect beneficiaries and charitable interests.
- Courts may surcharge fiduciaries to compensate for losses caused by breach of trust or breach of fiduciary duty in administration and disposition of trust assets.

## Conclusion

The court largely upheld removal and personal liability where trustees and a personal representative approved a sale of trust-related property under conflicted circumstances, emphasizing strict loyalty and full disclosure duties and approving removal and a significant surcharge as remedies for breach.


In re Leslie H. Green & Edith C. Green Charitable Tr., 172 Mich. App. 298, 431 N.W.2d 492 (Mich. Ct. App. 1988)