COA holds that breach-of-trust claims, regardless of how they are styled, are barred by the limitations period applicable to breach-of-trust claims

In Ducharme v Ducharme, the Michigan Court of Appeals held that breach-of-trust claims styled as tort claims are barred by one-year statute of limitations applicable to breach-of-trust claims.  Further, a beneficiary’s letter questioning the trustee’s annual report may be a basis for showing the beneficiary had notice of potential claims.
 
Donn and Michelle Ducharme are beneficiaries of two trusts.  Michelle Ducharme was the trustee of both trusts.  Between June 10 and June 16, 2011, Michelle provided Donn with annual reports for both trusts.  The annual accounts for both trusts included a disclaimer that a beneficiary could not bring a breach of trust action against a trustee if more than a year elapsed since the reports were sent.  On July 14, 2011, Donn replied in a letter that he had several unanswered questions about the reports, specifically noting several issues.  In November 2011, Michelle sent Donn supplements to the final reports.  Donn sued Michelle on October 31, 2012 alleging claims for breach of fiduciary duty, conversion of assets, commingling of assets, violation of impartiality, and fraud and misrepresentation.  The probate court concluded the claims were time barred and granted summary disposition to Michelle.  Donn appealed.  The Court of Appeals affirmed.
 
First, the Court concluded that Donn’s claims sounded in breach of trust rather than in tort, and thus were time barred by the one-year statute of limitations applicable to breach-of-trust claims.  All of the claims, the court reasoned, alleged that Michelle breached her duty as trustee in administration of the trust and were therefore properly classified as breach-of-trust claims.  The court also noted that the existence of a tort claim outside the trust context does not necessarily allow that tort action to supersede a trust action.  The court explained that where two statutes have a common purpose, the more specific statute controls.  In this case, the breach-of-trust statute, rather than the breach-of-fiduciary duty statute, specifically applies in the trust context, and thus its statute of limitations should apply. 
 
Second, the Court held that the two statutory requirements for applying the one-year limitations period were both satisfied.  The reports Michelle sent clearly informed Donn of the time limit for filing a claim, and the reports disclosed to Donn the existence of his potential claims.  In fact, Donn’s letter to Michelle specifically posed several of the questions that were later used as the basis of his legal claims.  Additionally, in Donn’s later affidavit, he disclosed that he objected to every accounting.  The court reasoned that this meant the “accountings provided sufficient detail to form the basis of an objection,” and therefore provided Donn notice of his potential claims.           

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