Managing Wrongful Death Settlements The Honorable David M. Murkowski Chief Judge, Kent County Probate Court I. History and Background All actions for wrongful death are statutory. No right of action existed for wrongful death at common law because actions for personal injury were deemed personal rights of action that were extinguished with the death of the injured person. "It is admitted on all hands, and cannot be denied, that, at common law, no civil action could be maintained for the death of a human being, caused by the wrongful act or negligence of another, or for any damages suffered by any person in consequence of such death." Hyatt v Adams, 16 Mich 180 (1867). At common law there was no civil cause of action for the death of a human being caused by the wrongful act or negligence of another or for damages suffered by any person in consequence of such death. Hardy v Maxheimer, 429 Mich 422 (1987); In In Re Olney Estate, 309 Mich 65 (1944). In Michigan, all actions and claims survive death, MCL 600.2921, and all actions for decedent's damages prior to death and damages arising from or as a consequence of a decedent's death shall be brought under the provisions of the Wrongful Death Act. MCL 600.2922. Nota bene Pursuant to MCL 600.2922(a), a cause of action is established against a person who commits a wrongful or negligent act against a pregnant individual for damages if the act results in a miscarriage or stillbirth of that individual, or physical injury to or the death of the embryo or fetus. II. Mechanics A. Petitions for settlement and distribution when no action is pending Subject matter jurisdiction Settlement If a wrongful death claim is to be settled and a civil action for wrongful death is not pending, jurisdiction lies with the probate court for settlement and distribution under the procedures contained in MCL 700.3924. MCL 600.2922(9). If a personal representative petitions the probate court asking leave to settle the claim, the probate court may conduct a hearing after proper notice and approve or reject the settlement. MCL 700.3924(1). In In Re Estate of Felix, No. 254751, 2005 Mich App LEXIS 1696, (July 14, 2005)(Unpublished), the Court of Appeals concluded that the permissive terms "if" and "may" used in MCL 700.3924(1) do not require a personal representative to petition the probate court for leave to settle a claim for wrongful death nor is the probate court required to conduct a hearing to approve the settlement. 1
Best Practice Nota bene Claimants Guardian ad litem Best Practice As a matter of practice, rarely will a personal representative not petition for court approval of a wrongful death settlement, wanting the protection of a probate court finding that the settlement is in the best interest of the decedent's estate and those claimants entitled to damages. Note the important distinction contained in the statute between the terms "settlement" and "distribution." Unless waived, notice of hearing for a petition to settle a wrongful death claim and a petition for authority to distribute proceeds must be given to all persons who may be entitled to damages as provided in MCL 600.2922. MCL 700.3924(1)- (2). Persons entitled to notice are limited to: The deceased's spouse The deceased's children The deceased's descendants The deceased's parents The deceased's grandparents The deceased's brothers and sisters, and if none of these persons survived, the deceased, then those persons to whom the deceased's estate would pass under intestate succession The children of the deceased's spouse Devisees under the will of the deceased except those whose relationship with the deceased violated Michigan law, including beneficiaries of a trust under the will Those persons who are designated in the will as persons who may be entitled to damages under the Wrongful Death Act The beneficiaries of a living trust of the deceased if there is a devise to the trust in the will of the deceased. MCL 600.2922(3)(a)-(c). If any interested person to the settlement or distribution is a minor, a disappeared person, or an incapacitated individual without a fiduciary, a guardian ad litem shall first be appointed by the court and the required notice shall be served on the guardian ad litem. MCL 700.3924(2)(c), MCL 600.2922(6)(b)-(c). The probate court should be vigilant regarding notice to grandchildren and great grandchildren in cases involving older decedents. Parents should not be permitted to represent their minor children in petitions for distribution because the parent and child's claim for damages are in conflict. The probate court may wish to seek information contained in the decedent's will, testimony to identify heirs form, supplemental testimony to identify non-heir devisees form, death certificate, obituary, and trust documents to determine whether all interested persons have been notified of the hearing. Distribution To distribute wrongful death settlement proceeds, the personal representative shall file with the probate court a petition for authority to distribute proceeds. Upon the filing of the petition the probate court is mandated to order a hearing. MCL 700.3924(2)(a). 2
Notice requirements The notice of hearing for authority to distribute proceeds must contain: 1. The name and address of the personal representative and of the personal representative's attorney. 2. A statement that, to recover damages under this section, the person who may be entitled to damages must present a claim for damages to the personal representative on or before the date set for hearing on the petition for distribution of the proceeds, and that failure to present the claim for damages within the time provided bars the person from making a claim to any of the proceeds. MCL 700.3924(2)(b)(i)-(ii). At the hearing on the personal representative's petition to distribute proceeds the probate court shall order payment from the proceeds the following: Mandatory payment of expenses 1. The decedent's reasonable medical and hospital expenses for which the estate is liable; 2. The decedent's funeral and burial expenses for which the estate is liable. MCL 700.3924(2)(b). The proceeds shall not be applied to the payment of any other charges against the decedent's estate. MCL 700.3924(2)(d). After the order of payment of expenses, the probate court shall then enter an order distributing the proceeds to those statutorily designated persons "who suffered damages and to the decedent's estate for compensation for conscious pain and suffering, if any, in the amount the court considers fair and equitable considering the relative damages sustained by each of the persons and the decedent's estate." MCL 700.3924(2)(d). Stipulations regarding distribution If none of the persons entitled to the proceeds is a minor, disappeared person, or a legally incapacitated individual, and all of the persons entitled to the proceeds execute a sworn stipulation or agreement in writing in which each person's portion of the proceeds is specified, the court order shall be entered in accordance with the stipulation or agreement. MCL 700.3924(2)(e). Any person who may be entitled to damages must present a claim for damages to the personal representative on or before the date set for hearing on the petition for distribution of proceeds. An untimely claim acts as a bar to any claim to the proceeds. MCL 700.3924(2)(f). Nota bene The only prerequisites that must be met in order to receive a share of the proceeds are 1. designation under the Wrongful Death Act as one entitled to damages, and 2. damages. Presentment of a claim for damages is not a prerequisite to receiving a share of the proceeds of a wrongful death settlement. In Re Estate of Kubiskey, 236 Mich App 443. 3
Damages The charge of the probate court is to distribute the proceeds to those eligible persons who suffered damages and to the decedent's estate for compensation for conscious pain and suffering in the amount the court considers fair and equitable considering the relative damages sustained by each of the persons and the decedent's estate. MCL 700.3924(2)(d). Damages for claimants include the loss of financial support and the loss of the society and companionship of the deceased. MCL 600.2922(6). The loss of society and companionship addresses the compensation for the destruction of family relationships which results when one family member dies. Crystal v Hubbard, 414 Mich 297 (1982). Both the length and quality of parties' relationship with the decedent are appropriately considered in determining the type of relationship shared by the claimant and the deceased. In Re Claim of Carr, 189 Mich App 234 (1991). A claim for loss of society and companionship under the Wrongful Death Act addresses compensation for the destruction of family relationships that result when one family member dies. The only reasonable means of measuring the actual destruction caused is to assess the type of relationship the decedent had with the claimant in terms of objective behavior as indicated by the time and activities shared and the overall characteristics of the relationship. McTaggart v Lindsey, 202 Mich App 616 (1993). There is no precise formula for determining damages for loss of society and companionship. Kirk v Ford Motor Company, 147 Mich App 337 (1985). The wrongful death act does not preclude distribution according to a decedent's will of the damages recovered in a wrongful death action for the decedent's conscious pain and suffering. In Re Thornton, 192 Mich App 709 (1992). Pain and suffering may be inferred from circumstantial evidence. Rickwalt v Richfield Lake Corp., 246 Mich App 450 (2001). The court has the authority to award a greater amount of actual damages than petitioner requested. In Re Estate of Jennifer M. Barker, Gibeault v Highland Park, 49 Mich App 736 (1973). Slayer statute A designated claimant under the Wrongful Death Act may forfeit the right to a distribution if the claimant has committed an enumerated felony against the decedent. MCL 600.2922(3), MCL 700.2802-2803. A step-child may recover as a child of a deceased's spouse, however, the children of a decedent's deceased spouse, who are not the children of the decedent, are not entitled to damages under the Wrongful Death Act because the decedent had no spouse at the time of death. In Re Estate of Combs, 257 Mich App 622 (2003). 4
Where a parent's negligence contributed to the death of a child, and the minor spent the majority of time with the other parent and the negligent parent failed to provide regular support to the child, the trial court did not err in refusing to award damages to the negligent parent. Lizza v Yamaha Motor Corp., No. 287274, 2010 WL 173635, (Unpublished). Appellate Review Findings of fact made by a probate court sitting without a jury are reviewed for clear error. In Re Bennett Estate, 255 Mich App 545 (2003). Similarly, a court's decision concerning the distribution of settlement proceeds in a wrongful death matter is reviewed for clear error. Reed v Breton, 279 Mich App 239 (2008). B. The Role of the Probate Court When an Action is Pending in Circuit Court When a wrongful death action is pending, the court where the action pends, typically the circuit court, has jurisdiction over settlement or dismissal and distribution of proceeds. MCL 600.2922(5)-(6). MCR 2.420(B) MCR 2.420 governs the procedure to be followed in the probate and circuit courts for the entry of a consent judgment, a settlement, or a dismissal pursuant to settlement in an action brought on behalf of a minor or legally incapacitated person or where a minor or a legally incapacitated individual is to receive a distribution from a wrongful death claim. The 2002 and 2006 amendments to MCR 2.420 increased the protection afforded to minors and legally incapacitated individuals. Settlement Distribution Guardian ad litem Requirements for entry of judgment or dismissal Bond set and posted Under the Wrongful Death Act, the personal representative shall file a motion in the court where the action is pending (circuit court) to seek leave of the court to settle the claim and the court shall, with or without notice, conduct a hearing and approve or reject the proposed settlement. MCL 600.2922(5). The personal representative shall file with the court a motion for authority to distribute the proceeds and upon the filing of the motion the court (circuit court) shall order a hearing. MCL 600.2922(6)(a). Before distribution, if any interested person is a minor, disappeared person, or an incapacitated individual for whom a fiduciary is not appointed, a fiduciary or guardian ad litem shall be first appointed and served notice. MCL 600.2922(6)(c). If a guardian or conservator for a minor or legally incapacitated individual has been appointed by the probate court, the terms of the proposed settlement or judgment may be approved by the court where the action pends upon the finding that the distribution is in the best interest of the minor or legally incapacitated individual. No judgment or dismissal may enter (in circuit court) until the court receives written verification from the probate court that the probate court has passed on the sufficiency of the bond and the bond, if any, has been 5
filed with the probate court. The written verification must be on a form approved by SCAO. MCR 2.420(B)(3). See SCAO Form MC95, attached. Distribution Settlements and judgments for minors exceeding $5,000 Appointment of Conservator This court rule requires the probate court to pass on the sufficiency of the bond, regardless of the amount of the distribution to be paid or when it will be paid any time the probate court has appointed a guardian or conservator for the minor or incapacitated individual. As an additional protection to minors, if the settlement or judgment requires payment of more than $5,000 to the minor immediately or in installments that exceed $5,000 in any single year during minority, a conservator must be appointed by the probate court before the entry of the judgment or dismissal and the judgment or dismissal must require that payments be made payable to the minor's conservator on behalf of the minor. Again, the (circuit) court shall not enter the judgment or dismissal until it receives written verification, in proper form, that the probate court has passed on the sufficiency of the bond of the conservator. MCR 2.420(B)(4)(a). Once a settlement or judgment has been approved, if the settlement or judgment does not provide payment of more than $5,000 to the minor in any single year, the money may be paid pursuant to MCL 700.5102. Trusts The court rule also provides procedures when a settlement or judgment provides for the creation of a trust for a minor or legally incapacitated individual. The court rule permits the circuit court to authorize the amount to be paid to the proposed trust but does not permit funding of the trust until the probate court approves the terms of the trust after notice to all interested persons and hearing. MCR 2.420(5). The probate court has exclusive subject matter jurisdiction regarding the trust. MCL 700.1302(b). Persons interested in the approval of a trust under MCR 2.420 are: The protected individual, if 14 years of age or older The presumptive heirs of the protected individual If no conservator, the agent under a durable power of attorney The nominated trustee A governmental agency paying benefits to the individual to be protected or before which an application for benefits is pending MCR 5.125(c)(28). 6