Opinion
No. 339577
08-21-2018
ESTATE OF THELMA L. DEGOEDE, by VELLA TRADER, Personal Representative, Plaintiff-Appellant, v. COMERICA BANK, formerly known as INDUSTRIAL STATE BANK & TRUST COMPANY, Defendant-Appellee.
UNPUBLISHED Kalamazoo Circuit Court
LC No. 2008-000191-CZ Before: SAWYER, P.J., and STEPHENS and GADOLA, JJ. PER CURIAM.
Plaintiff, Vella Trader, the personal representative of the estate of Thelma L. DeGoede, appeals as of right the trial court's order finding that any joint deposit accounts owned by Thelma and her husband, John DeGoede, Jr., were paid by defendant, Comerica Bank, and closed before Thelma's death in 2005.
This case arises from a dispute regarding the payment of three certificates of deposit (CDs) that were issued in the early 1980s. This case has an extensive procedural history. It is the third time that it has been before this Court. The underlying facts are described in Trader v Comerica Bank, 293 Mich App 210, 211-213; 809 NW2d 429 (2011) (Trader I):
On December 22, 1980, Industrial State Bank & Trust issued a CD payable to Thelma in the amount of $10,000. The CD had a maturity date of June 22, 1981, and a stated interest rate of 15.673 percent, payable at maturity. The CD indicates that it is "Non-Transferable" and is "TYPE 20." The front of the CD contains the following language:
"At maturity and upon presentation of this Certificate properly endorsed payment of this deposit will be made by Industrial State Bank & Trust
Company . . . . Upon written notice, the Bank reserves the right to redeem this Certificate on the original or any subsequent maturity date and further reserves the right to change the interest rate payable for any renewal period. This Certificate is designated by type above with special provisions by type as set forth on the reverse of this Certificate."
The back of the certificate contains three boxes. The first box is titled, "CERTIFICATE DESCRIPTION BY TYPE" and lists four different types of certificates. A "Type 20" certificate is described as follows: "MONEY MARKET CERTIFICATE: The Certificate will be automatically renewed for a like period unless presented for payment. Renewal rates are based on the Treasury Bill Rates as defined by the Federal Deposit Insurance Corporation in effect the week of renewal. This Certificate is non-negotiable." The second box is titled "FINAL PAYMENT INFORMATION" and has blanks for payment information that have not been filled in. The third box is titled "Show Payment method" and also has blanks that have not been filled in. Underneath the last box are the words "Customer endorsement," and no endorsement has been made.
On June 26, 1981, Industrial State Bank & Trust issued a CD payable to Thelma in the amount of $10,000. The CD had a maturity date of December 25, 1981, and a stated interest rate of 14.189 percent, payable at maturity. The remaining terms and conditions on the front and back of the certificate are identical to those contained on the CD issued on December 22, 1980, with one exception: the front of the CD does not state that it is nontransferable. There are no signatures or notations on the back of the certificate indicating final payment.
On July 13, 1982, Industrial State Bank & Trust issued a CD payable to Thelma in the amount of $10,000. The CD had a maturity date of January 11, 1983, and a stated interest rate of 13.098 percent, payable at maturity. The terms and conditions on the front of the certificate are identical to those of the first two, with two exceptions: First, along with the term "NON-TRANSFERABLE" on the front, the CD also states that it is "Non-Negotiable." Second, instead of stating that the reverse side of the certificate states provisions regarding the types of certificates, the certificate states, "This Certificate is designated by type and the description and provisions thereof are set forth on separate literature." Accordingly, the back of the certificate is somewhat different from the other two. The first box is titled "CERTIFICATE TYPE KEY" but does not contain language describing the certificate types; it does not contain language discussing the renewability of type 20 money market certificates. As with the other two CDs, the back of this certificate also contains the boxes for final payment information and payment method and also an area for customer endorsement. Similarly, there are no signatures or notations on the back indicating that final payment was made.
Comerica became the successor to Industrial State Bank and Trust in November 1982.
Thelma was married to John DeGoede, Jr. They had three children together: John DeGoede, III, Vella Trader, and Dee DeGoede. John, Jr., died in March 1992. Thelma died in May 2005. John III was initially appointed as the personal representative of Thelma's estate. He went to the Comerica branch in Comstock, Michigan, because he knew there was a safety deposit box in Thelma's name there. The safety deposit box contained the three Industrial CDs described above, jewelry, and cash. John III presented the CDs to Comerica for payment; however, the branch manager stated that there were no records pertaining to those CDs so they "must not exist." Therefore, the estate, represented by Trader, filed suit against defendant alleging breach of contract for its failure to honor the three Industrial CDs. Id. at 211.
Trader took over as representative of Thelma's estate because John III and Dee had a disagreement regarding the handling of the estate. --------
During the second bench trial, the trial court admitted a copy of a "replacement" Comerica CD dated February 4, 1983. The document had the word "replacement" typed in the top right corner. The replacement CD had an amount of $13,158. Defendant argued that the second and third Industrial CDs were "rollovers" from the first CD. In other words, after the first CD matured, it was rolled over into a second CD, which was rolled over into a third CD after it matured, which was rolled over into the replacement CD after Comerica took over Industrial. Thus, the same $10,000 was used to fund all four of the CDs. The replacement CD had the amount of $13,158, because defendant agreed to pay John, Jr., all the interest that was due from the prior CDs.
A panel of this Court remanded this case to the trial court for additional fact-finding regarding whether defendant proved an affirmative defense of prior payment. Trader v Comerica Bank, unpublished per curiam opinion of the Court of Appeals, issued December 2, 2014 (Docket No. 317622), p 8 (Trader II). On remand, the trial court concluded that defendant sustained its burden. This appeal followed.
Plaintiff argues on appeal that the trial court erred in finding that defendant proved its affirmative defense of prior payment by a preponderance of the evidence. We disagree.
"Because this case was heard as a bench trial, the court was obligated to determine the weight and credibility of the evidence presented." Wright v Wright, 279 Mich App 291, 299; 761 NW2d 443 (2008). This Court reviews "a trial court's findings of fact in a bench trial for clear error . . . ." Glen Lake-Crystal River Watershed Riparians v Glen Lake Ass'n, 264 Mich App 523, 531; 695 NW2d 508 (2004). "A finding is clearly erroneous where, although there is evidence to support the finding, the reviewing court is left with the definite and firm conviction that a mistake has been made." Id. (quotation marks and citation omitted). "An appellate court will give deference to the trial court's superior ability to judge the credibility of the witnesses who appeared before it." Id. (quotation marks and citations omitted).
"A nonnegotiable CD is a contract, and is governed by contract law." Trader I, 293 Mich App at 215. "When interpreting a contract, this Court's primary task is to determine the intent of the contracting parties." Id. "If a contract's language is not ambiguous, this Court will construe the contract and enforce its terms as written." Id. at 216.
"An affirmative defense is a defense that does not controvert the plaintiff's establishing a prima facie case, but that otherwise denies relief to the plaintiff." Stanke v State Farm Mut Auto Ins Co, 200 Mich App 307, 312; 503 NW2d 758 (1993). Plaintiff's allegations are accepted as true; however, plaintiff is not "entitled to recover on the claim for some reason not disclosed in the plaintiff's pleadings." Id.
Payment is listed as an affirmative defense. See MCR 2.111(3)(a). Defendant had to establish this affirmative defense by a preponderance of the evidence. See Stein v Home-Owners Ins Co, 303 Mich App 382, 390-391; 843 NW2d 780 (2013).
In this case, the trial court concluded that defendant had shown by a preponderance of the evidence that it had already paid the amount owed pursuant to the three Industrial CDs on the basis of the testimony of Susan Schmidt—the senior vice-president and quality director at Comerica—regarding banking proceedings in the early 1980s, the similarity in the math of the principal amount and interest owed under the Industrial CDs and the replacement CD issued by Comerica, and the fact that Thelma did not disclose the Industrial CDs on the 1992 inheritance tax return.
Based on the evidence in the record, the trial court did not clearly err in determining that the theory offered by defendant—that the Industrial CDs were rolled into the replacement CD issued by Comerica—was more persuasive than plaintiff's claim that the Industrial CDs were never paid because they were not returned to the bank or marked as paid. See Glen Lake-Crystal River Watershed Riparians, 264 Mich App at 531.
Schmidt testified that in the 1980s, bank managers were given discretion to pay out interest to customers if the customers claimed that they did not previously receive payment. In addition, Schmidt stated that a bank manager also had discretion to pay the interest rate listed on the CD if the customer let it lapse after it matured (instead of paying the applicable Treasury bill rate). Schmidt also indicated that customers did not have to present the original CD to the bank for payment because the records were kept electronically.
Additionally, it would be an odd coincidence that the amount of the replacement CD—$13,158—was so similar to the amount of the principal and interest if Thelma had not made one initial deposit of $10,000 that was rolled into the second CD, then the third CD, and finally the replacement CD. Especially when Comerica issued the replacement CD on February 4, 1983, after Comerica became successor to Industrial in November 1982.
Finally, Thelma did not disclose the existence of the Industrial CDs at the time of John, Jr.'s, death in 1992. However, she provided information regarding five Comerica CDs, including the replacement CD. Schmidt testified that Comerica stopped paying Thelma interest on any CDs in 1994, but apparently Thelma did not raise any issues with Comerica that she had three CDs on which she was no longer receiving interest.
Based on the foregoing, we do not believe that this Court should find that the trial court committed error requiring reversal in finding defendant's theory more persuasive than plaintiff's theory. See id. at 541 ("The trial court's decision to adopt plaintiffs' regulation algorithms and management plan was supported by the evidence, and we find no clear error.").
Next, plaintiff asserts that the trial court erred in not applying an adverse inference against defendant because it failed to produce the bank manager who issued the replacement CD in 1983 as a witness. We disagree.
A trial court's decision "to sanction a party for failing to preserve evidence" is reviewed for an abuse of discretion. Brenner v Kolk, 266 Mich App 149, 160-161; 573 NW2d (1997). "An abuse of discretion occurs when the decision results in an outcome falling outside the range of principled outcomes." Ronnisch Constr Group, Inc v Lofts On the Nine, LLC, 306 Mich App 203, 208; 854 NW2d 744 (2014).
An adverse inference permits the fact-finder to conclude that the missing evidence would have been adverse to the opposing party. Brenner, 226 Mich App at 155-156.
A jury may draw an adverse inference against a party that has failed to produce evidence only when: (1) the evidence was under the party's control and could have been produced; (2) the party lacks a reasonable excuse for its failure to produce the evidence; and (3) the evidence is material, not merely cumulative, and not equally available to the other party. [Ward v Consol Rail Corp, 472 Mich 77, 85-86; 693 NW2d 366 (2005).]
Here, the trial court did not abuse its discretion in not applying an adverse inference to defendant for its failure to produce the bank manager as a witness. She worked at Comerica in 1983. First, she was not under defendant's control. See id. She probably was a former employee. Second, although plaintiff asked Schmidt about the bank manager in her deposition, it is unclear whether plaintiff actually asked defendant to produce the bank manager as a witness in this case. See id. Finally, it is unlikely that the bank manager would remember the circumstances surrounding a CD she issued in 1983; and, importantly, nothing in the record suggests that plaintiff was unable to seek out her testimony. See id. See also Devlin v Kaplanis, 43 Mich App 519, 525; 204 NW2d 543 (1972) (concluding that the defendants' failure to produce a witness who was "equally within the control of all parties and could have been called to testify by anyone," did not support an unfavorable inference).
Further, plaintiff contends that the trial court erred in not conducting sufficient fact-finding as required by the panel in Trader II.
In Trader II, unpub op at 8, the panel issued the following instructions to the trial court:
The trial court in its discretion may allow the parties to submit additional evidence. Then, based on all the evidence submitted, the trial court shall conduct further fact finding with respect to each party and supply sufficient reasons for any fact found. Finally, the court is to determine if defendant met its burden of proving its affirmative defense by a preponderance of the evidence, and if not, the court is to determine if plaintiff proved her claim by a preponderance of the evidence.The panel concluded that the trial court erred in finding that the Industrial CDs had been redeemed because it relied solely on Thelma's failure to disclose the CDs at the time of John Jr.'s death. Id.
On remand, the trial court acknowledged that other inferences could be drawn from Thelma's failure to disclose the three Industrial CDs on the inheritance tax return; however, it concluded that the other inferences (such as forgetfulness) did not comport with the other evidence provided in this case. The trial court found that the absence of the three CDs on the tax return showed that any deposits associated with the CDs had been recategorized as one or more of the CDs that were listed on the tax return. The trial court concluded that this determination was further supported by the "highly-coincidental" math in the amount of the replacement CD and Schmidt's testimony regarding Comerica's common procedures in the early 1980s.
Based on the foregoing, the trial court complied with the panel's instructions. The panel determined that the trial court erred in basing its conclusion that the CDs had either been paid or recategorized solely on Thelma's failure to disclose the Industrial CDs in 1992. See id. On remand, the trial court further explained that its position was also supported by the amount of the replacement CD, which was consistent with an initial $10,000 deposit plus the combined calculated interest from the Industrial CDs pursuant to how a Comerica employee would have calculated the interest in the early 1980s. Further, the trial court relied on Schmidt's testimony regarding Comerica's banking practices in the 1980s. She indicated that bank managers had the discretion to pay interest to customers if they claimed they had not received payment. As a result, we do not believe the trial court clearly erred in its factual findings on remand. See Glen Lake-Crystal River Watershed Riparians, 264 Mich App at 531.
Finally, plaintiff argues that the trial court clearly erred in shifting the burden to plaintiff to rebut defendant's affirmative defense of prior payment. We disagree.
In this case, the trial court agreed with defendant's theory of the case. It concluded that the initial $10,000 deposit underlying the first Industrial CD plus the calculated interest was eventually rolled into the replacement CD after Comerica succeeded Industrial. The trial court noted that plaintiff failed to offer credible evidence to the contrary. This was a credibility determination that the trial court was required to make considering the vastly different theories presented by the parties. See Wright, 279 Mich App at 299. Essentially, the trial court had to determine whether the Industrial CDs had been paid when no documentation relating to the CDs (except the original paper CDs) was available and everyone involved in the transaction was deceased. In order to be successful, plaintiff had to prove by a preponderance of the evidence that the Industrial CDs had not been paid. The trial court concluded that the evidence did not support plaintiff's theory; however, it concluded that the evidence supported defendant's theory Thus, this writer does not believe that the trial court impermissibly shifted the burden to rebut defendant's affirmative defense to plaintiff. See id. Accordingly, the trial court did not err in finding that the Industrial CDs had already been paid. See Glen Lake-Crystal River Watershed Riparians, 264 Mich App at 531.
Finally defendant offers several alternative grounds that support the trial court's judgment in its favor. However, because we conclude that the trial court did not clearly err in determining that defendant proved its affirmative defense of prior payment by a preponderance of the evidence, we will not address defendant's alternative arguments on appeal.
Affirmed.
/s/ David H. Sawyer
/s/ Cynthia Diane Stephens
/s/ Michael F. Gadola