Attorney Battles To Keep Millions He Left Himself In Client’s Will

 

Attorney Battles For Millions He Left Himself In Client's Will

Editor’s note: this post was originally published on 03/24/2016. It was updated on 02/24/17, 07/10/17, and 12/14/17 to reflect new developments.

The Michigan Supreme Court will decide if an attorney who was retained to plan the estate of his dying friend, and left $14 million of his friend’s $17 million estate to himself and his children, must give up his windfall.

Background

The Detroit Free Press reported that Attorney Mark Papazian prepared a will and trust that named himself as Bobby Mardigian’s personal representative, awarded Papazian all of Mardigian’s personal property, created a $5-million trust for each of Papazian’s two children, and left Papazian the residual value of the estate, after expenses and gifts to other beneficiaries[1].

Mardigian died of lung cancer in January, 2012, at age 59. He was divorced and had no children.

Heirs Sue To Overturn the Will and Trust

When Papazian tried to introduce the will and trust he had prepared into probate, along with a petition to be appointed as Bobby Mardigian’s personal representative, Mardig-ian’s brother Ed Mardigian, Ed’s two sons, and Bobby’s girlfriend and two of his nieces, sued in county probate court to disallow the will and trust.

Ed Mardigian and his sons claimed they were Bobby Mardigian’s lawful heirs, and con-tended that a letter Bobby wrote after he had executed the will and trust prepared by Papazian, should instead be submitted into probate as his will and an amendment to his trust.

After discovery, Ed Mardigian moved for partial summary disposition, and asked the probate court to void all gifts to Papazian and his children contained in Bobby Mardig-ian’s will and trust, because they violated public policy, and were thus unenforceable.

Mardigian cited Michigan Rules of Professional Conduct 1.8(c): “A lawyer shall not pre-pare an instrument giving the lawyer or a person related to the lawyer as parent, child, sibling, or spouse any substantial gift from a client, including a testamentary gift, except where the client is related to the donee.” His attorney argued, “for over 100 years, the Supreme Court has ‘bluntly warned’ lawyers not to receive gifts from clients under wills they themselves have drafted…Mark Papazian did it anyway…in flagrant disregard of his ethical duties…[2].

The probate court denied Ed Mardigian’s motion.

Attorney Defends His Actions

Papazian claims that if the Michigan Legislature wanted to prohibit attorneys who draft wills from leaving bequests to themselves, it would pass a statute to that effect, as some states have done.

Further, Papazian said that even if he committed misconduct, he and his children shouldn’t be prevented from receiving bequests from a client he says was also his dear friend for 30 years.

He claims the will should be nullified only if he exerted “undue influence” on Bobby Mar-digian, but there’s no evidence of that.

As proof, Papazian claims “Bobby consulted repeatedly with both an independent attor-ney and Comerica Bank wealth management officials, about his estate documents in the six months after he executed the contested will and trust…Even after consulting these independent professionals, Bobby made no changes to the documents which Mr. Papazian had participated in drafting.[3]

However, Papazian also first asserted that Roy Luttman, his then law partner, had drafted the trust documents, but when deposed, Luttman testified: “absolutely not, une-quivocally no, never, did not do it…[4]

Probate Court Ruling 

In November, 2013, days before the case was to be tried in probate court, Papazian ad-mitted he had prepared both the will and trust. The judge ruled that this violated public policy, and declared both documents unenforceable. He also approved Ed Mardigian’s motion for summary disposition, reversing his earlier denial.[5]

On the scheduled trial date, the judge denied Papazian’s motion for a stay. He chose not to participate in the proceedings. The other parties – Ed Mardigian and his two sons, Bobby Mardigian’s girlfriend and two nieces, and J.P. Morgan bank – reached a settle-ment regarding the distribution of funds, and the jury was excused. The judge denied Papazian’s motion for reconsideration.

Appeal

Papazian then appealed the probate court’s approval of Ed Mardigian’s motion for sum-mary disposition to the Court of Appeals, which overturned it in a 2-1 decision last Octo-ber.[6]

The Court based its ruling on In re Powers Estate, 375 Mich 150, 156, 176, 179; 134 NW2d 148 (1965): “our Supreme Court held that a will, (leaving) the bulk of the estate to a member of the family of the attorney who drafted the will, and also naming the attorney as an additional beneficiary, was not necessarily invalid. Rather… a question of undue influence exists…undue influence arising from the relationship is presumed to have been exerted as the means to secure the testamentary gift…Powers is directly on point to the facts presented in the instant case, and as such is binding on this Court.[7]

The court concluded that Papazian “benefited from the transaction,” and “as the drafter of the documents, he had an opportunity to influence (Bobby Mardigian’s) decision…It is presumed he exerted undue influence,” but “case law and existing statutes afford (Papazian) the opportunity to attempt to prove by competent evidence that the presump-tion of undue influence should be set aside… we reverse and remand to the…Probate Court for (further) proceedings.”[8]

Supreme Court

Ed Mardigian and the other plaintiffs applied to the Michigan Supreme Court for leave to appeal the Court of Appeals’ ruling.

The Supreme Court heard oral arguments in the matter on 01/10/2017.

Mardigian’s attorney again argued that Papazian violated Michigan Rules of Professional Conduct 1.8(c) by drafting the will and benefiting from it, and the gifts he left to himself and his children should thus be set aside. Papazian’s attorney again relied on In re Powers Estate, to argue that Papazian should be allowed to prove that he didn’t unduly influence Bobby Mardigian.

On 07/07/17, the Court issued an order granting plaintiffs’ application, and ordering both sides to submit briefs. The order states:

“On January 10, 2017, the Court heard oral argument on the application for leave to appeal the October 8, 2015 judgment of the Court of Appeals. On order of the Court, the application is again considered, and it is GRANTED. The parties shall include among the issues to be briefed: (1) whether the rebuttable presumption of undue influence set forth in In re Powers Estate, 375 Mich 150 (1965), when used as a means to determine the testator’s intent, is a workable rule that sufficiently protects the testator when the testator’s lawyer violates MRPC 1.8(c); (2) whether this Court’s adoption of MRPC 1.8(c) warrants overruling In re Powers Estate; and (3) if In re Powers Estate is overruled, whether a violation of MRPC 1.8(c) should bear on the validity of the gift provided to the testator’s lawyer under the testamentary instrument; and if so, how?

The Attorney Grievance Commission, the Probate Section and the Elder Law and Disability Rights Section of the State Bar of Michigan are invited to file briefs amicus curiae. In addition, the State Bar of Michigan, or an appropriate committee of the State Bar authorized in accordance with the State Bar’s bylaws, is invited to file a brief amicus curiae. Other persons or groups interested in the determination of the issues presented in this case may move the Court for permission to file briefs amicus curiae.”

Amicus Briefs

Michigan’s Attorney Grievance Commission submitted an amicus brief on 10/27/17.

The brief’s arguments are:

  • I. A rebuttable presumption of undue influence is not a workable rule that sufficiently protects the testator when the testator’s attorney violates MRPC 1.8(c).
  • II. The Court’s adoption of MRPC 1.8(c) warrants overruling Powers.
  • III.A violation of MRPC 1.8(c) should invalidate the gift provided to the testator’s attorney under the will.

The Probate and Estate Planning Section of the State Bar of Michigan submitted an amicus brief on 11/3/17.

Its three main arguments are:

  • I. THE REBUTTABLE PRESUMPTION OF UNDUE INFLUENCE IS NOT
    A WORKABLE RULE TO SUFFICIENTLY PROTECT THE TESTATOR
    WHEN A LAWYER IS BOTH THE DRAFTING ATTORNEY AND A
    SUBSTANTIAL BENEFICIARY
  • II. THIS COURT’S ADDOPTION OF MRPC 1.8(C) DOES NOT WARRANT OVERRULING IN RE POWERS ESTATE BECAUSE THE APPLICABLE STATEMENTS SHOULD BE TREATED AS DICTA
  • III. A VIOLATION OF MRPC 1.8(C) SHOULD BEAR ON THE VALIDITY OF
    THE GIFT. THE PROBATE SECTION PRESENTS THREE OPTIONS FOR
    HOW IT SHOULD DO SO

The three options are:

(1) apply the rebuttable presumption approach established by Kar v. Hogan, 399 Mich 529 (1976), treating the drafting lawyer the same as any other fiduciary, and defer the issue to the Legislature to change existing law; (Note: this is Papazian’s argument.)
(2) create and apply a modified version of the rebuttable presumption approach established in Kar v Hogan, such that the presumption can only be overcome if the drafting lawyer establishes by clear and convincing evidence that the gift was not procured because of undue influence, with this determination being a question of fact;
(3) rule that any substantial gift, including a testamentary gift, is void, as a matter of law, as against public policy pursuant to MCL 700.2705, 700.7404, and 700.7410, where the gift was made from a client to a drafting lawyer or the lawyer’s parent, child, sibling, or spouse, unless the lawyer is related to the client. (Note: this is Mardigian’s argument.)

Further:

“The Probate Section does not condone the actions of the drafting attorney in this case and believes that all attorneys should strictly comply with MRPC 1.8(c). Attorneys presented with this situation in the future should be cautioned to refer the client to an independent attorney to draft the requested instrument. Despite that simple premise, resolution of this issue is complex because of the competing principles involved. As discussed above in the Introduction, this issue necessitates balancing the rights of a decedent to bequeath property as he or she wants against  the danger involved in a drafting attorney using his or her unique position of confidence and trust to bring about a self-interested gift. The Section is very mindful of the public perception of the integrity of attorneys, particularly in the estate planning field where it is essential that clients have complete faith and trust in their attorneys. Otherwise, many individuals may forgo retaining attorneys for estate planning or may do no planning at all. The Section requests that the Court consider, discuss and apply these considerations in determining what rule of law should apply.”

It concludes:

“This case has the potential to impact many more attorneys and the public at large than just the parties to this appeal. The Probate Section respectfully requests that this Court determine that In re Powers Estate did not sufficiently address the issue, although overruling of that decision by virtue of MRPC 1.8(c) is neither necessary nor warranted. Instead, this Court should carefully weigh the competing interests and apply a rule of law to provide guidance to members of the State Bar and ensure that public confidence in estate planning attorneys is not adversely affected.”

Oral Argument

Oral argument was held on 12/07/17 (watch on YouTube).

Ruling

The Supreme Court is expected to issue its ruling during its 2017-18 session.

Further Reading

Appellants’ Mardigian, et al., Brief on Appeal

Appellee Mark Papazian’s Brief

Appellant’s Reply Brief

About the author

Curtis Cooper is principal of Lawyers Insurance Group, a legal malpractice insurance brokerage that aggressively comparison shops on attorneys’ behalf to find them the best terms available in the market. Contact him by phone: (202) 802-6415, or email: ccooper “at” lawyersinsurer.com.

To obtain the best possible terms on your firm’s malpractice insurance, complete our on-line application.

End notes

  1. Egan, Paul, “Family Fights Attorney Getting Millions From Client’s Will”, DETROIT FREE PRESS, April 10, 2015, http://www.freep.com/story/news/local/michigan/2015/04/10/attorney-receiving-millions-will-drafted-wealthy-client/25611217/

 

  1. Ibid.

 

  1. Ibid

 

  1. Ibid

 

  1. See MARK S. PAPAZIAN, Executor for the Estate of ROBERT DOUGLAS MARDIGIAN, Appellant, v MELISSA GOLDBERG, SUSAN V. LUCKEN, NANCY VARBEDIAN, EDWARD MARDIGIAN, GRANT MARDIGIAN, MATTHEW MARDIGIAN, and JP MORGAN CHASE BANK, NA, Appellees, No. 319023, Charlevoix Probate Court, LC No. 12-011738-DE;12-011765-TV

http://publicdocs.courts.mi.gov:81/opinions/final/coa/20151008_c319023(137)_rptr_136o-319023-final.pdf

  1. Egan, Paul, “Court: Lawyer’s $14M Inheritance Unethical, Not Invalid”, DETROIT FREE PRESS, October 9, 2015, http://www.freep.com/story/news/local/michigan/2015/10/09/court-lawyers-14m-inheritance-unethical-not-invalid/73643866/

 

  1. See note 5 above.

 

  1. See note 5 above.

 

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