Baks v. Moroun

Citation227 Mich.App. 472,576 N.W.2d 413
Decision Date23 January 1998
Docket Number188874,Docket Nos. 184794
PartiesVictoria M. BAKS and Florence M. McBrien, Plaintiffs-Appellants, and Agnes Anne Moroun, Plaintiff-Appellee, v. Manuel J. MOROUN, Matthew Moroun, MJM First Ltd. Partnership, Ronald Lech, Lakeshore Properties of Michigan, Ammex, Inc., and Centra, Inc., Defendants-Appellees.
CourtCourt of Appeal of Michigan (US)

Jaffe, Raiti, Heuer & Weiss, P.C. by R. Christopher Cataldo and Brian G. Shannon, Detroit, for Victoria M. Baks and Florence M. McBrien.

Schaden, Wilson & Katzman by Bruce O. Wilson, Birmingham, for Victoria M. Baks.

Kohl, Secrest, Wardle, Lynch, Clark & Hampton by William P. Hampton, Farmington Hills, for Florence M. McBrien.

Condit, McGarry & Schloff, P.C. by Richard P. Condit, Bloomfield Hills, for Manuel J. Moroun, MJM First Limited Partnership, 5973 Corp., and Matthew Moroun.

Hyman & Lippitt by Norman L. Lippitt and H. Joel Newman, Birmingham, for Ronald Lech.

Seyburn, Kahn, Ginn, Bess, Deitch and Serlin, P.C. by Joel H. Serlin and Barry M. Rosenbaum, Southfield, for AMMEX, Inc., and Lakeshore Properties of Michigan, Inc.

Before WAHLS, P.J., and TAYLOR and HOEKSTRA, JJ.

TAYLOR, Judge.

In these consolidated appeals involving shareholder derivative and shareholder oppression claims, plaintiffs appeal as of right an order granting defendants' motion for partial summary disposition in Docket No. 184794, and by leave granted an order granting partial summary disposition in Docket No. 188874, both orders being predicated on statute of limitations grounds, pursuant to MCR 2.116(C)(7). We affirm.

These cases involve a dispute among the siblings of the Moroun family regarding the disposition and control of a family business, CenTra, Inc., a holding company that owns numerous subsidiaries whose operations range from trucking terminals to the ownership of the Ambassador Bridge and duty-free shops. The companies that became CenTra were founded or acquired in the late 1940s by T.J. Moroun, the father of plaintiffs-appellants Victoria M. Baks and Florence M. McBrien, plaintiff-appellee Agnes Anne Moroun (hereafter A.A. Moroun), and defendant-appellee Manual J. Moroun (hereafter M.J. Moroun). 1 Over the years, T.J. Moroun transferred ownership of these companies to his four children. Plaintiffs claim that in the early 1980s, M.J. Moroun, with the assistance of defendant Ronald Lech, executive vice president of CenTra, and Norman Harned, CenTra's chief financial officer, began operating CenTra as his "personal fiefdom," dominating and controlling virtually every aspect of its operations and assets, in such a manner that plaintiffs were shut out of CenTra's operations, denied basic information about CenTra's affairs, and were relegated to oppressed-shareholder status. In their first amended complaint filed on September 30, 1992, plaintiffs asserted, among other claims, a shareholder derivative claim alleging that M.J. Moroun and Lech breached their fiduciary duties under M.C.L. § 450.1541a; M.S.A. § 21.200(541a) by usurping corporate opportunities and what plaintiffs denominate "an oppressed minority shareholder action under M.C.L. § 450.1489; M.S.A. § 21.200(489)," alleging that the conduct of M.J. Moroun and Lech was "willfully unfair, fraudulent, illegal and oppressive to CenTra and plaintiffs." In their third amended complaint, plaintiffs added a claim that M.J. Moroun breached a stock restriction agreement by usurping CenTra's opportunities and diverting its assets for his own benefit and the benefit of his son, defendant Matthew Moroun, and entities owned or controlled by them. Among the alleged transactions involving the usurpation and diversion of corporate opportunities, plaintiffs identify those involving MJM First Limited Partnership, AMMEX, Inc., Lakeshore Properties of Michigan, Inc., and PAM Transportation.


The principal issue in these cases is whether the trial court erred in granting defendants' respective motions for summary disposition by applying the limitation provision contained in M.C.L. § 450.1541a(4); M.S.A. § 21.200(541a)(4) to "shareholder oppression" actions brought under M.C.L. § 450.1489; M.S.A. § 21.200(489) of the Michigan Business Corporation Act (MBCA). 2 M.C.L. § 450.1489; M.S.A. § 21.200(489) 3 provides in pertinent part:

(1) A shareholder may bring an action in the circuit court of the county in which the principal place of business or registered office of the corporation is located, to establish that the acts of the directors or those in control of the corporation are illegal, fraudulent, or willfully unfair and oppressive to the corporation, or to the shareholder.

M.C.L. § 450.1541a; M.S.A. § 21.200(541a) 4 provides in pertinent part:

(1) A director or officer shall discharge his or her duties as a director or officer including his or her duties as a member of a committee in the following manner:

(a) In good faith.

(b) With the care an ordinarily prudent person in a like position would exercise under similar circumstances.

(c) In a manner he or she reasonably believes to be in the best interests of the corporation.

* * * * * *

(4) An action against a director or officer for failure to perform the duties imposed by this section shall be commenced within 3 years after the cause of action has accrued, or within 2 years after the time when the cause of action is discovered or should reasonably have been discovered, by the complainant, whichever occurs first.

As a point of departure for determining whether the trial court properly granted summary disposition in these cases, it is helpful to begin with the observation that § 489(1) does not by its terms create a cause of action. Rather, it identifies (1) persons with standing to initiate a derivative action (shareholders), (2) courts with jurisdiction over such actions (circuit court), and (3) proper venue in such actions (the county in which the principal place of business or registered office of the corporation is located). By virtue of § 489(2), such actions are available only to shareholders of corporations whose shares are neither traded on a national securities exchange nor regularly quoted in an over-the-counter market by one or more members of a national or affiliated securities association. Thus, § 489 dovetails with other sections that recognize that the circuit courts, as courts of equity under Const. 1963, art. 6, § 13, generally possess visitorial power over domestic corporations registered or having a principal place of business within their respective territories, M.C.L. § 450.1487; M.S.A. § 21.200(487) and M.C.L. § 450.1514; M.S.A. § 21.200(514) inter alia, and the common law. Carpenter v. Landman, 192 Mich. 544, 547, 159 N.W. 322 (1916); Wojtczak v. American United Life Ins. Co., 293 Mich. 449, 453-454, 292 N.W. 364 (1940).

In comparison, § 541a(1) fixes or declares the duty owed by corporate fiduciaries to their corporate principals, while § 541a(2) and (3) speak of the types of information that may be relied upon in carrying out those responsibilities on behalf of the corporation, and § 541a(4) then establishes a two-year period of limitation, measured from the date the breach of such duty is discovered or reasonably should be discovered, combined with a three-year period of repose, to govern actions based on breach of such duties.

The first question presented is whether the trial court properly applied the limitation period contained in § 541a to plaintiffs' claims under § 489, or whether plaintiffs' claims under § 489 should be governed, as plaintiffs argue, by the residual or "catch-all" statute of limitations, which provides:

All other personal actions shall be commenced within the period of 6 years after the claims accrue and not afterwards unless a different period is stated in the statutes. [M.C.L. § 600.5813; M.S.A. § 27A.5813.]

In addressing this issue, we start with the observations that the primary goal of judicial interpretation of statutes is to ascertain and give effect to the intent of the Legislature. People v. Stanaway, 446 Mich. 643, 658, 521 N.W.2d 557 (1994); Farrington v. Total Petroleum, Inc., 442 Mich. 201, 212 501 N.W.2d 76 (1993). Statutory language should be construed reasonably, keeping in mind the purpose of the act. Barr v. Mount Brighton, Inc., 215 Mich.App. 512, 516, 546 N.W.2d 273 (1996). Nothing will be read into a statute that is not within the manifest intention of the Legislature as gathered from the act itself. In re Marin, 198 Mich.App. 560, 564, 499 N.W.2d 400 (1993). If reasonable minds can differ with regard to the meaning of a statute, judicial construction is appropriate. Heinz v. Chicago Road Investment Co., 216 Mich.App. 289, 295, 549 N.W.2d 47 (1996). The court must look to the object of the statute, the harm it is designed to remedy, and apply a reasonable construction that best accomplishes the purpose of the statute. Marquis v. Hartford Accident & Indemnity (After Remand), 444 Mich. 638, 644, 513 N.W.2d 799 (1994); In re Forfeiture of $5,264, 432 Mich. 242, 248, 439 N.W.2d 246 (1989).

Key to answering this threshold question is Detroit Gray Iron & Steel Foundries, Inc. v. Martin, 362 Mich. 205, 106 N.W.2d 793 (1961), in which the Michigan Supreme Court held that an action brought by a closely held corporation against a former director to recover profits made by him at the corporation's expense, through an alleged conspiracy that constituted fraudulent conduct against the corporation, could not be maintained because it was not commenced within the six-year period of limitation provided in 1948 C.L. § 450.47; Stat. Ann. 1959 Cum. Supp. § 21.47, which was the predecessor to both § 541 and its successor, § 541a of the current act. 5 In Detroit Foundries, the Court held:

The difficulty with plaintiff's theory [that § 47 does not apply to suits by a...

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