Shouneyia v. Shouneyia

• Decision Date: 18 January 2011
• Docket Number: Docket No. 297007.
• Citation: 807 N.W.2d 48,291 Mich. App. 318
• Parties: SHOUNEYIA v. SHOUNEYIA.
• Court: Court of Appeal of Michigan — District of US

291 Mich.App. 318

807 N.W.2d 48

SHOUNEYIA

v.SHOUNEYIA.

Docket No. 297007.

Court of Appeals of Michigan.

Submitted Dec. 9, 2010, at Lansing.Decided Jan. 18, 2011, at 9:05 a.m.

Hauer & Snover, P.C.(by Mark A. Snover, Bingham Farms and James D. Moriarty), for Patricia A. Shouneyia.

Paul C. Smith PLLC, Royal Oak (by Paul C. Smith), for Alec E. Shouneyia and the Shouneyia Bros. Corp.

Before: MURPHY, C.J., and METER and GLEICHER, JJ.

GLEICHER, J.

DefendantAlec E. Shouneyia owes money to plaintiffPatricia A. Shouneyia, his former spouse, for a property settlement and attorney fees contained in a divorce judgment.Plaintiff moved for the appointment of a receiver over assets or income possessed by defendant in Shouneyia Bros. Corp.(Shouneyia Brothers), an entity coowned by defendant and his brother, Frank Shouneyia.The circuit court appointed a receiver over Shouneyia Brothers without joining the company as a party to the proceeding, prompting defendant and Shouneyia Brothers(collectively referred to as “appellants”) to seek leave to appeal, which this Court granted.We affirm the order appointing a receiver, but remand for the addition of the corporation as a partydefendant.

In October 2008, the circuit court entered a divorce judgment, which in pertinent part awarded plaintiff a $50,000 property settlement and ordered defendant to pay plaintiff $40,000 in attorney fees.In June 2009, plaintiff urged the court to appoint a receiver “to collect the money Defendant owes Plaintiff” pursuant to the judgment of divorce, because defendant had paid nothing toward this debt.Plaintiff added that although defendant represented in January 2009 that he“was attempting to get a loan,” that the loan apparently “has never come to fruition.”Defendant responded that he had a long list of properties in foreclosure and other debts that left him insolvent.At a July 2009 hearing, plaintiff accused defendant of having lied under oath at the divorce trial about his lack of income from several real property rentals, his purchase of a winning lottery ticket ($15,000), and his receipt of checks (including one in the amount of $50,000) from his mother.The court ruled, “I understand there's quite a bit of distrust; however, before we go to a receiver I think it's not unreasonable to hold a creditor's exam.”

At a December 2009 examination, defendant appeared without counsel or supporting documentation, and in response to inquiries by plaintiff's counselhe repeatedly expressed an inability to recall or answered in a nonspecific fashion.Defendant did testify that he received a salary of about $300 a week from the Vineyard Market, operated by Shouneyia Brothers.Defendant averred that he and his brother, Frank Shouneyia, jointly ran Shouneyia Brothers and Vineyard Market, but that his brother was “out of the business right now,” in part because of a pending lawsuit that defendant had filed against Frank.With respect to the only other income source defendant could recall, a shopping center coowned by eight siblings, defendant could not remember how much income he received.Defendant denied having any other personal income or assets, apart from occasional monetary assistance from his mother and siblings.When plaintiff's attorney presented defendant with a statement reflecting a $20,000 wire transfer from defendant's girlfriend to defendant's business account, defendant responded that the money was to “[h]elp me out, get the business going, maybe I was short, maybe at the time; though, I don't remember.”Regarding monthly business-related bank deposits between December 2008 and July 2009 in amounts of more than $400,000 to in excess of $600,000, defendant explained that he provided check cashing services for his customers, resulting in large deposits.Defendant proclaimed that he charged little to no money for this service, which thus generated no appreciable income.Defendant refused to answer any questions relating to whether he ever won the lottery and induced an employee to claim the winnings for him.

In January 2010, plaintiff filed a renewed motion for the appointment of a receiver to collect the divorce judgment awards defendant owed her.Plaintiff characterized defendant's December 2009 testimony “as either a total fabrication and/or misrepresentation, perjury and at best evasive.”The circuit court found as follows at a hearing on plaintiff's motion:

Well, I have read the transcript of the creditor's exam, and to say that Mr. Shouneyia was evasive would be an understatement.Thousands of dollars coming in and out of these accounts and he never has any funds.It may well be that he has no funds.I don't know.But I tried this case and he was ordered to make a property settlement to this lady and a year has gone by; she has not received a nickel.And she is spending attorney fees and there are children.It's unconscionable.Unconscionable.

If he is receiving money from the [family] trust, where has that been?Now at the eleventh hour, a year later, he's going to offer her some money from the trust?Too little, too late.She should not have to chase him around to get these funds.And I don't believe there was an honest answer through this entire creditor's exam.

It's unfortunate, however, a receiver is more than justified.I will appoint Henry Nirenberg as receiver.And if indeed Mr. Shouneyia has no assets, Mr. Nirenberg will report that back to us, but I think he needs to have a look.

... Somebody needs to step forward, be honest, and let's get off the mark.But I don't think, a year from now, this lady should still be chasing around to get $50,000.That's ridicules [sic].

On January 20, 2010, the circuit court entered an order granting plaintiff's motion to appoint a receiver.

In February 2010, plaintiff filed another motion to appoint a receiver.Plaintiff premised the motion on the same facts set forth in the January 2010motion to appoint a receiver, but requested “that the Receiver have powers over Shouneyia Brothers Corporation, ... D/B/A Vineyard Market,” among other business entities.Receiver Nirenberg advised the court at a March 2010 hearing that defendant had thwarted his initial efforts to review the Vineyard Market's inventory and records.However, Nirenberg did notice that

the cash registers are zeroed out each day on a Z key three times a day, and that was indicated clearly to my accountant; therefore, there is no trail of what comes in and out of that business.The check cashing that goes on, there is no trail of that, as well.

Defendant expressed a desire to discuss a settlement, prompting the hearing to adjourn.A week later, defendant had not engaged in any settlement discussions with the receiver.The circuit court reasoned as follows that it would appoint a receiver over the corporate entity operating the market:

Well, frankly, having read all of the briefs I'm not really convinced that Estes versus Titus[481 Mich. 573, 751 N.W.2d 493(2008) ] is applicable in this situation, I think that was a little bit of a different scenario where assets were transferred to avoid payment, it really wasn't a receivership type of a case, and I'm not positive the Court has jurisdiction to grant the relief that's been requested.

However, I am going to ... grant your motion, ... because we don't have objections from either of the third parties.I think the bank is satisfied that they're protected, the other partner ... or the other member of the corporation is not objecting, so there's really no one else to protect at this point.

On March 17, 2010, the court entered an order appointing Nirenberg “as Receiver of the assets of Defendant, ... and Receiver of SHOUNEYIA BROS. CORP(‘Entity’) including all businesses operated through said Entity, including Vineyard III Market ... as well as all of the following-described property....”The court added that it was grounding the receiver's appointment on MCL 600.2926.

Appellants first aver on appeal that the circuit court's failure to join Shouneyia Brothers as a partydefendant in the underlying divorce action precluded the court from exercising authority over the corporation.Michigan courts have consistently recognized that court may not make “[a]n adjudication affecting” the rights of a person or entity not a party to the case.Capitol S. & L. Co. v. Standard S. & L. Ass'n.,264 Mich. 550, 553, 250 N.W. 309(1933);see alsoSpurling v. Battista,76 Mich.App. 350, 353, 256 N.W.2d 788(1977)(concluding that “the trial court did not have the power to compel [a law firm] to pay witness fees” when the law firm “was not a party to this action”).Plaintiff theorizes that the appointment of a receiver does not adversely affect any interested nonparty's rights, given that Frank Shouneyia, defendant's coowner in Shouneyia Brothers, consented to the receivership.But plaintiff's argument ignores that the corporation itself amounts to an interested party.¹The circuit court thus did not have authority to adjudicate the rights of Shouneyia Brothers without first making it a party to the case.

But, as recognized in MCR 2.207, “Misjoinder of parties is not a ground for dismissal of an action.Parties may be added or dropped by order of the court on motion of a party or on the court's own initiative at any stage of the action and on terms that are just.”See alsoHenkel v. Henkel,282 Mich. 473, 488, 276 N.W. 522(1937)(explaining that ordinarily “if the proper partiesplaintiff are not joined, this court will direct the joinder of the proper partiesplaintiff on appeal”).Except in circumscribed circumstances, “the jurisdiction of a divorce court is strictly statutory and limited to determining the rights and obligations between the husband and wife, to the exclusion of third parties.”Estes,481 Mich. at 582–583, 751 N.W.2d 493(quotation marks and citation omitted).“Third persons may be made defendants in an action for divorce where it is charged that such...