If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
COREY C. BORDINE, KIMBERLY BORDINE UNPUBLISHED
REYNOLDS, and PHILIP J. REYNOLDS, November 30, 2023
Plaintiffs-Appellants,
v No. 363655
Oakland Circuit Court
KARL BORDINE, ALBERT BORDINE, and LC No. 2021-191794-CZ
CALVIN BORDINE,
Defendants-Appellees.
Before: MURRAY, P.J., and CAMERON and PATEL, JJ.
PER CURIAM.
In this dispute among shareholders of a corporation, plaintiffs appeal as of right the trial
court’s order granting summary disposition to defendants. We affirm in part and reverse in part
the trial court’s opinion and order, and remand for further proceedings consistent with this opinion.
I. FACTS
Bordine Investment Co., Ltd. (BIC), is a Michigan corporation, which has five
shareholders: Albert Bordine and his four children Kimberly Bordine Reynolds,1 Corey Bordine,
Karl Bordine, and Calvin Bordine. Albert and Karl are also directors of BIC. According to
plaintiffs’ complaint, plaintiffs own 50% of BIC’s “Class B” shares and 36.7% of BIC’s “Class
A” shares. BIC owns real estate in Rochester Hills, Springfield Township, Mundy Township, and
Genoa Township, and leases that real estate to Bordine Nursery, Ltd. (Bordine Nursery) under a
Lease Agreement. At the time of the 2001 Lease Agreement, Kimberly, Corey, Karl, Calvin, and
Albert were all shareholders in both BIC and Bordine Nursery. At present, Calvin, through his
trust, is the sole owner of Bordine Nursery. According to plaintiffs, the rent paid by Bordine
1
Philip Reynolds appears to be a plaintiff because of his status as a trustee of the Kimberly Bordine
Reynolds irrevocable trust.
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Nursery is BIC’s only source of income except for a small amount of rental income related to a
cell phone tower and perhaps a billboard lease.
On December 28, 2021, plaintiffs filed a notice of assignment to the Oakland County
Business Court and a complaint against defendants, alleging: (1) as of June 2013, only Calvin and
Albert remained Bordine Nursery shareholders, (2) in December 2014, at a meeting Calvin chose
not to attend, BIC approved a rent increase of 3.5%, rather than the 5% allowed by the Lease
Agreement, (3) at a December 7, 2016 shareholder meeting, Calvin voted against plaintiffs’
requested rent increase, and Albert concurred, (4) Calvin and Albert refused to attend the
December 20, 2019 shareholder meeting to prevent a vote on rent increase, and abstained from
voting on rental increases on January 23, 2020, and June 24, 2021, a meeting Karl refused to attend,
(5) Albert and Calvin boycotted an October 15, 2021 shareholder meeting, (6) “on October 26,
2021, Karl and Albert, as directors, increased the rent–not 5% or more as allowed by the lease–but
rather by only 3% and only then, beginning January 1, 2022, even though the Metro Detroit CPI
[Consumer Price Index] had increased 5.5% from a year ago,” and (7) the fair market rent for the
premises is four times the amount BIC charges Bordine Nursery. Further, plaintiffs allege Bordine
Nursery, without authorization by BIC, has renovated and constructed new facilities on the
properties, in violation of law and ordinance, and this is likely to invalidate any fire insurance for
the property.
With these allegations, in Count 1 plaintiffs claim shareholder oppression in violation of
MCL 450.1489, asserting defendants, as directors and persons in control of BIC, have substantially
interfered with their interests as shareholders for several reasons, including failing to increase rent,
terminate the lease, accept plaintiffs’ buy-out offer, and attend shareholder meetings. In Count 2,
plaintiffs claim defendants breached their fiduciary duties. And, in Count 3, plaintiffs claim Calvin
aided and abetted by substantially assisting Karl and Albert in their breach of fiduciary duties.
Calvin filed his second motion for summary disposition of plaintiffs’ complaint under
MCR 2.116(C)(5) and (C)(8), asserting plaintiffs lack standing because their claims are based on
alleged harm to BIC, and plaintiffs did not comply with the statutory requirements for filing
derivative claims. Albert and Karl joined in the motion. Plaintiffs responded to the second motion
for summary disposition, asserting: (1) their claim of shareholder oppression under MCL 450.1489
in Count 1 is direct, not derivative, and (2) the facts alleged in Counts 2 and 3 show direct injury
to plaintiffs as shareholders of BIC.
Ultimately, the trial court granted defendants’ second motion for summary disposition in a
written opinion and order, stating, in pertinent part:
Here, the Court agrees with Defendants. The acts alleged to interfere with
Plaintiffs interests as shareholders primarily concern the lease that Plaintiffs are not
a party to. Plaintiffs oppression claim (Count I) is based on the lease between BIC
and the Nursery and the day-to-day management decisions of BIC. Injuries based
on violation of the lease or for insufficient rent increases, permit violations, or
insurance violations are injuries to BIC not Plaintiffs.
As to Counts II and III, the only breaches of fiduciary duty alleged are again
based on the lease between BIC and the Nursery. Plaintiffs cannot prevail on claims
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based on the lease without showing injury to BIC because BIC is the only party to
the lease.
Because the Court finds that Plaintiffs claims are derivative, Plaintiffs were
required to comply with the statutory requirements of MCL 450.1492a and MCL
450.1493a. Plaintiffs do not allege that they have met those requirements.
Plaintiffs therefore lack standing to pursue this action and summary disposition is
warranted.
II. ANALYSIS
A. STANDING AND MCR 2.116(C)(5)
Plaintiffs first assert that the trial court erred in using MCR 2.116(C)(5) to grant summary
disposition because defendants offered no evidence that plaintiffs lacked the capacity to sue. The
interpretation of court rules is reviewed de novo. AFP Specialties, Inc v Vereyken, 303 Mich App
497, 504; 844 NW2d 470 (2014), citing Henry v Dow Chem Co, 484 Mich 483, 495; 772 NW2d
301 (2009).
MCR 2.116(C)(5) allows for summary disposition when “[t]he party asserting the claim
lacks the legal capacity to sue.” MCR 2.116(C)(5). Although defendants moved for summary
disposition under both MCR 2.116(C)(5) and (C)(8), and the trial court cited both in its opinion
and order granting summary disposition, the trial court based its decision on lack of standing, never
specifically finding plaintiffs lacked the legal capacity to sue.
Legal capacity to sue involves the ability to initiate any lawsuit. In contrast, “[a] motion
for summary disposition asserting as its basis the doctrine of standing invokes a prudential doctrine
that focuses on whether a litigant is a proper party to request adjudication of a particular issue and
not whether the issue itself is justiciable.” Pontiac Police & Fire Retiree Prefunded Group Health
& Ins Trust Bd of Trustees v Pontiac No 2, 309 Mich App 611, 620-621; 873 NW2d 783 (2015),
quoting Lansing Sch Educ Ass’n v Lansing Bd of Educ, 487 Mich 349, 355; 792 NW2d 686 (2010)
(quotation marks and citation omitted). Motions for summary disposition asserting lack of
standing are appropriately reviewed under MCR 2.116(C)(8) or (C)(10). See Pontiac Police, 309
Mich App at 620-621.
Nevertheless, this Court has reviewed motions for summary disposition asserting lack of
standing under MCR 2.116(C)(5). Aichele v Hodge, 259 Mich App 146, 152 n 2, 165; 673 NW2d
452 (2003); Int’l Union UAW v Central Mich Univ Trustees, 295 Mich App 486, 492-493; 815
NW2d 132 (2012). And, regardless, even “ ‘[i]f summary disposition is granted under one subpart
of the court rule when it was actually appropriate under another, the defect is not fatal and does
not preclude appellate review as long as the record permits review under the correct subpart.’ ”
Bodnar v St John Providence, Inc, 327 Mich App 203, 211-212; 933 NW2d 363 (2019), quoting
Detroit News, Inc v Policemen & Firemen Retirement Sys of the City of Detroit, 252 Mich App
59, 66; 651 NW2d 127 (2002) (quotation marks and citation omitted). The pleadings permit us to
review the parties’ standing arguments under MCR 2.116(C)(8). Thus, if the trial court erred, the
error was harmless.
B. SHAREHOLDER OPPRESSION
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Next, plaintiffs assert they have properly stated a claim for shareholder oppression under
MCL 450.1489, and that claim is direct, not derivative. We agree with that assertion, at least in
part.
A trial court’s grant of summary disposition is reviewed de novo. Int’l Union UAW, 295
Mich App at 493. “In reviewing a motion for summary disposition pursuant to MCR 2.116(C)(5),
this Court must consider the pleadings, depositions, admissions, affidavits, and other documentary
evidence submitted by the parties.” Id. at 493 (quotation marks and citations omitted). Further,
standing is a question of law reviewed de novo. Pontiac Police, 309 Mich App at 621.
We also review de novo a trial court’s grant of summary disposition under MCR
2.116(C)(8) “to determine whether the opposing party failed to state a claim upon which relief can
be granted.” Charter Twp of Pittsfield v Washtenaw Co Treasurer, 338 Mich App 440, 448; 980
NW2d 119 (2021), citing Dalley v Dykema Gossett PLLC, 287 Mich App 296, 304; 788 NW2d
679 (2010). As stated in Dalley, 287 Mich App at 304-305:
A court may grant summary disposition under MCR 2.116(C)(8) if “[t]he opposing
party has failed to state a claim on which relief can be granted.” A motion brought
under subrule (C)(8) tests the legal sufficiency of the complaint solely on the basis
of the pleadings. Corley v Detroit Bd of Educ, 470 Mich 274, 277; 681 NW2d 342
(2004). When deciding a motion under (C)(8), this Court accepts all well-pleaded
factual allegations as true and construes them in the light most favorable to the
nonmoving party. Maiden v Rozwood, 461 Mich 109, 119; 597 NW2d 817 (1999).
A party may not support a motion under subrule (C)(8) with documentary evidence
such as affidavits, depositions, or admissions. Patterson v Kleiman, 447 Mich 429,
432; 526 NW2d 879 (1994). Summary disposition on the basis of subrule (C)(8)
should be granted only when the claim “is so clearly unenforceable as a matter of
law that no factual development could possibly justify a right of recovery.” Kuhn
v Secretary of State, 228 Mich App 319, 324; 579 NW2d 101 (1998).
In an action based on a written contract, the contract is considered part of the pleadings for review
under MCR 2.116(C)(8). Laurel Woods Apartments v Roumayah, 274 Mich App 631, 635; 734
NW2d 217 (2007).2
The trial court granted summary disposition of plaintiffs’ shareholder oppression claim,
citing Murphy v Inman, 509 Mich 132; 983 NW2d 354 (2022), and determined plaintiffs lacked
standing to assert the claim because it is derivative. Plaintiffs argue they properly stated a claim
for shareholder oppression under MCL 450.1489, and the trial court erred in dismissing that claim
as derivative in accordance with Murphy, because this Court held in Estes v Idea Engineering &
Fabricating, Inc, 250 Mich App 270, 649 NW2d 84 (2002), that such a claim is direct, not
derivative.
2
Although plaintiffs did not attach the Lease Agreement to their complaint, it was referenced in
the complaint, and was attached to Calvin’s reply brief in support of his second motion for
summary disposition.
-4-
Generally, “a suit to enforce corporate rights or to redress injury to the corporation is a
derivative suit; although it may be brought by the shareholder, the action itself belongs to the
corporation.” Murphy, 509 Mich at 160-161. In Murphy, which involved a breach-of-fiduciary-
duty claim arising from a corporate cash-out merger agreement, the Court refined the framework
for determining whether an action is direct or derivative, holding “courts must ask (1) who suffered
the alleged harm, and (2) who would receive the benefit of any remedy recovered.” Murphy, 509
Mich at 165. “If the answer to both questions is the corporation, the action is derivative. If the
shareholder suffers the harm independent of the corporation and receives the remedy rather than
the corporation, the action is direct.” Id. However, under MCL 450.1489:
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. [MCL 450.1489(1).]
In Estes, a conflict panel3 of this Court considered in part whether a prior version of MCL
450.1489 created a cause of action. Estes, 250 Mich App at 272. This Court stated:
It is the judgment of this Court that § 489 is quite clear in its mandate: § 489
creates a statutory cause of action along with flexible discretionary remedies to
shareholders of closely held corporations. Moreover, it is clear that this statutory
cause of action for “oppression” in favor of minority shareholders who are abused
by “controlling” persons, is a direct cause of action, not derivative, and though
similar to a common-law shareholder equitable action, provides a separate,
independent, and statutory basis for a cause of action. [Estes, 250 Mich App at
278.]
More recently, in Madugula v Taub, 496 Mich 685, 707; 853 NW2d 75 (2014), the Court described
the nature of shareholder oppression claims, stating:
Shareholders have long been able to bring a similar claim for fraud, illegality,
abuses of trust, and other oppressive conduct on the part of those in control of the
corporation through a shareholder derivative action. Whereas a shareholder in a
derivative action sues on behalf of the corporation, a shareholder bringing a § 489
claim may sue the directors directly or derivatively—i.e., on his or her own behalf
or on behalf of the corporation. However, even when a shareholder brings a claim
on his or her own behalf under § 489, the claim is often derivative in nature because
the remedies sought affect the corporation.
Thus, although derivative in nature because available remedies may affect the corporation, a
properly stated claim under MCL 450.1489 may be direct, rather than derivative.
3
A published opinion from a conflict panel “is binding on all panels of the Court of Appeals unless
reversed or modified by the Supreme Court.” MCR 7.215(J)(6).
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Again, “[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.” MCL 450.1489(1). Plaintiffs claim
defendants’ alleged actions amounted to willfully unfair and oppressive conduct, which means:
a continuing course of conduct or a significant action or series of actions that
substantially interferes with the interests of the shareholder as a shareholder.
Willfully unfair and oppressive conduct may include the termination of
employment or limitations on employment benefits to the extent that the actions
interfere with distributions or other shareholder interests disproportionately as to
the affected shareholder. The term does not include conduct or actions that are
permitted by an agreement, the articles of incorporation, the bylaws, or a
consistently applied written corporate policy or procedure. [MCL 450.1489(3).]
Therefore, to make out a claim, plaintiffs would have to prove defendants are directors or otherwise
in control of the corporation, and their “acts amounted to a ‘continuing course of conduct or a
significant action or series of actions that substantially’ interfered with their interests as
shareholders and that defendants took those acts with the intent to interfere with their interests as
shareholders.” Franks v Franks, 330 Mich App 69, 99-100; 944 NW2d 388 (2019).
Plaintiffs allege Albert and Karl serve as BIC’s directors, which neither disputes, and
Calvin is a de facto director because he “and Albert regularly confer and operate BIC to primarily
benefit Calvin and [Bordine] Nursery.” For their shareholder-oppression claim specifically,
plaintiffs allege defendants engaged in willfully unfair and oppressive conduct by: (1) refusing to
increase the unreasonably low rent charged to Bordine Nursery, (2) refusing to require Bordine
Nursery to obtain governmental and BIC approval for renovation and construction on the premises,
(3) refusing to require Bordine Nursery to have valid fire and casualty insurance, (4) refusing to
terminate the lease with Bordine Nursery, (5) retroactively approving construction and renovations
without due diligence, (6) acting in bad faith by their valuation of BIC at $28 million, but refusing
to accept plaintiffs’ buy-out at that same valuation, (7) refusing “to recognize the approval by the
shareholders to increase the rent to [Bordine] Nursery at shareholder meetings in January 2020
and June 2021, since the vote of only the voting shareholders is counted when a shareholder
abstains,” and (8) repeatedly boycotting shareholder meetings to prevent a quorum. Further,
plaintiffs allege “Albert has been both a director of BIC and, until January 2020, a shareholder of
[Bordine] Nursery, he had or has a clear conflict of interest, and has failed and refused to recuse
himself from voting on matters regarding the relationship between BIC and Nursery[.]”
Viewing these allegations in a light most favorable to plaintiffs, we conclude that plaintiffs
stated a direct claim for shareholder oppression, but not on the basis of every allegation. Plaintiffs’
assertions regarding defendants’ refusals to require Bordine Nursery to maintain appropriate
insurance, and to gain approval before construction, are insufficient to state a direct cause of action
because they do not interfere with plaintiffs’ interests as shareholders. MCL 450.1489(3) In
Madugula, 496 Mich at 718, the Court stated:
This Court has never exhaustively listed the interests or rights that
shareholders have as shareholders of a corporation. However, we have recognized
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that “[t]he relation between a corporation and its stockholders is contractual in its
nature” and that “[t]he charter of a corporation is its constitution. It prescribes the
duties of stockholders and directors within the limits of the charter in the exercise
of the power conferred upon them.” Beyond a corporation’s articles of
incorporation, we may also consider a corporation’s bylaws and the governing
statutes to determine a shareholder’s interests. [Citations omitted.]
Further:
Under the [Business Corporation Act, MCL 450.1101 et seq.] BCA, a shareholder
is “a person that holds units of proprietary interest in a corporation . . . .” Through
this interest in the corporation, a shareholder retains certain statutory rights that
allow the shareholder to protect and gain from his or her interest as a shareholder,
including, but not limited to, the right to vote, inspect the books, and receive
distributions. The BCA also allows shareholders to enter into voting agreements
and shareholder agreements. Through a voting agreement, shareholders may agree
to modify how the shares held by them are voted. Through a shareholder
agreement, shareholders are able to modify several of the statutory rights and
interests. A shareholder agreement, if it complies with the requirements of MCL
450.1488, “is effective among the shareholders and the corporation . . . .” Thus,
although the BCA provides specific rights and interests to a shareholder as a
shareholder, shareholders are entitled to modify these rights and interests through
shareholder agreements. [Madugula, 496 Mich at 718-719 (citations omitted).]
Although this alleged conduct, if true, may harm BIC, it does not interfere with plaintiffs’ interests
as shareholders. It does not affect their right to vote, to inspect books, or to receive distributions,
and neither party has alleged it violates a shareholder agreement or corporate bylaws. Instead, this
conduct would potentially violate the Lease Agreement, to which BIC and Bordine Nursery, and
not the shareholders, are parties.
Likewise, plaintiffs’ allegations regarding defendants’ refusal to increase the rent or
terminate the lease with Bordine Nursery are also insufficient to state a claim for shareholder
oppression, because willfully unfair and oppressive conduct does not include “conduct or actions
that are permitted by an agreement.” MCL 450.1489(3). The Lease Agreement allows for renewal
of the lease, stating:
The term of this Lease shall be automatically renewed for five (5) successive five
(5) year terms [hereinafter collectively “Renewal Term(s)” or individually
“Renewal Term”], from February 1 to January 31 of each year, unless either
Landlord or Tenant gives notice of termination within sixty (60) days prior to the
expiration of the initial term or each Renewal Term hereafter, as the case may be;
provided, however, in the event Landlord elects to increase the Annual Rental as
described below, Tenant may give notice of termination within ninety (90) days
prior to the Adjustment Date for which such Annual Rental shall be increased.
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And, if Bordine Nursery breaches the Lease Agreement, BIC may terminate the lease. Further, the
Lease Agreement only allows, but does not require, BIC to increase Bordine Nursery’s rent. It
states:
The Annual Rent may, at the Landlord’s option and in the Landlord’s complete and
unfettered discretion, be increased effective as of February 1 of each year of the
Initial Term or any Renewal Term (the “Adjustment Date”) commencing February
1, 2002, by an amount which is no greater than five percent (5%) of the then current
Annual Rental; provided, however, Landlord may only increase the Annual Rental
by more than five percent (5%) if there is an increase in the Consumer Price Index
(“Price Index”) effective as of February 1 of the calendar year involved during the
term of this Lease (the “Measure Date”) commencing February 1, 2001 which is
also greater than five percent (5%).
In contrast, viewing the allegations in a light most favorable to plaintiffs, plaintiffs have
stated a claim for shareholder oppression with regard to their assertions that defendants have
suppressed their voting power over a number of years, including by boycotting meetings,
undervaluing the land and, therefore, their shares, and hidden conflicts of interest. If true,
plaintiffs’ allegations would demonstrate Albert and Karl, as directors, and Calvin, in concert with
them, embarked on a course of conduct or series of actions that substantially interfered with
plaintiffs’ interests as shareholders—namely, the right to vote and to receive distributions,
Madugula, 496 Mich at 718-719, with the intent to prevent them from voting in favor of a rent
increase for Bordine Nursery, or maximizing the financial benefit of owning shares in BIC,
whether through rent distribution or sale of their shares.
This Court’s decision in Franks provides helpful insight. There, the plaintiffs claimed
shareholder oppression for conduct they alleged to be willfully unfair and oppressive, including
that the defendants stopped the payment of dividends and offered to purchase the plaintiffs’ shares
at an extremely low price. Franks, 330 Mich App at 101-105. This Court reasoned the evidence
demonstrated, as a result of these actions, that the plaintiffs stopped receiving the only benefit they
could derive from ownership of their shares—the payment of regular dividends, and permitted an
inference that the defendants had embarked on a plan to devalue the plaintiffs’ shares. Id. at 101-
103. Similarly, here plaintiffs allege a purposeful undervaluing of their shares. And, although not
perfectly analogous to Franks, because the plaintiffs there were nonvoting shareholders, plaintiffs’
allegations, if true, would demonstrate defendants’ efforts to essentially strip plaintiffs of their
voting rights by boycotting meetings, abstaining from voting, and voting as a block.
C. BREACH OF FIDUCIARY DUTY
In a somewhat similar vein, plaintiffs argue that their claims in Counts 2 and 3 are not
derivative because they alleged they suffered direct harm and would receive a direct benefit of any
remedy. Again, we agree in part.
In Count 2, plaintiffs incorporate the allegations included earlier in the complaint, and
assert defendants breached their fiduciary duties “as indicated above.” And, in Count 3, plaintiffs
incorporate the allegations included earlier in their complaint, and assert “Calvin had knowledge
of the violation of fiduciary duty by defendants Karl and Albert and gave substantial assistance in
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effecting that wrong.” Assuming plaintiffs intend to base their breach of fiduciary duty and aiding
and abetting breach of fiduciary duty claims on the same allegations forming the basis of their
shareholder-oppression claim, the trial court correctly determined that plaintiffs lacked standing
to assert their breach-of-fiduciary-duty claims, insofar as they relied on allegations related to the
Lease Agreement.
Even viewing the complaint in a light most favorable to plaintiffs, their claims for breach
of fiduciary duty based on allegations regarding defendants’ refusal to increase rent, terminate the
lease with Bordine Nursery, require Bordine Nursery to maintain appropriate insurance, and
require Bordine Nursery to gain approval before construction, are derivative. If true, both BIC
directly, and plaintiffs as shareholders in BIC, would suffer harm from these allegations, and would
receive the benefit of any remedy recovered. Murphy, 509 Mich at 165. An increase in rent, for
example, would presumably increase BIC’s profits and potentially, distributions to plaintiffs.
Likewise, refusing to increase rent could potentially suppress BIC’s profits. And, termination of
the Lease Agreement to either sell the land, or lease to someone other than Bordine Nursery, could
increase the value of BIC, as well as distributions to its shareholders. The same is true for requiring
Bordine Nursery to maintain appropriate insurance and request approval for construction as
required by its Lease Agreement with BIC. Because plaintiffs offer no argument that they followed
the statutory requirements for bringing derivative claims, MCL 450.1492a; MCL 450.1493a, the
trial court appropriately granted summary disposition of plaintiffs’ claims of breach of fiduciary
duty, and aiding and abetting breach of fiduciary duty on these bases.
However, the trial court erred when it determined plaintiffs lacked standing to assert
Counts 2 and 3 on the basis of their allegations that defendants suppressed their voting power over
a number of years, including boycotting meetings and undervaluing the land and, therefore, their
shares. Viewing these allegations in a light most favorable to plaintiffs, and for similar reasons as
those discussed earlier in this opinion, they state direct claims for breach of fiduciary duty and
aiding and abetting that breach.
To state a claim for breach of fiduciary duty, a defendant must allege: “(1) the existence of
a fiduciary duty, (2) a breach of that duty, and (3) damages caused by the breach of duty.”
Highfield Beach at Lake Mich v Sanderson, 331 Mich App 636, 666; 954 NW2d 231 (2020).
“[U]nder Michigan common law, corporate directors owe fiduciary duties directly to their
shareholders.” Murphy, 509 Mich at 152.
Colloquially, directors are required to act with due care, with loyalty, and in good
faith. These amorphous concepts do not, strictly speaking, encapsulate all that is
required of directors acting in their fiduciary capacity. For example, directors are
required to exercise candor toward the corporation’s shareholders and must disclose
all material facts within their knowledge that may influence shareholder action.
And, given that a corporation is carried on primarily for the profit of its
shareholders, we have stated that the “essence” of directors’ fiduciary duties is to
“produce to each stockholder the best possible return for his [or her] investment.”
[Id. at 148-149.]
Plaintiffs allege Karl and Albert, as BIC’s directors, owed them, as BIC shareholders,
fiduciary duties, which include the duty to act with loyalty and in good faith, Murphy, 509 Mich
-9-
at 148-149, and breached those duties by suppressing their vote, and undervaluing the land in an
effort to buy plaintiffs’ shares for less than they are worth. And, unlike their allegations regarding
rent payments and compliance with the Lease Agreement, on the basis of these allegations,
plaintiffs, as opposed to BIC, would suffer the harm and receive the remedy. For example,
plaintiffs, rather than BIC, would benefit from a fair sale of their shares.
Further, “Michigan law recognizes a cause of action for aiding and abetting a breach of
fiduciary duty.” Nicholl v Torgow, 330 Mich App 660, 675; 950 NW2d 535 (2019).
“Where a person in a fiduciary relation to another violates his duty as fiduciary, a
third person who participates in the violation of duty is liable to the beneficiary.”
The essential elements required for aiding-and-abetting liability are: (1) that an
independent wrong occurred, (2) that the aider or abettor had knowledge of the
wrong’s existence, and (3) that substantial assistance was given to effecting that
wrong. [Id. (citations omitted).]
Plaintiffs allege Calvin, though not a director himself, provided substantial assistance to
Karl and Albert’s efforts to breach their fiduciary duties, including by conferring with them to
operate BIC in a way that primarily benefits Calvin and Bordine Nursery, abstaining from voting
on rental increases, and refusing to attend meetings to prevent a quorum. Construing these
allegations in a light most favorable to plaintiffs, plaintiffs have at least stated a claim for aiding
and abetting breach of fiduciary duties.
D. BUSINESS COURT
Finally, plaintiffs assert that this case belongs in Oakland County Business Court, and
should be remanded there for further proceedings. Specifically, they argue the Business Court has
jurisdiction over “business or commercial disputes,” defined at both MCL 600.8031(1)(c) and
(2)(c). Under MCL 600.8031(2)(c), a business or commercial dispute includes those actions
involving the internal organization of business entities and the rights or obligations of
shareholders.
Questions of statutory interpretation are reviewed de novo. Blackwell v City of Livonia,
339 Mich App 495, 501; 984 NW2d 780 (2021). Additionally, “[w]hether a court has subject-
matter jurisdiction is a question of law reviewed de novo.” Hillsdale Co Senior Servs, Inc v
Hillsdale Co, 494 Mich 46, 51; 832 NW2d 728 (2013).
Under the Business Court Act, MCL 600.8031 et seq., a business court has jurisdiction
over business and commercial disputes for which equitable or declaratory relief is sought. MCL
600.8035(1). “An action must be assigned to a business court if all or part of the action includes
a business or commercial dispute.” MCL 600.8035(3).
MCL 600.8031 states, in pertinent part:
(1) As used in this section to section 8047:
* * *
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(c) “Business or commercial dispute” means any of the following:
(i) An action in which all of the parties are business enterprises, unless the only
claims asserted are expressly excluded under subsection (3).
(ii) An action in which 1 or more of the parties is a business enterprise and the other
parties are its or their present or former owners, managers, shareholders, members
of a limited liability company or a similar business organization, directors, officers,
agents, employees, suppliers, guarantors of a commercial loan, or competitors, and
the claims arise out of those relationships.
(iii) An action in which 1 of the parties is a nonprofit organization, and the claims
arise out of that party’s organizational structure, governance, or finances.
(2) Business or commercial disputes include, but are not limited to, the following
types of actions:
(a) Those involving the sale, merger, purchase, combination, dissolution,
liquidation, organizational structure, governance, or finances of a business
enterprise.
(b) Those involving information technology, software, or website development,
maintenance, or hosting.
(c) Those involving the internal organization of business entities and the rights or
obligations of shareholders, partners, members, owners, officers, directors, or
managers.
(d) Those arising out of contractual agreements or other business dealings,
including licensing, trade secret, intellectual property, antitrust, securities,
noncompete, nonsolicitation, and confidentiality agreements if all available
administrative remedies are completely exhausted, including, but not limited to,
alternative dispute resolution processes prescribed in the agreements.
(e) Those arising out of commercial transactions, including commercial bank
transactions.
(f) Those arising out of business or commercial insurance policies.
(g) Those involving commercial real property.
The primary goal of statutory interpretation is to give effect to the intent of the Legislature.
Badeen v PAR, Inc, 496 Mich 75, 81; 853 NW2d 303 (2014). “The first step in that determination
is to review the language of the statute itself. Unless statutorily defined, every word or phrase of
a statute should be accorded its plain and ordinary meaning, taking into account the context in
which the words are used.” Spectrum Health Hosp v Farm Bureau Mut Ins Co of Michigan, 492
Mich 503, 515; 821 NW2d 117 (2012) (quotation marks and citation omitted). “ ‘Although a
phrase or a statement may mean one thing when read in isolation, it may mean something
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substantially different when read in context.’ When reviewing a statute, courts should avoid a
construction that would render any part of the statute surplusage or nugatory.” Badeen, 496 Mich
at 81 (citations omitted).
Looking at the plain language of the statute, MCL 600.8031(1)(c) provides the definition
of a business or commercial dispute, as indicated by use of the word “means” after the phrase
“[b]usiness or commercial dispute.” Contrary to plaintiffs’ interpretation, MCL 600.8031(2) does
not then, immediately after that definition, provide a separate set of definitions. Rather, it provides
a list of the “types of actions” business or commercial disputes may “include.” Reading subsection
2 in context confirms this interpretation. After the list in MCL 600.8031(2) of the types of actions
a business or commercial dispute may include, MCL 600.8031(3) lists the types of actions
expressly excluded. Further, there would be no reason for the Legislature to use two back-to-back
subsections of the statute to define a business or commercial dispute when it could just use one.
And, had it intended to do so, it would make the most sense to keep the language consistent, using
the word “means” again in MCL 600.8031(2), to describe business or commercial disputes.
Because this case does not involve business enterprises as outlined in MCL 600.8031(1)(c), it
cannot be remanded to the business court.
E. CONCLUSION
We affirm in part, and reverse in part, the trial court’s order granting summary disposition
of plaintiffs’ claims, and remand to the trial court for further proceedings consistent with this
opinion. We do not retain jurisdiction.
/s/ Christopher M. Murray
/s/ Thomas C. Cameron
/s/ Sima G. Patel
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