First Public Corp. v. Parfet

Michigan Supreme Court
Lansing, Michigan 48909
____________________________________________________________________________________________
Chie f Justice Justices
Maura D. Corrigan Michael F. Cavanagh

Opinion
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
____________________________________________________________________________________________________________________________

FILED APRIL 8, 2003

FIRST PUBLIC CORPORATION,

FIRST VENTURE CORPORATION,

and LOU BEER,

Plaintiffs-Appellants,

v No. 119204

WILLIAM U. PARFET, IRDC ACQUISITION

CORPORATION, J.W. HENRY WATSON,

CALEDONIA GROUP INC., MPI RESEARCH,

L.L.C., IRDC ACQUISITION COMPANY, L.L.C.,

and THOMAS J. HOOGEBOOM,

Defendants-Appellees.

________________________________

PER CURIAM

Plaintiffs seek leave to appeal a Court of Appeals

judgment affirming the trial court’s grant of defendants’

motions for summary disposition. We affirm. However, because

the Court of Appeals erred by recognizing an entirely new form

of business entity not rooted in Michigan statutory or common

law, we vacate in part its judgment.

I. Background1

At the heart of plaintiffs’ various claims alleging

breaches of defendant’s fiduciary duties is whether plaintiff

First Public Corporation and defendant Caledonia Group, Inc.,

formed a lawful business relationship, and, if so, whether

that relationship was terminated by plaintiff Lou Beer’s

memorandum of July 23, 1995. Beer’s memorandum, sent to

defendant J.W. Henry Watson on behalf of plaintiffs, stated in

pertinent part that “I cannot rely on you to represent my

interests in good faith in any mutual transaction, and that

henceforth our dealings should be at arms’ length.”

Defendants Watson and Caledonia moved for summary

disposition under MCR 2.116(C)(8) and (10), primarily arguing

that First Public had failed to sufficiently allege that a

lawful business relationship had been formed. The trial court

concluded that First Public had alleged sufficiently either a

partnership or a joint venture with Caledonia. It also ruled

that even if a joint venture or partnership had been formed,

it ceased to exist as a result of Beer’s July 23, 1995,

memorandum to defendants. The trial court granted partial

summary disposition for Caledonia. Subsequently, the trial

court granted summary disposition for all defendants.

We have abbreviated the extensive factual and

procedural history. For a more detailed recitation, see 246

Mich App 182; 631 NW2d 785 (2001).

First Public then timely filed its appeal of right in the

Court of Appeals, to which defendants filed a cross-appeal.

The Court of Appeals thereafter affirmed the trial court’s

order of summary disposition for defendants,2 in part using a

different analysis than that employed by the trial court. The

Court of Appeals proposed to recognize a new commercial

business entity that it called a “joint enterprise.”

The Court’s analysis arose from its conclusion that the

trial court made inconsistent rulings. The trial court

initially found that plaintiffs had sufficiently pleaded the

creation of a partnership or joint venture, but it later

determined that the Beer memorandum had terminated the

business entity, and the court appears to have thereafter

assumed that plaintiffs never sufficiently pleaded the

creation of a partnership or joint venture. The Court of

Appeals presumed that the trial court had overlooked its

initial ruling that the creation of a valid business entity

had been sufficiently pleaded. The panel then concluded that

First Public had failed to produce any jury-submissible

evidence regarding either a partnership or a joint venture.

That conclusion should have offered a sufficient basis to

affirm the trial court.

The Court of Appeals, however, decided that another form

2
The Court of Appeals released an unpublished opinion on

March 16, 2001. The opinion was thereafter approved for

publication, 246 Mich App 182.

of commercial business entity, a “joint enterprise,” had been

sufficiently alleged. The remainder of the Court of Appeals

judgment then described this newly proposed business entity

and explained why the Beer memorandum extinguished the “joint

enterprise.”

II. Standard of Review

Whether Michigan law recognizes a “joint enterprise” as

a commercial business entity is a question of law that is

reviewed de novo. Danse Corp v Madison Hts, 466 Mich 175, 177

178; 644 NW2d 721 (2002). We also review de novo a trial

court’s decision to grant a motion for summary disposition.

Rose v Nat’l Auction Group, Inc, 466 Mich 453, 461; 646 NW2d

455 (2002).

III. Discussion

We reject the Court of Appeals panel’s conclusion that

plaintiff sufficiently alleged a “joint enterprise” because

our law does not recognize a “joint enterprise” as a distinct

commercial business relationship.

The Court of Appeals cited Berger v Mead, 127 Mich App

209, 215-216; 338 NW2d 919 (1983), for its conclusion that a

“joint enterprise” is recognized in Michigan law. Berger

defined a “joint enterprise” as “‘an undertaking to carry out

a small number of acts or objectives, which is entered into by

associates under such circumstances that all have an equal

voice in directing the conduct of the enterprise.’” Id. at

216, quoting 48A CJS, Joint Ventures, § 3, p 395. However,

the Court of Appeals failed to distinguish the actual

proposition in Berger from the present case. In Berger, a

worker’s compensation case, the court determined which of two

municipalities employed the injured plaintiff for the purpose

of ascertaining liability, where the two municipalities shared

a police force. The Court in Berger concluded that the shared

police force of the two municipalities could not be considered

a “joint venture” because the profit motive necessary for a

joint venture did not exist. Berger, supra. However, the

Berger Court observed that “a number of jurisdictions have

labelled noncommercial joint ventures as joint enterprises.”

Id. at 215 (emphasis added).

The alleged relationship in the present case was a

commercial business relationship because it had a profit

motive, unlike the arrangement in Berger. Accordingly, the

citation of Berger as authority for recognizing a commercial

business entity called a “joint enterprise” is misplaced.

In the commercial business law context, the term “joint

enterprise” is loosely synonymous with the terms “joint

venture” and “joint adventure,” or generally describes a

relationship that is either a “joint venture” or

“partnership.”3 However, the parties have not identified, nor

3
See, e.g., Goodwin v SA Healy Co, 383 Mich 300, 308
309; 174 NW2d 755 (1970) (“‘It can be said that a joint

adventure contemplates an enterprise jointly undertaken; that

it is an association of such joint undertakers to carry out a

single project for profit; that the profits are to be shared,

have we located, any Michigan case law that recognizes a

“joint enterprise” that is distinct from a “joint venture” or

“partnership” in the context of a legally recognized

commercial business relationship.4 As a result, Michigan case

law does not provide any foundation for the Court’s proposed

recognition of a “joint enterprise” as a distinct commercial

business entity.

More important, no statute has authorized the creation of

as well as the losses, though the liability of a joint

adventurer for a proportionate part of the losses or

expenditures of the joint enterprise may be affected by the

terms of the contract.’”) (emphasis added; citation omitted);

Van Stee v Ransford, 346 Mich 116, 125-126; 77 NW2d 346 (1956)

(“The name given the enterprise, whether that of partnership

or joint adventure, is, with respect to the duty of the trust

reposed, unimportant.”); Steinberg v Kowal, 345 Mich 1; 74

NW2d 909 (1956); Grabendike v Adix, 335 Mich 128; 55 NW2d 761

(1952); Kowal v Sang Corp, 318 Mich 312; 28 NW2d 113 (1947);

Steketee v Steketee, 317 Mich 100; 26 NW2d 724 (1947); Brewer

v Stoddard, 309 Mich 119; 14 NW2d 804 (1944); Hathaway v

Porter Royalty Pool, Inc, 296 Mich 90; 295 NW 571 (1941);

Danchoff v Sheahan, 270 Mich 201; 258 NW 246 (1935); Johnson

v Ironside, 253 Mich 428; 235 NW 209 (1931); Gleichman v

Famous Players-Lasky Corp, 241 Mich 266; 217 NW 43 (1928);

Alderton v Williams, 139 Mich 296; 102 NW 753 (1905); Wyatt v

Sweet, 48 Mich 539; 12 NW 692 (1882); Reed & Noyce, Inc v

Municipal Contractors, Inc, 106 Mich App 113; 308 NW2d 445

(1981); Alpine Constr Co v Gilliland, 23 Mich App 275; 178

NW2d 530 (1970).

4
We note that in Scarney v Clarke, 282 Mich 56, 66; 275

NW 765 (1937), this Court stated that “[i]n our opinion the

legal status of this association, being formed for business

purposes is that of a joint enterprise.” However, Scarney is

more properly understood as referring to a “joint enterprise”

generally as perhaps a joint venture or partnership. Scarney

involved charitable trusts and has never been cited as

authority for the recognition of a distinct legal commercial

business entity termed a “joint enterprise,” nor did it

attempt to create or characterize such a distinct entity.

a commercial business entity termed a “joint enterprise.”

Indeed, the phrase “joint enterprise” appears in only one set

of statutes in Michigan. Those statutes concern the lottery.

See MCL 432.3(c); 432.9(3); 432.11(3); 432.12(3); 432.25(10);

432.30(2); 432.33(2); 432.41(1).

Despite the absence of any authority recognizing joint

enterprises as commercial business entities, the Court, citing

Berger, concluded that a “joint enterprise” was sufficiently

alleged in the present case. The Court did not explain why

recognition of a new type of commercial entity was warranted

or why existing types of entities were inadequate. Further,

the Court of Appeals failed to articulate the principles that

define a “joint enterprise” or the characteristics that

separate this new entity from a joint venture or partnership.

Because it presented no persuasive basis for extending

the common law to recognize a distinct commercial business

entity termed a “joint enterprise,” we do not think it was

wise for the Court of Appeals to propose to do so, and we

decline to recognize such an entity at this time. Our

conclusion is reinforced by the fact that the recognition and

scope of duties in business relationships more appropriately

falls within the general domain of the policy-making branches

of our government. See, e.g., Uniform Partnership Act, MCL

449.1 et seq.

IV. Conclusion

For these reasons, we vacate the “joint enterprise”

portion of the judgment of the Court of Appeals. However, we

do not disrupt the judgment of the Court of Appeals that the

trial court properly ordered summary disposition for

defendants on the ground that plaintiffs failed to produce any

jury-submissible evidence regarding either a partnership or a

joint venture. Accordingly, we affirm.

Maura D. Corrigan

Elizabeth A. Weaver

Marilyn Kelly

Clifford W. Taylor

Robert P. Young, Jr.

Stephen J. Markman

CAVANAGH, J.

I would not dispose of this case by opinion per curiam,

but would grant leave to appeal.

Michael F. Cavanagh