FOUR STAR SERVICES INC V DENNIS A CARTER
Annotate this Case
Download PDF
STATE OF MICHIGAN
COURT OF APPEALS
FOUR STAR SERVICES, INC. and HOWARD J.
KLAASSEN,
UNPUBLISHED
July 17, 2001
Plaintiffs-Appellees/CrossAppellants,
v
DENNIS A. CARTER, WILLIAM H. HICKMAN,
RESOURCE MANAGEMENT INDUSTRIES,
L.L.C., MARTIN J. RENEL and COMMERCIAL
RESOURCE GROUP, INC.,
No. 217333
Oakland Circuit Court
LC No. 97-537086-CK
Defendants-Appellants/CrossAppellees.
Before: Griffin, P.J., and Jansen and Gage, JJ.
PER CURIAM.
This case involves the bitter business breakup of defendant entity Resource Management
Industries, L.L.C. (RMI), in which plaintiff Howard J. Klaassen and defendants Dennis A. Carter,
William H. Hickman and Martin J. Renel shared interests. Defendants appeal as of right from a
post bench trial judgment for plaintiffs. The trial court determined that plaintiffs covered various
RMI operating expenses and that Klaassen personally loaned RMI money, and consequently
found defendants jointly and severally liable for $78,179. Plaintiffs cross appeal the trial court’s
conclusion that Klaassen was not entitled to a salary during his involvement with RMI because
RMI never earned a profit. We affirm.
We first address defendants’ contention that the trial court erred in finding that Klaassen
loaned RMI $57,000. We review for clear error a trial court’s findings of fact. MCR 2.613(C).
A finding of fact is clearly erroneous when, although there is evidence to support it, the
reviewing court is left with a definite and firm conviction that a mistake has been made. In
applying the clearly erroneous standard, the reviewing court gives regard to the trial court’s
special opportunity to judge the credibility of the witnesses who appeared before it. In re
Forfeiture of $19,250, 209 Mich App 20, 29; 530 NW2d 759 (1995).
The parties did not dispute that by the summer of 1996 RMI needed funds to satisfy
outstanding debts to several of its subcontractors, some of whom sued or threatened legal action
-1-
against RMI, and that around this time Klaassen obtained a second mortgage on his home
amounting to approximately $75,000. Klaassen testified at trial that he, Carter and Hickman
agreed to seek second mortgages on their homes to help solve RMI’s money problems.1
According to Klaassen, he, Carter, Hickman and Renel all agreed that Klaassen would lend RMI
$57,000 in the form of several blank checks to be written to the various subcontractors. Klaassen
explained that the money was loaned at no interest, to be repaid when RMI generated sufficient
income. Klaassen’s wife testified that Carter and Renel promised her that RMI would repay the
loan. Klaassen also introduced at trial an invoice to RMI and several pages of canceled checks
from his personal account written to cover various debts of RMI. The invoice and checks totaled
approximately $57,000. In light of this evidence, we are not left with the definite and firm
conviction that the trial court erred in finding that Klaassen loaned RMI $57,000. In re
Forfeiture of $19,250, supra. Although defendants vigorously denied ever agreeing to borrow
$57,000 from Klaassen, the trial court apparently chose to accept Klaassen’s testimony regarding
the $57,000 loan, and we will not second guess this credibility determination. Sparling Plastic
Industries, Inc v Sparling, 229 Mich App 704, 716; 583 NW2d 232 (1998) (“Due regard shall be
given to the trial court’s superior opportunity and ability to judge the credibility of witnesses.”).
Defendants also argue that because Klaassen himself had a twenty-five percent interest in
RMI, the trial court should have reduced by twenty-five percent its award to Klaassen of money
that he allegedly paid on RMI’s behalf. We decline to consider this issue, however, because
defendants failed to properly preserve or present it for our review. Defendants nowhere objected
to the trial court’s damages calculations, and on appeal fail to cite any portion of the trial court
record where discussion regarding a reduction in damages occurred or any authority supporting
their argument. Mudge v Macomb Co, 458 Mich 87, 104-105; 580 NW2d 845 (1998) (noting
that an appellant may not simply announce a position or assert error then leave it up to this Court
to discover and rationalize the basis of his claim and uncover authority to sustain or reject his
position); Candelaria v B C General Contractors, Inc, 236 Mich App 67, 83; 600 NW2d 348
(1999) (“Appellate review is generally limited to issues decided by the trial court.”).
Defendants next assert that the trial court erred by invoking equity as a basis for holding
all defendants jointly and severally liable for its award to plaintiffs. Defendants reason that
because the trial court at the close of plaintiffs’ proofs summarily dismissed all but four counts of
plaintiffs’ fourteen-count first amended complaint,2 all of which remaining counts specifically
named only defendant entity RMI, the trial court improperly held the remaining defendants,
Carter, Hickman, Renel and Commercial Resource Group, Inc. (CRG),3 jointly and severally
liable with RMI. When reviewing equitable actions, this Court employs de novo review of the
trial court’s decision and reviews for clear error the findings of fact supporting the equitable
decision rendered. LaFond v Rumler, 226 Mich App 447, 450; 574 NW2d 40 (1997).
1
Neither Carter nor Hickman sought second mortgages to generate funds for RMI.
2
Plaintiffs voluntarily withdrew one count, and on defendants’ motion at the close of plaintiffs’
proofs the trial court dismissed nine more counts.
3
CRG was a general contracting entity formed by Carter, Hickman and Renel in June 1996.
Klaassen claimed that the individual defendants stole RMI business opportunities for CRG.
-2-
We initially reject defendants’ suggestion that they unfairly were forced to defend against
a theory of liability of which they had no knowledge or notice. Plaintiffs’ first amended
complaint as a whole clearly alleged specific, culpable behavior by all the individual defendants,
RMI and CRG. Defendants undisputedly had awareness of the specific allegations and causes of
action contained within the four complaint counts remaining at the time they presented their
defense. The trial court specifically advised defendants before they presented their defense of the
possibility of joint and several liability with respect to the four remaining counts. The possibility
of defendants’ joint and several liability on these remaining counts did not itself constitute a new
cause of action inappropriately based on undisclosed or unpleaded allegations. Furthermore, to
the extent that defendants urge in their appellate brief that the trial court’s imposition of joint and
several liability caused “manifest injustice reversible error,” defendants fail to explain how they
were prejudiced.
Defendants further assert with respect to the trial court’s imposition of joint and several
liability that the court improperly resorted to an equitable remedy because it specifically had
found that defendants engaged in no conspiracy, fraud or other surreptitious conduct and because
plaintiffs otherwise had an adequate remedy at law. We observe, however, that defendants need
not be found to have acted fraudulently before the court may resort to fashioning an equitable
remedy. Equitable jurisdiction is recognized where the facts involved in litigation are such that a
claimed legal remedy, although available, will not afford adequate relief. A legal remedy cannot
be said to give full and ample relief if it is not as effectual as that which equity affords.
Mooahesh v Dep’t of Treasury, 195 Mich App 551, 561; 492 NW2d 246 (1992), overruled on
other grounds in Silverman v Univ of Michigan Bd of Regents, 445 Mich 209, 216; 516 NW2d 54
(1994).
We conclude that in this case the trial court properly invoked equity to support its order
that all defendants be held jointly and severally liable for the award to plaintiffs. The trial court
noted that the individual defendants, who “were intimately involved in all of the decisions
reached during the effective life of R.M.I.,” took salaries from RMI and then pursued CRG as a
“seamless continuity of” RMI’s business.4 Moreover, at the time of trial RMI did not remain a
viable business entity: Carter, Hickman and Renel had voted to dissolve RMI; abundant
evidence reflected RMI’s lack of sufficient projects to finance its ongoing existence, including its
failures to pay several subcontractors and its involvement in litigation besides the instant case
that apparently was ongoing at the time of the instant trial; and Hickman testified that at the time
of trial RMI had no money. Because the trial court’s limitation of plaintiffs’ right to recover
from the essentially defunct RMI entity abandoned by the individual defendants would have
precluded any recovery by plaintiffs of the damages caused by RMI, we cannot conclude that the
trial court erred in invoking equity to facilitate plaintiffs’ recovery of the damages the court
awarded them. Mooahesh, supra.
Lastly, we consider plaintiffs’ contention that the trial court erred determining that
because RMI never earned a profit Klaassen was entitled to no salary for his work on behalf of
4
As plaintiffs note in their brief on appeal, defendants do not challenge the trial court’s findings
of fact in these respects.
-3-
RMI. Klaassen agreed to forego a salary until RMI became profitable. We detect no error in the
trial court’s finding that “[t]he proofs showed a failing business, R.M.I, which was unable to pay
its subcontractors and which never achieved a profit.” In light of (1) the abundant trial testimony
regarding RMI’s inability to sustain its business, (2) Hickman’s testimony that RMI had no
money at the time of trial, and (3) plaintiffs’ failure to introduce specific figures or testimony
regarding some specific amount of RMI’s alleged net profit,5 we are not left with the definite and
firm conviction that the trial court made a mistake in concluding that Klaassen was not entitled to
the salary he deferred because RMI never achieved profitability. In re Forfeiture of $19,250,
supra.
Affirmed.
/s/ Richard Allen Griffin
/s/ Kathleen Jansen
/s/ Hilda R. Gage
5
Although plaintiffs point to an “RMI Net Revenues” chart introduced by defendants that
purported to reflect RMI’s net profitability by $4,732.79, Hickman testified that despite the
chart’s title it reflected RMI’s gross profits because the chart did not take into account RMI’s
rent and administrative costs. Hickman further explained that RMI never received all the money
it earned pursuant to its various contracts because Klaassen diverted money to Four Star.
-4-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.