LARRY ZAHN V ENGINEERING SOLID SOLUTIONS INC
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STATE OF MICHIGAN
COURT OF APPEALS
LARRY ZAHN,
UNPUBLISHED
March 20, 2007
Plaintiff-CounterdefendantAppellant,
v
ENGINEERING SOLID SOLUTIONS, INC., and
FREDERICK A. KARAM,
No. 266196
Oakland Circuit Court
LC No. 2003-053133-CK
Defendants-CounterplaintiffsAppellees.
Before: Markey, P.J., and Murphy and Kelly, JJ.
PER CURIAM.
In this “shareholder” action, plaintiff Larry Zahn appeals the trial court’s order granting
defendants Engineering Solid Solutions, Inc. (ESS), and Karam a partial directed verdict. We
affirm.
In September 2003, ESS, which was owned by Karam, terminated plaintiff’s
employment. Thereafter, plaintiff, alleging that his termination was willfully unfair and
oppressive to him and to ESS, filed a shareholder’s action under MCL 450.1489 against
defendants.1 Plaintiff asserted that, pursuant to an offer to purchase 10 percent of ESS’s stock in
September 1999 and an offer in the fall of 2002 to purchase an additional 20 percent of ESS’s
stock, both of which he accepted as part of his compensation package, he owned 30 percent of
ESS’s stock, thereby making him a shareholder for purposes of MCL 450.1489. At the close of
plaintiff’s case-in-chief, defendants moved for a directed verdict. The trial court granted it as to
plaintiff’s claim that he owned 20 percent of ESS’s stock pursuant to the offer he received in the
1
Plaintiff alleged numerous other causes of action in his complaint, but those were dismissed
pursuant to a motion for summary disposition, and the dismissal of those claims is not challenged
on appeal.
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fall of 2002. According to the trial court, while plaintiff received offers to purchase an additional
20 percent of ESS’s stock, there was “nothing more than that.”2
On appeal, plaintiff argues that the trial court erred in granting a partial directed verdict to
defendants because his testimony created a question of fact as to whether he owned more than 10
percent of ESS’s stock. We review de novo a trial court’s decision to grant a motion for a
directed verdict. Tobin v Providence Hosp, 244 Mich App 626, 642-643; 624 NW2d 548 (2001).
A directed verdict is appropriate only when no factual question exists on which reasonable jurors
could differ. Smith v Foerster-Bolser Constr, Inc, 269 Mich App 424, 427-428; 711 NW2d 421
(2006). To determine whether a question of fact existed, we view the evidence presented up to
the time of the motion in the light most favorable to the nonmoving party,3 grant that party every
reasonable inference, and resolve any conflict in the evidence in that party’s favor. Thomas v
McGinnis, 239 Mich App 636, 643-644; 609 NW2d 222 (2000).
Certain elements, which include offer, acceptance, and consideration, are necessary to
make a contract. Kirchhoff v Morris, 282 Mich 90, 95; 275 NW 778 (1937); Eerdmans v Maki,
226 Mich App 360, 364; 573 NW2d 329 (1997). An offer, a unilateral declaration of intent, is
not a contract, Kamalnath v Mercy Mem Hosp Corp, 194 Mich App 543, 549; 487 NW2d 499
(1992), nor is an option to contract, Bowkus v Lange, 196 Mich App 455, 460; 494 NW2d 461
(1992), rev’d on other grounds 441 Mich 930 (1993). “An option is a mere offer that may ripen
into a binding bilateral contract upon a seasonable acceptance of the terms recited therein.” Id.,
citing LeBaron Homes, Inc v Pontiac Housing Fund, Inc, 319 Mich 310, 315; 29 NW2d 704
(1947). The acceptance of an option “must be in agreement with the terms proposed and the
exact thing offered.” Bowkus, supra at 460. A contract is made when the parties have executed
or accepted the offer, not before. Kamalnath, supra at 549. “‘[A]n acceptance sufficient to
create a contract arises where the individual to whom an offer is extended manifests an intent to
be bound by the offer, and all legal consequences flowing from the offer, through voluntarily
undertaking some unequivocal act sufficient for that purpose.’” In re Costs & Attorney Fees,
250 Mich App 89, 96-97; 645 NW2d 697 (2002), quoting Kraus v Gerrish Twp, 205 Mich App
25, 45; 517 NW2d 756 (1994), aff’d in part and remanded in part on other grounds 451 Mich 420
(1996).
According to plaintiff, he accepted the offer to purchase the additional 20 percent of
ESS’s stock when he agreed to work for ESS at a reduced salary. However, at trial, plaintiff
testified that, in September 1999, when he agreed to work for ESS, he was told by Karam that he
could purchase ten percent of ESS’s stock and that he would receive an option to purchase
additional ESS stock in the future. Viewing plaintiff’s testimony in the light most favorable to
plaintiff, the nonmoving party, Thomas, supra at 643-644, his testimony merely establishes that
2
The jury rejected plaintiff’s claim with respect to the remaining 10 percent of ESS’s stock,
finding that plaintiff never exercised the option to purchase.
3
While the parties acknowledge the principle that only evidence presented up to the time of the
motion is to be considered, they nonetheless proceed to cite evidence submitted after the motion
and included in defendants’ presentation of their case. We properly limit ourselves to the
evidence presented up to the time of the motion for directed verdict.
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he received an option to purchase additional ESS stock in the future. This option alone does not
establish that plaintiff owned 20 percent of ESS’s stock because an option, in order to become a
contract, must be accepted consistent with the proposed terms or agreed upon terms, and there
was no such evidence. Bowkus, supra at 460.4
Plaintiff failed to present any testimony that he accepted the above option or any other
offer to purchase the additional 20 percent of ESS’s stock. Plaintiff never tendered cash or check
to ESS for the purchase of the stock. Plaintiff presented no evidence that he and Karam agreed
to a purchase price for the sale of any ESS stock, nor did he present any signed document in
which he agreed to purchase ESS stock. In other words, plaintiff failed to present any evidence
that he voluntarily undertook some unequivocal act to manifest an intent to be bound to purchase
the additional 20 percent of ESS’s stock. In re Costs & Attorney Fees, supra at 96-97. There is
no evidence that plaintiff ever became a shareholder, acted as if he were a shareholder for
purposes of his divorce, taxes, and other documentation, took on the responsibilities or duties of
a shareholder, or was ever entitled to be deemed a shareholder. Because plaintiff failed to
establish that he accepted any offer to purchase the additional 20 percent of ESS’s stock, the trial
court did not err in granting defendants a directed verdict on plaintiff’s claim that, pursuant to an
offer he received in the fall of 2002, he owned 20 percent of ESS’s stock.
Plaintiff also argues that, even if the trial court did not err in granting defendants a partial
directed verdict, he is entitled to a new trial because the trial court’s order precluded the jury
from considering his testimony that he owned more than ten percent of ESS’s stock and, thereby,
the trial court’s order affected his substantial rights under MRE 103(a). Plaintiff’s argument is
without merit because MRE 103(a) does not apply to the present case. MRE 103(a) dictates
when a trial court’s error in either admitting or excluding evidence warrants reversal. See Lewis
v LeGrow, 258 Mich App 175, 200; 670 NW2d 675 (2003); Stitt v Holland Abundant Life
Fellowship (On Remand), 243 Mich App 461, 469; 624 NW2d 427 (2000). Plaintiff is not
arguing that the trial court erroneously admitted or excluded evidence, nor has plaintiff shown
that the trial court committed any error. Accordingly, plaintiff’s reliance on MRE 103(a) is
misplaced. Plaintiff is not entitled to a new trial.
Affirmed.
/s/ Jane E. Markey
/s/ William B. Murphy
/s/ Kirsten Frank Kelly
4
If any contract was formed by plaintiff working at a reduced salary, it was simply one pursuant
to which plaintiff would be given an opportunity to exercise the option to purchase stock;
however, there was no evidence that he actually exercised the option. Plaintiff’s appellate brief
implicitly suggests that the reduced salary was agreed to in exchange for the future transfer of
stock, with no additional payment for the stock or agreements being necessary, but this is wholly
inconsistent with plaintiff’s pleadings and the evidence at trial that reflected an opportunity or
offer to purchase stock by paying money out for the stock at a later date if plaintiff chose to
exercise the option and become a shareholder.
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