FIRST PUBLIC CORPORATION V WILLIAM U PARFET
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Michigan Supreme Court
Lansing, Michigan 48909
____________________________________________________________________________________________
Chie f Justice
Justices
Maura D. Corrigan
Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
Opinion
____________________________________________________________________________________________________________________________
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.
Background1
I.
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.
1
We have abbreviated the extensive factual and
procedural history. For a more detailed recitation, see 246
Mich App 182; 631 NW2d 785 (2001).
2
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
creation of a partnership or joint venture.
Appeals
pleaded
the
The Court of
presumed that the trial court had overlooked its
initial ruling that the creation of a valid business entity
had been sufficiently pleaded.
First
Public
had
failed
to
The panel then concluded that
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.
3
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.’”
216, quoting 48A CJS, Joint Ventures, § 3, p 395.
4
Id. at
However,
the
Court
of
Appeals
failed
to
distinguish
proposition in Berger from the present case.
the
actual
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,
5
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.
6
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”
7
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
8
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