Case Title: FIRST PUBLIC CORPORATION V WILLIAM U PARFET

Citation: 

Docket Number: 119204

State: michigan

Court: Michigan Supreme Court

Date: 2003-04-08T00:00:00Z

Document:
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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. 
Opinion 
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.  
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 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.  
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.’”  Id. at  
216, quoting 48A CJS, Joint Ventures, § 3, p 395.  However,  
4  
 
 
 
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,  
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