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### STATE OF MICHIGAN

COURT OF APPEALS

PATRICK J. MCCOURT,

Plaintiff-Appellant, UNPUBLISHED March 30, 2017

v No. 330766
Gratiot Circuit Court KENNETH C. FOWLER, PATRICK J. BERARDO, RICHARD W. BARCH, CULLEN DUBOSE, CRHC, INC ., and PINE VILLA
LIMITED DIVIDEND HOUSING ASSOCIATION, LC No. 13-011825-CZ

Defendants-Appellees.

Before: H OEKSTRA , P.J., and S AAD and R IORDAN , JJ.

P ER C URIAM

.

This is the second time this cas e has been before this Court. In our May 12, 2015 opinion, this Court reversed the trial court’s grant of summary disposition under MCR 2.116(C)(8) in favor of defendants and remanded for further pro ceedings. On remand, the trial court granted defendants’ subseque nt motion for summary disposi tion pursuant to MCR 2.116(C)(10). For the reasons provided below, we affirm.

The pertinent facts are reproduced from our 2015 opinion:

Defendant Pine Villa Limited Di vidend Housing Association (“Pi ne Villa”) is a limited partnership formed under the laws of the s tate of Michigan. The remaining individual defendants and defendant CRHC, Inc. (“ CRHC”) are present or former general partners in Pine Villa. According to the complaint, plaintiff was a limited partner of Capital Housing Partners-XCV III (“CHP-98”) “at all times pertinent to these proceedings.” CHP-98 was form ed as a District of Columbia limited partnership. The complaint further alleged th at CHP-98 was a limited partner of Pine Villa “[a]t all times pertinent to thes e proceedings.” Thus, plaintiff was a limited partner of a limited partner of Pine Vi lla.

Plaintiff alleged in his complaint that Pine Villa owned and m anaged real property in the form of apartment buildings in Alma, Michigan i n Gratiot County. Plaintiff also alleged that defendant Kenneth C. Fowler was the managing general partner of Pine Villa. Plaintiff alleged that Pine Villa reinv ested excess revenues-2- in the partnership and accumulated a repair and maintenance res erve of approximately three million dollars. Plaintiff alleged that, o nce the mortgage debt was paid and the property was not encumbered, the general partn ers failed to offer the project for sale or refinance the project so as to return t o the limited partners their investment. Further, plai ntiff alleged that Fowler and t he other individual defendants, in their capacity as general partners of Pine Villa , caused the entirety of the reserve fund to be expended on improvements to the prope rty. The general partners then informed CHP-98 th at it and its limited partners would suffer adverse tax consequences as the result of the expenditure of th e reserve fund and offered to purchase CHP-98’s interest in Pine Villa; the majori ty of CHP-98’s partners approved the sale of CHP-98’s interest in the fall of 2011, although plaintiff voted against it.

Plaintiff filed suit on August 12, 2013. Plaintiff brought th e action in his derivative capacity as a limited partner of CHP-98, pursuant to MCL 449.2001. Plaintiff alleged that defendant s’ conduct in “va stly undervalu ing the value of the project” and raising the specter o f adverse tax consequences en abled them to
obtain CHP-98’s interest at an unf air price, contrary to their fiduciary obligations. Plaintiff also alleged that defendants had breached the partner ship agreement and breached their statutory duties to CHP-98 under Michigan’s Revi sed Uniform Limited Partnership Act (RULPA), MCL 449.1101 et seq. CHP-98’s interest, and therefore plaintiff’s indirect i nterest, in Pine Villa was elim inated as the result of the sale. [ McCourt v Fowler , unpublished per curiam opinion of the Court of Appeals, issued May 12, 2015 (Docket Nos. 319772 & 319926), sli p op, pp 1-2.]

This Court reversed the trial c ourt grant of defendants’ motio n for summary disposition brought under MCR 2.116(C)(8) because plaintiff adequately plea ded that “ ‘at all times pertinent to these proceedings’ he was a limited partner of CHP -98.” Id. at 4-5. However, this
Court noted that

[s]hould it be determined through additional evidence that in f act CHP-98 did not exist at the time suit was filed, or that plaintiff was not a m ember of CHP-98 at that time, it may become appropriate to consider that evidence on a motion for summary disposition purs uant to MCR 2.116(C)(10). [ Id. at 5.]

After our remand, defendants moved for summary disposition pur suant to MCR 2.116(C)(10) and argued that plain tiff could not sustain his la wsuit because he was not a member
of CHP-98 at the time the action was filed. Defendants contend ed that plaintiff could not have been a member of CHP-98 in August 2013 when he filed the instan t complaint because CHP-98 did not exist at that time and instead was revoked, at the very latest, in September 2012. In support of their assertions, def endants provided (1) a copy of CHP-98’s 1065 tax return for 2012, which was marked as a “Final return” and (2) records from the D istrict of Columbia that show
CHP-98’s status as “revoked” effective September 4, 2012.

In response, plaintiff argued that he necessarily was a member of CHP-98 when he filed his complaint in August 2013 because, at that time, he had not been distributed his final-3- partnership distribution. In support, plaintiff submitted a co py of a check dated August 6, 2014, which was from CRI, Inc. and made out to plaintiff in the amoun t of $62,166.61.

In a reply/supplemental brief, defendants acknowledged that a check was issued to plaintiff in August 2014 but noted that the check was not issued by CHP-98 . Thus, the existence of the check lacked any legal significance. Further, defendant s provided the affidavit of Michael Murphy, who was a Seni or Vice President of CRI, Inc. Murphy st ated that, at one time, CRI was the general partner of CHP-98 and as part of its duties, it dis tributed the proceeds of the December 31, 2011 transaction to CHP-98’s limited partners, inc luding plaintiff. Two checks were issued to plaintiff, dated February 28, 2012, and April 10 , 2012, totaling $62,166.61. Murphy explained that plaintiff never cashed or deposited the c hecks and in July 2014, plaintiff asked that a new check be issued. As a result, a new check was issued for $62,166.61 on August 6, 2014—the same check plaintiff relies on to create a question of fact.

The trial court found that there was no question of fact relat ed to plaintiff’s status as a member of CHP-98 at the time he filed his complaint. The court found that plaintiff could not have been a member of CHP-98 at the time plaintiff filed his co mplaint because the evidence showed that CHP-98 did not exist at that time. On this basis, the trial court granted defendants’ motion for summary disposition.

I. STANDARD OF REVIEW

We review a trial court’s decision on a motion for summary dis position de novo. West v Gen Motors Corp , 469 Mich 177, 183; 665 NW2d 468 (2003). A motion brought und er MCR 2.116(C)(10) tests the factual sufficiency of the complaint. Maiden v Rozwood , 461 Mich 109, 120; 597 NW2d 817 (1999). Under this subrule, a “court conside rs affidavits, pleadings, depositions, admissions, and other evidence submitted by the pa rties, MCR 2.116(G)(5), in the light most favorable to the party opposing the motion.” Id. The motion is properly granted if (1) there is no genuine issue of mat erial fact and (2) the moving p arty is entitled to judgment as a
matter of law. West , 469 Mich at 183.

II. ANALYSIS

On appeal, plaintiff argues that the trial court erred because he presented evidence to create a question of fact whether CHP-98 was in existence at th e time he filed his lawsuit. We disagree.

MCL 49.2001 allows for a limited partner to

bring an action in the right of a limited partnership to recove r a judgment in its favor if general partners with a uthority to do so have refused to bring the action or if an effort to cause those general partners to bring the actio n is not likely to
succeed.

MCL 449.2002 provides that in orde r for someone to sustain such a derivative action on behalf of a limited partnership, the p laintiff, among other things, “m ust be a partner at the time of bringing the action.” Plaintiff f iled his suit as a derivative action on behalf of partnership CHP98 on August 12, 2013.-4- “In presenting a motion for summary disposition [under MCR 2.1 16(C)(10)], the moving party has the initial burden of supporting its position by affi davits, depositions, admissions, or other documentary evidence.” Quinto v Cross & Peters Co , 451 Mich 358, 362; 547 NW2d 314 (1996). When defendants moved for summary disposition this lat est time under MCR 2.116(C)(10), they alleged that plaintiff’s suit must be dismis sed because, contrary to MCL 449.2002, he was not (and could not have been) a member of CHP- 98 at the time he filed his lawsuit in August 2013. Specifically, defendants alleged that CHP-98 had ceased to exist and, therefore, it was impossible for anyone to have been a member, well before plaintiff filed his complaint. To support their assertion, defendants submitted do cumentary evidence that consisted of (1) a copy of CHP-98’s 1065 tax return for 2012, w hich was marked as a “Final return” and (2) records from the District of Columbia that show CHP-98’s status as “revoked” effective September 4, 2012.

Having met its initial burden to support its mo tion for summar y disposition, “[t]he burden then shifts to the opposing party to establish that a genuine i ssue of disputed fact exists.” Id. Here, in response to defendants’ motion, plaintiff submitted a single piece of evidence: a copy of a check dated August 6, 2014, that was issued to him from CRI i n the amount of $62,166.61. Plaintiff asserts that this check was a final disbursement of p artnership funds and that, because the check was issued in August 2014, it necessarily follows tha t CHP-98 had not ceased to exist and was still in existence through at least August 2014, which covered the time he filed his
lawsuit.

We hold that plaintiff has faile d to provide sufficient eviden ce to create a question of fact on this issue. Defendants provided evidence that tends to show that CHP-98 ceased to exist by September 4, 2012, which was almost a year before plaintiff fil ed his complaint. Thus, the evidence also shows that plaintiff could not have been a member of CHP-98 after September
2012. Plaintiff claims that the ch eck shows that CHP-98 was in existence well after he filed his complaint because the check was “issued” by CHP-98. But that a ssertion is not s upported by the check. The check on its face clearly shows that it was issued by CRI, not CHP-98. Indeed, CHP-98’s name does not appear any where on the check. While the re was evidence that CRI had been a general partner of CHP-98 while CHP-98 was in existence, the mere fact that the general partner issued the check does not equate to CHP-98 still being in existence at the time the check was issued. Quite simply, plaintiff had the burden to offer ev idence that he was a partner of CHP-98 at the time he filed his complaint, but the only piece o f evidence he submitted—the check issued by CRI—does not prove that. Accordingly, the tria l court properly granted defendants’ motion for summary disposition under MCR 2.116(C)(1 0). 1

1 We also reject plaintiff’s somewhat hard-to-follow position th at whether CHP-98 existed at the time he filed his complaint is not relevant. While he is corre ct that the key is whether plaintiff
was a member of CHP-98 at the tim e he filed his complaint, he fails to acknowledge that if CHP98 did not exist at that time, then, a fortiori , he also was not a member at that time.-5- Affirmed. Defendants, as the pr evailing parties, may tax cost s pursuant to MCR 7.219.

/s/ Joel P. Hoekstra /s/ Henry William Saad
/s/ Michael J. Riordan