Court Opinion

ID: 4215733
Source: CourtListenerOpinion
Date Created: 2017-10-30 07:10:31.683512+00
Date Added: 2024-06-11T14:15:14.004887
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

KOREAN AMERICAN SCHOLARSHIP FUND,                                    UNPUBLISHED
doing business as KASF, and KOREAN                                   October 26, 2017
AMERICAN CULTURAL CENTER OF
MICHIGAN,

               Plaintiffs-Appellants,

v                                                                    No. 334373
                                                                     Oakland Circuit Court
JONG DAE KIM,                                                        LC No. 2015-149415-NZ

               Defendant-Appellee.

Before: BORRELLO, P.J., and MURPHY and RONAYNE KRAUSE, JJ.

PER CURIAM.

       In this case involving a claim for conversion, plaintiffs appeal as of right the trial court’s
order granting defendant’s motion for summary disposition pursuant to MCR 2.116(C)(8) and
MCR 2.116(C)(10). We reverse and remand for further proceedings consistent with this opinion.

                                 I. FACTUAL BACKGROUND

        Defendant held positions of trust in the plaintiff organizations for many years, and was
authorized to issue checks on plaintiffs’ bank accounts for plaintiffs’ business expenses. After
completing an audit in 2014, plaintiff discovered that defendant had written thousands of dollars
in checks to himself, to his wife, and to his wife’s business. Additionally, plaintiffs discovered
that defendant had used a debit/ATM card to make purchases and withdraw cash, and plaintiffs
contend that defendant was without the authority to do so. Defendant admits that he wrote
checks to himself, to his wife, and to his wife’s business. While defendant argues that some of
those checks were written as reimbursement for expenses he incurred on behalf of plaintiffs, he
admits that he took plaintiffs’ funds on more than one occasion as a loan for his wife’s business.

        The parties presented disputed evidence regarding the procedure for issuing checks from
plaintiffs’ business accounts. Plaintiffs provided testimony that it was defendant’s practice to
request that other officers of plaintiffs signed blank checks, and that defendant would thereafter
make out the checks and affix his signature on the checks. Defendant admitted that he often
obtained other officers’ signatures on blank checks, including one check in the amount of
$3,000.00 that he made out to himself, after obtaining the other officer’s signature. However,
defendant argued that his signature on the checks was always a stamped signature, that he kept
                                                -1-
his signature stamp in his desk, and that other officers could have stamped his signature on the
checks made out to defendant, his wife, and his wife’s business. Plaintiff contradicted this
testimony, indicating that defendant was the only one who used his signature stamp on the
organizations’ business checks. Plaintiffs submitted to the trial court detailed information
regarding the checks, debit card purchases, and ATM withdrawals that form the basis of its civil
claim for conversion against defendant.

                                  II. STANDARD OF REVIEW

        The statute of limitations applicable to a claim for conversion is a question of law which
this Court reviews de novo. Tillman v Great Lakes Truck Center, Inc, 277 Mich. App. 47, 48; 742
NW2d 622 (2007)). Further, this Court reviews a trial court’s grant of summary disposition de
novo as a question of law. Maiden v Rozwood, 461 Mich. 109, 118; 597 NW2d 817 (1999).
MCR 2.116(C)(8) permits a trial court to grant summary disposition when an opposing party has
failed to state a claim on which relief can be granted. Thus, a motion under this rule tests the
legal sufficiency of a claim. Gorman v American Honda Motor Co, Inc, 302 Mich. App. 113,
131; 839 NW2d 223 (2013). “The purpose of such a motion is to determine whether the plaintiff
has stated a claim upon which relief can be granted. The motion should be granted if no factual
development could possibly justify recovery.” Beaudrie v Henderson, 465 Mich. 124, 129-130;
631 NW2d 308 (2001). A motion for summary disposition under MCR 2.116(C)(10) tests the
factual sufficiency of a claim. Lichon v American Universal Ins Co, 435 Mich. 408, 414; 459
NW2d 288 (1990). MCR 2.116(C)(10) permits summary disposition when, except with regard
to the amount of damages, there is no genuine issue regarding any material fact and the moving
party is entitled to judgment as a matter of law. In reviewing such a motion, this Court considers
the pleadings, affidavits, depositions, admissions, and documentary evidence and grants the
benefit of any reasonable doubt to the nonmoving party. Skinner v Square D Co, 445 Mich. 153,
161-162; 516 NW2d 475 (1994). The court is not permitted to assess credibility, or to determine
facts on a motion for summary disposition. Instead, the court’s task is to review the record
evidence, and all reasonable inferences therefrom, and decide whether a genuine issue of any
material fact exists to warrant a trial. Id. The trial court must give the benefit of any reasonable
doubt to the nonmoving party. Schultes v Naylor, 195 Mich. App. 640, 645; 491 NW2d 240
(1992).

                      III. STATUTE OF LIMITATIONS AND TOLLING

        The trial court’s order granting defendant’s motion for summary disposition adopted
defendant’s arguments, including the argument that plaintiffs’ conversion claim was barred by
the six-year statute of limitations set forth in MCL 600.5813, which provides that “[a]ll other
personal actions shall be commenced within the period of 6 years after the claims accrue and not
afterwards unless a different period is stated in the statutes.” The trial court erred as a matter of
law in applying the six-year statute of limitations because this Court has held that a claim for
conversion is subject to the three-year statute of limitations set forth MCL 600.5805(10) for “all
other actions to recover damages for the death of a person, or for injury to a person or property”.
Tillman, 277 Mich. App. at 49, citing Brennan v Edward D Jones & Co, 245 Mich. App. 156, 158;
626 NW2d 917 (2001), Janiszewski v Behrmann, 345 Mich. 8, 32; 75 NW2d 77 (1956). Simply
put “conversion is a wrongful act of dominion over another person’s property, even including

                                                -2-
forgery of instruments, and as such it constitutes an injury to property governed by the three-year
limitations period.” Tillman, 277 Mich. App. at 49, citing Brennan, 245 Mich. App. at 158.

        However, plaintiffs argue that the running of the otherwise applicable statute of
limitations was stayed by virtue of the fraudulent concealment statute, MCL 600.5855, which
provides:

       If a person who is or may be liable for any claim fraudulently conceals the
       existence of the claim or the identity of any person who is liable for the claim
       from the knowledge of the person entitled to sue on the claim, the action may be
       commenced at any time within 2 years after the person who is entitled to bring the
       action discovers, or should have discovered, the existence of the claim or the
       identity of the person who is liable for the claim, although the action would
       otherwise be barred by the period of limitations.

         As our Supreme Court stated in Trentadue v Buckler Lawn Sprinkler, 479 Mich. 378, 391;
738 NW2d 664 (2007), “MCL 600.5855 provides for essentially unlimited tolling based on
discovery when a claim is fraudulently concealed.” Under MCL 600.5855, the statute of
limitations is tolled when a party conceals the fact that the plaintiff has a cause of action. Sills v
Oakland Gen Hosp, 220 Mich. App. 303, 310; 559 NW2d 348 (1996), citing Smith v Sinai Hosp
of Detroit, 152 Mich. App. 716, 727; 394 NW2d 82 (1986). Furthermore, “[t]he plaintiff must
prove that the defendant committed affirmative acts or misrepresentations that were designed to
prevent subsequent discovery. Mere silence is insufficient.” Sills, 220 Mich. App. at 310, citing
Buszek v Harper Hosp, 116 Mich. App. 650, 654; 323 NW2d 330 (1982). In DeHaan v Winter,
258 Mich. 293, 296; 241 N.W. 923 (1932), superseded by statute on other grounds as stated in
Morgan v Taylor, 434 Mich. 180; 451 NW2d 852 (1990), our Supreme Court said that
“[f]raudulent concealment means employment of artifice, planned to prevent inquiry or escape
investigation, and mislead or hinder acquirement of information disclosing a right of action. The
acts relied on must be of an affirmative character and fraudulent.”

        Here, plaintiffs argue that defendant fraudulently concealed his acts of conversion
because he obtained blank checks that were pre-signed by plaintiffs’ other officers, prior to
defendant making those checks payable to himself, to his wife, or to his wife’s business. We
agree that such acts were affirmative acts designed to prevent subsequent discovery of the
fraudulent checks. Furthermore, plaintiffs produced testimony that defendant was never
authorized to obtain a debit/ATM card tied to plaintiff KACCM’s bank account. This testimony
created a genuine issue of material fact as to whether defendant obtained a debit card
surreptitiously, without plaintiff KACCM’s knowledge and authorization. We conclude that the
otherwise applicable three-year statute of limitations was tolled by virtue of the fraudulent
concealment statute, MCL 600.5855. Therefore, plaintiffs’ action was timely filed within two
years after plaintiffs’ audit uncovered defendant’s actions and discovered the existence of the
facts supporting their claim for conversion.

        In order to invoke the tolling of the statute of limitations provided for in MCL 600.5855,
“[t]he plaintiff must plead in the complaint the acts or misrepresentations that comprised the
fraudulent concealment.” Sills, 220 Mich. App. at 310, citing In re Estate of Farris, 160 Mich
App 14, 18; 408 NW2d 92 (1987). Here, plaintiffs did not expressly plead fraudulent

                                                 -3-
concealment in their complaint. However, plaintiffs argue that the trial court should have
allowed plaintiffs the opportunity to amend their pleadings pursuant to MCR 2.116(I)(5), which
provides that if a motion for summary disposition is “based on subrule (C)(8), (9), or (10), the
court shall give the parties an opportunity to amend their pleadings as provided by MCR 2.118,
unless the evidence then before the court shows that amendment would not be justified.”
Because the facts adduced by plaintiffs through discovery create a genuine issue of material fact
regarding defendant’s acts of fraudulent concealment, the trial court should have allowed
plaintiffs the opportunity to amend their complaint to specifically plead defendant’s acts of
fraudulent concealment.

        Furthermore, even if the acts set forth above did not rise to the level of fraudulent
concealment, plaintiffs correctly argue that evidence of an affirmative act of concealment is not
required to toll the statute of limitations where a fiduciary relationship exists between the parties.
Lumber Village, Inc v Siegler, 135 Mich. App. 685, 694-695; 355 NW2d 654 (1984). “As a
general rule, for fraudulent concealment to postpone the running of the period of limitation, the
fraud must be manifested by an affirmative act or misrepresentation. An exception to this rule is
that there is an affirmative duty to disclose where the parties are in a fiduciary relationship. Id. at
694-695 (citations omitted). It is undisputed that defendant held a fiduciary relationship with
both plaintiffs. Therefore, evidence of an affirmative act of concealment was not required to toll
the statute of limitations.

         Because plaintiffs’ civil claim for conversion was subject to the two-year statute of
limitations set forth in MCL 600.5855, plaintiffs’ civil claim for conversion was timely filed, and
the trial court erroneously granted defendant’s motion for summary disposition pursuant to MCR
2.116(C)(8).

                              IV. CIVIL TORT OF CONVERSION

       The trial court’s order granting defendant’s motion for summary disposition adopted
defendant’s arguments, including the argument that plaintiffs had failed to demonstrate the
required elements for a civil claim of conversion, and the trial court therefore granted
defendant’s motion for summary disposition pursuant to MCR 2.116(C)(10). Conversion is
defined as “any distinct act of domain wrongfully exerted over another’s property in denial of or
inconsistent with the rights therein.” Lawsuit Financial, LLC v Curry, 261 Mich. App. 579, 591;
683 NW2d 233 (2004), citing Foremost Ins Co v Allstate Ins Co, 439 Mich. 378, 391; 486 NW2d
600 (1992). To support an action for conversion of money, the defendant “must have obtained
the money without the owner’s consent to the creation of a debtor-creditor relationship and must
have had an obligation to return the specific money entrusted to his care.” Lawsuit Financial,
261 Mich. App. at 591, citing Head v Phillips Camper Sales & Rental, Inc, 234 Mich. App. 94,
111-112; 593 NW2d 595 (1999) (citations omitted).

       Although defendant claims that he issued some checks to himself as reimbursement for
expenses he incurred on behalf of plaintiffs, he also admitted that he took money from plaintiffs’
accounts on more than one occasion, in order to keep his wife’s business afloat, and defendant
admitted that he knew he had an obligation to repay those funds to plaintiffs. Defendant also
provided no explanation for various checks he issued from plaintiffs’ business accounts, many of
which were written either to defendant, defendant’s wife, or the business run by defendant’s

                                                 -4-
wife. Meanwhile, plaintiffs provided testimony that defendant had no authority to take
plaintiffs’ funds for defendant’s own personal use, or as a loan for his wife’s business. Based on
these facts, we conclude that plaintiffs demonstrated facts sufficient to create a genuine issue of
material fact regarding the required elements for a civil claim of conversion, and the trial court
erred in granting defendant’s motion pursuant to MCR 2.116(C)(10).

        Defendant argues that fraud must be pled with particularity, pursuant to MCR
2.112(B)(1), and argues that plaintiff’s complaint failed to prove specific instances of fraud, with
regard to the issuance of checks from plaintiffs’ business accounts or the use of the KACCM
debit/ATM card. During the course of discovery, plaintiffs provided a specific list of
transactions which plaintiffs alleged to have constituted acts of conversion by defendant, and
attached that documentation to the brief opposing defendant’s motion for summary disposition.
Furthermore, the deposition testimony included extensive discussion of specific transactions
which plaintiffs alleged to have constituted acts of conversion. To the extent that the trial court’s
ruling adopting defendant’s arguments in their entirety and the grant of summary disposition in
favor of defendant, the trial court should have allowed plaintiffs the opportunity to amend the
pleadings pursuant to MCR 2.116(I)(5), because the alleged acts of fraud could have been
articulated with the required particularity. A trial court should freely grant leave to amend
pleadings if justice so requires. Hakari v Ski Brule, Inc, 230 Mich. App. 352, 355; 584 NW2d 345
(1998).

        Reversed and remanded for further proceedings consistent with this opinion. We do not
retain jurisdiction.

                                                              /s/ Stephen L. Borrello
                                                              /s/ William B. Murphy
                                                              /s/ Amy Ronayne Krause

                                                -5-