Court Opinion

ID: 3172920
Source: CourtListenerOpinion
Date Created: 2016-01-28 08:04:40.616098+00
Date Added: 2024-06-11T11:56:29.286309
License: Public Domain

STATE OF MICHIGAN

                           COURT OF APPEALS

VENKATA KRISHNA NALLABALLI,                                      UNPUBLISHED
                                                                 January 26, 2016
              Plaintiff/Counter-
              Defendant/Appellant,

v                                                                No. 322021
                                                                 Washtenaw Circuit Court
ESWARI ACHANTA,                                                  LC No. 13-001104-CK

              Defendant/Counter-
              Plaintiff/Appellee,

and

GMGT TECHNOLOGIES, INC.,

              Defendant/Appellee.

SUNEETHA NALLABALLI,

              Plaintiff-Appellant,

v                                                                No. 325704
                                                                 Washtenaw Circuit Court
ESWARI ACHANTA and GMGT                                          LC No. 14-000663-CK
TECHNOLOGIES, INC.,

              Defendants-Appellees.

Before: SHAPIRO, P.J., and O’CONNELL and WILDER, JJ.

WILDER, J. (concurring).

        I concur with the majority opinion in Docket No. 322021. I agree that the trial court
properly granted summary disposition on Venkata’s claims because his rights did not vest before
the dissolution and winding up of GMGT’s affairs. With regard to Suneetha’s claims in Docket
No. 325704, I reluctantly concur in the majority’s decision to reverse and remand for further

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proceedings. In Venkata’s case, there was uncontradicted evidence presented that GMGT wound
up its affairs in 2012. If GMGT in fact wound up its affairs in 2012, then, as discussed below, I
would conclude that Suneetha’s claims against Achanta and GMGT brought in 2014 were
barred. However, because the evidence of GMGT’s winding up of its affairs was not presented
in Suneetha’s case, I agree that remand is proper.

        “Chapter 8 of the Business Corporation Act (BCA), MCL 450.1801 et seq., governs the
dissolution and winding up of Michigan corporations.” Flint Cold Storage v Dep’t of Treasury,
285 Mich. App. 483, 495; 776 NW2d 387 (2009). A dissolved corporation and its officers
continue to function, MCL 450.1834, and the corporation may be sued in its corporate name in
the same manner as if dissolution had not occurred, MCL 450.1834(e). See also Flint Cold
Storage, 285 Mich. App. at 495. However, after dissolution, the corporation “shall not carry on
business except for the purpose of winding up its affairs,” MCL 450.1833, which includes
paying debts and other liabilities, MCL 450.1833(c). Therefore, the clear rule is that “a
dissolved Michigan corporation may continue to exist beyond its date of dissolution only until its
[sic] has concluded ‘winding up its affairs . . . .’ ” Flint Cold Storage, 285 Mich. App. at 495-496
(citation omitted). Under the BCA, there is “no specific period in which a dissolved corporation
must complete the winding up process.” Id. at 496. Instead, “a corporation must finish
liquidating its business and complete the winding up process within a reasonable time.” Id. at
497. It is only “once a dissolved corporation has finished winding up its affairs, [that] its
existence is terminated and it ceases to exist for all purposes.” Id. at 498.

        GMGT was administratively dissolved on July 15, 2013. However, the record evidence
in Venkata’s case reveals that GMGT wound up its affairs in 2012, before the administrative
dissolution. Achanta stated by affidavit presented in that case that GMGT ceased doing business
in 2011, GMGT filed its final tax returns in 2012, and “[a]s of August 8, 2013, GMGT had no
assets, had not conducted any business for a long period of time and had been administratively
dissolved by the State of Michigan.” Based on this uncontradicted evidence, the practical date of
dissolution was year-end 2011 and defendants wound up any business matters in 2011 or 2012
with the filing of GMGT’s final tax returns. Neither Venkata nor Suneetha presented any
affidavit evidence, or even pleaded facts, tending to show that GMGT continued to operate as a
business in 2012 or that it continued to wind up its affairs into 2012 and 2013. Therefore, when
Suneetha filed suit on July 7, 2014, GMGT had finished winding up its affairs on the date of
dissolution, July 15, 2013, and “cease[d] to exist for all purposes.” Flint Cold Storage, 285 Mich
App at 498.

        Moreover, MCL 600.3605 governs actions “to compel persons to account for their
conduct in the management and disposition of the corporate funds and corporate property
committed to their charge,” MCL 600.3605(1)(a), and provides that the circuit court has
jurisdiction over any person who has held the offices of director, manager, trustee, or other
officer “against whom proceedings are commenced within 1 year after he has ceased to be a
director, manager, trustee, or other officer,” MCL 600.3605(2). Achanta effectively ceased to be
the manager when GMGT ended operation and wound up its affairs in 2012. Accordingly,
Suneetha’s suit, filed on July 7, 2014, was not commenced within one year after Achanta ceased
to be a manager of GMGT.

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       Nonetheless, because this evidence of GMGT’s winding up of its affairs is not part of the
lower court record in Suneetha’s case, I concur in the result in Docket No. 325704.

                                                           /s/ Kurtis T. Wilder

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