Korean American Scholarship Fund v. Jong Dae Kim
334373
| Mich. Ct. App. | Oct 26, 2017Background
- Defendant was a long‑time officer of two nonprofit plaintiffs and had authority to issue checks for business expenses and access accounts.
- A 2014 audit revealed thousands of dollars in checks written to defendant, defendant’s wife, and her business, plus unauthorized debit/ATM withdrawals.
- Defendant admitted writing checks to himself and taking loans for his wife’s business but claimed some payments were reimbursements and that his signature was applied by a stamp.
- Plaintiffs produced transaction lists and testimony alleging defendant often obtained other officers’ pre‑signed blank checks and used them to conceal transfers.
- Trial court granted defendant’s motion for summary disposition under MCR 2.116(C)(8) and (C)(10); plaintiffs appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicable statute of limitations for conversion claim | Conversion is injury to property governed by three‑year rule but tolling applies via MCL 600.5855 (fraudulent concealment) so claim is timely | Six‑year limitations (MCL 600.5813) or no tolling applies | Court held three‑year period applies and was tolled by fraudulent concealment (or fiduciary duty), so claim timely |
| Whether fraudulent concealment was sufficiently pleaded / should toll limitations | Plaintiffs argue discovery evidence shows affirmative concealment (pre‑signed checks, secret debit card) and/or fiduciary duty obviates need for affirmative act; court should allow amendment to plead concealment | Defendant contends plaintiffs failed to plead concealment and fraud with particularity | Court held evidence created genuine issue of concealment and trial court should have allowed amendment under MCR 2.116(I)(5); tolling applies |
| Sufficiency of conversion claim on summary disposition | Plaintiffs point to specific transactions, admission of loans, lack of authority for personal withdrawals; creates factual dispute about dominion and obligation to return | Defendant argues payments were reimbursements and challenges pleading particularity for fraud | Court held plaintiffs produced sufficient evidence to create genuine factual disputes on conversion elements; dismissal under (C)(10) was erroneous |
| Pleading fraud particularity requirement | Plaintiffs say they provided detailed transaction lists and discovery supporting particularity and should be allowed to amend | Defendant asserts MCR 2.112(B)(1) requires more in complaint | Court concluded plaintiffs could, after discovery, plead with particularity and should have been given leave to amend |
Key Cases Cited
- Tillman v. Great Lakes Truck Ctr., Inc., 277 Mich. App. 47 (Mich. Ct. App. 2007) (conversion governed by three‑year limitations for injury to property)
- Brennan v. Edward D. Jones & Co., 245 Mich. App. 156 (Mich. Ct. App. 2001) (conversion characterized as injury to property)
- Janiszewski v. Behrmann, 345 Mich. 8 (Mich. 1956) (conversion as injury to property)
- Maiden v. Rozwood, 461 Mich. 109 (Mich. 1999) (standard of review for summary disposition)
- Lawsuit Financial, LLC v. Curry, 261 Mich. App. 579 (Mich. Ct. App. 2004) (definition of conversion)
- Head v. Phillips Camper Sales & Rental, Inc., 234 Mich. App. 94 (Mich. Ct. App. 1999) (conversion of money requires no debtor‑creditor relationship)
- Trentadue v. Buckler Lawn Sprinkler, 479 Mich. 378 (Mich. 2007) (MCL 600.5855 allows tolling for fraudulent concealment)
- Sills v. Oakland Gen. Hosp., 220 Mich. App. 303 (Mich. Ct. App. 1997) (fraudulent concealment requires affirmative acts designed to prevent discovery)