Thomas P Corr Revocable Trust Agreement v. Patrick F Corr
356236
Mich. Ct. App.May 12, 2022Background:
- The Trust (Thomas P. Corr Revocable Trust) is a 33% limited partner of Frandorson Properties LP and shareholder of Corr Commercial Real Estate, Inc. (CCRE); plaintiff is the court-appointed special fiduciary of the Trust.
- In 2016 Timothy Corr filed derivative and individual claims alleging mismanagement, self-dealing, inadequate distributions, and tax mishandling by CCRE and Patrick and Michael Corr; that case settled and the parties executed a broad release; the Trust approved the settlement and received an increased ownership interest.
- In 2020 the special fiduciary (plaintiff) sued Frandorson/CCRE/Scout and the Corr brothers asserting similar mismanagement claims and alleging additional misconduct in 2017–2018 (phantom K-1 income, improper wages, inadequate distributions, tax reallocations).
- Defendants moved for summary disposition under MCR 2.116(C)(7), arguing res judicata (Timothy represented the Trust/was in privity in 2016) and that the settlement/release barred the claims; the trial court granted the motion and denied reconsideration.
- On appeal the Court of Appeals reviewed de novo and examined: (1) privity between Timothy and the Trust, (2) whether Timothy was the real party in interest in 2016, and (3) whether post-2016 claims could have been raised in the 2016 litigation or were barred by res judicata.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Privity between Timothy and the Trust | Timothy did not represent the Trust; no substantial identity of interests | Timothy’s 2016 suit targeted the same wrongs to benefit the partnership and limited partners (including the Trust); substantial identity exists | Court: Privity exists — Timothy’s 2016 litigation sufficiently represented the Trust’s legal interests |
| Real party in interest / Timothy’s right to sue derivatively in 2016 | Timothy could not adequately represent the Trust; he was not the real party in interest | Timothy was authorized by statute to bring derivative claims and the trial court allowed them; collateral attack not permitted | Court: Timothy was a proper real party in interest for purposes of the 2016 case; collateral attack on that jurisdictional ruling is improper |
| Whether current claims "could have been" raised in 2016 (same-transaction / res judicata) | Many claims arose from the same course of conduct and therefore are barred | 2016 litigation covered the same core allegations; many claims could have been raised then | Court: Claims based on pre-2016 misconduct are barred by res judicata; claims based on misconduct occurring after the 2016 settlement are not barred |
| Continuing-wrong / accrual & post-settlement misconduct (2017–2018) | The defendants’ misconduct was continuous; res judicata should not bar continuing wrongs arising after 2016 | Post-settlement acts are discrete new wrongs that were not and could not be litigated in 2016 | Court: Rejected broad "continuing wrong" extension; post-2016 misconduct claims accrued later and survive res judicata insofar as they arose after the settlement |
Key Cases Cited
- Adair v. Michigan, 470 Mich 105 (res judicata bars later actions if prior action decided on merits, parties/privity, and matter could have been resolved previously)
- Dextrom v. Wexford Co., 287 Mich App 406 (standard for MCR 2.116(C)(7) review and use of documentary evidence)
- Frank v. Linkler, 500 Mich 133 (claim accrues when the wrong was done)
- Beatrice Rottenberg Living Trust, 300 Mich App 339 (real-party-in-interest rule and its application to trust/beneficial-interest contexts)
- Howell v. Vito’s Trucking & Excavating Co., 386 Mich 37 (distinguished; not controlling for derivative-action representation issues)
- Plaza Investment Co. v. Abel, 8 Mich App 19 (discusses continuous breaches in lease repair context; court declined to extend it broadly)
- Froling Revocable Living Trust v. Bloomfield Hills Country Club, 283 Mich App 264 (noting abrogation/limits of common-law continuing-wrongs doctrine)
- Petraszewsky v. Keeth, 201 Mich App 535 (appellate burden on privity showing)