Lead Opinion
Plaintiff appeals as of right an April 19, 1991, order granting summary disposition for defendants Robert L. Medley, doing business as Robert L. Medley Co., and R.M. Service Company, Inc., pursuant to MCR 2.116(0(10) and
i
This case is a continuation of a prior action brought by plaintiff against Maintenance Research Laboratory, Inc., which was wholly owned by Robert Medley, to collect a default judgment. See SCD Chemical Distributors, Inc v Maintenance Research Laboratory, Inc,
After Maintenance turned its collateral over to Security Bank, the bank commenced a foreclosure action on its perfected security interest in Maintenance’s assets on August 8, 1989. In an order dated November 17, 1989, the trial court determined that Security Bank had a perfected security interest in all the assets of Maintenance that was superior to plaintiff’s claim. In the same order, the trial court approved the sale by Security Bank to Rite-Made Chemical Company, Inc., of all the assets of Maintenance. Plaintiff did not appeal this order.
Instead, plaintiff instigated the present action by filing a complaint against defendants on September 8, 1989, which was amended on October 30, 1989, alleging three causes of action. The first count alleged that assets, inventory, customers, and the goodwill of Maintenance were fraudulently conveyed by Robert Medley, while acting as
ii
On appeal, plaintiff first argues that the trial court erred in granting summary disposition for defendants Robert Medley, doing business as Robert Medley Co., and R.M. Service Company, Inc., pursuant to MCR 2.116(0(10), because there was a genuine issue of material fact concerning whether Robert Medley had made a fraudulent conveyance of Maintenance’s assets to R.M. Service Company, Inc. We disagree.
A motion for summary disposition under MCR 2.116(0(10) may be granted when, except with regard to the amount of damages, there is no genuine issue of material fact and the nonmoving party is entitled to judgment or partial judgment
In the Uniform Fraudulent Conveyance Act, "assets” are defined as follows:
"[A]ssets” of the debtor means property not exempt from liability for his debts. To the extent that any property is liable for any debts of the debtor, such property shall be included in his assets. [MCL 566.11; MSA 26.881.]
The first question presented is whether the items that plaintiff alleges were transferred by Robert Medley are assets within the meaning of the statute.
Although no Michigan case has decided whether certain of the property in question in this case constitute assets under the statute, this Court has observed that we may look to decisions from other states for guidance when interpreting uniform acts. Check Reporting Services, Inc v Mich Natl Bank—Lansing,
We further note that the Michigan Supreme Court in Maitland v Slutsky,
In light of the foregoing, we believe that the property that plaintiff alleges to have been fraudulently conveyed—the inventory, equipment, customers, chemical formulas, product names, and goodwill of Maintenance Research Laboratory, Inc.,—are assets within the meaning of the statute because each has some value. We note specifically that the chemical formulas and product names of Maintenance are assets for purposes of the Uniform Fraudulent Conveyance Act, even if they are not entitled to protection as trademarks, trade names or trade secrets. Moreover, we note that the goodwill of Maintenance has some value, notwithstanding Maitland, because plaintiff does not argue that goodwill alone was conveyed.
Notwithstanding that conclusion, plaintiff has failed to put forward factual support for the claim sufficient to raise a genuine issue of material fact under MCR 2.116(0(10) that defendant Robert Medley fraudulently conveyed these assets. Here the record shows that all the assets of Maintenance were sold to Rite-Made Chemical Company pursuant to an order of the trial court on Novem
Moreover, contrary to plaintiff’s allegation, there is no evidence that Robert Medley appropriated a corporate opportunity from Maintenance. As this Court stated in Production Finishing Corp v Shields,
"A corporate officer or director is under a fiduciary obligation not to divert a corporate business opportunity for his own personal gain. The rule is that if there is presented to a corporate officer or director a business opportunity which the corporation is financially able to undertake which is, from its nature, in the line of the corporation’s business and is of practical advantage to it, and which is one in which the corporation has an interest or a reasonable expectancy, and if, by embracing the opportunity, the self interest of the officer or director will be brought into conflict with that of this corporation, the law will not permit him to seize the opportunity for himself. If he does, the corporation may claim the benefit of the transaction.”
According to Medley’s deposition testimony, the Robert Medley Co. was established in June 1989, immediately after plaintiff garnished Maintenance’s accounts receivable.
Here plaintiff has not come forward with any evidence to show that Maintenance had any financial ability to undertake any business opportunity once plaintiff garnished its accounts receivable in June 1989. Further, there was no evidence that Robert Medley usurped a business opportunity that was in the line of Maintenance Research Laboratory’s business. We further note that there was no covenant not to compete in this case. As it stood, Robert Medley was free to use his skill, experience, and general knowledge to compete against Maintenance after it ceased to function or to assist any other firm in doing the same. See Binkley v Frutchey Bean Co,
Because plaintiff has not established a genuine issue of material fact relating to the fraudulent conveyance of assets under the Uniform Fraudulent Conveyance Act, there is no need to compel an accounting under MCL 600.3605; MSA 27A.3605 or to pierce the corporate veil. In Nogueras v Maisel & Associates of Michigan,
[T]here are three requisites to piercing the corporate veil and finding an identity between business entities. First, the corporate entity must be a mere instrumentality of another entity or individual. Second, the corporate entity must be used to commit a fraud or wrong. Third, there must have been an unjust loss or injury to the plaintiff.
Having concluded that the trial court properly granted summary disposition for defendants under MCR 2.116(0(10), we need not consider whether summary disposition was properly granted under MCR 2.116(C)(8).
iii
Plaintiff also claims that the trial court abused its discretion in limiting discovery in this case.
This Court reviews a trial court’s decision to grant or deny discovery for an abuse of discretion. Hartmann v Shearson Lehman Hutton, Inc,
In this case, we do not believe that the trial court abused its discretion in preventing plaintiff from conducting discovery of defendants’ customers and business records in the hands of those customers. As a review of the record indicates, plaintiff failed to show the trial court how taking the deposition of their customers and gaining access to their customers’ business records would be relevant to proving a fraudulent conveyance by defendants. Furthermore, because we have found that there was no fraudulent conveyance, the issue is moot.
Affirmed.
Notes
This testimony may be erroneous because the record discloses an assumed name certificate showing the formation of the Robert L. Medley Co. on June 4, 1985. This aspect of the testimony is not dispositive, because of our holding that there was no evidence of a fraudulent conveyance.
Concurrence Opinion
(concurring in part and dissenting in part). I dissent in part from the affirmance of the
I would remand the case for further proceedings, including appropriate discovery, regarding the period beginning June 1989 and ending with the sale of assets to Rite-Made.
In all other respects, I concur in the majority opinion.