BUSINESS LAW 6: Membership dispute in a LLC.

This case arises out of a joint business venture between cousins. The LLC was formed in 2015. Originally, plaintiff and defendant were going to share a 50/50 ownership interest, but because defendant alleged that she needed a majority ownership in order to satisfy her visa requirements, the operating agreement provided for a 51% to 49% ownership interest for defendant and plaintiff, respectively. The retail outlet was opened in October of the same year. At some point, a Jeep became a business asset of the LLC.

Up until the underlying dispute, defendant had been managing the store and plaintiff had been involved behind the scenes by handling payroll and other administrative tasks, including making changes to the website that maintained the business’s clothing inventory. At some point around January of 2016, the relationship between the parties deteriorated.

Plaintiff filed a motion for a preliminary injunction alleging that defendant had unilaterally: (1) locked plaintiff out of all of the LLC’s social media accounts and computer equipment, (2) removed the business’s alarm system, such that plaintiff was prevented from detecting when she was onsite, (3) refused to communicate with plaintiff, (4) paid employees under the table without withholding taxes, (5) prevented plaintiff’s access to company books and records, (6) changed the resident agent from plaintiff to herself, (7) updated the articles of organization to indicate that the business was now managed by the manager, (8) drove, and continued to drive, the Jeep that is titled in the company’s name, and (9) made decisions to pay for her personal matters with company funds.

The trial court granted plaintiff’s motion and ordered that (1) plaintiff be given access to all business, financial, and online accounts, (2) plaintiff receive keys, and have access, to the retail location, (3) neither party act in a harassing manner towards each other or other employees, and (4) defendant file a certificate of correction with the state regarding the improper amendment to the articles of organization.

The trial court recognized that defendant had made the decision to exclude plaintiff from the business. Supporting this premise, the trial court heard evidence that defendant changed the locks, prevented his access to financial and social media accounts, altered the articles of organization to give her management control, and unilaterally decided to close the store. Additionally, the testimony demonstrated that defendant, to some extent, was attempting to open the same type of business, under a similar name, and in potentially the same location.

Based on the testimony, the trial court ordered the dissolution and liquidation of the assets of the LLC. The trial court also directed the LLC, to make a distribution to plaintiff, which represented the 49% share owed to him to compensate for defendant’s distribution.

From our law firm in Plymouth, Michigan, Aldrich Legal Services represent business owners throughout Wayne County and the surrounding region who need help with partnership and membership disputes.

 Our founder, Brad Aldrich, has litigated thousands of cases throughout his more than 20 years of practicing law. If litigation is necessary, he can put his trial experience to work for you. He also has the knowledge you need to resolve disputes without litigation. This is just one of the many ways that Aldrich Legal Services builds relationships with clients for life.

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FAMILY LAW 37: Referee recommended against changing legal custody or parenting time.

Plaintiff requested sole legal custody, arguing that she and defendant had difficulty co-parenting and that defendant would not agree to medical treatment for the diagnosis and treatment of ADHD, need for orthodontic work, and need for vision testing and glasses. Plaintiff also requested an alternating weekly or biweekly schedule during the summer, which would increase her overall parenting time.

REAL ESTATE 40: Tax Tribunal denied petitioner’s claim of a principal residence exemption (PRE).

MCL 211.7cc(2) provides that an owner of property can claim the PRE by filing an affidavit that must state that the property is owned and occupied as a principal residence by that owner of the property on the date that the affidavit is signed and shall state that the owner has not claimed a substantially similar exemption, deduction, or credit on property in another state.

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REAL ESTATE 38: Plaintiff fails to make land contract payments.

The land contract stated that T Company sold real property to plaintiff. The land contract further stated that if plaintiff failed to make a monthly payment, T Company could execute the quitclaim deed, thereby terminating plaintiff’s rights to the real property under the land contract.

CONTRACTS 6: Do you understand the clauses in your Purchase Agreement?

The trial court granted defendants’ motion for summary disposition, concluding that the claims against the realty companies were barred by the valid release contained in the purchase agreement and that the claims against sellers were required to be resolved in arbitration because they fell within the scope of the arbitration clause in the purchase agreement.

DIVORCE 29: Spousal support in gross is non-modifiable, whereas periodic is subject to modification.

As the name implies, periodic spousal support payments are made on a periodic basis. Periodic spousal support payments are subject to any contingency, such as death or remarriage of a spouse, whereas spousal support in gross is paid as a lump sum or a definite sum to be paid in installments. In addition, one major difference between the two types of spousal support is modifiability. Spousal support in gross is non-modifiable, whereas periodic spousal support is subject to modification pursuant to MCL 555.28.1.

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PROBATE 28: Probate court enters a protective order providing support for a community spouse.

A probate court’s consideration of the couple’s circumstances cannot involve an assumption that the institutionalized spouse should receive 100% free medical care under Medicaid or an assumption that a community spouse is entitled to maintain his or her standard of living. Medicaid is a need-based program, and a Medicaid recipient is obligated to contribute to his or her care.

REAL ESTATE 36: Plaintiff argued that her claim was not time-barred because it did not accrue until the grandmother’s death.

Plaintiff’s interest in the subject property is best characterized as a remainder estate, because her right to possession of the property was postponed until the occurrence of a specific contingency, that being the deaths of the grandparents. Plaintiff pursued this action within the 15-year limitation period; accordingly, this action is not barred by MCL 600.5801(4).

LITIGATION 6: The terms of the agreement prevails over the course of performance.

The trial court determined that under the UCC, the express terms of the parties’ agreements prevailed over the course of their performance and course of dealing. Although a course of performance may show that parties have waived a specific contractual term under MCL 440.1303(6), the statute does not similarly provide that a course of dealing may demonstrate waiver.

PROBATE 27: Petitioner filed a petition for mental-health treatment.

In support of the allegations, petitioner attached clinical certificates from a physician and a psychiatrist who observed respondent at the hospital. Both doctors diagnosed respondent with bipolar disorder, determined that she displayed a likelihood of injuring herself and that she did not understand the need for treatment, and recommended a course of treatment that consisted of 60 days of hospitalization and 90 days of outpatient care.

5 Things Everyone Should Do Before Starting a Business

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