PER CURIAM.
Plaintiff appeals as of right the trial court's order granting defendants' motion for summary disposition in this action involving a dissolved partnership.
This case arises out of a partnership that lasted approximately four months, from November 2009 through February 2010. Defendant Petra Beierling developed a concept for an educational software business marketing online learning games to teachers. Beierling had contacts in the software and educational arenas and wanted to stream the online games into classrooms through periodic paid subscriptions. Beierling pitched her idea to two friends, plaintiff Katie Urbain and defendant Maureen Clinesmith. Both Urbain and Clinesmith were interested, and the three women formed a partnership. The partnership
Initially, Clinesmith orally agreed to invest $10,000 in the partnership, and, for purposes of equity, Beierling's and Urbain's equity stakes were to be valued by the amount of time that each person invested in the business at an hourly rate of $25. Very shortly thereafter, Clinesmith decided to become an active partner and loaned the partnership money instead of investing money in the business. The three partners decided to be equal partners and equally divide the work, each receiving 1/3 of the profits after Clinesmith's loan was repaid. After Clinesmith opted to become an active partner, the partners abandoned the idea of tracking hours. Urbain testified that she kept track of the hours that she performed work for the partnership for only the first few days.
Over the next several months, the partners worked to create a marketing plan to sell subscriptions, write questions for game banks, and develop and design their website, ifiveeducation.com. The partners intended to launch the website in early February 2010 because they believed that that was the best time for sales in the education industry. Because of several issues, however, including an apparent personality conflict between Beierling and Urbain, the website launch was delayed and the partnership broke down. The partners had several communications and met in person at least once, during which time Beierling told Urbain that Urbain was no longer a partner in the venture. Urbain felt that she had been ousted from the partnership and was surprised when Beierling cut off her access to a partnership e-mail account and discontinued her website administration privileges. Beierling and Clinesmith dissolved the partnership and commenced a successor partnership, consisting of only Beierling and Clinesmith, which launched the website within weeks. Despite e-mail blasts and other targeted marketing, the partnership sold exactly one unit for a total of $69.99.
Plaintiff filed the instant action against defendants, alleging breach of the partnership agreement (count I), breach of fiduciary duty (count II), breach of their duty to render information (count IV), improper dissolution of the partnership (count VI), civil conspiracy (count VII), and concert of action (count VIII) and requesting an accounting (count V).
We review de novo a trial court's decision on a motion for summary disposition. Lakeview Commons Ltd. Partnership v. Empower Yourself, LLC, 290 Mich.App. 503, 506, 802 N.W.2d 712 (2010). The trial court granted summary disposition on plaintiff's civil-conspiracy and concert-of-action claims pursuant to MCR 2.116(C)(8). "A motion for summary disposition brought pursuant to MCR 2.116(C)(8) tests the legal sufficiency of the complaint on the allegations of the pleadings alone." Feyz v. Mercy Mem. Hosp., 475 Mich. 663, 672, 719 N.W.2d 1 (2006). "[T]he motion tests whether the complaint states a claim as a matter of law, and the motion should be granted if no factual development could possibly justify recovery." Id. The trial court granted summary disposition on plaintiff's remaining claims pursuant to MCR 2.116(C)(10). A motion under subrule (C)(10) tests the factual sufficiency of a complaint. Corley v. Detroit Bd. of Ed.,
The UPA defines a partnership as "an association of 2 or more persons ... to carry on as co-owners a business for profit[.]" MCL 449.6. Pursuant to the UPA, "[t]he dissolution of a partnership is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on as distinguished from the winding up of the business." MCL 449.29. The dissolution of a partnership may occur by the acts of the partners, by operation of law, or by decree of the trial court. See MCL 449.31 and MCL 449.32. Because a partner's right to dissolve the partnership is "inseparably incident to every partnership," there can be no indissoluble partnership. Atha v. Atha, 303 Mich. 611, 614, 6 N.W.2d 897 (1942) (quotation marks and citation omitted).
Plaintiff argues that defendants' decision to discontinue the partnership and oust her was wrongful absent the consent of all partners pursuant to MCL 449.18(h). Plaintiff also asserts that discontinuing the partnership was an act that made it impossible to carry on the ordinary business of the partnership, which was required to be authorized by all partners according to MCL 449.9(3)(c). Plaintiff's arguments fail to acknowledge the section of the UPA that sets forth circumstances under which a partner may dissolve a partnership.
The UPA specifies that
Plaintiff admitted in her first amended complaint that the partners did not specify a definite term for the partnership and, similarly, did not specify a particular undertaking. Plaintiff maintained that the partners agreed "[t]o carry on the partnership business indefinitely." Plaintiff also maintained that the partners agreed "[t]o work together to create, design, launch, fund, market, and make changes and improvements, as necessary, to the website, or other websites they may develop[.]" Therefore, because there was no specific term set forth in the partnership agreement, which was open-ended about the partnership's undertakings with regard to developing websites then and in the future, the partnership could be dissolved by the express will of any partner pursuant to the UPA. MCL 449.31(1)(b); Rinke v. Rinke, 330 Mich. 615, 623-624, 48 N.W.2d 201 (1951). Accordingly, neither Clinesmith nor Beierling breached the partnership agreement when they dissolved the partnership, and the trial court properly granted summary disposition for defendants on plaintiffs claim alleging breach of the partnership agreement.
Plaintiff next argues that defendants acted in bad faith, both leading up to and after the discontinuation of the partnership, when they failed to disclose their intent to discontinue the partnership while at the same time allowing plaintiff to continue to perform partnership work for which she would reap no rewards.
In Gilroy, 151 Mich.App. at 637, 391 N.W.2d 419, this Court clearly articulated that the fiduciary duty between partners arises only from the partnership agreement:
The Gilroy Court further stated, "[A] partner [cannot] maintain an action in tort against a partner who by arbitrary or bad faith breach of the partnership contract has caused the termination of the partnership." Id. at 637 n. 6, 391 N.W.2d 419. Because the fiduciary relationship between plaintiff and defendants arose only by virtue of the parties' partnership agreement, the trial court properly determined that "the dissolution of the partnership cannot form the basis for a breach of fiduciary duty." Therefore, plaintiff's claim fails as a matter of law,
Plaintiff also contends that defendants breached their fiduciary duty to her when they refused to compensate her with an hourly wage for her contributions to the partnership. Plaintiff, however, overlooks MCL 449.18(f), which plainly states, "A partner is not entitled to remuneration for acting in the partnership business...." As an equal partner, plaintiff would have been entitled to 1/3 of the partnership's profits, MCL 449.18(a), but there were no profits to distribute. Plaintiff unequivocally testified at her deposition that she understood that none of the partners would be paid until the enterprise began to "make money." Because the record clearly indicates that the partnership never made a profit to distribute, plaintiff is not entitled to damages.
Plaintiff next argues that defendants breached their duty to render information to her when they failed to inform her that they wanted her out of the partnership and instead continued to allow her to perform partnership work for which she would not be compensated. MCL 449.20 imposes a duty on partners to "render on demand true and full information of all things affecting the partnership to any partner...." MCL 449.20 "has been broadly interpreted as imposing a duty to disclose all known information that is significant and material to the affairs or property of the partnership." Band, 176 Mich. App. at 113, 439 N.W.2d 285.
With regard to plaintiff's status in the partnership immediately before she was ousted, the record indicates that defendants did not conceal the fact that they had decided to remove plaintiff from the partnership. Deposition testimony from all three partners revealed that the partners discussed the fact that Beierling no longer wanted to work with plaintiff and wanted her out of the partnership. In fact, the partners exchanged several communications on the topic over the course of a few days, including a series of e-mails, phone calls, and at least one in-person meeting, before Beierling terminated plaintiff's access to her partnership e-mail account and her website administration privileges. Thus, the record reveals that defendants did not breach their duty to render information with regard to plaintiff's status in the partnership.
Plaintiff next contends that she requested an accounting of the partnership, which was not performed at the time of her request. Under MCL 449.22(a), (b), and (d), a partner has the right to a formal accounting of partnership affairs "[i]f he is wrongfully excluded from the partnership business or possession of its property by his copartners," "[i]f the right exists under the terms of any agreement," or "[w]henever other circumstances render it just and reasonable." It appears from the facts of this case that it was "just and reasonable" for plaintiff to request a formal accounting of partnership affairs at the time of her departure from the partnership. It is undisputed that defendants eventually provided plaintiff a full accounting of the business. Plaintiff takes issue with the timing of the disclosure, however, arguing that defendants should not receive credit for the fact that they ultimately provided the accounting as part of the discovery process.
We agree with plaintiff that defendants should have provided her a formal accounting of partnership affairs pursuant to MCL 449.22 within a reasonable time after the partnership dissolved and that litigation should not have been necessary for plaintiff to obtain the accounting. Plaintiff fails, however, to demonstrate that she was in any way damaged by the breach because the partnership was not profitable. Again, the UPA aims to make an aggrieved partner economically whole. Gilroy, 151 Mich.App. at 637, 391 N.W.2d 419. Despite plaintiff's efforts, there were no partnership assets to partition or profits to share. Notably, in her first amended complaint, plaintiff sought an order compelling an accounting and an award of "money damages in the amount found due by the accounting[.]" Because the partnership had no profits to distribute, the trial court properly granted summary disposition on plaintiff's claim seeking an accounting.
Plaintiff next asserts that she had a right to account for her interests in the partnership on the date of its dissolution. MCL 449.40 sets forth rules for distributing partnership property upon dissolution of a partnership. In general, MCL 449.40(b) provides that creditors should be paid first, then monies owed to partners for liabilities other than for capital and profits, followed by distribution of capital and, finally, profits to partners.
Under MCL 449.37, "partners who have not wrongfully dissolved the partnership... [have] the right to wind up the partnership affairs[.]" Thus, defendants should have afforded plaintiff an opportunity to be involved in the winding-up of partnership affairs. The record reveals that plaintiff had no input whatsoever in the windup process because Beierling and Clinesmith took sole control of all partnership affairs, including the launch of the website and partnership finances.
Clinesmith, the partner responsible for accounting duties, testified with regard to winding up partnership affairs that she "personally look[ed] at the financials and recognized that there [were] only expenses. There were no profits." She testified:
It appears from Clinesmith's testimony that she attempted to marshal partnership assets, value the assets at the time of dissolution, and distribute those assets. Unfortunately, there was no surplus of assets over and above the $10,000 loan from Clinesmith.
Undoubtedly, defendants did not allow plaintiff to engage in any of the activities necessary to properly wind up the partnership. However, plaintiff has again failed to show that she was damaged. Plaintiff testified that she was aware of the $10,000 capital loan that Clinesmith had made to the partnership and that the loan was to be repaid before any partnership assets or profits would be distributed to the partners. This approach was consistent with MCL 449.40(b). While it would have been prudent to have a valuation of the partnership's website and other intangibles calculated at the time of partnership's dissolution, doing so would have been a formidable task considering that the website had not yet launched. In any event, it appears that the market set the value of the business after the website's launch when only one sale was generated despite extensive targeted marketing to industry professionals. While plaintiff claims that she was a "co-owner" of partnership property, the record reveals that there were no assets or profits to distribute to her. Accordingly, the trial court properly granted summary disposition for defendants on plaintiff's dissolution-of-partnership claim.
Finally, plaintiff contends that because the trial court erred by dismissing her tort claim of breach of fiduciary duty, it also erred by dismissing her claims of civil conspiracy and concert of action. This Court has defined a civil conspiracy as "a combination of two or more persons, by some concerted action, to accomplish a criminal or unlawful purpose, or to accomplish a lawful purpose by criminal or unlawful means." Advocacy Org. for Patients & Providers v. Auto Club Ins. Ass'n, 257 Mich.App. 365, 384, 670 N.W.2d 569 (2003), aff'd 472 Mich. 91, 693 N.W.2d 358 (2005) (quotation marks and citation omitted). In addition, to establish a concert-of-action claim, a plaintiff must prove "that all defendants acted tortiously pursuant to a common design" that caused harm to the
"[A] partner [cannot] maintain an action in tort against a partner who by arbitrary or bad faith breach of the partnership contract has caused the termination of the partnership." Gilroy, 151 Mich.App. at 637 n. 6, 391 N.W.2d 419. Because plaintiff's civil-conspiracy and concert-of-action claims are based on her claims related to the dissolution of the partnership and those claims arose only from the partnership agreement and therefore sound in contract rather than tort, plaintiff has failed to allege a separate actionable tort. Given that plaintiff has not established that defendants committed an underlying tort, she cannot sustain her claims of concert of action and civil conspiracy. Accordingly, the trial court properly granted summary disposition on those claims.
Having found no error requiring reversal, we affirm the trial court's order granting summary disposition for defendants.
Affirmed. Defendants, being the prevailing parties, may tax costs pursuant to MCR 7.219.
DONOFRIO, P.J., and MARKEY and OWENS, JJ., concurred.