BORRELLO, P.J.
Plaintiff Dean Altobelli filed a multi-count complaint against defendants Michael W. Hartmann, Michael A. Coakley and others, alleging that defendants wrongfully terminated his property interest in his membership at Miller Canfield Paddock & Stone, PLLC ("Miller Canfield" or "the firm"). On November 7, 2012, the circuit court denied defendant's motion for summary disposition and motion to compel arbitration, and granted plaintiff's motion for partial summary disposition under MCR 2.116(C)(10) on Count
Prior to the events leading to this lawsuit, plaintiff Dean Altobelli was a senior principal at Miller Canfield, where he worked for 17 years. Plaintiff became an equity owner in the firm in January 2006. In late May or early June of 2010, plaintiff, who had played football at Michigan State University when Nick Saban was the head coach, was offered an opportunity to work as a coach and intern for Saban at the University of Alabama football program. Plaintiff proposed a 7 to 12 month leave of absence to defendant Michael Hartmann, Chief Executive Officer (CEO) and one of the managers of Miller Canfield, and to Michael Coakley, who was not a manager but was head of the firm's litigation practice group, of which plaintiff was apparently a member. One term of this proposal was that plaintiff would be able to return as senior principal any time before June 1, 2011.
Plaintiff contends that Hartmann "supported my opportunity" and that Hartmann told plaintiff he could spend as much time as needed at Alabama and still receive certain allocated income from his clients. Defendants dispute this assertion, and Hartmann specifically stated that he "never promised Altobelli that he could have any kind of leave of absence, and made no statements about supporting a leave of absence upon which he reasonably could rely." Hartmann claimed that plaintiff "asked for my opinion about whether he could come back to the Firm" and that Hartmann replied he "thought that [plaintiff] probably could." However, Hartmann averred that both he and plaintiff "knew that I was not in a position to make any commitment that the Firm would take him back in the future ... as I did not have the authority to make such a commitment." Hartmann further stated that "no Principal of the Firm has ever been given approval to work full time at another job while remaining a Principal at Miller Canfield." Plaintiff represented that in reliance on his view of Hartmann's statements, he "moved ... to finalize arrangements with the University of Alabama while preserving [my] business at the Firm," and he executed documents with Alabama in June 2010. Plaintiff stated that he spent "about 400 hours during June and July 2010" preserving clients and business for the firm.
Plaintiff alleged that Hartmann "did a 180 degree turn" when Hartmann returned from a June 2010 vacation and "rejected the idea of a leave of absence that protected my ownership interest[,] stating that instead he wanted me to withdraw from the Firm without any written assurance that my ownership would be protected." Plaintiff sent an e-mail on July 7, 2010, seeking approval from Hartmann
Plaintiff asserts that despite his several requests, the firm managers would not meet with him to discuss his status. In e-mails dated July 7 and July 8, 2010, plaintiff stated: "I have no plans to resign from the firm as of the end of June" and "I will not voluntarily resign my principal status and compensation at this time." On July 20, 2010, plaintiff detailed his goals and contributions for the coming reporting period (July 2010 through June 2011), including the value of the Alabama opportunity. Plaintiff stated that the next day, July 21, 2010, "Hartmann called me and told me that the managers decided to `terminate' my ownership effective July 31, 2010." Plaintiff "demanded a vote of the principals" and an opportunity to present his case to them, asserting that the managers lacked authority to terminate his ownership interest.
Plaintiff averred that he sent an e-mail to the managers on July 22, 2010, asserting that he disagreed with the decision to terminate his ownership status and questioned defendants' authority to terminate his ownership. Hartmann replied to plaintiff's July 22, 2010 e-mail that same day, and averred that it stated: "I did not say the Firm had terminated your position. I told you that since you had voluntarily accepted a full time position at the University of Alabama and had already started your new position that the Firm would consider you to have withdrawn from the partnership as of July 31, 2010." Hartmann reiterated, "[T]he Firm did not terminate your position. You voluntarily accepted another full time job in Alabama."
Plaintiff stated that he continued to work for the benefit of his clients and the firm throughout 2010, alleging that he was "shorted" on his 2010 income. Plaintiff claimed that various other members of the firm were not aware of the situation and that a former manager had told him "Hartmann had a duty to sit down ... to work things out" and that the situation that developed "should have never happened." Hartmann responded that the firm had compensated plaintiff for his 2010 work and that he had received additional money by appealing the original compensation award.
Hartmann stated that on "information and belief," plaintiff continued to be employed by the University of Alabama football program as of September 12, 2012. Defendants contend that plaintiff never returned to the firm or asked for the return of any clients or cases.
Miller Canfield is a professional limited liability company under the Limited Liability Company Act (LLCA), MCL 450.4101 et seq. The internal affairs of the firm are governed by the Miller Canfield Operating Agreement. The Operating Agreement provides that members of the firm are referred to as "principals," § 2.3, and it vests five senior principals, who are the managing directors, with "[s]ole, full and complete power and authority to manage" the firm. § 2.8. The Operating Agreement provides the managing directors with authority to appoint a CEO who has, "with binding effect on the Managing Directors, the power and authority of the Managing Directors with respect to the day-to-day administration of the business and affairs of the Firm between meetings of the Managing Directors." § 2.14.
The Operating Agreement further provides:
Plaintiff filed his original complaint on June 13, 2012, and his amended complaint 13 days later. Plaintiff alleged the following six claims: breach of fiduciary duty (Count I), illegal shareholder oppression contrary to MCL 450.4515 (Count II), conversion (Count III), bad-faith misrepresentation (Count IV), tortious interference with a business relationship or expectancy (Count V), and civil conspiracy (Count VI).
On July 13, 2012, in lieu of answering the complaint, defendants filed a motion for summary disposition and a motion to compel arbitration. Defendants argued that plaintiff voluntarily withdrew from the firm "[b]y switching careers and accepting other employment." Defendants asserted that the court was required to dismiss the complaint because plaintiff's claims fell within the ambit of the Operating Agreement's mandatory arbitration clause § 3.6, which provided that: "[a]ny dispute ... between the Firm.... and any ... former Principal ... of any kind or nature whatsoever... shall be solely ... resolved according to the following procedure," namely, arbitration. As defendants noted, "The arbitration provision is written in expansive terms. It obligated and obligates [plaintiff] to arbitrate any and every dispute relating to his former position at the Firm. Not just some of those disputes, but all of them. It could not be drafted in broader language." Defendants further argued that "for purposes of this submission, it matters not one wit [sic] that [plaintiff] has limited his claims in this suit to claims against decision makers in the Firm rather than the firm itself."
In contrast, plaintiff argued that he could pursue claims against defendants individually because Michigan law provides that corporate employees and officials may be held personally liable for their own tortious acts even if acting on behalf of a company. Plaintiff further argued that the central issue in the case involved ultra vires conduct, and asserted that the nature of his claims showed that his suit was not against the firm, but rather against defendants individually.
The circuit court ruled that the dispute did not fall within the scope of the arbitration clause, reasoning:
The circuit court went on to state that other sections of the Operating Agreement reinforced that point because the provisions "repeatedly differentiate between the firm and the principals."
Referring to three forms developed by Miller Canfield that plaintiff attached to his response to defendants' motion, the circuit court stated:
After concluding that there was no presumption of arbitrability under MCR 3.602 and that the present case did not fall within the ambit of the Michigan Arbitration Act, MCL 600.5001 et seq.,
After rejecting defendants' arguments concerning arbitration, the circuit court granted partial summary disposition to plaintiff on his claims for shareholder oppression, conversion, and tortious interference with a business expectancy. At the outset of its analysis, the circuit court reasoned that MCL 450.4509(1) required an LLC to set forth in its operating agreement the manner by which a member may voluntarily withdraw and concluded that plaintiff had not voluntarily withdrawn under the terms of the Operating Agreement. It also concluded that plaintiff did not withdraw involuntarily because the required two-thirds vote was not held. The circuit court then concluded that defendants acted without authority by depriving plaintiff of his ownership interest in the firm. On the basis of this conclusion, the circuit court ruled that termination of plaintiff's ownership substantially interfered with his interest as a member and that he was entitled to summary disposition on his shareholder oppression claim. Further, because it concluded that defendants terminated plaintiff's ownership interest without authority, the circuit court ruled that plaintiff was entitled to summary disposition on his conversion claim. Finally, the circuit court concluded that the improper termination of plaintiff's
This Court granted defendants' application for leave to appeal the circuit court's order.
Defendants contend that the circuit court erred by denying their motion to compel arbitration and by granting plaintiff partial summary disposition.
We review de novo a circuit court's determination regarding whether an issue is subject to arbitration. In re Nestorovski Estate, 283 Mich.App. 177, 184, 769 N.W.2d 720 (2009). "This Court reviews the grant or denial of summary disposition de novo to determine if the moving party is entitled to judgment as a matter of law." Maiden v. Rozwood, 461 Mich. 109, 118, 597 N.W.2d 817 (1999). The circuit court granted partial summary disposition under MCR 2.116(C)(10). "In reviewing a motion brought under MCR 2.116(C)(10), we review the evidence submitted by the parties in a light most favorable to the non-moving party to determine whether there is a genuine issue regarding any material fact." Cuddington v. United Health Servs., Inc., 298 Mich.App. 264, 271, 826 N.W.2d 519 (2012). "A genuine issue of material fact exists when the record leaves open an issue on which reasonable minds could differ." Bennett v. Detroit Police Chief, 274 Mich.App. 307, 317, 732 N.W.2d 164 (2007). This case requires that we construe and apply the relevant statutes; issues of statutory construction involve questions of law that are also reviewed de novo. Cuddington, 298 Mich.App. at 271, 826 N.W.2d 519.
On appeal, defendants first argue that the circuit court erred by denying their motion to compel arbitration because, according to defendants, plaintiff attempted to make an "end run" around the arbitration process by filing suit against defendants individually rather than against the business entity, i.e., the firm.
This Court has previously set forth the basic standards to determine whether a party is compelled to seek arbitration as follows:
Defendants contend that Rooyakker & Sitz v. Plante & Moran, PLLC, 276 Mich.App. 146, 742 N.W.2d 409 (2007), is dispositive of the issue of whether this matter is subject to arbitration. In Rooyakker, the individual plaintiffs, Mathew D. Rooyakker, George M. Sitz, and Sandra K. Burns, were employed by the defendant Plante & Moran, an accounting and business consulting firm. Id. at 148, 742 N.W.2d 409.
The arbitration clause provided in pertinent part:
The individual plaintiffs worked at Plante & Moran's Gaylord office. Id. at 148, 742 N.W.2d 409. When that office closed, the individual plaintiffs declined to relocate to another office and instead commenced working for the plaintiff Rooyakker & Sitz, PLLC. Id. at 150, 742 N.W.2d 409. Shortly thereafter, Plante & Moran initiated arbitration proceedings against the plaintiffs individually, alleging that they had violated the client solicitation clause. Id. The plaintiffs then commenced suit, alleging, among other things, that the agreement was unenforceable and that the individual defendants Kevin Lang and Michelle Carroll had interfered with business expectations and defamed the plaintiff Rooyakker & Sitz, PLLC. Id. at 150-151; 742 N.W.2d 409. Ultimately, the trial court held that the parties were bound by the arbitration clause and granted summary disposition in favor of the defendants. Id. at 151-152, 742 N.W.2d 409.
The plaintiffs appealed, arguing in part that the trial court had erred by ordering the plaintiff Rooyakker & Sitz, PLLC, and the individual defendants Lang and Carroll to submit to arbitration when those parties were not signatories to the original agreement containing the arbitration clause. Id. at 162, 742 N.W.2d 409. This Court rejected the plaintiff's argument, reasoning as follows:
We disagree with defendants' assertion that Rooyakker is directly on point. The central question in this case does not involve whether plaintiff should be allowed to sever his claims into arbitrable and nonarbitrable categories. Rather the central question presented in this case is whether plaintiff can sue defendants as individuals, or whether plaintiff is required to arbitrate his claims against them. That question was not at issue in Rooyakker. Therefore, we turn to the language of the operating agreement to discern whether the operating agreement mandates arbitration of plaintiff's claims.
Abbreviated and emphasized to be pertinent to the present case, it is "Any dispute, controversy or claim ... between the Firm ... and any current or former Principal... of any kind or nature whatsoever... shall be solely and conclusively resolved according to the arbitration procedure." Thus, the arbitration provision in Rooyakker is not the same as, or even analogous to, that in the present case. The arbitration clause in this case is more restrictive in that it limits its scope to disputes between the firm and a principal.
In the present case, there is clearly an arbitration provision in the Operating Agreement. The question is whether it applies to these particular parties, which, by legal necessity, implicates the next question: whether the disputed issue is arguably within the arbitration clause.
As the circuit court concluded, the plain language of the arbitration provision in this case clearly and unambiguously contemplates arbitration of disputes between "the Firm" and "a Principal." There is no language contained in the operating agreement from which this Court could infer that the arbitration provision contemplated disputes between principals, i.e., between plaintiff and the firm managers he has sued. We also cannot find that the language of the provision is ambiguous on this point. Indeed, as the circuit court observed, the provision "does not even mention disputes between current or former principals." And, as the circuit court also noted, there are other provisions in the operating agreement that clearly distinguish between the firm and its principals. For example, the arbitrator selection procedure calls for the arbitration to be conducted by three arbitrators, "one of whom shall be appointed by the Firm, one by the Principal(s) ... and the third of whom shall be appointed by the first two arbitrators." As the circuit court observed, "In a dispute solely between current or former principals, the Firm would not be a party, yet the only provision governing arbitrator selection requires the Firm in all instances to select one of the arbitrators." In Rooyakker, this Court stated that when interpreting arbitration clauses, "[t]he court should resolve all conflicts in favor of arbitration." Rooyakker, 276 Mich.App. at
Defendants additionally rely on Hall v. Stark Reagan, PC, 294 Mich.App. 88, 818 N.W.2d 367 (2011), rev'd in part 493 Mich. 903, 823 N.W.2d 274 (2012), in which this Court considered the arbitrability of the plaintiffs' age discrimination claims. This Court held that those claims did not come within the following language in the arbitration agreement at issue: "`Any dispute regarding interpretation or enforcement of any of the parties' rights or obligations hereunder,'" reasoning that "[t]he `rights or obligations' delineated in the contract bear no relationship to [the plaintiff's] age-discrimination claims." Id. at 94, 98, 818 N.W.2d 367. Our Supreme Court reversed in an order on the following grounds:
Defendants contend that the circuit court erred when it relied on this Court's now "defunct" decision in Hall to conclude that § 3.6 did not extend to plaintiff's dispute with the individual principals of the firm. However, to state that the circuit court "relied" on Hall is to overstate the circuit court's ruling relative to Hall. The circuit court cited Hall in footnotes to the following passage:
We glean from this portion of the circuit court's ruling that the proposition for which the circuit court cited Hall was essentially that "by their chosen words, the contracting parties determined the scope of their arbitration agreement," Hall, 294 Mich.App. at 98 n. 3, 818 N.W.2d 367, which is also unremarkable and unassailable. As this Court and our Supreme Court have observed, that is a bedrock principle in contract law. See generally Bayati v. Bayati, 264 Mich.App. 595, 599, 691 N.W.2d 812 (2004); In re Egbert R. Smith Trust, 480 Mich. at 24, 745 N.W.2d 754. Hence, the manner in which the circuit court relied on this Court's ruling in Hall does not call into question its conclusion that the shareholder-oppression, conversion, and tortious-interference claims did not come within the arbitration provision in the present case. Moreover, the language in the arbitration clause at issue in Hall, like the clause in Rooyakker, addresses which types of claims are subject to arbitration, not whom the disputes must be between for arbitration to be required, and that is the central question in this case.
In reaching its conclusions on this issue, the circuit court rejected defendants' arguments that this dispute is really between plaintiff and the firm, not between plaintiff and present or former principals. The circuit court noted that plaintiff's claims were asserted against defendants in
We therefore concur with the circuit court that the dispute between plaintiff and the named individual defendants is not even arguably within the arbitration clause. The circuit court therefore did not err by denying defendants' motion for summary disposition.
Defendants next argue that the circuit court erred by granting plaintiff's motion for partial summary disposition with respect to the claims of shareholder oppression, conversion, and tortious interference with a business expectancy. Defendants contend that there was a genuine issue of material fact and cite affidavits they submitted with their response to plaintiff's motion. Defendants contend that the circuit court "elected to disregard the Defendants' opposing [a]ffidavits that contested all of the material facts on which Altobelli relied in making his claims." (Emphasis omitted.)
The circuit court's grant of partial summary disposition was based on its interpretation of MCL 450.4509(1), a subsection of the LLCA governing a member's withdrawal from a limited liability company. Before discussing the circuit court's interpretation of this statute, a brief overview of the statutory history of this provision is useful.
MCL 450.4509(1) provides in pertinent part: "A member may withdraw from a limited liability company only as provided in an operating agreement." This provision was amended by 1997 PA 52. Before that amendment, it provided in pertinent part:
Thus, the statute before the amendment allowed withdrawal in two situations: first, "as provided in an operating agreement," and second, under the withdrawal mechanism provided by the statute, which required 90 days' written notice. The 1997 amendment removed the statutory withdrawal mechanism and provided that withdrawal from an LLC was proper "only as provided in the operating agreement." 1997 PA 52.
The circuit court reasoned that the revised language of MCL 450.4509(1) "requires an LLC to set forth in its operating agreement the method by which a member may withdraw." The court reasoned as follows:
After concluding that MCL 450.4509(1) required an LLC to set forth the methods by which a member may voluntarily withdraw, the circuit court proceeded to hold that the Operating Agreement did not provide a means for individual principal members to voluntarily withdraw from Miller Canfield. The circuit court reasoned as follows:
Having concluded that the Operating Agreement did not provide a means for plaintiff to withdraw from the firm, the court proceeded to grant partial summary disposition in favor of plaintiff with respect to Counts II, III, and V, because, according to the circuit court, these claims were "premised on the underlying assertion that Plaintiff did not voluntarily withdraw from the firm; that no events constituting an automatic withdrawal occurred; and that no involuntary withdrawal in conformity with the operating agreement occurred." The circuit court stated, "No method was set forth here, and therefore there was no method with which Plaintiff could comply. Under these circumstances, the Court finds that there is no genuine issue of material fact that Plaintiff did not voluntarily withdraw from Miller Canfield."
Defendants argue that the circuit court erred by concluding that the Operating Agreement did not provide a means for an individual principal to voluntarily withdraw. Specifically, defendants cite § 2.29 of the Operating Agreement, which provides that "[a] Principal may voluntarily withdraw from the Firm at any time Defendants also note that other language in § 2.29 mentions "voluntary withdrawal" several times, including language that states, "[a] Principal shall be deemed to have voluntarily withdrawn from the Firm upon such Principal's death," and in other parts stating how voluntary withdrawal affects distribution and compensation.
We hold that the circuit court's interpretation of MCL 450.4509(1) and of the Operating Agreement is legally incorrect. The statute provides that "[a] member may withdraw from a limited liability company only as provided in an operating agreement" (emphasis added). The circuit court interpreted the statutory language "only as provided in an operating agreement" to mean that the operating agreement must provide a specific method or procedure for voluntary withdrawal. Absent specified means and procedures, the court reasoned, there can be no voluntary withdrawal.
Because the circuit court concluded that the Operating Agreement did not permit plaintiff to voluntarily withdraw, it rejected defendants' argument that whether plaintiff voluntarily withdrew should be analyzed by applying the facts to the dictionary definition of "voluntary." "Courts may consult dictionary definitions to ascertain the plain and ordinary meaning of terms undefined in an agreement." Holland v. Trinity Health Care Corp., 287 Mich.App. 524, 527-528, 791 N.W.2d 724 (2010). The Operating Agreement contains three references to circumstances that constitute voluntary withdrawal, but does not further define the term. Specifically, § 2.29 provides that "[a] Principal may voluntarily withdraw from the firm at any time.... A Principal shall be deemed to have voluntarily withdrawn from the Firm upon such Principal's death." In addition, § 2.34 addresses several named professional corporations that were allowed to continue as senior principals and provides in pertinent part:
Although the circumstances set forth in these provisions constitute a "voluntary withdrawal," the Operating Agreement does not contain any language indicating that these are the only circumstances in which a principal may withdraw from the firm. At the least, the juxtaposition of "[a] Principal may voluntarily withdraw from the Firm at any time" with the three specified circumstances set forth above makes the agreement ambiguous on that point. We therefore turn to the dictionary to clarify the definition of the term "voluntary."
Random House Webster's Collegiate Dictionary (2001) defines "voluntary" in relevant part as "done, made, brought about, or undertaken of one's own accord or by free choice" and "acting or done without compulsion or obligation." Thus, in the context of the Operating Agreement, "voluntary" can reasonably be construed to include actions taken by an individual of his or her own accord, by free choice, without compulsion or obligation.
In this case, defendants submitted two affidavits to support that there was a genuine
Hartmann averred that "[o]ne time honored way for principals to withdraw from the Firm is to simply take another job. Over the years, a number of principals have withdrawn from the Firm by taking another job." Hartmann asserted that plaintiff voluntarily withdrew from the firm when he vacated his office, stopped coming to work, took another job, and accepted compensation and benefits from another employer. Hartmann stated that plaintiff "was not ousted from the Firm. This was not a termination or an involuntary withdrawal requiring a two-thirds vote of the other Senior Principals." Hartmann further stated that under the Operating Agreement, the managers had to approve any outside employment, and the managers decided not to approve plaintiff's request to work at the University of Alabama. Hartmann asserted that "[n]o vote or input from the other Principal or owners was required."
In addition, Hartmann cited § 2.17 of the Operating Agreement, which in pertinent part provides:
Hartmann stated that plaintiff was aware that written approval was required before he could work full-time for another entity, yet nevertheless left for the University of Alabama.
Hartmann also quoted the following from a July 7, 2010 e-mail that plaintiff sent him and others from which it could be reasonably inferred that plaintiff understood that if the managers did not approve his working at the University of Alabama, his departure for the university would constitute withdrawal from the firm:
Furthermore, although plaintiff asked for a 7 to 12 month leave of absence, when proposing the terms of that request, plaintiff stated, "Dean Altobelli may return to Miller Canfield as a senior principal at any time before June 1, 2011." Hartmann asserted that the language in this request "makes it clear that [plaintiff] knew all along that he could not continue as a Principal at Miller Canfield while holding another job. Indeed, his own proposal seeks to allow him to return to Miller Canfield as a Principal."
In his affidavit, LeRoy Asher, Jr., confirmed that plaintiff had "asked whether, if he returned to the Firm in the future, I would return the mortgage servicing client to him."
Viewed in a light most favorable to defendants, we conclude that these affidavits leave open a genuine issue of material fact regarding whether plaintiff voluntarily withdrew from the firm — i.e., whether plaintiff left the firm of his own accord and by his own free choice without compulsion or obligation. In the event that he did, there would have been no need for a vote of the senior principals to expel him. The circuit court's determination that the vote was required, the lack of that vote, and the declaration in MCL 450.4504(1) that a membership interest in an LLC is personal property, were the basis on which the circuit court granted partial summary disposition on the claims of shareholder oppression, conversion and tortious interference with a business expectancy. Because there was a genuine issue of material fact regarding whether plaintiff voluntarily left the firm, summary disposition was inappropriate. Cuddington, 298 Mich.App. at 270, 826 N.W.2d 519; MCR 2.116(C)(10).
The circuit court did not err by denying defendants' motion to compel arbitration because the claims asserted by plaintiff in this case do not fall within the arbitration clause contained in Miller Canfield's Operating Agreement. However, there remains a genuine issue of material fact as to whether plaintiff voluntarily withdrew from the firm, and the circuit court erred
Affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion. Neither party having prevailed in full, neither may tax costs. MCR 7.219(A). Jurisdiction is not retained.
SERVITTO and BECKERING, JJ., concurred with BORRELLO, P.J.
