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Business Cases in the News: Shareholder Oppression

Business Cases in the News:

 Shareholder Oppression


     In an unpublished opinion last year in Berger v. Katz, Case No.: 291663, the Michigan Court of Appeals sent a strong message to the business community that it would liberally enforce the provisions of MCL 450.1489. That statute gives a remedy to minority shareholders who have suffered  shareholder oppression at the hands of the majority shareholders.


     In Berger, the Court of Appeals found evidence that Defendants stopped making payments to Plaintiff, no longer sought his input on corporation matters and substantially increased their salaries at his expense was sufficient to support a claim, for among other things, breach of fiduciary duty. In that regard the Court held:


     “Majority Shareholders in a corporation owe “the utmost good faith in its control and management as to the minority and it is the essence of this trust that it must be so managed so as to produce to each shareholder, the best possible return upon his investment.” Salvador v. Connor, 87 Mich App 664, 675; 276 NW2d 458 (1978), quoting 6 Callaghan’s Michigan Civil Jurisprudence (2d ed), §166, p 365. Where the evidence shows that majority shareholders improperly diverted corporate funds, a breach of fiduciary duty of the majority shareholders can be found. Salvador, 87 Mich App at 675-677.”


     If you or a loved one are involved in a corporation or limited liability company (LLC) and need assistance, just call Guy Vining. Guy Vining of the Vining Law Group, PLC, has assisted many minority shareholders in cases involving oppressive conduct of the majority shareholders. Your initial meeting will be without any charges and strictly confidential. Many of these cases can be prosecuted on a contingency fee basis so that you will not pay an attorney fee unless there is a favorable financial outcome.


Guy Vining has practiced law throughout the state of Michigan. His office is located in the downriver city of Taylor where he primarily serves the Metro-Detroit area. He has represented employers and employees in employment litigation in the trial court and the appellate courts in the following areas: whistleblower, breach of contract, public policy, discrimination, wage and hour violation, covenants not to compete, Americans with disabilities action and retaliation

Oppression of Minority Shareholders: Statute of Limitations



Statute of Limitations

A minority shareholder, pursuant to MCL 450.1489, may seek relief from majority oppression. The general statute of limitations is a period of 6 years for general oppressive conduct. The reason apparently is because the minority shareholder has the burden of establishing “a continuing course of conduct or a significant action or series of actions that substantially interferes with the interests of the shareholders, as a shareholder.” Therefore, the statues allow a long “look back” at majority misconduct with respect to equitable relief available. In Estes v. Idea Engineering, 250 Mich App 270 (2002) the Court of Appeals found that the 6 years provides an appropriate amount of time to produce proof of a pattern of misconduct and to seek relief.

The equitable relief available is broad and includes, among other things: dissolution and liquidation of the corporation, injunctions and Court ordered buy-outs.

An important distinction is made under the statute, however, with respect to relief consisting of monetary damages. Specifically, claims for money damages must be brought within 3 years of accrual or within 2 years after the aggrieved shareholder discovers or should have reasonably discovered the damages, which ever occurs first. Therefore, a minority shareholder should seek legal counsel at the first signs of oppression to protect his rights. A delay in prosecuting a case might result in a denial of money damages even though significant equitable remedy is available.

[Guy Vining, an attorney, in metro-Detroit, maintains his office in Taylor, Michigan, where he serves the local communities and the tri-county area. If you or a family member of friend would like a no-obligation no cost consultation, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]