Member oppression action; Member qualification in a PLLC & non-licensed persons; Willfully unfair & oppressive conduct under MCL 450.4515; Availability of unjust enrichment when an operating agreement exists; Harmless error; Remedies & damages for member oppression; Dismissal of counterclaims; United Veterinary Hospitals (UVH)

The court held that plaintiffs-husband and wife investors were members of defendant-veterinary clinic (UVH) despite not being licensed veterinarians, and that defendant-Avtar, a veterinarian and owner of UVH, engaged in willfully unfair and oppressive conduct warranting a buyout of their interests. Plaintiffs sued defendants alleging Avtar excluded them from the veterinary business they co-founded, seized company funds, and falsely claimed to be sole owner. The trial court granted summary disposition for plaintiffs on their member oppression and unjust enrichment claims, finding UVH had four members with 25% interests each and that Avtar “engaged in willfully unfair and oppressive conduct against and/or unjustly enriched himself at the expense of” plaintiffs. It ordered Avtar to buy out plaintiffs’ interests at fair value, awarded damages for their expenditures and lost interest, and reduced the award to reflect plaintiffs’ retention of the UVH property. On appeal, the court rejected defendants’ argument that plaintiffs could not be members of a PLLC because they were not licensed veterinarians. It explained that under MCL 450.4202(2), “filing is conclusive evidence that all conditions precedent required to be performed under this act are fulfilled… except in an action… by the attorney general,” and “[o]nly the state has standing to contest that presumption.” Thus, “the alleged incorporation defect does not bar plaintiffs from advancing a member oppression” claim. The court also found ample evidence of oppressive conduct, noting that Avtar removed plaintiffs from bank accounts, filed tax documents falsely listing himself as sole owner, transferred $178,000 into accounts only he controlled, and used UVH funds to increase his salary, pay personal taxes, and cover his legal fees while withholding plaintiffs’ distributions. This “clearly and substantially interfered with plaintiffs’ rights and interests as members,” meeting the statutory definition of oppression under MCL 450.4515. As to unjust enrichment, the court agreed defendants were correct that such a claim cannot lie when an operating agreement governs the parties’ rights: “a contract will not be implied… where a written agreement governs.” But it held that the trial court’s error in granting summary disposition on that claim was harmless under MCR 2.613(A) because the remedies were independently proper under the oppression statute. Finally, it affirmed dismissal of defendants’ counterclaims, emphasizing that the trial court found plaintiffs did not “wrongfully withdraw money or transfer real or personal property” and that any transfers were authorized or “substantially necessary to preserve UVH’s assets.” Affirmed.