e-Journal Summary

e-Journal Number : 61329
Opinion Date : 11/17/2015
e-Journal Date : 12/07/2015
Court : Michigan Court of Appeals
Case Name : Coppola v. Manning
Practice Area(s) : Business Law, Litigation
Judge(s) : Per Curiam – Gadola, Hoekstra, and M.J. Kelly
Full Text Opinion

Breach of fiduciary duty claims against former corporate directors & officers; Prentis Family Found. v. Barbara Ann Karmanos Cancer Inst.; Teadt v. Lutheran Church MO Synod; Wagner Elec. Corp. v. Hydraulic Brake Co.; Production Finishing Corp. v. Shields; MCL 450.1541a; Estes v. Idea Eng’g & Fabrications, Inc.; MCL 450.1261(b); MCL 450.1492a; Whether the plaintiff-court-appointed receiver could pursue the claims on the corporation’s behalf; MCL 600.2926; Arbor Farms, LLC v. GeoStar Corp.; Ypsilanti Fire Marshal v. Kircher; Band v. Livonia Assocs.; MCR 2.622(E)(1); In re Receivership of 11910 S. Francis Rd. (Price v. Kosmalski); Stephenson v. Golden; McPherson v. Gregory; Principle that legal actions belonging to an entity are considered assets or property; Young v. Independent Bank; Whether a release barred the receiver’s claims; Interpreting a release as a contract; Shay v. Aldrich; Cole v. Ladbroke Racing MI, Inc.


[Unpublished opinion.] Holding that the plaintiff-receiver stated a cause of action for breach of fiduciary duty, that he had standing to pursue such claims in his role as receiver, and that defendant-Manning was not released from liability for the claims, the court reversed the trial court’s order granting the defendants summary disposition and remanded for further proceedings. Manning and other defendants were former directors and officers of a corporation, ReCellular. Plaintiff alleged that “defendants mismanaged the company and, more particularly, that they breached the fiduciary duties they owed to ReCellular as officers and directors.” The court held that “contrary to defendants’ arguments and the trial court’s framing of the matter, a corporation such as ReCellular may file suit against officers and directors for breach of their fiduciary duties.” It noted that such “a cause of action has been long recognized in Michigan and it remains viable under the current version of MCL 450.1541a.” Plaintiff “did not necessarily have to be a shareholder to pursue claims against defendants because it is clear that a corporation may directly file suit to enforce the fiduciary duties owed under MCL 450.1541a.” Further, given “a receiver’s general authority to sue set forth in MCR 2.622(E)(1)” and plaintiff’s specific authority, as set forth in the trial court’s order, “to initiate lawsuits that he deems appropriate to carry out his duties,” it followed that he “had authority to initiate the current lawsuit to enforce ReCellular’s claims for breach of fiduciary duty against its officers and directors.” Manning claimed that his release was “unambiguous and that, because it applies to ‘any and all’ claims,” it released him from liability that might attach in this suit. “The basic flaw with this argument is that it ignores the plain language of the release” and misconstrued plaintiff’s “role as receiver as well as the nature of the claims” he brought in this case. The release unambiguously related only to claims the lenders “might bring against Manning.” It referred “specifically and repeatedly to the release of liability by ‘the lenders,’” and gave “absolutely no indication that ReCellular, i.e., ‘the borrower,’” released him from any liability he might owe to ReCellular.

Full Text Opinion