But "inside baseball" is different. The term implies knowing something that is beyond ordinary understanding. Esoteric even. More effort is required to grasp "inside baseball" information, but the payoff is greater: you become smarter! So bear with me.
This blog has often cited business cases decided by Kent County (MI) Circuit Court Judge Christopher Yates. Judge Yates not only writes opinions with brevity and wit; he's a modest soul who invites lawyers to call him "Chris" outside of the courtroom (a judge with humility? - what a concept).
In the case of Young v Vandermeer, Judge Yates was presented with the messy aftermath of a business falling out. The corporation was Grand Connection, Inc. ("GCI"), and its two shareholders were Amy Young and Teresa Vandermeer. Five years ago, Judge Yates order GCI dissolved after Young and Vandermeer couldn't agree on how to run the operation. But now the parties were back before Judge Yates to decide the fate of eight claims brought by Young against Vandermeer.
Let's set the stage. Trial lawyers make claims for their clients. That's what trial lawyers do. And trial lawyers are prone to make claims that have little or nothing to do with the facts or the law of their case, thinking that if you throw enough mud (or a more disgusting substance) against the wall (here defined as the Court), some will stick. But judges take a dim view of peppering them with unfounded claims; the reputation of the lawyer bringing these claims may suffer - and rightfully so. Fortunately for Young's lawyer, Judge Yates was tolerant, stating in a footnote that:
A hallmark of the Kent County [MI] Specialized Business Docket is numerosity of claims. The instant case surely does not disappoint in that regard, so the Court must engage in its usual practice of plowing, claim by claim, through the plaintiff's overstuffed pleading.
Here are the eight claims against VanderMeer that Young pitched to Judge Yates, the required elements of each, and why they failed:
Claim Description
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Required Elements (MI law)
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Why The Court Rejected
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1. Statutory Conversion
of Money
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(1) Money must amount to personal property; and
(2) VanderMeer must have had an obligation to return that money to Young.
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There wasn't any actual money that could have been converted. Unrealized profits are not personal property, so they couldn't have been converted.
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2. Misappropriation of Corporate Opportunities
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VanderMeer must have been a corporate officer or director who
appropriated a corporate opportunity for her own benefit, thereby breaching her fiduciary duties to the corporation.
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Young has no standing to assert this claim because she
isn’t the corporation that was allegedly injured, and she can’t assert the
claim as a GCI shareholder because she doesn’t meet the statutory requirements for
a derivative shareholder suit.
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3. Fraudulent Misrepresentation
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VanderMeer must have misrepresented a past or existing fact.
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The alleged fraudulent misrepresentations were made
by the court-appointed receiver who wasn't even a representative of VanderMeer.
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4. Silent Fraud
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VanderMeer must have suppressed a material fact that she was legally obligated to disclose, rather than making an affirmative misrepresentation.*
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No evidence that VanderMeer's action in renewing an essential GCI software license without informing Young was fraudulent.
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5. Shareholder Oppression
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(1) VanderMeer must have engaged in fraud, illegality, or
oppressive conduct.
(2) Young must have been a minority shareholder in GCI who was abused
by “controlling” persons.
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Young was an equal GCI shareholder with VanderMeer so the minority
shareholder requirement wasn’t met.
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6. Tortious Interference with Business Relationships
& Expectancies
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VanderMeer must have done something illegal, unethical or
fraudulent.
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Young failed to prove that VanderMeer did anything illegal,
unethical or fraudulent.
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7. Civil Conspiracy
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Requires a combination of two or more persons, by
some concerted action, that accomplished a criminal or unlawful purpose, or that accomplished a lawful purpose by criminal or unlawful means.
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Young failed to prove that VanderMeer engaged in criminal acts by
dealing with GCI's customers.
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8. Unjust Enrichment
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For an unjust enrichment claim to succeed, there
must not be any express contract covering the same subject matter.
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There was an express contract between the parties.
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*Further, Young must show some
type of representation by words or actions that was false or misleading and intended to deceive.
For my trial lawyer audience, does it make good sense to allege these claims when there was no legal or factual support for any of them? Are you worried that making unsupported claims tarnishes a lawyer's credibility in arguing future cases before the Court?
For my business audience, now that you know about these somewhat esoteric causes of action, if you find yourself in a nasty dispute with a fellow shareholder, you can alert your lawyer to give them due consideration. Perhaps you will fare better than Ms. Young - or not!
Cue music: And it's one, two, [NO] eight strikes you're out at the old ballgame!
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