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STATE OF MICHIGAN
COURT OF APPEALS


ARTHUR ROMENCE, ROBERT NIEMIEC, MARTIN McENROE, DOUGLAS BART, LARRY SHARP, HANS BORLINGHAUS, MARY FREDRICKS, JOHN FURTON, and DIANNA LUMAN, Plaintiffs-Appellants/CrossAppellees, v JOHN CARRIER, JAMES SUMNERS, DAVID SAVAGE, and DAVID COLLINS, Defendants-Appellees/CrossAppellants.

UNPUBLISHED April 28, 2005

No. 253713 Kent Circuit Court LC No. 03-006167-CB

Before: Neff, P.J., and White and Talbot, JJ. PER CURIAM. Plaintiffs appeal as of right, and defendants cross-appeal, from an order granting summary disposition in plaintiffs' favor in this shareholder dispute concerning a stock sale in a privately-owned corporation. Plaintiffs seek to change the remedy ordered by the trial court from rescission to specific performance, permitting them to purchase their proportionate share of the stock. Defendants seek reinstatement of the stock sale. We affirm. I Plaintiffs and defendants are shareholders in Excellence Manufacturing, Inc. ("Excellence"). Plaintiffs owned thirty percent of the shares of stock of Excellence, and defendants owned nineteen percent of the shares. Karol Ervins-Houtman, who is not a party to this lawsuit, owned the remaining fifty-one percent of the shares of stock. On May 30, 2003, defendants, who comprised the board of directors of Excellence, entered into an agreement with Ervins-Houtman to purchase her shares of stock. Although the shareholder agreement and the corporate bylaws of Excellence in effect at the time required that any stock first be offered for sale to the corporation, and then to all shareholders in their proportionate shares, defendants individually purchased Ervins-Houtman's majority share without the requisite offer to all shareholders. -1-


Plaintiffs filed this action to enforce their rights under the bylaws,1 arguing that they were entitled to purchase their proportionate shares of Ervins-Houtman's stock.2 Plaintiffs requested that the court impose a constructive trust on the shares of stock purchased by defendants. Defendants filed a motion for summary disposition, claiming that the bylaws were amended on May 30, 2003 to remove the sale restrictions. Defendants argued that Article X of the bylaws provided that the bylaws may be amended by a majority vote of the board of directors, and the board had unanimously agreed to remove the transfer restrictions. Defendants' purchases therefore did not violate the bylaws. In response, plaintiffs requested that a crossmotion for summary disposition be granted in their favor. The trial court found that, contrary to defendants' argument, the amendment to the bylaws was not effected until the summer of 2003, after the purported purchase of ErvinsHoutman's stock and after plaintiffs' action was filed. Accordingly, the sale was a nullity. The court granted summary disposition in favor of plaintiffs, invalidating the sale and returning the parties to their stock ownership status of as May 29, 2003. II Plaintiffs contend that the trial court abused its discretion in merely vacating the sale to defendants and returning the parties to the status quo ante rather than imposing a constructive trust on the disputed stock shares and transferring those shares to plaintiffs upon payment. We disagree. A trial court has discretion in awarding damages, including the remedy of specific performance in the purchase of stock. Livingston v Krown Chemical Mfg, Inc, 50 Mich App 153, 156-157; 212 NW2d 775 (1973), aff'd 394 Mich 144; 229 NW2d 793 (1975). An abuse of discretion is found only in extreme cases in which the result is so palpably and grossly violative of fact and logic that it evidences a perversity of will, a defiance of judgment, or the exercise of passion or bias. Dep't of Transportation v Randolph, 461 Mich 757, 768; 610 NW2d 893 (2000). A trial court's grant or denial of summary disposition is reviewed de novo. Shepherd Montessori Ctr Milan v Ann Arbor Charter Twp, 259 Mich App 315, 324; 675 NW2d 271 (2003). Plaintiffs argue that under Article VII,

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Michigan Law