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STATE OF MICHIGAN COURT OF APPEALS

JOHNNY G. COOPER and JCDD HOLDINGS, L.L.C., Plaintiffs-Appellants, v DAVID DEAN, PURSUIT ENGINEERING, L.L.C., PURSUIT TECHNOLOGY, INC., and PURSUIT MANUFACTURING, L.L.C., Defendants-Appellees.

UNPUBLISHED March 30, 2010

No. 283244 Oakland Circuit Court LC No. 2007-080020-CK

Before: SERVITTO, P.J., and O'CONNELL, and ZAHRA, JJ. PER CURIAM. In this action seeking the recovery of monies plaintiffs allegedly paid to defendants, plaintiffs appeal as of right an order of dismissal with prejudice, which followed an order granting defendants summary disposition. We affirm in part, reverse in part, and remand for further proceedings. I. INTRODUCTION Plaintiff Johnny Cooper owns Stargate, P.C., which configures heavy-duty laptop computers for installation in commercial trucks. David Dean is part owner of defendants Pursuit Engineering, L.L.C., Pursuit Technology, Inc., and Pursuit Manufacturing, L.L.C. Pursuit Engineering researches and develops night vision technology for military purposes. Pursuit Manufacturing assembles night vision technology and Pursuit Technology leases labor to Pursuit Engineering and Pursuit Manufacturing. Cooper and Dean met in 2005 and discussed the potential development of a mobile night vision product that could transmit images to Stargate computers mounted inside military vehicles or elsewhere. The parties began to research and develop the product during which time Cooper allegedly personally provided Dean with $15,000 and procured in excess of $100,000 for the project. Pursuit Engineering largely researched and developed the product. Cooper and Dean signed Articles of Incorporation creating JCDD Holdings, L.L.C., to market the potential new product, and Cooper and Dean began meeting with potential customers. Cooper attempted to finalize an operating agreement, but Dean refused to sign a proposed operating agreement claiming that the terms that Cooper had included in the agreement entitled JCDD to licenses owned by Pursuit Engineering. Dean later claimed that he

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was informed the Stargate computer was not rugged enough for military application and returned the product to StarGate. II. FIDUCIARY DUTY Plaintiffs first argue that the trial court erroneously concluded that no fiduciary relationship existed between Johnny Cooper and David Dean. We disagree. This Court reviews de novo a trial court's decision to grant or deny a motion for summary disposition. City of Taylor v Detroit Edison Co, 475 Mich 109, 115; 715 NW2d 28 (2006). Pursuant to a motion brought under MCR 2.116(C)(10), this Court construes the pleadings, admissions and other evidence submitted by the parties in a light most favorable to the non-moving party. Brown v Brown, 478 Mich 545, 551-552; 739 NW2d 313 (2007). A motion brought under MCR 2.116(C)(10) operates to test the factual support for a claim. Spiek v Dept of Transportation, 456 Mich 331, 338; 572 NW2d 201 (1998). "The court considers the affidavits, pleadings, depositions, admissions, and other documentary evidence submitted or filed in the action to determine whether a genuine issue of any material fact exists to warrant a trial." Spiek, supra at 338, citing Singerman v Municipal Service Bureau, Inc, 455 Mich 135, 138; 565 NW2d 383 (1997). Because a "mere promise" to offer factual support for a party's position at trial is insufficient to overcome a motion brought under MCR 2.116(C)(10), this Court considers "the substantively admissible evidence actually proffered in opposition to the motion." Maiden v Rozwood, 461 Mich 109, 121; 597 NW2d 817 (1999). "Whether to recognize [a] plaintiff's cause of action for breach of fiduciary duty in this context is a question of law." Teadt v St John's Evangelical Church, 237 Mich App 567, 574; 603 NW2d 816 (1999). Questions of law are subject to de novo review. Id. "A breach of fiduciary claim requires that the plaintiff `reasonably reposed faith, confidence and trust' in the fiduciary." Rose v National Auction Group, 466 Mich 453, 469; 646 NW2d 455 (2002), quoting Beaty v Hertzberg & Golden, PC, 456 Mich 247, 260; 571 NW2d 716 (1997) (Emphasis deleted). "A person in a fiduciary relation to another is under a duty to act for the benefit of the other with regard to matters within the scope of the relation." Teadt, supra at 581. "Relief is granted when such position of influence has been acquired and abused, or when confidence has been reposed and betrayed." Id. A person under a fiduciary duty is obligated "to act in the utmost good faith" in the interest of the principal to whom the duty is owed. Rose, supra at 473. MCL 450.4404 provides, in pertinent part: (1) A manager shall discharge his or her duties as a manager in good faith, with the care of an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner he or she reasonably believes to be in the best interests of the limited liability company. Plaintiffs, in the lower court and on appeal, contend that a fiduciary relationship arose between Dean and plaintiffs by operation of MCL 450.4404(1), because Dean executed the articles of organization of JCDD, and, as such, Dean was a member, manager, or both, of JCDD. We conclude that the trial court correctly determined that plaintiffs failed to show that Dean was either a member or manager of JCDD. -2-

MCL 450.4501 provides, in pertinent part: (1) A person may be admitted as a member of a limited liability company in 1 or more of the following ways: (a) In connection with the formation of the limited liability company, by signing the initial operating agreement. (b) After the formation of the limited liability company, in 1 or more of the following ways: (i) In the case of a person acquiring a membership interest directly from the limited liability company, by complying with the provisions of an operating agreement prescribing the requirements for admission or, in the absence of provisions prescribing the requirements for admission in an operating agreement, upon the unanimous vote of the members entitled to vote. Plaintiffs admitted in their brief on appeal that it "is undisputed that the written operating agreement was never signed." Plaintiffs argues that the trial court erroneously concluded that a person becomes a member of a limited liability company only by executing an operating agreement because the language of MCL 450.4501 is permissive and not mandatory. We agree with the trial court. The only manner MCL 450.4501 provides to become a member of a limited liability company "in connection with the formation" is "by signing the initial operating agreement." The remaining methods of becoming a member plainly apply "After the formation of the limited liability company." Further, Dean did not become a member and manager of JCDD because he executed the articles of organization. The articles of organization do not identify the members of JCDD, and Dean, according to the articles of organization, executed the document as an "organizer" and not as a "member" or "manager." Further, MCL 450.4202 provides that, "One or more persons, who may or may not become members, may be the organizers of a limited liability company by filing executed articles of organization." (Emphasis added.) Contrary to plaintiffs' contention, the articles of organization do not suggest that Dean was a member or manager of JCDD. Accordingly, plaintiffs failed to present evidence that Dean acquired fiduciary duties to plaintiffs through his membership and/or management position with JCDD. The trial court properly granted defendants summary disposition. III. JOINT VENTURE AND OR ENTERPRISE Plaintiffs next argue that the trial court improperly concluded that there was no "Joint Venture and or Enterprise" between plaintiffs and defendants. We disagree. As an initial matter, we observe that plaintiffs did not ask the trial court to determine whether any "Joint Venture and or Enterprise" or partnership existed between plaintiffs and defendants; instead, plaintiffs alleged

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that there was a contract between Cooper and Dean that required Dean to execute the operating agreement for JCDD. Alternately, plaintiffs sought relief through a claim of promissory estoppel.1 The elements of an enforceable contract are: "(1) parties competent to contract, (2) a proper subject matter, (3) legal consideration, (4) mutuality of agreement, and (5) mutuality of obligation." Hess v Cannon Twp, 265 Mich App 582, 592; 696 NW2d 742 (2005). "It is hornbook law that a valid contract requires a `meeting of the minds' on all the essential terms." Kamalnath v Mercy Memorial Hosp Corp, 194 Mich App 543, 549; 487 NW2d 499 (1992). A promise to enter into a future contract may give rise to an enforceable contractual obligation. Opdyke Inv Co v Norris Grain Co, 413 Mich 354, 359; 320 NW2d 836 (1982). However, such a "contract to contract" will fail for indefiniteness unless it includes all essential terms to be incorporated into the subsequent contract. Id. The elements of promissory estoppel are: "(1) a promise, (2) that the promisor should reasonably have expected to induce action of a definite and substantial character on the part of the promise, and (3) that in fact produced reliance or forbearance of that nature in circumstances such that the promise must be enforced if injustice is to be avoided." Novak v Nationwide Mutual Ins Co, 235 Mich App 675, 686-687; 599 NW2d 546 (1999). "In determining whether a requisite promise existed, we are to objectively examine the words and actions surrounding the transaction in question as well as the nature of the relationship between the parties and the circumstances surrounding their actions." Id. at 687. Moreover, this Court "exercise[s] caution in evaluating the estoppel claim and should apply the doctrine only where the facts are unquestionable and the wrong to be prevented undoubted." Id. We conclude the trial court correctly determined that plaintiffs failed to present sufficient evidence to support its contention that there was an oral or written contract between the parties that required Dean to execute the operating agreement for JCDD. Specifically, plaintiffs failed to present admissible evidence demonstrating that: (1) Dean promised to execute the operating agreement, or that (2) there was a "meeting of the minds" with regard to the essential terms of the alleged contract for Dean to execute the operating agreement. Kamalnath, supra at 549. Rather, Dean's unrebutted deposition testimony reveals that he refused to execute the operating agreement because the terms of the operating agreement were unacceptable. Given there was no evidence presented that Dean was required to execute the operating agreement, the trial court correctly concluded that there was no contract, and properly granted defendants' motion for summary disposition. Similarly, plaintiffs failed to support their promissory estoppel claim. Plaintiffs claim that defendants promised Cooper "that they owned patents and licenses to night vision technology which they would contribute to JCDD Holdings and which JCDD Holdings could then use to sell the product(s) Dean and Cooper had agreed to sell under the auspices of JCDD

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We note that plaintiffs admitted in their motion for summary disposition that a joint venture was never consummated. Thus, the trial court correctly concluded that a joint venture did not exist between Cooper and Dean.

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Holdings." Plaintiffs also claim that Dean promised "to enter into the LLC and sign the operating agreement to perfect the formation of the LLC." Even assuming there is evidence that Dean indicated he would sign an operating agreement, we cannot conclude that plaintiffs could reasonably conclude that Dean would execute an operating agreement that purported to contribute licenses for the patents held by defendant Pursuit Engineering, L.L.C. There is no evidence of this promise, and thus, the trial court properly granted summary disposition in favor of defendants on plaintiffs' promissory estoppel claim. IV. STANDING/PROPER PARTY Plaintiffs next argue that the trial court incorrectly concluded that plaintiffs lacked standing. Whether a party has standing is a question of law that we review de novo." Manuel v Gill, 481 Mich 637, 642; 753 NW2d 48 (2008). "Standing ensures that a genuine case or controversy is before the court." Michigan Citizens for Water Conservation v Nestle Waters North America, 479 Mich 280, 294; 737 NW2d 447 (2007). Our Supreme Court has articulated a three-element test to determine whether a plaintiff has standing to bring an action: "First, the plaintiff must have suffered an `injury in fact' - an invasion of a legally protected interest which is (a) concrete and particularized, and (b) `actual and imminent,' not `conjectural' or `hypothetical.' Second, there must be a causal connection between the injury and the conduct complained of

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