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STATE OF MICHIGAN
COURT OF APPEALS


THOMAS M. SHOAFF, Plaintiff-Appellee, v GARY D. BALDWIN, former Personal Representative of the Estate of Duane V. Baldwin; MARY JO BALDWIN, former Co-Trustee of the Duane V. Baldwin Trust, JACOBS MANAGEMENT, L.L.C., FFM CO., INC., DGM CORP., AGRICON, INC., STOCKBRIDGE LIMITED PARTNERSHIP #1; STOCKBRIDGE LIMITED PARTNERSHIP #2; STOCKBRIDGE LIMITED PARTNERSHIP #3; STOCKBRIDGE LIMITED PARTNERSHIP #4; STOCKBRIDGE LIMITED PARTNERSHIP #5, Defendants-Cross PlaintiffsCounter Plaintiffs, and THOMAS E. WOODS, as successor Personal Representative of the Estate of Duane V. Baldwin and as successor Trustee of the Duane V. Baldwin Trust, Defendants-Appellants, and BALDWIN SOD FARMS and MARK BALDWIN, Cross-Defendants.

UNPUBLISHED February 3, 2005

No. 248606 Ingham Circuit Court LC No. 99-090282-CZ

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THOMAS M. SHOAFF, Plaintiff-Counter DefendantAppellee, v GARY D. BALDWIN, former Personal Representative of the Estate of Duane V. Baldwin; MARY JO BALDWIN, former Co-Trustee of the Duane V. Baldwin Trust, JACOBS MANAGEMENT, L.L.C., FFM CO., INC., DGM CORP., AGRICON, INC., STOCKBRIDGE LIMITED PARTNERSHIP #1; STOCKBRIDGE LIMITED PARTNERSHIP #2; STOCKBRIDGE LIMITED PARTNERSHIP #3; STOCKBRIDGE LIMITED PARTNERSHIP #4; and STOCKBRIDGE LIMITED PARTNERSHIP #5, Defendants-Counter PlaintiffsCross Plaintiffs-Appellants, and THOMAS E. WOODS, Successor Personal Representative of the Estate of Duane V. Baldwin, and THOMAS E. WOODS, as Successor Trustee of the Duane V. Baldwin Trust, Defendants, and BALDWIN SOD FARMS and MARK BALDWIN, Cross-Defendants. No. 248609 Ingham Circuit Court LC No. 99-90282-CZ

THOMAS M. SHOAFF, Plaintiff-Counter DefendantAppellee, -2-

v GARY D. BALDWIN, former Personal Representative of the Estate of Duane V. Baldwin; MARY JO BALDWIN, former Co-Trustee of the Duane V. Baldwin Trust, JACOBS MANAGEMENT, L.L.C., FFM CO., INC., DGM CORP., AGRICON, INC., STOCKBRIDGE LIMITED PARTNERSHIP #1; STOCKBRIDGE LIMITED PARTNERSHIP #2; STOCKBRIDGE LIMITED PARTNERSHIP #3; STOCKBRIDGE LIMITED PARTNERSHIP #4; and STOCKBRIDGE LIMITED PARTNERSHIP #5, Defendants-Counter PlaintiffsCross Plaintiffs-Appellants, and THOMAS E. WOODS, Successor Personal Representative of the Estate of DUANE V. BALDWIN, and THOMAS E. WOODS, as Successor Trustee of the Duane V. Baldwin Trust, Defendants-Appellants, and BALDWIN SOD FARMS and MARK BALDWIN, Cross-Defendants.

No. 255460 Ingham Circuit Court LC No. 99-90282-CZ

Before: Griffin, P.J., and Saad and O'Connell, JJ. PER CURIAM. In these consolidated cases stemming from a failed business venture, defendants1 appeal by right from a final judgment entered by the circuit court in favor of plaintiff Thomas M. Shoaff

As used in this opinion, the term "defendants" collectively refers to all "primary" and "secondary" defendants. The "primary defendants" are Thomas E. Woods, Successor Personal
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following a bench trial, and by leave granted from the court's order denying certain postjudgment motions filed by defendants. We affirm. FACTUAL BACKGROUND This case arises out of a business agreement (the Agreement) dated February 3, 1996, between plaintiff Thomas Shoaff and the late Duane V. Baldwin and Mark Baldwin. The parties agreed to form and become shareholders in a corporation to be known as Baldwin Farms, Inc. The Agreement specifically stated that Duane and Mark Baldwin would be responsible for the management and operation of Baldwin Farms, which would grow and sell sod in Florida. Plaintiff, for his part, was to guarantee the financing in the form of a $400,000.00 loan from a financial institution in Indiana. The Agreement provided that, in guaranteeing the loan, plaintiff was relying entirely on the projections, representations, and abilities of Duane Baldwin to make the farm a viable enterprise. In return, Duane Baldwin agreed to indemnify plaintiff and hold him harmless if Baldwin Farms failed to repay the $400,000.00 loan. Concurrent with the Agreement, the parties executed a separate indemnity/hold harmless agreement, which reiterated that plaintiff would guarantee a $400,000.00 loan to Baldwin Farms based on Duane Baldwin's financial projections and on his alleged expertise, knowledge, management abilities, and supervision of the venture. The indemnity agreement provided that the indemnitor, Duane Baldwin, agreed to indemnify and hold harmless plaintiff in the event of any failure by the corporation to meet its obligations with respect to the guaranteed loan. The indemnity agreement further expressly stated that if plaintiff was required to take any action to enforce the terms of the Agreement, plaintiff would be entitled to recover all costs and expenses associated therewith, including legal fees incurred in enforcing the Agreement. As security for

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Representative of the Estate of Duane V. Baldwin, and Thomas E. Woods, as Successor Trustee of the Duane V. Baldwin Trust. The term "secondary defendants" collectively refers to Gary D. Baldwin, as former Personal Representative of the Estate of Duane V. Baldwin; Mary Jo Baldwin, as former Co-Trustee of the Duane V. Baldwin Trust; Jacobs Management, LLC; FFM Co., Inc.; DGM Corp; Agricon, Inc.; and Stockbridge Limited Partnerships #1-5. DGM Corporation is an operating company that works in conjunction with a marketing company, Agricon (a company formed in 1974). DGM was formed in 1986 by Duane and Mary Lou Baldwin, Mark Baldwin, and Gary and Linda Baldwin. Duane Baldwin served as president of DGM until about 1990, at which time Gary Baldwin then became president. The assets of DGM include farmland and specialized equipment that it uses in active and ongoing farming operations harvesting sod, processing peeled onions for the Campbell Soup Company, general farming equipment, and storage and office buildings. Agricon is a now defunct Michigan corporation originally used by DGM as a marketing company. Agricon ceased active operations in the mid-1990's. Agricon still owns an interest in a parcel of land in dispute in this case, a Jackson county property sold in August 2003. Five limited partnerships, Stockbridge Limited Partnerships #1-5 created by Duane and Mary Lou Baldwin, own farm lands which were leased to DGM. FFM, LLC, and Jacobs Management, LLC, are two limited liability companies that were created to function as general partners of limited partnerships #2-5, in which Duane, Gary, and Mary Jo Baldwin took memberships in exchange for limited partnership interests.

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the obligation, Duane Baldwin pledged 2,000 shares of stock in American Paytel Corporation, which were represented to have a value of $200.00 per share, in support of his obligation. By virtue of two amendments to the indemnity agreement in 1996, the amount of the loan was increased to over $700,000.00. In these first and second amended indemnity agreements, the parties reaffirmed the terms of the existing indemnity and extended its coverage to the restructured loan. Mark Baldwin was added as an additional "joint and several" indemnitor, and, in addition, the parties agreed that additional assets would provide collateral for the indemnity in the event that the PayTel stock should prove to be deficient. According to plaintiff, Duane Baldwin claimed he had more than enough assets, in the form of real estate holdings and securities, to cover the obligation. However, unbeknownst to plaintiff, in October 1991, five years before the agreement with plaintiff was signed, Duane Baldwin had transferred his residence, real estate holdings, mutual fund accounts, bonds, insurance policies, and certificates of deposit into five newly-created limited partnerships, in which his children were given ownership interests, but Baldwin retained the largest percentage of interest.2 In July 1998, Duane Baldwin conveyed the remainder of his assets to the Duane V. Baldwin Trust, a revocable living trust. Due to adverse weather conditions, the sod farm business was a failure, and Baldwin Farms never made any of the payments on the loans. At the same time, the value of American Paytel stock plummeted. In February 1998, Baldwin Farms was unable to meet its payments of principal and interest coming due to the bank. In September 1998, Duane Baldwin died unexpectedly from a heart attack.3 His estate was valued at less than $15,000.00. There is no dispute in this case that the assets of the estate and trust were inadequate to cover Baldwin's debt to plaintiff. Plaintiff paid off the loans in September 1999 pursuant to his loan guarantee, shortly after filing the instant suit in June 1999.4 In March 2001, the parties stipulated to allow plaintiff to file a second amended complaint, in which plaintiff alleged eight causes of action against the primary and secondary defendants: breach of contract (Count I); fraud (Count II); tortious conversion (Count III); fraudulent conveyances pertaining to the 1991 and 1998 transfers (Count IV); recovery of property from the estate (Count V); accounting of assets held by defendants

These limited partnerships, Stockbridge Limited Partnerships #1-5, are named defendants in this action because plaintiff claims that these transfers left Baldwin insolvent.
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His wife, Mary Lou Baldwin, predeceased her husband and her interest in the real property, trust, and partnerships passed to her husband in 1994, before the indemnity agreements were made to plaintiff.

Plaintiff filed suit in the circuit court after Duane Baldwin died but before an estate was opened. Once the estate was opened and a personal representative appointed, plaintiff filed his first amended complaint against the personal representative and trustee of Duane Baldwin's estate and trust, and eventually added as defendants Jacobs Management, LLC; FFM, Co., LLC; DGM Corporation; Agricon, Inc.; and Stockbridge Limited Partnerships #1-5.

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(Count VI); violation of the Michigan Securities Act (Count VII); and injunctive relief (Count VIII). Plaintiff sought indemnification pursuant to the terms of the Agreement. The payments and interest totaled in excess of $729,000.00. Plaintiff claims to have first learned of the 1991 conveyances through discovery in this litigation. Plaintiff claimed that assets owned by Duane Baldwin were used to induce him to enter into personal guarantees for the commercial loans used to support Baldwin Sod Farms. Plaintiff further alleged that both Duane Baldwin and Mark Baldwin presented financial statements that misrepresented the success of the venture and represented that additional assets would be available to indemnify him, if necessary. On April 23, 2001, the primary defendants agreed to the entry of a consent judgment in the amount of $701,462.76, plus statutory interest as provided by MCL 600.6013, and admitted liability pursuant to the indemnification agreements (Count I of the second amended complaint). Defendants then filed motions for summary disposition, pursuant to MCR 2.116(C)(7), (8), and (10), pertaining to all eight counts of the second amended complaint. In a written opinion and order dated September 12, 2001, the trial court granted summary disposition on Count VII, but denied defendants' motions as to all remaining counts. Counts I, II, and III were subsequently dismissed with prejudice by stipulation of the parties. A five-day bench trial was held on the remaining equitable claims. At trial, plaintiff attacked the validity of Duane Baldwin's 1991 transfers of real and personal property to the secondary defendants on the theory that they were made with the intent to hinder, delay, or defraud present and future creditors contrary to the Uniform Fraudulent Conveyance Act (UFCA), MCL 566.11 et seq., and that the defendant partnerships and corporations were sham entities created and used for improper purposes, i.e., to hinder and delay payment on a lawful judgment to avoid creditors. At the conclusion of trial, the circuit court rendered a written opinion and order of judgment in favor of plaintiff, concluding that plaintiff had proven his case by "overwhelming evidence." In its amended judgment, the circuit court found "by clear and convincing evidence that the transfers of property to the Entity [secondary] Defendants were fraudulent as to Plaintiff herein" under the UFCA and, further, "that the Entity [secondary] Defendants were the alter ego of Duane V. Baldwin and had no legitimate existence apart from him and were sham entities created or maintained to avoid his obligations to creditors." The court's judgment provided that "all transfers of property, real, personal or mixed, to the Entity [secondary] Defendants are hereby set aside to the extent necessary to satisfy Plaintiff's claim under this Judgment and Plaintiff's Partial Consent Judgment" against the primary defendants. The court separately tried the issue of attorney fees and costs to which plaintiff was entitled pursuant to the terms of the indemnity agreements. Following the presentation of proofs on the issue of costs and fees, the court awarded plaintiff a total of $446,824.49 in attorney fees and costs. A final judgment in the amount of $1,352,936.82 was entered on December 17, 2002. The circuit court denied defendants' post-judgment motions for credit against the judgment. In these consolidated appeals, defendants now raise issues concerning the pre-trial summary disposition motions, the trial court's findings of fact and conclusions of law rendered after the bench trial, and post-judgment proceedings.5 In Docket No. 248609, the secondary

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The partial consent judgment entered on April 23, 2001, is not being appealed by any of the
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defendants appeal as of right from the amended judgment entered in favor of plaintiff following the bench trial. In Docket No. 248606, the primary defendants filed a separate appeal by right, which raises essentially the same arguments and issues as those set forth in Docket No. 248609. Accordingly, these two appeals will be jointly addressed in this opinion. In Docket No. 255460, all defendants appeal by leave granted from the circuit court's post-judgment order denying their motion for a credit against the judgment. Docket Nos. 248609 and 248606 I Defendants first argue that the trial court erred in permitting plaintiff to pursue his fraudulent conveyance claim more than six years after the challenged conveyances transpired. Defendants note that, with regard to the November 1991 transfers of real and personal property to the Stockbridge limited partnerships, this lawsuit was not commenced until 1999, and the fraudulent conveyance claim was not asserted until the filing of the first amended complaint in May 2000. Defendants contend that the applicable six-year limitations period provided by MCL 600.5813 expired at least two years before this lawsuit was filed because, for purposes of the UFCA, the six-year limitations period runs from the date of the transfers. Defendants further argue that plaintiff had actual notice, as a matter of law, that these transfers had occurred because each 1991 transfer of land to the limited partnerships was promptly recorded with the county register of deeds, and, in due course, the transfers were also recorded with the township and the Michigan Department of Treasury. We review de novo a trial court's decision on a motion for summary disposition under MCR 2.116(C)(7). DiPonio Construction Co, Inc v Rosati Masonry Co, Inc, 246 Mich App 43, 46-47; 631 NW2d 59 (2001). In determining whether a party is entitled to judgment as a matter of law pursuant to MCR 2.116(C)(7), a court must accept as true a plaintiff's well-pleaded factual allegations, affidavits, or other documentary evidence and construe them in plaintiff's favor. Brennan v Edward D Jones & Co, 245 Mich App 156, 157; 626 NW2d 917 (2001). Where there are no factual disputes and reasonable minds cannot differ on the legal effects of the facts, the decision regarding whether a plaintiff's claim is barred by the statute of limitations is a question of law which is also reviewed de novo. Id. The interpretation and application of a statute of limitations presents a question of law which is likewise reviewed de novo on appeal. If the language of the statute is clear, no further analysis is necessary or allowed. Pohutski v City of Allen Park, 465 Mich 675, 683; 641 NW2d 219 (2002). In the absence of disputed facts, the question whether a cause of action is barred by the statute of limitations is also a question of law. Moll v Abbott Laboratories, 444 Mich 1, 26; 506 NW2d 816 (1993).

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defendants. Further, because no party has sought review of the circuit court's grant of summary disposition with regard to Count VII, the Michigan Securities Act violation, that cause of action is not at issue in this appeal.

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Here, the parties do not contest that the applicable statute of limitations is MCL 600.5813, which provides that, "All other personal actions shall be commenced within the period of 6 years after the claims accrue and not afterwards unless a different period is stated in the statutes." MCL 600.5827 further provides: Except as otherwise expressly provided, the period of limitations runs from the time the claim accrues. The claim accrues at the time provided in sections 5829 to 5838, and in cases not covered by these sections the claim accrues at the time the wrong upon which the claim is based was done regardless of the time when damage results. Recently, in Boyle v General Motors Corp, 468 Mich 226, 227; 661 NW2d 557 (2003), our Supreme Court held that the discovery rule does not apply to cases alleging fraud; rather, an action for fraud accrues under MCL 600.5827 at the time the wrong was done, not when it was discovered or should have been discovered. Citing Stephens v Dixon, 449 Mich 531, 534-535; 536 NW2d 755 (1995), the Boyle Court further noted that, "The wrong is done when the plaintiff is harmed, rather than when the defendant acted." Id. at 231 n 5 (emphasis added). A cause of action does not "accrue" until all the necessary elements of the claim have occurred and can be alleged in the complaint. Moll, supra at 15-16. In the instant case, when Duane Baldwin conveyed his real and personal property to the Stockbridge partnerships in 1991, the UFCA was still in effect.6 The UFCA prohibited conveyances that were fraudulent as to "present and future creditors." See MCL 566.16; MCL 566.17.7 As the trial court correctly noted, plaintiff's claims of fraudulent conveyance did not "accrue" within the meaning of MCL 600.5813 and MCL 600.5827 until Baldwin entered into the agreements with plaintiff and plaintiff was, as a result, harmed. Boyle, supra. Thus, because Duane Baldwin entered into the agreement with plaintiff in February 1996, the June 1999 complaint, and the May 2000 amended complaint, were filed well within the six-year period of limitation.

The UFCA has since been repealed and replaced in 1998 by the Uniform Fraudulent Transfers Act (UFTA), MCL 566.31 et seq., which similarly provides that "A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred. . . ." [MCL 566.34(1); emphasis added.] MCL 566.16 provided: "Every conveyance made and every obligation incurred without fair consideration when the person making the conveyance or entering into the obligation intends or believes that he will incur debts beyond his ability to pay as they mature, is fraudulent as to both present and future creditors." MCL 566.17 provided: "Every conveyance made and every obligation incurred with actual intent, as distinguished from intent presumed in law, to hinder, delay, or defraud either present or future creditors, is fraudulent as to both present and future creditors."
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Under defendants' erroneous interpretation of Michigan law, plaintiff would have less than one year from the time he met Baldwin in 1996 to bring suit because the wrong purportedly was done when the assets were conveyed in 1991. This approach is without logic. For example, if plaintiff was not introduced to Baldwin until 1998, then the six-year statute of limitations would have run before any relationship was even developed. Under defendants' flawed reasoning, the Michigan Supreme Court has recognized that "a plaintiff's cause of action could be barred before the injury took place." Stephens, supra at 535. Finally, when a person makes false representations about the title to real property, he is not relieved of liability for fraud merely because the person he defrauded could have detected the fraud by examining the public records. In re People v Jory, 443 Mich 403, 417-418 n 10; 505 NW2d 228 (1993); Cole Lakes, Inc v Linder, 99 Mich App 496, 506; 297 NW2d 918 (1980). Therefore, the trial court properly held that defendants' statute of limitations defense was without merit. II Secondary defendants next argue that the circuit court lacked jurisdiction to hear plaintiff's claims alleging fraudulent conveyance and for an accounting or for attorney fees and costs. Defendants maintain that, under Michigan's Estate and Protected Individuals Code (EPIC), MCL 700.1101 et seq., the only proper party to bring such a claim, and thereby vest jurisdiction in the circuit court, is the personal representative of the estate suing on behalf of beneficiaries and/or creditors. MCL 700.3710.8 Defendants contend that plaintiff cannot seek to directly void transfers made by the decedent because his claim to the assets, if any, is only derivative. We disagree. Questions regarding statutory interpretation and application are issues of law determined de novo on appeal. Yaldo v North Pointe Ins Co, 457 Mich 341, 344; 578 NW2d 274 (1998). As the trial court noted when addressing this issue in its opinion and order dated September 12, 2001, defendants did not raise this issue until almost a year after the case had been pending in circuit court. The trial court properly concluded, as plaintiff argued, that this case is, in essence, a breach of contract action, and, as such, the probate court has concurrent, not exclusive, jurisdiction over this matter under the EPIC, which provides in pertinent part: (1) In addition to the jurisdiction conferred by section 1302 and other laws, the [probate] court has concurrent legal and equitable jurisdiction to do all of the following in regard to an estate of a decedent, protected individual, ward, or trust:

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MCL 700.3710 provides: "The property liable for the payment of unsecured debts of a decedent includes all property transferred by the decedent by any means that is in law void or voidable as against the decedent's creditors, and subject to prior liens, the right to recover this property, so far as necessary for the payment of the decedent's unsecured debts, is exclusively in the personal representative."

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*** (i) Hear and decide a contract proceeding or action by or against an estate, trust, or ward. [MCL 700.1303; emphasis added.]9 Because the underlying complaint in this matter is clearly a breach of contract action involving three indemnity agreements and plaintiff's allegation that fraud was committed in order to get plaintiff to personally guarantee commercial loans to Baldwin Sod Farms, the trial court did not err in concluding that it had subject-matter jurisdiction to hear this cause of action. III Defendants next argue that the trial court erred by entering a money judgment on an unpleaded "sham entity" theory. Defendants maintain that, before a "piercing the veil" theory may be considered, it must first be pleaded by setting forth facts sufficient to show that the entity form was used to perpetrate a fraud on the plaintiff. Defendants argue that, here, there are no allegations regarding "sham entities" that would justify piercing the corporate veil, such as a claim that Duane Baldwin treated the assets of the corporations/partnerships as his own. Moreover, defendants contend that not only was the "sham entity" theory never pleaded, it was also not supported by competent evidence, particularly with regard to defendants DGM and Agricon. Defendants maintain that each corporation was formed according to law, and no evidence showed that either corporation was used as an "alter ego" by Baldwin. This Court reviews a trial court's findings of fact in a bench trial for clear error and reviews de novo its conclusions of law. Ambs v Kalamazoo Co Rd Comm, 255 Mich App 637, 651; 662 NW2d 424 (2003). "A finding is clearly erroneous where, although there is evidence to support the finding, the reviewing court on the entire record is left with the definite and firm conviction that a mistake has been made." Id. at 652. "An appellate court will give deference to `the trial court's superior ability to judge the credibility of the witnesses who appeared before it.'" Id., quoting Rellinger v Bremmeyr, 180 Mich App 661, 665; 448 NW2d 49 (1989). A trial court's decision whether to pierce the corporate veil is reviewed de novo because of the equitable nature of the inquiry. Foodland Distributors v Al-Naimi, 220 Mich App 453, 456; 559 NW2d 379 (1996). However, the trial court's decision "will not be reversed unless the factual findings are clearly erroneous or the reviewing court is convinced that it would have reached a different result had it occupied the trial court's position." Law Office of Lawrence J. Stockler, PC v Rose, 174 Mich App 14, 43-44; 436 NW2d 70 (1989).

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When plaintiff filed this action, the Revised Probate Code was in effect. The Revised Probate Code was repealed effective April 1, 2000, and was superseded by the EPIC. The EPIC applies to court proceedings pending on April 1, 2000, except to the extent, in the opinion of the court, the Revised Probate Code should be made applicable in the interest of justice or because of the infeasibility of applying EPIC's procedures. See MCL 700.8101.

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Initially, as plaintiff correctly notes, "piercing the corporate veil" is not in and of itself a cause of action, but rather a doctrine which fastens liability on the individual who uses a corporation merely as an instrumentality to conduct his or her own personal business, and liability arises from fraud or injustice perpetrated not on the corporation but on third parties dealing with the corporation. See In re RCS Engineered Products Co, Inc, 102 F3d 223, 226 (CA 6, 1996); Aioi Seiki, Inc v JIT Automation, Inc, 11 F Supp 2d 950, 953-954 (ED Mich, 1998). There is no single rule delineating when the corporate entity may be disregarded. Foodland, supra at 456. A court may find that one entity is the alter ego of another and pierce the corporate veil upon proof of three elements: first, the corporate entity must be an instrumentality of another; second, the corporate entity must be used to commit a fraud or wrong; and, third, there must have been an unjust loss or injury to the plaintiff. Acton Plumbing & Heating Co v Jared Builders, Inc, 368 Mich 626; 118 NW2d 956 (1962); In re RCS Engineered Products, Inc, supra at 226; Nogueras v Maisel & Assoc of Michigan, 142 Mich App 71, 86; 369 NW2d 492 (1985). In the instant case, the material allegations of Count IV of plaintiff's second amended complaint adequately set forth a claim to recover property transferred in fraud of the creditor, thus providing a basis for the trial court to pierce the corporate veil. First, plaintiff alleged in paragraphs 53-56 that the limited partnership and corporation defendants were created solely to avoid creditors. Second, plaintiff alleged in paragraph 59 of the amended complaint that these entities were used to commit wrongs against creditors. Finally, plaintiff claimed he suffered an unjust loss in paragraphs 31-32. "The only requirements for stating a cause of action is a presentation of factual allegations that would reasonably inform defendants of the `nature of the claims' against which defendants are called upon to defend." Smith v Stolberg, 231 Mich App 256, 260-261; 586 NW2d 103 (1998); MCR 2.111(B)(1). Defendants' argument that the "sham entity" theory was not supported by competent and material evidence is likewise without merit. Plaintiff presented ample evidence at trial that defendant entities were sham entities that merely served as Duane Baldwin's alter ego. The evidence showed that family members who had partnership and corporate interests never provided consideration for those purported interests and never shared in the profits or losses of the entities. The evidence overwhelmingly established Duane Baldwin's abuse of partnership and corporate arrangements by using them as devices from which he paid his personal expenses, while insulating himself from payment of his personal debts. Plaintiff's expert, Allan Claypool, testified that Duane Baldwin failed to comply with state and federal tax laws and nearly all of the requisite partnership formalities required by the partnership agreements. For example, Duane Baldwin's children were not paid their respective shares of partnership profits or losses; no partnership records were ever maintained; annual statements were not delivered to each partner; no annual meetings ever took place; except for Stockbridge Limited Partnership #5, no bank accounts were established or operated; no salary was paid to the general partner; provisions applicable to the transfer of limited partnership interests were not followed; no state or federal income tax returns were ever filed for Stockbridge Limited Partnerships #1-4; only some of the required income tax returns were filed for Stockbridge Limited Partnership #5; and no balance sheets or financial statements were ever prepared or maintained for the partnerships. -11-


There was additional evidence that Duane Baldwin retained total control of the entities' assets for his exclusive individual benefit. For example, he personally filed Michigan farmland preservation tax credit claims with his personal income tax returns. Duane Baldwin represented in those documents that he was the owner of, and entitled to, 100 percent of the property tax credits attributable to the farmland, which was actually titled in the partnerships. Duane Baldwin also represented in a handwritten 1996 financial statement that the Michigan farmland, valued at $600,000.00, was owned by him personally. Furthermore, Duane Baldwin's own home was titled in the name of one of the partnerships. According to Claypool, the establishment of defendant entities served no legitimate business purpose. Furthermore, DGM acted as a conduit, and, based on the testimony of Gary Baldwin, the business and personal assets were so intertwined with all of the entities that he did not know who owned the interests. We conclude that the trial court did not clearly err in piercing the veil of these partnership and corporate entities and finding that they were, indeed, sham entities used by Duane Baldwin for his sole benefit. In so concluding, the trial court noted in its written opinion and order that "It is noteworthy that Duane Baldwin was not a stranger to the courts and was sued numerous times in relation to his business enterprises." Under the circumstances, and in light of the evidence of record, the trial court properly held that the resultant transfers were accordingly voidable. IV The secondary defendants next argue that the circuit court erroneously found that transfers of property owned by Duane and Mary Lou Baldwin made in 1991 to Stockbridge Limited Partnerships #1-5 were a "fraudulent conveyance" in 1991 under the UFCA, MCL 566.17, to a then-existing creditor. Defendants contend that plaintiff did not become a creditor under MCL 566.17 until he had a claim of indemnity against Duane Baldwin in February 1998; consequently, the lack of a creditor relationship between plaintiff and Baldwin at the time of the transfers bars plaintiff's claim, and the court's finding to the contrary is clearly erroneous. Defendants further maintain there was no proof of "fraudulent intent" of the kind necessary to set aside voluntary conveyances as to existing (or later) creditors. Cole v Brown, 114 Mich 396, 399; 72 NW 247 (1897). Defendants contend that the alleged failures by the limited partnerships or corporations to which Duane Baldwin transferred assets to file annual reports, pay annual fees, or to keep minutes, is unrelated to the gratuitous transfers of entireties property in the form of limited partnership interests or limited corporation shares to family members in 1991 and 1993. Defendants argue that the trial court's findings that the transfers were made to avoid Duane Baldwin's debt to plaintiff are contrary to law and fact, particularly where the debt arose in 1998 when plaintiff paid the bank loan, more than seven years after the date of the creation of the limited partnerships. We disagree. Both the UFCA, in effect in 1991, and the current act, the UFTA, specifically prohibit transactions made with the intent to hinder, delay, or defraud future creditors. The overwhelming evidence clearly supports the trial court's conclusion that the 1991 and 1998 transfers violated the UFCA. The record indicates that, in 1991, Duane Baldwin and his attorney formed a firm to develop and market a "scheme" to shield assets from future creditors, at about the same time that Baldwin transferred most, if not all, of his assets to five limited partnerships. The scheme was to be marketed to farmers, individuals, and lawyers, and promoted the concept of farmers transferring all of their property to several limited partnerships and corporations to -12-


avoid future creditors. Also in 1991, Baldwin transferred most of his assets to defendants Stockbridge Limited Partnerships #1-5. In exchange for the property, Baldwin issued partnership interests to himself and other family members for no consideration. Baldwin did not file a gift tax return for the interests transferred to family members. Baldwin repeatedly represented to plaintiff in 1996 and 1997, during the series of business transactions involving Baldwin Farms, that he held enough property to indemnify plaintiff for any losses incurred by that business venture. Consistent with these representations was Baldwin's handwritten personal financial statement, dated December 1996, showing his net worth to be $1,700,000. No mention was made of the five limited partnerships holding Baldwin's real estate. According to plaintiff's expert's testimony and written opinion, Duane Baldwin did not avail himself of typical and legitimate estate planning techniques. Moreover, contrary to defendants' assertion, the evidence shows that Duane Baldwin was rendered insolvent as a result of his fraudulent transactions. When he died, his estate was probated as a small estate of less than $15,000.00, which clearly was not enough to cover his debts. The petition filed with the probate court makes no mention of any stock in American Paytel, which is consistent with the evidence showing that Duane Baldwin never really owned any stock in American Paytel. In any event, under the UFCA and UFTA, it is not necessary for plaintiff to show that Baldwin was in fact insolvent. See MCL 566.17; MCL 566.34(1); Coleman-Nichols v Tixon Corp, 203 Mich App 645, 658-659; 513 NW2d 441 (1994). An intent to delay or hinder creditors, standing alone, is sufficient to constitute a fraudulent conveyance under MCL 566.17. As the trial court concluded in its written opinion, the evidence that the transfers were made by Duane Baldwin in 1991 with the intent to defraud present and future creditors was "overwhelming." The court further aptly noted that the testimony of one witness alone

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