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Bar Briefs July 2006
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Bar Briefs
July 2006 • Volume 25• Number 01

From the President
"Our New President " by Evelyn Femminineo

From the Executive Director

"The Millennial: Renae A. Topolewski "

by Rick R. Troy

Circuit Court Corner by Keith Beasley

Elder Law
"Through the Looking Glass" by Alan Polack

Feature Article
"Claims of Adverse Employment Actions as Unfair
or Oppressive Conduct Against Minority Shareholders "

by Andrew D. Bos

From the YLS
"Thank You Mark & Carrie "
by Karen Trickey, YLS Chair

From the President
"Our New President " by Evelyn Femminineo

I'm so happy and proud to be writing this article to introduce you to our new MCBA President, my son, Jacob M. Femminineo, Jr. Jake is very happy and excited to be your President and is planning many events and programs to enhance your MCBA membership.
Many of you knew and remember my husband and Jake’s dad, Jake Senior. As our son has continued on his legal career path, I often think about how happy and proud his Dad would be at this special time. I know his Dad would be thinking about all the different directions he could have gone in his life. Growing up, we never pushed Jake or his brother David to become lawyers. In fact, we never thought Jake would be a lawyer at all, much less President of the MCBA.

At various times in his life, Jake thought about many different careers.

There was the time when he was a little toddler, infatuated with big trucks. His goal in life at that time was to drive a big truck, maybe even a garbage truck.

Once he started school, he refined his ambitions and decided he was musically inclined. He eagerly took up the trombone, delighted with the shiny instrument and the very cool black carrying case. We saw Carnegie Hall in his future but unfortunately, he gave it up after about two weeks.

Then came the time in grade school when he ran for student athletic director at St. Thecla’s. Using the Martin Luther King Jr., “I Have A Dream” speech as a basic outline, he gave an equally impassioned speech and won the job. We knew he was destined for politics. He often talked about running for President some day (of the country, not the MCBA).

Once in high school, his ambitions turned to yet another career path. He and his friends from De La Salle along with David made a video movie titled “Where the Hell is Santa Claus?” for presentation to the family at the holiday gatherings. He went so far as to climb up on the roof of the house to get some great footage. Neither his dad nor I were home at the time and only learned about the cinematography ambitions when one of the neighbors called to let us know they had been on the roof. Kids really develop their personalities in high school and Jake was no exception. That’s when we began to see the lengths he would go to in order to have fun. He declared himself as the mascot of the De La Salle Pilots at football games, and would appear in a mask, a cape and rubber boots to lead the crowd in cheers at half-time.

In order to teach Jake and David the value of a dollar, we required them to have summer jobs. One summer, Jake worked for a company that was tearing down a former clothing store. Jake rescued a mannequin, dressed it in some of my old clothes and belted her into the front passenger seat of his car. He drove around with her everywhere and if anyone asked who was in the car, he would tell them it was me and would take them to the car to introduce “us”. He got many people to fall for this practical joke.

Once he got to college at Wayne State University, his thoughts turned to girls, girls, girls. My husband was convinced he would fall in love and not finish school. When a girl would call the house, my husband would take extreme measures to thwart the budding romance. He would rush to the phone, tell the girl that Jake wasn’t home (even if he was) and to stop calling. We needn’t have worried though because Jake Jr. really did have his priorities in order and put the girls on the “sidebar” until he finished his education.

Then one day, he surprised me and his Dad and told us he wanted to go to law school and he wanted to go where his Dad had gone, to the Detroit College of Law. While he still had fun, he took his law school studies very seriously because he wanted to follow in his Dad’ s footsteps and make us both proud. Once he passed the Bar exam, he joined his Dad in his practice. I have to say that was one of the proudest moments of our lives. Many times, my husband would come home and tell me that a Judge or fellow attorney told him what a great job Jake was doing. He was beaming when he told me about those times and I’m sure he considered them to be among the best moments in his life.

Like his Dad, Jake loves a good party. He enjoys inviting people over for a barbeque and tasting of the homemade wine. Jake is very proud that he learned to make the wine with his Dad and Grandpa while he was still in high school. The wine-making has become a big tradition every fall and he invites many friends to join in the process. Just like his Dad, he loves to give away the wine and is proud of it’s quality and popularity among the legal community.

All kidding aside, Jake takes his position as President of the MCBA very seriously. He is very creative and innovative and I’m sure the members will find that Jake will give his all to serve his peers. As he leads you into the second century of the Association I’m sure you will find that Jake will start some new traditions and programs to benefit the members. I have all the confidence in the world that he will do a great job for you. Congratulations Jake! I love you and I’m very proud of you!

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From the Executive Director
"The Millennial: Renae A. Topolewski "
by Rick R. Troy

How do you define success?
Success is personal satisfaction. You are a product of your choices so I hope to make wise decisions that will have a positive impact on my future.

What is your greatest accomplishment?

I was the first in my family to attend college so graduating from law school and passing the bar is my greatest so far. I create goals for myself which allows me to always strive for something.

What are your greatest setbacks or disappointments?

When I let fear be in control instead of confronting it head on. I also am so excited to begin working, but was disappointed to find a lack of job opportunities for new attorneys in Michigan.

What influence did your mother have on your life?

She taught me to be an independent woman and to be true to my values and morals.

What influence did your father have on your life?
With hard work and determination, anything is possible.

What talents or natural abilities make you good at what you do?

I am am artist and enjoy painting and gardening. I feel that seeing things from an artistic viewpoint allows me to think of creative arguments. I am also a great listener. I have friends and family that always seem to think I am the new “Ann Landers”. Even strangers will come up and ask me for advice on just about anything. Listening is the key to great relationships.

Who Are You

Born prior to 1946 75 million Americans
Patriotic, fiscally conservative, hard working, loyal to institutions, reverent to authority, hierarchal leadership, person to person networking, participates at the table, regular attendance.

Baby Boomers
Born 1946 – 1964 80 million Americans
Optimistic, idealistic, competitive, driven by a desire io leave their mark, has a love/hate relationship with authority, comfortable with leadership by consensus, person to person networking, participates at the table, regular attendance.

Generation Xers
Born 1965 – 1981 46 million Americans
Independent, entrepreneurial, adaptive to change, skeptical of institutions, balanced work ethic, unimpressed with authority, leadership by competency, networks via email, participates by paying for access, networks for educational value, occasional attendance.

Born 1982 – 2000 76 million Americans
Techno-savvy, collaborative, realistic, judges institutions on their merits, optimistic, energetic towards work, respectful of authority, welcomes leadership by achievement, networks for the education value by email and web forums, participates by paying for access, attendance based on perception of the cause.

What have you learned to do that was not a natural talent but has helped you become successful?
I have learned to communicate effectively with acquaintances. Everyone has something they want to talk about so if you can find an interest a person has, then you can talk to anyone about anything.

How would you characterize your personal style?
I am very much a classic girl but with a modern twist.

Do you have a personal vision? A positive picture of yourself in the future?

I hope to become a judge someday. A judge has so much influence over our community professionally and socially. I want to make a difference and help others meet their goals. I also want to become well versed with others’ personal viewpoints so I can acquire understandings and beliefs on what others feel is important.

What values do you hold in the highest regard?

To remain honest and be truthful; to never take things for granted; to work hard if you want to make a difference and to never lose sight of personal integrity.

Other than law, what are you most interested in? What are you most passionate about?

I enjoy watching the news and keeping up on current affairs. I also love to spend time with my family and friends.

Any heroes in your life?
Sandra Day O’Connor – because she was the first female USSC Justice. Even though she graduated 3rd in her class, she had a hard time getting a job because she was female. She is living proof that you have to work to get what you want.

What magazines, journals do you regularly read?
Lawyers weekly online, newsweek, MSNBC online and the local newspaper.What websites do you frequent on a regular basis?
Google – I love to search information. MSN to check the news. Lawcrossing because I am actively seeking a job and
Hotmail to check my e-mail.

What is your favorite book? Have you read a book lately that you would recommend and why?
I can’t say that I have a favorite book. but I do love mysteries. I don’t get to read as much as I would like to for personal enjoyment. I am currently reading “Unfit to Practice” by O’Shaughnessy and its’ great so far!

Do you listen to (pick your favorite) radio, album, cassettes, CD’s mp3’s). What music would we find in your car today?
I listen to CDs in my home but hope to soon step up to the MP3. In my car I listen to XM satellite radio which is so wonderful. I have a U2 CD always in my CD player – its my favorite band and you will always hear me playing their music.

What is your biggest concern about the planet?
Honestly, I am afraid that we are not taking care of it properly. We need to start conserving more or we will have no planet to live on! Just look at the global warming effects we are experiencing now.

Who is the most successful person you know?
Earlier I mentioned success is personal satisfaction so I can’t really say that there is one person who is the most successful. If you are truly happy with where you are in life, then you are successful.

What upsets you the most?

People who act without regard to the consequences that may arise.

Is there anything that you want to accomplish that you have not yet?
I want to travel as much as I can, especially to Ireland and Australia. Life is too short to stay in one place. I would love to experience the world and its cultures.

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Circuit Court Corner by Keith Beasley, Court Administrator

Presiding Judge Juvenile Division
Chief Judge Viviano has decided to further the mission of the Court by separating judicial responsibilities for the juvenile and domestic relations areas of the Court. Judge Mark Switalski has done a wonderful job of overseeing the day-to-day operations of the Family Division. However, the juvenile and domestic areas of the Court are huge areas of responsibility and are very different. Judge Viviano is most familiar with the juvenile area. Therefore, Judge Viviano has decided that he will act as the Presiding Judge of the Juvenile Division henceforth. Judge Mark Switalski will continue to be the Presiding Judge of the Family Division.

Judgments for Defense Costs
Remember: If you are appointed to represent an indigent felony defendant in our Court, submit your billing to Judicial Aide two weeks before sentencing. There continues to be some confusion as to the reason for this. This is for your clients benefit. It is intended to give your client notice of the total defense costs incurred on his or her behalf and an opportunity to be heard on the question of the extent to which he or she should be ordered to reimburse Macomb County for this expense. The amount of reimbursement is based on, but is not necessarily the same amount you will be paid as counsel. The judge assigned to the case exercises his or her discretion to determine the amount to be repaid, considering ability to pay.

Juvenile Neglect and Abuse Cases to Utilize Child Support Guidelines
In an amendment of MCR 3.973(F), the Michigan Supreme Court has directed that family courts must use the child support guidelines to determine how much money parents of children placed in foster case due to abuse or neglect are to reimburse the State after one or more of the charges are found to be true. It may be ordered at an initial dispositional hearing. The text of this order is available on the Michigan Supreme Courts’ Web site “Recent Amendments to Court Rules.”

Changes to Daner Law Library Collection
At the request of the Board of Commissioners, the Court has agreed to a change in the James C. Daner Law Library to reduce the cost of legal publications to Macomb County and better serve the public and Bar. As a result, the 'Federal' materials will be transferred to the County Library on Hall Road. This will make the materials available more hours to both the public and lawyers and reduce duplication. For non-lawyers, it will provide them something they have never had in our building - the assistance of librarians. In addition, the County Library has a free Westlaw terminal available for anyone to use. The Library is going to expand the scope of this Westlaw subscription to provide access to federal materials. The Daner Law Library will remain open to the public with a core set of Michigan materials. The books will be transferred sometime this summer.

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Elder Law
"Through the Looking Glass " by Alan Polack

This is the latest on implementing the Deficit Reduction Act in Michigan. I've taken the liberty of taking this right off the Elder Law Listserv on May 29, 2006. Several representatives of the Elder Law Section (along with Todd Tennis from Capital Servies) met with DCH policy people last Friday. I will try to summariz the key points from that meeting:

DCH is currently focusing almost exclusively on the DRA requirements related to documentation of citizenship. They are looking at a July 1 deadline for implementation, which would mean they would have to post proposed rules by June 2, in order to have a 30 day comment period. That does not appear realistic. Further, they are anxious to create a policy that meets their statutory obligations, but with enough flexibility to prevent undue hardship. Alison Hirshel, who was part of our group, has volunteered to work with DCH to come up with suitable language for the policy. Alison will also put together a letter to DCH advocating for an extension of the deadline (as requested by the DCH staff at the meeting). Assuming there is no objection, the Elder Law Section will sign onto the letter with other advocacy groups.

Otherwise, they claim they have taken little or no action toward implementation of the other parts of DRA that are of interest to us. They do not expect to begin focusing on these issues (such as divestment) until after they have taken care of the documentation issue. They also say they have a meeting with CMS in September, and do expect to have any new policy dealing with our critical issues published before that meeting. Therefore, it would appear that DHS will continue to process applications under existing policy at least until the f all of 2006 – if not later.

• They have been promised and have expected clarification and assistance from CMS in the form of letters to the state Medicaid directors regarding implementation of DRA, but those letters have not arrived as anticipated. My sense was that they feel abandoned with a confusing piece of legislation.• Any new policy will be submitted for 30 day comment. But we will be involved in the drafting process before publication for comment takes place.

• In addition to other challenges to the implementation of DRA, the State has a freeze on “systems changes” for the Medicaid program, and they have yet to figure out how they would implement DRA changes in light of this limitation. They see this as a big problem, but my impression is they have taken a “we’ll worry about that later” attitude about this.

• They agree in principal with the concept that if people are taking steps today based on current published policy, that they should not be penalized by implementation of new policy at a later date – that is, they are conceptually committed to implementing the divestment rules in a prospective manner. However, I would not rely too much on this representation because it comes before they have begun to really look at what these changes involve and what the law requires.

• They seem quite open to having the Elder Law Section’s DRA committee work with them on policy that makes sense. We agreed that the first step will be for our committee to provide a letter identifying what we see as the issues that will need to be addressed by new policy. There does not appear to be any urgency in getting this letter to them, as they are not going to focus on it right away, although we certainly want our discussions to be in full swing before they go to the CMS conference in September. I will prepare a draft letter to circulate to the other committee members in the near future.

In conclusion, the meeting was interesting for a couple reasons (1) we now have some sense of where they are – which is not very far – and how long we may have to operate under existing rules, and (2) we have hopefully established a relationship which will allow us to participate in the process by which the new policy is drafted.

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Feature Article
"Claims of Adverse Employment Actions as Unfair or Oppressive Conduct Against Minority Shareholders"
by Andrew D. Bos

In 2004, the Michigan Court of Appeals decided Franchino v. Franchino, 263 Mich. App. 172, 687 N.W.2d 620 (2004), which hinged on whether or not the Section 489 (M.C.L.A. §450.1489) of the Michigan Business Corporation Act (the “MBCA”) protected minority shareholders when they suffered harm in their capacities as either employees or directors of a company. In this case, the court heard a dispute between two family members (father and son) who were the sole owners of a privately held Michigan company, Franchino Mold & Engineering Co. These two individuals were the only shareholders and the only directors of the company.1 The plaintiff (who is the defendant’s son) had an employment contract which stated that his employment could only be terminated upon the unanimous consent of all of the directors.2 After a number of disagreements between the father and son as to how to run the company, the defendant (the majority shareholder) removed the plaintiff from the board of directors, elected himself the sole director, and then terminated the plaintiff.3 In response, the plaintiff brought an action for minority shareholder oppression.4 In affirming the decision of the lower court, the Michigan Court of Appeals ruled that Section 489 of the MBCA does not allow a shareholder to recover for any harm suffered in his or her capacity as an employee or member of the Board of Directors of a corporation.5 This section only protects a shareholder’s interest as a shareholder, and since no adverse action was taken against the plaintiff in his capacity as a shareholder (terminating plaintiff did not relate to plaintiff’s interest as a shareholder in the company), he had no claim under Section 489.6

The end result of the Franchino case is that, in interpreting Section 489, a court should not consider the termination of employment or other adverse employment actions taken, or termination of membership on the board of directors, in evaluating a shareholder oppression claim. Rather, the statute is limited to adverse actions taken against a person in his or her capacity as a shareholder, and not in their capacity as either a member of the company’s board of directors or as an employee.

Section 489 is designed to protect minority shareholders from actions by the company’s directors. Under Section 489, any shareholder can bring an action in the circuit court of the county of either the principal place of business or the company’s registered office, in an attempt to establish that the acts of the directors are illegal, fraudulent, or willfully unfair and oppressive to either the corporation or the shareholder.
7 If the minority shareholder is successful in proving his or her case, the court may order any relief that it considers appropriate, including: (a) the dissolution and liquidation of the corporation; (b) the cancellation or alteration of a provision contained in the articles of incorporation or the bylaws of the corporation; (c) the cancellation or alteration of, or an injunction against, a resolution or other act of the corporation; (d) the direction or prohibition of an act of the corporation or a party to the action; (e) requiring that the corporation purchase the shares of the minority shareholder at fair market value; or (f) awarding monetary damages to the minority shareholder.8

It is important to note that the statute specifically excludes claims for “willfully unfair and oppressive conduct” if such actions are permitted by an agreement, the articles of incorporation, the bylaws, or a consistently applied written corporate policy or procedure.
9 Thus, to state a claim based on objectionable provisions contained in the articles of incorporation, bylaws or any contract, it must be on the basis that the provisions in question are illegal or fraudulent, not that they are willfully unfair or oppressive. As a result, a majority shareholder can contract around claims for willfully unfair and oppressive conduct when drafting the corporate organizational documents or buy-sell agreements.

Additionally, it is important to remember that Section 489 applies only to minority shareholder oppression in the context of private companies.

Prior to the 1989 amendments to the MBCA, the section of the MBCA dealing with minority shareholder oppression was a part of the statute dealing with dissolution.
11 Although a court could order different remedies12, the shareholder had to request the dissolution of the company in pleading a case of minority shareholder oppression. Under the 1989 amendments to the MBCA, the minority shareholder oppression concept was moved to its current section13, and additional remedies were made available to be sought by a plaintiff.

Recently, the Michigan legislature amended the definition of “willfully unfair and oppressive conduct” in the minority shareholder context. The revisions to Section 489 are in response to the Franchino decision.

The revision to Section 489 permits consideration of employment actions against a minority shareholder in suit brought claiming willfully unfair and oppressive conduct if those actions disproportionately affect an individual’s rights as a shareholder. If you represent privately held Michigan corporations with minority shareholders or represent individuals owning minority interests in Michigan corporations, you should keep this revision in mind when those clients seek your advice pertaining to any employment agreements or other employment matters between a company and a minority shareholder.

Subsection (3) of Section 489 was revised by Public Act 68 of 2006 as follows:
(3) As used in this section, “willfully unfair and oppressive conduct” means a continuing course of conduct or a significant action or series of actions that substantially interferes with the interests of the shareholder as a shareholder. Willfully unfair and oppressive conduct may include the termination of employment or limitations on employment benefits to the extent that the actions interfere with distributions or other shareholder interests disproportionately as to the affected shareholder. The term does not include conduct or actions that are permitted by an agreement, the articles of incorporation, the bylaws, or a consistently applied written corporate policy or procedure.
Section 489 was previously amended in 2001, when the legislature first added the above subsection (3), in an attempt to clarify their intent regarding the meaning of “willfully unfair and oppressive conduct.” Prior to the 2001 amendment, no separate definition of “willfully unfair and oppressive conduct” existed under this Section. In light of the Franchino decision, Section 489 is being further revised to expand the scope of items that can be considered willfully unfair and oppressive conduct.

While at first Section 489 seems like a windfall for employees, it is important to read the section carefully. Remember, the action must impact the employee’s interests as a shareholder or any distributions that would be received as a shareholder. As a result, merely firing an employee who happens to be a minority shareholder would be insufficient to sustain a claim of oppression. Rather, the adverse employment action must somehow disproportionately impact that individual’s rights as a shareholder in some capacity. If a minority shareholder receives any particular benefits, as a shareholder, by virtue of his or her employment, and those benefits are adversely affected by virtue of an adverse employment action, then the shareholder could make a claim for oppression under Section 489.

Even with the passage of this amendment to Section 489, Michigan corporations will still have the ability to terminate employees who are minority shareholders. A claim for oppression only arises when the employment termination or other adverse employment action disproportionately impacts the employee’s interests as a shareholder. As a result, a practitioner should always make a fact intensive analysis in discussing Section 489 of the MBCA, as it will be important to determine, regardless of whatever other positions the minority shareholder may hold with the company, whether or not any adverse actions have been taken with regard to the potential claimant’s status as a shareholder. Even with this new amendment, no clear rules exist as to whether a minority shareholder has a claim for shareholder oppression under Section 489. 1 Franchino, 263 Mich. App. at 174.

2 Id. at 174.
3 Id. at 177.
4 Id. at 178.
5 Franchino, 263 Mich. App. at 185-186.
6 Id. at 191.
7 M.C.L.A. §450.1489(1).
8 Id.
9 M.C.L.A. §450.1489(3).
10 M.C.L.A. §450.1489(2).
11 Former M.C.L.A. §450.1825(1) (1973).
12 Former M.C.L.A. §450.1825(2) (1973).
13 M.C.L.A. §450.1489.

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From The YLS
"Thank You Mark and Carrie " by Karen Trickey, Young Lawyers Section Chair

I am very excited to become the Chair of the young Lawyers Section of the Macomb County Bar Association for 2006-2007. Luckily, I have had a few years on the Board to watch and learn from the Chairs that came before me. I would like to thank two of those Chairs, one who will be with us for another year and one that will be leaving the Board after six years of excellent service.

Mark Pellecchia has been on the Young Lawyers Board for six years and is currently on the Board as Immediate Past Chair. Last year he did an excellent job as the leader of the Young Lawyers. I was always very proud of Mark as I watched him excel as a very busy sole practitioner and still attend every meeting and event we sponsored. Mark has done an excellent job increasing involvement in the Young Lawyers Section. He also involved the Young Lawyers in new events and created stronger connections with programs such as the Circuit Court Drug Court. I appreciate all of his hard work and am glad that he will continue to be on the board to help through the next year. He has already been very helpful to me by offering advice and providing me with important suggestions.

Carrie Fuca has been on the Young Lawyers Board for six years and has been very active with the Young Lawyers her entire career. Carrie is one of the first people that I met when I began attending YLS functions and she has always been one of my favorite people, someone that I have looked up to and have considered a mentor. Carrie was an outstanding Chair who worked very hard and was successful in recruiting new Young Lawyers and expanding the Young Lawyers Section. As Carrie continued to gain responsibility within the Board, she also developed her solo practice. She managed everything so well that she made it look easy. Despite any stresses that she had, she was always energetic and enthusiastic. She was always available if I had any questions for her and never made me feel uncomfortable when I asked for help. As Immediate Past Chair she was available and willing to give advice and make suggestions based on her past experiences. Carrie has been an asset to the YLS and she will be missed as a Board member!

Thank you, Mark, for your hard work as Chair last year and Thank You, Carrie, for all of your achievements and dedication throughout your years as part of the Young Lawyers Section.

As Chair this year, my goal is to further build the Young Lawyer Section. We want the Young Lawyer Section to continue to be a relevant part of the Macomb County Bar Association. To do that, we need to have as many of the young lawyers in Macomb County become involved in the Section. If you know any young lawyers, please encourage them to do so. If you are a young lawyer, and you are not a member of the Bar (there is no charge to be a member of the Young Lawyers Section), please join and become involved. Please feel free to contact me if you have any questions about the Section at trickeykaren@hotmail.com.

The Board will be planning some exciting events this year in conjunction with the Centennial Celebration, as well as CLEs, social events and dinner meetings. July 21st is the Young Lawyers BBQ at the Law Offices of DeMoss, Dempsey & DeMoss located at 445511 N. Gratiot Avenue, Clinton Township, MI 48036. There will be music, food, drinks, and a wonderful pool! And its free!! Please come and join us and bring your bathing suit!

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