The Fifth District Appellate Court affirmed St. Clair County Associate Judge Christopher Kolker’s order dismissing claims in a suit alleging officers of a concrete corporation took company assets and customers.
Justice James Moore delivered the Rule 23 decision on Aug. 17.
The appellate court held that Kolker did not err in dismissing the claims. Moore wrote that "where the plaintiffs’ damages do not exist independent of damages to the corporation, such claims are required to be brought directly."
Plaintiffs Robert Fournie Sr. and Kenneth Fournie filed the complaint in 2009 in St. Clair County against Fournie Contracting Company Inc., Karen Fournie and James Fournie. The appellate decision was based on their May 21, 2015, fourth amended complaint.
Moore noted that because prior orders and filings were not provided, “this court does not have the benefit of referring to these prior pleadings and proceedings thereon due to the incomplete nature of the common law record. As such, any doubts raised by insufficiencies in the record will be resolved against the appellants.”
According to the amended complaint, Belleville Concrete Contracting Company (BCC) is a family-owned corporation in which the plaintiffs own 50 percent of the stock.
The plaintiffs allege that in January 2002 James Fournie became president of BCC and his wife Karen Fournie became the bookkeeper and office manager.
Then in August 2006, Karen Fournie incorporated Fournie Contracting Company, Inc. (FCC). She began operating FCC as a competing concrete and plastering business at the same address where BCC operated.
Robert and Kenneth Fournie claim the defendants “conspired to usurp corporate opportunities and steal the assets and the good will of BCC to the benefit of their new competing company, Fournie Contracting Company, Inc. (FCC), eventually rendering BCC insolvent and forced into receivership.”
They allege the defendants stole money, checks and accounts receivable and deposited the funds into FCC accounts. They also allegedly diverted business opportunities and used BCC’s address, reputation, employees, equipment, machinery, tools, vehicles and materials to perform FCC jobs.
The plaintiffs claim they filed a petition for accounting and receivership in a prior case. They allege they were unaware of the existence of FCC and agreed to keep James and Keren in their positions.
Counts I, II and III were against both James and Karen Fournie for willful and wanton misconduct. Count IV of the complaint alleges James Fournie owed each partner a duty of loyalty, care and fidelity because BCC was a de facto partnership.
On May 29, 2015, the defendants filed a motion to dismiss counts I, II and III, alleging they were previously litigated and dismissed with prejudice.
According to the motion, the counts were previously dismissed with prejudice based on the circuit court’s finding that they were shareholder derivative actions and cannot be brought by the individual plaintiffs against the named defendants.
The plaintiffs responded with their amended complaint. Counts I, II and III in the amended complaint “plead corporate damages in a direct action, and, as the previous orders dismissing these counts found, must be brought as a shareholder’s derivative action,” the motion states.
On June 16, 2015, the plaintiffs replied to the motion, stating that the first three counts of the amended complaint have nothing to do with the dismissed counts in the previous complaint.
Robert and Kenneth Fournie argue that “the basis of a derivative action is that all shareholders were harmed equally and any damages would flow back to the corporation where they would be distributed to all the shareholders pro rata, based on the shares they controlled.”
They add that “they have a direct action because not all of the shareholders were harmed and the defendants would benefit by their own illegal actions if this were made a derivative action because they would recoup a percentage of the money they already stole from BCC.”
On June 17, 2015, the circuit court dismissed counts I, II and III of the complaint, concluding that the damages the plaintiffs are seeking are those of BCC and should be brought as derivative actions.
The plaintiffs asked the court to reconsider and later voluntarily dismissed count IV on July 8, 2015, which was brought against James Fournie. The court granted dismissal of the sole remaining count but denied the motion to reconsider. The plaintiffs appealed.
The appellate court concluded that it is clear that BCC was injured, meaning the plaintiffs were injured as shareholders.
However, “there are no allegations in the complaint whatsoever as to how the plaintiffs were injured by the defendants’ wrongdoing, other than by virtue of the fact that they are the shareholders of BCC. Accordingly, the allegations in the complaint fail to show a direct injury to the plaintiffs independent of an injury to BCC.”
The court further held that it may be possible to proceed with claims made directly against James Fournie, “as the remaining defendants are not controlling entities with regard to BCC, but rather are alleged to be an employee and a competing corporate entitiy.”
But the plaintiffs voluntarily dismissed their claim against him.
“Otherwise, we find, for the aforementioned reasons, that the plaintiffs are required to bring their causes of action against the defendants as derivative claims.
Justices Thomas Welch and Melissa Chapman concurred.