Business & Commercial Disputes in Michigan

Business and commercial disputes in Michigan are handled through the specially created Business Courts, which are specialty dockets created under MCL Section 600.8033 in 2013, and which are part of the Circuit Court System in the various Districts. This statute enumerates specific types of business and commercial disputes, and also specifically excludes disputes that don’t fall within these categories. 

MCL 600.833 defines Business or Commercial dispute as:

(i)   An action in which all of the parties are business enterprises, unless the only claims asserted are expressly excluded under subsection (3).

(ii)   An action in which 1 or more of the parties is a business enterprise and the other parties are its or their present or former owners, managers, shareholders, members of a limited liability company or a similar business organization, directors, officers, agents, employees, suppliers, guarantors of a commercial loan, or competitors, and the claims arise out of those relationships.

(iii)   An action in which 1 of the parties is a nonprofit organization, and the claims arise out of that party's organizational structure, governance, or finances.

MCL 600.833 also defines the types of actions that fall under these categories as: 

(a)  Those involving the sale, merger, purchase, combination, dissolution, liquidation, organizational structure, governance, or finances of a business enterprise.

(b)  Those involving information technology, software, or website development, maintenance, or hosting.

(c)  Those involving the internal organization of business entities and the rights or obligations of shareholders, partners, members, owners, officers, directors, or managers.

(d)  Those arising out of contractual agreements or other business dealings, including licensing, trade secret, intellectual property, antitrust, securities, noncompete, nonsolicitation, and confidentiality agreements if all available administrative remedies are completely exhausted, including, but not limited to, alternative dispute resolution processes prescribed in the agreements.

(e)  Those arising out of commercial transactions, including commercial bank transactions.

(f)    Those arising out of business or commercial insurance policies.

(g)  Those involving commercial real property.

The statute also defines what Business Enterprise means including sole proprietorships, partnerships, limited partnerships, joint ventures, limited liability companies, limited liability partnerships, for-profit or not-for-profit corporations or professional corporations, business trusts, real estate investment trusts, or any other entity in which a business may lawfully be conducted in the jurisdiction in which the business is being conducted. The section also notes that the term Business Enterprise doesn’t include ecclesiastical or religious organizations.

Avoiding business disputes involves well planned business strategies and planning. There are specific steps that are recommended, such as having proper corporate documents, defining all parties’ roles and responsibilities in all corporate documents, carefully amending corporate documents and agreements according to new laws and regulations, as well as what the parties wish to accomplish through their business agreements, executing employment agreements with owners, complying with the documented corporate formalities, acting in good faith when exercising business judgment, not misusing business assets, avoiding transactions that create conflicts of interest, such as interested parties and not arms’ length transactions, obtaining consent for any interested-party transactions, defining majority and minority interest holders and outlining their specific capital investments and percent stake interests and voting rights, and just being transparent and documenting actions and transactions clearly and thoroughly. This is not an all-inclusive list, but it certainly provides a good outline of steps to aid in avoiding major disputes and issues that can lead to litigation. 

Contact the business attorneys in Ann Arbor at Pear Sperling Eggan & Daniels, P.C. today, and let us help guide you through business and commercial legal disputes in Michigan. Please contact us at 734-665-4441 or fill out our contact form to schedule an initial consultation.