Committee hears bill to clarify business-court jurisdiction for shareholder and LLC disputes

The Michigan House Judiciary Committee heard testimony on House Bill 4840, which would clarify that disputes among owners of privately held corporations and limited liability companies should be assigned to Michigan business courts even when the business entity itself is not named as a party, and would confirm business courts’ ability to handle post-judgment enforcement in those cases.

Judge Yates of the Michigan Court of Appeals, former business-court judges James Alexander and Doug Turing, and business-law practitioners described the bill as a clarifying amendment to make business-court assignment consistent across circuits. Judge Yates said he had experience running a business docket for more than a decade and that differences in judicial interpretation had caused inconsistent assignments; the proposed amendment would align assignment with the legislature’s original intent. Judge Alexander said the change would prevent situations where shareholder disputes were sent to general-jurisdiction courts despite clearly arising from business ownership conflicts.

Doug Turing, testifying as a business litigator, described the 2012 statewide business-court legislation as largely successful and called HB 4840 a noncontroversial clarifying amendment to the shareholder-oppression and LLC-oppression provisions in the Business Corporation Act and the LLC Act. He said the bill would also clarify that proceedings to enforce a business-court judgment should remain in the business court rather than be transferred away for post-judgment enforcement.

Members asked operational questions about forum selection and venues. Representative Breen asked whether cases are automatically added to the business-docket and whether parties can opt out; witnesses explained the statute provides for review by the chief judge of the circuit when a party seeks to move a case to general jurisdiction. Representative Responiak asked about concurrent matters when an owner dies; witnesses confirmed estates and probate matters can lead to concurrent actions and that courts try to keep related litigation together. A committee member asked whether the bill would require litigants to travel; witnesses said many circuits (about 16 or 17) have business dockets and that parties can use forum-selection clauses in contracts.

Judge and practitioner testimony framed the bill as a technical, efficiency-focused change to reduce duplicative litigation and to keep related business adjudications and enforcement together in the business-court system.

Committee members did not take a final vote on HB 4840 during this hearing.