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Keywords

contractplaintiffdefendantattorneydiscoverytrialmotionsummary judgmentfiduciarywrongful terminationcorporationfiduciary dutybreach of fiduciary dutymotion for summary judgmentattorney-client privilege
plaintiffdefendantattorneyfiduciarycorporationfiduciary dutybreach of fiduciary duty

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Fassihi v. Sommers, Schwartz, Silver, Schwartz & Tyler, P.C., 107 Mich.App. 509, 309 N.W.2d 645

Facts

The plaintiff, a radiologist and 50% shareholder of Livonia Physicians X-Ray, P.C., was ousted from the corporation at the request of his partner, Dr. Lopez. The defendant attorney, Donald Epstein, was involved in the ouster process and delivered a letter to the plaintiff claiming termination of his interest in the corporation. The plaintiff alleged that the attorney failed to disclose his dual representation of both the corporation and Dr. Lopez, which led to his wrongful termination and loss of medical staff privileges at St. Mary's Hospital.

On February 22, 1977, plaintiff filed a verified complaint and sought relief under the authority of GCR 1963, 908. In his complaint, plaintiff asserted that he was a 50% shareholder, officer, and director of Livonia Physicians X-Ray, P.C., a professional medical corporation.

Issue

The main legal issues were whether an attorney-client relationship existed between the plaintiff and the defendant, and whether the defendant could assert attorney-client privilege against the plaintiff regarding communications about the ouster.

We start our analysis by examining whether an attorney-client relationship exists between plaintiff and defendant.

Rule

The court ruled that the attorney-client relationship exists between the attorney and the corporation, not the individual shareholders, and that fiduciary duties may still exist even without an attorney-client relationship. Additionally, the attorney-client privilege cannot be asserted against a member of the corporate control group regarding communications made on behalf of the corporation.

A corporation exists as an entity apart from its shareholders, even where the corporation has but one shareholder.

Analysis

The court analyzed the nature of the relationship between the plaintiff and the defendant, concluding that while no formal attorney-client relationship existed, the defendant still owed fiduciary duties to the plaintiff as a 50% shareholder. The court found that the defendant's failure to disclose his dual representation and the contract between Dr. Lopez and St. Mary's Hospital constituted a breach of fiduciary duty and fraudulent concealment.

Although we conclude that no attorney-client relationship exists between plaintiff and defendant, this does not necessarily mean that defendant had no fiduciary duty to plaintiff.

Conclusion

The court affirmed the trial court's denial of the defendant's motion for summary judgment, reversed the denial of the plaintiff's motion to compel discovery, and remanded the case for further proceedings consistent with its opinion.

Affirmed in part, reversed in part and remanded for proceedings consistent with this opinion.

Who won?

The plaintiff prevailed in part, as the court recognized the existence of a cause of action for breach of fiduciary duty and fraudulent concealment, allowing the case to proceed.

The court held that: (1) no attorney-client relationship existed between plaintiff and defendant; (2) complaint stated a cause of action for breach of fiduciary duty; (3) complaint stated a cause of action for fraudulent concealment.

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