Helzer v. F Joseph Lamb Co. , 171 Mich. App. 6 ( 1988 )

Kelly, J.

Plaintiffs appeal the October 13, 1986, order granting summary disposition to defendants, F. Jos. Lamb Co., Ltd., and David P. Gammon, pursuant to MCR 2.116(C)(1), for lack of jurisdiction. Plaintiffs also appeal the December 19, 1986, order granting summary disposition to defendant Lamb Technicon Corporation pursuant to MCR 2.116(C)(10), no genuine issue of fact, the moving party being entitled to judgment as a matter of law. These two appeals have been consolidated, and we affirm in part and reverse in part.

The cases arise from the same incident. This is an automobile negligence action. On December 18, 1984, plaintiff Doris Helzer was struck by a van while crossing a street in Windsor, Ontario, Canada. The van was owned by defendant Wheels Leasing of Canada, leased by defendant F. Jos. Lamb Co., Ltd., and driven by defendant David P. Gammon, an employee of F. Jos. Lamb Co., Ltd. Defendant Wheels Leasing is not a party to this appeal. The other named defendant is Lamb Technicon Corp., a Michigan corporation and the parent corporation of F. Jos. Lamb Co., Ltd., a Canadian corporation. F. Jos. Lamb Co., Ltd., is a wholly owned subsidiary of Lamb Technicon Corporation.

The two Lamb corporations share several common board members and officers. Both companies manufacture transfer line systems. Approximately ten percent of the Canadian corporation’s sales are to the U. S. parent corporation. All of the Canadian entity’s corporate records and its accounting department are located in Canada, whereas the corporate records of the U. S. parent are kept at its Michigan headquarters. However, the two corporations are connected by a computer system and a courier is used to transport parts and inter-office mail between them on a daily basis.

Plaintiffs’ first argument is that the trial court erred in granting Lamb Technicon’s motion for summary disposition, on the basis that there existed no ground on which to pierce the corporate veil of subsidiary F. Jos. Lamb Co., Ltd. The basis for any liability in the parent corporation, pursuant to plaintiffs’ theory, is grounded upon plaintiffs’ assertion that the corporate veil of F. Jos. Lamb Co., Ltd., must be pierced because maintaining the fiction of its separate existence from the parent corporation is against public policy.

In Wells v Firestone Tire & Rubber Co, 421 Mich 641, 650; 364 NW2d 670 (1984), the Supreme Court discussed the efficacy of piercing the corporate veil:

We recognize the general principle that in Michigan separate entities will be respected. See Klager v Robert Meyer Co, 415 Mich 402; 329 NW2d 721 (1982). Finley v Union Joint Stock Land Bank of Detroit, 281 Mich 214; 274 NW2d [sic, NW] 768 (1937), and Gledhill v Fisher & Co, 272 Mich 353; 262 NW 371 (1935).

However, the fiction of a distinct corporate entity separate from the stockholders is a convenience introduced in the law to subserve the ends of justice. When this fiction is invoked to subvert justice, it is ignored by the courts. Paul v University Motor Sales Co, 283 Mich 587, 602; 278 NW 714 (1938). This of course means that, in general, even though Firestone is the parent company of Muskegon Firestone, its separate existence will be respected, unless doing so would subvert justice or cause a result that would be contrary to some other clearly overriding public policy. See, e.g., Cinderella Theatre Co, Inc v United Detroit Theatres Corp, 367 Mich 424; 116 NW2d 825 (1962).

Plaintiffs argue that not piercing the corporate veil in this instance would be contrary to public policy. Plaintiffs’ argument is based upon the fact that, if the corporate fiction is not ignored, plaintiffs’ only possible remedy will be found in a Canadian court, where recovery is limited by law. Plaintiffs contend that application of Canadian law would contravene Michigan’s strong public policy of ensuring the rights of its citizens.

However, the Supreme Court in Wells held that the corporate veil may be pierced when the corporate relationship involved is contrary to some "clearly overriding public policy.” We cannot conclude that there is a clearly overriding public policy to allow a Michigan resident, injured in a foreign jurisdiction by residents and entities of that foreign jurisdiction, to pierce a Canadian corporate veil in order to find a Michigan parent corporation liable. If this state had such an overriding public policy, the whole notion that corporations are separate entities from their owners would be destroyed. We affirm the decision of the trial court on this issue.

Plaintiffs also argue that the trial court erred in determining that it had no jurisdiction over F. Jos. Lamb Co., Ltd. We agree and reverse on this issue.

Michigan’s long arm statute provides in part:

The existence of any of the following relationships between a corporation and the state shall constitute a sufficient basis of jurisdiction to enable the courts of record of this state to exercise general personal jurisdiction over the corporation and to enable such courts to render personal judgments against the corporation.

(3) The carrying on of a continuous and systematic part of its general business within the state. [MCL 600.711; MSA 27A.711.]

Beyond this statutory requirement, in International Shoe Co v Washington, 326 US 310, 316; 66 S Ct 154; 90 L Ed 95 (1945), the Supreme Court held that due process requires that a defendant who is not present in the state must have certain minimum contacts with the foreign state for jurisdiction to be upheld.

Here, since F. Jos. Lamb Co., Ltd., regularly buys and sells parts in Michigan, sends a company courier to Michigan on a daily basis, and has a direct computer link-up with its Michigan parent corporation, we find that both Michigan’s statutory requirement and due process considerations are satisfied for general personal jurisdiction over this Canadian corporation in a Michigan court of law. On that basis we reverse the October 13, 1986, order of the trial court so far as F. Jos. Lamb Co., Ltd., is concerned.

However, we affirm the lower court decision so far as individual defendant David P. Gammon is concerned, finding that the trial court did not have either general personal jurisdiction or limited personal jurisdiction over this defendant. Plaintiffs rely on MCL 600.711(3); MSA 27A.711(3) for general personal jurisdiction. Since that statute applies only to jurisdiction over corporations, we find no merit in plaintiffs’ contention that it would apply to individual defendant Gammon.

We also find no limited personal jurisdiction over defendant Gammon. Although Gammon, acting as an agent for F. Jos. Lamb Co., Ltd., drove daily into Michigan, the accident that resulted in plaintiffs’ injuries took place in Canada. Although plaintiffs claim Gammon was on his way to Michigan, Gammon’s deposition does not support this conclusion. This accident had no connection with Michigan, other than the fact that plaintiffs were Michigan residents. Therefore, since the harm done did not arise out of acts due to the transaction of business in this state, and since the tort did not take place in this state, there is no basis for limited personal jurisdiction over either F. Jos. Lamb Co., Ltd., or its agent Gammon. MCL 600.715; MSA 27A.715.

We do not address the issue raised in the dissenting opinion. No claim of forum non conveniens was raised below and we decline to ingest that •issue on appeal.

Affirmed in part and reversed in part.

L. P. Borrello, J., concurred.