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Michigan Supreme Court Issues Important Ruling in LLC Member Oppression Case

In Frank v. Linkner, decided on May 15, 2017, the Michigan Supreme Court made several important rulings involving limited liability company member oppression claims. First, the Court held that member oppression claims accrue under MCL 450.4515 when a plaintiff incurs a harm that is actionable, not when a plaintiff incurs a calculable financial injury. Therefore, if events giving rise to member oppression have occurred, the claim accrues regardless of when monetary damages result. Further, if additional damages resulting from the same harmful conduct occur, the additional damages do not reset the plaintiff’s accrual date. The Court also held that MCL 450.4515 is a three-year statute of limitations and not a statute of repose, reasoning that there was no indication that the Michigan Legislature intended this statute to be a statute of repose. Finally, despite the three-year statute of limitations, a plaintiff bringing a claim for damages has only two years to bring a claim after plaintiff discovers the claim because the language of the statute requires the claim to be brought within three years of accrual or two years after discovery of the claim, whichever occurs first. In other words, the two year period commences once a plaintiff discovers or reasonably should have discovered the cause of action.

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