White v. JPMorgan Chase Bank NA et al

Filing 48

OPINION ; signed by Judge Robert Holmes Bell (Judge Robert Holmes Bell, kcb)

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
KENNETH L. WHITE,
Plaintiff,
File No. 1:10-cv-1031
v.
HON. ROBERT HOLMES BELL
JPMORGAN CHASE BANK, N.A.
and CITIBANK, N.A.,
Defendants.
/
OPINION
This matter is before the Court on Defendant JPMorgan Chase’s motion for summary
judgment. (Dkt. No. 33.) Included in Defendant’s motion is an objection to Kenneth L.
White as Plaintiff on the basis that Mr. White is not the real party in interest as required by
Fed. R. Civ. P. 17. Because the Court agrees that Plaintiff is not the real party in interest,
Plaintiff’s complaint will be dismissed.
Plaintiff Kenneth L. White was President and sole shareholder of Steigmeyer, Inc.
(Dkt. No. 1-2, Pl. Compl. ¶ 7.) In October of 2007, Plaintiff began negotiations on behalf
of Steigmeyer to sell Steigmeyer’s assets to a buyer. (Id. at ¶ 10.) According to Plaintiff, an
initial oral agreement was reached to sell Steigmeyer’s assets for $175,000. (Id. at ¶ 11.)
On October 10, the buyer obtained an official bank check from Defendant Chase Bank
in the amount of $75,000, payable to Plaintiff. (Id. at ¶ 15.) On October 11, “Plaintiff, as
president and sole shareholder of Steigmeyer, Inc., received from the buyer the $75,000

official bank check and thereupon deposited the check into Steigmeyer, Inc.’s bank account
with Defendant Chase Bank.” (Id. at ¶ 16).
Shortly

after

depositing

the

$75,000

check,

a

dispute

arose

between

Plaintiff/Steigmeyer and buyer over the terms of the asset sale. Plaintiff states that further
negotiations took place and that a new oral agreement was reached on October 14 which
preserved the alleged $175,000 purchase price. (Id. at ¶ 20.) On October 15, Steigmeyer and
buyer entered into a written contract for the sale of Steigmeyer assets for the price of
$100,000. Plaintiff maintains that the $100,000 written sale price was agreed to only after
confirmation by a Chase Bank employee that the prior $75,000 check had been deposited to
Steigmeyer’s account. Defendant maintains that the $100,000 written sale price was the total
purchase price. (Dkt. No. 34 at 1.)
It is undisputed that Plaintiff received and deposited a second check in the amount of
$100,000 to the Steigmeyer Chase Bank account. It is also undisputed that, on or about
October 17, 2007, Defendant charged back the $75,000 deposit from the first check,
apparently at the request of buyer. Plaintiff believes that Defendant’s refusal to honor the
initial $75,000 check is a violation of Michigan’s Uniform Commercial Code, while
Defendant maintains that Plaintiff’s action to recover the $75,000 cancelled check is an
attempt at double payment.
Among the several arguments advanced by Defendant in its motion is the contention
that Plaintiff is not the real party in interest to bring this suit. Federal Rule of Civil

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Procedure 17 states that “an action must be prosecuted in the name of the real party in
interest.” Defendant argues that Steigmeyer, Inc., not Plaintiff, is the real party in interest,
because the agreement for the sale of Steigmeyer’s assets was between Steigmeyer, Inc., and
the buyer.
Plaintiff believes that Defendant’s argument “borders on absurd” because, “if the
purchase money for the business was paid to Steigmeyer itself, Mr. White would essentially
be giving the business away, rather than selling it.” (Dkt. No. 43 at 5.) However, when a
corporation sells all or substantially all of its assets, it is the corporation that gives value, and
not the shareholder(s). M.C.L. 450.1753.
It is clear from the record that the agreement between Steigmeyer and buyer (Plaintiff
was not an individual party to the transaction) constituted an asset sale. The written
agreement is labeled “Agreement: Purchase and Sale of Business Assets.” (Dkt. No. 34-5,
Ex. E.) The contract does not contemplate the sale of Steigmeyer shares. (Id.) Rather, it
specifies the sale of categories of assets. Indeed, initialed revisions to the contract show that
certain categories of assets were excluded from the sale. (Id.) Nowhere does Plaintiff deny
that the agreement was an asset rather than a stock sale.
Although the $75,000 check which is the subject of this litigation was made out to
Plaintiff, not Steigmeyer, Plaintiff acknowledges that he accepted it “as president and sole
shareholder of Steigmeyer” and that he “deposited the check into Steigmeyer, Inc.’s bank
account.” (Dkt. No. 1-2, Pl. Compl. ¶ 16.) The alleged actionable wrong — Defendant

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charging back the initial $75,000 deposit — was committed against Steigmeyer, not Plaintiff.
The funds were removed from Steigmeyer’s account, and the real party in interest to recover
those funds is Steigmeyer.
Defendant raised its objection to Plaintiff as the real party in interest on June 8,
2011(Dkt. No. 34 at 9-12). As adequate time has passed since the raising of the Rule 17
objection, Plaintiff’s complaint will be dismissed for failure to prosecute in the name of the
real party in interest. It should be noted, however, that dismissal based on the plaintiff not
being the real party in interest generally does not bar a subsequent action by the real party in
interest. Gillig v. Nike, Inc., 602 F.3d 1354, 1362 (Fed. Cir. 2010).

Dated: November 27, 2011

/s/ Robert Holmes Bell
ROBERT HOLMES BELL
UNITED STATES DISTRICT JUDGE

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