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A Better Partnership
September 09, 2009

COA Opinion: Trial courts may not weigh evidence at the summary disposition phase and an affidavit containing more than conclusory allegations can create an issue of fact even if there is not great de

On September 8, 2009, the Court of Appeals published its opinion in Innovative Adult Foster Care, Inc. v. Ragin, reversing the circuit court's grant of summary disposition in favor of defendants, John and Mary Ragin, on Innovative Adult Foster Care's (ƒ''Innovativeƒ') declaratory-judgment action for the purpose of resolving which of two competing factions had lawful control of Innovative's board of directors.' The court determined that a sufficiently detailed affidavit and one corporate filing listing additional directors created a genuine issue of material fact as to the size and membership of the board.'

The four original incorporators of Innovative were Gene Harris, his wife Rene Harris, John Ragin, and his wife Mary Ragin.' After Gene Harris' death, a dispute arose among the remaining incorporators as to the management of the business.' Rene Harris called a special board of directors meeting, and' informed those present' that seven additional directors had been elected to the board at the suggestion of her late husband, before his death, by the unanimous consent of the four original incorporators.' The Ragins protested the validity of the meeting, denied' having elected additional directors, ' and did not consent to' Harris' purported election of directors.' The Ragins then called their own special board of directors meeting, not attended by Rene Harris, at which they and the others present voted to elect seven different directors to the board.

Rene Harris' brought a declaratory-judgment action for the purpose of resolving which faction had lawful control of Innovative's board of directors.' The Ragins moved for summary disposition.' The circuit court granted the Ragins' motion.

On appeal, the court concluded that a genuine issue of material fact existed as to which faction had control of Innovative.' The court noted that although the Ragins submitted substantial evidence indicating that the four original incorporators never had agreed to increase the size of the board, the evidence submitted by Rene Harris, including a sufficiently detailed affidavit and one corporate filing listing additional directors, created a genuine issue of material fact.

On remand, the court also requested the circuit court to determine' whether Rene Harris received proper notice of the special meeting called by the Ragins.

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