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STATE OF MICHIGAN

IN THE 37 CIRCUIT COURT FOR THE COUNTY OF CALHOUN


161 E. Michigan Ave. Battle Creek, MI 49014 (269) 969-6518

Candice Tyler and John Debay,


Plaintiffs, Hon. Sarah S. Lincoln
vs. Docket No. 15-0846 NO
Narconon Freedom Center, et al,
Defendants.

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FINDING
Defendant Narconon Freedom Center (hereafter NFC) seeks summary disposition in the

instant case pursuant to MCR 2.116 (C)(7) and (C)(8). Defendants first argue that Plaintiffs'
claim is barred by a release that Defendant claims Candice Tyler executed upon entry into their
rehabilitation program.
Plaintiffs' response contains affidavits from Plaintiffs Tyler, Debay and a former
employee of the NFC. These affidavits create sufficient question as to the execution and
accuracy of the release in question to deny NFC's request for summary disposition pursuant to
MCR 2.116 (C)(7). The question of whether or not a valid release was executed and applies in

the instant case will be left to the jury.


Defendant NFC further argues that summary disposition should be granted pursuant to

MCR 2.116 (C)(8). A motion under MCR 2.116 (C)(8) should be granted only when the claims
are "so clearly unenforceable as a matter of law that no factual development could possibly
justify recovery. Further, courts may only consider only the pleadings when deciding a motion

based on MCR 2.116 (C)(8). MCR 2.116 (G)(5). A review of the pleadings in the instant case

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does not support Defendant's allegation that Plaintiffs have failed to state claims upon which
relief can be granted. Because "all well-pleaded allegations are accepted a true, and construed on

the light most favorable to the non-moving party", the Plaintiffs have included in their pleadings
sufficient facts and allegations of damages to allow the instant case to be heard by a jury.
Therefore, Defendant Narconon Freedom Center's motion for summary disposition is denied in
its entirety.

Defendant Narconon Eastern United States (hereafter NEUS) seeks summary disposition
in the instant matter under two theories. First, NEUS claims that summary disposition should be

granted pursuant to MCR 2.116 (C)(l), due to lack of personal jurisdiction.


Pursuant to MCL 600.711, Michigan courts may exercise general personal jurisdiction
over corporations that are engaged in "[t]he carrying on of a continuous and systematic part of its

general business within the state." "The plaintiff bears the burden of establishing jurisdiction
over the defendant but need only make a prima facie showing of jurisdiction to defeat a motion
for summary disposition. The affidavits, together with any other documentary evidence
submitted by the parties, must be considered by the court. All factual disputes for the purpose of

deciding the motion are resolved in the plaintiffs (nonmovant's) favor. " Jeffrey v Rapid
American Corp, 448 Mich 178, 184 (1995).
In the instant case, Plaintiffs have presented a prima facie case establishing personal
jurisdiction. Applying the court's analysis King v. Ridenour, 749 F. Supp 2d 648 (E.D. Mich.
2010), a case provided by Defendant, a defendant who does not maintain "offices, personal or
real property; it has never commenced litigation in any court in Michigan; it has never advertised
in Michigan, except insofar as it maintains a website accessible to Michigan residents" does not

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demonstrate that it carries on business in a continuous and systematic fashion. However, these

facts are significantly different that those presented by Plaintiffs in the instant case.
In the instant case, NEUS admits by way of affidavit that it maintains the website that is
described in detail by Plaintiffs. Although NEUS claims that the website is "passive" and
"accessible to anyone in the world", it does not address by way of affidavit the specific

allegations made by Plaintiffs regarding its targeting of Michigan citizens. In the instant case, the
website advertises a drug treatment center located within the state. Further, the website
specifically advertises Michigan drug rehabilitation. Once a user selects the state of Michigan,
the website provides detailed information about the Narconon Freedom Center. The site further
urges the user to contact them regarding the Michigan facility. Therefore, Defendant NEUS's

motion for summary disposition pursuant to MCR 2.116 (C)(l) is denied.


Defendant NEUS further argued that summary disposition should be granted because the
is no genuine issue of material fact related to the issue of liability. Based upon a review of the
facts, and acknowledging that the facts must be viewed in the light most favorable to the nonmoving party, it is clear that there is a question of material fact related to the issue of damages.

Defendant NEUS's motion for summary disposition is denied as itrelatedtoMCR2.116(C)(10).


Finally, Defendants Narconon International (hereafter, N1) and Association of Better

Living and Education (hereafter, ABLE) seek summary disposition pursuant to both MCR 2.116
(C)(l) and (C)(10). Plaintiff alleges that this court has personal jurisdiction over N1 and ABLE
because they do business in Michigan through an alter ego - NFC.
Generally, parent and subsidiary corporations are treated as separate entities. For the

corporate veil to be pierced, the plaintiff must allege facts that show (1) that the corporate entity

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is a mere instrumentality of another entity or individual, (2) that the corporate entity was used to
commit fraud or a wrong, and (3) that, as a result, the plaintiff suffered an unjust injury or loss.

RDM Holdings, Ltd v Continental Plastics Co, 281 Mich App 678, 715 (2008). In this instance,
it is clear that there are significant connections between NFC and NI/ABLE. However,
Defendants' properly cited the factors to be considered when determining the existence of an
alter ego relationship. These include: if the parent and subsidiary share principal offices, if they
share board members or executives, if all of the parent's revenue comes from the subsidiary's

sales, if all capital for the subsidiary is provided by the parent, if the subsidiary purchases
supplies exclusively from the parent, if the subsidiary is seriously undercapitalized, if the parent
regularly provided gratuitous services to the subsidiary, if the parent handled the subsidiary's

payroll, if the parent directed the policies and decisions of the subsidiary, and if the parent
considered the subsidiary's project to be its own.
In the instant case, there has been evidence presented by Plaintiffs to support a finding

that NI/ABLE may direct the policies and decisions of the subsidiary. However, that is simply
one factor that must be considered. Overall, Plaintiffs have failed to sufficiently address the
remaining factors. Therefore, Defendants NI/ABLE motion for summary disposition pursuant to

MCR 2.116 (C)(l) is granted.

IT IS SO ORDERED. ^-

8\ 3'-^ | D C_
Date Sarah S. Lincoln

Circuit Court Judge

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