A recent published decision from the Michigan Court of Appeals underscores a critical issue for LLC members, heirs, and anyone asserting ownership in a Michigan limited liability company: bank documents cannot be relied upon to prove LLC membership because those are documents of a third-party, not “of the limited liability company” as the statute requires.
In Estate of James D. Branch v. Kevin Rudolph, Docket No. 368071, the court held that a bank signature card listing an individual as a “member” of a limited liability company is not sufficient to establish that person’s ownership interest under Michigan’s Limited Liability Company Act (MLLCA). This case has important implications for business owners, estate administrators, and litigators navigating membership and ownership disputes in Michigan LLCs.
Background
After the death of James Branch, co-member of Safe Transportation, LLC (STL), his estate sued Kevin Rudolph — brother of the surviving member, Lee Rudolph — alleging Kevin wrongfully withdrew funds from STL’s bank accounts. The estate claimed Kevin was a de facto member based on a Chase Bank signature card that labeled him a “member” on STL’s accounts.
Kevin and Lee submitted affidavits denying any ownership interest for Kevin and explaining that Kevin accessed the accounts at Lee’s direction to pay company expenses and keep STL operating after James’s death. The estate presented no evidence of an operating agreement, member vote, assignment, or LLC-generated documents reflecting Kevin as a member — only the Chase form.
The Michigan Court of Appeals affirmed summary disposition for Kevin, holding that third-party documents cannot establish LLC membership under Michigan’s LLC Act. Only LLC-originated records, such as internal statements, tax filings, or a signed operating agreement, can confer member status. The estate also failed to provide evidence that Kevin misused the funds or personally benefited — undermining its claims for conversion, fraud, and unjust enrichment.
Key Holding: Only Certain Documents Establish LLC Membership
Under the Michigan Limited Liability Company Act, an individual can only be deemed a member of an LLC if their membership is reflected in:
- An operating agreement;
- A unanimous vote of members if no operating agreement exists;
- An assignment of a membership interest;
- A plan of merger or conversion; or,
- The LLC’s own records, tax filings, or written statements.
Because none of these were presented, the court held there was no issue of fact as to Kevin’s non-member status — even if the bank mistakenly labeled him otherwise.
Bottom Line: Even if a bank or a different third-party call someone a “member,” that label has no legal weight under the MLLCA unless it originates from the LLC itself.
Practical Implications
- LLC Members: Document Ownership Clearly
Always execute and maintain a written Operating Agreement.
Keep clear, internal written records, including member consents and resolutions.
Don’t rely on external documents, like bank forms, to establish ownership.
- Personal Representatives and Heirs: Know What to Look For
When handling estates involving LLCs, request the company’s internal records and tax documents — not just third-party forms.
- Litigators: Prove Membership With the Right Evidence
If a case turns on whether someone is a member of an LLC, use internal company documentation. Bank or vendor records are not enough.
Conclusion
Estate of Branch confirms that LLC ownership in Michigan is strictly defined by statute. Without LLC-originated documents identifying someone as a member, external representations — no matter how formal they appear — will not establish ownership. For business owners, fiduciaries, and litigators, this case is a timely reminder to ensure proper LLC governance and documentation are in place.