A New Lawsuit Vs. PulteGroup Ties To Dismissal Of Senior Exec

A Michigan-based law firm announced it filed court documents in Michigan's 30th Circuit Court, Lansing, MI, on May 1, 2023, alleging that PulteGroup broke Michigan state laws requiring public corporations to allow shareholders deep access to strategic level records and details on the inner workings of the enterprise. The court filing connects with the termination last December of a strategic-level executive who – prior to his exit – was in line for an imminent promotion to Chief Operating Officer of the Fortune 500 company.

The May 1st lawsuit alleges the nation's No. 3-ranked homebuilding enterprise has failed to comply with Michigan law stating that public companies incorporated in the state must provide – in response to company shareholders' demand -- information, data, and records pertinent to the enterprise's performance and fiduciary duty for their inspection.

At issue, according to the filing, is an unsatisfactory amount of public disclosure around the company's handling of a probe and dismissal of C-suite track executive Brandon Jones, who was found to have violated PulteGroup's code of conduct and business ethics.

According to a prepared press release about this week's legal action:

The lawsuit seeks the transparent release of information from the company to shareholders, pursuant to the Michigan Business Corporations Act, related to its recent internal investigation of questionable behavior by top executives at the company.

The investigation concerns whether PulteGroup and certain of its officers and/or directors have engaged in unlawful business practices in relation to the oversight of the Board of Directors of PulteGroup.

Reports of violations of the Company’s Code of Ethical Business Conduct, due to the use of fake Twitter accounts to harass others by at least one former senior executive, led to that employee’s termination from PulteGroup.  In addition, the Company subsequently reported the termination of the former Director of Human Resources.

Court filings include an "Exhibit A" letter addressed to PulteGroup chairman of the board Thomas Folliard, and to company counsel, demanding access to and inspection of 11 bulleted documents, presentations, statements, texts, phone records, and social media account information related to the company's employee investigation and a series of inferred corporate and individual consequences of the probe.

The state Business Corporation Act law the suit references as validation for its claim states:

Any shareholder of record, in person or by attorney or other agent, shall have the right during the usual hours of business to inspect for any proper purpose the corporation's stock ledger, a list of its shareholders, and its other books and records, if the shareholder gives the corporation written demand describing with reasonable particularity his or her purpose and the records he or she desires to inspect, and the records sought are directly connected with the purpose. A proper purpose shall mean a purpose reasonably related to such person's interest as a shareholder. The demand shall be delivered to the corporation at its registered office in this state or at its principal place of business. In every instance where an attorney or other agent shall be the person who seeks to inspect, the demand shall be accompanied by a power of attorney or other writing which authorizes the attorney or other agent to act on behalf of the shareholder.

PulteGroup, in a statement responding to the announced May 1st lawsuit, states:

PulteGroup values the trust shareholders place in our company. As such, we responded multiple times to this inquiry and actively worked to validate the request for information. Despite our ongoing requests for even basic information, the plaintiff’s law firm is unable or unwilling to provide appropriate proof their client owns stock in PulteGroup required by Michigan law. We are willing to work toward an appropriate resolution and implore all parties involved to do the same. In working on behalf of all shareholders, we will follow the applicable laws as clearly defined but we must also defend against unlawful access to confidential information to further their – or a third party’s – objectives unrelated to the proper interest of a shareholder."

At issue are questions – both in this May 1st lawsuit filed by Michigan-based Miller Law Firm P.C., and in ongoing legal efforts stemming from Pulte-founder William J. Pulte's grandson Bill Pulte's original filing against Brandon Jones for personal and reputational harm via a series of intentionally undermining, mean, and bullying Twitter posts – of who, among PulteGroup senior executives, knew and discussed what and when as the case came to light.

[Disclosure: Pulte Capital Partners, a Bill Pulte company, is one of The Builder's Daily's 'Friend' partners, dating from December 2021. This involves a small financial payment in return for an agreed-upon level of corporate logo promotion and website acknowledgment. This agreement has no bearing or impact on editorial content.]

In a January follow to the story, suggesting fallout of the original Brandon Jones lawsuit could potentially spread from an individual to a corporate matter, we wrote:

An ongoing bone of contention centers on William J. Pulte's original assertion that PulteGroup should bring on an independent third-party law firm to investigate the the Brandon Jones matter. Gordon's letter to Sheldon states:

'Did your access to confidential information transmitted to the Board of Directors contribute to your recommendation of utilizing King & Spalding LLP to conduct an investigation of the allegations of the lawsuit, instead of hiring an independent law firm for the investigation into the alleged actions of Brandon Jones (and potential co-conspirators)?'

While Bill Pulte has called on PulteGroup executive leadership to conduct an independent, third-party investigation into Jones' social media smear campaign and has made requests for executive records, his legal proceedings have focused on individuals rather than specifically alleged wrongdoing at the corporate level.

At The Builder's Daily's request this morning, Bill Pulte's statement today reads:

... it has been a living nightmare as CEO Ryan Marshall and Board Chairman Thomas Folliard stonewall and block access to the alleged investigation’s report. Several members of the Pulte Family have asked for a copy of the report into Jones’ scheme so that the family could assess liability, civil or criminal, protecting both the family and shareholders.

Now, a shareholder steps forward, sharing the concerns of the Pulte Family and is attacked by Ryan Marshall’s Management team.

The Pulte Family stands in support of all legitimate efforts to make public the findings of the investigations into Brandon Jones and other executives and will assess how to be helpful in embodying William J. Pulte’s 'do the right thing,' axiom.

Stay tuned.