PulteGroup Legal Plot Thickens As Firm Moves To Dismiss Suit

John McManus -

PulteGroup attorneys last week countered a lawsuit filed against the homebuilding firm in Michigan's 30th Circuit Court, Lansing, MI, early last month, asking the court to disqualify and dismiss the lawsuit on several grounds.

The 77-page filing reflects not only a defense of PulteGroup from allegations it violated Michigan state laws. It also carries stirrings of a stiffer response to a concurrent and intertwined campaign of criticism and suspicion of wrongdoing heaped on top PulteGroup executives by the late company founder's grandson, William J. Pulte.

The plot lines are complicated. The disputes and legal proceedings are layered, with numerous points of origin. The matters at issue include reputation at a family-name level, paralleling and sometimes conflicting with shareholders' interests in a public enterprise that bears that family name, and proper business conduct at an individual and corporate level. Untangling all the personal, legal, and corporate areas of vibration here, and getting ultimately to a glide-path forward for strategic management the nation's No. 3-ranked homebuilding enterprise will likely take time to resolve the criss-cross of separate but related disputes.

This one starts with Betty Trester – reportedly of Beavercreek, OH – on behalf of whom Miller Law Firm, P.C., filed a complaint on May 3, accusing the company of violating laws governing businesses incorporated in the state of Michigan.

[Here's the original May 3, 2023 TBD account of the case brought by Michigan-based Miller Law Firm, P.C., on behalf of plaintiff Betty Trester), identified in the filing as a PulteGroup shareholder].

In its own filing last week on June 2, PulteGroup responded to the Betty Trester suit's allegations of wrongdoing. The filing requested that Chief Circuit Judge Joyce Draganchuk dismiss the Trester complaint.

To review, TBD reported the gist of the Trester case as follows:

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." – The Builder's Daily, May 3, 2023

PulteGroup executives' position on the Brandon Jones matter is 1) that it dismissed Jones summarily after it determined he broke the company's rules of conduct, and 2) that it resolved through an independent internal investigation that Jones "acted alone" in his breach of those rules.

PulteGroup attorneys, Dykema Gossett PLLC, contest the validity of the Betty Trester case, questioning both the plaintiff's claim as a PulteGroup shareholder "of record" during a timespan applicable to the case. Also, they take issue with the Trester suit's scope and valid purpose behind its demand for access to PulteGroup corporate communications, records, and initiatives.

PulteGroup attorneys outlined and supported five assertions as reasons Judge Draganchuk might consider to dismiss the complaint filed by Miller Law Firm on behalf of Betty Trester:

  • Questions as to whether Trester meets legal requirements as a "shareholder of record."
  • Argument that the Trester case fails in its statement of its reason for demanding access to privileged company information, instead basing its demand on unproven, speculated wrongdoing. In other words, the law bars "fishing expeditions" based on hearsay and unsupported suspicion.
  • Given questions about both Trester's standing as a shareholder and the origin and purpose of her complaint relative, PulteGroup asks the judge, at a minimum for time for "discovery" to sort out conflicting "factual" assertions.
  • If the judge does not agree to dismiss the case based on the motion, PulteGroup notes that the stated demand for access to records far overreaches the scope of the complaint as it relates to the termination of former PulteGroup Senior VP for field operations, Brandon Jones due to his violation of company code of conduct and ethics policy.
  • Lastly, the PulteGroup motion requested a denial of attorney's fee assignment to the firm in light of its evidenced willingness to work in good-faith with the plaintiff when the matter first arose.

The PulteGroup attorneys' filing delves deep into both the case law around thresholds required at a "shareholder of record," whether the plaintiff's statement of purpose for the demand for "books and records" qualifies under law – i.e. "a credible basis" for the demand vs. unsupported speculation, etc.

As well, the PulteGroup raises a question as to whether Trester's complaint and demand for books and records is in "good faith" in its stated purpose. The company suggests that evidence shows that Trester may – directly or indirectly – have acted to assist efforts of William J. Pulte (the grandson of company founder Bill Pulte), in efforts to put pressure on company management. A series of Twitter postings from Trester to William Pulte, and a response to at least one of them is included in exhibits provided as part of the PulteGroup motion for dismissal.

As for William Pulte, he remains unsatisfied with the validity of corporate attorney King & Spalding LLP's engagement to investigate Jones' misconduct. In his view, only an independent 3rd party firm could have fairly determined whether or not Jones acted on his own, or communicated with other company officials about what he was doing to try to smear William Pulte's online reputation, or tried to hide evidence of who knew what when. So, he's turned up the heat in his own suggestions that Jones either did not act alone, or at least made others – including top executives – aware of his attempts to discredit the founder's grandson via a Twitter smear effort.

Upon learning of the PulteGroup motion to dismiss Trester's complaint, and evidently reviewing the company's filing, the founder's grandson William Pulte had this response.

Ryan Marshall's right-hand proxy, Brandon Jones, got fired by the PulteGroup Board of Directors because he was doing unethical and maybe worse behavior. While I support the employees of PulteGroup, I do not support Brandon Jones or Ryan Marshall, and their malicious and fraudulent attacks on the Pulte Family. How extraordinary that a Fortune 500 CEO, Ryan Marshall's paranoia is now enabling him to abuse shareholder funds to attack shareholders while his terminated right-hand-man used fake and stolen identities to attack the Pulte Family and others online. Our legal team is reviewing Ryan Marshall's improper mentions of me in their legal filing against a shareholder. I support transparency and believe that the company my family founded should release all relevant records to all shareholders, the public, and journalists - assuming Ryan Marshall has nothing to hide." – William J. Pulte