The Miller Law Firm P.C. filed a lawsuit on behalf of PulteGroup shareholder Betty Trester in connection with its investigation of claims of “unlawful business practices at PulteGroup.”
The lawsuit leans on a clause in the Michigan Business Corporations Act stating shareholders of records are entitled to inspect the corporation’s stock ledger, a list of its shareholders, and its other books and records, so long as the shareholder has provided a “proper purpose” for requesting the documents. According to the Act, a proper purpose “shall mean a purpose reasonably related to such person’s interest as a shareholder.”
The lawsuit centers around the home builder’s lack of public disclosure surrounding the firing of Brandon Jones prior to his appointment as chief operating officer. Jones, the company’s then-senior vice president of field operations, was due to become COO in January before the Pulte family filed a civil complaint against him, alleging harassment and defamation of the late William Pulte, company founder; Bill Pulte; and the family of Bill Pulte through a network of Twitter bots.
At the time of Jones’ firing, the company said the decision came after an independent investigation that determined Jones had violated the company’s code of ethical business conduct. The investigation, led by King & Spalding, determined there was “no evidence of involvement or knowledge of [Jones’] conduct by any other company employees.”
The lawsuit seeks the transparent release of information from PulteGroup to shareholders, pursuant to the Michigan Business Corporations Act, related to its internal investigation into the “questionable behavior” by top executives at the company. According to a news release announcing the lawsuit, the investigation concerns whether PulteGroup and certain officers and/or directors “have engaged in unlawful business practices in relation to the oversight of the board of directors of PulteGroup.”
The lawsuit states that Trester requested a release of the internal investigation documents to her on March 15, 2023. Additionally, the request included “all communications and presentations by any PulteGroup executive about William J. Pulte III and William J. Pulte IV or any relative of them since January 1, 2022;” documents relating to the departure of former senior vice president of human resources Michelle Hairston; and documents relating to the deactivation of the personal Twitter account of executive vice president Todd Sheldon.
According to The Miller Law Firm, PulteGroup “refused to release the requested information.” In a filing with Ingham County’s 30th Circuit Court in Michigan shared with BUILDER, PulteGroup says the company responded within five days of receiving the request and requested proof that Trester “is and has been a shareholder of record for all the relevant times.”
PulteGroup affirms that Trester “lacks standing because she is not a shareholder of record” as required under the Michigan Business Corporations Act and she “has not articulated a proper purpose as required under the statue or requested records directly connected with the stated purpose.” PulteGroup argues that, the shareholder status of Trester notwithstanding, “proper purpose” requires more than “idle curiosity or mere speculation of mismanagement.” The home builder’s filing says records demand brought in “bad faith or for improper purposes must be denied.”
“Here, there is a connection between Trester and William J. Pulte (Bill Pulte), the grandson and namesake of PulteGroup’s founder William J. Pulte, and as readily evident from the records demand and the Complaint, it appears Trester is acting as a proxy in this case for Bill Pulte to improve or assist his position in a pending case in Florida against former PulteGroup executive Brandon Jones and/or his general public relations campaign against PulteGroup,” the filing reads.
