Id. 4. These parties' claims and counter-claims are governed by Michigan law. McElwee v. Wharton, 19 F. Supp.2d 766, 773 (W.D.Mich. 1998). 5. Under Michigan law, a person may be liable as a "partner by estoppel" for not only reliance upon a false representation of partnership that the person has induced, but also reliance that others have induced with the consent of the person.
b. Extensions of the no right of private action under FICA Courts which have concluded that FICA does not provide a private right action have also held that related non-statutory claims, based upon the same misclassification theory, are also foreclosed. Noting its agreement with the Salazar court that no private right of action was available to the plaintiffs under FICA, the court in McElwee v. Wharton, 19 F. Supp. 2d 766, 771 (W.D. Mich. 1998) also foreclosed plaintiff's attempt to proceed on an equitable theory of restitution: Although Plaintiff wishes to proceed on an equitable theory of recovery rather than under a statute, the rationale in Salazar applies equally to a restitution claim.
(6/22/05 Ord. at 13, docket #51.) See also McElwee v. Wharton, 19 F. Supp. 2d 766, 772 (W.D. Mich. 1998); Daratony v. Bumgardner, No. 202562, 1998 WL 1988903, at *3 (Mich.App. Nov. 13, 1998). As with any equitable estoppel, however, the person who claims partnership by estoppel must have been reasonable in his or her reliance on the actions of another.
Several district courts have found preemption in this context. See, e.g. McElwee v. Wharton, 19 F.Supp.2d 766, 771 (W.D.Mich. 1998) ("In light of the available legal remedies, there is no need to recognize an equitable right for restitution as to federal employment taxes."). We agree with PLANCO that permitting Umland's suit to proceed with respect to the 2000-03 damages she allegedly experienced would interfere with the IRS's administrative scheme for handling such disputes.
See 26 U.S.C. § 7422; Crouch v. Guardian Angel Nursing, Inc., No. 3:07-cv-541, 2009 WL 3738095, at *7 (M.D. Tenn. Nov. 4, 2009) ("The court there found that there was 'no need to recognize an equitable right for restitution as to federal employment taxes' in light of other available legal remedies, namely the plaintiff's ability to urge the IRS to enforce the legal obligations of the employer to pay the taxes, the ability to file an administrative claim for a refund from the IRS under 26 U.S.C. § 6511(a), and the ability to file suit under 28 U.S.C. § 1345(a) in the event the request for a refund is denied." (citing McElwee v. Wharton, 19 F. Supp. 2d 766, 771 (W.D. Mich. 1998))). The Court also notes that, contrary to Plaintiff's assertions, the IRS is not an innocent third party.
Partnership by estoppel requires (1) that a person holds himself out to another as a partner in a partnership and (2) that the other detrimentally relies on this representation. See McElwee v. Wharton, 19 F.Supp.2d 766, 772 (W.D. Mich. 1998).
But numerous jurisdictions have either rejected that limited reading of the phrase or have read “given credit” to mean giving credence to a representation of a partnership by detrimentally relying on the representation. See, e.g., Pinnacle Port Cmty. Ass'n v. Orenstein, 872 F.2d 1536, 1540–41 (11th Cir.1989) (providing that Florida courts have not limited partnership by estoppel to matters involving financial credit and construing credit to mean detrimental reliance on the purported partnership); Glazer v. Brookhouse, 471 F.Supp.2d 945, 948–49 (E.D.Wis.2007) (concluding that the Wisconsin Supreme Court has not limited the phrase “given credit” to financial credit and that the phrase means to detrimentally rely on the representation of a partnership); see also McElwee v. Wharton, 19 F.Supp.2d 766, 772 (W.D.Mich.1998) (construing Michigan's partnership-by-estoppel statute to apply to a party who detrimentally relies on a representation of a partnership by contracting with the purported partnership); Four Star Capital Corp. v. Nynex Corp., 183 F.R.D. 91, 105–06 (S.D.N.Y.1997) (acknowledging that federal and New York courts have interpreted “given credit” to mean financial credit or a reliance on the existence of a represented partnership); Sitchenko v. DiResta, 512 F.Supp. 758, 761–62 (E.D.N.Y.1981) (holding that one gave credit to a purported partnership by entering into an employment agreement in reliance on the representation of a partnership). These authorities indicate that the phrase “given credit” is one that is reasonably understood as not being limited to the extension of financial credit.
But numerous jurisdictions have either rejected that limited reading of the phrase or have read “given credit” to mean giving credence to a representation of a partnership by detrimentally relying on the representation. See, e.g., Pinnacle Port Cmty. Ass'n, Inc. v. Orenstein, 872 F.2d 1536, 1540–41 (11th Cir.1989) (providing that Florida courts have not limited partnership by estoppel to matters involving financial credit and construing credit to mean detrimental reliance on the purported partnership); Glazer v. Brookhouse, 471 F.Supp.2d 945, 948–49 (E.D.Wis.2007) (concluding that the Wisconsin Supreme Court has not limited the phrase “given credit” to financial credit and that the phrase means to detrimentally rely on the representation of a partnership); see also McElwee v. Wharton, 19 F.Supp.2d 766, 772 (W.D.Mich.1998) (construing Michigan's partnership-by-estoppel statute to apply to a party who detrimentally relies on a representation of a partnership by contracting with the purported partnership); Four Star Capital Corp. v. Nynex Corp., AGS, 183 F.R.D. 91, 105–06 (S.D.N.Y.1997) (acknowledging that federal and New York courts have interpreted “given credit” to mean financial credit or a reliance on the existence of a represented partnership); Sitchenko v. DiResta, 512 F.Supp. 758, 761–62 (E.D.N.Y.1981) (holding that one gave credit to a purported partnership by entering into an employment agreement in reliance on the representation of a partnership).
But numerous jurisdictions have either rejected that limited reading of the phrase or have read "given credit" to mean giving credence to a representation of a partnership by detrimentally relying on the representation. See, e.g., Pinnacle Port Cmty. Ass'n, Inc. v. Orenstein, 872 F.2d 1536, 1540-41 (11th Cir. 1989) (providing that Florida courts have not limited partnership by estoppel to matters involving financial credit and construing credit to mean detrimental reliance on the purported partnership); Glazer v. Brookhouse, 471 F. Supp. 2d 945, 948-49 (E.D. Wis. 2007) (concluding that the Wisconsin Supreme Court has not limited the phrase "given credit" to financial credit and that the phrase means to detrimentally rely on the representation of a partnership); see also McElwee v. Wharton, 19 F. Supp. 2d 766, 772 (W.D. Mich. 1998) (construing Michigan's partnership-by-estoppel statute to apply to a party who detrimentally relies on a representation of a partnership by contracting with the purported partnership); Four Star Capital Corp. v. Nynex Corp., AGS, 183 F.R.D. 91, 105-06 (S.D.N.Y. 1997) (acknowledging that federal and New York courts have interpreted "given credit" to mean financial credit or a reliance on the existence of a represented partnership); Sitchenko v. DiResta, 512 F. Supp. 758, 761-62 (E.D.N.Y. 1981) (holding that one gave credit to a purported partnership by entering into an employment agreement in reliance on the representation of a partnership). These authorities indicate that the phrase "given credit" is one that is reasonably understood as not being limited to the extension of financial credit.