UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

CH HOLDING COMPANY and

CH/BRAND PARKING ASSOCIATES,

Plaintiffs, Case Number 14-14430

v. Honorable David M. Lawson

MILLER PARKING COMPANY,

JAMES N. MILLER, JAMES N. MILLER

REVOCABLE TRUST UTA DATED

NOVEMBER 19, 1998, and MILLER

PARKING SERVICES, LLC,

Defendants.

___________________________________/

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART

PLAINTIFFS’ MOTION TO REMAND

Before the Court is the plaintiffs’ motion to remand, which addresses the defendants’ second

notice of removal. After the case was removed the first time under docket number 12-10629, the

Court found that several of the plaintiffs’ claims were precluded as a matter of law because the

bankruptcy trustee for the estate of Miller Parking Company, LLC (Miller Detroit) had the sole and

exclusive legal standing to pursue them. The Court therefore dismissed those claims and remanded

the remaining state law claims, which the Court found did not implicate the interests of the

bankruptcy estate. After the case was remanded, the plaintiffs amended their complaint, and the

defendants responded with a second notice of removal, contending that two of the claims in the

amended complaint run afoul of the same rules of law that precluded the plaintiffs from pursuing

the previously dismissed counts. Because adjudication of counts VIII and IX of the amended

complaint require the adjudicating court to determine whether certain funds were property of the

bankruptcy estate, those counts are “related to” the bankruptcy case, and therefore this Court has

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jurisdiction over those counts under 28 U.S.C. § 1334(b). The removal of the case was proper. The

Court will retain jurisdiction over those counts, but remand the remaining state law claims under 28

U.S.C. § 1367, because those counts do not relate to the bankruptcy or to the other counts. 

I.

On September 12, 2013, the Court filed an opinion and order in CH Holding v. Miller

Parking, case number 12-10629, granting in part the defendants’ motion for judgment on the

pleadings, dismissing counts I through VII, X, and XI of the complaint, and remanding the

remaining claims (counts VIII, IX, and XII through XIV) to the Oakland County, Michigan circuit

court. The plaintiffs filed a motion for reconsideration, and the James Miller defendants filed a

motion for relief under Rule 60 from the order of remand. After a considerable period of

forbearance jointly requested by the parties, due to their prolonged efforts to settle the case, the

Court filed an opinion and order on May 12, 2014 denying both motions. In denying the defendants’

motion, the Court noted that “[i]f the plaintiffs seek to amend their pleadings to add claims that

would implicate the Court’s bankruptcy jurisdiction by seeking directly to recover funds that are the

property of either the Bruce Miller or Miller Parking bankruptcy estates, then the defendants may

seek their relief by taking appropriate action to remove the dispute to a federal forum.” Op. & Order

[dkt. #74] at 6, CH Holding v. Miller Parking Company, No. 12-10629 (E.D. Mich. May 12, 2014).

On May 14, 2014, following protracted litigation regarding a proposed settlement between

the plaintiffs and certain defendants (“the Weinstein and Stein defendants”), the Court affirmed the

approval of the settlement by the bankruptcy court. Op. & Order [dkt. #14], In re Miller Parking,

case number 13-14963 (E.D. Mich. May 14, 2014). The Court later entered a stipulated order

dismissing all claims against the Weinsteins and Steins in the related matter of Lim v. Miller Parking

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Company, 11-14422. From the caption of the recently re-removed amended complaint in CH

Holding, it appears that all claims against the Weinsteins and Steins also were dismissed in the

Oakland County case (as was required by the partial settlement). Only the Miller Defendants (James

N. Miller and his various family trusts) now remain in CH Holding and in Lim v. Miller Parking.

Subsequently, in response to concerns raised by the defendants about the scope of the claims

presented in counts VIII and IX, the state court ordered the plaintiffs to file an amended complaint

expressing more precisely the nature of the recovery sought in those counts. In count VIII of their

first amended complaint for conversion against James N. Miller individually, the plaintiffs now

allege that James Miller, in his capacity as president and managing agent of Miller Detroit,

authorized payment to a law firm for the attorney’s fees incurred by Bruce Miller in defense of the

2004 CH Holding lawsuit in state court. The plaintiffs allege that James Miller had no legal

authority to spend Miller Detroit’s funds in that fashion, and they aver that some of those funds

came from parking revenues that should have been held in trust for CH Holding and CH/Brand. The

plaintiffs say that diverting those funds for attorney’s fee payments benefitted James Miller

personally, and as a result he is liable for statutory and common law conversion. 

Count IX alleges conspiracy against James Miller on the same factual premises as count VIII,

based on allegations that James N. Miller, Bruce Miller, and Miller Detroit acted together in their

scheme to use company funds to pay Bruce Miller’s attorney’s fees, instead of remitting “some or

all of the Parking Revenues to CH/Brand and [CH Holding].” Am. Compl. ¶ 47. 

On November 19, 2014, after the amended complaint was filed, the James Miller defendants

filed their present notice of removal on the ground that the claims in amended counts VIII and IX

“arise under” the Bankruptcy Code, 11 U.S.C. § 544(b), and “relate to” the administration of the

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Miller Detroit bankruptcy estate, because those counts seek the recovery of assets that ought

rightfully to be preserved for the estate and its creditors. In their motion to remand, the plaintiffs

argue that the challenged counts seek recovery solely against James N. Miller individually and do

not in any way implicate the bankruptcy estate.

II.

The plaintiffs contend that the case must be remanded because the original claims in counts

VIII and IX did not implicate the bankruptcy estate, and the amended complaint changes nothing

about the substance of those claims, but merely pleads additional factual detail to explain how the

alleged wrongs were accomplished. The defendants respond that the plaintiff’s amended claims do

implicate the property of the bankruptcy estate, because adjudication of the claims necessarily

requires a determination of the bankruptcy estate’s ownership of specific property. The defendants

also argue that if James N. Miller is to be held liable for wrongful payment of attorney fees in the

Oakland County (2004) lawsuit, then he has a right to seek contribution from the parties on whose

behalf at least some of those fees allegedly were paid, which, according to the amended complaint,

were Bruce Miller and Miller Detroit, both of which are in bankruptcy presently. The defendants

have the better argument, at least as to their first premise. 

The defendants, as the removing parties, must establish that the Court has subject matter

jurisdiction to adjudicate the case. Charvat v. EchoStar Satellite, LLC, 630 F.3d 459, 462 (6th Cir.

2010). A civil action brought in a state court may be removed to federal court if the federal court

would have had original jurisdiction. 28 U.S.C. § 1441(a). The party invoking the federal court’s

jurisdiction has the burden of establishing subject matter jurisdiction. Cleveland Housing Renewal

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Project v. Deutsche Bank Trust Co., 621 F.3d 554, 559 (6th Cir. 2010) (citing Hertz Corp. v. Friend,

559 U.S. 77, 96 (2010)). 

“A district court’s jurisdiction over bankruptcy cases and proceedings comes from 28 U.S.C.

§ 1334(b), which gives the district courts ‘jurisdiction of all civil proceedings arising under title 11,

or arising in or related to cases under title 11.’” In re Greektown Holdings, LLC, 728 F.3d 567, 577

(6th Cir. 2013). “The grant of jurisdiction over proceedings ‘related to’ the bankruptcy case is quite

broad.” Ibid. (citing Celotex Corp. v. Edwards, 514 U.S. 300, 307-08 (1995)). “The test for

determining whether a civil proceeding is related to bankruptcy is whether the outcome of that

proceeding could conceivably have any effect on the estate being administered in bankruptcy.” Ibid.

(citing Lindsey v. O’Brien, Tanski, Tanzer and Young Health Care Providers of Conn. (In re Dow

Corning Corp.), 86 F.3d 482, 489 (6th Cir. 1996)) (quotation marks and alterations omitted). “‘An

action is related to bankruptcy if the outcome could alter the debtor’s rights, liabilities, options, or

freedom of action (either positively or negatively) and which in any way impacts upon the handling

and administration of the bankrupt estate.’” Ibid. (quoting Lindsey, 86 F.3d at 489). “The mere fact

that there may be common issues of fact between a civil proceeding and a controversy involving the

bankruptcy estate does not bring the matter within the scope of section 1334(b).” Ibid. (quotations

and alterations omitted). “Instead, there must be some nexus between the ‘related’ civil proceeding

and the title 11 case.” Ibid.

“For the purpose of determining whether a particular matter falls within bankruptcy

jurisdiction, it is not necessary to distinguish between . . . proceedings ‘arising under,’ ‘arising in,’

and ‘related to’ a case under title 11 . . . . [I]t is necessary only to determine whether a matter is at

least ‘related to’ the bankruptcy.” In re Wolverine Radio Co., 930 F.2d 1132, 1142 (6th Cir. 1991). 

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The “related to” inquiry asks . . . whether the outcome of the claims would effect the estate,” and,

accordingly, “whether there is a nexus between the other proceeding and the bankruptcy case.”

Greektown, 728 F.3d at 578 (citing Lindsey, 86 F.3d at 489) (emphasis in original). Even where a

claim is not “property of” the bankruptcy estate, a case based on that claim may still be “related to”

the bankruptcy, where the trustee and another claimant both seek to recover “the same limited pool

of money, in the possession of the same defendants, as a result of the same acts, performed by the

same individuals, as part of the same conspiracy.” Fisher v. Apostolou, 155 F.3d 876, 882 (7th Cir.

1998).

The plaintiffs’ amendments to counts VIII and IX expand — or perhaps clarify — the nature

of their conversion claim against James Miller. The plaintiffs now say that James Miller took money

that belonged to Miller Detroit (or that Miller Detroit held in trust for some of the plaintiffs) and

paid it to a law firm defending Bruce Miller in a state court lawsuit in which he was charged with

breaching his fiduciary duties to these same plaintiffs. In other words, the plaintiffs seek recovery

from James Miller for his hand in alienating money held by Miller Detroit, either as its own or in

trust. 

The plaintiffs do not dispute this characterization of their intentions. However, they argue

that because the object of their claim is James Miller — and they intend to confine their recovery

only to him (at least on the conversion claims) — the Miller Parking bankruptcy is not implicated,

and therefore their amended claims do not relate to the bankruptcy. That argument ignores the

obvious point, however, that in order to determine whether James Miller is guilty of conversion, the

adjudicator must first determine whether the money paid for attorney’s fees was spent wrongfully

and therefore should still belong to Miller Parking. It is difficult to avoid the ensuing conclusion

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that such a finding would “relate to” the bankruptcy case, since it would have an impact on the

composition of the property of the estate. It would affect the handling and administration of the

bankrupt estate, by markedly increasing or decreasing the recovery and distribution that the trustee

can accomplish. In re Greektown Holdings, LLC, 728 F.3d at 577. The plaintiffs disavow any

intention of attempting to recover from “the same limited pool of money, in the possession of the

same defendants, as a result of the same acts, performed by the same individuals, as part of the

same” conduct, all of which also are at issue in the trustee’s pending action against the same

defendants. Fisher, 155 F.3d at 882. But the adjudication of the newly amended counts VIII and IX

would require a determination of the same facts as if the plaintiffs were trying to recover the

alienated funds for themselves alone. And that decision leads to a determination of what is — or

was — the property of the Miller Detroit bankruptcy estate. 

There is another issue looming here that also “relates to” the Miller Detroit bankruptcy: if

James Miller assisted in the conversion of Miller Parking assets, then should the cause of action for

conversion belong to the trustee as property of the bankruptcy estate? 

“A bankruptcy estate is comprised of ‘all legal or equitable interests of the debtor in property

as of the commencement of the case.’” In re Shelbyville Rd. Shoppes, LLC, 775 F.3d 789, 794 (6th

Cir. 2015) (quoting 11 U.S.C. § 541(a)(1)). As soon as a bankruptcy petition is filed, the estate

becomes “the owner of all of [the debtor’s] property, including tort claims that accrued before [the

petition was filed].” Auday v. Wet Seal Retail, Inc., 698 F.3d 902, 904 (6th Cir. 2012). “[A]ll causes

of action that hypothetically could have been brought pre-petition are property of the estate . . . even

if the debtor was unaware of the claim,” and the “entire cause of action is property of the estate, even

if further post-petition damages were incurred.” Tyler v. DH Capital Mgmt., Inc., 736 F.3d 455, 462

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(6th Cir. 2013) (quotations and alterations omitted). This “[p]roperty of the estate is central to the

bankruptcy process,” because it “becomes the ‘pot’ from which all claims against the debtor will be

paid pursuant to the Bankruptcy Code’s priority scheme.” In re Robinson, 764 F.3d 554, 559 (6th

Cir. 2014) (quotations and alterations omitted). 

Where the plaintiffs’ “cause of action [against the debtor] would be based on facts generally

available to any creditor, and recovery would serve to increase the pool of assets available to all

creditors,” only the trustee may pursue it, and claims by individual creditors are precluded. In re

Emoral, Inc., 740 F.3d 875, 881 (3d Cir. 2014). Accordingly, where a “creditors’ claims against []

non-debtor fiduciaries depend[] on the non-debtor’s misconduct with respect to the corporate

debtor,” and the claims are premised upon alleged “transfers from the debtor to a non-debtor control

person or entity,” the claims are “general claims” that the trustee has exclusive standing to pursue

on behalf of all creditors of the estate. In re Teknek, LLC, 563 F.3d 639, 649 (7th Cir. 2009)

(emphasis in original) (noting that the Seventh Circuit has found claims to be property of the estate

where they were based on “alleged breach[es] [by non-debtor defendants] of fiduciary duties to the

debtor” or “looting of the debtor corporation in which the plaintiffs had invested”); see also N.L.R.B.

v. Martin Arsham Sewing Co., 873 F.2d 884, 888 (6th Cir. 1989) (“To allow a creditor of the

bankrupt to pursue his remedy against third parties on a fraudulent transfer theory would undermine

the Bankruptcy Code policy of equitable distribution by allowing the creditor ‘to push its way to the

front of the line of creditors.’”). 

The plaintiffs’ attempt artfully to plead their claims as merely seeking to recover from James

N. Miller individually his personal funds and certain funds held “in trust” for them by Miller Detroit. 

That framing does not distinguish meaningfully those claims from other property of the estate that

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the trustee has the sole right to recover and distribute. In their complaint, the plaintiffs allege that

(1) Miller Detroit received parking revenues that were the property of the plaintiffs and which it

“held in trust” for their benefit; (2) James Miller and Miller Detroit refused to remit the parking

revenues to the plaintiffs and converted the funds to their own use, in order to pay attorney fees

incurred by Bruce Miller and Miller Detroit in defending the 2004 Oakland County lawsuit; (3) the

payment of attorney fees from funds held by Miller Detroit was authorized by James Miller as

president of the company, but was expressly prohibited by the terms of the governing corporate

articles; and (4) the “retention of the Parking Revenues by [Miller Detroit] and James N. Miller and

the improper use of the Parking Revenues by James N. Miller and [Miller Detroit] for the benefit

of [James] Miller’s father, Bruce Miller, and for the benefit of [Miller Detroit] interfered with and

deprived CH/Brand and [CH Holding] of [their] ownership and interest in the Parking Revenues.” 

Compl. ¶ 43.

As the revised allegations now make clear, the plaintiffs are seeking not only to target James

Miller, but also are attempting to “jump the queue” and seize upon certain specific assets of Miller

Detroit collected, held, and ultimately paid out in the course of its operations, to which they purport

to have a superior or individualized claim. They contend that they are entitled to recover these funds

because, rather than surrendering them as required, Miller Detroit instead wrongfully paid them out

to the law firm that defended it and Bruce Miller during the five-year litigation in the 2004 Oakland

County lawsuit, and James Miller had a hand in that decision. However, allegations that certain

funds were collected on the one hand, and (perhaps wrongly) paid out on the other, do not suffice

to excise those funds — and the tort damages that may result from their alleged conversion — from

the scope of the “property of the estate.” If, as the plaintiffs claim, the funds wrongly were paid out,

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then they must be recovered by the estate; the fact that funds were paid to defend the debtor or its

principals against a lawsuit brought by a particular creditor does not mean that only that creditor

may recover them to the exclusion of all others. The fact that the plaintiffs assert a pre-petition

interest in the funds as a result of certain contractual or fiduciary obligations establishes only that

they have a possibly meritorious claim against the estate, not that they have a right to pursue the

exclusive recovery of any arbitrary set of dollars that they designate as theirs alone from among the

many millions paid out by Miller Detroit to numerous parties over the years preceding the filing of

its petition.

In In re National Century Financial Enterprises, Inc., 423 F.3d 567 (6th Cir. 2005), the Sixth

Circuit confronted a strikingly similar attempt at artful pleading by a creditor attempting to make

an end run around the bankruptcy process. The court of appeals in that case held that the district

court properly had affirmed the decision of the bankruptcy court enforcing the automatic stay under

11 U.S.C. § 362(a) against the creditor’s state court action seeking damages from a third-party (nondebtor) defendant bank, which the creditor alleged had refused to obey the creditor’s instructions

to remit funds held by the bank in the debtor’s accounts. The Sixth Circuit explained that, no matter

how they were construed, the claims pleaded in the creditor’s state court complaint could not be

allowed to proceed, because they necessarily would require the court to determine who owned the

disputed funds. The creditor’s claims did not place those funds beyond the scope of the “property

of the estate” merely because the creditor asserted that it had an exclusive right to the funds under

a “constructive trust” theory. The court summarized the plaintiff’s argument, which is strikingly

parallel to those raised by CH Holding here:

The district court held that “the Louisiana complaint, though naming non-debtor JP

Morgan as a defendant, seeks a determination that the money in the Debtors’ bank

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accounts belongs to [creditor] Amedisys.” The bankruptcy court similarly concluded

that Amedisys, through the Louisiana action, sought to obtain ownership rights of the

disputed accounts receivable. Amedisys, on appeal, contends that these holdings

were misguided, because the Louisiana action concerns only JP Morgan’s failure to

follow [the debtor’s] instructions to remit $7.3 million to Amedisys. Amedisys

argues that it merely seeks money damages from JP Morgan, because JP Morgan

breached a duty to transfer the property to Amedisys.

Id. at 575. The court rejected that argument, concluding that, although the plaintiffs sought relief

only against the bank, “every count in the complaint requires the court to adjudicate whether

Amedisys had a rightful claim to [the disputed funds].” Ibid. 

The Seventh Circuit has rejected similar attempts at artful pleading by individual creditors,

holding that “creditors’ claims against [] non-debtor fiduciaries [that] depend[] on the non-debtor’s

misconduct with respect to the corporate debtor,” where the claims are premised upon alleged

“transfers from the debtor to a non-debtor control person or entity,” are “general claims” that the

trustee has exclusive standing to pursue on behalf of all creditors of the estate. In re Teknek, LLC,

563 F.3d 639, 649 (7th Cir. 2009) (emphasis in original) (noting that the Seventh Circuit has found

claims to be property of the estate where they were based on “alleged breach[es] [by non-debtor

defendants] of fiduciary duties to the debtor” or “looting of the debtor corporation in which the

plaintiffs had invested”).

After oral argument on the remand motion, the Court permitted the parties to file

supplemental briefs to address the impact of National Century on the present motion. The plaintiffs

filed a supplemental brief in which they argue that National Century is distinguishable from the

present case because (1) in National Century the creditor plaintiff sought to have funds held in

specific bank accounts in the debtor’s name turned over to the creditor by the bank, which was the

defendant in the state court action (the debtor was not named in state court); (2) the present

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complaint, in count VIII, seeks money damages solely from James N. Miller individually, for alleged

personal conduct that involved mishandling funds that the plaintiffs contend were their property,

held in trust by Miller Detroit; and (3) unlike in National Century, the trustee of the Miller Detroit

bankruptcy estate has not undertaken any action to enforce the automatic stay under 11 U.S.C. §

362(a)(3), or to pursue the specific claim for conversion of parking revenues that is raised by the

present plaintiffs in their state court amended complaint.

The plaintiffs rely principally on In re Cincom iOutsource, Inc., 398 B.R. 223, 228-29

(Bankr. S.D. Ohio 2008), in which the bankruptcy court distinguished National Century and found

that it did not bar a state court proceeding by a creditor against a non-debtor and the parent company

of a bankrupt debtor corporation. The parent (Cincom Systems, Inc., [“Systems”]) and its subsidiary

(Cincom iOutsource, Inc. [“iOutsource”]) entered into a number of contracts with various customers

to provide leased equipment. Customer financing for the leases was provided by several lenders,

including Fifth Third Bank. Much of the equipment provided through the leases allegedly was

obsolete, broken, or never delivered to the customers who were supposed to receive it.

One such customer, plaintiff Universal Equipment Leasing, LLC (“UEL”), filed a complaint

in the Northern District of California against Fifth Third Bank and Systems, alleging that the two

had conspired to commit fraud in the course of the leasing deals. The trustee of the iOutsource

bankruptcy estate moved to stay the UEL action and a number of similar cases brought by other

plaintiffs similarly situated. The trustee argued that iOutsource was the alter ego of its parent,

Systems, and that any judgment against Systems therefore would deplete funds that should be

retained and turned over to satisfy the claims of all iOutsource creditors. The trustee also contended

that any judgment against the parent would obstruct the recovery of funds under a fraudulent transfer

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or avoidance theory, which the trustee alleged wrongly were conveyed from the subsidiary to the

parent. UEL alleged that Fifth Third had breached its fiduciary duties to UEL in the course of

brokering and financing the fraudulent leases, and that it therefore was entitled to a judgment against

Fifth Third for damages that UEL had suffered as a result of that breach.

The bankruptcy court found that the action against Fifth Third Bank for breaching its

fiduciary duty in negotiating and brokering the equipment leases “has nothing to do with Systems’

alleged duty to iOutsource or iOutsource’s creditors.” Cincom iOutsource, 398 B.R. at 229. The

court held “that UEL’s prosecution of this lawsuit against Fifth Third, a non debtor, [does not] in

any way implicate[] estate property or usurp[] the Trustee’s ability to pursue the various claims he

is asserting against Systems in bankruptcy court.” Ibid. Because “Fifth Third must answer for its

own conduct in the California litigation surrounding these transactions,” the court “conclude[d] that

a potential judgment against Fifth Third, a solvent entity, does not actually deplete the bankruptcy

estate of property by depriving the Trustee, in this case, of any claims or defenses he might want to

assert in the bankruptcy litigation.” Ibid. 

The bankruptcy court also observed that the claims against Fifth Third and the debtor were

discrete because each of them entered had entered into separate arrangements with various parties

to perform distinct duties, and Fifth Third’s defenses to the claims would be entirely separate from

any that might be raised by either Systems or iOutsource (and, consequently, by the Trustee standing

in the shoes of the debtor in attempting to defend any related claims):

Fifth Third and iOutsource are separate, unaffiliated companies who entered into

and, then, were supposed to perform distinct obligations under the parties’ various

agreements. . . . Fifth Third has no derivative defense to assert that can be said to

belong to the bankruptcy estate of iOutsource. Neither is this situation analogous

factually to the one in Patton where the stay was extended to halt nonbankruptcy

litigation because of its negative impact on the estate. An entry of judgment against

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Fifth Third would not necessarily impair the debtor’s rights against one of its general

partners or affiliated entities, thus making it less likely that that partner or affiliate

would be able to make a contribution to pay the debtor’s creditors.

Ibid. 

The plaintiffs here are correct in their observation that, unlike National Century, the present

complaint does not specifically assert a claim for turnover of identifiable funds in any discrete bank

account held in the name of the debtor. However, the plaintiff in National Century sought both a

turnover of certain funds and damages on a number of theories. The National Century plaintiff

alleged that: (1) it was entitled to specific performance of an “implied contract” for the benefit of

the plaintiff, including a refund of the disputed funds; (2) it was a third-party beneficiary of a trust

relationship between the bank and the debtor; (3) the bank breached a fiduciary duty to the plaintiff

to ensure that funds due the plaintiff were not mishandled or withheld; (4) the bank converted the

funds by refusing to deliver them upon demand; and (5) the bank was unjustly enriched by its

retention of the funds. National Century, 423 F.3d at 572. The Sixth Circuit held that “[b]ecause

the Louisiana action seeks to obtain the accounts receivable held in a JP Morgan account in the

name of [the debtor entity], and because the accounts receivable likely constitute property of the

bankruptcy estate, the bankruptcy court properly enforced the automatic stay under 11 U.S.C. §

362(a)(3).” Id. at 575. However, the court of appeals also observed that “[t]he district court

correctly found that while only some counts in the complaint pray the court to order JP Morgan to

remit the disputed accounts receivable to Amedisys, every count in the complaint requires the court

to adjudicate whether Amedisys had a rightful claim to that property.” Ibid. (emphasis added). The

same is true here.

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Resolution of the present plaintiffs’ claim for conversion, by definition, will require any

court that decides it to resolve the question of who owned — and consequently who now has a

rightful claim to — the $900,000 in allegedly mishandled parking revenues that the plaintiffs seek

to have returned to them (along with damages suffered as a result of the wrongful deprivation of the

funds). “Conversion, both at common law and under [Michigan Compiled Laws § 600.2919a] is

defined as any distinct act of domain wrongfully exerted over another’s personal property in denial

of or inconsistent with the rights therein.” Aroma Wines & Equip., Inc. v. Columbian Distribution

Servs., Inc., --- N.W.2d ---, ---, No. 148907, 2015 WL 3772434 (Mich. June 17, 2015) (emphasis

added) (quotation marks and citation omitted). “Money is treated as personal property, and an

action may lie in conversion of money provided that there is an obligation to keep intact or deliver

the specific money in question, and where such money can be identified.” Dunn v. Bennett, 303

Mich. App. 767, 778, 846 N.W.2d 75, 81 (2013) (quotation marks omitted). “Conversion may occur

when a party properly in possession of property uses it in an improper way, for an improper purpose,

or by delivering it without authorization to a third party.” Dep’t of Agric. v. Appletree Mktg., L.L.C.,

485 Mich. 1, 14, 779 N.W.2d 237, 244-45 (2010) (footnotes omitted). Just as the Sixth Circuit held

in National Century, such a determination inescapably implicates the bankruptcy estate, because a

judgment that the disputed funds were the exclusive property of the plaintiffs necessarily would

preclude any recovery of those same funds for the benefit of all creditors by the bankruptcy estate. 

See National Century, 423 F.3d at 576 (observing that “[w]hatever determination is made in the

Louisiana action concerning the prebankruptcy ownership of the accounts receivable will necessarily

be relevant to postbankruptcy ownership as well”). 

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There is yet another reason why the amended Counts VIII and IX relate to the Miller Detroit

Bankruptcy. Although the Miller Detroit trustee has not yet asserted any claim against the James

Miller defendants on precisely the same theory as that alleged by the CH Holding plaintiffs, she has

raised claims in Lim v. Miller Parking, 11-14422, which seek recovery for the same type of harm,

from the same individual defendant (James N. Miller), for the same type of conduct (mishandling

and wrongly distributing funds of debtor Miller Detroit). In her complaint, the trustee specifically

seeks damages against James N. Miller for breaches of fiduciary duty, by which she contends James

Miller enriched himself at the expense of the debtor and its rightful creditors:

44. Defendant James N. Miller owed a duty of loyalty to the Debtor and was at

all relevant times a fiduciary of the Debtor.

45. Defendant James N. Miller breached his duties to the Debtor in causing

Debtor to handle Defendant MPC’s administrative work for no consideration

and causing Debtor to make additional transfers to Defendant MPC and the

individual Defendants [including James N. Miller] for no consideration or

less than fair consideration during a period when Debtor was insolvent.

46. As an owner of Defendant MPC, Defendant James N. Miller profited

personally from the enrichment of Defendant MPC at Debtor’s expense.

47. As a result of Defendant James N. Miller’s breach of his duties to Debtor, the

Debtor suffered substantial losses and this bankruptcy case.

Am. Compl. [dkt. #27-1], Lim v. Miller Parking Company, No. 11-14422 (E.D. Mich. Oct. 24, 2012)

(emphasis added).

It is self-evident that any judgment against James N. Miller individually for wrongs

committed within the scope of his position as president of Miller Detroit very well could “impair

the debtor’s rights against one of its [principals], thus making it less likely that that [party] would

be able to make a contribution to pay the debtor’s creditors.” In re Cincom, 398 B.R. at 229. If the

CH Holding plaintiffs prevail on their claims, any success they have in executing a judgment against

James Miller may substantially impair the trustee’s ability to collect against him for congruent

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liability based on substantially similar and overlapping allegedly wrongful conduct that equally

harmed all creditors of the Miller Detroit estate. Moreover, unlike in Cincom, this is not a case

where the CH Holding plaintiffs, Miller Detroit, and James N. Miller reasonably can be cast as

“separate, unaffiliated [entities] who entered into and, then, were supposed to perform distinct

obligations under [] various agreements.” The relations between the parties here certainly were

“various” in their scope, complexity, and terms. But the alleged conduct by James Miller in

handling all of the funds and affairs of Miller Detroit was inextricably intertwined with the handling

of the specific funds that the plaintiffs now seek to recover for themselves alone, possibly to the

detriment of all others who may have been harmed by the same course of conduct. The plaintiffs

allege, in essence, that James Miller mishandled funds held by Miller Detroit and made payments

that ought not to have been made, leaving the company bereft of means to satisfy the demands of

the plaintiffs as judgment creditors. But they have not shown any way in which this particular harm,

which they have attempted to isolate and seek to redress as theirs alone, can be segregated from the

greater common harm done to all Miller Detroit creditors by all of the various related devices that

James Miller allegedly employed to the same end.

If Miller Detroit wrongfully paid out any funds for the benefit of any third party in the form

of unauthorized attorney fees (or in any other wrongful manner), rather than retaining those funds

in order properly to pay them when and to whom they were due, then the debtor’s assets were

depleted to the detriment of all creditors, not just the plaintiffs in this case. Therefore, the claims

raised in counts VIII and IX of the amended complaint “relate to” the Miller Detroit bankruptcy

case, and the Court has original jurisdiction over them. 

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III.

There are other counts in the amended complaint, which the parties agree do not relate to the

bankruptcies and which ought to be remanded to state court. In their response to the motion to

remand, the defendants concede that “Counts XII and XIII were brought against James N. Miller

and/or Miller Parking Services, LLC for conversion and trespass regarding incidents subsequent to

December, 2009 and those claims are properly before the Oakland County Circuit Court.” Those

claims were joined in the plaintiffs’ complaint filed in state court, presumably because they arose

against some of the common defendants. They are not “related to” the Miller Detroit bankruptcy. 

In re Wolverine Radio Co., 930 F.2d 1132, 1142 (6th Cir. 1991) (quoting In re Pacor, 743 F.2d 984,

994 (3d Cir. 1984)). Nor are they “so related to” the other claims in the complaint “that they form

part of the same case or controversy.” 28 U.S.C. § 1367(a). Therefore, the Court will remand those

counts to state court for adjudication. 

IV.

Counts VIII and IX of the amended complaint filed in state court relate to the Miller Detroit

bankruptcy, and therefore this Court has original jurisdiction over those counts under 28 U.S.C. §

1334(b). Counts XII and XIII do not relate to the bankruptcy, nor are they subject to the Court’s

supplemental jurisdiction. 

Accordingly, it is ORDERED that the plaintiffs’ motion to remand [dkt. #4] is GRANTED

IN PART AND DENIED IN PART. 

It is further ORDERED that this Court has subject matter jurisdiction over VIII and IX of

the amended complaint, and those counts shall be adjudicated in this Court. 

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It is further ORDERED that the remaining allegations of the amended complaint are

REMANDED to the Oakland Count Circuit Court for adjudication. 

s/David M. Lawson 

DAVID M. LAWSON

United States District Judge

Dated: June 23, 2015

PROOF OF SERVICE

The undersigned certifies that a copy of the foregoing order was served

upon each attorney or party of record herein by electronic means or first

class U.S. mail on June 23, 2015.

s/Susan Pinkowski 

SUSAN PINKOWSKI

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