NOT RECOMMENDED FOR PUBLICATION

File Name: 20a0608n.06

No. 19-2079

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

In re: OAKLAND PHYSICIANS MEDICAL 

CENTER, LLC, dba Doctors’ Hospital of Michigan,

Debtor.

YATINDER M. SINGHAL, M.D.,

Appellant,

v.

BASIL T. SIMON, Trustee, 

 Appellee.

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ON APPEAL FROM THE 

UNITED STATES DISTRICT 

COURT FOR THE EASTERN

DISTRICT OF MICHIGAN

BEFORE: GUY, BOGGS, and WHITE, Circuit Judges. 

HELENE N. WHITE, Circuit Judge. Appellant Yatinder Singhal, M.D., was a board 

member of Oakland Physicians Medical Center, LLC, dba Doctors’ Hospital of Michigan (the 

Hospital), which filed for Chapter 11 bankruptcy protection. Appellee Basil Simon, in his capacity 

as liquidation trustee of the Hospital, filed an adversary proceeding against Singhal alleging, as 

relevant here, conversion based on Singhal’s diversion of money owed to the Hospital under 

contracts the Hospital had with two medical schools. The district court granted summary judgment 

to Simon on his common-law-conversion claim. Singhal appeals, arguing that there is a genuine 

dispute of material fact about whether the Hospital’s Board of Directors consented to the relevant 

transactions and that he is entitled to a setoff in the amount of a settlement between another doctor 

and Simon. We REVERSE the grant of summary judgment as to the contracts with one of the 
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medical schools, AFFIRM the grant of summary judgment as to the other, VACATE the setoff 

determination, and REMAND for further proceedings.

I.

The Hospital was formed in 2008 to acquire the assets of another hospital. Its members 

consisted of physicians and McLaren Health Center. In 2010, McLaren demanded repayment of 

a secured loan, and the other members advanced money to the Hospital to repay the loan and keep 

the Hospital functioning. Singhal is a practicing psychiatrist and was a shareholder and member 

of the Hospital’s Board of Directors (Board) during the relevant times.

The Hospital operated a student-education program for which the Hospital accepted 

students from medical schools for clinical rotations in exchange for the schools’ payments to the 

Hospital of an agreed sum for each student that the Hospital’s doctors (“preceptors”) trained. Two 

of those medical schools were Ross University School of Medicine (Ross), and Windsor 

University School of Medicine (Windsor). 

In February 2012, Dr. Nikhil Hemady formed American Medical Education Group LLC 

(AMEG), with Hemady and Singhal each holding a 50% membership interest. In March 2012, 

pursuant to an affiliation agreement, Ross agreed to pay the Hospital $500 per week for each 

student that the Hospital’s preceptors trained in a clinical rotation. In February 2013, Singhal sent 

a letter to Ross, which he signed as “Chairman, Board of Directors” of the Hospital, stating the 

following:

This letter is to request that based on a decision made by the Board of Directors of 

Doctors’ Hospital of Michigan earlier this week, all Ross payments moving forward 

be directed to [AMEG]. This decision will enable the clinical preceptors for various 

rotations at Doctors’ Hospital to be paid in a timely manner. Can we please add the 

necessary provision to the existing agreement with Ross to make sure that this 

change is clearly stated? 
No. 19-2079, Singhal v. Simon

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Bk. AP R. 102-4.1

Singhal testified that the Hospital had well-known financial problems and a reputation of 

not paying its bills; thus, having AMEG receive the money from Ross and pay the doctors meant 

that more doctors would be willing to train the medical students. In accordance with Singhal’s 

letter, Ross paid AMEG $894,500 from June 2013 through September 2015. AMEG, in turn, 

distributed some of that money to Singhal, Hemady, and other preceptors. According to Singhal, 

this arrangement was “net profit . . . , zero loss” for the Hospital, which was supposed to receive 

$96,000 per year in profit from AMEG. Bk. AP R. 124-9 at 7. Simon alleges, however, that the 

Hospital never received any money from AMEG. Singhal testified that it was Hemady’s 

responsibility to remit payment to the Hospital, and that Hemady was questioned at the Board 

meetings about the payments. Hemady later settled Simon’s claims against him arising out of 

Hemady’s creation of AMEG for $250,000. 

Similarly, in January 2013, the Hospital and Windsor entered into an affiliation agreement 

in which Windsor agreed to pay the Hospital $400 per week for each student the Hospital trained 

in a clinical rotation. In August 2013, Dr. Prakash Sanghvi formed DHOM Education, LLC 

(DHOM), with Sanghvi and Singhal each holding a 50% membership interest. From November 

2013 through November 2015, Windsor paid DHOM approximately $184,000. Sanghvi testified 

that DHOM did not have a contract with Windsor or the Hospital. 

Paragraph 11.6 of the Hospital’s Operating Agreement provides:

A member of the Board of Directors shall have no authority to take action on behalf 

of the Company in his or her individual capacity, except pursuant to specific 

authorization by the Board of Directors or to the extent a member of the Board of 

1 The adversary proceeding against Singhal, 2:16-ap-05120 (E.D. Mich. Bankr.), will be cited as Bk. AP. 

The docket of the district court that filed the order being appealed, 2:18-cv-12147 (E.D. Mich.), will be cited as Dist. 

Ct. 
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Directors also holds an executive position as an officer or agent of the Company 

and takes action in that capacity. 

Bk. AP R. 113-4 at 4. Paragraph 11.3(a)(i) of the Operating Agreement provides that the Board 

of Directors has 

[t]he authority to approve any transaction involving the Company in which a . . . 

member of the Board of Directors has an interest . . . , provided that the transaction 

is fully disclosed to all members of the Board of Directors and terms of the 

transaction are ‘arms-length’ and fair to the Company. 

Id. at 3.

In July 2015, the Hospital filed a voluntary petition under Chapter 11 of the Bankruptcy 

Code in the United States Bankruptcy Court for the Eastern District of Michigan. The bankruptcy 

court appointed Simon as trustee, and later as liquidation trustee. Singhal filed a proof of claim in 

the amount of $1,499,983.13. Simon then filed an adversary proceeding against Singhal. In his 

second amended complaint, Simon alleged seven counts against Singhal: recharacterization of 

advances by Singhal (Count I); fraudulent transfers under 11 U.S.C. §§ 544, 548(a)(1)(B), 550 and 

551 (Count II); avoidance of fraudulent transfers under Michigan’s Uniform Fraudulent Transfer 

Act, Mich. Comp. Laws § 566.31 et seq., and 11 U.S.C. §§ 544(b) and 550 (Count III); breach of 

statutory duties to act in good faith and in the best interests of the company (Count IV); commonlaw and statutory conversion (Count V); equitable subordination of claims (Count VI); and claim 

disallowance under 11 U.S.C. § 502(d) (Count VII). 

Both parties moved for partial summary judgment, with Simon seeking summary judgment 

on Counts II, III, and V, and Singhal seeking summary judgment on Counts II-V. After the 

bankruptcy court disposed of the summary-judgment motions, the district court withdrew the 

reference2as to Counts IV and V, vacated the bankruptcy court’s order as to those counts, and 

2 The bankruptcy court is a unit of the district court and is empowered by statute, upon referral by a district 

court, which occurred here, to “hear and determine all cases under title 11 and all core proceedings arising under title 
No. 19-2079, Singhal v. Simon

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ordered the bankruptcy court to file a report and recommendation on those counts. The bankruptcy 

court entered a report and recommendation concluding that Simon was not entitled to summary 

judgment on Count IV; that Simon was entitled to summary judgment on his common-lawconversion claim; and that Singhal was entitled to summary judgment on Simon’s statutoryconversion claim. Singhal objected to the report and recommendation’s conclusion that Simon 

was entitled to summary judgment on the common-law-conversion claim, arguing in part that 

Singhal had presented a genuine dispute of material fact about whether the Board consented to 

Singhal’s diverting the payments from Ross and Windsor to AMEG and DHOM, and that any 

recovery should be reduced by the amount of Simon’s settlement with Hemady.

The district court overruled Singhal’s objections and adopted the bankruptcy court’s report 

and recommendation. The district court concluded that Singhal “has not submitted any evidence 

of board approval,” and that there was no reason to set off or reduce the damages based on Simon’s 

settlement with Hemady because the common-law rule of setoff had been abrogated and because 

“the claims against Hemady were not parallel claims of conversion, and the law allows for ‘some 

overlap,’ while not barring double recovery.” Dist. Ct. R. 18, PID 234, 239. The district court 

accordingly entered judgment on Simon’s common-law-conversion claim in the amount of 

$1,078,500 and closed the case.3 Singhal now appeals. 

11, or arising in a case under title 11,” and may enter a final order with respect to those proceedings. 28 U.S.C. 

§ 157(b)(1). However, “[t]he district court may withdraw, in whole or in part,” the reference to the bankruptcy court 

“on its own motion or on timely motion of any party, for cause shown.” Id. § 157(d).

3 Simon represented that he waived his claim under Count IV. “With th[at] claim[] out of the picture, the 

district court’s order below is a final order, and we have appellate jurisdiction.” G.G. Marck & Assocs., Inc. v. Peng, 

309 F. App’x 928, 932 (6th Cir. 2009); see also Scarbrough v. Perez, 870 F.2d 1079, 1082 (6th Cir. 1989).
No. 19-2079, Singhal v. Simon

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II.

A. 

Singhal first argues that the district court erred in finding that there was no genuine dispute 

of material fact about whether Singhal was liable for common-law conversion for diverting the 

Ross and Windsor payments to AMEG and DHOM. We review the district court’s determination 

de novo, viewing all evidence in the light most favorable to Singhal, the non-moving party, and

drawing all reasonable inferences in his favor. See In re Tri-City Turf Club, Inc., 323 F.3d 439, 

442 (6th Cir. 2003); Fed. R. Civ. P. 56(a).

Under Michigan law, conversion is “any distinct act of dominion wrongfully exerted over 

another’s personal property in denial of or inconsistent with his rights therein.” Aroma Wines & 

Equip, Inc. v. Columbian Distrib. Servs., Inc., 871 N.W.2d 136, 141 (Mich. 2015) (internal 

quotation marks and citations omitted). For purposes of this appeal, the parties agree that Singhal 

directed that the Ross and Windsor payments be made to AMEG and DHOM, respectively, and 

that these acts constitute common-law conversion unless Singhal disclosed his interests in AMEG 

and DHOM to the Board and obtained Board approval for redirecting the payments, consistent 

with the Operating Agreement and Michigan law. 

Regarding the disclosure of his interests in AMEG and DHOM, Singhal relies on the 

following portions of his deposition testimony:

Q: Did you tell [the other Board members] Dr. Short and/or Dr. Jolly that you had 

an interest in American Medical Education Group, a financial interest?

A: They knew that. And they were also rotating with them. I don’t know about Dr. 

Jolly but I thought Dr. Jolly, also, had one medical student one time, if I remember 

correctly.

. . . .

Q: Were the board members aware that you had an interest in DHOM?

A: Board members knew that I had an interest and board members also knew that I 
No. 19-2079, Singhal v. Simon

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got the contract with the hospital from them because of my own relationship with 

them. 

Bk. AP R. 124-9 at 3, 7.

Simon argues that the testimony about the Board’s knowledge of Singhal’s interests in 

AMEG and DHOM is insufficient because “[n]othing in [Singhal’s] deposition testimony indicates 

the specific details of the Board members’ knowledge or that Defendant in any way complied with 

the requirements of the Operating Agreement or the LLC Act.” Appellee’s Br. at 19. The 

bankruptcy court appeared to conclude that this testimony presented a genuine dispute of material 

fact about whether the Board members had the requisite knowledge of Singhal’s interest in the 

companies. We agree. Simon fails to explain how the cited testimony does not establish a genuine 

issue as to whether there was sufficient disclosure of Singhal’s interests consistent with the 

Operating Agreement or Michigan law. The portion of the Operating Agreement cited by Simon 

requires that “the transaction” involving the Hospital in which a Board member has an interest be 

“fully disclosed to all members of the Board of Directors” without specifying how a Board member 

must disclose his interest in the other company with whom the Hospital is transacting. Bk. AP R. 

113-4 at 3. Michigan Compiled Laws § 450.4409 (2010) provides:

(1) Except as otherwise provided in an operating agreement, a transaction in which 

a manager or agent of a limited liability company is determined to have an interest 

shall not, because of the interest, be enjoined, be set aside, or give rise to an award 

of damages or other sanctions, in a proceeding by a member or by or in the right of 

the company, if the manager or agent interested in the transaction establishes any 

of the following:

. . . .

(c) The material facts of the transaction and the manager’s or agent’s 

interest were disclosed or known to the members entitled to vote and they 

authorized, approved, or ratified the transaction.

. . . .

(3) Except as otherwise provided in the articles of organization or an operating 

agreement, a transaction is authorized, approved, or ratified for purposes of 

subsection (1)(c) if it receives a majority of votes cast by the members entitled to 

vote that do not have an interest in the transaction.
No. 19-2079, Singhal v. Simon

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Even assuming that an interested director must comply with the statute to avoid liability 

for common-law conversion, Singhal testified plainly that his interests in AMEG and DHOM were 

“known to the members entitled to vote,” Mich. Comp. Laws § 450.4409(1)(c) (2010). Although 

the testimony is sparse and the full deposition transcript is not in the record, viewing this evidence 

in the light most favorable to Singhal and drawing all reasonable inferences in his favor, and 

consistent with the bankruptcy court’s determination, Singhal presented a genuine dispute of 

material fact about whether the Board members knew of his interests in AMEG and DHOM, which 

would satisfy the plain language of § 450.4409(1)(c) and the Operating Agreement on this point.

At oral argument in this appeal, Simon argued that Singhal did not comply with the 

Operating Agreement because Singhal’s lack of specificity about the terms of the AMEG 

transaction does not allow a reasonable jury to conclude that the “terms of the transaction are 

‘arms-length’ and fair to the [Hospital].” Bk. AP R. 113-4 at 3. Simon did not cite or discuss this 

language in his briefing to the bankruptcy court, the district court, or this court, and the district 

court did not grant summary judgment on this basis. Rather, although Simon generally stated that 

Singhal did not comply with the Operating Agreement or Michigan law in diverting the Ross and 

Windsor funds to other companies, Simon focused only on whether Singhal presented evidence 

that the other Board members were aware of Singhal’s interest in AMEG and DHOM and approved 

the transactions with them. Failure to raise an argument below generally forfeits the argument on 

appeal. See United States v. Boumelhem, 339 F.3d 414, 428 (6th Cir. 2003) (explaining that a 

party forfeits an “alternative argument in support of a lower court’s decision” “by failing to raise

the issue in the district court”). We have the discretion to consider arguments presented for the 

first time on appeal, Hayward v. Cleveland Clinic Found., 759 F.3d 601, 615 (6th Cir. 2014), and 

may affirm on any grounds supported by the record, Wallace v. Oakwood Healthcare, Inc., 954 
No. 19-2079, Singhal v. Simon

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F.3d 879, 886 (6th Cir. 2020). However, here, neither party submitted the full transcripts of the 

relevant depositions into the record, or even the full Operating Agreement, instead submitting only 

the portions of the depositions and Operating Agreement that supported the specific arguments 

made. Without a full record or adequate briefing on this issue, we cannot say that “the proper 

resolution is beyond any doubt” or that “the issue is presented with sufficient clarity and 

completeness and its resolution will materially advance the progress of already protracted 

litigation,” circumstances that might make it appropriate to consider an issue not raised in the 

district court. Hayward, 759 F.3d at 615 (alteration, internal quotation marks, and citations 

omitted).

Further, the evidence in the record does not establish as a matter of law that the terms of 

the Ross-AMEG-Hospital arrangement were not fair to the Hospital or were not disclosed to the 

Board. Simon characterizes the arrangement as the Hospital simply agreeing “to [forgo] over 

$1,000,000 in revenue.” Appellee’s Br. at 17. But Singhal testified that by forming AMEG,

Hemady and Singhal were able to recruit more doctors to train the medical students, doctors who 

otherwise would have declined the opportunity due to the Hospital’s reputation for not paying its 

bills, which in turn provided more profit for the Hospital. Further, according to Singhal, AMEG 

incurred the liabilities of paying the preceptors, and Hemady was supposed to pay the Hospital 

nearly $100,000 per year as profit. Finally, Singhal testified that Hemady “explained the situation” 

around the Ross payments being redirected to AMEG, and “we approved it.” Bk. R. 124-9 at 4. 

Viewing this evidence in the light most favorable to Singhal and drawing all reasonable inferences 

in his favor, a reasonable jury could conclude that the transaction was disclosed to the Board and

was fair to the Hospital.4 

4 To be sure, there are numerous other facts that can and should be considered in determining whether the 

transaction was disclosed to the Board and fair to the Hospital, including how much profit the Hospital was receiving 
No. 19-2079, Singhal v. Simon

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Regarding receiving authorization from the Board to redirect the Ross and Windsor 

payments to AMEG and DHOM, Singhal relies on the following portions of his deposition 

testimony: 

Dr. Hemady came and asked the board. So the idea was to train these students at 

different doctors’ offices so that those doctors get motivated to bring the business 

to our – Doctors’ Hospital. Dr. Hemady because he was in family practice and 

involved with that – those doctors wanted to come but wanted to be compensated 

obviously for their services and they will not trust Doctors’ Hospital for payment 

because Doctors’ Hospital – I’m going into detail. I don’t know if you need that or 

not. I don’t know. 

Q: You can continue.

A: So it was Dr. Hemady – so our situation was that we cannot afford to have any 

business, which causes a loss.

Q: Which goes where?

A: Causes a loss to the hospital. So it was – Dr. Hemady said he wanted to rotate 

the hospital so how could we do that. The board approved that. This medical 

education trust will give a fixed amount to the hospital every month or whatever 

. . . . So the hospital situation was net gain, zero cost, zero loss. So the hospital was 

making money. Another corporation was formed from which he paid the doctors. 

The doctors will trust the corporation to be paid on time, unlike the hospital. They 

will not trust the hospital that they will get it on time. That’s all I know about 

American Education.

Bk. AP R. 124-9 at 2.

Q: The letter indicates that there was a decision made by the board – by the way, 

the letter is dated February 6 of 2013 and it indicates that there was a request to 

request based on a decision of the board of directors of Doctors’ Hospital that all 

Ross payments moving forward be directed to American Medical Education Group 

at the 461 West Huron Street, Suite 610, Pontiac, Michigan address, right? 

A: Yes.

Q: That’s what it says, right?

A: Yeah.

Q: Is that the address of the hospital?

A: Yes.

prior to AMEG’s involvement, the reasonableness of the management fees charged by Hemady and Singhal, whether 

other companies besides AMEG were considered by the Board or made offers, and details about Hemady’s explanation 

of “the situation” to the Board. Had Simon specifically raised these issues in his summary-judgment briefing, the 

parties may have been able to flesh out these issues by submitting additional portions of deposition transcripts, or it 

would have alerted Singhal of the necessity to gather further evidence, if available, to address these issues.
No. 19-2079, Singhal v. Simon

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Q: The Ross payments you’re referring to the – in that letter you’re referring to the 

payments that would have been made pursuant to the affiliation agreement, which 

is marked as Exhibit 1; would that be a fair statement?

A: Yes.

Q: And the board approved this change?

A: Yes, it did.

Q: Who approved this?

A: Board means board, right? 

Q: So Dr. Short agreed to this?

A: You know, board means three members of the board so I can’t tell you. If the 

board is approving it, the board is approving it, right?

Q: Okay. Who were the members of the board of directors in 2013?

A: I think me, Dr. Short, I think, and Dr. Jolly.

Q: All right. And you’re saying that the three of you approved the payments change 

from the hospital to American Medical Education Group? 

A: As I said earlier, Dr. Hemady came to the board. He explained the situation. The 

hospital got money and we approved it because that’s the way we could get other 

doctors to bring business to the hospital. And you’re still saying the same thing. 

That’s what we talked about it.

Id. at 3-4. 

The bankruptcy court reasoned that Singhal’s testimony only pertained to the purpose of 

forming AMEG and DHOM and the Board’s approval of the training program between the 

Hospital and the medical schools, but not whether the Board approved the redirection of funds 

from Ross and Windsor to AMEG and DHOM. The district court did not elaborate further. Simon 

does not defend the bankruptcy court’s reasoning on appeal, and Singhal’s testimony that the 

“board approved this change” clearly refers to the Board’s approval of redirecting the payments 

from Ross to AMEG. Simon argues instead that 

[t]o the extent that Defendant now offers his testimony to prove the truth of the 

matter asserted i.e. Board approval of the diversion of payments to AMEG and 

DHOM, these out of court statements by the Debtor’s board members are hearsay 

under Federal Rule of Evidence (“F.R.E.”) 801 (c) and inadmissible under F.R.E. 

802. Defendant’s testimony regarding the Board’s approval cannot be considered 

on a Motion for Summary Judgment.

Appellee’s Br. at 19-20.
No. 19-2079, Singhal v. Simon

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The testimony is not hearsay. Singhal was a member of the Board and the testimony is 

about actions taken by the Board, which he would have been present to observe. Although unclear 

from his argument, Simon’s theory appears to be that Singhal is necessarily relaying statements 

by each of the Board members for the truth of those statements. The issue, however, is not whether 

the Board members’ statements were true, but whether they occurred at all, and thus whether 

approval was actually given. As the Seventh Circuit has explained,

[p]erformative utterances are not within the scope of the hearsay rule, because they 

do not make any truth claims. Had the marshal overheard Dodd tell Montana, ‘your

father has promised me $10,000,’ Dodd’s overheard statement would have been

hearsay, because its value as evidence would have depended on its being truthful, 

that is, on such a promise having actually been made. But what in fact was 

overheard was merely a demand—in effect, ‘give me $10,000’—and so the only 

issue of credibility was whether the marshal was reporting the demand correctly, 

and his testimony was not hearsay.

United States v. Montana, 199 F.3d 947, 950 (7th Cir. 1999); see also Preferred Properties, Inc. 

v. Indian River Estates, Inc., 276 F.3d 790, 798 n.5 (6th Cir. 2002) (explaining that the “verbal 

acts doctrine” applies where “legal consequences flow from the fact that words were said, e.g., the 

words of offer and acceptance which create a contract” (internal quotation marks and citations 

omitted)); Fed. R. Evid. 801 advisory committee note to subdiv. (c) (“If the significance of an 

offered statement lies solely in the fact that it was made, no issue is raised as to the truth of anything 

asserted, and the statement is not hearsay.”). Because Singhal’s testimony does not seek to 

introduce out-of-court statements for the purpose of proving the truth of the matters asserted, but 

only that the statements of approval were made, his testimony is not inadmissible hearsay. See 

Fed. R. Evid. 801(c).

Finally, Simon notes that there is strong evidence discrediting Singhal’s testimony, 

including the testimony from the other two Board members that they knew nothing about the 

payments being redirected to AMEG. But Singhal testified to the contrary, and Singhal’s 
No. 19-2079, Singhal v. Simon

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testimony is not so implausible as to defy “common sense.” Appellee’s Br. at 20. Singhal provided 

an explanation as to why it would be beneficial to the Hospital for the preceptors to be paid through 

a different company, and some of the preceptors, including one of the other Board members, were 

paid by AMEG, apparently without questioning why AMEG was the company paying them for 

their teaching services. 

Accordingly, Singhal presented a genuine dispute of material fact about whether he 

obtained the requisite authorization from the Board to divert the payments from Ross to AMEG.

Although Singhal’s testimony is sufficient to survive summary judgment on the Ross 

payments, Singhal did not testify similarly about the diversion of payments from Windsor to 

DHOM or point to any evidence that would allow us to infer that the Board approved the diversion 

of the Windsor payments. Nor does the remaining evidence Singhal relies on suffice to create a 

genuine dispute of material fact. As the district court correctly determined, “Singhal cannot 

advance pure legal argument that the missing board minutes may contain favorable evidence that 

would create a factual dispute.” Dist. Ct. R. 18, PID 234. Thus, Singhal’s argument—rather than 

his testimony—that the authorization is documented in the missing Board minutes is not sufficient 

to create a genuine dispute of material fact about whether the Board approved the WindsorDHOM-Hospital arrangement. Singhal also points to a statement made in his Answer that he acted 

at all times with Board approval, but Singhal’s reliance on a statement made in his unverified 

Answer does not constitute evidence for purposes of summary judgment. See Celotex Corp. v. 

Catrett, 477 U.S. 317, 324 (1986).

Accordingly, we reverse the grant of summary judgment as to the money Ross paid to 

AMEG, and affirm the grant of summary judgment as to the diverted Windsor funds. 
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B.

Singhal also argues that the district court erred in concluding as a matter of law that he is 

not entitled to a setoff in the amount of the settlement between Hemady and Simon, and that 

judgment against Singhal for the full amount of the converted funds results in an unjust double 

recovery.5 We review this question de novo. Laethem Equip. Co. v. Deere & Co., 485 F. App’x 

39, 51 (6th Cir. 2012). The district court rejected Singhal’s argument, reasoning as follows:

As to damages, if one joint tortfeasor pays “a lump sum in exchange for a release, 

and a judgment is subsequently entered against the non-settling tortfeasor, the 

judgment is reduced pro tanto by the settlement amount.” This principle is known 

as the common-law rule of “setoff.” However, the common-law rule of setoff has 

“generally [] been abrogated in Michigan.” Also, applying the setoff rule 

presupposes that the parties are joint tortfeasors, and that the settlement reached as 

to one party amounts to a parallel claim against the non-settling party. 

Michigan courts have said that the general rule prohibiting unjust enrichment by 

“double recovery” is not offended simply because there may be “some overlap” 

between co-defendant’s conduct. On the contrary, Michigan courts have recognized 

that “there is no rigid rule against overcompensation,” and “making tortfeasors pay 

for the damages they cause can be more important than preventing 

overcompensation.” 

. . . .

The evidence shows that Singhal alone was responsible for converting the Trustee’s 

money (and/or right to payments). Whether Singhal distributed the converted funds 

to several doctors, or kept the entire amount for himself, does not affect his liability 

to Trustee for the full amount of his conversion. In other words, if a person steals 

$1,000,000, they are liable for $1,000,000; the fact that they gave $500,000 to a

third-party does not alleviate any liability. Because Singhal was responsible for the

conversion of $1,078,500, the R&R did not err in its damages calculation.

Singhal says that he is entitled to a setoff for the amount of the settlement reached 

between Trustee and Dr. Hemady, who is Singhal’s’ [sic] 50% partner in AMEG. 

However, the settlement between Trustee and Dr. Hemady related to different 

claims and/or theories of liability. It appears that $60,000 of the $250,000 

settlement related to a turnover claim under 11 U.S.C. §542 and the remaining 

$190,000 relates to unearned monies. Because the claims against Hemady were not 

parallel claims of conversion, and the law allows for “some overlap,” while not 

5 Singhal did not raise this argument with the bankruptcy court during the initial summary judgment briefing 

in the bankruptcy court. Simon argued to the district court, in response to Singhal’s objection to the bankruptcy court’s 

report and recommendation, that Singhal therefore had forfeited this argument. The district court did not determine

whether the argument was forfeited, nor does Simon argue on appeal that Singhal forfeited this argument. Thus, we 

do not consider this issue.
No. 19-2079, Singhal v. Simon

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barring double recovery, the Court sees no reason to [set off] the Hemady 

settlement amount from Singhal’s liability for conversion. 

Dist. Ct. R. 18, PID 232-33, 238-39 (first alteration in original) (citations omitted).

Singhal argues that the district court erred in relying on Michigan’s general abrogation of 

the common-law rule of setoff because it failed to recognize that setoff still applies to jointly liable 

tortfeasors, and he contends that Singhal and Hemady are jointly liable. Singhal further argues 

that the theories of liability for Hemady and Singhal are irrelevant because the damages against 

Singhal and the settlement with Hemady were meant to compensate for the same harm. Simon 

responds that Hemady is not jointly liable with Singhal for conversion; that the distinct theories of 

liability against Hemady and Singhal preclude a setoff; and that Singhal’s argument fails because 

he did not file a third-party complaint against Hemady in the adversary proceeding. 

The district court did not err in finding that Singhal is not entitled to a setoff on the basis 

that he and Hemady are jointly liable. “State substantive law applies to setoff claims.” Laethem 

Equip., 485 F. App’x at 51 (citing BP Exploration & Oil Co. v. Maintenance Servs., Inc., 313 F.3d 

936, 942 (6th Cir. 2002)). Singhal argued to the district court, contrary to his argument on appeal, 

that “[i]t is well settled in Michigan that the liability of each defendant for damages is several only 

and not joint.” Dist. Ct. R. 12, PID 119. He cannot turn around on appeal and argue that he and 

Hemady are jointly liable and that he is entitled to a setoff on that basis when he never made that 

argument to the district court. Further, Singhal’s argument to the district court is consistent with 

Michigan law for most tort actions, including claims of conversion. Although Michigan abolished 

joint and several liability in most actions “based on tort or another legal theory seeking damages 

for personal injury, property damage, or wrongful death,” Mich. Comp. Laws § 600.2956 (1996), 

this court has recognized that several Michigan Courts of Appeals have held that the statute applies 

“to torts beyond those involving personal injury, property damage, and wrongful death,” Mike’s 
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Train House, Inc. v. Lionel, L.L.C., 472 F.3d 398, 413-14 (6th Cir. 2006)); see also Laethem 

Equip., 485 F. App’x at 47 (explaining that “there is no dispute that a reduction would have been 

warranted if the jury found [the defendant] liable on only the tort theory” in a case not involving 

personal injury, property damage, or wrongful death).

Prior to 1995, Michigan had a joint-and-several-liability scheme. Michigan followed the 

common-law rule of setoff providing that in a tort action against joint tortfeasors, where “one 

alleged tortfeasor agrees to settle his potential liability by paying a lump sum in exchange for a 

release, and a judgment is subsequently entered against the non-settling tortfeasor, the judgment 

is reduced pro tanto by the settlement amount.” Markley v. Oak Health Care Investors of 

Coldwater, Inc., 660 N.W.2d 344, 346 (Mich. Ct. App. 2003). In 1995, Michigan 

abolished joint and several liability in most contexts and created an allocation-offault system in which each tortfeasor is liable only for the portion of the total 

damages that reflects that tortfeasor’s percentage of fault. Because a system of 

several liability already incorporates the fault of all tortfeasors in establishing every 

individual tortfeasor’s proportion of fault, there is no danger that the plaintiff will 

be overcompensated for the injury by the failure to set off the amount of another 

tortfeasor’s settlement.

Velez v. Tuma, 821 N.W.2d 432, 437 (Mich. 2012) (footnote omitted). Because Michigan 

abolished joint and several liability for most tort actions, Singhal is not entitled to a setoff in the 

amount for which Hemady settled with the Hospital on the basis that he and Hemady are jointly 

liable. See id.

However, there is no indication that Michigan abolished its general rule that only one 

recovery is allowed for a single injury, see Great N. Packaging, Inc. v. General Tire & Rubber 

Co., 399 N.W.2d 408, 410 (Mich. Ct. App. 1986), which is “distinct, but not necessarily 

incompatible” with the setoff rule, K.S. v. Detroit Pub. Sch., 153 F. Supp. 3d 970, 979 (E.D. Mich. 

2015) (citation omitted); see also Laethem Equip., 485 F. App’x at 50-53 (analyzing whether the 

defendants were entitled to a reduction in damages based on the one-recovery rule despite finding 
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that comparative-fault principles applied to the claims at issue). “To determine whether a double 

recovery has occurred, this Court must ascertain what injury is sought to be compensated. Thus, 

where a recovery is obtained for any injury identical with another in nature, time, and place, that 

recovery must be deducted from the plaintiff’s other award.” Grace v. Grace, 655 N.W.2d 595, 

602 (Mich. Ct. App. 2002) (citations omitted). The amount of reduction is determined by 

analyzing the extent to which the first recovery overlaps with the second, and to make that 

determination “it is necessary to go beyond the theoretical damages and look at the actual damages 

sought and proved by plaintiff” in a particular case. Great N. Packaging, 399 N.W.2d at 412.

Simon settled with Hemady without initiating an adversary proceeding, and thus the precise 

theories of liability underlying the settlement were never evaluated in court. Nor is the settlement 

agreement, or any testimony about the settlement, in the record. The district court, however, 

accepted Simon’s characterization in his brief that “$60,000 of the $250,000 settlement related to 

a turnover claim under 11 U.S.C. §542 and the remaining $190,000 relates to unearned monies.” 

Dist. Ct. R. 18, PID 239 (citation omitted). In the bankruptcy proceeding, Simon filed a motion 

for order authorizing him to compromise claim against Hemady. The motion provides, in relevant 

part:

9. One of the purposes of the Liquidation Trust is to pursue Trust Causes of Action 

which included certain alleged claims against [Hemady] relating to the creation of 

[AMEG] to administer a program originated by Hemady between the Debtor and a 

medical school which provided students to the clinical rotation program of the 

Debtor.

10. As a result of the Trustee’s investigation of the Debtor’s financial affairs, the

Trustee asserted that Hemady, together with [Singhal] formed AMEG to administer 

the clinical rotation programs for [Ross] pursuant to an Affiliation Agreement dated 

March 26, 2012 between the Debtor and Ross and to receive payment from Ross 

under such agreement. Hemady asserts that AMEG was created because the Debtor 

was mismanaging the Affiliation Agreement and administering the clinical rotation 

program in a manner that would have resulted in Ross . . . cancelling the Agreement 

had AMEG not been created and taken over the program. The Trustee asserts 

otherwise.
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11. Over the past several months, Hemady and the Trustee engaged in discussions 

and reviewed documents provided by the parties relating to the Trustee’s claims in 

an attempt to resolve this Trust Cause of Action without the filing of an adversary

proceeding. The parties have agreed to settle the Trustee’s claims consistent with 

the terms and conditions contained in the proposed order attached hereto as Exhibit 

1. Under the settlement, Hemady has agreed, pursuant to a prior demand by the 

Trustee, to turn over funds remaining in the AMEG bank accounts in the sum of 

$60,000, and to pay the additional sum of $190,000.00 as follows: four annual 

consecutive installments of $47,500.00 commencing October 1, 2017 and 

continuing until paid in full. Hemady shall also appear for a deposition under oath 

to testify about AMEG and the involvement of Singhal and others in connection 

with the Trustee’s claims.

Dist. Ct. R. 16-2, PID 186-87. The bankruptcy court granted the motion, ordering that 

the Trustee shall be and hereby is authorized to compromise his claim against

[Hemady] in exchange for the turnover of sums remaining in the account of 

[AMEG], being the sum of $60,000, plus payment of additional funds in the amount 

of $190,000.00;

IT IS FURTHER ORDERED that said sum shall be paid as follows: $60,000.00 in

the AMEG account,[] payable upon the entry of this Order and the balance of 

$190,000.00 paid in four equal consecutive annual installment payments of 

$47,500.00 commencing October 1, 2017 and continuing until paid in full.

Id. at PID 183.

Although the record is not fully developed on this issue, the basis for the claims against 

Hemady set forth in the motion appears to be the same conduct that is the basis for the conversion 

claim, i.e., the funds from Ross being diverted from the Hospital to AMEG. Simon, at one point 

in the litigation, agreed, as he described the claim against Hemady to be “substantially similar to 

the claim he makes against [Singhal].” Bk. AP R. 113 at 15. Because the record on summary 

judgment permits a finding that the settlement with Hemady compensates the Hospital for the 

identical injury as the damages for the conversion claim against Singhal, Singhal may be entitled 

to a reduction in damages pursuant to the one-recovery rule.

The district court’s rationale in rejecting Singhal’s argument at this stage of the proceedings 

is unpersuasive. First, it concluded that there were distinct theories of liability applicable to 
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Singhal and Hemady by accepting Simon’s statement about the theory of Hemady’s liability. Even 

if Simon’s description of his theory of liability against Hemady is accurate—which is unknown 

from the record—the theories of liability need not be identical for the one-recovery rule to apply. 

For example, in Grace, the plaintiff sought damages against her husband for fraudulently 

concealing marital assets and not disclosing the true value of disclosed assets. 655 N.W.2d at 602. 

In a separate action, the plaintiff sought damages against her divorce attorney for legal malpractice 

based on the attorney’s failure to discover the assets the husband concealed and the true value of 

the disclosed assets. Id. Despite the distinct theories of liability against each, the Michigan Court 

of Appeals held “that plaintiff has sought to recover damages for an injury identical in nature, time, 

and place against both defendant and her divorce attorney” and affirmed the trial court’s decision 

to reduce the jury award by the settlement amount in the malpractice action. Id. at 603; see also

Chicilo v. Marshall, 460 N.W.2d 231, 232 (Mich. Ct. App. 1990) (“In making such a determination

[about whether a double recovery occurred], the nature of the conduct causing the injury and the 

label attached to the plaintiff's claims are of little relevance.”).

Further, the district court’s explanation that Michigan law allows for “some overlap” is 

insufficient to justify its conclusion that Singhal is not entitled to a setoff or reduction as a matter 

of law. The district court relied on K.S.—a federal district court case—but the facts there are 

distinguishable. In K.S., the plaintiff sued Detroit Public Schools (DPS), DPS officials, and an 

individual (Pugh) arising out of Pugh’s sexual misconduct towards the plaintiff. 153 F. Supp. 3d 

at 973. The DPS defendants eventually settled with the plaintiff for $350,000, and a jury verdict 

was returned against Pugh in the amount of $250,000 for battery and intentional-infliction-ofemotional-distress (IIED) claims. Id. In concluding that the one-recovery rule did not require 

reducing the judgment against Pugh, the district court explained:
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According to the amended complaint in this case, the plaintiff sought recovery from 

both Pugh and the DPS defendants on the [Michigan Elliott-Larsen Civil Rights 

Act (ELCRA)] claim for “emotional, psychological, and physical injuries, and the 

permanent and serious impairment of plaintiff's academic and social development.” 

On the Title IX claim against the DPS only, the plaintiff's damages claim was based 

on “physical injuries, mental and emotional distress, pain, grief and anguish, 

medical expenses and the loss of earning capacity, all past, present, and future.” He 

also sought damages against Pugh alone on the battery claim for “emotional, 

psychological, and physical injuries, and the permanent and serious impairment of 

plaintiff's academic and social development” and on the IIED claim for “severe 

emotional distress to plaintiff.” There is considerable overlap in the nature of the 

damages requested against the DPS defendants and against Pugh in the amended 

complaint. However, those damages are not identical.

The settlement with the DPS defendants, as described on the record, was meant to 

cover the plaintiff's claim for damages—which included loss of earning capacity—

plus attorney’s fees, for which the DPS defendants could be liable under Title 

IX, see 42 U.S.C. § 1998(b), and ELCRA, see Mich. Comp. Laws § 37.2802. The 

jury verdict addressed only the plaintiff’s damages for emotional distress or 

emotional suffering, which was limited by the jury instructions to “mental anguish[ 

] and ...embarrassment, humiliation, or mortification.” Because the jury returned a 

verdict in Pugh’s favor on the ELCRA claim, the plaintiff cannot recover attorney’s 

fees against him. There was no economic component in the verdict, such as the loss 

of earning capacity, which was included in the settlement with the DPS defendants. 

It can fairly be said that the DPS defendants’ settlement was meant to compensate 

the plaintiff for a certain measure of emotional suffering. But despite some overlap, 

there is a distinct identity in the damages awarded by the jury and the amount to be 

paid by the school district. Therefore, requiring defendant Pugh to pay the full 

judgment would not offend the one recovery rule.

Id. at 981-82.

Unlike in K.S., where the DPS defendants’ settlement was intended to compensate for 

additional damages (earning capacity and attorney’s fees) that the verdict against Pugh did not 

include, it is not apparent here whether there is any distinction in damages between the claims 

against Hemady and Singhal. As stated in Simon’s motion, the claims against Hemady “relat[e] 

to the creation of [AMEG] to administer a program originated by Hemady between the Debtor and 

a medical school which provided students to the clinical rotation program of the Debtor.” Dist. 

Ct. R. 16-2, PID 186. Singhal’s liability for conversion likewise relates to the creation of AMEG 
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to administer the Ross medical-student-training program and the diversion of funds from the 

Hospital to AMEG. 

Finally, Simon’s argument that Singhal is not entitled to a reduction in damages because 

he never filed a third-party complaint against Hemady is unavailing. He cites no authority for the 

proposition that a non-settling tortfeasor must implead another tortfeasor where that other 

tortfeasor already settled the relevant claims with the plaintiff. Further, Grace, like the present 

case, also involved a limitation on damages based on a prior settlement. 655 N.W.2d at 600, 603. 

There is no suggestion in Grace that the settling attorney was ever joined in the plaintiff’s later 

proceeding against her husband, but the court nevertheless subtracted the prior settlement amount 

in determining damages because “plaintiff has sought to recover damages for an injury identical 

in nature, time, and place against both defendant and her divorce attorney.” Id. at 603.

Accordingly, we vacate the district court’s setoff determination. If Singhal is found liable 

for conversion of the Ross funds, this question should be reconsidered after additional evidence is 

presented.

III.

For the reasons set out above, we AFFIRM the district court’s grant of summary judgment 

on the common-law conversion count as it pertains to the funds diverted to DHOM, REVERSE 

the district court’s grant of summary judgment on the common-law conversion count as it pertains 

to the funds diverted to AMEG, VACATE the district court’s setoff determination, and REMAND

for further proceedings consistent with this opinion.