Court Opinion

ID: 2970814
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:22:47.160721+00
Date Added: 2024-06-11T12:09:54.317929
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RECOMMENDED FOR FULL-TEXT PUBLICATION
           Pursuant to Sixth Circuit Rule 206            2     In re G.A.D., Inc.                           No. 01-2235
   ELECTRONIC CITATION: 2003 FED App. 0285P (6th Cir.)
               File Name: 03a0285p.06                                        _________________
                                                                                    COUNSEL
UNITED STATES COURT OF APPEALS
                                                         ARGUED: Laurel A. Stuart-Fink, LAUREL STUART-
             FOR THE SIXTH CIRCUIT                       FINK & ASSOCIATES, West Bloomfield, Michigan, for
               _________________                         Appellant. Tony F. Di Ponio, CALHOUN, DI PONIO &
                                                         GAGGOS, Lathrup Village, Michigan, for Appellee.
In re: G.A.D.,                   X                       ON BRIEF: Laurel A. Stuart-Fink, LAUREL STUART-
INCORPORATED ,                    -                      FINK & ASSOCIATES, West Bloomfield, Michigan, for
                                                         Appellant. Tony F. Di Ponio, CALHOUN, DI PONIO &
                      Debtor. -                          GAGGOS, Lathrup Village, Michigan, for Appellee.
                                  -  No. 01-2235
_______________________           -
                                   >                                         _________________
                                  ,
DONNA EGLINTON ,                  -                                              OPINION
          Plaintiff-Appellant, -                                             _________________
                                  -
          v.                      -                        BOYCE F. MARTIN, JR., Chief Circuit Judge. Donna
                                  -                      Eglinton appeals the district court’s affirmance of a
                                  -                      bankruptcy court decision to deny reconsideration of a motion
HUGH LOYER and GEORGE
                                  -                      to vacate. For reasons stated below, we AFFIRM.
CHAPEL,                           -
       Defendants-Appellees. -                              In September 1996, Ronald Korte, Eglinton’s boyfriend,
                                  -                      filed a petition for relief under Chapter 11 of the United States
                                  -                      Bankruptcy Code, which was converted later to a Chapter 7
                                 N                       bankruptcy. On May 7, 1997, while his bankruptcy was
     Appeal from the United States District Court        pending, Korte entered a lease agreement with defendants
    for the Eastern District of Michigan at Detroit.     Loyer and Chapel for nonresidential property in White Lake,
   No. 00-75251—Denise Page Hood, District Judge.        Michigan. The bankruptcy court approved the lease
                                                         agreement on April 24, 1997. The lease agreement contained
               Argued: March 27, 2003                    a clause stating Korte could not assign, transfer, or sublet
                                                         without the written consent of Loyer and Chapel.
         Decided and Filed: August 13, 2003                Despite the prohibition, on May 12, 1997, Korte
                                                         purportedly assigned the lease agreement to G.A.D., Inc., a
Before: MARTIN, Chief Circuit Judge; KENNEDY and         Michigan corporation Eglinton owns, without notice to
          DAUGHTREY, Circuit Judges.                     creditors or permission to do so from the bankruptcy court or

                           1
No. 01-2235                           In re G.A.D., Inc.    3    4    In re G.A.D., Inc.                          No. 01-2235

landlords. We will refer to the transfer as an assignment,         Eglinton responded to Loyer and Chapel’s attorney on
although its actual legal status is indeterminate.               August 24 and 25 to the notice of removal and motion for
                                                                 dismissal, respectively, several days after the time for
   When the landlords learned of the transaction in December     response expired. The bankruptcy court conducted a hearing
of 1997, they entered into an agreement with the bankruptcy      on August 26. Eglinton, who appeared pro se, claims she did
trustee that he would be the only entity who could possess the   not have notice that the court would hear the motion to
premises. Korte objected, but the bankruptcy court approved      dismiss in addition to the notice of removal on that day. The
the agreement. The district court affirmed the bankruptcy        bankruptcy court eventually dismissed Eglinton’s claims with
court’s order on appeal.                                         prejudice. Loyer and Chapel thereafter entered into an
                                                                 agreement with the trustee of the G.A.D. bankruptcy to
  Meanwhile, G.A.D. filed a notice of lis pendens on the         purchase G.A.D.’s property. Eglinton subsequently returned
premises in Oakland County Circuit Court and a complaint         to state court with the suit. The state circuit court dismissed
against the landlords. This first lawsuit sought a declaration   her claims, and she appealed to the Michigan Court of
that the assignment was valid and enforceable, injunctive        Appeals. Eventually, the state trial court dismissed her claim
relief, and monetary damages. Loyer and Chapel removed           on remand.
from state court to Korte’s bankruptcy case as an adversary
proceeding. G.A.D. filed an objection to the notice of             On July 24, 2000, almost a year after the hearing in
removal, but the bankruptcy court found removal was              bankruptcy court, Eglinton filed a motion to vacate the
appropriate because the state court action was inextricably      bankruptcy court order of dismissal, pursuant to Federal Rule
intertwined with the bankruptcy case and related, pursuant to    of Civil Procedure 60(b). The bankruptcy court entered an
11 U.S.C. §157(c)(1). The bankruptcy court then granted          order on September 8, 2000, denying Eglinton’s motion to
Loyer and Chapel’s motion to dismiss with prejudice.             vacate. Eglinton filed a motion to reconsider, and the
                                                                 bankruptcy court denied the motion to reconsider. Eglinton
  On September 22, 1998, G.A.D. filed a petition for Chapter     appealed from this last order to the United States District
11 bankruptcy. G.A.D. asserted a leasehold interest in the       Court for the Eastern District of Michigan, which denied her
property. G.A.D’s bankruptcy case was converted to a             appeal and affirmed the order denying her motion to
Chapter 7 proceeding, which vested the Chapter 7 trustee with    reconsider. She filed a timely notice of appeal from the
any interest G.A.D. had in the leasehold.                        district court’s decision.
   On June 13, 1999, Eglinton filed a complaint in her name        We review denial of a Rule 60(b) motion for abuse of
in Oakland County Circuit Court against Loyer and Chapel,        discretion. Smith v. Kincaid, 249 F.2d 243, 245 (6th Cir.
making the same claims as the former suit, except the latter     1957). The burden is on the movant to bring herself within
alleged fraud and misrepresentation, seeking monetary            the provisions of Rule 60(b). Id. We “find an abuse of
damages for relief. Loyer and Chapel filed motions to            discretion only if we have ‘a definite and firm conviction that
remove Eglinton’s suit to the G.A.D. bankruptcy and to           the court below committed a clear error of judgment in the
dismiss on July 28. Response from Eglinton was due fifteen       conclusion it reached upon a weighing of the relevant
days later. On August 16, Loyer and Chapel filed a               factors.’” Union Oil Co. of Cal. v. Serv. Oil Co. 766 F.2d
certification of no response to the dismissal motion.            224, 227 (6th Cir. 1985)(quoting Taylor v. United States
                                                                 Parole Com’n., 734 F.2d 1152, 1155 (6th Cir.1984)). A
No. 01-2235                             In re G.A.D., Inc.      5    6      In re G.A.D., Inc.                          No. 01-2235

lower court abuses its discretion when it relies on clearly          reasons to excuse her from the requirement to file a timely
erroneous findings of fact, improperly applies the law, or uses      notice of appeal from bankruptcy court to the district court
an incorrect legal standard. Romstadt v. Allstate Ins. Co., 59       and the requirement to file a timely motion under Rule 60(b).
F.3d 608, 615 (6th Cir. 1985).                                       The Supreme Court has instructed courts to hold pleadings
                                                                     filed by pro se litigants to a less stringent standard than those
   Federal Rule of Civil Procedure 60(b) provides that a court       filed by lawyers, Haines v. Kerner, 404 U.S. 519, 520 (1972),
may relieve a party or party’s representative from a final           but has“never suggested procedural rules in ordinary civil
judgment, an order, or a proceeding under certain                    litigation should be interpreted so as to excuse mistakes by
circumstances. The pertinent circumstances here are                  those who proceed without counsel.” McNeil v. United
“mistake, inadvertence, surprise, or excusable neglect,” Fed.        States, 508 U.S. 106, 113 (1993).
R. Civ. P. 60(b)(1), and circumstances where “the judgment
is void,” Fed. R. Civ. P. 60(b)(4).                                     We hold that the district court did not abuse its discretion
                                                                     when it denied Eglinton’s motion to reconsider based upon
  Time limitations govern the filing of a Rule 60(b) motion,         Rule 60(b)(1). The procedural law and deadlines are
but the rule states generally that “[t]he motion shall be made       straightforward. Federal Rule of Bankruptcy Procedure 9024
within a reasonable time.” We have held that “reasonable             provides that Federal Rule of Civil Procedure 60 applies in
time” under 60(b) means that if a reason to set aside the            cases under the Bankruptcy Code. Mirroring the federal
judgment is known within the time for filing notice of appeal,       rules, Local Rule 9024-1 of the Bankruptcy Court for the
a motion should be brought under Rule 60(b)(1) during that           Eastern District of Michigan states:
period. Barrier v. Beaver, 712 F.2d 231, 234-35 (6th Cir.
1983). Regardless of circumstances, no court can consider a              Motion to Alter or Amend Order or Judgment or for
motion brought under Rule 60(b)(1), (2), or (3) a year after             Rehearing or Reconsideration
judgment. Fed. R. Civ. P. 60(b); McDowell v. Dynamics                    (a) Time. A motion to alter or amend an order or
Corp. of America, 931 F.2d 380, 384 (6th Cir. 1991). Motions             judgment and a motion for rehearing or reconsideration
under subsections (4), (5), and (6) may be made within a                 shall be served not later than 10 days after entry of such
“reasonable time,” which we have determined is dependent                 order or judgment.
upon the facts in a case, including length and circumstances
of delay in filing, prejudice to opposing party by reason of the     Eglinton filed her motion almost a year after the bankruptcy
delay, and circumstances warranting equitable relief. Olle v.        court entered judgment. By failing to meet deadlines for a
Henry & Wright Corp., 910 F.2d 357, 365 (6th Cir. 1990).             response to the motion to dismiss and to file a notice of
The time for filing a notice of appeal from a judgment of the        appeal of the bankruptcy court’s decisions, she did not
bankruptcy court to the district court is ten days from entry of     comport with procedural rules.
the judgment under Bankruptcy Rule 8002.
                                                                        Eglinton argues that she did not timely respond to the
  Eglinton’s first claim for relief is based on her assertion that   motion to dismiss because she was unaware that the notice of
her failure to file a motion to vacate or for reconsideration of     removal had no effect on the procedures required with respect
the bankruptcy court’s dismissal is a result of excusable            to the dismissal motion, essentially assuming no response was
neglect under Rule 60(b)(1). She argues that proceeding as a         necessary. The notice attached to the motion to dismiss,
pro se plaintiff and pursuing the matter in state court are          however, states in very plain language that she had fifteen
No. 01-2235                            In re G.A.D., Inc.     7    8     In re G.A.D., Inc.                           No. 01-2235

days to file a response or the court might decide she did not      de novo review of matters to which any party has timely
oppose the motion and rule against her. Though she was a           objected. Id. Section 157(b)(3) provides that the bankruptcy
pro se litigant, procedural rules were available to her as they    judge shall determine if a proceeding is core or related either
are to all persons appearing before courts, and if unsure of the   on any party’s timely motion or on the judge’s own motion.
procedural requirements, she could have clarified them with        In making the ruling, the court looks at the form and the
the clerk’s office.                                                substance of the proceeding. Sanders Confectionary Prods.,
                                                                   Inc., v. Heller Fin., Inc., 973 F.2d 474, 483 (6th Cir. 1992)
   Though Eglinton asserted in the September 2000                  (citing In re Wolverine Radio Co., 930 F.2d 1132, 1144 (6th
bankruptcy court hearing, as she does here, that Loyer and         Cir. 1991). “A core proceeding either invokes a substantive
Chapel did not comply with local rules so that they are being      right created by federal bankruptcy law or one which could
held to a less stringent application of the rules than she, this   not exist outside of the bankruptcy.” Id.
allegation does not cure the defects in neglect of the
deadlines. Voicing procedural grievances a year after the            If the dispute over the lease was not a core proceeding, then
occurrence is inappropriate. Rather, the appropriate time to       the bankruptcy judge was without power to enter an order to
voice that complaint was at the first bankruptcy court hearing     dismiss, and the order would be void. Other circuits have
in 1999 or in motions properly filed then.                         determined, as quoted by the Eighth Circuit in Kocher v. Dow
                                                                   Chem. Co., 132 F.3d 1225, 1230 (1997), that a Rule 60(b)(4)
  Eglinton’s second claim for relief asserts that the              motion will succeed only if the lack of subject matter
bankruptcy court had no jurisdiction over the claims against       jurisdiction was “so glaring as to constitute ‘a total want of
Loyer and Chapel, rendering the court’s judgment dismissing        jurisdiction,’ ” (quoting Kansas City S. Ry. v. Great Lakes
her claim void. Under Rule 60(b)(4), if the rendering court        Carbon Corp., 624 F.2d 822, 825, (8th Cir.)(en banc), cert.
lacked subject matter jurisdiction, the underlying judgment is     denied, 449 U.S. 955 (1980)), or “‘no arguable basis’ for
void, and it is per se an abuse of discretion to deny a            jurisdiction existed,” (quoting Nemaizer v Baker, 793 F.2d 58,
movant’s motion to vacate. Antoine v. Atlas Turner, Inc., 66       65 (2d Cir. 1986)).
F.3d 105, 108 (6th Cir. 1995).
                                                                     Eglinton’s jurisdictional argument claims that the lease
  Title 28, chapter 6, governs the jurisdiction and powers of      assignment dispute was not a core proceeding in the Chapter
bankruptcy courts. Under 28 U.S.C. § 157 (b)(1), bankruptcy        7 bankruptcy proceeding. Nevertheless, we conclude that she
judges may hear and determine core proceedings arising             has not shown a total want of jurisdiction. In removing the
under the bankruptcy code and may enter orders and                 suit filed by G.A.D. from state court to the Korte bankruptcy,
judgments in those proceedings. Core proceedings are               the bankruptcy court found that resolving the dispute over the
defined in a non-exclusive list at section 157(b)(2). The          leasehold would require examining the purported assignment
significance of whether a proceeding is core or non-core is        and deciding if the transfer was valid, as well as analyzing
that the bankruptcy judge may hear non-core proceedings            section 365 of the bankruptcy code governing executory
related to bankruptcy cases but cannot enter judgments and         contracts and unexpired leases. Though not expressly using
orders without consent of all parties to the proceeding. See       the words “core proceeding,” the bankruptcy court found that
§ 157(c). Without consent from the parties, a district judge       the controversy was inextricably intertwined with the
must make final determinations after considering the findings      bankruptcy case. In Eglinton’s mirror-image suit, the very
and conclusions of the bankruptcy judge and after conducting       same leasehold is in dispute; thus, validity of the transfer will
No. 01-2235                            In re G.A.D., Inc.     9

again require the court to make a determination of the
leasehold’s status in the bankrupt estate of G.A.D.
Additionally, determination of the fraud and
misrepresentation issue Eglinton raises would, as the
bankruptcy court found with respect to claims in the first suit,
require determination of the validity of the assignment and
the right to posses the premises. This goes to the heart of an
estate asset.
  Even if we were to decide that the dispute was not a core
proceeding, procedural flaws would again defeat Eglinton’s
claims. A claimant has ten days in which to appeal a decision
of the bankruptcy court to the district court. Eglinton chose
instead to pursue her suit again in state court. “A party may
not use a Rule 60(b)(4) motion as a substitute for a timely
appeal.” Id.
  In pursuing virtually the same suit in state and federal
court, by her corporation and by herself, and in doggedly
seeking favorable judgment despite neglect of procedural
mechanisms, Eglinton has not had just one bite at the apple
but has nearly consumed the entire fruit. Such litigation
tactics are disfavored, and we will not relieve her of the
consequences of the failure to meet deadlines. The judgment
of the district court is AFFIRMED.