Court Opinion

ID: 4501138
Source: CourtListenerOpinion
Date Created: 2020-01-24 10:04:54.086075+00
Date Added: 2024-06-11T08:49:33.145378
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                 revision until final publication in the Michigan Appeals Reports.

                            STATE OF MICHIGAN

                            COURT OF APPEALS

THERESA ONEY MARLOW,                                               UNPUBLISHED
                                                                   January 23, 2020
               Plaintiff-Appellee,

v                                                                  No. 345021
                                                                   Wayne Circuit Court
MARCUS MARLOW,                                                     LC No. 13-101066-DM

               Defendant,

and

ARTHUR R. VAN DER VANT,

               Appellant.

Before: K. F. Kelly, P.J., and BORRELLO and SERVITTO, JJ.

PER CURIAM.

        Following the judgment of divorce of plaintiff and defendant, at plaintiff’s request the
trial court appointed Arthur R. van der Vant as the “receiver” in this matter. He appeals as of
right an order setting aside the Order Resolving Differences. For the reasons set forth in this
opinion, we vacate that portion of the trial court’s order that sets aside the Order Resolving
Differences and remand to the trial court for further proceedings consistent with this opinion.

                                      I. BACKGROUND

        When plaintiff and defendant divorced in 2014 they had two young children. Plaintiff
was awarded sole legal and physical custody and defendant was ordered to pay monthly child
support of $1,806.00. On September 19, 2014, plaintiff filed a motion to appoint a receiver
noting that defendant had defied the court’s authority and was found in contempt, that defendant
had refused to pay child support and other money owing to plaintiff, and that defendant had
refused to offer any payment or plan for payment relative to his obligations. Plaintiff asked that
the receiver “be appointed by [the court] to intercept defendant’s income to address his Court
orders for payment in a timely responsible fashion” and that the receiver “be paid from the

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Defendant’s funds which come under the control of the Receiver.” The trial court granted
plaintiff’s motion on November 21, 2014. It ordered that the receiver would be permitted to use
discovery to obtain information about defendant’s income, including income from practicing
medicine and managing or renting real estate properties. The receiver was empowered to collect
rents on relevant properties and all income related to defendant’s medical practice, and to pursue
collections to satisfy the judgment of divorce and child support debts in both Michigan and
Illinois. He was required to submit periodic written reports to plaintiff’s counsel as well as a
final report. The court set the receiver’s fees at $180.00 per hour plus costs, but retained the
authority to review all fees for reasonableness and the right to reduce fees deemed excessive.

        Once the receiver was appointed, he noted that “after defendant was served with the
Notice of Receivership and was asked to surrender the control of the rental units and nonexempt
income to receiver, defendant’s response was: “You will never be in control of this; ever, ever.””
Defendant was ordered to show cause on numerous occasions for failure to pay his support
obligation or to comply with the trial court’s order appointing the receiver. The receiver
remained on task and submitted eight receiver’s reports and applications for fees between
February 26, 2015 and May 8, 2017. The trial court approved the fees and costs submitted for
approval, as well as the fees and costs of the receiver’s counsel. After failing to appear for the
first motion to show cause in 2015, a bench warrant was issued for defendant’s arrest. Defendant
remained recalcitrant throughout the proceedings and refused to pay child support, and was
successful in keeping any income from the receiver.

        At one point during the proceedings, the receiver sought payment for his fees and costs
and those of his counsel from plaintiff. After exchanging several motions, the receiver and
plaintiff engaged in settlement negotiations. Ultimately, plaintiff and the receiver came to an
agreement that any sums of money paid by defendant to plaintiff, plaintiff’s counsel, the
receiver, or receiver’s counsel would be shared by dividing it up so that each of these four parties
would get 25%. On February 1, 2017, the trial court issued an order memorializing this
agreement, entitled the “Order Resolving Differences.”

        On May 4, 2017, a warrant was signed for defendant’s arrest for felony nonsupport. On
January 22, 2018, this matter was administratively transferred a new judge. On March 27, 2018,
plaintiff and the receiver filed a joint motion to appoint a guardian ad litem for defendant after
learning that the trial judge in the criminal case had determined that he “was not competent to
stand trial on the charge.” On April 25, 2018, the parties appeared before the trial court. The
trial court granted plaintiff and the receiver’s joint motion to appoint a guardian ad litem and
appointed Ethan John Marlow temporary guardian. On May 18, 2018, as part of continuing
negotiations between the parties, the receiver emailed defendant’s guardian the 22nd draft of a
proposed consent order. Defendant’s guardian declined to settle.

       At a subsequent hearing, the receiver requested that the trial court set a show cause
hearing to find defendant in contempt of court. The trial court inquired regarding defendant’s
competency and subsequently dismissed the show cause order given the criminal court’s
determination regarding defendant’s competence. The trial court then granted the receiver’s
request to be dismissed. Next, the trial court, sua sponte, set aside the Order Resolving
Differences, finding it “illegal.” It issued a written order on June 25, 2018 discharging the
receiver “on satisfaction of all parties” and dissolving the receiver’s bond; dismissing the

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receiver’s motion to show cause as moot because defendant was previously found incompetent to
stand trial; setting aside the “Order Resolving Differences” dated February 1, 2017; and
continuing defendant’s bond. The receiver filed a motion for reconsideration which the trial
court denied. The receiver now appeals as of right.

                                          II. ANALYSIS

                                        A. DUE PROCESS

        On appeal, the receiver argues that the trial court deprived him of his property interest in
getting paid for his services by sua sponte setting aside the Order Resolving Differences without
notice and a meaningful opportunity to be heard. “The United States and Michigan Constitutions
preclude the government from depriving a person of life, liberty, or property without due process
of law.” Hinky Dinky Supermarket, Inc v Dep’t of Community Health, 261 Mich App 604, 605-
606; 683 NW2d 759 (2004), citing US Const, Amend XIV; Const 1963, art 1, § 17. “Procedural
due process serves as a limitation on governmental action and requires a government to institute
safeguards in proceedings that might result in a deprivation of life, liberty, or property.” Mettler
Walloon, LLC v Melrose Twp, 281 Mich App 184, 213; 761 NW2d 184 (2008). “The basic
requirements of due process in a civil case include notice of the proceeding and a meaningful
opportunity to be heard.” Al-Maliki v LaGrant, 286 Mich App 483, 485; 781 NW2d 853 (2009).
The notice provided must “be reasonably calculated . . . to apprise interested parties of the
pendency of the action and afford them an opportunity to present their objections.” Maxwell v
Dep’t of Environmental Quality, 264 Mich App 567, 574; 692 NW2d 68 (2004).

        At issue here is the receiver’s property interest in the form of compensation for his
services to the trial court, committed to writing in the Order Resolving Differences. The receiver
submitted eight receiver’s reports and applications for fees between February 26, 2015 and
May 8, 2017, and all submitted fees were found to be reasonable and approved for payment by
Judge Hegarty. At the time the receiver was discharged by Judge Halloran, the receiver’s ninth
report and application for fees remained outstanding. Because plaintiff was not receiving court-
ordered child support payments and plaintiff’s attorney, the receiver, and the receiver’s attorney
were not being compensated for their ongoing services. However, the record demonstrates that
despite the fact that the receiver was not able to recover significant amounts of money from
defendant, plaintiff, plaintiff’s attorney, and Judge Hegarty were satisfied with the receiver’s
services.

        “Receivers have a right to compensation for their services and expenses.” Cohen v
Cohen, 125 Mich App 206, 215; 335 NW2d 661 (1983); “Circuit courts appointing receivers
should be cognizant of MCR 2.622(D), which permits a circuit court, on application of the
receiver, to set the compensation of the receiver, and to require the party requesting the
receivership to bear the costs associated with it. But regardless of whether a circuit court
chooses to exercise its discretion under the court rule, the circuit court, at the time it appoints a
receiver, should nevertheless make provision for the payment of receivership expenses and
should be aware of the order of priority of any competing interests and other relevant collateral
issues that could affect a receiver’s compensation.” In re Receivership of 11910 South Francis
Rd, 492 Mich 208, 232; 821 NW2d 503 (2012). Here, Judge Hegarty set the receiver’s rate in

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the Order Appointing Receiver on November 21, 2014 and ordered that defendant was
responsible for all of the receiver’s fees. And later, Judge Hegarty approved the result of the
party’s negotiation concerning their competing interests in the form of the Order Resolving
Differences which directed how everyone would ultimately be paid.

        After Judge Halloran took over the case, there was a hearing on June 25, 2018. The only
motions scheduled by any of the parties for hearing on that date were the Receiver’s Motion to
Schedule Show Cause Hearing and to Discharge Receiver and Plaintiff’s Motion to Compel
Friend of the Court to Correct Account arrearage. At the hearing, the trial court dismissed the
receiver’s request to schedule a show cause hearing because defendant had been adjudicated
incompetent in the corresponding criminal case. Without discussion, the trial court granted the
receiver’s request to be dismissed as the receiver. Finally, the trial court took up the plaintiff’s
motion to compel the Friend of the Court to correct the official account. The trial court brought
up the Order Resolving Differences, stating, “the order of predecessor judge dividing the
payments four ways is to be set aside. All support payments go to the mother. And if the mother
winds up having to pay attorney fees or costs then she will come back to the Court and then she
will have those reimbursed and the Friend of the Court will consider whether or not they will get
involved in doing this and collecting those fees.” When the receiver protested, that “the order
dividing payments four ways was an agreed order,” the court cut him off, saying that the order
was illegal.

        The receiver did not receive notice that the trial court planned to raise the legality of the
Order Resolving Differences at the June 25, 2018 hearing. The trial court sua sponte brought up
the order during the hearing as part of its response to plaintiff’s motion regarding the addition of
fees to defendant’s Friend of the Court account. Neither the receiver nor plaintiff raised the
legality of the Order Resolving Differences in either of the motions that were set to be heard that
day. When the trial court brought up the Order and set it aside, the receiver attempted to make
an argument, but the trial court did not allow it. Based on the foregoing, we conclude that the
trial court did not meet the basic requirements of due process. While the receiver had notice of
the hearing and attended it, he was not aware and had no reason to know that Judge Halloran
would be bringing up and discussing the merits of an 18-month-old order issued by Judge
Hegarty. Allowing the receiver to present only one and a half sentences of argument on an issue
before being cut off does not amount to a meaningful opportunity to be heard or to present his
objections. Al-Maliki, 286 Mich App at 485; Maxwell, 264 Mich App at 574.

        Further, in this case, due process safeguards were not satisfied during the motion for
reconsideration. See Al-Maliki, 286 Mich App at 485-486 (indicating that where a court
considers an issue sua sponte, due process can be satisfied by affording a party an opportunity to
be heard on rehearing or reconsideration); Great Lakes Div of Nat’l Steel Corp v Ecorse, 227
Mich App 379, 406; 576 NW2d 667 (1998) (due process safeguards satisfied by opportunity to
move for reconsideration and evidence that Michigan Tax Tribunal considered the issues raised
in the motion for reconsideration). Here, the trial court decided the motion for reconsideration
without oral argument pursuant to MCR 2.119(F)(2). The trial court’s order denying
reconsideration and reinstatement contains boilerplate language and does not present any legal
analysis regarding the issues the receiver raised in his motion for reconsideration concerning the
legality of the Order Resolving Differences. Most notably, the trial court stated that “the
Receiver cites to legal authorities and evidence that could have been raised at the time of the

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hearing.” We find this statement disingenuous because the facts of the case illustrate that the
receiver actually did not have the opportunity to raise “legal authorities and evidence” at the time
of the hearing. The fact that the trial court used that reasoning to deny the receiver’s
reconsideration motion on that basis demonstrates to us that the basic requirements of due
process were not met in this case. Al-Maliki, 286 Mich App at 485; Maxwell, 264 Mich App at
574. For these reasons, we vacate that portion of the trial court’s order that sets aside the Order
Resolving Differences and remand for fourth proceedings consistent with this opinion.1

                           B. ORDER RESOLVING DIFFERENCES

        The receiver next argues that the Order Resolving Differences does not require the Friend
of the Court to collect or add receiver’s fees and attorney fees to the Friend of the Court’s child
support account balance, so the trial court erred when it concluded that the order violates the
Friend of the Court act, MCL 552.501, as well as the guidelines in the Michigan IV-D Child
Support Manual.

        “The primary purpose of a receiver is to preserve property and to dispose of it under the
order of the court.” Band v Livonia Associates, 176 Mich App 95, 104 439 NW2d 285 (1989),
also see Westgate v Westgate, 294 Mich 88, 91; 292 NW 569 (1940). Circuit judges, in the
exercise of their equitable powers, may appoint receivers in all cases pending where appointment
is allowed by law. MCL 600.2926. The phrase “allowed by law” is not limited to situations
where appointment of a receiver is provided for by statute. It also refers to those cases where the
facts and circumstances justify appointment of a receiver in order to afford equitable relief.
Band, 176 Mich App at 105. “A court has the basic responsibility of enforcing its own orders
and has considerable discretion in choosing the means to be employed.” Id. (citation omitted).

       “Receivers have a right to compensation for their services and expenses.” Cohen, 125
Mich App at 215. “Receivers ordinarily have a right to compensation for their services and
expenses, and such right is a strong equity, analogous to an obligation founded upon an implied
contract, and is not dependent upon the mere arbitrary discretion of the court, if the appointment
of the receiver was regular and his conduct has been free from exception. Such right of the
receiver to compensation is a charge on the property or fund in receivership.” Fisk v Fisk, 333
Mich 513, 518, 53 NW2d 356 (1952) (internal quotations and citation omitted.)

       When seeking payment, a receiver looks first to the property itself. Fisk, 333 Mich at
516. “If there are insufficient funds because, for example, a creditor with a superior lien is owed
more than what the property is worth, then the receiver may petition the court pursuant to MCR

1
 Holding that the receiver is entitled to relief on the basis of his due process arguments, we need
not consider the receiver’s alternative argument that the trial court was precluded under MCR
2.613(B) from setting aside the Order Resolving Differences. If we did consider the arguments
we would conclude that the receiver is not entitled to relief because once the action was
administratively transferred from Judge Hegarty, he became unable to act and Judge Halloran
was then empowered to rule in the matter.

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2.622(D) to order the party who sought the appointment of the receiver to compensate the
receiver for his or her costs and fees.” In re Receivership of 11910 South Francis Rd, 492 Mich
at 232 n 48.

       In this case, plaintiff sought the appointment of the receiver and the trial court appointed
the receiver and set his compensation rate in an order dated November 21, 2014. The receiver
sought payment from plaintiff and on February 1, 2017, after plaintiff, her counsel, the receiver,
and the receiver’s counsel negotiated an agreement regarding payment of receiver’s fees and
receiver’s attorney’s fees, the trial court entered the Order Resolving Differences which states in
pertinent part:

              IT IS FURTHER ORDERED that Receiver’s request for Receiver’s Fees
       and Receiver’s Attorney Fees is withdrawn as to the Plaintiff for fees and costs
       incurred in the past.

             IT IS FURTHER ORDERED that Receiver shall not seek Receiver’s Fees
       and Receiver’s Attorney Fees from Plaintiff for fees and costs in the future.

                                             * * *

                IT IS FURTHER ORDERED that all money received from the Defendant
       in the future, directly or indirectly, by the Receiver, and / or the Receiver’s
       Attorney, by the Plaintiff, and/or the Plaintiff’s Attorney, through the Wayne
       County Friend of the Court, the office of the Michigan Attorney General, the
       Circuit Court of Wayne County Michigan, the Circuit Court of Cook County
       Illinois, or any other governmental agency or Court, and / or by any other means
       or from any other source, including but not limited to judgments, insurance
       policies, inheritance, gifts, lottery wins, payments made directly to the Plaintiff’s
       children’s college accounts, child support payments, reimbursement for joint
       marital debt, or from any other sources whatsoever, shall be shared evenly
       between the Plaintiff, Plaintiff’s Attorney, the Receiver, and the Receiver’s
       Attorney, (25% - 25% - 25% - 25% ) and shall be applied as a payment in such a
       way and amounts to the outstanding balance due to the Plaintiff, the Plaintiff’s
       Attorney, the Receiver, and the Receiver’s Attorney, continuing even after
       Receiver’s Discharge and / or Receiver’s Attorney’s Discharge, and / or Plaintiffs
       Attorney’ withdrawal, until all outstanding fees and expenses approved by this
       Court are paid in full.

        We read the plain language of the order as a disbursement mechanism in the event any
monies are received from defendant from any source. We do not read the language as stating
that any receiver’s or attorney’s fees and costs should be added to defendant’s Friend of the
Court account or that any receiver’s or attorney’s fees and costs be characterized as child support
and coded as such for payment from defendant. If that is what the Order Resolving Differences
directed the parties or the Friend of the Court to do, that would be error because in determining
or awarding child support, a trial court must follow the formula set forth in the Michigan Child
Support Formula Manual. Peterson, 272 Mich App at 516, citing MCL 552.519(3)(a)(vi) and

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MCL 552.605(2). When a trial court orders child support, MCL 552.605(2) mandates the
following:

       Except as otherwise provided in this section, the court shall order child support in
       an amount determined by application of the child support formula developed by
       the state friend of the court bureau as required in section 19 of the friend of the
       court act, MCL 552.519. The court may enter an order that deviates from the
       formula if the court determines from the facts of the case that application of the
       child support formula would be unjust or inappropriate and sets forth in writing or
       on the record all of the following:

       (a) The child support amount determined by application of the child support
       formula.

       (b) How the child support order deviates from the child support formula.

       (c) The value of property or other support awarded instead of the payment of child
       support, if applicable.

       (d) The reasons why application of the child support formula would be unjust or
       inappropriate in the case.

“Thus, as required by MCL 552.605(2), when deviating from the formula, the trial court fulfills
its statutory duty only when the court has articulated its rationale in accordance with subsection
2(a) through (d).” Peterson, 272 Mich App at 517. Although a court may modify a child
support order “as the circumstances of the parents and the benefit of the children require,” MCL
552.17(1), a child support order must rest on the application of the child support formula
pursuant to legislative mandate. MCL 552.519(3)(a)(vi); Ghidotti v Barber, 459 Mich 189, 200;
586 NW2d 883 (1998). But in this case—on its face—the trial court’s Order Resolving
Differences does not seek payment of any receiver’s or attorney’s fees and costs as a “child
support arrearage” and is therefore not inconsistent with the plain statutory language defining the
methodology for child support calculation.

        Finally, Section 5.10 “Debt Types” of the Michigan IV–D Child Support Manual
referenced by Judge Halloran does not change the substance of our analysis. The trial court
relied on the Section 5.10 of the Michigan IV–D Child Support Manual for the proposition that
plaintiff (CP or custodial parent) cannot assign her right to collect attorney fees from defendant
(AF or alleged father). Because the Order Resolving Differences does not contain any language
creating an assignment of child support, but rather directs plaintiff, her attorney, the receiver, and
the receiver’s attorney regarding what to do with any monies received from defendant after
receiving those funds from any source, we have not detected error with regard to Michigan IV–D
Child Support Manual Section 5.10.

                                         C. NEW JUDGE

       Lastly, the receiver argues that Judge Halloran’s failure to adequately review the
receiver’s motions and his failure to properly adjourn or adjudicate all outstanding issues with

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due deliberation showed an intent to dispatch with this case with improper haste in blatant
disregard of the interests of receiver, the receiver’s attorney, plaintiff, and plaintiff’s attorney and
evidenced bias. We conclude the issue moot because Judge Halloran has retired from the Third
Circuit bench.

        Affirmed in part, vacated in part, and remanded for further proceedings consistent with
this opinion. No costs are awarded. We do not retain jurisdiction.

                                                                /s/ Kirsten Frank Kelly
                                                                /s/ Stephen L. Borrello
                                                                /s/ Deborah A. Servitto

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