G.A.D. Inc v. Loyer ( 2003 )

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.