JPMorgan Chase Bank, N.A. v. Winget et al

Filing 751

ORDER DENYING 734 Motion for Reconsideration. Signed by District Judge Avern Cohn. (MVer)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

JPMORGAN CHASE BANK, N.A.,
Plaintiff/Counter-Defendant,

Case No. 08-13845

v.
HON. AVERN COHN
LARRY J. WINGET and the
LARRY J. WINGET LIVING TRUST,
Defendants/Counter-Plaintiffs.
__________________________________/
MEMORANDUM AND ORDER
DENYING WINGET’S MOTION FOR RECONSIDERATION (Doc. 734)1
I.
This is a commercial dispute. J. P. Morgan Chase (Chase) is the administrative
agent for a group of lenders that extended credit to Venture Holdings Company, LLC
(Venture) under a credit agreement. In 2008, Chase sued Larry J. Winget (Winget) and
the Larry J. Winget Living Trust (Winget Trust) to enforce a Guaranty and two (2)
Pledge Agreements entered into by Winget and signed by Winget and the Winget Trust
in 2002, guaranteeing the obligations of Venture. After years of litigation and mutliple
appeals, on July 28, 2015, the Court entered an Amended Judgment in favor of Chase
and against Winget and the Winget Trust that enforced the Guaranty and Pledge
Agreements against Winget and the Winget Trust. Specifically, the judgment against
the Winget Trust was in the amount of $425,113.115.59. The judgment against against
Winget was limited to $50 million. (Doc. 568). Because Winget later satisfied his
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Upon review of the parties’ papers, the Court deems this matter appropriate for
decision without oral argument. See Fed. R. Civ. P. 78(b); E.D. Mich. LR 7.1(f)(2).

portion of the judgment, Chase began collection efforts against the Winget Trust.
Following being informed that Winget transferred all of the Winget Trust’s assets to
himself without prior notice, Chase claimed that the transfer was fraudulent particularly
because a judgment remained against the Winget Trust.
Chase then filed a motion for partial judgment on the pleadings (Doc. 699), on
the grounds that the transfer amounted to constructive fraud. The Court agreed. (Doc.
732). Before the Court is Winget’s motion for reconsideration. (Doc. 734). For the
reasons that follow, the motion will be denied.
II.
E.D. Mich LR 7.1(h) governs motions for reconsideration, providing in relevant
part:
Generally, and without restricting the court’s discretion, the court will not
grant motions for rehearing or reconsideration that merely present the
same issues ruled upon by the court, either expressly or by implication.
The movant must not only demonstrate a palpable defect by which the
court and the parties have been misled but also show that correcting the
defect will result in a different disposition of the case.

E.D. Mich. LR 7.1(h)(3).
III.
The primary thrust of the motion for reconsideration is the Court of Appeals for
the Sixth Circuit’s decision in Meoli v. Huntington National Bank, 848 F.3d 716 (6th Cir.
2017). Chase contends Meoli is inapplicable to its fraudulent transfer claim. The Court
agrees. Meoli involved a bankruptcy trustee’s efforts to recover from a bank amounts
the debtor company had deposited to the accounts of related company. The Sixth
Circuit rejected the argument that the bank was a transferee under the Bankruptcy
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Code, finding that the bank did not gain dominion and control over the deposits, which
the account holder remained free to withdraw.
Winget points to the statement in Meoli that “[t]he account holder’s right to
withdraw the deposits keeps the bank from obtaining dominion and control,” and seems
to suggest that Winget had a similar relationship with the Winget Trust. Not so. In
Meoli the Court of Appeals said that a depositary bank “never has actual control of the
funds” it receives for deposit because “it has no discretion over the uses to which the
depositor’s money is to be put.” Meoli, 848 F.3d at 725 (quoting Nordberg v. Societe
Generale, 848 F.2d 1196, 1200 (11th Cir. 1988); Universal Serv. Admin. Co. v.
Post-Confirmation Comm. of Unsecured Creditors of Incomnet Commc’ns Corp., 463
F.3d 1064, 1074 (9th Cir. 2006).) Indeed, a bank does not have the right to dispose of
or encumber monies in an account. This case, however, is not about the relationship
between a bank and an account holder. Rather, it is the relationship between a trust
and the trustee of the trust. Here, the trustee had broad authority to manage the
property of the trust; he had the power to buy, sell, encumber, and otherwise deal with
trust property. This includes entering into a contract like the Guaranty involved in this
case.
Again, Winget’s misreading of Meoli is simply a repetition of his argument that
conflates the distinction between the personal and individual debts of an agent/trustee
and the debts of the trust itself, which is a separate legal entity. Meoli does nothing to
change the Court’s analysis.
None of Winget’s other arguments for reconsideration have merit. Winget
continues to maintain, via varied arguments, that because Larry Winget had a
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pre-existing right to revoke the Winget Trust and used the Winget Trust as a will
substitute, the transfer of the Winget Trust’s assets could not have been a fraudulent
conveyance, ignoring the third party claim of Chase as a creditor of the Winget Trust as
distinguished from any obligation to Winget individually. The Court has repeatedly
explained that neither a settlor’s right to revoke nor the fact that a trust may serve as a
will substitute erases the trust’s contractual obligations.
Finally, the Court is constrained to observe that Winget’s arguments have
created an aura of complexity to inter vivos trusts such as the Winget Trust that simply
does not exist. The concept of a living or revocable trust created during the life of the
settlor (sometimes referred to as a living trust) is neither new nor novel, tracing back to
the Middle Ages in England. See https://en.wikipedia.org/wiki/English_trust_law (Last
visited Sept. 12, 2017); see also E. William Carr, Revocable Trusts (1980).
IV.
For the reasons stated above, Winget’s motion for reconsideration is DENIED.
SO ORDERED.
S/Avern Cohn
AVERN COHN
UNITED STATES DISTRICT JUDGE
Dated: September 13, 2017
Detroit, Michigan

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