The Huntington National Bank v. JS & P, L.L.C. et al
ORDER Granting 13 Motion to Appoint Receiver. Signed by District Judge Victoria A. Roberts. (LVer)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
THE HUNTINGTON NATIONAL BANK,
successor to Fidelity Bank,
a national banking association,
Case No. 13-13841
Hon. Victoria A. Roberts
JS & P, L.L.C., a Michigan limited liability company,
JAMES J. PRICE, an individual, FAST TRACK AUTO
SERVICE CENTER, L.L.C., a Michigan limited liability company,
LOYAL INVESTMENTS, INC., a Michigan corporation,
JAMES M. PRICE, an individual, FAST TRACK SELF
SERVE WASH, L.L.C., a Michigan limited liability company,
SRS, LLC, a Michigan limited liability company, and
SUSAN PRICE, jointly and severally,
ORDER GRANTING PLAINTIFF’S
MOTION FOR APPOINTMENT OF RECEIVER (DOC. #13)
Plaintiff, Huntington National Bank, successor to Fidelity Bank (“Plaintiff”), filed this
action against Defendants, JS & P, L.L.C. (“JS&P”) and Fast Track Auto Service Center, L.L.C.
(“Fast Track,” collectively with JS&P, “Defendants”), for breach of their obligations to Plaintiff
under certain Loan Documents described below.
Before the Court is Plaintiff’s Motion for Appointment of Receiver (Doc. # 13); Plaintiff
seeks the appointment of a receiver over two Properties– described below – to secure
Defendants’ obligations. Defendants did not respond to Plaintiff’s motion.
JS&P is indebted to Plaintiff under a promissory note dated December 8, 2006, in the
principal sum of $862,500.00 (the “JS&P Note”). Repayment of the JS&P Note, and all other
indebtedness of JS&P to Plaintiff, is secured by, among other things, (i) the guaranty of Fast
Track dated June 10, 2005 (the “Fast Track JS&P Guaranty”), and (ii) a mortgage dated April 4,
2006, encumbering property commonly known as 35125 Utica Road, Clinton Township,
Michigan, including all improvements thereon and income derived therefrom (the “JS&P
Property”), which was recorded by the Macomb County Register of Deeds on June 16, 2006, in
Liber 17930, Page 300 (the “JS&P Mortgage”).
Fast Track is indebted to Plaintiff under a promissory note dated January 16, 2009, in the
principal sum of $281,000.00 (the “Fast Track Note”). Repayment of the Fast Track Note, and
all other indebtedness of Fast Track to Plaintiff, is secured by, among other things, (i) the
guaranty of JS&P dated January 16, 2009 (the “JS&P Fast Track Guaranty”), and (ii) a mortgage
dated January 16, 2009, encumbering real property commonly known as 15779 15 Mile Road,
Clinton Township, Michigan, including all improvements thereon and income derived therefrom
(the “Fast Track Property”, and collectively with the JS&P Property, the “Properties”), which
was recorded by the Macomb County Register of Deeds on January 20, 2009, in Liber 019624,
Page 00159 (the “Fast Track Mortgage,” collectively with the JS&P Mortgage, the
Fast Track is further indebted to Plaintiff under a guaranty dated March 27, 2008 (the
“Fast Track SRS Guaranty,” collectively with the Fast Track JS&P Guaranty and the JS&P Fast
Track Guaranty, the “Guaranties”), promising to repay the indebtedness of Defendant, SRS,
LLC, to Plaintiff under a promissory note of even date, in the principal sum of $247,878.82, as
amended on January 16, 2009 (collectively, the “SRS Note,” and together with the JS&P Note
and the Fast Track Note, the “Notes”).
Upon review of Plaintiff’s Motion for Appointment of Receiver, the Court finds that the
appointment of a receiver over the Properties, and the income derived therefrom, is appropriate
and consistent with the rights afforded to Plaintiff in the Notes, the Guaranties and the Mortgages
(collectively, the “Loan Documents”).
IT IS ORDERED:
Appointment of Receiver. Basil Simon, whose address is 422 W. Congress,
Suite 400, Detroit, Michigan 48226 (the “Receiver”), is appointed as receiver for the Properties
and all related payments, leases, rents, books and records, deposits, bank accounts and other
property, tangible or intangible, that is used or usable (collectively, the “Receivership Property”).
Possession and Control of Receivership Property. The Receiver is authorized
to immediately take possession and control of the Receivership Property, and to manage,
recommend and consummate the sale of all or any portion of same (subject to the approval of the
Court), as the Receiver deems appropriate, and to otherwise exercise the powers and duties set
forth in this Order. The Receiver is authorized to remove any principal, member, general
partner, limited partner, manager, officer, employee, representative or agent of Defendants from
control and/or management of the affairs of the Receivership Property.
Actions in Furtherance of Possession and Control. The Receiver is authorized
to take any reasonable actions which the Receiver deems necessary or appropriate to take
possession of, to exercise full control over, to prevent waste and to otherwise preserve, manage,
maintain, secure and safeguard the Receivership Property.
Surrender of Receivership Property. Defendants and their members, managers,
employees and agents are directed to surrender all of the following relating to the Receivership
Property to the Receiver, to the extent that they are in their possession, custody and control:
All keys and access codes necessary for the Receiver to obtain possession
of and to manage the Receivership Property, as provided in this Order.
All work in process, materials, supplies, “punch lists” and other pending
work orders with respect to construction at the Properties, if any.
All construction contracts and subcontracts for construction on the
Properties, if any.
All bids for contractor work, if any.
All agreements with brokers or other commission agreements pertaining to
sales or leases of the Receivership Property, or any portion thereof.
All leases and other executory contracts, including all amendments,
pertaining to the Receivership Property, or any portion thereof.
All documents, books, records, computer files and records concerning the
finances, rents, operation and management of the Receivership Property.
A list of all accounts receivable and accounts payable, and all details
All documents identifying pending litigation.
All utility agreements.
Such other records pertaining to the Receivership Property as may be
reasonably requested by the Receiver.
All cash and deposits owned by or in the possession of Defendants, or
their members, managers, employees and agents, pertaining to the
All documents and records useful in maintenance of the Properties,
including but not limited to, as applicable, building permits, plumbing and
HVAC drawings, soil borings reports, surveys, environmental reports,
architectural or design diagrams and building specifications.
All documentation pertaining to contracts entered into by Defendants
relating to its business operations and to the Receivership Property.
Powers and Duties of Receiver. The Receiver is vested with and must discharge
the following authority, powers and duties:
The maintenance, securing, management, operation, leasing (upon terms
acceptable to Plaintiff) and preservation of the Receivership Property.
The assumption of control over the Receivership Property, including all
related deposits, security deposits, and other cash collateral.
The maintenance of one or more separate accounts, in the Receiver’s own
name, as Receiver for the Receivership Property, from which the Receiver
must disburse all authorized payments, as provided in this Order.
The preparation and maintenance of books, records and financial reports
of the Receivership Property, including but not limited to operating and
income statements, balance sheets, and all other statements prepared for
the Receivership Property, and provide copies of same to the parties to this
action, through their counsel.
The purchase of such insurance as the Receiver deems appropriate for the
preservation and protection of the Receivership Property, naming the
Receiver and Plaintiff as additional insureds, or as necessary to protect
The receipt and endorsement of checks pertaining to the Receivership
Property, either in the name of the Receiver or in the name of Defendants,
The payment of all real estate and personal property taxes, and any other
taxes or assessments against the Receivership Property, during the period
of the receivership.
Taking such action, including the filing of one or more lawsuits as the
Receiver deems necessary and appropriate, in the Receiver’s discretion,
for the collection of any outstanding accounts receivable or other monies
owed to Defendants.
The investigation of any fraudulent or otherwise improper transfers or
conveyances of the assets of Defendants as the Receiver deems necessary
and appropriate, and, if necessary, the prosecution of any action to set
such transaction(s) aside.
Prevent the withdrawal or misapplication of funds.
Issue such subpoenas as deemed necessary to allow the Receiver to fulfill
the duties set forth in this Order.
Notwithstanding anything to the contrary contained in this Order, the Receiver does not have the
authority to file petitions for relief under the Bankruptcy Code for Defendants.
Access to Books and Records. The Receiver must permit Plaintiff and its agents
and counsel access to the Receivership Property at all reasonable times, to inspect the
Receivership Property and the books and records of Defendants.
Employment of Third Parties. The Receiver is authorized, but not required, to
employ such attorneys, accountants, appraisers, agents and others, as the deems appropriate – all
without recourse against the Receiver.
Borrowing of Funds. Subject to the approval of the Court, without affecting the
rights of the parties relating to the underlying Note, the Receiver is authorized, but not required,
to borrow funds for approved purposes, if necessary, upon terms and conditions agreeable to
Plaintiff and the Receiver. Upon receipt of the approval of the Court, the Receiver is authorized
to execute all promissory notes, loan agreements, receiver’s certificates, and amendments as
necessary to accomplish same.
Exercise of Powers Available Under Applicable Law. Without limiting or
expanding the foregoing, the Receiver is authorized to exercise all powers generally available
under federal law or the laws of the State of Michigan, which may be incidental to the powers
described in this Order, and to act on behalf of and in the name of Defendants, as the Receiver
Further Instructions. The Receiver has the right to apply to the Court for
further instructions and authorization during the pendency of this action.
Protective Advances. Subject to the order of the Court, all reasonable advances
to the Receiver made by Plaintiff for the benefit of the Receivership Property, together with any
other reasonable costs and expenses incurred by the Receiver pursuant to this Order, are deemed
protective advances pursuant to the Notes, are secured by the Guaranties and Mortgages, and
have priority over all claims and liens of all others claiming an interest in any of the
No Transfer of Title. Nothing contained in this Order shall be construed to
transfer title to any of the Receivership Property to the Receiver.
Sale of Property. The Receiver is authorized to, on behalf and in the name of
Defendants, expeditiously and diligently sell the Properties, with the approval of the Court,
consistent with the provisions of 28 U.S.C. §2001(a), under the following conditions:
The sales must be for cash or credit bid, unless otherwise authorized by
the Court, for an amount subject to the approval of the Court.
The sales approved by the Court must be free and clear of all mortgage
interests, security interests and other liens, as applicable, which may be
transferred to the net proceeds of sales. No person or entity shall have any
redemption rights with respect to any sales effectuated by the Receiver,
and any sales are final upon entry of an order of the Court confirming
Execution of Sale Related Documents. In connection with any sale of the
Receivership Property approved by the Court, the Receiver is authorized, in the name of
Execute a deed of conveyance and bill of sale.
Attend and consummate the closing at the offices of any title company
acceptable to the Receiver and Plaintiff (the “Title Company”).
Approve, with Plaintiff, closing statements with respect to any sale of the
Properties, including all costs of closing, sales commissions, and other
adjustments to the purchase price.
Obtain all mortgage and construction lien waivers, quit claim deeds, and
such other documents as are reasonably requested by the Title Company
or the Receiver to effectuate the sale of the Properties, and to allow the
issuance of the appropriate owner’s policy of title insurance to the
Disbursement of Net Sale Proceeds. The “net proceeds of sale” are the gross
sale price of any Receivership Property, less closing costs, sales commissions, and other
adjustments approved by the Court. Disbursement of the net proceeds of sale must be approved
by the Court.
Lien Priorities. The rights and priorities of Plaintiff and any other parties with
respect to the Receivership Property must be determined in accordance with applicable federal
law or Michigan law, without regard to the provisions of this Order.
No Waiver of Claims and Defenses. Nothing contained in this Order enlarges or
restricts the claims and defenses of Plaintiff or other parties claiming interests with respect to the
Compensation of Receiver and Agents. The Receiver, and all persons
employed by the Receiver, must be compensated at their normal rates, with invoices to be issued
and copies furnished to the parties to this action, through their respective counsel, on a monthly
basis. The Receiver’s general office administration, accounting and overhead must not be
charged against the income generated by the Receivership Property. The Receiver and his
counsel may receive payment on a monthly basis, without further Court order, provided no
objections are filed with the Receiver or his counsel, as the case may be, within seven (7) days
after such invoices are mailed to the parties to this action, through their respective counsel. In
the event any objections are timely filed, the Receiver or any other party may file a motion with
the Court to determine the propriety of the fees sought or of the objection(s). The Receiver must
be reimbursed for any reasonable out-of-pocket expenses incurred during the period of the
receivership concerning the obligations and duties set forth in this Order. The compensation paid
to Receiver and Receiver’s professionals must be paid first from the income generated from the
Receivership Property and, next, by Plaintiff, but only to the extent that the income from the
Receivership Property is insufficient to pay the compensation of the Receiver and professionals.
Receiver’s Reports. The Receiver must furnish to the Court and to all parties,
through their respective counsel, monthly reports and statements accounting for all receipts and
disbursements. The reports served upon counsel must be submitted to the Court for its review in
camera, and must not be filed with the Clerk of the Court.
Receiver’s Bond. Within fifteen (15) days of entry of this Order, the Receiver
must post a surety bond in an amount of $10,000.00. The cost of the bond shall be an expense of
the receivership, for which the Receiver must be reimbursed in accordance with the terms of this
Lawsuits Against Receiver. No person or entity may file suit against the
Receiver, or take other action against the Receiver, without an order of the Court permitting the
suit or action. Notwithstanding the foregoing, nothing in this Order serves to stay or otherwise
enjoin any pending action to enforce lien rights, including but not limited to the foreclosure of
mortgages encumbering property owned by Defendants.
Pre-Receivership Liabilities. Plaintiff, the Receiver and the Receiver’s agents
are not liable for any claim, obligation, liability, action, cause of action, cost or expense of
Defendants, their business operations, or the Receivership Property arising out of or relating to
events or circumstances occurring prior to the entry of this Order, including without limitation,
any contingent or unliquidated obligations and any liability from the performance of services
rendered by third parties on behalf of Defendants, and any liability to which Defendants
currently or may ultimately be exposed under any applicable laws pertaining to the ownership,
use or operation of the Receivership Property and their business operations (collectively all of
the foregoing is referred to as “Pre-Receivership Liabilities”). Plaintiff, the Receiver, and the
Receiver’s agents are not obligated to advance any funds to pay any Pre-Receivership Liabilities.
Notwithstanding the foregoing, with the prior written consent of Plaintiff (but not otherwise), the
Receiver may fund Pre-Receivership Liabilities from funds collected from the operation of the
Stay of Actions. Except by leave of this Court and except with respect to the
right of Plaintiff to foreclose the Mortgages or to otherwise take any enforcement action against
the Receivership Property during the pendency of the receivership, Defendants and all other
persons, creditors and entities, are stayed from taking any action to establish or enforce any
claim, right or interest for, against, on behalf of, in, or in the name of Defendants, the Receiver,
the Receivership Property, or the Receiver’s duly authorized agents acting in their capacities as
such, including but not limited to, the following actions:
Commencing, prosecuting, litigating or enforcing suit, except that the
actions may be filed to toll any applicable statute of limitations;
Accelerating the due date of any obligation or claimed obligation,
enforcing any lien upon, or taking or attempting to take possession of, or
retaining possession of, property of Defendants that relates in any way to
the Receivership Property, or attempting to foreclose, forfeit, alter or
terminate the interests of Defendants in the Receivership Property,
whether such acts are part of a judicial proceeding or otherwise;
Using self-help or executing or issuing, or causing the execution or
issuance of any court attachment, subpoena, replevin, execution or other
process for the purpose of impounding or taking possession of or
interfering with, or creating or enforcing a lien upon the Receivership
Doing any act or thing to interfere with the Receiver taking control,
possession or management of the Receivership Property, or to in any way
interfere with the Receiver or the duties of the Receiver or his agents; or to
interfere with the exclusive jurisdiction of this Court over the Receivership
This paragraph does not stay the commencement or continuation of an action or proceeding by a
governmental unit to enforce such governmental unit’s police or regulatory power.
No Personal Liability of Receiver. The Receiver and his employees, agents and
attorneys have no personal liability in connection with any obligations, liens or amounts owed to
Defendants resulting from the performance of their duties pursuant to this Order, it being
understood that the rights of each such creditor will be determined in accordance with applicable
Breaches by Receiver. The Receiver and his employees, agents and attorneys
have no personal liability, and they shall have no claim asserted against them relating to the
Receiver’s duties under this Order, except for those arising from intentional tortious acts,
breaches of fiduciary duties, acts committed in bad faith, gross negligence, gross or willful
misconduct, malicious acts, or the failure to comply with this Order or any other order of the
Interference with Receiver’s Duties. The parties to this action, those in active
participation or concert with them who receive notice of this Order, and those having claims
against the Receivership Property who receive notice of this Order, are enjoined from interfering
with the Receiver’s actions in furtherance of performing the duties and carrying out the
responsibilities outlined in this Order.
Receiver as Fiduciary. The Receiver must faithfully discharge all of the duties
outlined in this Order, and must obey all other orders of the Court. The Receiver is deemed a
fiduciary for the benefit of all persons having or claiming an interest in the Receivership
Property, and must exercise the office accordingly.
Commercial Reasonableness. The Receiver’s actions at all times must be
commercially reasonable, and the Receiver is subject to the personal jurisdiction of this Court.
Acceptance of Appointment as Receiver. The Receiver’s duty to act in that
capacity is subject to the written acceptance and approval of the terms of this Order. Upon
acceptance, the Receiver is bound by the terms of this Order, and all obligations imposed hereby.
Duration of Receivership. This receivership will continue until the earlier of: (i)
the sale of all Receivership Property; or, (ii) further order of the Court.
Discharge of Bond. The termination of the receivership will not discharge the
Receiver or the Receiver’s bond.
Resignation of Receiver. In the discretion of the Receiver, the Receiver may
notify the Court and the parties that the receivership is no longer practical. Upon such event, the
Receiver’s duties terminate thirty (30) days after filing the notice with the Court, followed by an
order of the Court terminating the receivership.
Removal of Receiver. The Receiver may be removed either: (i) thirty (30) days
after the filing of a written demand for removal signed by Plaintiff’s counsel, and filed with the
Court; or, (ii) in the Court’s equitable discretion, upon a motion for cause. If the Receiver is
removed, a successor receiver may be appointed by a stipulated order on behalf of the parties to
this action. If the parties to this action are unable to agree on a successor receiver, the Court may
appoint a successor receiver, after a motion is filed by any party to this action requesting the
appointment of same.
Final Accounting. Within thirty (30) days after the termination of the
receivership for any reason, the Receiver must submit a final accounting for approval by the
Court, with copies to be furnished to the parties to this action.
Court Approval of Final Accounting. Upon the Court’s approval of the
Receiver’s final accounting, the Receiver will be discharged, and the Receiver’s bond must be
Tax Returns. The Receiver and the professionals employed by the Receiver are
not responsible or required to, and must not, prepare or file tax returns in connection with the
Receivership Property or Defendants, or otherwise wind down the business affairs of the
Receivership Property or of Defendants.
Lien Enforcement and Foreclosure Rights. Nothing in this Order affects the
rights of parties who have been granted mortgages or other liens upon property owned by
Defendants, including the right to commence or continue foreclosure proceedings, either
judicially or by advertisement. No further order of the Court is necessary for a mortgagee or lien
claimant to commence a foreclosure, either judicially or by advertisement.
Amendment of Order. This Order may be amended for cause, either upon the
stipulation of the Receiver and the parties, or for cause, after a motion and hearing. No
amendment to this Order affects the rights of persons or entities who are able to demonstrate that
they relied upon the pre-existing terms of this Order to their detriment.
No Prejudice. This Order does not prejudice the rights of any party to any claim,
right or defense which they may have to Plaintiff’s claims set forth in the complaint.
Environmental Compliance. The Court finds that Plaintiff, in seeking the
appointment of the Receiver, is engaged in a “workout activity,” as that term is defined in
M.C.L. § 324.20101a(3), and its actions in seeking the appointment of a Receiver are intended to
protect the value and marketability of the Properties, which is its collateral for repayment of the
debts described. The Court further finds that Plaintiff’s actions in seeking the appointment of the
Receiver, do not constitute participation in management, as that term is defined in 42 U.S.C. §
Utilities. Any utility provider receiving notice of this Order must establish and
provide utility service to the Properties, in the name of the Receiver.
S/Victoria A. Roberts
Victoria A. Roberts
United States District Judge
Dated: February 21, 2014
The undersigned certifies that a copy of this
document was served on the attorneys of
record by electronic means or U.S. Mail on
February 21, 2014.
ACCEPTANCE OF RECEIVERSHIP
The duties of the Receiver, as set forth in the foregoing Order, are accepted and agreed
Approved as to form:
By: Douglas C. Bernstein (P33833)
Patrick C. Lannen (P73031)
Attorneys for Plaintiff
Attorneys for Defendants
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