TBF Financial, LLC v. Drouillard et al

Filing 21

ORDER granting 20 plaintiff's post-judgment Motion for appointment of a receiver. Signed by District Judge George Caram Steeh. (MBea)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
(SOUTHERN DIVISION)
TBF FINANCIAL, LLC,
an Illinois limited liability company,

Case No. 2:14-CV-11495
Hon. George Caram Steeh
Mag. David R. Grand

Plaintiff,
vs.
MARC DROUILLARD, an individual,
and EXECUTIVE INSTALLATIONS, INC., a
Michigan corporation, jointly and severally,
Defendants.
__________________________________________________________________/
PLUNKETT COONEY
Douglas C. Bernstein (P33833)
Patrick C. Lannen (P73031)
Attorneys for Plaintiff
38505 Woodward Avenue, Suite 2000
Bloomfield Hills, MI 48304
[phone]; [phone]
[phone] (Fax)
[e-mail]
[e-mail]
__________________________________________________________________/

ORDER GRANTING PLAINTIFF’S POST-JUDGMENT
MOTION FOR APPOINTMENT OF A RECEIVER

RECITALS
1.

On April 14, 2014, TBF filed a Complaint against Defendants Marc

Drouillard (“Drouillard”) and Executive Installations, Inc. (“Executive”, and
collectively with Drouillard, the “Defendants”) for breaching, respectively, the
terms of a certain promissory note (the “Note”) and Guaranty (the “Guaranty”)
dated August 25, 2003.
2.

In the Complaint, TBF sought a money judgment against the

Defendants, jointly and severally, for the sum certain of $287,093.64, as of
October 3, 2013, under the terms of the Note and Guaranty instruments. Id. at ¶¶
21 and 26.
3.

TBF also sought judicial foreclosure of a mortgage (the “Mortgage”)

given as security for repayment of the Note and Guaranty obligations, and for
appointment of a receiver over the real estate encumbered by the Mortgage.
4.

On November 13, 2014, the Clerk of the Court entered a default

against Defendants for failure to plead or otherwise defend. Dkt. No. 12.
5.

On March 3, 2015, the Court entered a default Judgment for the sum

certain of $287,093.64, as of October 3, 2013, against Defendants jointly and
severally. Dkt. No. 14.
6.

Now, the Court, after having reviewed the papers filed, having heard

oral argument, otherwise being fully informed in the premises, and finding that
2

good cause exists for granting the relief sought, appoints a Receiver over the below
described property as follows.
NOW, THEREFORE, IT IS ORDERED:
1.

Appointment of Receiver. Mark S. Kassab of M. Shapiro Real

Estate Group, which has address of 31550 Northwestern Highway, Suite 220,
Farmington Hills, Michigan 48334 (the “Receiver”), is appointed as receiver for
the real property commonly known as 1225 East Third Street, Monroe, Michigan
48161 (the “Property”), and all payments, leases, rents, books and records,
deposits, bank accounts and other property, tangible or intangible, that is used or
usable or related thereto (collectively, the “Receivership Property”).
2.

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.
3.

Actions in Furtherance of Possession and Control. The Receiver is

authorized to take any reasonable actions which the Receiver shall deem necessary
3

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.
4.

Surrender of Receivership Property. Defendants, their 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:
a.

All keys and access codes necessary for the Receiver to obtain
possession of and to manage the Receivership Property, as
provided in this Order.

b.

All documents and records useful in maintenance of the
Property, 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.

c.

All work in process, materials, supplies, “punch lists” and other
pending work orders with respect to construction at the
Properties, if any.

d.

All construction contracts and subcontracts for construction on
the Property, if any.

e.

All bids for contractor work, if any.

f.

All agreements with brokers or other commission agreements
pertaining to sales or leases of the Receivership Property, or
any portion thereof.

g.

All leases and other executory contracts, including all
amendments, pertaining to the Receivership Property, or any
portion thereof.
4

h.

i.

A list of all accounts receivable and accounts payable, and all
details regarding same.

j.

All documents identifying pending litigation.

k.

All utility agreements.

l.

Such other records pertaining to the Receivership Property as
may be reasonably requested by the Receiver.

m.

All cash and deposits owned by or in the possession of
Defendants or any of their agents, or members, managers,
employees and representatives, pertaining to the Receivership
Property.

n.

5.

All documents, books, records, computer files and records
concerning the finances, rents, operation and management of
the Receivership Property.

All documentation pertaining to contracts entered into by
Defendants or any of its agents relating to business operations
of the Receivership Property.

Powers and Duties of Receiver. The Receiver shall be vested with

and shall discharge the following authority, powers and duties:
a.

The maintenance, securing, management, operation, leasing
(upon terms acceptable to TBF) and preservation of the
Receivership Property.

b.

The assumption of control over the Receivership Property,
including all deposits, security deposits, and other cash
collateral relating thereto.

c.

The maintenance of one or more separate accounts, in the
Receiver’s own name, as Receiver for the Receivership
Property, from which the Receiver shall disburse all authorized
payments, as provided in this Order.
5

d.

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.

e.

The purchase of such insurance as the Receiver deems
appropriate for the preservation and protection of the
Receivership Property, naming the Receiver and TBF as
additional insureds, or as necessary to protect their interests.

f.

The receipt and endorsement of checks pertaining to the
Receivership Property, either in the name of the Receiver or in
the name of Defendants, as applicable.

g.

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.

h.

Taking such action, including the filing of one or more lawsuits
as the Receiver shall deem necessary and appropriate, in the
Receiver’s discretion, for the collection of any outstanding
accounts receivable or other monies owed to Defendants.

i.

The investigation of any fraudulent or otherwise improper
transfers or conveyances of the assets of Defendants as the
Receiver shall deem necessary and appropriate, and, if
necessary, the prosecution of any action to set such
transaction(s) aside.

j.

Prevent the withdrawal or misapplication of funds.

k.

Issue such subpoenas as deemed necessary to allow the
Receiver to fulfill the duties set forth in this Order.

6

6.

Access to Books and Records. The Receiver shall permit TBF 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.
7.

Employment of Third Parties. The Receiver is authorized, but not

required, all without recourse against the Receiver, to employ such attorneys,
accountants, appraisers, agents and others, as the Receiver may from time to time
deem appropriate.
8.

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 TBF and the Receiver. Upon receipt of the
approval of the Court, the Receiver shall be authorized to execute all promissory
notes, loan agreements, receiver’s certificates, and amendments thereto, as shall be
necessary to accomplish same.
9.

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 shall deem appropriate.

7

10.

Further Instructions. The Receiver shall have the right to apply to

the court for further instructions and authorization during the pendency of this
action.
11.

Protective Advances. Subject to the order of the court, all

reasonable advances to the Receiver made by TBF for the benefit of the
Receivership Property, together with any other reasonable costs and expenses
incurred by the Receiver pursuant to this Order, shall be deemed to be protective
advances pursuant to the Note, and shall be secured by any applicable Guaranty
and by the Property and Mortgage, and shall have priority over all claims and liens
of all others claiming an interest in any of the Receivership Property.
12.

No Transfer of Title. Nothing contained in this Order shall be

construed to transfer title to any of the Receivership Property to the Receiver.
13.

Sale of Property. The Receiver is authorized to, on behalf and in the

name of Defendants, expeditiously and diligently sell the Property, with the
approval of the court, consistent with the provisions of 28 U.S.C. §2001(a), under
the following conditions:
a.

The sales shall be for cash or credit bid, unless otherwise
authorized by the Court, for an amount subject to the approval
of the court.

b.

The sales approved by the court shall 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
8

with respect to any sales effectuated by the Receiver, and any
sales shall be final upon entry of an order of the court
confirming same.
14.

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 Defendants, to:
a.
b.

Attend and consummate the closing at the offices of any title
company acceptable to the Receiver and TBF (the “Title
Company”).

c.

Approve, with TBF, closing statements with respect to any sale
of the Property, including all costs of closing, sales
commissions, and other adjustments to the purchase price.

d.

15.

Execute a deed of conveyance and bill of sale.

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
Property, and to allow the issuance of the appropriate owner’s
policy of title insurance to the purchaser.

Disbursement of Net Sale Proceeds. The “net proceeds of sale”

shall be deemed to be 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 shall be approved by the court.
16.

Lien Priorities. The rights and priorities of TBF and any other

parties with respect to the Receivership Property shall be determined in accordance

9

with applicable federal law or Michigan law, without regard to the provisions of
this Order.
17.

No Waiver of Claims and Defenses. Nothing contained in this Order

shall enlarge or restrict the claims and defenses of TBF or other parties claiming
interests with respect to the Receivership Property.
18.

Compensation of Receiver and Agents. The Receiver, and all

persons employed by the Receiver, shall be compensated at their normal rates, with
invoices to be issued and copies furnished to TBF and Defendants, through their
respective counsel or directly if unrepresented in the case of Defendants, on a
monthly basis. The Receiver’s general office administration, accounting and
overhead shall 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 TBF and Defendants, through their respective counsel or directly. 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 shall 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
10

Receiver’s professionals shall be paid first from the income generated from the
Receivership Property and, next, by TBF and Defendants jointly, but only to the
extent that the income from the Receivership Property is insufficient to pay the
compensation of the Receiver and professionals.
19.

Receiver’s Reports. The Receiver shall 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
shall be submitted to the Court for its review in camera, and shall not be filed with
the Clerk of the Court.
20.

Receiver’s Bond. No bond shall be required.

21.

Lawsuits Against Receiver. No person or entity shall 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 shall serve 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 parties to this action.
22.

Pre-Receivership Liabilities. TBF, the Receiver and the Receiver’s

agents shall not be 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
11

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 its business operations
(collectively all of the foregoing is referred to as “Pre-Receivership Liabilities”).
TBF, the Receiver, and the Receiver’s agents shall not be obligated to advance any
funds to pay any Pre-Receivership Liabilities. Notwithstanding the foregoing, with
the prior written consent of TBF (but not otherwise), the Receiver may fund PreReceivership Liabilities from funds collected from the operation of the
Receivership Property.
23.

Stay of Actions. Except by leave of this Court and except with

respect to the right of TBF to foreclose the Mortgage 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:

12

a.

Commencing, prosecuting, litigating or enforcing suit, except
that the actions may be filed to toll any applicable statute of
limitations;

b.

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;

c.

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 Property;
and,

d.

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
Property.

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.
24.

No Personal Liability of Receiver. The Receiver and his employees,

agents and attorneys shall have no personal liability in connection with any
obligations, liens or amounts owed to or from Defendants resulting from the

13

performance of their duties pursuant to this Order, it being understood that the
rights of each such creditor shall be determined in accordance with applicable law.
25.

Breaches by Receiver. The Receiver and his employees, agents and

attorneys shall 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 Court.
26.

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.
27.

Receiver as Fiduciary. The Receiver shall faithfully discharge all of

the duties outlined in this Order, and shall obey all other orders of the Court. The
Receiver shall be deemed a fiduciary for the benefit of all persons having or
claiming an interest in the Receivership Property, and shall exercise the office
accordingly.

14

28.

Commercial Reasonableness. The Receiver’s actions at all times

shall be commercially reasonable, and the Receiver is subject to the personal
jurisdiction of this Court.
29.

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 shall be bound by the terms of this
Order, and all obligations imposed hereby.
30.

Duration of Receivership. This receivership shall continue until the

earlier of: (i) the sale of all Receivership Property; or, (ii) further order of the court.
31.

Discharge of Bond. Not applicable.

32.

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 shall terminate thirty (30) days
after filing the notice with the Court, followed by an order of the Court terminating
the receivership.
33.

Removal of Receiver. The Receiver may be removed either: (i) thirty

(30) days after the filing of a written demand for removal signed by TBF’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
15

are unable to agree on a successor receiver, the court shall appoint a successor
receiver, after a motion is filed by any party to this action requesting the
appointment of same.
34.

Final Accounting. Within thirty (30) days after the termination of the

receivership for any reason, the Receiver shall submit a final accounting for
approval by the court, with copies to be furnished to the parties to this action.
35.

Court Approval of Final Accounting. Upon the court’s approval of

the Receiver’s final accounting, the Receiver shall be discharged, and the
Receiver’s bond shall be canceled.
36.

Tax Returns. The Receiver and the professionals employed by the

Receiver shall not be responsible or required to, and shall 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.
37.

Lien Enforcement and Foreclosure Rights. Nothing in this Order

shall be construed to affect the rights of parties who have been granted mortgages
or other liens upon property owned by Defendants not specifically identified in this
Order, 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.
16

38.

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 shall affect 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.
39.

No Prejudice. This Order shall not prejudice the rights of any party

to any claim, right or defense which they may have to TBF’s claims set forth in the
complaint.
40.

Environmental Compliance. The Court finds that TBF, 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 Property, which
is its collateral for repayment of the indebtedness described herein. The Court
further finds that TBF’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. §
9601(a)(20).
41.

Utilities. Any utility provider receiving notice of this Order shall

establish and provide utility service to the Properties, in the name of the Receiver.

17

IT IS SO ORDERED.
s/George Caram Steeh
United States District Judge
Dated: September 22, 2015

ACCEPTANCE OF RECEIVERSHIP
The duties of the Receiver, as set forth in the foregoing Order, are accepted
and agreed to.

_______________________________________
Receiver

Dated: September __, 2015
Approved as to form:
PLUNKETT COONEY
/s/ Patrick C. Lannen
By: Douglas C. Bernstein (P33833)
Patrick C. Lannen (P73031)
Attorneys for TBF

18