ORDER Denying Appeal and Affirming Bankruptcy Court's 9/20/16 Order Signed by District Judge George Caram Steeh. (MBea)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
BERNARD SLOANE GLIEBERMAN,
Case No. 16-13552
HON. GEORGE CARAM STEEH
BERNARD SLOANE GLIEBERMAN,
Chapter 7 Case No. 15-55996
BR NORTH 223, LLC,
ORDER DENYING APPEAL AND AFFIRMING
BANKRUPTCY COURT’S SEPTEMBER 20, 2016 ORDER
This is an appeal from a final order of the Eastern District of Michigan
Bankruptcy Court, compelling production of documents, finding Debtor
Bernard Sloane Glieberman in contempt of court and imposing sanctions
“Contempt Order”) (Bankr. Dkt. No. 162). The Contempt Order held Debtor
in contempt of the Bankruptcy Court for willfully failing to comply with the
Bankruptcy Court’s August 24, 2016 order compelling production of
documents and imposed a $2,000 sanction. Debtor argues on appeal that
the Bankruptcy Court deprived him of his due process rights by holding him
contempt and levying sanctions on an expedited basis and without an
evidentiary hearing, and erred in finding that he had possession, control or
custody over the documents required to be produced.
STATEMENT OF FACTS
BR North (“Appellee”) holds a judgment of over $81 million against
Debtor and is his single largest creditor. On November 2, 2015, Debtor filed
a voluntary petition for relief under Chapter 11 of the Bankruptcy Code,
which was converted to a Chapter 7 liquidation case on December 20,
2016. On June 21, 2016, in preparation for a planned multi-party mediation
in the bankruptcy case, the parties stipulated to entry of an Order under
Bankruptcy Rule 2004 for the Production of Documents by Debtor (the
“Stipulation”). The Bankruptcy Court entered the Stipulated Order on June
22, 2016 (the “Production Order”). This Production Order required Debtor to
produce to Appellee all the documents specified by the Stipulation by July
14, 2016, contemplating “all information and/or documents available to the
Debtor or obtainable by the Debtor from his agents, representatives,” etc.
Relevant to this appeal, the Production Order required Debtor to produce:
From January 11, 2011 to present, documents
evidencing any compensation for services and/or
employee, retiree, consultant, or similar benefits
provided to the Debtor, to the extent any such
documents exist. These documents should include,
but not be limited to, all documents reflecting rights
to future compensation and/or benefits.
From January 11, 2011 to present, all records of
wires, checks, or other transfers evidencing
payments, or compensation or income of any kind
attributable to Mr. Glieberman, made into any
account held by Tracey Katzen, to the extent any
such documents exist.
From January 11, 2011 to present, all statements of
the American Express Platinum card (account
ending in 0-16003), which is or was previously in
the name of the Debtor; which have not been
previously been produced to BR North, and all
records, if any of Debtor’s payments with respect to
From April 1, 2015 through the present day, any
and all documents of the real property development
known as HRS Communities; Home Renewal
Systems, LLC; Home Renewal Realty, LLC;
Londonberry, LLC; and/or any other companies
involving Tracey Katzen that relate to the Debtor,
including, but not limited to, documents in the
possession or control of the Debtor, reflecting any
payments by these entities made to him, for him
and/or on his behalf.
Exhibit A to Stipulation at pp 5-6.
From July 8, 2016 through August 15, 2016, Debtor produced certain
documents to Appellee pursuant to the Production Order. However,
Appellee believed Debtor failed to produce “any and all” documents
responsive to the quoted paragraph, and on August 17, 2016 filed a Motion
Compel, for Contempt and Sanctions (“First Contempt Motion”). Appellee
argued that Debtor could have complied with the Production Order,
numerous exhibits in support of its argument. Appellee also moved for a
shortened notice of hearing, pursuant to Bankruptcy Rules 9006(c) and
The Bankruptcy Court granted an expedited hearing and scheduled the
hearing for six days later on August 23, 2016.
In its First Contempt Motion, Appellee pointed out that the Production
Order required bank records of Debtor’s daughter Tracey Katzen to be
produced, as well as the bank records and other records of numerous
Debtor-related entities. Appellee established that Debtor previously used
Tricia Gregart, the long-time controller of his real estate projects, to obtain
documents regarding his personal financial affairs and those of the
companies he was affiliated with for the Bankruptcy Court. Appellee
attached exhibits to its motion, including (1) documentary evidence including
public records, corporate filings and newspaper articles related to Debtor,
daughter, and his new projects which had not been revealed to the
Bankruptcy Court or creditors, and (2) deposition testimony that revealed
Debtor’s role in founding, managing or controlling the numerous companies
whose documents he refused to produce.
For example, Appellee alleges that Debtor formed more than 15 real
estate development and other investment companies in the last few years,
listing his daughter Tracey Katzen as registered agent. Appellee’s source
for this allegation is the Michigan Department of Licensing and Regulatory
Affairs. One project, the Grandview Marquette Apartment Project, was
allegedly led by Debtor, using several of his real estate companies. This
project has been in the works for over a year and closed on June 3, 2016.
Appellee ties several of Debtor’s companies to the project by citing to
newspaper articles and the Warranty Deed for the purchase of the property,
including Home Renewal Systems, LLC, Grandview Marquette developer,
LLC, GMHRR, LLC, and Grandview MT LLC.
In another example, Appellee documents that Debtor is known to be
President and Manager of HRS Communities. HRS Communities
developed the Clyde Smith Farms development, which represents 146 site
condos. Appellee presented the deposition of Tricia Gregart that Debtor
himself managed Clyde Smith Farms. Gregart further testified that although
Tracey Katzen was held out as the principal of numerous companies,
including Londonberry, the management company over Clyde Smith Farms,
she was not a manager and Debtor was really in charge. As for Ms.
Katzen’s duties for Home Renewal Realty, Clyde Smith and Londonberry,
Gregart testified that Katzen funds them and sits in on Tuesday meetings.
(Gregart dep., pp 158, 161). Beyond that, Ms. Gregart was “not sure” what
Katzen did for the companies.
In its order granting Appellee’s motion for expedited hearing, the
Bankruptcy Court permitted any response to the First Contempt Motion to
be raised at the hearing. Debtor did not file anything with the Bankruptcy
Court in response to the First Contempt Motion, nor did it rebut any of
Appellee’s evidence at the hearing. The Bankruptcy Court found on the
record that there was enough evidence that Debtor was able to obtain the
documents set forth in the Production Order. On August 24, 2016, the
Court ordered Debtor to produce all documents set forth in the Production
Order, for all companies listed in that order, as well as for twenty-one other
companies in which Debtor and his daughter are involved, by noon on
August 26, 2016.
Debtor produced some documents, but not all, and on September 9,
2016, Appellee filed a Second Motion to Compel, for Contempt and for
Sanctions (“Second Contempt Motion”). The Bankruptcy Court granted
Appellee’s Motion to Expedite Hearing, and set the hearing for eleven days
later on September 20, 2016. Debtor did not file a response to the Second
Contempt Motion. At the hearing, Debtor’s counsel argued, without
presenting any evidence, that his client lacked possession or control of
of the documents, other than those that were previously produced. Debtor’s
counsel also asserted that Debtor’s interest in some of the businesses was
misrepresented in the newspaper articles cited by Appellee. The Court
responded that the misinformation identified did not form the basis of her
opinion. Counsel responded, “I don’t have anything further to offer.”
The Bankruptcy Court found Debtor in contempt of court for willfully
failing to comply with the Court’s August 24, 2016 Order. The Court
explained its reasons on the record:
For reasons that were fully detailed in the first motion to
compel, that being filed on August 17, 2016, I found, and I find
today, that Mr. Glieberman has control over all documents that
are requested by BR North in this case. . . . it is based on the
very, very lengthy and thorough documentation of his
involvement in Digim, the other enterprises that are owned by
his children, all the exhibits about where documents are kept,
the deliberate failure to disclose his wife’s American Express
card when it’s clear that that’s the American Express card that
must be being used to fund the lifestyle that’s being lived by the
(Opinion p. 10-12). The Court made it clear that it found Appellee’s
arguments, as supported by the evidence submitted by Appellee, to be
credible, while finding that Debtor’s “protestations that he cannot obtain
these records are not credible”. Id.
The Court stated that Debtor “may purge himself of such contempt by
producing, and is hereby Ordered again to produce, to counsel for BR North
223, LLC, all documents . . . .” Debtor has not produced the documents, but
instead filed this appeal.
STANDARD OF REVIEW
When a Bankruptcy Court=s decision is appealed to the District Court,
the District Court is bound by the Bankruptcy Court=s findings of fact unless
they are clearly erroneous. Bankr. Rule 8013. This Court reviews the
Bankruptcy Court=s findings of fact for clear error and its conclusions of law
de novo. Rembert v. AT & T Univ. Card Serv. (In re Rembert), 141 F.3d
277, 280 (6th Cir. 1998).
A decision on a motion for contempt lies within the sound discretion of
the court and is reviewed for an abuse of discretion. Elec. Workers Pension
Tr. Fund of Local Union #58 v. Gary’s Elec. Serv. Co., 340 F.3d 373, 378
Cir. 2003). “Under this standard, a district court’s decision is to be afforded
great deference; it will be disturbed only if the district court relied upon
erroneous findings of fact, improperly applied the governing law, or used an
erroneous legal standard.” Id.
To hold a litigant in contempt, the movant must produce clear and
convincing evidence to show a violation of a definite and specific order of
the court requiring the litigant to perform or refrain from performing a
particular act or acts with knowledge of the court’s order. Id. at 379 (citation
omitted). “Once the movant establishes his prima facie case, the burden
shifts to the contemnor who may defend by coming forward with evidence
showing that he is presently unable to comply with the court’s order.” Id.
The contemnor must show “‘categorically and in detail’” why they are unable
to comply with the court’s order. Id. (quoting Rolex Watch U.S.A. v.
Crowley, 74 F.3d 716, 720 (6th Cir. 1996)). The court must consider
whether the contemnor took all reasonable steps within his power to comply
with the court’s order. Id.
Debtor argues that he was denied due process where the Bankruptcy
Court granted an expedited hearing, giving him a mere three business days
to respond to the First Contempt Motion. Debtor suggests that the
appropriate remedy for inadequate process is that the Sanctions Order be
Appellee responds that Debtor waived this issue by raising it for the
first time on appeal. Local Bankruptcy Rule 9006-1 provides that a party
may apply ex parte for an order shortening another party’s time for
response. The Rule further provides that “[a] party aggrieved by such an
order may move for a dissolution of the order.” In this case there is no
record of Debtor seeking a dissolution of the order expediting the hearing.
When Appellee requested concurrence in the First Contempt Motion and
motion for expedited hearing, Debtor did not expressly give his consent, but
did concede to the expedited hearing date:
Neither my client nor I are willing to consent to the
Motion described in your email, nor the request for
an expedited hearing. Notwithstanding that fact, I
am already down in front of Judge McIvor next
Tuesday on another matter, and will be out of the
country the following week, so if you think the
motion justifies an expedited hearing, I’d just as
soon have it occur next week before I go on
(8/17/16 email of counsel).
Debtor clearly had notice of the hearing, and was also given an
opportunity to be heard. The Bankruptcy Court’s Orders Granting
Hearing permitted responses to the Contempt Motions to be raised at the
hearings themselves, thus giving Debtor the maximum time possible to
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prepare. In this case, the evidence is clear that Debtor never sought
dissolution of the order shortening time, never requested an adjournment of
any hearing, never requested more time to prepare a response, never
complained about a lack of due process before filing this appeal, and did
attempt to offer any evidence to the Bankruptcy Court to rebut Appellee’s
This Court finds that the Bankruptcy Court did not abuse its discretion
in shortening the time that Debtor had to respond to the Contempt Motions.
Furthermore, the Court finds that Debtor has not shown he was denied due
process such that the Contempt Order should be set aside in this case.
Contempt Finding and Sanctions
Debtor argues that the Bankruptcy Court’s finding that he violated the
Court’s prior orders was clearly erroneous in that it reached factual findings
based on little or no evidence that Debtor controls the entities required to
produce the documents. Debtor argues that most of the evidence Appellee
submitted to the Bankruptcy Court in support of its First Contempt Motion
was not admissible because it was lacking in foundation and authenticity.
For example, Exhibit I is a list of 24 entities and their respective resident
agents. Only three of these entities list Debtor as the resident agent, while
the remaining entities list Tracey Katzen as resident agent. However, the
deposition testimony of Ms. Gregart is offered to explain that Ms. Katzen
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does not act as a manager of the companies, while Debtor himself does.
support its allegation that Debtor attempted to shield himself from income
paid in his name by creating a web of direct and indirect payments through
his daughter Ms. Katzen, Appellee offers Ms. Gregart’s deposition that she
has access to all company accounts “with which Mr. Glieberman has any
connection whatsoever.” Gregart dep. 138. Ms. Gregart testified that she
moves money on an “as-needed basis” between the companies, including
and from the accounts that are in the name of Tracey Katzen. Gregart dep.
Debtor points out that the depositions of Ms. Gregart and Ms. Katzen
contain conflicting testimony that creates an issue of fact regarding the
management of the companies at issue. Nevertheless, the Bankruptcy
Court found Appellee’s explanation of the evidence submitted to be
credible and sufficient to support a prima facie case that Debtor was able to
comply with the Production Order. “[B]ased on all the information that has
been provided by BR North, Mr. Glieberman still retains responsibility for
many, many entities, . . .” August 23, 2016 Transcript at p. 13.
In order to hold a litigant in contempt, the movant must produce clear
and convincing evidence to show a violation of a definite and specific order
of the court requiring the litigant to perform or refrain from performing a
particular act or acts with knowledge of the court’s order. Gary’s Elec.
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Serv., 340 F.3d at 379. The evidence submitted by Appellee, taken as a
whole, supports Appellee’s position that the Debtor had the ability to
with the Court’s order requiring him to produce the documents responsive
the Production Order.
The burden then shifted to the Debtor to defend by coming forth with
evidence showing in detail why he is unable to comply with the Court’s
order. As discussed, the record reveals no attempt by Debtor to present
any evidence as to why he could not comply. The Bankruptcy Court was
thus well within its discretion to conclude that Debtor violated its prior order.
For the reasons stated above, the court DENIES Debtor/Appellant=s
appeal and AFFIRMS the Bankruptcy Court’s Contempt Order.
Dated: April 14, 2017
s/George Caram Steeh
GEORGE CARAM STEEH
UNITED STATES DISTRICT JUDGE
CERTIFICATE OF SERVICE
Copies of this Order were served upon attorneys of record on
April 14, 2017, by electronic and/or ordinary mail.
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