Bank of America, N.A. v. M Rashid Holdings, LLC et al

Filing 20

ORDER granting Plaintiff's 7 Motion for Appointment of Receiver and 8 Motion for Expedited Hearing. Signed by District Judge Denise Page Hood. (JOwe)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
BANK OF AMERICA, N.A.,
Plaintiff,
Case No. 17-13068
HON. DENISE PAGE HOOD

v.
M RASHID HOLDINGS, LLC,
and MASHIYAT RASHID,

Defendants.
_________________________________________/
ORDER GRANTING PLAINTIFF’S
MOTION FOR APPOINTMENT OF RECEIVER [#7]
and MOTION FOR EXPEDITED HEARING [#8]
I.

INTRODUCTION
Plaintiff filed this mortgage foreclosure action on September 19, 2017, when

it was assigned to the Honorable Avern Cohn. On September 25, 2017, Plaintiff filed
a Motion for Appointment of Receiver (“Receiver Motion”) [#7] and Motion to
Expedite Hearing on the Receiver Motion. [#8] The Receiver Motion has been fully
briefed. On October 16, 2017, this action was reassigned to the undersigned as a
companion case to criminal case 17-20465 (the “Criminal Case”). A hearing was set
for and held on October 27, 2017. By virtue of the hearing held on October 27, 2017,
the Court GRANTED the Motion to Expedite Hearing. For the reasons set forth
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below, the Court grants the Receiver Motion.
II.

BACKGROUND
Defendant M Rashid Holdings LLC (“Rashid Holdings”) is the owner of

property commonly known as 2990 W Grand Boulevard, Detroit, Michigan (the
“Property”). Plaintiff issued a loan of approximately $2 million to Rashid Holdings
dated January 30, 2017 (the “Loan Agreement”), with a mortgage on the Property
securing the loan. Defendant Mashiyat Rashid is a guarantor of the mortgage on the
Property.
On July 6, 2017, Defendant Rashid was indicted for alleged attempt and
conspiracy to commit healthcare fraud and related claims (the Criminal Case), and the
Criminal Case remains pending. On October 6, 2017, the Court entered an Order
regarding the Property in the Criminal Case. That Order provided for, among other
things, the appointment of a receiver for the Property with the power and authority
to maintain and sell the Property. Until a receiver is appointed, all expenses related
to the Property require approval of Pretrial Services.
III.

APPLICABLE LAW & ANALYSIS
A.

Applicable Law

The appointment of a receiver is a matter of judicial discretion, and the Court
has inherent authority to appoint one. U.S. v. Prod. Plated Plastics, Inc., 61 F.3d 904,
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at *7 (6th Cir. 1995) (recognizing inherent power of courts to appoint receiver);
Federal Nat. Mortg. Ass’n v. Mapletree Investors Ltd. Partnership, 2010 WL
1753112, at *3 (E.D. Mich. 2010); Liberte Capital Group, LLC v. Capwill, 462 F.3d
543, 551 (6th Cir. 2006). “A district court enjoys broad equitable powers to appoint
a receiver over assets disputed in litigation before the court. The receiver’s role, and
the district court’s purpose in the appointment, is to safeguard the disputed assets,
administer the property as suitable, and to assist the district court in achieving a final,
equitable distribution of the assets if necessary.” Liberte Capital, 462 F.3d at 551.
B.

Analysis

The parties agree that the appointment of a receiver for the Property is
appropriate, and the parties acknowledge that the Court ordered the appointment of
a receiver in its October 6, 2017 Order in the Criminal Case. Accordingly, the
Receiver Motion is granted.
The parties disagree on who should be appointed as receiver, and each party
has proposed a person for the Court to appoint as receiver for the Property. Plaintiff
seeks the appointment of Michael A. Stevenson, and in their brief, Defendants sought
the appointment of Michael Kalil. At the hearing, Defendants’ argument focused
more on having Michael Kalil retained as the manager of the Property than as receiver
for the Property. The parties acknowledged that Plaintiff and its proposed receiver
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have offered to retain Michael Kalil and his company (NIA Farbman) as the manager
of the Property.
The Court notes that Defendants cannot control the terms of the order of
receivership.1 The terms of bond for Defendant Mayishat Rashid (prior to his bond
being revoked) provided that he was not to have any involvement in the control of the
Property, and it appears to the Court that he likely violated those conditions in a
number of ways.
The Court appoints Michael A. Stevenson as receiver for the Property. The
Court declines Defendants’ request to appoint Michael Kalil as receiver for the
Property and leaves the appointment of any Property manager (including Michael
Kalil or NIA Farbman) to the receiver.
Plaintiff submitted a proposed “Order for Appointment of Receiver” (“the
Order”), to which Defendants had a number of objections, each of which was

The Court notes that Defendants have expressed a desire that the Property
only be maintained by the appointed receiver (and not sold). The October 6, 2017
Order in the Criminal Case provides that the appointed receiver shall have the
authority to sell the Property. See Criminal Case, Dkt. No. 153, PgID 962
(“Following the receiver’s initial assessment of the Restrained Property, act
expeditiously to market the 2990 W. Grand Boulevard Property for sale and take
all other commercially reasonable steps in order to maximize the value of, and
recovery related to, the 2990 W. Grand Boulevard property for the benefit of all
interested parties”) and PgID 964 (“Upon the sale of the 2990 W. Grand
Boulevard property, . . .”).
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addressed at the hearing. First, Defendants argued that the language in Paragraph A
of the preamble to the Order “asserting the breach by M. Rashid Holdings, LLC”
should be removed, as it was unnecessary for the purposes of appointing a receiver.
The Court declines Defendants’ argument. The language Defendants seeks to have
removed is nothing more than a statement of Plaintiff’s alleged basis for this action
and does not constitute a finding by the Court.
Second, Defendants asked the Court to include in the Order language
specifying that Michael Kalil would be the manager of the Property if Michael A.
Stevenson is appointed receiver. At the hearing, the parties seemed to agree that
Michael Kalil would be an appropriate manager for the Property. The Court
concludes that the inclusion of language regarding any arrangement of that nature in
the Order is not necessary. Third, Defendant requested that the Court include
language in Paragraphs 5.h. and 5.i. that the receiver could not file or take any actions
against Defendants or any of their employees. The Court finds that it would not be
proper to limit the receiver’s ability to take any actions he deems necessary and
appropriate for the benefit of the Property.
Fourth, Defendants request that Paragraph 6 be amended to provide that their
counsel have access to books and records. The Court agrees that Defendants’ civil
and criminal legal counsel – and legal counsel for the Government – should have
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reasonable access to the Receivership Property (as defined in the Order) at reasonable
times. The Order issued by the Court shall include Defendants’ requested amendment
to Paragraph 6.
Fifth, Defendants argue that the Mortgaged Property (as defined in the Order)
cannot be sold, as permitted under Paragraph 13, because a sale would violate
Defendants’ statutory redemption rights pursuant to M.C.L. 600.3140. Redemption
rights under M.C.L. 600.3140 only apply to foreclosure proceedings, which is not a
sale contemplated by Paragraph 13. See id.; M.C.L. 600.3115. The Court will not
amend Paragraph 13 in accord with Defendants’ argument, but the Court will amend
Paragraph 13 to reflect that any sale of the Mortgaged Property requires approval of
the Court.
Sixth, Defendants request that the following language be removed from
Paragraph 33: “either (i) thirty (30) days after filing of a written demand for removal
signed by BANA’s counsel, and filed with the Court; or (ii).” Plaintiff did not object
to removal of that language. The Court agrees that removing that language is
appropriate, and it will be removed.
IV.

CONCLUSION
For the reasons stated above,
IT IS ORDERED that Plaintiff’s Motion for Appointment of a Receiver, Dkt.
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No. 7, is GRANTED.
IT IS FURTHER ORDERED that Plaintiff’s Motion for Expedited Hearing,
Dkt. No. 8, is GRANTED.
IT IS FURTHER ORDERED that Michael A. Stevenson is APPOINTED
RECEIVER for the Property (2990 W. Grand Boulevard, Detroit, Michigan).
IT IS FURTHER ORDERED that an “Order for Appointment of Receiver”
will be entered separately.
IT IS ORDERED.

S/Denise Page Hood
Denise Page Hood
Chief Judge, United States District Court
Dated: October 31, 2017
I hereby certify that a copy of the foregoing document was served upon counsel of
record on October 31, 2017, by electronic and/or ordinary mail.
S/LaShawn R. Saulsberry
Case Manager

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