OPINION and ORDER. Signed by District Judge Linda V. Parker. (RLou)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
In re: GLENN RICHARD UNDERWOOD
GLENN RICHARD UNDERWOOD,
Civil Case No. 15-12563
Honorable Linda V. Parker
Bankr. Case No. 06-55754
Adv. Pro. No. 14-4966
Honorable Thomas J. Tucker
PATRICIA SELENT, ET AL.,
OPINION AND ORDER
This matter is before the Court as an appeal from the United States
Bankruptcy Court for the Eastern District of Michigan, the Honorable Thomas J.
Tucker presiding. Debtor and Appellant Glenn Richard Underwood
(“Underwood”) appeals two decisions entered by Judge Tucker in an adversary
proceeding Underwood filed against several of his creditors in his Chapter 11
bankruptcy case and the bankruptcy liquidating trustee, Gene R. Kohut
(“Liquidating Trustee”). Specifically, Underwood challenges Judge Tucker’s
December 10, 2014 order granting a motion to dismiss filed by Patricia Selent and
Lynda Carto and dismissing the first three counts of Underwood’s adversary
complaint. Underwood also challenges Judge Tucker’s July 9, 2015 order
adjudicating the fourth count of Underwood’s complaint, requiring certain property
re-deeded to the Liquidating Trustee, and allowing the Liquidating Trustee to sell
any of the properties as permitted by the confirmed plan in Underwood’s Chapter
11 case, as modified by an October 14, 2008 order. For the reasons that follow,
this Court affirms Judge Tucker’s decisions.
Standard of Review
The bankruptcy court’s findings of fact are reviewed under the clearly
erroneous standard. Fed. R. Bankr. P. 8013. “A finding of fact is clearly
erroneous ‘when although there is evidence to support it, the reviewing court, on
the entire evidence, is left with the definite and firm conviction that a mistake has
been committed.’ ” United States v. Mathews (In re Matthews), 209 B.R. 218, 219
(B.A.P. 6th Cir. 1997) (quoting Anderson v. City of Bessemer City, 470 U.S. 564,
573 (1985)). The bankruptcy court’s conclusions of law are reviewed de novo.
Nuvell Credit Corp. v. Westfall (In re Westfall), 599 F.3d 498, 501 (6th Cir. 2010).
This means the Court reviews the law independently and gives no deference to the
conclusions of the bankruptcy court. Myers v. IRS (In re Meyers), 216 B.R. 402,
403 (B.A.P. 6th Cir.1998). “[I]f a question is a mixed question of law and fact,
then [the reviewing court] must break it down into its constituent parts and apply
the appropriate standard of review for each part.” Investors Credit Corp. v. Batie
(In re Batie), 995 F.2d 85, 88 (6th Cir. 1993).
Factual and Procedural Background
This bankruptcy matter arises from an Oakland County Circuit Court case
that Selent, Carto, and other family members of Underwood (i.e., the defendants in
the bankruptcy adversary case, but for the Liquidating Trustee) filed in 2004
against Underwood and Underwood Property Management Company, a sibling
partnership that owned and managed numerous real estate properties. See
Underwood v. Carto, No. 315949, 2014 WL 4263229, at *1 (Mich. Ct. App. Aug.
28, 2014). The 2004 lawsuit resulted in a judgment of $392,752, plus interest,
against Underwood and in favor of the plaintiffs (hereafter “Judgment Creditors”).
(Id.) To protect himself from the judgment while he pursued his state court
appellate remedies, Underwood filed a Chapter 11 bankruptcy petition on October
On July 24, 2007, the bankruptcy court entered an order confirming
Underwood’s bankruptcy plan. Order, In re Underwood, No. 06-55754 (Bankr.
E.D. Mich. July 24, 2007), ECF No. 114. The bankruptcy plan provides that the
Judgment Creditors possess allowed claims against Underwood “only to the extent
that the Judgment Creditors … are deemed to have  claim[s] against
[Underwood] after all appellate rights are exhausted by [Underwood] and the
claims by the Judgment Creditors … against [Underwood] are both final and nonappealable under the laws of the State of Michigan.” Id. at 2-3. The amount of the
claims, the plan states, is in the amount determined by the Michigan courts. 1 Id. at
4. The bankruptcy plan requires Underwood to escrow and maintain a balance of
no less than $450,000 with Bank of America by May 31, 2008, for payment of the
Judgment Creditors’ allowed unsecured claims.2 Id. at 3. The plan further requires
Underwood to make “[p]ayment to the Judgment Creditors … by the later of: (1)
May 31, 2008; or (2) ten (10) days after all appellate rights are exhausted by
[Underwood] and the claims by the Judgment Creditors … against [Underwood]
are both final and non-appealable under the laws of the State of Michigan
(‘Disbursement Date’).” Id.
Pursuant to a stipulation between Underwood and the Judgment Creditors,
the bankruptcy plan was modified on October 13, 2008. Stip. & Order, id., ECF
No. 169. The modified plan inter alia reduces the amount of the escrow balance
and requires Underwood to execute quit claim deeds to the Liquidating Trustee
with respect to the following properties: (a) 6085 and 6185 White Lake Road,
White Lake, MI; (b) 9230 Dixie Hwy. (with four lots), Clarkston, MI; (c) 9237
Hillcrest, Clarkston, MI; 11875 Milford, Holly, MI; and (d) 137 Hudson and 158
The plan also provides for the payment of interest on any allowed unsecured
claim pursuant to Michigan Compiled Laws Section 600.6013.
The order provided for an escrow account with LaSalle Bank, N.A. or its
successor or acquirer. Bank of America acquired LaSalle Bank in 2007.
Summit (4 units), Pontiac, MI. Id. at 2-3. The modified plan orders the
Liquidating Trustee to “hold the quit claim deeds in escrow and not record the
same until twenty (20) days after all appellate rights are exhausted by
[Underwood] and the claims by the Judgment Creditors … against [Underwood]
are both final and non-appealable under the laws of the State of Michigan.” Id. at
3. The modified bankruptcy plan provides that, after such time, the Liquidating
Trustee may record the deeds and “to the extent reasonably necessary … effectuate
the sale of such real property in order to satisfy any outstanding obligation to the
Judgment Creditors on Appeal or the Liquidating [Trustee].” Id.
In June 2008, the Michigan Court of Appeals ruled on Underwood’s appeal
of the Oakland County Circuit Court judgment. Carto v. Underwood Prop. Mgmt.
Co., No. 272747, 2008 WL 2389493 (Mich. Ct. App. June 12, 2008). The court of
appeals affirmed the trial court’s grant of summary disposition in favor of the
Judgment Creditors and against Underwood, but vacated the trial court’s damages
award. Id. The court remanded the matter to the trial court for a recalculation of
On remand, the trial court appointed a certified public accountant (“CPA”)
as an expert to assist it in properly calculating the damages. Underwood, 2014 WL
4263229, at *1. Based on the CPA’s calculations, the trial court issued a revised
judgment of $200,823 against Underwood on November 15, 2010. Id.
Underwood filed three unsuccessful motions for the trial court to reconsider its
revised judgment and one unsuccessful motion for relief from judgment. Id.
Underwood appealed the trial court’s decisions to the Michigan Court of Appeals,
without success as well. Id. and n.3
Underwood filed additional lawsuits in the Michigan courts seeking to
overturn the Oakland County Circuit Court’s judgment. Id. In February 2010, he
filed a civil complaint against Selent, which the trial court dismissed on summary
disposition in favor of Selent on res judicata grounds. Id. at *2. The Michigan
Court of Appeals affirmed. Underwood v. Selent, No. 298312 (Mich. Ct. App.
Oct. 20, 2011) (unpublished). The appellate court explained “this is at least the
third time that [Underwood] has brought suit against the same defendant.” Id. The
court also stated that, “[e]ven though he is dissatisfied, [Underwood] cannot
merely re-label and then couch his assertions in different arguments in repeated
attempts to relitigate the same matter hoping for a result he finds more favorable.”
In December 2012, Underwood sued Carto “generally alleg[ing] that the trial
court in the 2004 case ignored facts, improperly appointed a CPA, and used
procedures that denied him a fair trial.” Underwood, 2014 WL 4263229, at *2.
Carto moved for summary disposition on res judicata grounds, which the trial court
granted with respect to all but one claim (slander) on April 5, 2013. Id. The court
concluded that Underwood raised or could have raised most of his claims during
the 2004 litigation. Id. The trial court subsequently granted summary disposition
to Carto on Underwood’s slander claim. Id. Underwood appealed.
On August 28, 2014, the Michigan Court of Appeals affirmed the trial
court’s decision. Id. The court determined not only that res judicata barred
Underwood’s claims, but that Underwood’s appeal was vexatious. Id. The court
We determine that Underwood’s appeal is
vexatious because it was taken for the purposes of
hindrance and without any reasonable basis for belief that
there was a meritorious issue for this Court to determine
on appeal. This is the third appeal in which this Court has
affirmed the trial court’s dismissal of suits related to or
based on conduct in the 2004 case on res judicata
grounds. And this is the second appeal from a complaint
against one of the plaintiffs in the 2004 case.
The panel’s decision in Selent informs our
determination. In Selent, Underwood sued Selent, another
sibling involved in his 2004 lawsuit, on substantially [the
same] claims as he made against Carto in this lawsuit.
The trial court dismissed Underwood’s suit against Selent
on res judicata grounds. Underwood appealed that
dismissal, and a panel of this Court affirmed the trial
court’s dismissal in no uncertain terms. The Selent panel
explained that res judicata barred Underwood’s claims,
“for the same reasons clearly and succinctly stated by the
previous panel of this court in In re Estate of Underwood
when [Underwood] brought the case for the second
time[.]” The panel further warned Underwood that he
could not repeatedly attempt to relitigate the issues in the
2004 case and that his repeated lawsuits wasted judicial
Despite this Court’s decision in Selent, Underwood
filed a new lawsuit against a different sibling involved in
the 2004 case. Underwood’s suit in this case presents
substantially the same allegations against Carto as he
presented against Selent: allegations that a panel of this
Court painstakingly explained were barred by res
judicata. The most reasonable explanation for
Underwood’s behavior is that he has engaged in it for the
purposes of hindrance. Further, Underwood cannot have
a reasonable basis for believing that there is a meritorious
issue to be determined. This Court has twice explained
that res judicata bars all claims related to the 2004
lawsuit. But Underwood explicitly based his December
2012 complaint in this case on Carto’s alleged conduct
during the 2004 lawsuit.
Id. at 4-5 (footnotes omitted). The court of appeals awarded Carto actual damages
and expenses for defending against Underwood’s appeal and remanded the matter
to the trial court, ordering the trial court to assess punitive damages in an additional
amount equal to Carto’s actual expenses. Id. *5.
In the meantime, while Underwood was exhausting all state court avenues
for overturning the Oakland County Circuit Court’s November 15, 2010 judgment,
he initiated the adversary proceedings in the bankruptcy court against the Judgment
Creditors and the Liquidating Trustee. Adversary Compl., Underwood v. Selent,
No. 06-55754 (Bankr. E.D. Mich. filed Sept. 9, 2014), ECF No. 1. In Counts I and
II of his adversary complaint, Underwood again attempted to challenge the validity
of the state court’s judgment, claiming the trial judge violated his due process
rights and improperly calculated the Judgment Creditors’ damages. In Count III,
he sought payment from the escrowed funds and claims the trial court took
approximately $4,500 from those funds to pay the Judgment Creditors’ share of the
court appointed CPA fees in violation of the automatic stay in the bankruptcy
proceedings. Finally, in Count IV, Underwood alleged that the Liquidating
Trustee wrongfully conveyed three properties owned by Underwood and his wife
to the Judgment Creditors: 6085 and 6185 White Lake Road, White Lake,
Michigan 48383 and 9230 Dixie Hwy., Clarkston, Michigan 48343.
Selent and Carto filed a motion to dismiss the adversary complaint. The
Liquidating Trustee filed a motion to dismiss or, in the alternative, for summary
judgment. Judge Tucker held a hearing on the motions on December 10, 2014, and
at the close of the hearing, dismissed with prejudice Counts I through III of the
adversary complaint against not only Selent and Carto, but all of the Judgment
Creditors who Underwood named as defendants in his adversary complaint.
12/10/14 Hr’g Tr., Underwood v. Selent, No. 14-04966 (Bankr. E.D. Mich.), ECF
No. 80. Judge Tucker denied without prejudice the Liquidating Trustee’s motion
and thus left pending only Count IV of the adversary complaint. Id. Judge Tucker
entered a written order on the same date. Order, id. (Bankr. E.D. Mich. Dec. 10,
2014), ECF No. 65.
With respect to his dismissal of Counts I and II of the adversary complaint,
Judge Tucker reasoned that Underwood essentially was challenging the November
2010 state court judgment for which he exhausted all state court appeals or rights
of appeal without success. Judge Tucker first explained that the bankruptcy plan,
as modified, clearly provided the Judgment Creditors with allowable claims for the
amount of the judgment as determined based on the outcome of the state court
litigation. Judge Tucker found the state court judgment to be a final, nonappealable decision. Judge Tucker further held that the Rooker-Feldman doctrine,
res judicata, and collateral estoppel barred Underwood from re-litigating the
correctness of that judgment in the bankruptcy proceedings.
With respect to Underwood’s request for a return of escrowed funds in
Count III of his adversary complaint, Judge Tucker concluded that he is not
entitled to those funds. As Judge Tucker explained, the modified bankruptcy plan
required Underwood to deposit funds into an escrow account to be held until
payment to the Judgment Creditors within ten days after the Disbursement Date
(i.e., the date Underwood exhausts his appellate rights and the claims of the
Judgment Creditors against Underwood become final and non-appealable under
Michigan law). Judge Tucker further found that the modified plan provides for a
return of the escrowed funds to Underwood only if the Judgment Creditors are
deemed not to have allowed claims on appeal (or to the extent those claims are less
than the escrowed amount).
Before Underwood filed his adversary complaint, the judgment against
Underwood and in favor of the Judgment Creditors became final and nonappealable and had not been paid. As such, Judge Tucker concluded that
Underwood was not entitled to have the escrow proceeds (including any funds held
in escrow with the Oakland County Circuit Court) returned to him, as he requested
in Count III.3 Rather, Judge Tucker held, in accordance with the modified
bankruptcy plan, those proceeds had to be used to pay down the unsatisfied state
Finally, Judge Tucker found no merit to Underwood’s claim in Count III that
the state circuit court judge violated the automatic bankruptcy stay by taking
approximately $4,500 from the escrowed funds to pay the Judgment Creditors’
share of the court appointed CPA’s fees. As Judge Tucker explained, the funds
were removed after Underwood’s Chapter 11 bankruptcy case was closed and thus
when there was no bankruptcy stay in effect. Moreover, the state court had
determined that the funds did not belong to Underwood. To the extent Underwood
In addition to the funds Underwood was required to deposit in a Bank of America
escrow account pursuant to the modified bankruptcy plan, funds were held in
escrow in the Oakland County Circuit Court. The modified bankruptcy plan
required Underwood to deposit the latter funds into the Bank of America escrow
account. Underwood did not maintain the required balance in the Bank of America
escrow account and the funds escrowed with the state court had not been
transferred to Bank of America. Rather than having the money held in escrow with
the state court paid to Underwood and then requiring him to deposit those funds
into the Bank of America account, Judge Tucker ordered those funds paid directly
to the Judgment Creditors.
was challenging that determination, Judge Tucker advised that the dispute needed
to be adjudicated in the state court rather than the bankruptcy court.4
The Liquidating Trustee subsequently renewed his motion for summary
judgment with respect to Count IV of the adversary complaint and Underwood
filed several motions, which the bankruptcy court construed as motions for partial
summary judgment as to Count IV.5 Judge Tucker held a hearing with respect to
the motions on July 8, 2015, at which time he granted in part and denied in part the
Liquidating Trustee’s motion and denied Underwood’s motions. 7/8/15 Hr’g Tr.,
Underwood v. Selent, No. 14-04966, (Bankr. E.D. Mich. filed Aug. 19, 2015), ECF
No. 200. Judge Tucker entered a written order on July 9, 2015. Order, id., (Bankr.
E.D. Mich. July 9, 2015), ECF No. 185.
Judge Tucker concluded that the Liquidating Trustee lacked the authority
under the modified bankruptcy plan to transfer the following three properties
directly to the Judgment Creditors: 6085 and 6185 White Lake and 9230 Dixie
Highway (Lots 81 and 82). Based on Underwood’s indication at the motion
On January 14, 2015, Underwood filed a notice of appeal as to Judge Tucker’s
December 10, 2014 decision, which was assigned to the undersigned as Civil Case
No. 15-10155. This Court dismissed the appeal on September 21, 2015,
concluding that it was filed beyond the fourteen-day time limit for filing a
bankruptcy appeal set forth in Rule 8002 of the Federal Rules of Bankruptcy
Procedure. Order, Underwood v. Selent, No. 15-10155 (E.D. Mich. Sept. 21,
2015), ECF No. 17.
In his motions, Underwood sought to have the properties at issue in Count IV
deeded directly to him.
hearing that he was not pursuing damages as a result of the wrongful transfer, see
7/8/15 Hr’g Tr. at 57, Judge Tucker concluded that the best resolution would be to
require the Judgment Creditors to transfer the properties back to the Liquidating
Trustee and then allow the Liquidating Trustee to perform the duties required of
him with respect to the properties in accordance with the modified bankruptcy
plan. Specifically, the plan grants the Liquidating Trustee “the power to sell the
Real Property in his reasonable business judgment” so as “to satisfy any
outstanding obligation to the Judgment Creditors or the Liquidating Agent.”
Order, In re Underwood, No. 06-55754 (Bankr. E.D. Mich. Oct. 13, 2008), ECF
No. 169 at 3.
Judge Tucker deemed the order adjudicating Count IV of the adversary
complaint (the only count remaining) to be a final judgment concluding the
adversary proceeding. Order, Underwood v. Selent, No. 14-04966 (Bankr. E.D.
Mich. July 9, 2015), ECF No. 185.
On July 10, 2015, Underwood filed a notice of appeal with respect to Judge
Tucker’s December 10, 2014 and July 9, 2015 decisions. He moved for a stay of
the bankruptcy proceedings pending appeal, which the bankruptcy court denied on
July 23, 2015. Underwood renewed his motion to stay in this Court, which the
Court denied on September 30, 2016.6 (ECF No. 14.)
Applicable Law and Analysis
On appeal, Underwood essentially argues that the bankruptcy court should
not have accepted the state court judgment as the amount owed to the Judgment
Creditors because the judgment was based on an incorrect accounting and pursuant
to proceedings that violated Underwood’s due process rights. The bankruptcy plan
provides the Judgment Creditors with allowed claims against Underwood in the
amount determined by the Michigan courts after Underwood exhausts all appellate
rights and the claims are both final and non-appealable under Michigan law.7
Underwood fully exhausted his rights to appeal the Oakland County Circuit
Court’s judgment on remand, without success. In fact, the Michigan Court of
Appeals concluded that Underwood’s repeated attempts to litigate the merits of the
judgment were vexatious. Underwood cannot use the bankruptcy court
proceedings to overturn the state court’s judgment. Judge Tucker correctly
Subsequent to Underwood’s appeal, proceedings continued in the bankruptcy
court with respect to the sale of the properties. On May 17, 2016, Underwood filed
a motion for leave to appeal the bankruptcy court’s decision as to one of those
properties, which has been filed as Civil Case No. 16-11752 and assigned to the
undersigned. The Court will issue a separate decision with respect to that motion.
As Judge Tucker pointed out at the December 10, 2014 hearing, the bankruptcy
plan, as modified, remains in full force and effect.
concluded that the Rooker-Feldman doctrine, res judicata, and collateral estoppel
barred Underwood’s challenges to that judgment.
“Federal courts do not stand as appellate courts for decisions of state courts.”
Hall v. Callahan, 727 F.3d 450, 453 (6th Cir. 2013) (citing Rooker v. Fidelity Trust
Co., 263 U.S. 413 (1923); Dist. of Columbia Court of Appeals v. Feldman, 460
U.S. 462 (1983)). “The Rooker-Feldman doctrine ‘prevents a federal court from
exercising jurisdiction over a claim alleging error in a state court decision.’ ” Id.
(quoting Luber v. Sprague, 90 F. App’x 908, 910 (6th Cir. 2004)). “Federal
courts’ ‘authority to review a state court’s judgment’ is vested ‘solely in the
Supreme Court.’ ” Id. (quoting Exxon Mobil Corp. v. Saudi Basic Indus. Corp.,
544 U.S. 280, 292 (2005)) (brackets omitted); see also 28 U.S.C. § 1257.
Nevertheless, “the Rooker-Feldman doctrine does not bar ‘a district court from
exercising subject-matter jurisdiction simply because a party attempts to litigate in
federal court a matter previously litigated in state court.’ ” Id. (quoting Exxon
Mobil Corp., 544 U.S. at 293).
As the Supreme Court clarified in Exxon Mobil, “[t]he Rooker-Feldman
doctrine … is confined to cases of the kind from which the doctrine acquired its
name: cases brought by state-court losers complaining of injuries caused by statecourt judgments rendered before the [federal] court proceedings commenced and
inviting [federal] court review and rejection of those judgments.” 544 U.S. at 284.
The Sixth Circuit subsequently explained that “[i]n post-Exxon analysis, we have
distinguished between plaintiffs who bring an impermissible attack on a state court
judgment—situations in which Rooker-Feldman applies—and plaintiffs who assert
independent claims before the district court—situations in which Rooker-Feldman
does not apply.” Kovacic v. Cuyahoga Cty. Dep’t of Children & Family Servs.,
606 F.3d 301, 309 (6th Cir. 2010). The “pertinent inquiry” after Exxon Mobil, the
Sixth Circuit advises, “is whether the ‘source of the injury’ upon which [the]
plaintiff bases his federal claim is the state court judgment, not simply whether the
injury complained of is ‘inextricably intertwined’ with the state-court judgment.”
Id. (quoting McCormick v. Braverman, 451 F.3d 382, 394-95 (6th Cir. 2006)).
As Judge Tucker pointed out during the December 10, 2014 motion hearing,
in the adversary proceeding Underwood was not seeking to modify the bankruptcy
plan so the amount of the Judgment Creditors’ claims would not be based on the
final, non-appealable state court judgment.8 Rather, Underwood was asking the
bankruptcy court to declare the Oakland County Circuit Court’s judgment void
because the state court violated his due process rights and erred in calculating
damages. This directly implicates Rooker-Feldman concerns. Like the plaintiffs
in Rooker and Feldman, Underwood sought review and rejection of the state court
judgment. However, even if the Rooker-Feldman doctrine did not preclude the
Judge Tucker explained that if Underwood was seeking such relief, he had to do
so in the Chapter 11 case by moving to modify the bankruptcy plan.
relief Underwood sought in the bankruptcy court adversary proceeding, preclusion
“The Full Faith and Credit Act … requires [a] federal court to ‘give the same
preclusive effect to a state-court judgment as another court of that State would
give.’ ” Exxon Mobil, 544 U.S. at 293 (quoting Parson Steel, Inc. v. First Alabama
Bank, 474 U.S. 518, 523 (1986)). Principles of estoppel apply in bankruptcy
proceedings. Grogan v. Garner, 498 U.S. 279, 284 n.11 (1991). Judge Tucker
relied on two preclusion doctrines: collateral estoppel and res judicata.
In Michigan, the two doctrines serve largely the same purpose. Michigan
courts have held that “[t]he doctrine of collateral estoppel must be applied so as to
strike a balance between the need to eliminate repetition and needless litigation and
the interest in affording litigants a full and fair adjudication of the issues involved
in their claims.” Storey v. Meijer, Inc., 429 N.W.2d 169, 171 (Mich. 1988).
Similarly, “[t]he doctrine of res judicata is intended to relieve parties of the cost
and vexation of multiple lawsuits, conserve judicial resources, and encourage
reliance on adjudication, that is, to foster the finality of litigation.” Bryan v.
JPMorgan Chase Bank, 848 N.W.2d 482, 485-86 (Mich. Ct. App. 2014) (internal
quotation marks and citation omitted).
As the Michigan Supreme Court has explained, “res judicata bars a
subsequent action between the same parties when the evidence or essential facts
are identical.” Dart v. Dart, 597 N.W.2d 82, 88 (Mich. 1999). “The Court has
taken a broad approach to the doctrine of res judicata, holding that it bars not only
claims already litigated, but also every claim arising from the same transaction that
the parties, exercising reasonable diligence, could have raised but did not.” Adair
v. State of Michigan, 680 N.W.2d 386, 396 (Mich. 2004) (citing Dart, 597 N.W.2d
at 88). Res judicata bars a subsequent action when (1) an earlier action “was
decided on the merits, (2) both actions involve the same parties or their privies, and
(3) the matter in the second action was, or could have been, resolved in the first.”
Id. Collateral estoppel is a subset of res judicata.
“Collateral estoppel bars relitigation of an issue in a new action arising
between the same parties or their privies when the earlier proceeding resulted in a
valid final judgment and the issue in question was actually and necessarily
determined in that proceeding.” Leavy v. Orion Twp., 711 N.W.2d 438, 441
(Mich. Ct. App. 2006) (citing People v. Gates, 452 N.W.2d 627, 630 (Mich.
1990)). The following requirements are required under Michigan law for collateral
estoppel to apply:
1) the parties in both proceedings are the same or in
2) there was a valid, final judgment in the first
3) the same issue was actually litigated in the first
4) that issue was necessary to the judgment, and
5) the party against whom preclusion is asserted (or its
privy) had a full and fair opportunity to litigate the issue.
United States v. Dominguez, 359 F.3d 839, 842 (6th Cir. 2004) (citing Gates, 452
N.W.2d at 630-31).
The validity of the Oakland County Circuit Court judgment was fully
litigated (several times) in the Michigan courts in proceedings involving
Underwood and one or more of the Judgment Creditors, who are in privity.9
Underwood had full and fair opportunities to litigate his challenges to the judgment
in the state court proceedings. The Michigan courts upheld the judgment. As
such, as Judge Tucker correctly concluded, Underwood was barred from utilizing
the bankruptcy proceedings to litigate the issue again. Applying these principles of
estoppel are particularly appropriate here where the Michigan Court of Appeals
ruled that Underwood’s continued efforts to overturn the judgment have become
As the Michigan Supreme Court has defined:
To be in privity is to be so identified in interest with another party that
the first litigant represents the same legal right that the later litigant is
trying to assert. The outer limit of the doctrine traditionally requires
both a substantial identity of interests and a working functional
relationship in which the interests of the nonparty are presented and
protected by the party in the litigation.
Adair, 680 N.W.2d at 396 (internal quotations marks and citations omitted).
In short, the Court holds that the bankruptcy court did not err in concluding
that Underwood’s adversary claims were barred by the Rooker-Feldman doctrine,
res judicata, and collateral estoppel.
IT IS ORDERED, that the bankruptcy court’s December 10, 2014 and July
9, 2015 decisions are AFFIRMED.
s/ Linda V. Parker
LINDA V. PARKER
U.S. DISTRICT JUDGE
Dated: March 13, 2017
I hereby certify that a copy of the foregoing document was mailed to counsel of
record and/or pro se parties on this date, March 13, 2017, by electronic and/or U.S.
First Class mail.
s/ Richard Loury
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