Dietrich v. Grosse Pointe Park, City of et al
ORDER Adopting 35 Report and Recommendation, Granting 20 Defendants' Motion to Dismiss, Granting 24 Motion for Sanctions and Denying as Moot 31 Plaintiff's Motion for Summary Judgment. Signed by District Judge Terrence G. Berg. (AChu)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
EDGAR J. DIETRICH,
Case No. 16-11049
HON. TERRENCE G. BERG
HON. STEPHANIE DAWKINS DAVIS
GROSSE POINTE PARK, et al.
ORDER ADOPTING REPORT AND RECOMMENDATION (DKT. 35),
GRANTING DEFENDANTS’ MOTION TO DISMISS (DKT. 20), GRANTING
DEFENDANTS’ MOTION FOR SANCTIONS (DKT. 24), AND DENYING
AS MOOT PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT (DKT. 31)
Plaintiff Edgar J. Dietrich (“Plaintiff”), acting in pro per, filed suit against
Defendants City of Grosse Pointe Park, and its City Manager, Dale Krajniak
(collectively “Defendants”) (Dkt. 1). The Complaint alleges that Defendants violated
Plaintiff’s Fifth Amendment right to due process. Plaintiff also alleges various state
claims, including tortuous interference with business relationships, conversion, and
breach of contract. Id. As described in greater detail below, Plaintiff alleges that
these wrongs occurred during eviction and collection proceedings relating to a state
This matter is before the Court on Magistrate Judge Stephanie Dawkins
Davis’s Report and Recommendation dated January 12, 2017 (Dkt. 35),
recommending that Defendant’s motion to dismiss (Dkt. 20) be granted, that
Defendant’s motion for sanctions (Dkt. 24) be granted, and that Plaintiff’s motion
for summary judgment (Dkt. 31) be denied as moot.
The law provides that either party may serve and file written objections
“[w]ithin fourteen days after being served with a copy” of the Report and
Recommendation. 28 U.S.C. § 636(b)(1). Plaintiff filed timely objections (Dkt. 36) to
the Report and Recommendation. A district court must conduct a de novo review of
the parts of a Report and Recommendation to which a party objects. See 28 U.S.C. §
636(b)(1). “A judge of the court may accept, reject, or modify, in whole or in part,
the findings or recommendations made by the magistrate judge. The judge may
also receive further evidence or recommit the matter to the magistrate judge with
The Court has reviewed Magistrate Judge Davis’s Report and
Recommendation, and Plaintiff’s objections thereto. For the reasons set forth below,
Plaintiff’s objections are OVERRULED, and the Report and Recommendation is
ACCEPTED and ADOPTED as the opinion of the Court. Accordingly, Defendants’
motion to dismiss (Dkt. 20) is GRANTED, Defendants’ motion for sanctions (Dkt.
24) is GRANTED, and Plaintiff’s motion for summary judgment (Dkt. 31) is
DENIED AS MOOT. This matter is hereby re-referred to Magistrate Judge Davis
to conduct a hearing, and then recommend an appropriate sanction for Plaintiff’s
Rule 11 violations.
Plaintiff alleges that on January 1, 2006, Defendant Dale Krajniak, in his
capacity as manager of the City of Grosse Pointe Park, entered into a lease with the
Dietrich Family Trust (the “Trust”) for a building located at 15001 Charlevoix,
Grosse Pointe Park, Michigan (Dkt. 1, Pg ID 3). This property became the location
for La Chateau Art Gallery & Custom Framing (the “Gallery”) and all business
transactions relating to the Gallery were transacted with Mr. Krajniak (Id.).
Plaintiff worked as the manager of the Gallery.
In his Complaint, Plaintiff acknowledges that, in 2005, Peter Tiernan, M.D.
(“Tiernan”) obtained an $11 million legal malpractice judgment against him (Id. at
¶ 8). After winning this judgment against Plaintiff, Tiernan successfully petitioned
Wayne County Circuit Court Judge Jeanne Stempien to put the Gallery – owned by
the Trust and managed by Plaintiff – into receivership because the Gallery was
being “utilized as a vehicle for transferring and hiding property which could be used
to satisfy the Judgment” (Dkt. 20, Ex. A, Pg ID 97). On August 26, 2013, Judge
Stempien entered an order appointing Basil Simon as the receiver of the Gallery to
serve as “the agent of [the] Court … with full powers as Receiver over [the Gallery]
and all of [its] businesses, assets and property....” (Id.).
In an effort to halt the receivership and preserve his assets, Plaintiff filed a
Chapter 7 bankruptcy petition on August 21, 2013. See E.D. Mich. Bankr. Case
No. 13-57297. On October 29, 2013, the Bankruptcy Court entered an order
denying Plaintiff’s motion to enforce a mandatory stay under 11 U.S.C. § 362,
holding that the appointment of Mr. Simon as a receiver over the Gallery remained
in full force and effect (Id., Dkt. 87). Mr. Simon also is the duly acting and qualified
Chapter 7 trustee of Plaintiff’s bankruptcy case. That bankruptcy case has been
extensively litigated, and is ongoing. During the receivership, and pursuant to the
Wayne County Circuit Court’s orders, Mr. Simon1 apparently liquidated the
Gallery’s assets and accounted for the receipt of the proceeds of such sales to the
Wayne County Circuit Court.
Turning back to the Defendants in this case, on November 15, 2013, Plaintiff
(through his son) filed a lawsuit in the Grosse Point Park Municipal Court. This
suit requested to allow Plaintiff to enter the Gallery, and sought injunctive relief
ordering Grosse Pointe’s Department of Public Safety to stop “purposefully violating
the lease between Plaintiff and the City of Grosse Pointe Park” (Dkt. 20, Ex. F).
The Municipal Court dismissed that case with prejudice for lack of jurisdiction. (Id.,
Then, in January 2014, Plaintiff sued Defendants in this Court, claiming that
he had been wrongfully deprived access to the Gallery. See E.D. Mich. Case No. 1410264. Plaintiff was initially represented by an attorney in that case. Plaintiff’s
attorney voluntarily dismissed that case without prejudice. Plaintiff, then acting in
pro per, filed a motion to reopen that case. In essence, Plaintiff argued that his
Plaintiff also filed a civil action against Mr. Simon in this Court. That case was dismissed for lack
of subject matter jurisdiction on October 18, 2016. See Dietrich v. Simon, No. 16-11071, 2016 WL
6106742 (E.D. Mich. Sept. 14, 2016), report and recommendation adopted, No. 16-11071, 2016 WL
6083752 (E.D. Mich. Oct. 18, 2016).
prior counsel dismissed the case without first informing him of her intent to do so,
and without his express permission, and that the dismissal should be vacated.
This Court denied Plaintiff’s motion to reopen the case, and noted that Plaintiff
could simply re-file a new case if he wanted to reanimate that litigation. In so
doing, however, this Court expressly cautioned Plaintiff to “to carefully review the
arguments raised [by] Defendants …,particularly those related to the RookerFeldman doctrine” (Id. Dkt. 18, FN 1). The Court also reminded Plaintiff of his
Rule 11 obligation to not file frivolous litigation.
Grosse Pointe Park then initiated eviction proceedings against the Trust (the
lessor of the Gallery) in 2014. On July 9, 2014, the Grosse Pointe Woods Municipal
Court2 entered an order terminating the lease and ordering the Trust to vacate the
Gallery. After the Trust filed a claim of appeal, the parties entered into a release
agreement on August 22, 2014. Plaintiff signed the release agreement individually,
and on behalf of the Trust (Dkt. 20, Ex. M).
The release provides:
The Dietrich Parties3, including its predecessors, agents, successors, assigns,
joint venturers, partners, current and former employees, servants,
representatives, officials, attorneys, associates, and trusties of the foregoing
persons, and any other party who may claim under or through them hereby
knowingly and voluntarily release, forgive, absolve and discharge all rights,
claims, demands, damages, actions, and causes of action, which The Dietrich
Parties and its above-mentioned others now have or may have in the future,
known or unknown, foreseen or unforeseen, arising from the claims which are
the subject matter of the Lease, Eviction, and Appeal against the City and its
past and present employees, agents, and/or representatives, and any and all
The eviction action was handled by the Grosse Pointe Woods Municipal Court, as the Grosse Pointe
Park Municipal Judge had recused himself.
The “Dietrich Parties” are defined in the release as Edgar Dietrich, that is, the Plaintiff in this
case, and The Dietrich Trust (Pd ID 268).
claims which were, or could have been, or can be asserted against its past and
present employees, agents, and/or representatives.
On March 18, 2016 Plaintiff filed the lawsuit that is now before the Court, suing
Defendants Grosse Pointe Park and Mr. Krajniak (Dkt. 1). Plaintiff’s lawsuit raises
four claims: (1) alleged violations of Plaintiff’s Fifth Amendment right to not be
deprived of property without due process; (2) tortious interference with a business
relationship, based on allegations that Defendants’ prohibiting Plaintiff from
entering the Gallery prevented him from honoring contracts with “consignors;” (3)
breach of contract, alleging that Defendants breached the lease agreement for the
Gallery; and (4) conversion, alleging that Defendants allowed Mr. Simon to enter
the Gallery and sell off the items contained therein.
A. Motion To Dismiss Standard
A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of the plaintiff’s
complaint. Accepting all factual allegations as true, the Court reviews the
Complaint in the light most favorable to the plaintiff. See Eidson v. Tennessee
Dep’t of Children’s Servs. 510 F.3d 631, 634 (6th Cir. 2007). To survive a motion to
dismiss, the Complaint must state sufficient “facts to state a claim to relief that is
plausible on its face.” See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct.
1955, 167 L.Ed.2d 929 (2007). The Complaint must demonstrate more than a sheer
possibility that the defendant’s conduct was unlawful. Id. at 556. Claims
comprised of “labels and conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Id. at 555. Rather, “[a] claim has facial plausibility
when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).
B. Rule 11 Sanctions Standard
Under Rule 11(b)(1) a party certifies that by presenting a pleading to the
court, the pleading is “not being presented for any improper purpose, such as to
harass, cause unnecessary delay, or needlessly increase the cost of litigation; (2) the
claims are warranted by existing law or by a nonfrivolous argument for extending,
modifying or revising existing laws; and (3) the factual contentions have evidentiary
support.” Fed. R. Civ. P. 11(b). Where a motion for sanctions is filed, “it must
describe the specific conduct that allegedly violates Rule 11(b).” General Retirement
System of City of Detroit v. Snyder, 822 F.Supp.2d 686, 698 (E.D. Mich. 2011). In
imposing Rule 11 sanctions courts are to examine whether the individual attorney’s
conduct was reasonable under the circumstances. Id. at 699.
Courts have the discretion to determine whether a party’s “conduct was
unreasonable, thereby justifying an award of sanctions under Rule 11.” Id.
Reasonableness is an objective standard. See Knestrick v. International Business
Machines Corp., 945 F. Supp. 1080, 1082 (E.D. Mich. 1996) (“The question is
whether a competent attorney * * * after appropriate investigation would have
reasonably believed the claim was grounded in fact or law”). Therefore, a party has
three obligations under Rule 11. First, to conduct a reasonable inquiry to determine
the pleading is well grounded. Jackson v. Law Firm of O’Hara, Rudberg, Osborne
and Taylor, 875 F.2d 1224, 1229 (6th Cir. 1989). Second, the party must conduct a
reasonable inquiry to determine that the positions taken are warranted by existing
law or as good faith arguments for extension or modification of existing law. Id.
Third, the document must not be filed for any improper purpose. Id.
C. The Rooker-Feldman Doctrine Bars Plaintiff’s Claims
The Rooker-Feldman doctrine provides that inferior federal courts lack
jurisdiction to review the final judgments of state courts. See Hutcherson v.
Lauderdale County, 326 F. 3d 747, 755 (6th Cir. 2003). It applies in cases “brought
by state-court losers complaining of injuries caused by state-court judgments
rendered before the district court proceedings commenced and inviting district court
review and rejection of those judgments.” Exxon Mobil Corp. v. Saudi Basic Indus.
Corp., 544 U.S. 280, 284 (2005). The Sixth Circuit has explained the application of
Rooker-Feldman as follows:
The inquiry then is the source of the injury the plaintiff alleges in the federal
complaint. If the source of the injury is the state court decision, then the
Rooker–Feldman doctrine would prevent the district court from asserting
jurisdiction. If there is some other source of injury, such as a third party’s
actions, then the plaintiff asserts an independent claim.
McCormick v. Braverman, 451 F.3d 382, 393 (6th Cir. 2006). Federal jurisdiction is
proper, therefore, “if a federal plaintiff presents an independent claim, ‘albeit one
that denies a legal conclusion that a state court has reached in a case to which he
was a party.’” Brown v. First Nationwide Mortgage Corp., 206 Fed. App’x. 436, 439
(6th Cir. 2006) (quoting Exxon Mobil Corp., 544 U.S. at 293). An example of such
an independent claim is one where “there is some other source of injury, such as a
third party’s actions....” Id. To determine the source of the injury, a court must
refer to the plaintiff’s request for relief. Berry v. Schmitt, 688 F.3d 290, 299 (6th
Cir. 2012) (quoting Evans v. Cordray, 424 Fed. App’x. 537, 539 (6th Cir. 2011)).
Plaintiff’s Complaint makes two central claims. First, Plaintiff claims to
have been injured by the Wayne County Circuit Court’s appointment of a receiver.
Second, Plaintiff claims to have been injured by the Grosse Pointe Woods Municipal
Court’s order evicting the Trust from the Gallery and terminating the lease. In
particular, Plaintiff alleges that Defendants: violated his due process rights by
“allowing [Mr. Simon] to seize and sell” the property in the Gallery (Dkt. 1 ¶ 37),
interfered with Plaintiff’s business relationships by prohibiting him from accessing
the Gallery during the eviction process (Dkt. 1 ¶ 39), breached the lease agreement
by allowing Mr. Simon to “pillage” the property in the Gallery (Dkt. 1 ¶ 41), and
converted Plaintiff’s property by allowing Mr. Simon into the Gallery (Dkt. 1 ¶ 43).
These allegations are nothing more direct frontal attacks on the orders and
judgments of two state courts – the Wayne County Circuit Court, and the Grosse
Pointe Woods Municipal Court.
Plaintiff argues in his objections that the source of his injury is not the state
court decisions against him. Magistrate Judge Davis concluded to the contrary that
the instant action was an attack on those state court judgments, and this conclusion
is correct and well supported. Plaintiff’s Complaint, distilled to its essence, seeks
relief from Defendants Grosse Pointe Park and its city manager for permitting the
duly appointed receiver and trustee from discharging his duties, as expressly
authorized by the Wayne County Circuit Court (which appointed Mr. Simon as
receiver), the Bankruptcy Court (which appointed Mr. Simon as Trustee), and the
Grosse Pointe Woods Municipal Court (which evicted the Trust from the Gallery).
The injuries complained of by Plaintiff flow directly from the orders of these courts
and the execution of those orders by duly-appointed representatives of the court.
Furthermore, Plaintiff, in his response to Defendants’ motion to dismiss, argues
that “[t]he Rooker-Feldman doctrine does not apply where a claim is brought under
the Bankruptcy Code” (Dkt. 26, Pg ID 497). The proper forum to litigate alleged
violations of the Bankruptcy Code is in the Bankruptcy Court, where Plaintiff’s
Chapter 7 case is still ongoing.
In sum, Plaintiff’s claims in this case are barred by the Rooker-Feldman
D. The Release Also Bars Plaintiff’s Claims
The second issue presented in Defendants’ motion to dismiss is whether
Plaintiff’s claims are barred by a release agreement. Defendants seek dismissal of
the Complaint under Rule 12(b)(6) on the grounds that Plaintiff executed a
settlement agreement and release of all legal claims against Defendants relating to
the leasing of the Gallery and the subsequent eviction proceedings. In the motion
to dismiss before the Court, Defendants have attached a copy of the release as an
exhibit to a Rule 12(b)(6) motion (Dkt. 20, Ex. M). The Sixth Circuit has held that
“release is an affirmative defense that must be pled by the defendant, which
includes showing that the release was fairly executed….” Wysocki v. Int'l Bus.
Mach. Corp., 607 F.3d 1102, 1108, FN3 (6th Cir. 2010). Once a defendant has
raised release as an affirmative defense, a plaintiff may prove the “the invalidity of
the release, which can be done by showing mistake, incapacity, fraud,
misrepresentation, unconscionability, or duress.” Id.
When a party moving under Rule 12(b)(6) presents matters outside the
pleadings and the court does not exclude the materials, the court must treat the
Rule 12(b)(6) motion as a motion for summary judgment under Rule 56. Before
converting a motion to dismiss, the Court must give the parties “a reasonable
opportunity to present all the material that is pertinent to the motion.” Id. But
notice is required only to the extent that “one party is likely to be surprised by the
proceedings.” The necessity of prior notice “depends upon the facts and
circumstances of each case.” Id. In this case, the Court finds it appropriate to
convert Defendants’ motion to dismiss to a motion for summary judgment without
additional notice to the parties. It should be no surprise to Plaintiff that
Defendants would rely on the release as a bar to this litigation, after all, Plaintiff
himself signed it. Moreover, Plaintiff had multiple opportunities to argue that the
release did not bar his claims – first, in his response to Defendants’ motion to
dismiss, and second, in his objections to Magistrate Judge Davis’s Report and
Turing to the release itself, its provisions quite clearly bar the claims that
Plaintiff is bringing in this lawsuit. Plaintiff, and the Trust, released all claims
“arising from…the subject matter of the Lease, Eviction, and Appeal against the
City and its past and present employees.” Plaintiff admits that he signed the
release, but argues in his objections in conclusory fashion that he did so under
duress. Plaintiff has not plead sufficient facts to establish duress. The only
argument advanced by Plaintiff was that he was forced to sign the release under
duress knowing that he was going to be evicted and his records and personal
belongings were within the Gallery. The release was signed after the Municipal
Court entered an order of eviction, while that order was on appeal. The release
itself allowed Plaintiff a 30-day extension of time to vacate the premises. Plaintiff,
an attorney himself, was represented by another attorney during the negotiation of
the release. As correctly noted in the Report and Recommendation, Plaintiff has
simply not plead sufficient facts to raise an argument that the release is somehow
invalid due to duress.
As such, since Plaintiff’s claims are barred by the terms of the release,
Defendants’ motion to dismiss is also granted on these grounds.
After filing their motion to dismiss, Defendants filed a Rule 11 motion, after
complying with that Rule’s safe harbor provisions (Dkt. 24). Defendants move for
sanctions under Rule 11 because the Complaint in this action was filed despite the
application of the Rooker-Feldman doctrine and because Plaintiff’s claims are
squarely barred by the release agreement.
As noted above, Plaintiff previously filed this lawsuit against Defendants.
See Dietrich v. Grosse Pointe Park, et al., E.D. Mich. Case No. 14-10264. He was
represented by an attorney in that case. Plaintiff’s attorney voluntarily dismissed
that case without prejudice. Plaintiff, then acting in pro per, filed a motion to
reopen the case, arguing that his prior counsel purportedly dismissed the case
without first informing him of her intent to do so, and without his express
permission, the dismissal should be vacated. This Court denied Plaintiff’s motion
to reopen the case, and noted that Plaintiff could simply re-file a new case if he
wanted to reanimate that litigation. In so doing, however, this Court expressly
cautioned Plaintiff to “to carefully review the arguments raised [by] Defendants …,
particularly those related to the Rooker-Feldman doctrine.” Out of a desire to
prevent Plaintiff from exposing himself to future sanctions, the Court also reminded
Plaintiff of his Rule 11 obligations not to file frivolous litigation.
Despite this express warning, Plaintiff refiled this case without any good
faith argument that could overcome the Rooker-Feldman doctrine barring his
claims. What makes matters worse is that, during the time between the dismissal
of the first lawsuit and the filing of the present lawsuit, Plaintiff entered into a
release agreement with Defendants that expressly released any claims against
Defendants relating to the eviction proceedings or the lease of the Gallery. By
signing such a release, Plaintiff essentially agreed not to bring the very claims that
he is bringing in this lawsuit. Under such circumstances, Plaintiff’s claims are
clearly not “warranted by existing law or by a nonfrivolous argument for extending,
modifying or revising existing law.” Fed. R. Civ. P. 11(b). As properly noted by
Magistrate Judge Davis, in similar circumstances courts in this district have not
hesitated to impose Rule 11 sanctions. See e.g., J. Edward Kloian Found. v.
Findling, 2013 WL 6859143, *7-8 (E.D. Mich. Dec. 30, 2013); Musilli v. Googasian,
2006 WL 3030974, *6 (E.D. Mich. Oct. 23, 2006; Lund v. Citibank (West) FSB, 2007
WL 3408468, *3 (E.D. Mich. Nov. 14, 2007).
In sum, this Court agrees with Magistrate Judge Davis’s recommendation
that sanctions against Plaintiff are warranted in this case. This matter is hereby
re-referred to Magistrate Judge Davis to conduct a hearing and the offer a
recommendation to the Court as to what an appropriate sanction should be. The
Court will retain jurisdiction over this matter until an appropriate sanction award
is determined. See. e.g., Red Carpet Studios Div. of Source Advantage, Ltd. v. Sater,
465 F.3d 642, 645 (6th Cir. 2006) (citing Willy v. Coastal Corp., 503 U.S. 131, 138,
112 S.Ct. 1076, 117 L.Ed.2d 280 (1992) (holding that even where a federal court
dismissed a case for lack of subject matter jurisdiction – in that case for lack of a
federal question – it nonetheless had jurisdiction to impose Rule 11 sanctions for
abuses of the judicial process)).
F. Plaintiff’s Motion for Summary Judgment
Finally, the Court adopts Magistrate Judge Davis’s recommendation that,
since Plaintiff’s claims are barred by the Rooker-Feldman doctrine and by the terms
of the release, then Plaintiff’s motion for summary judgment should be denied as
moot. That motion is denied as moot.
For the reasons set forth above, Plaintiff’s objections are OVERRULED, and
the Report and Recommendation is ACCEPTED and ADOPTED as the opinion of
the Court. Accordingly, Defendants’ motion to dismiss (Dkt. 20) is GRANTED,
Defendants’ motion for sanctions (Dkt. 24) is GRANTED, and Plaintiff’s motion for
summary judgment (Dkt. 31) is DENIED AS MOOT. Plaintiff’s Complaint is
DISMISSED WITH PREJUDICE. This matter is hereby re-referred to
Magistrate Judge Davis to conduct a hearing, and then recommend an appropriate
sanction for Plaintiff’s Rule 11 violations.
s/Terrence G. Berg
TERRENCE G. BERG
UNITED STATES DISTRICT JUDGE
Dated: February 28, 2017
Certificate of Service
I hereby certify that this Order was electronically submitted on February 28,
2017, using the CM/ECF system, which will send notification to each party.
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