Underwood v. McCarver
OPINION and ORDER Granting In Part and Denying In Part Appellant's 1 Motion for Leave to Appeal. 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. 16-11752
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 GRANTING IN PART AND DENYING IN PART
APPELLANT’S MOTION FOR LEAVE TO APPEAL
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. This is the third appeal Debtor and Appellant Glenn Richard
Underwood (“Underwood”) has filed arising from his Chapter 11 bankruptcy case
and the adversary proceedings he commenced against several judgment creditors
and the bankruptcy liquidating trustee, Gene R. Kohut (“Liquidating Trustee”).
This Court dismissed Underwood’s first appeal (Civil Case No. 15-10155) as
untimely and recently issued a decision in his second appeal (Civil Case No. 1512563) affirming the bankruptcy court’s decisions. Underwood now seeks to
appeal Judge Tucker’s May 5, 2016 order in the Chapter 11 case overruling his
objections to the Liquidating Trustee’s proposed sale of real property commonly
known as Lots 81 and 82, 9230 Dixie Highway, Clarkston, Michigan 48348
(“Dixie Highway Property”).
Underwood filed for Chapter 11 bankruptcy to protect himself from a
judgment entered against him in the Circuit Court for Oakland County, Michigan
and in favor of several of his family members: Julie McCarver, Jane Staebell,
Patricia Selent, Thomas Underwood, Julia Snead, Lynda Carto, and D. Jeanette
Sullivan (hereafter “Judgment Creditors”). After granting summary judgment in
favor of the Judgment Creditors, the circuit court judge entered a judgment in the
amount of $392,752, plus interest, against Underwood. Underwood appealed and
the Michigan Court of Appeals affirmed the grant of summary disposition to the
Judgment Creditors, but vacated the judgment and remanded the matter for recalculation of damages. On remand, the Oakland County Circuit judge entered a
revised judgment of $200,923 against Underwood.
On July 24, 2007, while the appeal was pending, the bankruptcy court
entered an order confirming Underwood’s Chapter 11 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 [they] are deemed to have a claim
against [Underwood] 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 2-3. The amount
of the claims, the plan states, is in the amount determined by the Michigan courts.
Id. at 4. The plan requires Underwood to pay 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 requires Underwood inter alia to execute quit claim
deeds to the Liquidating Trustee with respect to the following properties: (a) 6086
and 6185 White Lake Road, White Lake, MI; (b) 9230 Dixie Highway (with four
lots), Clarkston, MI; (c) 9237 Hillcrest, Clarkston, MI; and (d) 137 Hudson and
158 Summit (4 units), Pontiac, MI. 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 non3
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.
Underwood filed multiple lawsuits in the state courts seeking to overturn the
Oakland County Circuit Court’s judgment. His attempts were unsuccessful.
Underwood then initiated adversary proceedings in the bankruptcy court against
the Judgment Creditors and Liquidating Trustee, again attempting to challenge the
validity of the state court judgment. In his adversary complaint, Underwood also
alleged that the Liquidating Trustee had wrongfully transferred some of the abovereferenced properties directly to the Judgment Creditors.
In a December 10, 2014 decision, Judge Tucker rejected Underwood’s
challenges to the state court judgment. In a July 9, 2015 decision, Judge Tucker
concluded that the Liquidating Trustee lacked the authority to transfer the
properties directly to the Judgment Creditors and ordered that they be transferred
back to the Liquidating Trustee and that the Liquidating Trustee then be allowed to
perform the duties required of him with respect to the properties in accordance
with the modified bankruptcy plan. The current appeal arises only from the
Liquidating Trustee’s attempt to sell the Dixie Highway Property.
On February 2, 2016, the Liquidating Trustee—in accordance with
procedures outlined in the modified bankruptcy plan—filed and served a 15-day
notice of his intention to sell the Dixie Highway Property for the sum of $65,000 to
Angona Construction Company. Cert. of Service, In re Underwood, No. 06-55754
(Bankr. E.D. Mich. filed Feb. 2, 2016), ECF No. 224. Underwood filed an
objection to the sale on February 16, 2016. Obj., id., ECF No. 225. In addition to
claiming that the sale price was too low, Underwood objected based on many of
the same arguments he has raised in numerous state and federal court proceedings
to challenge the state court judgment. Id. On February 29, 2016, Judge Tucker
issued an order overruling all of Underwood’s objections except for his sale price
objection. Order, id., ECF No. 227. On March 16, 2016, Judge Tucker held a
hearing to address the remaining objection and ordered additional briefing and the
submission of relevant evidence. Id.
On May 5, 2016, after receiving and reviewing the additional submissions,
Judge Tucker entered an order overruling Underwood’s objection to the
Liquidating Trustee’s sale of the Dixie Highway Property. Order, id., ECF No.
240. Judge Tucker found and concluded “that the Liquidating [Trustee]’s business
judgment—that the proposed sale price for the Property is a fair price—is a
‘reasonable business judgment,’ within the meaning of the October 14, 2008 Order
modifying the Debtor’s confirmed Chapter 11 plan.” Id. at 2. Judge Tucker
ordered that the Liquidating Trustee may close the proposed sale and stated that his
order was effective immediately. Id. at 6.
A final order of the bankruptcy court may be appealed as of right pursuant to
28 U.S.C. § 158(a)(1). For purposes of appeal, a final order “ends the litigation on
the merits and leaves nothing for the court to do but execute the judgment.”
Midland Asphalt Corp. v. United States, 489 U.S. 794, 798 (1989) (citations
omitted). “[W]here an order in a bankruptcy case finally dispose[s] of discrete
disputes within the larger case, it may be appealed immediately.” Winget v. J.P.
Morgan Chase Bank, N.A., 537 F.3d 565, 579 (6th Cir.2008). A bankruptcy
court’s order authorizing the sale of property of the estate is an appealable final
order.1 In re LWD, Inc., 335 F. App’x 523, 528 (6th Cir. 2009) (citing Precision
Indus., Inc. v. Qualitech Steel SBQ, LLC, 327 F.3d 537, 543 (7th Cir. 2003);
Winget, 537 F.3d at 578). Thus, this Court concludes that Underwood should be
allowed to appeal Judge Tucker’s May 5, 2016 order.
That order only addressed Underwood’s objection to the sale price for the
Dixie Highway Property. Underwood’s motion for leave to appeal reflects that he
intends to argue before this Court that Judge Tucker’s evaluation of the proeprty’s
value was wrong. It also reflects, however, that he intends to re-litigate arguments
It is not evident to this Court that the Dixie Highway Property was property of the
estate when Judge Tucker entered his order allowing for its sale.
regarding the validity of the Oakland County Circuit Court judgment. Underwood
has challenged the validity of the judgment in several state court proceedings,
leading the Michigan Court of Appeals to conclude that his continued pursuit of
those issues was vexatious. He also attempted to raise the same challenges in the
bankruptcy court. As set forth in this Court’s opinion and order in Underwood’s
second bankruptcy appeal, he is barred by the Rooker-Feldman doctrine and
principles of estoppel from re-litigating these issues. He may not use the current
appeal as another attempt to do so.
As such, the only issue this Court will entertain on appeal is whether Judge
Tucker abused his discretion in concluding “that the Liquidating [Trustee]’s
business judgment—that the proposed sale price for the Property is a fair price—is
a ‘reasonable business judgment,’ within the meaning of the October 14, 2008
Order modifying the Debtor’s confirmed Chapter 11 plan.”
IT IS ORDERED that Appellant’s motion for leave to appeal is
GRANTED IN PART AND DENIED IN PART in that the only issue this Court
will consider on appeal is whether Judge Tucker abused his discretion in
concluding “that the Liquidating [Trustee]’s business judgment—that the proposed
sale price for the Property is a fair price—is a ‘reasonable business judgment,’
within the meaning of the October 14, 2008 Order modifying the Debtor’s
confirmed Chapter 11 plan.”
IT IS FURTHER ORDERED that Appellant’s brief shall be filed on or
before March 31, 2017; Appellees’ briefs are due on or before May 1, 2017;
Appellant’s reply brief is due on or before May 15, 2017.
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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