Taylor et al v. DLI Properties, L.L.C, d/b/a FORD FIELD et al

Filing 80

OPINION and ORDER Denying Plaintiff's 67 Motion for Reconsideration and Douglas Dymarkowski's 74 Motion to Substitute Trustee as Plaintiff. Signed by District Judge Judith E. Levy. (SBur)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
Melissa Taylor and Douglas St.
Pierre,
Case No. 15-13777
Plaintiffs,
Judith E. Levy
United States District Judge

v.
DLI Properties, LLC, d/b/a Ford
Field, S.A.F.E. Management, LLC,
Donna Farmer, and Sabrina
Wiggins,

Mag. Judge David R. Grand

Defendants.
________________________________/
OPINION AND ORDER DENYING PLAINTIFFS’ MOTION FOR
RECONSIDERATION [67] AND DOUGLAS DYMARKOWSKI’S
MOTION TO SUBSTITUTE TRUSTEE AS PLAINTIFF [74]
Plaintiff Melissa Taylor’s personal injury claims against defendants
S.A.F.E. Management, LLC, Donna Farmer, and Sabrina Wiggins were
dismissed on September 28, 2018, for failure to state a claim.1 (Dkt. 65.)
The Court found that Taylor was judicially estopped from asserting her

The Court provided a complete factual background of this case in its Opinion
and Order granting defendants’ motion to dismiss (Dkt. 65), which the Court
incorporates here by reference.
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claims because she failed to include them in her Chapter 7 bankruptcy
petition. (Id.) Plaintiffs filed a Motion for Reconsideration. (Dkt. 67.)
Supplemental briefing was ordered in response to plaintiffs’ first ground
for reconsideration, in which plaintiff argued that the Court improperly
dismissed Taylor’s claims because they belong to her bankruptcy trustee,
Douglas Dymarkowski. (Dkt. 69.) The briefing was complete. (Dkts. 71,
73.) Then, Dymarkowski filed a motion to substitute himself as plaintiff
(Dkt. 74), and the parties responded. (Dkts. 75, 76.) The Court now
considers the motions together.
I.

Legal Standard
To prevail on a motion for reconsideration under Local Rule 7.1, a

movant must “not only demonstrate a palpable defect by which the court
and the parties and other persons entitled to be heard on the motion have
been misled but also show that correcting the defect will result in a
different disposition of the case.” E.D. Mich. LR 7.1(h)(3). “A palpable
defect is a defect that is obvious, clear, unmistakable, manifest or plain.”
Witzke v. Hiller, 972 F. Supp. 426, 427 (E.D. Mich. 1997). The “palpable
defect” standard is consistent with the standard for amending or altering
a judgment under Federal Rule of Civil Procedure 59(e), that there was

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“(1) a clear error of law; (2) newly discovered evidence; (3) an intervening
change in controlling law; or (4) a need to prevent manifest injustice.”
Henderson v. Walled Lake Consol. Schs., 469 F.3d 479, 496 (6th Cir.
2006). Motions for reconsideration should not be granted if they “merely
present the same issues ruled upon by the court, either expressly or by
reasonable implication,” E.D. Mich. LR 7.1(h)(3), or if the “parties use . .
. a motion for reconsideration to raise new legal arguments that could
have been raised before a judgment was issued.” Roger Miller Music, Inc.
v. Sony/ATV Publ’g, 477 F.3d 383, 395 (6th Cir. 2007).
II.

Analysis
Plaintiffs argue that the opinion and order dismissing Taylor’s

remaining claims contains two palpable defects within the meaning of
Local Rule 7.1(h)(3): first, the Court improperly dismissed Taylor’s claims
because they belong to Dymarkowski, and second, the Court’s application
of judicial estoppel to Taylor’s conduct was incorrect. (Dkt. 67.) As to the
first ground, there was a palpable defect, a clear error of law, but it does
not affect the disposition of this case because the Court denies

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Dymarkowski’s motion to substitute.2 And as to the second ground,
plaintiffs fail to show that there was a palpable defect in the Court’s
judicial estoppel analysis according to the Rule 59(e) standard.
A. Ground One: The Claims Belong to the Trustee, but the
Disposition of the Case is Unaffected.
Plaintiffs argue that Taylor’s personal injury claims legally belong
to Dymarkowski, and so the Court cannot dismiss them because Taylor
would be judicially estopped from bringing them. (Dkt. 67 at 3.) Plaintiffs
are correct that a court cannot dismiss claims under the doctrine of
judicial estoppel as applied to the bankruptcy petitioner because it would
unfairly penalize the bankruptcy trustee for the petitioner’s conduct. (Id.
(citing Stephenson v. Malloy, 700 F.3d 265, 272 (6th Cir. 2012).) But the
underlying legal issue is that Taylor has no standing to bring these
claims because the claims do not belong to her. (Dkt. 69 at 4–6 (citing
Auday v. Wet Seal Retail, Inc. 698 F.3d 902, 903 (6th Cir. 2012).)
However, a court may only grant a motion for reconsideration if
“correcting the defect will result in a different disposition of the case.”

Plaintiffs also argue that the Court’s application of judicial estoppel to
Taylor’s conduct is incorrect and that it should have applied it to Dymarkowski
because the claims belong to him as trustee. (Dkt. 67 at 10.) Because the Court denies
the motion to substitute Dymarkowski, this ground is moot.
2

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E.D. Mich. LR 7.1(h)(3). Here, the claims were dismissed with prejudice.
(Dkt. 65 at 23.) As noted in the order for supplemental briefing, the Court
has three options: (1) grant the motion to reconsider, but maintain the
dismissal and find that the claims are dismissed without prejudice so
Dymarkowski may pursue them later; (2) grant the motion to reconsider,
reverse the dismissal, and substitute Dymarkowski, permitting these
personal injury claims to go forward; or (3) deny the motion to reconsider
because the claims are properly dismissed with prejudice, despite Federal
Rule of Civil Procedure 17(a)(3). (Dkt. 69 at 7.) The third option is most
appropriate.
Rule 17(a)(3) provides: “The court may not dismiss an action for
failure to prosecute in the name of the real party in interest until, after
an objection, a reasonable time has been allowed for the real party in
interest to ratify, join, or be substituted into the action.” However, courts
do not construe this provision literally and “have held that when the
determination of a proper party is not difficult and where there has been
no understandable mistake, dismissal is warranted despite Rule

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17(a)(3).”3 Barefield v. Hanover Ins. Co., 521 B.R. 805, 810 (E.D. Mich.
2014) (citing cases). Courts must still consider substitution before
dismissing a case; this is an important caveat. Id. (same). Even so, courts
have dismissed claims where “substitution would not achieve the purpose
of Rule 17(a)(3),” which is “to protect against forfeiture” of claims when
it is difficult to determine who the real party in interest is or an
understandable mistake has been made as to the proper party. Id.
For example, in Rodriguez v. Mustang Manufacturing Co., the court
determined that it was inappropriate, despite Rule 17(a)(3), to permit the
substitution of a bankruptcy trustee because it was not legally difficult
to determine the real party in interest, there was no indication the
plaintiff had made a reasonable mistake, and the substitution had not
occurred within a reasonable amount of time.4 No. 07-CV-13828, 2008
WL 2605471, at *3–4 (E.D. Mich. June 27, 2008).

For this reason, plaintiffs’ argument that defendants did not object to Taylor
as plaintiff has no bearing on this analysis. (See Dkt. 71 at 5.)
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The court in Rodriguez considered when the plaintiff had filed and concluded
his bankruptcy, more than two years before the civil suit, to find an unreasonable
delay. 2008 WL 2605471, at *3. However, it is more consistent with the principle in
Stephenson that the bankruptcy trustee should not be penalized for the actions of the
bankruptcy petitioner, 700 F.3d at 272, to consider when the trustee knew about the
claims, rather than when the bankruptcy ended. See also Canterbury v. FederalMogul Ignition Co., 483 F. Supp. 2d 820, 827 (S.D. Iowa 2007).
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Here, the purpose of Rule 17(a)(3) is not fulfilled by permitting the
substitution of Dymarkowski. It is not difficult to determine that
Dymarkowski had the right to sue. Id. at *4 (“The law of the Sixth Circuit
clearly demonstrates that [plaintiff’s] bankruptcy trustee had the
exclusive right to bring the bankruptcy claim.”); e.g., Auday, 698 F.3d at
904–05. Plaintiffs also do not show that the failure to substitute
Dymarkowski earlier was due to a reasonable mistake. Rather, they
argue that Dymarkowski was ignorant of the law, which is not an excuse
or a reasonable mistake. (See Dkt. 71 at 3.) Moreover, Dymarkowski has
had a reasonable time in which to substitute himself as plaintiff. He has
known about the personal injury claims since April 2018, but he
neglected to determine his rights as trustee and further them for seven
months. Instead, with motions flying back and forth, he chose to sit on
his rights. Concerns about accidental or unwitting forfeiture are
therefore minimal. For these reasons, it is appropriate to deny the motion
to substitute, which therefore does not change the disposition of this case.
Taylor is still the plaintiff and her claims are still properly dismissed,
albeit for a lack of standing.

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Plaintiff argues that the Court should substitute Dymarkowski
under Rule 17(a)(3) because the statute of limitations prevents the
trustee from bringing the claims later, even if the Court determined on
this motion that a dismissal of claims without prejudice was proper. (Dkt.
71 at 7–8 (citing Barefield, 521 B.R. at 811).) However, this case is
distinguishable from Barefield because the court there did not consider
an unreasonable delay by the trustee to file a motion to substitute and
preserve his rights as the real party in interest.
Plaintiff also argues that in Auday, the Sixth Circuit required the
district court to consider on remand only dismissal without prejudice or
substitution. (Dkt. 71 at 6 (citing Auday, 698 F.3d at 905–06).) However,
these were case-specific remand directions, not a bar on utilizing
discretion to dismiss claims with prejudice.
Finally, plaintiffs point to Canterbury, arguing that because
Dymarkowski did not know about the claims until the statute of
limitations had expired, any dismissal “would be inequitable.” 483 F.
Supp. 2d at 827. Plaintiffs fail to note that the Canterbury court expressly
considered the swiftness of the trustee’s actions to reopen the bankruptcy
and “ensure the ongoing vitality of the present claims.” Id. at 826. In

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Canterbury, the trustee reopened the case two weeks after the
defendant’s motion raising the plaintiff’s failure to disclose the claims in
the bankruptcy petition; a week after that, the trustee requested that the
bankruptcy court permit him to hire counsel. Then, the plaintiff filed a
motion to amend the complaint to substitute the trustee a little over two
months after defendant filed the motion.
In contrast, in this case, once he reopened Taylor’s bankruptcy case,
Dymarkowski did nothing to preserve his claims. He reopened the
bankruptcy case on the same day defendants filed their motion to dismiss
on judicial estoppel grounds (Dkts. 57, 61-3), but it was not until the
Court ordered supplemental briefing over seven months later that
Dymarkowski sought appointment of counsel or filed a motion to be
substituted. (Dkt. 71 at 3–4.)
Given this analysis, plaintiffs’ assertion that equity, justice, and the
preparation by the parties for trial require substitution of Dymarkowski
under Federal Rule of Procedure 1 is unpersuasive.5 (See id. at 6.)

In the alternative, plaintiffs argue that Dymarkowski should be substituted
under Federal Rules of Civil Procedure 25(c) and 21. Both rules grant discretion to
federal courts to substitute parties. Fed. R. Civ. Pro 21 & 25(c); e.g., Bauer v.
Commerce Union Bank, 859 F.2d 438, 421–22 (6th Cir. 1988). For the same reasons
the Court finds that Rule 17(a)(3) is no bar to denying the substitution, the Court also
declines to exercise its discretion to substitute Dymarkowski under these rules. There
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Dymarkowski failed to actively preserve his right to bring the personal
injury claims and pursue them, despite clear law providing for his rights
to bring the claims. It is his delay that has delayed the resolution of this
case. Therefore, the denial of his motion to substitute is appropriate, and
plaintiffs’ motion for reconsideration on this ground is denied.
B. Ground 2: There is no Palpable Defect in the Earlier Judicial
Estoppel Analysis.
Plaintiffs argue that the Court’s judicial estoppel analysis of
Taylor’s conduct is a palpable defect because the Court did not address
certain factors relating to the reopening of the bankruptcy proceedings
and because plaintiffs disagree with the Court’s application of the judicial
estoppel test. (Dkt. 67 at 2, 11.) Although this argument is now moot
because Taylor has no standing to bring these personal injury claims and
Dymarkowski has not been substituted for her, it warrants addressing
because it is blatantly improper under the Local Rules. Local Rule
7.1(h)(3) prohibits parties from restating their arguments simply because
they disagree with the Court, but this is precisely what plaintiffs do.

was also no transfer of interest because the claims belonged to Dymarkowski all
along, and so the Court further declines to substitute him under Rule 25(c).

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To determine whether a bankruptcy petitioner is judicially
estopped from bringing a civil claim, a court must find that:
(1) the debtor plaintiff ‘assert[ed] a position that is contrary
to one that the [plaintiff] has asserted under oath in a
[bankruptcy] proceeding . . . [,] (2) the [bankruptcy] court
adopted the contrary position either as a preliminary matter
or as part of a final disposition,’ and (3) the plaintiff’s failure
to disclose was not due to ‘mistake or inadvertence.’
(Dkt. 65 at 10 (quoting White v. Wyndham Vacation Ownership, Inc., 617
F.3d 472, 476 (6th Cir. 2010).) Under prong three, courts look at whether
“there was an absence of bad faith.” (Id. (quoting White, 617 F.3d at 476–
77).) Plaintiff fails to show a palpable defect in the Court’s analysis of
prong one, prong two, and bad faith.
Plaintiffs repeat their earlier arguments under the first prong.
(Compare Dkt. 67 at 12–13 with Dkt. 61 at 15–16.) Plaintiffs do not point
to any law, much less different law, that shows the Court committed clear
error by applying the wrong law or overtly misapplying the law.
As to the second prong, that the bankruptcy court adopted Taylor’s
position, plaintiffs focus on the Court’s use of the phrase “final
disposition” in the opinion and cite law permitting parties to reopen
bankruptcy proceedings and indicating bankruptcy closure does not
adjudicate rights. (Id. at 12–13.) However, plaintiffs still neglect to
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address the White test, which provides that this prong is satisfied when
“the bankruptcy court adopt[s] the contrary position as either a
preliminary matter or as part of a final disposition.” 617 F.3d at 478
(emphasis added). Whether the discharge of debt was a preliminary
matter or a final disposition, the result is the same—the bankruptcy
court adopted Taylor’s contrary position when it discharged her debts.
The White court considered identical circumstances in holding that the
bankruptcy court adopted the plaintiff’s contrary position when it
discharged the debts. 617 F.3d at 474, 478–79. It did so despite the
plaintiff’s bankruptcy amendment, which would have required reopening
the bankruptcy case. See id. at 474. Plaintiffs’ effort to obscure clear,
binding precedent does not create a palpable defect. This is not a close
question of law, much less clear error of law.
Plaintiffs’ argument that “[t]he court’s analysis of Plaintiff’s
absence of bad faith is incorrect” (Dkt. 67 at 14) also does not show a
palpable defect. Plaintiffs repeat their previous arguments because they
believe Taylor’s ex post facto efforts to notify the bankruptcy court of her
omission should have been credited more than they were. In their closest
brush with the palpable defect standard, they argue that the Court’s

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application of White, specifically where the Court noted that “more is
required” than ex post facto efforts (Dkt. 65 at 16), is “not supported by
law.” (Dkt. 67 at 15.) In the end, however, plaintiffs merely disagree with
the Court’s run-of-the-mill analysis, which does not generate a palpable
defect.
In its opinion, the Court was not creating a different standard for
bad faith than the one enunciated in White by stating that “more is
required.” Rather, the Court summarized its comparison between the
actions of the plaintiffs in White and Eubanks v. CBSK Financial Group,
Inc., 385 F.3d 894 (6th Cir. 2004), and Taylor. (Dkt. 65 at 16–20.) White
requires the Court to consider the extent, effectiveness, and timing of
Taylor’s efforts to inform the bankruptcy court of undisclosed claims, and
any other factors that are useful to assess whether she acted without bad
faith. 617 F.3d at 480–82. The Court concluded that precedent does not
support finding a lack of bad faith when the only efforts she undertook to
apprise the bankruptcy court of her omission occurred after the
defendants raised a judicial estoppel argument, i.e. more is required by
the case law to show an absence of bad faith. (Dkt. 65 at 17.)

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This is consistent with White. In White, an ex post facto amendment
to a bankruptcy petition was insufficient on its own to show a lack of bad
faith. See 617 F.3d at 481. The White court did not consider the clerical
steps to file an amendment, such as reopening the bankruptcy case or
reappointing the trustee. Those steps, which plaintiffs point to (Dkt. 67
at 2), are inconsequential to the White analysis.
Plaintiffs also argue that the Court held that a case must present
identical facts as those in Eubanks to show an absence of bad faith. (Dkt.
67 at 16.) The Court analyzed the impact of precedent, it did not forge a
new judicial estoppel test or standard for showing a lack of bad faith. (See
Dkt. 65 at 17–18.) See also White, 617 F.3d 477–78 (recounting the Sixth
Circuit’s comparison of cases to Eubanks in Lewis v. Weyerhaeuser Co.,
141 F. App’x 420 (6th Cir. 2005), and conducting its own comparison to
Eubanks).
Finally, Taylor argues that the Court should have interpreted other
factors differently and weighed more heavily the interests of Taylor’s
creditors. (Dkt. 67 at 10, 14.) White permits courts to consider other
factors that “undermine the sufficiency of “[plaintiff’s] attempts to advise
the bankruptcy court of her . . . claim.” 617 F.3d at 482. And judicial

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estoppel, an equitable doctrine, requires the Court “to weigh the benefits
involved and the degree and fault of the parties,” including creditors. See
id. at 485 (Clay, J., dissenting). In its opinion, the Court followed White.
As to the other factors the Court considered, plaintiffs address two.
First, they assert that Taylor had poor counsel during her first
bankruptcy. (Dkt. 67 at 14.) This does not negate what the Court
considered, which was that she would have had more knowledge than a
person who had never filed for bankruptcy before, when it determined
this factor further indicated bad faith. Second, plaintiffs argue that the
Court was wrong to find Taylor’s amended bankruptcy was a sign of bad
faith. (Id. at 16–17.) As indicated in the parties’ “Joint Final Pretrial
Order,” Taylor planned to present nearly $200,000 in medical bills to the
jury. (Dkt. 54 at 3.) It is a struggle to see how it was palpable error to find
the bankruptcy amendment—listing the claim as worth $75,000—
evinced bad faith when Taylor herself represented to the Court that it
was worth more than twice that.
Finally, plaintiffs fail to show that the Court did not consider the
interests of Taylor’s creditors or that it abused its discretion when it
determined that equity required the Court to find Taylor’s fault

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outweighed all else. Plaintiffs repeat their earlier arguments, noting that
the Court did not explicitly address the creditor’s interests. (See Dkt. 67
at 10.) The Court found Taylor was judicially estopped, which reasonably
implies it determined her fault was greater on balance than all other
interests. See E.D. Mich. LR 7.1(h)(3) (“[T]he court will not grant motions
for rehearing or reconsideration that merely present the same issues
ruled upon by . . . reasonable implication.”); see, e.g., White, 617 F.3d at
484 (finding plaintiff was judicially estopped despite the interests of her
creditors). Taylor may wish for a different outcome, but that does not
create a palpable defect.
III. Conclusion
For the reasons set forth above, the Court’s palpable error in
dismissing claims for judicial estoppel reasons, rather than because
Taylor lacked standing, has no effect on the disposition of the case
because the purpose of Rule 17(a)(3) is not fulfilled by granting the
motion to substitute the trustee. The remainder of plaintiffs’ motion for
reconsideration is therefore moot.
Accordingly, the motions for reconsideration (Dkt. 67) and to
substitute the trustee (Dkt. 71) are DENIED.

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IT IS SO ORDERED.
Dated: December 19, 2018
Ann Arbor, Michigan

s/Judith E. Levy
JUDITH E. LEVY
United States District Judge

CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served
upon counsel of record and any unrepresented parties via the Court’s
ECF System to their respective email or First Class U.S. mail addresses
disclosed on the Notice of Electronic Filing on December 19, 2018.
s/Shawna Burns
SHAWNA BURNS
Case Manager

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