Fifth Third Bank v. United States Department of Agriculture-Rural Development et al

Filing 65

OPINION ; signed by Judge Robert Holmes Bell (Judge Robert Holmes Bell, kcb)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

FIFTH THIRD BANK,
Plaintiff,
CASE NO. 1:12-CV-1123
v.
HON. ROBERT HOLMES BELL
UNITED STATES DEPARTMENT
OF AGRICULTURE-RURAL
DEVELOPMENT, et al.,
Defendants.
/
OPINION
On February 11, 2013, this Court entered an opinion and order denying Defendant
Triangle Associates’ motion for summary judgment. (Dkt. Nos. 34-35.) On February 25,
2013, Triangle filed a motion for reconsideration of that order. (Dkt. No. 37.) Pursuant to
W.D. Mich. LCivR 7.4(b), the Court invited all interested parties to file a response to that
motion. The Court has received three such responses, and now denies the motion for
reconsideration.
I.
The Western District of Michigan’s Local Civil Rules provide that a party that moves
for reconsideration must demonstrate that there is a palpable and misleading defect as well
as that a different result is required as a result of a correction of that defect. W.D. Mich.
LCivR 7.4(a). As a general rule, “motions for reconsideration which merely present the same

issues ruled upon by the Court shall not be granted.” Id.
Although there is no specific provision for a motion for reconsideration in the Federal
Rules of Civil Procedure, such a motion is to be evaluated as a motion to alter or amend the
judgment under Federal Rule of Civil Procedure 59(e). See Aero-Motive Co. v. William
Becker, No. 1:99-CV-384, 2001 WL 1699194, at *1 (W.D. Mich. Dec. 6, 2001) (citing Huff
v. Metro. Life Ins. Co., 675 F.2d 119, 122 (6th Cir. 1982)). A motion for reconsideration is
an opportunity to “point out manifest error of law or present newly discovered evidence.”
Aero-motive, 2001 WL 1699194 at *1 (citing Sault Ste. Marie Tribe of Chippewa Indians v.
Engler, 146 F.3d 367, 374 (6th Cir. 1998)).
II.
In denying the motion for summary judgment, this Court concluded that Triangle’s
default judgment against Fifth Third, a garnishee, did not result in Fifth Third being
personally liable for the garnishment. Triangle now argues that there was a palpable and
misleading defect in this analysis because the Court misinterpreted McKnight v. General
Retirement System of City of Detroit, Nos. 290261, 293215, 2010 WL 4628654 (Mich. Ct.
App. 2010), and did not comply with the Rooker-Feldman doctrine. Triangle further argues
that Fifth Third is personally liable for the default judgment pursuant to Michigan case law
and the Michigan Court Rules.

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A. Alleged Errors
1. McKnight
Triangle argues that Fifth Third omitted material portions of McKnight “upon which
this Court clearly relied and cited in its opinion.” (Dkt. No. 38, at 1.) However, this Court
did not cite McKnight in its opinion denying the motion for summary judgment and did not
rely on McKnight in reaching its decision.

Thus, regardless of the differences in

interpretation of McKnight between Triangle and Fifth Third,1 it is irrelevant for purposes
of determining if there was a palpable and misleading defect in the Court’s February 11
opinion.
2. Rooker-Feldman
Triangle further argues that this Court was misled by Fifth Third’s argument that it
was not challenging the state court judgment. However, Triangle merely raises the same
arguments this Court previously found unconvincing. “[M]otions for reconsideration which
merely present the same issues ruled upon by the Court shall not be granted.” W.D. Mich.
LCivR 7.4(a). Triangle’s argument is that the default judgment against Fifth Third was one
of personal liability and that this Court thus overruled the state court by limiting the judgment
to the account funds. As fully covered in the prior opinion (and discussed again in this

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The Court notes that McKnight seems to imply that personal liability can exist on a
default judgment in a garnishment proceeding. The lower court imposed personal liability on a
defaulted garnishee, and the court of appeals did not reverse the lower court on that ground.
However, McKnight never addressed the issue of whether the liability could be personal, instead
focusing on the amount of liability that could be imposed. Without any analysis in the opinion as
to why personal liability can or cannot be imposed, the Court does not find McKnight persuasive.
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opinion), Rooker-Feldman is not applicable because the default judgment did not hold Fifth
Third personally liable for the garnishment. Thus, this Court did not overrule the state court,
and there was no palpable and misleading defect in its opinion.
Contrary to Triangle’s supplement, Fifth Third’s recent motion in the Michigan Court
of Appeals asking the court to hold Fifth Third’s appeal in abeyance pending this Court’s
determination of the interpleader action is not evidence that Fifth Third is attempting to
circumvent the Michigan courts. Instead, the motion is based on the fact that this Court may
resolve the conflicting claims to the account funds, and if the Court decides that Triangle has
the superior interest then Fifth Third concedes that its claim pending on appeal – that the
lower court’s entry of default judgment was premature – would constitute harmless error and
be moot. (See Dkt. No. 52, Ex. 1.)
B. Personal Liability on the Default Judgment
Triangle cites various cases and court rules to support its claim that Fifth Third is
personally liable on the default judgment.2 According to an 1896 opinion, the garnishee’s
“failure to expose for execution such property and effects after the plaintiff has become
entitled to levy thereon renders the garnishee defendant personally liable in his own goods
and estate to the amount of such judgment.” Childs v. N.B. Carlstein Co., 76 F. 86, 94
(Circuit Court, E.D. Mich. 1896). First, the Court will not rely on an 1896 case interpreting
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The two bankruptcy court decisions in Illinois and Virginia provided by Defendant
Bentwaters, which indicate that a default judgment constitutes an “independent cause of action”
or “an action against the employer-garnishee,” are not helpful in determining the meaning of
Michigan’s garnishment statutes and rules and are thus omitted from this discussion.
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antiquated statutory language to find Fifth Third personally liable. Second, this language is
patently ambiguous; it is not clear that Fifth Third’s failure to file a disclosure statement is
equivalent to a “failure to expose for execution such property and effects.” Id.
Next, Triangle quotes a 1993 Michigan Court of Appeals decision which held that
“the garnishee is liable for ‘all debts, whether or not due, owing by the garnishee defendant
to the principal defendant . . . . This rule conforms with the statutory provision that the court
has the power to apply the garnishment to an ‘obligation owed.’” Royal York of Plymouth
Ass’n v. Coldwell Banker Schweitzer Real Estate Servs., 506 N.W.2d 279, 280-81 (Mich. Ct.
App. 1993) (quoting Mich. Ct. R. 3.101(G)(1)(d) and Mich. Comp. Laws § 600.4011(1)(b)).
The Court fails to see the significance of this holding. Fifth Third did not owe a debt to the
principal defendant, Bentwaters, and the writ of garnishment did not seek payment of any
such debt. Triangle’s argument that general deposits in a bank create a debtor-creditor
relationship, even if accepted by the Court,3 would only establish that the DACA account
funds were eligible to be sought through a writ of garnishment. Nothing in Royal York or
Michigan Court Rule 3.101(G) suggests that the garnishee defendant is personally liable for
any such debt or obligation owed; instead, the Rule, in discussing garnishee liability, lists
debts equally with other items eligible for garnishment, such as tangible property. See Mich.
Ct. Rule 3.101(G)(1)(a)-(i).
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Triangle ignores the fact that the existence of a debtor-creditor relationship would be
complicated by the fact that the USDA had exclusive control over the account as a secured
creditor. Because of that interest, it is unclear to the Court whether any “debt” owed by Fifth
Third as a result of the general deposit of funds would be owed to the USDA or to Bentwaters.
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The other court rules cited by Triangle similarly offer little support for finding Fifth
Third personally liable. Rule 3.101(O) merely states the general rule that judgment may be
entered against the garnishee for the payment of money or property in satisfaction of the
garnishment. Similarly, Rule 3.101(S) states the rule that a court may enter a default
judgment against a garnishee who fails to make a required disclosure within the time limits
provided.4 Language that merely provides that a garnishee “is liable” does not equate with
that liability being personal, and neither rule provides specific language to indicate that this
liability is indeed personal.
As stated in the Court’s prior opinion, Mich. Comp. Laws § 600.4011, et seq.,
expressly provides for circumstances where a garnishee may become personally liable:
Any person summoned as a garnishee or any officer, agent, or other person
who appears and answers for a corporation summoned as a garnishee, who
knowingly and wilfully answers falsely upon his disclosure or examination on
oath is liable to the plaintiff in garnishment, or to his executors or
administrators, to pay out of his own goods and estate the full amount due on
the judgment recovered with interest, to be recovered in a civil action.
Mich. Comp. Laws § 600.4051 (emphasis added). These circumstances are not present here,
and the Court will not read-in personal liability to the language of various court rules which
impose liability on garnishees but do not include operative language similar to “is liable to

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Bentwaters provides a secondary source which states “a default judgment [] may be
executed against the garnishee’s own funds or property.” Michigan Court Rules Practice, 4
Mich, Ct, Rules Prac., § 3101.8 (5th ed.). However, in support, the source only cites to Rule
3.101(S)(1) which does not provide that a default judgment may be taken against the garnishee’s
own funds or property. Indeed, to describe the cap on the amount able to be recovered on a
default judgment, Rule 3.101(S)(1) refers to Rule 3.101(G)(2) which discusses what property
may be garnished in general.
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pay out of his own goods and estate.” Id.
IV.
Because Triangle has not identified a palpable and misleading defect in this Court’s
previous opinion, the motion for reconsideration will be denied.
An order consistent with this opinion will be entered.

Dated: March 20, 2013

/s/ Robert Holmes Bell
ROBERT HOLMES BELL
UNITED STATES DISTRICT JUDGE

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