CH Holding Co. v. Miller Parking Co.

534 B.R. 308, 2015 U.S. Dist. LEXIS 81000, 2015 WL 3868648
CourtDistrict Court, E.D. Michigan
DecidedJune 23, 2015
DocketCase No. 14-14430
StatusPublished
Cited by1 cases

This text of 534 B.R. 308 (CH Holding Co. v. Miller Parking Co.) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
CH Holding Co. v. Miller Parking Co., 534 B.R. 308, 2015 U.S. Dist. LEXIS 81000, 2015 WL 3868648 (E.D. Mich. 2015).

Opinion

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS’ MOTION TO REMAND

DAVID M. LAWSON, District Judge.

Before the Court is the plaintiffs’ motion to remand, which addresses the defendants’ second notice of removal. After the case was removed the first time under docket number 12-10629, the Court found that several of the plaintiffs’ claims were precluded as a matter of law because the bankruptcy trustee for the estate of Miller Parking Company, LLC (Miller Detroit) had the sole and exclusive legal standing to pursue them. The Court therefore dismissed those claims and remanded the remaining state law claims, which the Court found did not implicate the interests of the bankruptcy estate. After the case was remanded, the plaintiffs amended their complaint, and the defendants responded with a second notice of removal, contending that two of the claims in the amended complaint run afoul, of the same rules of law that precluded the plaintiffs from pursuing the previously dismissed counts. Because adjudication of counts VIII and IX of the amended complaint require the adjudicating court to determine whether certain funds were property of the bankruptcy estate, those counts are “related to” the bankruptcy case, and therefore this Court has jurisdiction over those counts under 28 U.S.C. § 1334(b). The removal of the case was proper. The Court will retain jurisdiction over those counts, but remand the remaining state law claims under 28 U.S.C. § 1367, because those counts do not relate to the bankruptcy or to the other counts.

I.

On September 12, 2013, the Court filed an opinion and order in CH Holding v. Miller Parking, case number 12-10629, granting in part the defendants’ motion for judgment on the pleadings, dismissing counts I through VII, X, and XI of the complaint, and remanding the remaining claims (counts VIII, IX, and XII through XIV) to the Oakland County, Michigan circuit court. The plaintiffs filed a motion for reconsideration, and the James Miller defendants filed a motion for relief under Rule 60 from the order of remand. After a considerable period of forbearance jointly requested by the parties, due to their prolonged efforts to settle the case, the Court filed an opinion and order on May 12, 2014 denying both motions. In denying the defendants’ motion, the Court noted that “[i]f the plaintiffs seek to amend their pleadings to add claims that would implicate the Court’s bankruptcy jurisdiction by seeking directly to recover funds that are the property of either the Bruce Miller or Miller Parking bankruptcy es[311]*311tates, then the defendants may seek their relief by taking appropriate action to remove the dispute to a federal forum.” Op. & Order [dkt. # 74] at 6, CH Holding v. Miller Parking Company, No. 12-10629, 2014 WL 1882768 (E.D.Mich. May 12, 2014).

On May 14, 2014, following protracted litigation regarding a proposed settlement between the plaintiffs and certain defendants (“the Weinstein and Stein defendants”), the Court affirmed the approval of the settlement by the bankruptcy court. Op. & Order [dkt. # 14], In re Miller Parking, 510 B.R. 123 (E.D.Mich.2014). The Court later entered a stipulated order dismissing all claims against the Wein-steins and Steins in the related matter of Lim v. Miller Parking Company, 11-14422. From the caption of the recently re-removed amended complaint in CH Holding, it appears that all claims against the Weinsteins and Steins also were dismissed in the Oakland County case (as was required by the partial settlement). Only the Miller Defendants (James N. Miller and his various family trusts) now remain in CH Holding and in Lim v. Miller Parking.

Subsequently, in response to concerns raised by the defendants about the scope of the claims presented in counts VIII and IX, the state court ordered the plaintiffs to file an amended complaint expressing more precisely the nature of the recovery sought in those counts. In count VIII of their first amended complaint for conversion against James N. Miller individually, the plaintiffs now allege that James Miller, in his capacity as president and managing agent of Miller Detroit, authorized payment to a law firm for the attorney’s fees incurred by Bruce Miller in defense of the 2004 CH Holding lawsuit in state court. The plaintiffs allege that James Miller had no legal authority to spend Miller Detroit’s funds in that fashion, and they aver that some of those funds came from parking revenues that should have been held in trust for CH Holding and CH/Brand. The plaintiffs say that diverting those funds for attorney’s fee payments benefitted James Miller personally, and as a result he is liable for statutory and common law conversion.

Count IX alleges conspiracy against James Miller on the same factual premises as count VIII, based on allegations that James N. Miller, Bruce Miller, and Miller Detroit acted together in their scheme to use company funds to pay Bruce Miller’s attorney’s fees, instead of remitting “some or all of the Parking Revenues to CH/ Brand and [CH Holding].” Am. Compl. ¶ 47.

On November 19, 2014, after the amended complaint was filed, the James Miller defendants filed their present notice of removal on the ground that the claims in amended counts VIII and IX “arise under” the Bankruptcy Code, 11 U.S.C. § 544(b), and “relate to” the administration of the Miller Detroit bankruptcy estate, because those counts seek the recovery of assets that ought rightfully to be preserved for the estate and its creditors. In their motion to remand, the plaintiffs argue that the challenged counts seek recovery solely against James N. Miller individually and do not in any way implicate the bankruptcy estate.

II.

The plaintiffs contend that the case must be remanded because the original claims in counts VIII and IX did not implicate the bankruptcy éstate, and the amended complaint changes nothing about the substance of those claims, but merely pleads additional factual detail to explain how the alleged wrongs were accomplished. The defendants respond that the plaintiffs [312]*312amended claims do implicate the property of the bankruptcy estate, because adjudication of the claims necessarily requires a determination of the bankruptcy estate’s ownership of specific property. The defendants also argue that if James N. Miller is to be held liable for wrongful payment of attorney fees in the Oakland County (2004) lawsuit, then he has a right to seek contribution from the parties on whose behalf at least some of those fees allegedly were paid, which, according to the amended complaint, were Bruce Miller and Miller Detroit, both of which are in bankruptcy presently. The defendants have the better argument, at least as to their first premise.

The defendants, as the removing parties, must establish that the Court has subject matter jurisdiction to adjudicate the case. Charvat v. EchoStar Satellite, LLC, 630 F.3d 459, 462 (6th Cir.2010). A civil action brought in a state court may be removed to federal court if the federal court would have had original jurisdiction. 28 U.S.C. § 1441(a).

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Bluebook (online)
534 B.R. 308, 2015 U.S. Dist. LEXIS 81000, 2015 WL 3868648, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ch-holding-co-v-miller-parking-co-mied-2015.