Gold v. Soueidan

CourtUnited States Bankruptcy Court, E.D. Michigan
DecidedJuly 24, 2023
Docket23-04167
StatusUnknown

This text of Gold v. Soueidan (Gold v. Soueidan) is published on Counsel Stack Legal Research, covering United States Bankruptcy 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
Gold v. Soueidan, (Mich. 2023).

Opinion

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION In re: Case No. 23-42109 ZAHRA SOUEIDAN, Chapter 7 Debtor. / Judge Thomas J. Tucker STUART A. GOLD, TRUSTEE, Plaintiff, vs. Adv. Pro. No. 23-4167 ALI H. SOUEIDAN, Defendant. / OPINION REGARDING THE DEFENDANT’S MOTION FOR RECONSIDERATION AND RELIEF FROM JUDGMENT I. Introduction This adversary proceeding is before the Court on the motion by the Defendant, Ali Soueidan, entitled “Defendant’s Motion to Set Aside Default and Default Judgment Pursuant to F.R.Civ.P. 55(c) and 60(b),” filed on June 19, 2023 (Docket # 12, the “Motion”). The Motion seeks reconsideration of, and relief from, the Court’s June 14, 2023 default judgment against the Defendant (Docket # 10, the “Default Judgment”).1 The Plaintiff Trustee filed a response objecting to the Motion (Docket ## 16, 17). The Court held a telephonic hearing on the Motion on July 19, 2023, and then took the Motion under advisement. 1 The Motion also seeks relief from the Clerk’s Entry of Default, filed June 14, 2023 (Docket # 8), based on Fed. R. Civ. P. 55(c), which applies in adversary proceedings under Fed. R. Bankr. P. 7052. That part of the Motion only matters if the Court grants relief from the Default Judgment, which the Court will not do, for the reasons discussed in this Opinion. The Court has reviewed and considered all of the written and oral arguments of the parties, all of the papers filed by the parties, and other relevant parts of the record. The Court will deny the Motion, for the reasons stated below. II. Background

In this case, the Plaintiff Trustee filed his complaint against the Defendant on April 20, 2023, and then filed an amended complaint on May 30, 2023, seeking to avoid, as a fraudulent transfer, a transfer of real estate that was done on May 24, 2019 by the Chapter 7 bankruptcy Debtor, Zahra Soueidan (the “Debtor”).2 The Debtor is the Defendant’s wife, and the transfer was a transfer of the real estate in which the Debtor and the Defendant live, located at 5734 Middlesex, Dearborn, Michigan (the “Property”). Immediately before the transfer, the Debtor was the sole owner of the Property. By a quit claim deed recorded on May 24, 2019, the Debtor

transferred the Property to the Defendant and herself, as husband and wife, as a tenancy by the entireties. The complaint and the amended complaint alleged that the transfer is avoidable under the combination of 11 U.S.C. § 544(b) and Michigan’s fraudulent transfer statutes, Mich. Comp. Laws §§ 566.34(1)(a) and 566.34(1)(b). It is undisputed that the Defendant failed to timely respond to either the complaint or the amended complaint. As indicated in the summons served with the complaint,3 and under applicable rules, the Defendant’s answer to the complaint originally was due no later than 30 days after the date of issuance of the summons. See Fed. R. Bankr. P. 7012(a). This meant that

2 Docket ## 1, 6. 3 Docket # 2. 2 the original answer deadline was Monday, May 22, 2023.4 But on May 10, 2023, the Defendant, through his attorney, Tarek N. Chami, filed a stipulation to extend the deadline to respond to the complaint, until June 13, 2023.5 That same day the Court entered an order granting the requested extension of time, but ordering that “additional extensions of this deadline are disallowed.”6

Thus, the Defendant’s deadline to answer or otherwise respond to the complaint was June 13, 2023. On May 30, 2023, the Plaintiff Trustee filed his amended complaint, which was served on the Defendant’s attorney the same day, via the Court’s ECF system.7 It is undisputed that under Fed. R. Civ. P. 15(a)(3), which applies in adversary proceedings under Fed. R. Bankr. P. 7015, the deadline for the Defendant to respond to the amended complaint was 14 days after May 30, 2023, i.e., June 13, 2023.8

4 As stated on the summons, the date of issuance of the summons was April 20, 2023. (See Summons (Docket # 2)). Thirty days after that date was Saturday, May 20, 2023. Under Fed. R. Bankr. P. 9006(a)(1)(C), this meant that the deadline was Monday, May 22, 2023. 5 Docket # 4. 6 Docket # 5 (bold in original). 7 See Docket ## 6, 7. 8 Civil Rule 15(a)(3) states: Unless the court orders otherwise, any required response to an amended pleading must be made within the time remaining to respond to the original pleading or within 14 days after service of the amended pleading, whichever is later. Fed. R. Civ. P. 15(a)(3). Because the amended complaint was served on the Defendant’s attorney through the Court’s ECF system on the date is was filed, service of the amended complaint was complete on the date of filing (May 30, 2023), and 14 days after that date was June 13, 2023. See Fed. R. Civ. P. 5(b)(2)(E), which applies in adversary proceedings under Fed. R. Bankr. P. 7005; see also ECF Procedure 12(a)(1) (Bankr. E.D. Mich.). The Court’s ECF Procedures apply in this adversary 3 The Defendant never filed an answer or other response to either the original complaint or the amended complaint. The day after the June 13, 2023 answer deadline passed, on June 14, 2023, the Clerk entered a default against the Defendant; the Plaintiff Trustee moved for a default judgment, and the Court entered the Default Judgment.9

The Default Judgment granted the relief sought by the amended complaint. It avoided the May 24, 2019 transfer of the Property, and adjudged that the Property is owned solely by the bankruptcy estate in the Debtor’s bankruptcy case, free and clear of any interest of the Defendant. The Defendant’s Motion does not allege that the entry of the Default Judgment was erroneous in any way. Rather, the Motion seeks relief from that Default Judgment, based on Fed. R. Civ. P. 60(b)(1), which applies under Fed. R. Bankr. P. 9024. Defendant argues for such relief based on alleged “mistake . . . or excusable neglect.” In support of the Motion, the

Defendant filed his own affidavit and a declaration of attorney Tarek N. Chami.10 The Defendant alleges that he did not file a timely answer to the amended complaint because the Defendant’s attorney, Mr. Chami, mistakenly thought that the Defendant had more time, beyond June 13, 2023, to answer the Plaintiff Trustee’s amended complaint. And, the Defendant alleges, attorney Chami advised the Defendant of this. In the Motion and in its supporting documents, neither the Defendant nor attorney Chami state what the legal basis was for their thinking that the Defendant had additional time beyond

proceeding. See L.B.R. 9029-1(a), 9029-1(c) (E.D. Mich.). 9 Docket ## 8, 9, 10. 10 Docket ## 13-1, 20. 4 June 13, 2023 to answer the amended complaint. Nor do they state how much additional time they thought they had. III.

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Gold v. Soueidan, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gold-v-soueidan-mieb-2023.