New Products Corp. v. Thomas Tibble

• Court: Court of Appeals for the Sixth Circuit
• Decided: April 24, 2018
• Docket: 17-2258
• Status: Unpublished

Opinion

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION File Name: 18a0211n.06

No. 17-2258

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

FILED Apr 24, 2018 DEBORAH S. HUNT, Clerk In re: MODERN PLASTICS ) CORPORATION, ) Debtor. ) ) On Appeal from the United States _____________________________________ ) District Court for the Western District NEW PRODUCTS CORPORATION, ) of Michigan ) Appellant, ) ) v. ) ) THOMAS R. TIBBLE, individually and in his ) capacity as Chapter 7 Trustee; FEDERAL ) INSURANCE COMPANY, ) Appellees. ) ) _________________________________/

Before: GUY, SUTTON, and COOK, Circuit Judges.

RALPH B. GUY, JR., Circuit Judge. New Products Corporation (NPC) appeals the

dismissal of claims it brought against former Chapter 7 Trustee Thomas Tibble and his surety

Federal Insurance Company. NPC, an unhappy creditor, alleged that the Trustee breached his

fiduciary duties in handling one of the Debtor’s assets—namely, real property on which sat a

former manufacturing facility that was methodically stripped by scrappers and allowed to

deteriorate while it was part of the bankruptcy estate. NPC argues, as it did before the district Case No. 17-2258 2 New Prods. Corp. v. Tibble, et al.

court, that the bankruptcy judge erred in narrowing its claims on motions for summary judgment,

denying reconsideration, and ordering a bifurcated trial on NPC’s secured creditor claims to

determine the central factual question of whether there was equity in the Property. (Orders dated

12-14-14, 7-23-15, 8-26-15, and 10-15-15.) NPC contends that the bankruptcy judge erred in

granting defendants’ mid-trial motion for judgment on partial findings under Fed. R. Civ. P.

52(c) (Fed. Bankr. R. P. 7052), and denying NPC’s motion for new trial or to alter or amend

judgment under Fed. R. Civ. P. 59 (Fed. Bankr. R. P. 9023). (Orders dated 1-21-16, 3-14-16.)

The district court affirmed the bankruptcy court in all respects. See New Prods. Corp. v. Tibble,

et al. (In re Modern Plastics Corp.), 577 B.R. 270 (W.D. Mich. 2017). After careful

consideration of the issues presented on appeal, the district court’s order affirming the

bankruptcy court’s judgment on the merits is affirmed.

I.1

The Debtor Modern Plastics Corporation’s assets included approximately 12 acres of real

property commonly known as 489 North Shore Drive, Benton Harbor, Michigan (Property). The

Property, located directly across the street from NPC and adjacent to a relatively new golf course

development, included “a main building, initially constructed in 1936, [that] consisted of

approximately 127,000 square feet [that was] at one time used for manufacturing, office, and

related purposes.” New Prods. Corp. v. Tibble, et al. (In re Modern Plastics Corp.), 543 B.R.

819, 826 (Bankr. W.D. Mich. 2016) (“Findings of Fact and Conclusions of Law After Trial”).

The Property was part of the collateral that the Debtor pledged to secure its pre-petition loans

from Bank of America (BOA), on which the Debtor owed $1,275,912.01 when the bankruptcy

petition was filed on January 26, 2009. Id. at 825-26.

1 The lengthy procedural history and the evidence before the bankruptcy judge will not be detailed here, and familiarity with all six of the bankruptcy court’s orders relating to this appeal is assumed. Case No. 17-2258 3 New Prods. Corp. v. Tibble, et al.

Financial difficulties left the Debtor unable to meet its obligations to BOA, state and

local taxing authorities, and other creditors (including NPC). Id. at 826. The Debtor ceased

operations in July 2008, and conducted a pre-petition equipment auction at the behest of BOA in

October 2008. Although the condition of the building was contested, the bankruptcy judge found

after the bifurcated trial that leaks in the roof resulted in “pools of standing water within the

building” that were visible during the pre-petition equipment auction. Id. Also, the Trustee’s

“credible testimony established that the Property was in a deplorable and unsafe condition” when

he made his one and only inspection in January 2009. Id.

The Property was listed for sale pre-petition and, with the consent of BOA, the Debtor

entered into an agreement on December 26, 2008, to sell the Property to Ox Creek Development,

LLC (an entity associated with the golf course) for $650,000. Id. at 825-26. Once in

bankruptcy, and again with the consent of BOA, the Trustee tried unsuccessfully to sell the

Property to Ox Creek for between $650,000 and $590,000—after negotiating an agreed carve-out

for the bankruptcy estate. Id. at 826-27. When that sale did not close, the Trustee negotiated an

option agreement extending Ox Creek’s right to purchase the Property for another four months.

Id. at 827. Although the option was not exercised, the Trustee received the option payments

without objection from BOA. Id. at 825.2

The Trustee obtained casualty insurance on the Property for a year and a half, but

cancelled the insurance in November 2010 after BOA advised that it would not pay the premium

or put any more money in the Property. (Page ID # 5509.) The Trustee later leased the parking

lot for an event at the golf course and retained the income for the estate without objection from

BOA. Id. In fact, the bankruptcy judge found that BOA had acquiesced in the Trustee’s

2 Not long after the bankruptcy filing, contamination from a leaking transformer was discovered and the EPA subsequently incurred removal and cleanup costs in excess of $600,000. Case No. 17-2258 4 New Prods. Corp. v. Tibble, et al.

handling of the Property for more than four years—never objecting, requesting adequate

protection, moving for relief from the stay, or seeking to compel the Trustee to abandon the

Property. Id. at 821. BOA’s representative testified that the bank did not want to foreclose on

the Property (Page ID # 5488), which effectively “ke[pt] the bank out of the chain of title of a

potentially contaminated industrial site.” Id. at 827.3

NPC is a “Tier 1” automotive supplier “founded by the same man who established the

Debtor and still managed by the founder’s granddaughter [Cheryl Miller].” Id. at 820. NPC was

an unsecured creditor when the Debtor filed for bankruptcy, and only later became a secured

creditor when NPC “acquired BOA’s rights against the Debtor and the Property under a post-

petition assignment of the bank’s loan documents” on March 4, 2013. Id. NPC acquired those

rights for $225,000 as the high bidder in an auction of BOA’s promissory notes, mortgages, and

other loan documents (after beating out another entity associated with the golf course). Id. at

826. Miller testified that she saw this as an opportunity to acquire the Property, intending to use

the building to expand NPC’s operations, create a “buffer” between NPC and the golf course,

and possibly subdivide and sell some of the lots.

Miller testified that she was shocked to discover after the assignment that the interior of

the Debtor’s facility had been systematically stripped by scrappers and the roof had failed in two

places. Two witnesses testified to having participated in organized scrapping activities during

late 2010 and into 2011; one of whom testified that he was paid to work at the site five days a

week, eight hours a day, for seven months removing truckloads of material. New Prods., 543

B.R. at 828. Two notices of condemnation were sent to the Debtor in 2011, allowing an

opportunity to bring the structure up to code but suggesting that the Debtor consider demolition

3 There was evidence that BOA drafted a motion to lift the stay but never filed it. (Page ID # 4556-65.) Case No. 17-2258 5 New Prods. Corp. v. Tibble, et al.

as an alternative. Id. Miller testified that she had not been inside the building between the

bankruptcy filing and the assignment. The bankruptcy judge found it difficult to believe Miller

could have been unaware of the scrapping activities since she worked across the street during

this period. Id. at 829. More importantly, however, the bankruptcy judge explained that he did

not believe Miller—a sophisticated businessperson running a Tier 1 global automotive

supplier—would have authorized the purchase of the debt without inspecting the interior “unless

the condition of the building was immaterial to the decision.” Id.

Not long after the assignment, the Trustee filed a motion for approval of his final report

giving notice of the proposed distributions and the resulting abandonment of all remaining estate

property pursuant to 11 U.S.C. § 554(c). Id. NPC opposed that motion and, in September 2013,

filed this action seeking damages for diminution in value of the Property resulting from the

Trustee’s alleged breach of fiduciary duties owed to the estate, BOA, and NPC. Id. at 820-21.

NPC maintained, among other things, that the Trustee failed to protect the Property against

vandals and scrappers who stripped the building over time of its “copper wires, steel beams,

piping, ‘bus ducts,’ lighting fixtures, furnaces, [and] even support beams.” Id. at 820. NPC

documented further deterioration and additional scrapping activity in the post-assignment/pre-

abandonment period, but did not file any motions for relief from the stay, for adequate

protection, or to compel abandonment. Id. Ultimately, the Trustee’s final report was approved

and the Property abandoned in January 2014. Id. When the bankruptcy judge suggested that the

appointment of an independent trustee might be warranted, Tibble resigned and a successor

trustee was appointed in January 2015.

The bankruptcy judge narrowed NPC’s claims in several ways that are challenged on

appeal, including: (1) ruling that NPC could not pursue a claim on behalf of the unsecured Case No. 17-2258 6 New Prods. Corp. v. Tibble, et al.

creditors (i.e., the estate) after appointment of the successor trustee; (2) concluding that NPC

could not recover damages for the cancellation of casualty insurance where NPC’s predecessor-

in-interest had acquiesced in that decision; and (3) holding that NPC had “purchased only BOA’s

contract rights against the Debtor but not any of the tort claims BOA may have had against the

Trustee (including claims that BOA may have been able to assert for pre-assignment breaches of

fiduciary duty).” Id. at 821. Together, those rulings meant that NPC could recover only as a

secured creditor and only for “diminution of the Property’s value that occurred between the

March 4, 2013 Assignment Date, and January 6, 2014 (the date that the Trustee technically

abandoned the property).” Id. The bankruptcy court denied three new cross-motions for

summary judgment, finding that disputed questions of valuation and equity were central to

determining “whether Mr. Tibble breached his fiduciary duty or whether his actions were

reasonable under the circumstances.” This prompted the bankruptcy judge to order a bifurcated

trial to determine the value of the Property and extent of the encumbrances against it, and

clarifying that evidence regarding the value pre- and post-assignment would be considered.

At trial, the bankruptcy judge heard two days of testimony, received two important

depositions, and admitted an extensive number of exhibits into evidence. After NPC completed

its proofs, defendants moved for entry of judgment in their favor under Rule 52(c). The

bankruptcy judge issued written findings of fact and conclusions of law, and denied NPC’s

motion for new trial or to alter or amend judgment. The district court examined NPC’s claims of

error and affirmed in all respects. This appeal followed.

II.

In this appeal, the bankruptcy court’s orders are reviewed directly rather than the

intermediate decision of the district court. Lowenbraun v. Canary (In re Lowenbraun), 453 F.3d Case No. 17-2258 7 New Prods. Corp. v. Tibble, et al.

314, 319 (6th Cir. 2006). We review the bankruptcy court’s legal conclusions de novo, and its

factual findings for clear error. Id.; Zingale v. Rabin, 693 F.3d 704, 707 (6th Cir. 2012).

Decisions regarding the admission of evidence are reviewed for abuse of discretion. Conwood

Co., LP v. U.S. Tobacco Co., 290 F.3d 768, 781 (6th Cir. 2002).

A. Breach of Fiduciary Duty

NPC argues that the bankruptcy court erred in concluding that a trustee owes no duty to

protect or insure property that is retained in the bankruptcy estate if that property is fully

encumbered. This characterization misstates, or at least overstates, the bankruptcy court’s actual

rulings recognizing the Trustee’s competing duties to secured and unsecured creditors. The

bankruptcy court’s judgment did not rest on a finding that there was no duty, but rather

determination that the Trustee had not breached his duties to BOA or NPC with respect to the

Property under the circumstances. We find no error of law.

The bankruptcy court recognized that a Chapter 7 Trustee “primarily represents the

unsecured creditors, and represents the secured creditors only in his capacity as a custodian of

the property upon which they have a lien.” Ford Motor Credit Co. v. Weaver, 680 F.2d 451, 462

n.8 (6th Cir. 1982) (quoting The Second Nat’l Bank of Nazareth v. Marcincin (In re Nadler),

8 B.R. 330, 333 (Bankr. E.D. Pa. 1980)). The trustee’s duty to “account for all property

received,” 11 U.S.C. § 704(a)(2), does not impose an unqualified duty to protect or manage

assets for the benefit of secured creditors at the expense of the estate. United States ex rel. The

Peoples Banking Co. v. Derryberry (In re Peckinpaugh), 50 B.R. 865, 869 (Bankr. N.D. Ohio

1985); see also Fox v. Anderson (In re Thu Viet Dinh), 80 B.R. 819, 823 (Bankr. S.D. Miss.

1987) (“The trustee must also exercise reasonable diligence to conserve the assets of the

bankruptcy estate, but he is not relegated to the role of a ‘babysitter’ for the secured creditors.”). Case No. 17-2258 8 New Prods. Corp. v. Tibble, et al.

Rather, “[t]he measure of care, diligence and skill required of a bankruptcy trustee is that of an

ordinary prudent man in the conduct of his private affairs under similar circumstances and of a

similar object in view.” Reich v. Burke (In re Reich), 54 B.R. 995, 998 (Bankr. E.D. Mich.

1985); see also Central Savings Bank v. Lasich (In re Kinross Mfg. Corp.), 174 B.R. 702, 706

(Bankr. W.D. Mich. 1994) (finding that whether a trustee breached his duty, including by not

procuring insurance, “is bound inextricably” with the particular facts of the case). The

bankruptcy court did not err in concluding that the value of and extent of the liens against the

Property would be central to determining whether Tibble breached his fiduciary duties to the

secured creditors under the circumstances.

The bankruptcy judge found the evidence overwhelmingly established that the Property

was underwater. Specifically, after determining the total amount of the liens, the bankruptcy

judge found that the liens exceeded the value of the Property by more than $950,000 on both the

“Petition Date” and the “Assignment Date.” New Prods., 543 B.R. at 830. In determining the

value of the Property, the bankruptcy judge found, in part, that the pre-petition offer of $650,000

was an “exceedingly persuasive indicator of the Property’s value as of the Petition Date,” and

that BOA’s willingness to grant a carve-out and accept much less than its claim “sp[oke]

volumes about the lender’s dim view of the Property’s value.” Id. at 827. Further, evidence that

“BOA was unwilling to spend any money to insure its collateral” supported “an inference of less,

rather than more, value than the $650,000 it was willing to accept pre-petition.” Id. Even more

significantly, the bankruptcy judge also found that “it was the location of the Property, rather

than the structures built upon it, that accounted for most of the value.” Id. at 828. Evidence

supporting that conclusion included: a pre-petition opinion that “the highest and best use for the

Property was as a redevelopment site”; credible evidence that the vacant building was in poor Case No. 17-2258 9 New Prods. Corp. v. Tibble, et al.

condition when the petition was filed; and the failure of BOA or NPC to pursue any of the

protections for the building that were available to them as secured creditors. Id. at 828-29.

The bankruptcy court acknowledged the devastating effects of the post-petition scrapping

as “shocking, if not revolting,” but concluded that “BOA and the trustee agreed expressly or

impliedly to neglect the building because it did not make economic sense to do otherwise.” Id. at

832. Consequently, “[g]iven the complete absence of equity, and the relative unimportance of

the building in the evaluation of the Property,” the bankruptcy judge found that “Mr. Tibble

behaved as ‘an ordinary prudent man in the conduct of his private affairs under similar

circumstances and with a similar object in view’ would have behaved.” Id (quoting Weaver,

680 F.2d at 461-62; In re Kinross, 174 B.R. at 705). NPC argues this was error for several

reasons.

B. Judgment on Partial Findings

Rule 52(c) provides, in part, that: “If a party has been fully heard on an issue during a

nonjury trial and the court finds against the party on that issue, the court may enter judgment

against the party on a claim or defense that, under controlling law, can be maintained or defeated

only with a favorable finding on that issue.” In entering judgment under Rule 52(c), the court

must set forth specific findings of fact that are reviewed for clear error. Sharp v. United States,

401 F.3d 440, 442 (6th Cir. 2005). NPC argues that the bankruptcy court erred in granting

judgment because some of the findings were not supported by the record, because testimony

from NPC’s expert witness was excluded, and because NPC did not have an opportunity to be

“fully heard.”4

4 NPC also repeats its claim that the burden was improperly placed on NPC to disprove an affirmative defense. However, the bankruptcy court found that the evidence had so “overwhelmingly establish[ed] the absence of equity” that it was not necessary to identify which party bore the burden of proof with respect to the value proposition. 543 B.R. at 824 n.8. Case No. 17-2258 10 New Prods. Corp. v. Tibble, et al.

Findings. NPC argues that there was no evidence to support the finding that the Debtor

had deferred maintenance or that there were roof leaks and places with standing water at the time

the petition was filed. As the district court observed, however, Ronald Miller testified that he

was hired to evaluate Modern Plastics in 2008; that the “roof was leaking in multiple places,

probably [because] there was a lot of deferred maintenance”; and that it “didn’t appear as though

the company had been investing in the building for quite a long time.” Describing leaks in the

production area, Miller said “in some of the areas it was standing water around the injection

molding process.” Miller added that it had rained prior to the equipment auction and potential

buyers had to navigate around puddles of water. BOA’s representative also testified that he saw

a puddle of water inside the building in 2008. The bankruptcy judge’s findings in this regard

were not clearly erroneous.

NPC contends that several findings regarding the assignment were outside the scope of

the trial. First, NPC argues it was error to find that Cheryl Miller was aware of the pre-

assignment scrapping but preclude her from explaining why she was unable to inspect the

interior prior to the assignment. The bankruptcy judge expressed doubt that Miller was unaware

of the condition of the building, but, whether or why she was unaware of the scrapping activities

was immaterial because “it was reasonable for the bankruptcy court to infer that she acted as she

did because the condition of the building was not important to her decision.” New Prods.,

577 B.R. at 284. NPC represents that Miller would have testified that she was unable to inspect

the building because she could not obtain the insurance required as a condition to access the

building. NPC does not explain how this evidence could have undermined the bankruptcy

judge’s inference. Case No. 17-2258 11 New Prods. Corp. v. Tibble, et al.

Second, NPC challenges the bankruptcy judge’s statement in a footnote that “it must have

been clear to the Trustee, after the Assignment Date, that he could no longer count on

cooperation from the holder of the principal secured claim against the Property.” New Prods.,

543 B.R. at 826 n.9. The rest of the footnote makes clear, however, that this was nothing more

than a comment on the timing of the Trustee’s motion for approval of his final report. Id. (“From

the various objections to the Trustee’s proposals that New Products filed while it held only an

unsecured claim, it must have been clear to the Trustee . . . .”). Nor has NPC articulated how this

was either inaccurate or material to the bankruptcy court’s judgment.

Third, attacking the bankruptcy judge’s statement that BOA and NPC had taken a

“cavalier approach to the building,” NPC complains that the bifurcated trial prevented Miller

from testifying that NPC had taken some steps to protect the building after it became a secured

party. Miller did testify, over defendants’ objection, about further looting and scrapping in the

post-assignment period; but, she was not asked about any self-help efforts NPC undertook to try

to prevent it. Nonetheless, Miller’s testimony that NPC used its own security guards and

installed new locks and a surveillance camera would not have undermined the bankruptcy

judge’s finding that NPC did not exercise its rights as a secured creditor.

Opinion Testimony. NPC offered an unconventional method for valuing the Property

based on the opinion of Michael Frederick of Frederick Construction that the scrap value of the

materials removed from the Debtor’s facility “would be approximately $1.5-$2.0 million

dollars.” Defendants moved to exclude Fredrick’s opinion for a number of reasons, including

failure to comply with Fed. R. Civ. P. 26. The bankruptcy judge carefully analyzed the issues,

recognized that Fredrick could be qualified as an expert, but warned that Fredrick would not be

permitted to stray too far from his report. At trial, after voir dire and argument from counsel, Case No. 17-2258 12 New Prods. Corp. v. Tibble, et al.

Frederick’s opinion testimony was excluded both because he relied on matters not mentioned in

his report and because his opinion was not “based on sufficient facts or data” to satisfy Fed. R.

Evid. 702(b). New Prods., 543 B.R. at 823 n.7. The bankruptcy judge, as “gatekeeper,” was

required to determine whether the expert witness testimony “both rests on a reliable foundation

and is relevant to the task at hand.” Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 597

(1993). After review of the voir dire, we agree entirely with the district court that “Fredrick’s

opinion testimony was problematic in many respects” and was based on “questionable

assumptions” and “a lack of concrete, reliable support for his estimate.” 577 B.R. at 281.) The

bankruptcy judge did not abuse his discretion by excluding Fredrick’s opinion regarding the

“scrap value” of the building.

Not Fully Heard. NPC argues that the bankruptcy court erred in granting judgment under

Rule 52(c) because NPC did not have an opportunity to be “fully heard.” NPC’s argument is

cast in terms of a lack of evidence regarding either the value of the land alone or under an

“income approach.” Reading past the argument headings, however, NPC’s claim is that it was

not “fully heard” on the issue of valuation because it did not have the opportunity to cross-

examine two witnesses whose reports were admitted into evidence without objection but whom

the defendants never called because their Rule 52(c) motion was granted. In this appeal, NPC

does not acknowledge that it could have called either witness or objected to the admission of

their reports without an opportunity to cross-examine them. The bankruptcy judge did not

prevent NPC from doing so, and only entertained the defendants’ motion after NPC had rested.

This claim is without merit. See EBC, Inc. v. Clark Bldg. Sys., Inc., 618 F.3d 253, 274 n.23 (3d

Cir. 2010) (rejecting similar argument). Case No. 17-2258 13 New Prods. Corp. v. Tibble, et al.

Finally, NPC asserts in a catch-all fashion that the bankruptcy court should have

considered the “Offer of Proof” that it filed shortly after its motion for new trial or to alter or

amend judgment. (Page ID # 3278.) The pleading purports to summarize evidence that NPC

had not presented due to the bifurcation of issues and entry of judgment under Rule 52(c). The

bankruptcy judge refused to strike that pleading, but expressly declined to consider it. The

pleading sets out NPC’s theory of the case, including describing evidence that was admitted at

trial; but, NPC has offered no explanation on appeal (here or in the district court) of how

consideration of this pleading could have altered the bankruptcy court’s judgment. As such, this

claim of error is deemed forfeited. See McPherson v. Kelsey, 125 F.3d 989, 995-96 (6th Cir.

1997) (“[I]ssues averted to in a perfunctory manner, unaccompanied by some effort at developed

argumentation, are deemed waived.” (citation omitted)).

C. Assignment of BOA’s Pre-Petition Claims

The bankruptcy court granted in part the defendants’ second motion for summary

judgment, concluding that the assignment of “all the right, title and interest of [BOA] in, to and

under the Loan Documents,” did not include any “non-contract claims (including for breach of

fiduciary duty) predating the Assignment.” New Prods. Corp. v. Tibble, et al. (In re Modern

Plastics Corp.), 534 B.R. 723, 729 (Bankr. W.D. Mich. 2015) (summary judgment order); see

also New Prods. Corp. v. Tibble, et al. (In re Modern Plastics Corp.), 536 B.R. 783, 786-87

(Bankr. W.D. Mich. 2015) (denying reconsideration). NPC has not shown this was error, or that

any error would be material in light of the bankruptcy judge’s subsequent findings.

First, NPC argues that it succeeded to all of the rights of BOA because a mortgage

assignee stands in the shoes of the mortgage assignor. See Coventry Parkhomes Condo. Ass’n v.

Fannie Mae, 827 N.W.2d 379, 382 (Mich. Ct. App. 2012) (holding that lien held by assignee of Case No. 17-2258 14 New Prods. Corp. v. Tibble, et al.

mortgage had the same priority as mortgagee). It is certainly true that NPC was entitled to

enforce the mortgage and notes, and stood in BOA’s shoes with respect to the secured claim that

had been filed in the bankruptcy proceeding. NPC does not dispute, however, that an assignment

is a contract to be interpreted in accordance with rules of contract construction under Michigan

law. See Macomb Interceptor Drain Drainage Dist. v. Kilpatrick, 896 F. Supp. 2d 650, 658-59

(E.D. Mich. 2012). As the court in Macomb Interceptor explained, an assignment of the rights

under a contract permits an assignee to assert claims or causes of action to enforce the

contractually created rights, but it does not necessarily permit the assignee to bring distinct tort

or statutory claims. Id. at 660-61.

As noted earlier, § 2.1 of the Assignment provided that NPC purchased and BOA sold,

assigned, and transferred to NPC “all the right, title and interest of [BOA] in, to and under the

Loan Documents (except with respect to the Guaranties and the Guarantors).” New Prods.,

534 B.R. at 726. The “Loan Documents” were specifically defined to include only the security

agreement (as amended), a promissory note, a mortgage and an assignment of rents, which the

bankruptcy court recognized gave NPC the right to enforce contractual claims against the Debtor

and its property. Id. In § 2.3 of the Assignment, NPC also acknowledged that BOA was “not

assigning, transferring, or otherwise providing Assignee any rights in or to anything . . . other

than the Loan and the documents and items specified on Exhibit A.” Id. Without repeating the

bankruptcy court’s reasoning in full, we find no error in its conclusion that “the Bank assigned to

New Products only the Bank’s contractual rights against the Debtor, not its tort claims, if any,

against Mr. Tibble.” Id.; see also New Prods., 536 B.R. at 786-87. Case No. 17-2258 15 New Prods. Corp. v. Tibble, et al.

D. Unsecured Creditor Claims

Finally, NPC asserts that it should have been allowed to pursue a breach of fiduciary duty

claim on behalf of the unsecured creditors despite the appointment of a successor trustee. The

bankruptcy judge ruled during a pretrial conference that NPC did not have standing to do so, and

confirmed that the successor trustee had decided not to pursue a claim against Tibble on behalf

of the estate. NPC argued in its post-judgment motion (and in the district court) that it could

have established derivative standing. The district court found, however, that NPC had not raised

the issue prior to the entry of judgment or shown that it met the requirements for derivative

standing. New Prods., 577 B.R. at 277.

As the bankruptcy court explained, the successor trustee became “the representative of

the estate and the person with standing to sue Mr. Tibble for any breach of duty he owed to the

estate during his tenure. See 11 U.S.C. § 323; see also Fed. R. Bankr. P. 2012(b) and 6009.”

(Page ID # 160 n.3.) NPC has abandoned the issue of derivative standing on appeal and,

changing course, now argues that it should have been allowed to proceed with a claim on behalf

of the estate because this action was filed when Tibble was still the Chapter 7 Trustee. This

argument is deemed forfeited, however, both because NPC offers no reasoned explanation for

why that should be so, and because the argument is raised for the first time on appeal. See In re

Johnston, 209 F.3d 611, 612 & n.1 (6th Cir. 2000) (citing White v. Anchor Motor Freight, Inc.,

899 F.2d 555, 559 (6th Cir. 1990)); McPherson v. Kelsey, 125 F.3d 989, 995-96 (6th Cir. 1997).

* * *

The district court’s order affirming the bankruptcy court’s judgment on the merits is

AFFIRMED.