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untanglingwebs
El Supremo
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On 1-21-2009 The arbitrator awarded Steinberg $1,049,587.47 plus attorney fees. Young's defense to arbitration was said to be frivolous and in violation of MCR 2.114 (f).
Two days following a creditor's exam, April 2,2009, Young transferred five properties from himself to one of his related entities. He transferred 901 Lippincott to OU Home and 410 Lippincott, 1020 N Genesee, 5226 N Saginaw St., and E. Cass to Operation Unification. Later on April 7, 2009, the property at 910 Lippincott was transferred back to Young. The same day as the last transfer Young borrowed $100,000 from the City of Flint Economic Development Corporation for a meat market at this site which was operated by Joann Burks. The market only lasted about 4 months and the loan is now part of the bankruptcy. |
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Sat Mar 01, 2014 4:03 pm |
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untanglingwebs
El Supremo
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| Chase Bank interceded in the Steinberg case in order to protect their investments and had the case moved to federal court. |
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Sat Mar 01, 2014 4:08 pm |
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untanglingwebs
El Supremo
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Michigan nonprofits require a copy of the IRS 501(c) 3. Housing was not the original purpose of the nonprofit, which was parent education. Homes and home rentals were originally under the for-profit OU Home. Under information received and beliefs, the IRS usually takes longer to review application for housing nonprofits.
After reviewing the 990 reports, housing management replaces parent education and scholarships. Later it becomes housing for the elderly and low income. It is not until 2009 that the local board votes to make housing their mission. They have already been working for the county on housing and providing housing for former foster children. Young signs resolution for the change, but no resolution is mentioned in the minutes. I question the legitimacy of the resolution because the IRS documents show another board. The board on the IRS documents consists of employees and former employees of SDE-BP. The local board was increased to meet the CHDO requirement of a board with a one-third low income membership, The new board had administrators and employees of the OU group and family members.
The IRS 990's show no employees and no properties. However court records and documents from the Genesee County Register of Deeds prove that is untrue. Operation Unification even has homes in Florida. Charles Young III also filed bankruptcy and showed that Operation Unification owed him $75,000 in unpaid wages. He and Charles Young Sr. were also shown on the local Board of Directors. |
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Sat Mar 01, 2014 4:43 pm |
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untanglingwebs
El Supremo
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| Neither the county or the city required copies of the IRS 990's. Both relied on a letter from the accountant for Operation Unification, Brian Freeman, who s also the Treasurer on the IRS documents. My first Freedom of Information request to the City had a response that no application had been required for the CHDO designation. |
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Sat Mar 01, 2014 4:50 pm |
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untanglingwebs
El Supremo
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In the past, DCED would have required a copy of an IRS 990 or an audit in order to be considered for CHDO status.
Even if a records check had never revealed the Steinberg lawsuit, a local lawsuit from 2008 would have thrown up a red flag. The case, Purnell Green II and Carolyn Green v Operation Unification and SDE Business partnering LLC, case # 08-89126 CZ, Judge Neithercut.
Paragraph 3 of the verified complaint:
That, on information and belief, SDE Business partnering, LLC., is a Michigan Limited Liability Company doing business in the County of Genesee and is the parent company of Defendant Operation Unification, INC.
The lawsuit alleged that their property was accessed and 170 trees were cut down and removed, from the Green's property along Thread Lake. They further alleged that the defendants built structures and part of a parking lot on their property.
The Genesee County Drain Commission issues a Soil Erosion/Sedimentation Control Permit )8-0093 on 4/23/2008 for Lakeshore Apartments, 410 Lippincott. The land owner is shown as Charles Young Jr., 400 Renaissance Center, Detroit. The on site responsible person is Charles Young Jr., SDE Business Partnering at G5345 N. Saginaw St. This address belongs to the Village.
In an attempt to limit damages, OU Homes Inc., enlisted CV Richardson as a Master Gardener to indicate she saw no damage on the property. Her maiden name was Young and she later becomes a board member for Operation Unification. Young used a copy of a Consumers Power License Agreement-Genesee #ES1025 for Flint Township in an attempt to justify his building on a Consumer easement in Flint. It didn't work. |
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Sat Mar 01, 2014 5:37 pm |
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untanglingwebs
El Supremo
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HUD Chapter 3 CHDO requirements and activities building HOME, was issued in March 0f 2008.
Requirements include a specific geographic service area, a board with one-third membership that is low-income and a max on limits of representation and control by a for-profit entity when sponsored by a for-profit. The CHDO cannot be controlled by, nor under the direction of for-profit entities or individuals seeking profit from the organization.
A CHDO can be sponsored or organized by a for profit if the primary purpose of the for-profit sponsor is the development or management of housing. That means a builder, developer or real estate management firm may not spin off a CHDO.
For-profits may appoint no more than 1/3 of the CHDO's governing board. Those appointed by the for-profit may not appoint the remaining members of the board.
The CHDO must be independent and free to contract for their goods and services.
The purpose of the CHDO requirements on capacity is o build staff experience and expertise. The CHDO must have their own professional staffs.
A CHDO can share staff with another non-profit if they have a formalized written agreement that outlines the work to be undertaken and the service period. The other non-profit must be financially and legally separated from the CHDO sponsor and may be created by the CHDO.
The financial standards are detailed in 24 CFR 84.21. |
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Sat Mar 01, 2014 7:09 pm |
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untanglingwebs
El Supremo
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A CHDO must have capacity and enough assets to perform the task they are tasked with.
The assets of Operation Unification according to their IRS 990's:
2004 $3,263
2005 $1,413
2006 $1,413
2007 $ 716
2008 $4,083
These are hardly the assets of an agencyQualified to handle rehabilitating multiple homes. |
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Sat Mar 01, 2014 7:24 pm |
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untanglingwebs
El Supremo
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Searched for: VILLAGE SHORES PROPERTIES, INC.
ID Num: 02344P
Entity Name: VILLAGE SHORES PROPERTIES, INC.
Type of Entity: Domestic Profit Corporation
Resident Agent: JOANN BURKS
Registered Office Address: 2050 WARNER ST FLINT MI 48503
Mailing Address: MI
Formed Under Act Number(s): 284-1972
Incorporation/Qualification Date: 4-22-2009
Jurisdiction of Origin: MICHIGAN
Number of Shares: 60,000
Year of Most Recent Annual Report:
Year of Most Recent Annual Report With Officers & Directors:
Status: AUTOMATIC DISSOLUTION Date: 7-15-2012
This corporation was to manage the apartments at 410 Lippincott. They never filed any reports and the incorporation papers did not reveal a Board of Directors. They did have a face book page. The property is now in the name of Charles Young Jr. |
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Sat Mar 01, 2014 7:42 pm |
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J HUNTINGWORTH TUNE
F L I N T O I D
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Interesting stuff.Should there be a Grand Jury ? A DOJ complaint ? Were there political folk ( office holders ) involved ?
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Sun Mar 02, 2014 1:02 am |
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untanglingwebs
El Supremo
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An OIG complaint was filed with Washington and accepted. The OIG investigator was new and did not understand the documents I gave her. She actually asked me what law was violated when I told her it was against federal regulations s to file a false application for funding. The OIG files are rife with people being prosecuted for that crime. She is no longer with the agency.
I am suspicious of the Genesee County case in which Mark DeMaria and Smith Village Development are suing Greg Eason, Dayne Walling, Charley Young Jr, Bret Russell and Smith Village Construction. Judge Yuille is such a stickler over cases proceeding in a timely manner and no real action has taken place. Two lawyers have withdrawn in the last year and that is about all that has happened. Are the Feds in place?
The City of Flint will have a hard time getting any money from their lawsuit as they have to wait in line. Consumers is fighting the bankruptcy because their claim is Operation Unification, Charles Young Jr, Joanna Burks, Lela Johnson, OU Home and OU Village committed fraud. Because of the fraud element they received triple damages and state their case cannot be dismissed by bankruptcy. Chase Bank too has sued and has perfected liens. They are challenging the bankruptcy. Flint is so far back in the money train that they may get the properties, but I don't see them getting any money. Now Genesee Township is suing a list of Defendants, including Operation Unification, to quiet title on 24 properties.
Mt Morris Township and Genesee County have a number of properties for Operation Unification. I believe these are NSP properties. Blame Omar Sims, Woodrow Stanley, Raynetta Speed, the Land Bank, and Vernon Chapel for pushing the legitimacy of Young and his group.
More federal money will be repaid. Young originally applied to renovate 7 houses in Area 1. The city pushed him to change to area 3, the area close to Vernon Chapel and no nearby school. They then increased the number of houses to 14. Significant amounts of money have already been repaid so it should be no surprise that Young has chosen to keep the houses and keep on renting them and not follow his contract. |
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Sun Mar 02, 2014 3:40 am |
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untanglingwebs
El Supremo
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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
EARLE STEINBERG, Case No. 09-11836
Plaintiff, HONORABLE SEAN F. COX
United States District Judge
v.
CHARLES YOUNG, JR. et al.,
Defendants.
___________________________/
OPINION & ORDER
Plaintiff Earle Steinberg (“Steinberg”) filed this breach of contract and fraudulent
transfer action against Defendants Charles Young, Jr. (“Young”) and numerous business entities
owned in whole or in part by Young, in the Oakland County, Michigan, Circuit Court on April 7,
2009. Defendant JPMorgan Chase Bank, N.A. (“the Bank”) was allowed to intervene in the state
court proceedings on April 29, 2009, and on May 13, 2009 the Bank removed this action. [Doc.
No. 1]. The matter is currently before the Court on Steinberg’s “Emergency Motion for
Immediate Hearing for Preliminary Injunction” [Doc. No. 11], and Steinberg’s “Motion for
Appointment of Receiver.” The parties have fully briefed the issues, and a hearing was held June
24, 2009. For the reasons that follow, the Court DENIES both of Steinberg’s motions [Doc.
Nos. 11 & 12].
BACKGROUND
Defendant Young is the owner or majority shareholder of several corporate entities (“the
SDE Entities”) that provide purchasing services to large companies in an effort to make
purchasing more efficient.
Steinberg v. Young et al Doc. 35
Dockets.Justia.com
2
The SDE Entities relevant to these motions are three separate companies: a parent
company and two subsidiaries. The parent company is SDE Business Partnering, LLC (“SDE
BP”). SDE BP is alleged to be the sole shareholder of two subsidiary entities: 1) SDE-MRO
Express, Inc. n/k/a SDE Business Services, Inc. (“SDE MRO INC”); and 2) SDE-MRO Express,
LLC (“SDE MRO LLC”).
The Bank’s Perfected Security Interest in the Assets of the SDE Entities
The Bank gave the SDE Entities a revolving line of credit, which, as of December 20,
2007, totaled $4,300,000 in outstanding debt on one note, and an additional $854,199.99 on a
separate note. These debts were secured pursuant to two separate security agreements.
The first of these agreements granted the Bank a lien on all of SDE BP’s “present and
future inventory, chattel paper, accounts, monies, equipment and general intangibles, as well as
all present and future accessions, attachments, accessories, tools, parts, supplies, replacements,
additions, products, and produce of the assets. . . .” [SDE BP Security Agreement, Bank’s Ex. 4,
Doc. No. 15]. This security agreement was signed between the parties on November 29, 2005,
and a UCC financing statement renewal was filed on October 24, 2007. [See Bank’s Ex. 5, Doc.
No. 15].
All of the obligations of the SDE Entities owed to the Bank are also secured under the
terms of a commercial security agreement dated April 3, 2008, executed and delivered by SDE
MRO LLC. According to the terms of that document, SDE MRO LLC granted the Bank a lien
on all SDE MRO LLC’s present and future inventory, chattel paper, accounts, monies,
equipment and general intangibles, as well as all present and future accessions, attachments,
accessories, tools, parts, supplies, replacements, additions, products, and produce of the assets.
3
SDE MRO LLC Security Agreement, Bank’s Ex. 6, Doc. No. 15]. The Bank perfected its
security interest in the SDE MRO LLC collateral by filing a UCC financing statement on April
29, 2008. [See Bank’s Ex. 7, Doc. No. 15].
Bank does not have a security interest in the assets of SDE MRO INC, but at the hearing
held June 24, 2009, both parties stipulated that SDE MRO INC does not currently, nor did it
ever, have any assets in which to take a security interest.
Young, the SDE Entities, and Steinberg
On or about September 21, 2006, Steinberg entered into an employment contract with
SDE MRO INC and SDE BP, with Young signing on behalf of the SDE Entities. Steinberg
began working for SDE MRO INC in 2007 pursuant to a written employment agreement,
receiving an initial retention bonus of $700,000 and an annual base salary of $750,000.
Steinberg never received $500,000 of his $700,000 retention bonus. Young is also
alleged to have twice acted unilaterally in reducing Steinberg’s base salary: from $750,000 to
$502,000 on September 28, 2007; and from $502,000 to $250,000 on January 7, 2008. When
Steinberg objected to these reductions in his compensation, Young demanded that Steinberg
accept a new employment agreement or resign. Young ultimately terminated Steinberg’s
employment on February 4, 2008.
On February 8, 2008, Steinberg filed an arbitration claim against Young, SDE BP and
SDE MRO INC with the American Arbitration Association (“AAA”) for breach of his
employment agreement. On January 21, 2009, the AAA panel found Young’s defense to be
frivolous, and granted a monetary award in favor of Steinberg in the amount of $1,049,587.45,
plus interest. Steinberg filed a Motion to Confirm Arbitration Award in the Oakland County,
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Michigan, Circuit Court on February 11, 2009, which was confirmed and entered as a judgment
on February 18, 2009 in the amount of $1,052,777.53.
While Steinberg was pursuing the arbitration action against Young and the SDE Entities,
Steinberg alleges that Young transferred funds, real property, and business opportunities
between and among the SDE Entities in an effort to hinder Steinberg’s collection efforts and to
conceal or dissipate assets. During subsequent creditor’s examinations, Steinberg admitted that
money had been shifted between companies whenever one entity needed funds, which Young
himself characterized as “robbing Peter to pay Paul.” [Doc. No. 11, Ex. 5, p.81].
Young also allegedly purchased several homes in the Flint, Michigan area (“the Real
Estate”) with assets from the SDE Entities, and quitclaimed them between limited liability
companies in an effort to further conceal assets.
Finally, Young is accused of transferring interests in several of the SDE Entities to third
parties for consideration of less than market value, further evidence that Young may be
attempting to hide assets from creditors such as Steinberg. Young is also alleged to have
transferred several lucrative contracts between the SDE Entities for negligible consideration.
Relevant Proceedings Before This Court
On April 20, 2009, a consent judgment was entered into between Young and the SDE
Entities, and the Bank, before this Court on a related case. [See Case No. 09-cv-10554, Doc. No.
13]. That order granted Bank a judgment against SDE BP under the first note in the principal
balance of $2,456,783.41, interest of $37,576.49 through and including April 8, 2009, with
interest continuing to accrue at the per diem rate of $344.59, costs of $250 and attorney fees of
$36,232. Bank also was granted a judgment against SDE BP under the second note in the
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principal balance of $637,107.59, interest of $1,879 through and including April 8, 2009, with
interest continuing to accrue at the per diem rate of $96.98, costs of $300 and attorney fees in the
amount of $36,232.
The assets of the SDE Entities, in which the Bank has a perfected security interest, are
not likely to satisfy these judgments. [See Bank’s Br., Doc. No. 15, p.9 (“[These] assets will not
likely satisfy Bank’s security interest as SDE [BP]’s only assets are its receivables.”)]. As such,
the Bank is likely undersecured in its loans to the SDE Entities.
After receiving his $1,052,777.53 judgment against Young and SDE MRO INC in
Michigan state court, Steinberg filed the instant action in the Oakland County, Michigan, Circuit
Court on April 7, 2009. In this action, Steinberg alleges that Young has abused the corporate
form of the SDE Entities, and that Young has been fraudulently transferring assets out of the
entities in an effort to defeat Steinberg’s collection efforts.
On April 17, 2009, a temporary restraining order and order to show cause was entered by
the Oakland County Circuit Court in favor of Steinberg on an ex parte basis, freezing the assets
of the SDE Entities in order to prevent their dissipation.
The Bank intervened in this action by stipulation on May 13, 2009, and removed the
action to federal court.
Steinberg filed his “Motion for Preliminary Injunction” [Doc. No. 11] on May 18, 2009,
and his “Motion for Appointment of Receiver” [Doc. No. 12] on May 19, 2009. The Court held
a status conference between the parties on May 22, 2009, wherein the parties agreed to extend
the terms of the Oakland County Circuit Court’s temporary restraining order through 5:00 p.m.
on June 24, 2009, and the Court set Steinberg’s two motions for a hearing on June 24, 2009.
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STANDARD OF REVIEW
In evaluating a motion for preliminary injunction, federal courts consider the following
four factors: 1) the likelihood of the movant’s success on the merits; 2) whether the movant will
suffer irreparable injury without the injunction; 3) the harm to others which will occur if the
injunction is granted; and 4) whether the injunction would serve the public interest. See In re
Delorean Motor Co., 755 F.2d 1223, 1228 (6th Cir. 1985).
In evaluating a motion for appointment of a receiver, federal courts consider a number of
factors, including, but not limited to: 1) the existence of a valid claim by the moving party; 2) the
probability that fraudulent conduct has occurred or will occur to frustrate the claim; 3) imminent
danger that property will be lost, concealed or diminished in value; 4) inadequacy of legal
remedies; 5) lack of less drastic equitable remedies; and 6) the likelihood that appointment of a
receiver will do more harm than good. See Meyer Jewelry Co. v. Meyer Holdings, Inc., 906
F.Supp. 428, 432 (E.D. Mich. 1995).
ANALYSIS
Even assuming, arguendo, that Young is abusing the corporate form of the SDE Entities
in an effort to defeat Steinberg’s creditor claim, Steinberg’s motions [Doc. Nos. 11 & 12] must
still be DENIED. The Bank is a secured creditor of the SDE Entities, with first priority over all
the assets Steinberg alleges have been fraudulently transferred. Furthermore, at the June 24,
2009 hearing, evidence was presented to the Court that other secured creditors may also be in
line to collect from Young and the SDE Entities before Steinberg. Evidence has also been
presented to the Court that the value of the SDE Entities’ assets leaves the Bank undersecured,
and Steinberg has not presented any objective evidence to the contrary.
1 Again, while the Bank admittedly does not have a perfected security interest in the assets of
SDE MRO INC, both parties stipulated at the June 24, 2009 hearing that SDE MRO INC does not
currently, nor did it ever, have any assets upon which a creditor could levy.
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I. Steinberg Cannot Satisfy the In Re Delorean Factors For Evaluating a Motion for
Preliminary Injunction.
Steinberg argues that the Court should issue a preliminary injunction in the instant case,
in effect halting what Steinberg alleges are fraudulent transfers by Young from the SDE Entities
designed to frustrate Steinberg’s collection efforts. For purposes of this motion, the Court will
presume, arguendo, that Steinberg can satisfy In re Delorean’s first prong requiring a
“likelihood of success on the merits.” Even so, Steinberg is unable to satisfy the remaining three
prongs of the In re Delorean analysis, and as such the Court DENIES his motion for preliminary
injunction. [Doc. No. 11].
A. Steinberg Will Not Suffer “Irreparable Injury” Without an Injunction.
Steinberg will not suffer “irreparable injury” under In re Delorean’s second prong should
the Court not grant him an injunction in the instant case. All of the assets of the SDE Entities
which Steinberg seeks to levy upon in this action are already subject to the Bank’s perfected
security interest.1 Further, all evidence in this case suggests that the Bank is likely undersecured
in the assets of the SDE Entities, i.e., that the liquidated value of the SDE Entities is unlikely to
satisfy the Bank’s security interest. As such, even if Young is abusing the corporate form of the
SDE Entities by passing money between them through fraudulent transfers, all such transfers are
between entities the Bank enjoys a security interest over. There is, in short, nothing for
Steinberg to levy upon in this action.
As explained supra, the Bank perfected its security interest in SDE MRO INC’s parent
2 Pursuant to M.C.L. § 566.31(h), “lien” is defined as “a charge against or an interest in property
to secure payment of a debt or performance of an obligation, and includes a security interest created by
agreement, a judicial lien obtained by legal or equitable process or proceedings, a common-law lien, or a
statutory lien.”
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company, SDE Business Partnering, LLC (“SDE BP”) in 2005, and perfected its security interest
in SDE-MRO Express, LLC (“SDE MRO LLC”) in 2008. In contrast, Steinberg did not even
become an unsecured judgment creditor until February of 2009.
Under Michigan’s enactment of the Uniform Fraudulent Transfers Act (“UFTA”),
codified at M.C.L. § 566.31 et seq., Steinberg cannot recover assets transfered by the SDE
Entities. By definition under the UFTA, the “assets” Steinberg seeks to recover cannot include
“property to the extent that it is encumbered by a valid lien.” M.C.L. § 566.31(b). A valid
security interest, such as the Bank’s security interests in the assets of the SDE Entities, is such a
“lien” for purposes of the UFTA.2
The Bank has first priority over all assets of the SDE Entities, and it appears that
liquidation of all SDE Entity assets is unlikely to satisfy the Bank’s security interest.
Essentially, this means that all assets of the SDE Entities, including proceeds from those assets
(such as the Real Estate), will be consumed first in satisfying the Bank’s security interest before
claims of unsecured creditors like Steinberg will be paid. As Steinberg likely stands to collect
nothing from the SDE Entities’ assets, the fraudulent transfer of assets between the SDE Entities
does not injure Steinberg. The inability of an unsecured creditor to satisfy his or her judgment
does not result in irreparable harm warranting a preliminary injunction. See, e.g., Elliott
Brothers Steel Co. v. Michigan Metals, Inc., 2008 WL 2697287, *2 (E.D. Mich. July 2, 2008)
(Hood, J.). Steinberg therefore cannot satisfy prong two of In re Delorean.
B. The Bank Will Suffer Harm if an Injunction is Granted.
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As the secured creditor with first priority over the assets of the SDE Entities, the Bank
likely stands to collect everything from the disposition of the SDE Entities’ assets. Furthermore,
any surplus assets not consumed in satisfaction of the Bank’s security interest, if any do remain,
will almost surely be consumed in satisfaction of other secured debts which also have priority
over Steinberg’s unsecured claim. Were this Court to grant a preliminary injunction in favor of
Steinberg, an unsecured creditor, the Bank and any other secured creditors would be injured by
the Court’s order. Steinberg therefore cannot satisfy prong three of In re Delorean.
C. Issuing an Injunction Would be Contrary to the Public Interest.
“[T]he basic purpose of Article Nine of the Uniform Commercial Code is to provide a
simple and unified structure within which the immense variety of present-day secured financing
transactions can go forward with less cost and with greater certainty.” Maxl Sales Co. v.
Critiques, Inc., 796 F.2d 1293, 1296 (10th Cir. 1986). Commercial lenders are more willing to
loan money to borrowers when the lender’s rights in the collateral are protected and upheld by
the law pursuant to the Code’s terms.
Article Nine allows a lender whose debtor is in default to take possession of the
collateral, M.C.L. § 440.9609(1)(a), and “sell, lease, license, or otherwise dispose of any or all of
the collateral. . .,” M.C.L. § 440.9610(1), in an effort to recoup its loss. This added security
allows lenders to make loans to a greater number of applicants, whose credit scores may
otherwise not qualify for loans, and allows banks to make loans at lower interest rates to all
borrowers.
Granting Steinberg a preliminary injunction in this case, where all of the assets of the
SDE Entities are subject to multiple security interests with higher priority, would, in effect,
10
prevent the secured creditors from availing themselves of the benefits of Article Nine; benefits
those creditors likely took into account when advancing monies to the SDE Entities in the first
place. M.C.L. § 440.9610(1) allows secured creditors such as the Bank to seize and sell the
assets of the SDE Entities upon default. Not allowing the Bank to do so in this case, because of
a preliminary injunction freezing the assets of the SDE Entities, would only make lenders more
apt to refuse such loans in the future. This clearly is contrary to the public interest, and for that
reason Steinberg cannot satisfy the fourth and final prong of In re Delorean.
For these reasons, the Court DENIES Steinberg’s “Motion for Preliminary Injunction”
[Doc. No. 11].
II. There is No Reason For the Court to Appoint a Receiver in This Case.
Steinberg also brings a “Motion for Appointment of Receiver” [Doc. No. 12]. In that
motion, Steinberg argues that “there are other creditors of SDE Business Partnering, LLC, and/or
the other defendants, with outstanding amounts owed to them and which would also benefit from
the appointment of a receiver.” [Doc. No. 12, p.5]. “If a receiver is appointed, the assets of [the
SDE Entities] may be gathered and distributed in a fair and economical manner.” Id. at 6.
The Court has the power to appoint a receiver in cases where such action is warranted.
The Federal Rules of Civil Procedure provide, in pertinent part:
The procedure on execution, in proceedings supplementary to and in aid of a judgment,
and in proceedings on and in the aid of execution shall be in accordance with the practice
and procedure of the state in which the district court is held. . . .
FED. R. CIV. P. 69. Michigan state law allows for the appointment of a receiver upon the
application of a judgment creditor:
After judgment for money has been rendered in an action in any court of this
state, the judge may, on motion in that action or in a subsequent proceeding:
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(4) Appoint a receiver of any property the judgment debtor has or may thereafter
acquire.
M.C.L. 600.6104(4). However, “the appointment of a receiver is an extraordinary equitable
remedy that is justified only in extreme situations.” Meyer Jewelry Co. v. Meyer Holdings, Inc.,
906 F.Supp. 428, 432 (E.D. Mich. 1995) (Gadola, J.).
Meyer Jewelry laid out several factors for courts to weigh in considering a motion for
appointment of a receiver:
Factors typically influencing the district court’s exercise of discretion include the
existence of a valid claim by the moving party; the probability that fraudulent
conduct has occurred or will occur to frustrate the claim; imminent danger that
property will be lost, concealed, or diminished in value; inadequacy of legal
remedies; lack of less drastic equitable remedy; and the likelihood that
appointment of a receiver will do more harm than good.
Meyer Jewelry, 906 F.Supp. at 432.
In this case, even assuming arguendo that Young and the SDE Entities have engaged in
fraudulent conduct, the only creditor which has likely been damaged by that fraudulent conduct
is the Bank. Absent a showing that the assets of the SDE Entities are likely to return a surplus of
monies above and beyond the Bank’s secured claim, to say nothing of the other secured claims
ahead in line of Steinberg, neither Steinberg nor any other unsecured creditor has been damaged
by Young’s actions in the instant case.
At the June 24, 2009 hearing, the Bank argued that it was perfectly capable of collecting
and selling the assets of the SDE Entity, and therefore opposed Steinberg’s request for a
receiver. The Court assumes that Bank is perfectly capable of performing the functions a
receiver would perform. Futhermore, a receiver, who would be entitled to collect expenses for
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his or her efforts, would only further diminish the assets available to the Bank, to the other
secured creditors of the SDE Entities, and, if somehow monies remain afterward, to Steinberg
himself.
For these reasons, the Court DENIES Steinberg’s “Motion for Appointment of Receiver”
[Doc. No. 12].
CONCLUSION
For the reasons explained above, the Court DENIES Steinberg’s “Motion for Preliminary
Injunction” [Doc. No. 11], and DENIES Steinberg’s “Motion for Appointment of Receiver”
[Doc. No. 12].
IT IS SO ORDERED.
S/Sean F. Cox
Sean F. Cox
United States District Judge
Dated: June 30, 2009
I hereby certify that a copy of the foregoing document was served upon counsel of record on
June 30, 2009, by electronic and/or ordinary mail.
S/Jennifer Hernandez
Case Manager
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Sun Mar 02, 2014 5:23 pm |
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untanglingwebs
El Supremo
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During this quarter, the Flint City Council approved entering into a total of five contracts totaling $1,335,513 for acquisition -rehab - resale to four different agencies. The following contracts were awarded:
Salem Housing has identified the following properties in Area 1 to acquire, rehab, and re-sell: 1615 Stone Street, 503 Copeman, 1658 N. Grand Traverse. In Area 2,
Salem Housing will acquire 309 W. Van Wagoner and 3617 Mason St., rehabilitate and re-sell to income qualified buyers.
The City awarded a contract to Operation Unification to acquire and rehabilitate the following 5 structures in Area 3 of the City's NSP: 638 W. Ruth, 641 W. Ruth, 642 W. Ruth, 645 W. Ruth, 646 W. Ruth.
Another contract was awarded to the Genesee County Land Bank for rehabilitation of tax-foreclosed properties in Area 1. The Land Bank is using a combination of NSP,
HOME, and Land Bank funds to rehabilitate and re-sell six properties in their Hurley Redevelopment Area. Three of thefollowing properties will be renovated using NSP funds: 713 Grand Traverse, 726 Stone Street, 707 Stone Street, 717 Stone
Street, 719 Stone Street, or 612 W. Second Avenue.
Finally, the City awarded a contract with Genesee County Community Action Resource Department to acquire two units and build on two tax foreclosed vacant lots in the Smith Village Redevelopment Area in Area 1 of the City's NSP. |
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Sun Mar 09, 2014 7:20 am |
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untanglingwebs
El Supremo
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Operation Unification originally bid on Area 1, but was persuaded to change their bid to Area 3, closer to Vernon Chapel Church.
In the monitoring report by HUD conducted on April 23-26,2012 discovered instances of noncompliance in NSP 1 and NSP3 funds. (Neighborhood Stabilization Program) This was the third year of monitoring. NSP technical assistance was provided in 2010 because of the city's lack of progress.
When building the FIA agency building on Clio Road, the city drew down $550,000 in a forgivable loan to BOJI (MG Investments) although the project was solicited through the State of Michigan. This was a low risk project with a long term lease already committed. A resale back to the city as required by the state contract meant that the developers net proceeds were " in excess of 23% or more than $1million at closing". The city had to return the $550,000 to the Treasury and then $550,000 had o be recommitted to another NSP eligible activity.
Since the money had already been spent, was general fund money used to repay the Treasury? Was any portion of the $550,000 used for "kick backs and other bribe schemes? |
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Sun Mar 09, 2014 7:43 am |
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untanglingwebs
El Supremo
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The city contracted with Circle of Love from Saginaw for homeowner assistance and homeowner counseling services. It was determined the city did not provide due diligence in securing the services of Circle of Love for the NSP activity" All counsling participants had to re-enroll in an approved organization. The city had to cease using Circle of Love and repay all funds from a nonfederal source. The city then had to reallocate the $250,000 to an NSP eligible activity.
Circle of Love had one Flint connection. Charlotte Edwards was a board member of the agency. She had previously been a board member representing a bank in the now defunct Community Capital Development Corporation when they handled the Flint Area Investment Fund. |
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Sun Mar 09, 2014 7:53 am |
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untanglingwebs
El Supremo
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The city failed to use proper procurement procedures when selecting a Project Manager Consultant and HUD determined there was no evidence of competition and no evaluation took place. "This became a sole source solicitation without justification" stated HUD.
All funding had to be repaid from non-federal funds and the grant amount reallocated and expended by March 2013. |
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Sun Mar 09, 2014 7:59 am |
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