In re Mich. Prop. Managers.Com, LLC

624 B.R. 626

IN RE: MICHIGAN PROPERTY MANAGERS.COM, LLC, Debtor.

Case No. 20-50288

United States Bankruptcy Court, E.D. Michigan, Southern Division.

Signed February 2, 2021

Stephen Feldman, David E. Sims, Finkel Whitefield Selik, Farmington Hills, Michigan, Attorneys for Finkel Whitefield Selik.

Tracy M. Clark, Steinberg Shapiro & Clark, Southfield, Michigan, Attorney for Homer W. McClarty, Chapter 7 Trustee.

ORDER DENYING MOTION FOR RECONSIDERATION

Thomas J. Tucker, United States Bankruptcy Judge

This case is before the Court on the motion filed by Finkel, Whitefield Selik ("Finkel Whitefield") on January 19, 2021, entitled "Motion for Reconsideration and/or Clarification of the Court's Order Determining Estate's Interest In Bank Funds" (Docket # 89, the "Motion"), which the Court construes as a motion for reconsideration of, and for relief from, the Court's January 13, 2021 Order (Docket # 83). The Court will deny the Motion, for the following reasons.

First , the Court finds that the Motion fails to demonstrate a palpable defect by which the Court and the parties have been misled, and that a different disposition of the case must result from a correction thereof. See L.B.R. 9024-1(a)(3) (E.D. Mich.).

Second , the allegations in the Motion do not establish excusable neglect under Fed. R. Civ. P. 60(b)(1), or grounds under Fed. R. Civ. P. 60(b)(6), Fed. R. Bankr. P. 9024, or any other valid ground for relief from the January 13, 2021 Order.

Third , Finkel Whitefield lacks standing to seek the relief sought in the Motion. In the January 13, 2021 Order, the Court made the following findings and conclusions, on a final basis:

Of the $354,728.02 balance that the [Chapter 7 Trustee's Motion (Docket # 32 at ¶ 22) ] identifies as being in the IOLTA account of attorney Stephen Feldman, the sum of $137,671.76 represents security deposit funds that the Debtor held in trust as of the bankruptcy petition date, and these are therefore funds in which the bankruptcy estate has no equitable interest, under 11 U.S.C. § 541(d). The remaining funds, i.e. , $217,056.26, are property of the bankruptcy estate, in which the bankruptcy estate has both legal title and sole equitable interest.

Finkel Whitefield now seeks a modification of the Court's January 13, 2021 Order to increase the amount of the funds found to be security deposit funds, from the $137,671.76 amount found by the Court, to $246,978.20. (This, in turn, would reduce the amount of funds in the IOLTA account that are property of the bankruptcy estate, from $217,056.26 to $107,749.82).

But Finkel Whitefield itself has no financial stake in the issue of how much of the funds in the IOLTA account are security deposit funds.¹ This is because Finkel Whitefield does not claim to be a creditor in this bankruptcy estate, and makes no claim to any of the funds in the IOLTA account; rather, all such funds belong to others. Finkel Whitefield therefore lacks standing to seek a finding by this Court that more than $137,671.76 represents security deposit funds rather than property of the bankruptcy estate. Finkel Whitefield's present Motion must be denied for lack of standing. See generally In re Underwood , 583 B.R. 438, 440-41 (Bankr. E.D. Mich. 2018) (standing in a bankruptcy case requires that one have a "pecuniary interest" in the outcome).

Fourth , even if Finkel Whitefield had standing to make the argument it now makes in the Motion, it fails to demonstrate, or explain how its Motion Exhibit A, an unauthenticated, unexplained document, proves that this Court made an error, let alone an error that amounts to a "palpable defect,"² in determining that the security deposit portion of the funds in the IOLTA account is $137,671.76. The Court made that determination at the conclusion of the December 9, 2020 hearing, after discussing at length, with the parties who appeared at that hearing, the detailed facts presented by the Chapter 7 Trustee's November 4, 2020 motion, entitled "Trustee's Motion for Order Determining Estate's Interest in Bank Funds" (Docket # 32, the "Trustee's Motion").

Fifth , even if Finkel Whitefield had standing to make the argument it now makes in the Motion, Finkel Whitefield waived such argument. It did so by: (1) failing to make the argument in a response, or file any response at all, to the Chapter 7 Trustee's Motion;³ (2) failing to appear and make the argument at the December 9, 2020 hearing on the Trustee's Motion; (3) failing to make the argument in any timely objection to the Court's December 9, 2020 Order (Docket # 70) (the due date of which was January 8, 2021); (4) filing, on December 22, 2020, a timely objection to the Court's December 9, 2020 Order (Docket # 77), but failing to make the argument in that objection;⁴ (5) affirmatively stating, in its December 22, 2020 objection (see Docket # 77 at ¶ 4), that the sum of the security deposits in the IOLTA account is $137,671.76, as stated in the Court's December 9, 2020 Order.⁵

Sixth , and relatedly, even if Finkel Whitefield had standing to make the argument it now makes in the Motion, such argument cannot be made for the first time in a motion for reconsideration, only after the Court has made its ruling. Finkel Whitefield does not allege any valid reason why it could not have made its argument sooner. Finkel Whitefield waived the argument by failing to make it before the Court made its final ruling on the Chapter7 Trustee's Motion and entered the January 13 2021 Order. See In re Madison Heights Group, LLC , 506 B.R. 734, 736 (Bankr. E.D. Mich. 2014) ; see also Riverview Trenton R.R. Co. v. DSC, Ltd. (In re DSC, Ltd. ), 486 F.3d 940, 947 (6th Cir.2007) (citing with approval, and applying, Wiley v. United States , 20 F.3d 222, 226 (6th Cir.1994) for the proposition that "objections raised for the first time in a reconsideration motion are deemed to have been waived"); Evanston Ins. Co. v. Cogswell Props., LLC , 683 F.3d 684, 692 (6th Cir.2012) (citations omitted) ("Arguments raised for the first time in a motion for reconsideration are untimely and forfeited on appeal.").⁶

Accordingly,

IT IS ORDERED that the Motion filed by Finkel Whitefield (Docket # 89) is denied.

1 None of the parties...