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JPMorgan Chase Bank v. Winget

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

December 15, 2016




         I. Introduction

         This is another chapter in the longstanding commercial dispute between Larry Winget (Winget) and JPMorgan Chase Bank, NA (Chase) regarding the obligations of Winget and the Larry J. Winget Living Trust (Winget Trust).[2] As will be explained, the dispute culminated in the entry of a $400 million dollar judgment against Winget and the Winget Trust. Chase is pursuing post-judgment collection efforts on the judgment which have met with resistence from Winget.

         Before the Court is Chase's motion to compel (Doc. 692) and Winget's motion to compel. (Doc. 695). For the reasons that follow, Chase's motion is GRANTED and Winget's motion is DENIED. Chase shall submit a proposed order detailing precisely the discovery requested of Winget.

         II. Background

         In 2008, Chase sued Winget and the Winget Trust to enforce a Guaranty and two (2) Pledge Agreements entered into by Winget and signed by Winget and the Winget Trust in 2002, guaranteeing the obligations of Venture Holdings Company, LLC. After years of litigation including appeals, the Court entered an Amended Final Judgment against Winget and the Winget Trust in the amount of $425, 113, 115.59 and limiting Chase's recourse as to Winget as to $50 million as provided for in the Guaranty. After entry, Chase began collection efforts under Michigan law, [3] including issuing writs of garnishment and serving discovery on Winget and the Winget Trust. During these post-judgment proceedings, Chase learned that in January of 2014, Winget revoked the Winget Trust, a fact Winget kept in pectore until Chase began collection efforts on the judgment.

         Winget then filed an action for declaratory relief, seeking a declaration that Chase has no further recourse against Winget, including assets that were once part of the Winget Trust. Winget v. Chase, 15-13469. Chase filed a counterclaim, asserting several claims which essentially boil down to the contention that Winget's revocation of the Winget Trust was fraudulent. In other words, Chase's counterclaim[4] is the functional equivalent of post-judgment proceedings in the 2008 case. The declaratory action and the 2008 action have been consolidated with all documents filed under the 2008 case. See Doc. 686.

         III. Legal Standard

         The scope of discovery under the Federal Rules of Civil Procedure is traditionally quite broad. Lewis v. ACB Bus. Servs., 135 F.3d 389, 402 (6th Cir.1998). Parties may obtain discovery on any matter that is not privileged and is relevant to any party's claim or defense if it is reasonably calculated to lead to the discovery of admissible evidence. Fed.R.Civ.P. 26(b)(1). “Relevant evidence” is “evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.” Fed.R.Evid. 401. Rule 33 allows a party to serve requests for production of documents on an opposing party. Fed.R.Civ.P. 33. A party receiving these types of discovery requests has 30 days to respond with answers or objections. If the receiving party fails to respond, Rule 37 provides the party who sent the discovery the means to file a motion to compel. Fed.R.Civ.P. 37(a)(3)(B)(iii) and (iv). If a court grants a Rule 37 motion to compel, then the court must award reasonable expenses and attorney's fees to the successful party, unless the successful party did not confer in good faith before the motion, the opposing party's position was substantially justified, or other circumstances would make an award unjust. Fed.R.Civ.P. 37(A)(5)(a).

         IV. Chase's Motion to Compel

         Chase, in seeking to collect on a judgment against the Winget Trust, is entitled to discovery in aid of execution on the judgment. See n. 3., supra. As noted above, Winget has alleged that effective January 1, 2014, the Winget Trust was revoked and all of its holdings transferred, apparently for no consideration, to Winget-conduct that would support recovery of these assets as a fraudulent conveyance, among other claims.

         The information Chase seeks is relevant to its collection efforts. Chase requested that Winget produce documents relating to the Winget's Trust's assets and transfers. These documents are relevant to Chase's post-judgment efforts to learn what was held through the Trust and what has happened to those assets. Chase's theory, advanced in the counterclaims to the declaratory judgment action that has been consolidated with this case, is that the revocation of the Trust was a fraudulent conveyance. That is, rather than being transferred for a legitimate business purpose, the Trust was stripped of its assets in order to thwart enforcement of a judgment against the Trust. Chase's counterclaims survived a motion to dismiss.

         Indeed, this Court has expressly recognized, Chase is entitled to discovery regarding what was in the Trust during the relevant period, what was transferred out of the Trust during the relevant period, and to whom those transfers were made. See Ex. A to Chase's motion, July 27, 2016 Hrg. Tr. at 9:15-23, 11:6-9 (Chase is “saying that you revoked it, and they want to know the circumstances. They are entitled to discovery. They are entitled to know what went on.”)

         Further, none of Winget's objections to producing the requested documents have merit. Winget argues both that Chase cannot seek discovery from Winget about the Winget Trust because Winget is not a judgment debtor, and cannot seek discovery from the Trust “[b]ecause the Trust never ...

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