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LLC v. Glieberman

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

December 22, 2016

BRNORTH 223, LLC, Plaintiff,
v.
BERNARD GLIEBERMAN, ET AL., Defendants.

          R. Steven Whalen United States Magistrate Judge.

          OPINION AND ORDER (1) DENYING BR NORTH 223. LLC'S OBJECTIONS (ECF NO. 345): (2) ADOPTING THE MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION (ECF NO. 340): (3) GRANTING BR NORTH 223'S EMERGENCY MOTION TO SEIZE AND TRANSFER ALL SHARES OF CERTAIN STOCK HELD BY DEBTOR IN AID OF COLLECTION ON THE JUDGMENT (ECF NO. 151): AND (4) ORDERING BERNARD GLIEBERMAN TO TURN OVER ALL SHARES OF STOCK IN DIGIM. INC. TO BR NORTH 223

          PAUL D. BORMAN UNITED STATES DISTRICT JUDGE.

         Now before the Court is Magistrate Judge Whalen's September 18, 2015 Report and Recommendation which recommends that this Court grant Judgment Creditor, BR North 223, LLC's ("BR North") Emergency Motion to Seize and Transfer all Shares of Certain Stock Held by Debtor in Aid of Collection on the Judgment. (ECF No. 340, Report and Recommendation.) BR North filed an objection to the Report and Recommendation on October 5, 2015 (ECF No. 345.) Judgment Debtors, Bernard Glieberman individually and as Trustee for the Bernard Glieberman Revocable Trust, ("Judgment Debtors") filed an objection on the same date. (ECF No. 344.) BR North and Judgment Debtors both filed responses to the other party's objections. (ECF Nos. 346, 347.) On November 2, 2015, the date that BR North filed a timely reply, Bernard Glieberman filed a "Notice of Petition in Bankruptcy" and advised the Court that "the above proceedings are STAYED until further order of the Bankruptcy Court."[1] (ECF No. 350; Bankr. Case no. 15-55996, Mclvor, J.)

         On January 19, 2016, the Bankruptcy Court entered an "Order Granting Relief from Automatic Stay Solely to Permit Federal Court to Enter its Determination Regarding Report and Recommendation (Dkt #340)." (ECF No. 355, Ex. 1.)

         On January 29, 2016, Glieberman filed a "Notice of Withdrawal of Defendants' Objections to Magistrate Judge's Report and Recommendation" and "Notice of Withdrawal of Defendants' Response to Judgment Creditor's Objection to Report and Recommendation." (ECF Nos. 358, 359.)

         The Court notes that on January 28, 2016, Lontray Enterprises, LLC filed a pending motion for "Enforcement of Mandatory Joinder Provisions of Michigan Trying Title Statute (MCL § 600.6128) pursuant to Binding Sixth Circuit Precedent." (ECF No. 357.) Then on February 3, 2016, Lontray filed a "Notice of Joinder/Concurrence" in the Objection and Response that were withdrawn from the docket some four days prior by Glieberman. The Court does not address the Judgment Debtor's Objection and Response as they became inoperative when they were withdrawn on January 29, 2016 - prior to any joinder by Lontray.

         The Court now addresses BR North's objection to the Report and Recommendation, which is the sole remaining objection. (ECF No. 345.) This Court reviews de novo the portions of a report and recommendation to which objections have been filed. 28 U .S.C. § 636(b)(1); Fed.R.Civ.P. 72(b). Having conducted a de novo review of the parts of the Magistrate Judge's Report and Recommendation to which valid objections have been filed pursuant to 28 U.S.C. § 636(b)(1), the Court will deny the BR North's objections and adopt the Magistrate Judge's Report and Recommendation.

         1. BACKGROUND

         BR North originally filed suit against Bernard Glieberman, both individually and as trustee for the Bernard Glieberman Revocable Trust dated June 8, 2001 as amended, in the United States District Court for the Eastern District of California. On March 26, 2012, United States District Judge Lawrence J. O'Neill of that District granted BR North's Motion for Default Judgment in that case, ordering judgment in favor of BR North and against then Defendants Glieberman and his Trust in the amount of $81, 170, 331.74. Thereafter, BR North (now a judgment creditor) filed a certification of the default judgment order in this Court on February 26, 2013 against Defendants (now judgment debtors). (ECF No. 1.)

         On August 15, 2013, the Court granted BR North's Emergency Motion to Seize and Transfer Property of Debtor to Satisfy Judgment, and required Judgment Debtors to transfer all the stock of Strathmore Finance Company, Inc., Tralon Corp., and Renegades Management to BR North to satisfy the March 26, 2012 default judgment. (ECF No. 115, Order.)

         On March 3, 2014, BR North filed a "Judgment Creditor's Emergency Motion to Seize and Transfer All Shares of Certain Stock Held by Debtor in Aid of Collection on the Judgment." (ECF No. 151.) In its motion to seize, BR North requested that the Court order Bernard Glieberman ("Glieberman") to turn over certain property to satisfy its judgment, specifically his shares of stock in Digim, Inc. (Id.) BR North represented that files produced by the Judgment Debtors indicated that Glieberman was the owner and president of Digim, Inc. but that Glieberman's counsel refused to turn over the stock and claimed that Glieberman had not been a shareholder of that company since 2008. (Id. at *l-2.) The matter was referred to Magistrate Judge Whalen who held an initial hearing on the matter on March 25, 2014. (ECF No. 157, 3/25/14 Hrg. Tr.) After hearing from the parties, Magistrate Judge Whalen ordered an evidentiary hearing on the ownership status of the Digim stock which was held on August 5, 2014. (ECF No. 156.)

         At the August 5, 2014 evidentiary hearing, Magistrate Judge Whalen recognized that "The issue in this case is narrow and it has to do with the ownership, I guess, status of Digim, Inc." (ECF No. 168, 8/5/14 Hrg. Tr., at 9.) BR North's counsel similarly stated that the "sole question" before the court was "the ownership of the shares or share of stock of Digital Image, Inc. that's what it's formerly known as and Digim, Inc. and whether or not those shares of stock were later transferred away to different entities." (Id., at 10.) BR North then explained its theory of the case: Bernard Glieberman "never successfully transferred those shares of stock to an entity known as Digital Image, LLC" and the ownership of Digital Image, Inc., later renamed Digim, Inc. was always in Bernard Glieberman's name. (Id., at 11.)

         A. Facts regarding Digim Stock Ownership

         It is undisputed that Glieberman owned 100% of the shares of Digital Image, Inc. prior to the creation of the Trust in 2001. (ECF No. 162, Joint Statement, at ¶4.)

         On October 1, 2008 Tay Land, LLC was created by Glieberman, as trustee of the Trust. (Id. at ¶ 5.) Glieberman, as trustee, owned 99% of Tay Land and Sandra Glieberman (his wife) owned 1%. (/tf. at ¶¶ 5-6.)

         In 1999, Glieberman organized Lontray Enterprises, LLC. At that time, Glieberman and his wife each owned a 1% member interest and their son, Lonie Glieberman, and their daughter, Tracy Katzen, each owned a 49% membership interest. At some point in 2005, Glieberman transferred his 1% share of Lontray to the Trust. (Id. at ¶¶ 9-11.) At all relevant times, Glieberman was the manager of Lontray. (Id. at ΒΆ12.) Glieberman also had complete ...


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