United States District Court, E.D. Michigan, Southern Division
In re GLENN RICHARD UNDERWOOD Debtor.
PATRICIA SELENT, ET AL., APPELLEES. GLENN RICHARD UNDERWOOD, Appellant, Bankr. No. 06-55754 Adv. Pro. No. 14-4966
Honorable Thomas J. Tucker Judge
OPINION AND ORDER
V. PARKER U.S. DISTRICT JUDGE
matter is before the Court as an appeal from the United
States Bankruptcy Court for the Eastern District of Michigan,
the Honorable Thomas J. Tucker presiding. Debtor and
Appellant Glenn Richard Underwood (“Underwood”)
appeals two decisions entered by Judge Tucker in an adversary
proceeding Underwood filed against several of his creditors
in his Chapter 11 bankruptcy case and the bankruptcy
liquidating trustee, Gene R. Kohut (“Liquidating
Trustee”). Specifically, Underwood challenges Judge
Tucker's December 10, 2014 order granting a motion to
dismiss filed by Patricia Selent and Lynda Carto and
dismissing the first three counts of Underwood's
adversary complaint. Underwood also challenges Judge
Tucker's July 9, 2015 order adjudicating the fourth count
of Underwood's complaint, requiring certain property
re-deeded to the Liquidating Trustee, and allowing the
Liquidating Trustee to sell any of the properties as
permitted by the confirmed plan in Underwood's Chapter 11
case, as modified by an October 14, 2008 order. For the
reasons that follow, this Court affirms Judge Tucker's
Standard of Review
bankruptcy court's findings of fact are reviewed under
the clearly erroneous standard. Fed.R.Bankr.P. 8013. “A
finding of fact is clearly erroneous ‘when although
there is evidence to support it, the reviewing court, on the
entire evidence, is left with the definite and firm
conviction that a mistake has been committed.' ”
United States v. Mathews (In re Matthews), 209 B.R.
218, 219 (B.A.P. 6th Cir. 1997) (quoting Anderson v. City
of Bessemer City, 470 U.S. 564, 573 (1985)). The
bankruptcy court's conclusions of law are reviewed de
novo. Nuvell Credit Corp. v. Westfall (In re
Westfall), 599 F.3d 498, 501 (6th Cir. 2010). This means
the Court reviews the law independently and gives no
deference to the conclusions of the bankruptcy court.
Myers v. IRS (In re Meyers), 216 B.R. 402, 403
(B.A.P. 6th Cir.1998). “[I]f a question is a mixed
question of law and fact, then [the reviewing court] must
break it down into its constituent parts and apply the
appropriate standard of review for each part.”
Investors Credit Corp. v. Batie (In re Batie), 995
F.2d 85, 88 (6th Cir. 1993).
Factual and Procedural Background
bankruptcy matter arises from an Oakland County Circuit Court
case that Selent, Carto, and other family members of
Underwood (i.e., the defendants in the bankruptcy adversary
case, but for the Liquidating Trustee) filed in 2004 against
Underwood and Underwood Property Management Company, a
sibling partnership that owned and managed numerous real
estate properties. See Underwood v. Carto, No.
315949, 2014 WL 4263229, at *1 (Mich. Ct. App. Aug. 28,
2014). The 2004 lawsuit resulted in a judgment of $392, 752,
plus interest, against Underwood and in favor of the
plaintiffs (hereafter “Judgment Creditors”).
(Id.) To protect himself from the judgment while he
pursued his state court appellate remedies, Underwood filed a
Chapter 11 bankruptcy petition on October 30, 2006.
24, 2007, the bankruptcy court entered an order confirming
Underwood's bankruptcy plan. Order, In re
Underwood, No. 06-55754 (Bankr. E.D. Mich. July 24,
2007), ECF No. 114. The bankruptcy plan provides that the
Judgment Creditors possess allowed claims against Underwood
“only to the extent that the Judgment Creditors
… are deemed to have  claim[s] against [Underwood]
after all appellate rights are exhausted by [Underwood] and
the claims by the Judgment Creditors … against
[Underwood] are both final and non-appealable under the laws
of the State of Michigan.” Id. at 2-3. The
amount of the claims, the plan states, is in the amount
determined by the Michigan courts. Id. at 4. The
bankruptcy plan requires Underwood to escrow and maintain a
balance of no less than $450, 000 with Bank of America by May
31, 2008, for payment of the Judgment Creditors' allowed
unsecured claims. Id. at 3. The plan further
requires Underwood to make “[p]ayment to the Judgment
Creditors … by the later of: (1) May 31, 2008; or (2)
ten (10) days after all appellate rights are exhausted by
[Underwood] and the claims by the Judgment Creditors …
against [Underwood] are both final and non-appealable under
the laws of the State of Michigan (‘Disbursement
to a stipulation between Underwood and the Judgment
Creditors, the bankruptcy plan was modified on October 13,
2008. Stip. & Order, id., ECF No. 169. The
modified plan inter alia reduces the amount of the
escrow balance and requires Underwood to execute quit claim
deeds to the Liquidating Trustee with respect to the
following properties: (a) 6085 and 6185 White Lake Road,
White Lake, MI; (b) 9230 Dixie Hwy. (with four lots),
Clarkston, MI; (c) 9237 Hillcrest, Clarkston, MI; 11875
Milford, Holly, MI; and (d) 137 Hudson and 158 Summit (4
units), Pontiac, MI. Id. at 2-3. The modified plan
orders the Liquidating Trustee to “hold the quit claim
deeds in escrow and not record the same until twenty (20)
days after all appellate rights are exhausted by [Underwood]
and the claims by the Judgment Creditors … against
[Underwood] are both final and non-appealable under the laws
of the State of Michigan.” Id. at 3. The
modified bankruptcy plan provides that, after such time, the
Liquidating Trustee may record the deeds and “to the
extent reasonably necessary … effectuate the sale of
such real property in order to satisfy any outstanding
obligation to the Judgment Creditors on Appeal or the
Liquidating [Trustee].” Id.
2008, the Michigan Court of Appeals ruled on Underwood's
appeal of the Oakland County Circuit Court judgment.
Carto v. Underwood Prop. Mgmt. Co., No. 272747, 2008
WL 2389493 (Mich. Ct. App. June 12, 2008). The court of
appeals affirmed the trial court's grant of summary
disposition in favor of the Judgment Creditors and against
Underwood, but vacated the trial court's damages award.
Id. The court remanded the matter to the trial court
for a recalculation of damages. Id.
remand, the trial court appointed a certified public
accountant (“CPA”) as an expert to assist it in
properly calculating the damages. Underwood, 2014 WL
4263229, at *1. Based on the CPA's calculations, the
trial court issued a revised judgment of $200, 823 against
Underwood on November 15, 2010. Id. Underwood filed
three unsuccessful motions for the trial court to reconsider
its revised judgment and one unsuccessful motion for relief
from judgment. Id. Underwood appealed the trial
court's decisions to the Michigan Court of Appeals,
without success as well. Id. and n.3
filed additional lawsuits in the Michigan courts seeking to
overturn the Oakland County Circuit Court's judgment.
Id. In February 2010, he filed a civil complaint
against Selent, which the trial court dismissed on summary
disposition in favor of Selent on res judicata grounds.
Id. at *2. The Michigan Court of Appeals affirmed.
Underwood v. Selent, No. 298312 (Mich. Ct. App. Oct.
20, 2011) (unpublished). The appellate court explained
“this is at least the third time that [Underwood] has
brought suit against the same defendant.” Id.
The court also stated that, “[e]ven though he is
dissatisfied, [Underwood] cannot merely re-label and then
couch his assertions in different arguments in repeated
attempts to relitigate the same matter hoping for a result he
finds more favorable.” Id.
December 2012, Underwood sued Carto “generally
alleg[ing] that the trial court in the 2004 case ignored
facts, improperly appointed a CPA, and used procedures that
denied him a fair trial.” Underwood, 2014 WL
4263229, at *2. Carto moved for summary disposition on res
judicata grounds, which the trial court granted with respect
to all but one claim (slander) on April 5, 2013. Id.
The court concluded that Underwood raised or could have
raised most of his claims during the 2004 litigation.
Id. The trial court subsequently granted summary
disposition to Carto on Underwood's slander claim.
Id. Underwood appealed.
August 28, 2014, the Michigan Court of Appeals affirmed the
trial court's decision. Id. The court determined
not only that res judicata barred Underwood's claims, but
that Underwood's appeal was vexatious. Id. The
We determine that Underwood's appeal is vexatious because
it was taken for the purposes of hindrance and without any
reasonable basis for belief that there was a meritorious
issue for this Court to determine on appeal. This is the
third appeal in which this Court has affirmed the trial
court's dismissal of suits related to or based on conduct
in the 2004 case on res judicata grounds. And this is the
second appeal from a complaint against one of the plaintiffs
in the 2004 case.
The panel's decision in Selent informs our
determination. In Selent, Underwood sued Selent,
another sibling involved in his 2004 lawsuit, on
substantially [the same] claims as he made against Carto in
this lawsuit. The trial court dismissed Underwood's suit
against Selent on res judicata grounds. Underwood appealed
that dismissal, and a panel of this Court affirmed the trial
court's dismissal in no uncertain terms. The
Selent panel explained that res judicata barred
Underwood's claims, “for the same reasons clearly
and succinctly stated by the previous panel of this court in
In re Estate of Underwood when [Underwood] brought
the case for the second time[.]” The panel further
warned Underwood that he could not repeatedly attempt to
relitigate the issues in the 2004 case and that his repeated
lawsuits wasted judicial resources.
Despite this Court's decision in Selent,
Underwood filed a new lawsuit against a different sibling
involved in the 2004 case. Underwood's suit in this case
presents substantially the same allegations against Carto as
he presented against Selent: allegations that a panel of this
Court painstakingly explained were barred by res judicata.
The most reasonable explanation for Underwood's behavior
is that he has engaged in it for the purposes of hindrance.
Further, Underwood cannot have a reasonable basis for
believing that there is a meritorious issue to be determined.
This Court has twice explained that res judicata bars all
claims related to the 2004 lawsuit. But Underwood explicitly
based his December 2012 complaint in this case on Carto's
alleged conduct during the 2004 lawsuit.
Id. at 4-5 (footnotes omitted). The court of appeals
awarded Carto actual damages and expenses for defending
against Underwood's appeal and remanded the matter to the
trial court, ordering the trial court to assess punitive
damages in an additional ...