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In re Romanzi

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

March 28, 2017

In re Craig S. Romanzi, Debtor.
v.
Kenneth A. Nathan, Appellee. Fieger & Fieger P.C., et al., Appellants,

          R. Steven Whalen United States District Court Judge

          OPINION AND ORDER DENYING MOTION TO WITHDRAW THE REFERENCE [1]

          GERSHWIN A. DRAIN UNITED STATES MAGISTRATE JUDGE

         Without Prejudice

         I. Introduction

         This case stems from an involuntary bankruptcy proceeding filed against Craig S. Romanzi (“Debtor”) on March 16, 2016. The bankruptcy trustee of Romanzi, Kenneth A. Nathan (“Appellee” or “Trustee”) seeks recovery of an attorney fee that he alleges Fieger & Fieger, P.C. and Geoffrey N. Fieger (“Appellants” or “Defendants”) wrongfully retained. Appellee claims the attorney fee is an asset of the bankruptcy estate.

         This matter is presently before the Court on Appellants' Motion to Withdraw the Reference. Dkt. No. 1. Upon review of the pleadings, the Court finds that oral argument will not aid in the disposition of this matter. Accordingly, the Court will decide the matter on the pleadings. See E.D. Mich. LR 7.1(f)(2). For the reasons explained fully below, Court DENIES Appellants' motion without prejudice.

         II. Factual And Procedural Background

Facts related to these proceedings were recited in a parallel appeal of a Bankruptcy Court order. See In re Romanzi, No. 16-CV-13986, 2017 WL 395289, at *1-2 (E.D. Mich. Jan. 30, 2017). For the sake of uniformity, the Court will repeat those facts again here:
Debtor, Craig Romanzi, previously worked as a partner in the law firm of Romanzi & Nardicchio, PLLC. On February 12, 2014, Debtor joined the law firm of Fieger & Fieger, PC. On March 10, 2014, Debtor filed a wrongful death action in Wayne County Circuit Court (hereinafter, the “Thomas Litigation”). Debtor left the Fieger firm on February 9, 2015.
The Fieger firm retained the Thomas Litigation on behalf of the plaintiffs. In August 2015, the Fieger firm filed a motion for approval of settlements and for an order authorizing the payment of attorney fees and costs. On August 16, 2015, Debtor filed a notice of claim of lien in the Thomas Litigation. In that notice, Debtor alleged that he brought the case to the Fieger firm and that he was entitled to a lien in the amount of one-third of the net recovery obtained in the case. On August 19, 2015, the Fieger firm filed a “Notice of Fraudulent Pleading, ” alleging that Debtor's claim of lien was fraudulent and that he had no interest in any of the attorney fees owed as a result of the settlement in the Thomas Litigation.
On September 3, 2015, the state court in the Thomas Litigation entered an order approving wrongful death settlements and approving fees and costs in the case. In total, the Fieger firm was awarded $74, 862.54 in costs and $3, 547, 541.10 in fees for the estates of Tracey Thomas, William Thomas, and Dorothy Thomas. The state court also entered an order absolving the state court defendants and their insurance carriers from any responsibility or liability relating to attorney liens. That order directed that the settlement checks shall be issued to the estates and the Fieger firm, “except for payments to fund any structures which are to be issued to or at the direction of the structure provider.” Debtor did not seek reconsideration or appeal the orders entered regarding fees in the Thomas Litigation.
On September 29, 2016, Debtor filed a complaint in Oakland County Circuit Court against the Fieger firm, Case Number 2016-151745-CB, alleging breach of contract, misrepresentation, fraud, conversion, and negligence. The complaint sought compensation for attorney fees Debtor believed the Fieger firm owed to him as a result of his involvement in the Thomas Litigation.
An involuntary Chapter 7 bankruptcy case was filed against Debtor Craig S. Romanzi on March 16, 2016 in Case Number 16-43857-mbm (the “Bankruptcy Case”). Kenneth A. Nathan was appointed trustee over the bankruptcy estate. Among the assets allegedly owed to the estate is an amount equal to one-third (1/3) of the attorney fee of $3, 547, 541.242 from the Thomas Litigation.
On July 6, 2016, Debtor's lawsuit in Oakland County Circuit Court was voluntarily dismissed without prejudice. On July 12, 2016, Trustee filed a five-count adversary complaint against the Fieger firm and Geoffrey Fieger (hereinafter referred to as the “Adversary Proceeding”). The Adversary Proceeding, No. 16-04672-mbm, includes claims for breach ...

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