United States District Court, E.D. Michigan, Southern Division
MEMORANDUM AND ORDER DENYING WINGET'S MOTION FOR
RECONSIDERATION (Doc. 734) 
COHN UNITED STATES DISTRICT JUDGE
a commercial dispute. J. P. Morgan Chase (Chase) is the
administrative agent for a group of lenders that extended
credit to Venture Holdings Company, LLC (Venture) under a
credit agreement. In 2008, Chase sued Larry J. Winget
(Winget) and the Larry J. Winget Living Trust (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. After years of
litigation and mutliple appeals, on July 28, 2015, the Court
entered an Amended Judgment in favor of Chase and against
Winget and the Winget Trust that enforced the Guaranty and
Pledge Agreements against Winget and the Winget Trust.
Specifically, the judgment against the Winget Trust was in
the amount of $425, 113.115.59. The judgment against against
Winget was limited to $50 million. (Doc. 568). Because Winget
later satisfied his portion of the judgment, Chase began
collection efforts against the Winget Trust. Following being
informed that Winget transferred all of the Winget
Trust's assets to himself without prior notice, Chase
claimed that the transfer was fraudulent particularly because
a judgment remained against the Winget Trust.
then filed a motion for partial judgment on the pleadings
(Doc. 699), on the grounds that the transfer amounted to
constructive fraud. The Court agreed. (Doc. 732). Before the
Court is Winget's motion for reconsideration. (Doc. 734).
For the reasons that follow, the motion will be denied.
Mich. LR 7.1(h) governs motions for reconsideration,
providing in relevant part:
Generally, and without restricting the court's
discretion, the court will not grant motions for rehearing or
reconsideration that merely present the same issues ruled
upon by the court, either expressly or by implication. The
movant must not only demonstrate a palpable defect by which
the court and the parties have been misled but also show that
correcting the defect will result in a different disposition
of the case.
Mich. LR 7.1(h)(3).
primary thrust of the motion for reconsideration is the Court
of Appeals for the Sixth Circuit's decision in Meoli
v. Huntington National Bank, 848 F.3d 716 (6th Cir.
2017). Chase contends Meoli is inapplicable to its
fraudulent transfer claim. The Court agrees. Meoli
involved a bankruptcy trustee's efforts to recover from a
bank amounts the debtor company had deposited to the accounts
of related company. The Sixth Circuit rejected the argument
that the bank was a transferee under the Bankruptcy Code,
finding that the bank did not gain dominion and control over
the deposits, which the account holder remained free to
points to the statement in Meoli that “[t]he
account holder's right to withdraw the deposits keeps the
bank from obtaining dominion and control, ” and seems
to suggest that Winget had a similar relationship with the
Winget Trust. Not so. In Meoli the Court of Appeals
said that a depositary bank “never has actual control
of the funds” it receives for deposit because “it
has no discretion over the uses to which the depositor's
money is to be put.” Meoli, 848 F.3d at 725
(quoting Nordberg v. Societe Generale, 848 F.2d
1196, 1200 (11th Cir. 1988); Universal Serv. Admin. Co.
v. Post-Confirmation Comm. of Unsecured Creditors of Incomnet
Commc'ns Corp., 463 F.3d 1064, 1074 (9th Cir.
2006).) Indeed, a bank does not have the right to dispose of
or encumber monies in an account. This case, however, is not
about the relationship between a bank and an account holder.
Rather, it is the relationship between a trust and the
trustee of the trust. Here, the trustee had broad authority
to manage the property of the trust; he had the power to buy,
sell, encumber, and otherwise deal with trust property. This
includes entering into a contract like the Guaranty involved
in this case.
Winget's misreading of Meoli is simply a
repetition of his argument that conflates the distinction
between the personal and individual debts of an agent/trustee
and the debts of the trust itself, which is a separate legal
entity. Meoli does nothing to change the Court's
Winget's other arguments for reconsideration have merit.
Winget continues to maintain, via varied arguments, that
because Larry Winget had a pre-existing right to revoke the
Winget Trust and used the Winget Trust as a will substitute,
the transfer of the Winget Trust's assets could not have
been a fraudulent conveyance, ignoring the third party claim
of Chase as a creditor of the Winget Trust as distinguished
from any obligation to Winget individually. The Court has
repeatedly explained that neither a settlor's right to
revoke nor the fact that a trust may serve as a will
substitute erases the trust's contractual obligations.
the Court is constrained to observe that Winget's
arguments have created an aura of complexity to inter vivos
trusts such as the Winget Trust that simply does not exist.
The concept of a living or revocable trust created during the
life of the settlor (sometimes referred to as a living trust)
is neither new nor novel, tracing back to the Middle Ages in
England. See ...