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Michaelian v. Lawsuit Financial, Inc.

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

April 19, 2019




         I. Introduction

         The facts of this case were set out in laborious detail in the Court's previous Order issued on March 20, 2019 addressing the parties' summary judgment motions. ECF No. 73. To the extent they are relevant, those facts are adopted here. For now, it is enough to recap that Plaintiff Judith Michaelian sued Defendants Lawsuit Financial, Inc. and its owner Mark Bello because her deceased husband had invested hundreds of thousands of dollars with Bello and his company, and Mrs. Michaelian wanted the money back.

         Earlier in the litigation, Plaintiff twice requested the Court to appoint a receiver to take over the assets of the defendant company, first on April 3, 2018, and again on August 6, 2018. ECF Nos. 27, 50. The Court found the record before it insufficient to determine whether appointing a receiver would be appropriate. For that reason, on October 30, 2018, the Court appointed a special master/examiner to conduct a forensic accounting of Defendant Lawsuit Financial's finances and report on whether it had the capacity to pay Plaintiff back. ECF No. 62. On December 21, 2018, the Court filed the special master/examiner's report under seal and directed the parties to file any objections to unsealing the report within fourteen days. ECF No. 65. Receiving no objections, on January 10, 2019 the Court unsealed the report and denied Plaintiffs' Motion to Appoint a Receiver. ECF No. 66. Plaintiff now moves to strike the report of the special master/examiner, ECF No. 67, and further to reconsider the Court's order denying appointment of a receiver, ECF No. 68. For the reasons set forth below, it is ORDERED that both motions are DENIED.

         Also before the Court is Defendants' motion asking for partial reconsideration of the Court's March 20, 2019 summary judgment Order on the ground that the Court failed to consider Defendant's affirmative defense that Count X of Plaintiffs' Complaint was brought outside the one-year statute of limitations for sale of an unregistered security. ECF No. 76. Defendant's Motion is also DENIED.

         II. Legal Standards

         Plaintiffs cite no legal standard that the Court should apply in considering their Motion to Strike. Instead, Plaintiffs raise several arguments related to the veracity of the report itself: (1) the report relies on flawed or false data; (2) the report is incomplete; and therefore (3) the report is not useful to the Court. Rather than filing these objections during the fourteen-day period the Court established to consider such arguments before adding the report to the public record, or during the twenty-one-day period for objections to such reports set forth in Fed.R.Civ.P. 53(f)(2), Plaintiffs did not interpose their objections until after the Court had considered the report in making its decision not to appoint a receiver. In any event, Plaintiffs' tardy objections do not warrant striking the report of the special master/examiner. Fed.R.Civ.P. 53(f)(3) indicates that “[t]he court must decide de novo all objections to findings of fact made or recommended by a master.”

         With respect to the Cross-Motions for Reconsideration, the Court may grant a motion for reconsideration if the movant satisfactorily shows: (1) the existence of a palpable defect that misled the parties and the Court; and (2) the correction of such defect would result in a different disposition of the case. E.D. Mich. L.R. 7.1(h)(3). A defect is palpable if it is “obvious, clear, unmistakable, manifest, or plain.” Olson v. Home Depot, 321 F.Supp.2d 872, 874 (E.D. Mich. 2004).

         III. Analysis

         a. Plaintiffs' Motion to Strike the Report of the Special Master/Examiner

         On October 15, 2018, the Court heard oral argument on Plaintiffs Second Motion to Appoint a Receiver. At the hearing, the Court indicated that the pleadings and exhibits pertaining to the request to appoint a receiver raised sufficient questions about Lawsuit Financial's solvency to justify the appointment of a special master/examiner to investigate the financial condition of Defendant Lawsuit Financial, Inc. The Court directed parties to submit a proposed stipulated order that specified the duties of the special master/examiner. The parties submitted this proposed stipulated order on October 19, 2018. The stipulation indicated that the special master/examiner should investigate the following:

. The current financial health and stability of LFC, including an assessment of its assets and short and long-term debt obligations, and its long-term sustainability and viability, both
. The ability of LFC to fund the payment of a settlement or judgment in the amount of approximately $800, 000 (less the $266, 000 LFC has escrowed or repaid to date), with monthly payments over a 24-36 month time frame, while continuing to operate under its current business model of funding cases; and,
• A determination of the largest regular monthly payment that LFC could consistently make while still ...

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