United States District Court, E.D. Michigan, Southern Division
OPINION AND ORDER DENYING DEFENDANTS' EX PARTE
MOTION TO DELAY THE APPOINTMENT OF A RECEIVER , DENYING
DEFENDANTS' MOTION FOR RECONSIDERATION , , AND
DENYING PLAINTIFF'S MOTION TO FILE A RESPONSE IN
OPPOSITION TO DEFENDANTS' MOTION FOR RECONSIDERATION
STEPHEN J. MURPHY, III United States District Judge
16, 2019, the Court denied Plaintiff Huntington National
Bank's ("Huntington") motion for a preliminary
injunction and granted its renewed motion for appointment of
a receiver. ECF 49. The Court allowed either party to file
motions for reconsideration within ten days if they believed
that further evidence could change the Court's ruling.
Id. at 2484. The Court further ordered that
"[a]ny such motion must be accompanied by affidavits,
declarations, and a summary of the testimony and evidence
that would alter the Court's decision." Id.
On May 20, 2019, Defendants Sakthi Automotive Group, USA,
Inc., Sakthi America Corporation, and Sakthi Real Estate
Holdings ("Sakthi Defendants") filed an ex parte
motion to delay appointment of a receiver until after the
Court considered Sakthi Defendants' motion for
reconsideration. ECF 51. On May 21, 2019, Sakthi Defendants
filed a motion for reconsideration. ECF 56, 57. On May 28,
2019, Huntington filed a motion for leave to file a response
in opposition to Sakthi Defendants' motion for
reconsideration. ECF 61. For the reasons that follow, the
Court will deny each of these motions and will appoint by
separate order Kevin English, managing partner of Lark
Advisors, to serve as receiver. See ECF 52, PgID 2514-15.
the Court will grant a motion for reconsideration,
"[t]he movant must not only demonstrate a palpable
defect by which the court and the parties and other persons
entitled to be heard on the motion have been misled but also
show that correcting the defect will result in a different
disposition of the case." E.D. Mich. L.R. 7.1(h)(3).
"A 'palpable defect' is a defect which is
obvious, clear, unmistakable, manifest, or plain."
Fleck v. Titan Tire Corp., 177 F.Supp.2d 605, 624
(E.D. Mich. 2001) (citation omitted).
Court found in its Order granting Huntington's renewed
motion for a receiver, "the parties' briefing and
evidence, including relevant contractual language in the
parties' loan documents, establish that Huntington is
entitled to the appointment of a receiver." ECF 49, PgID
2488. Sakthi Defendants admitted that they are in default of
the parties' loan agreements. ECF 30, PgID 1522. And
Huntington, consistent with the terms of the parties'
contracts, sought to have a receiver appointed to protect its
interests in certain collateral. See ECF 26-5, PgID 760, ECF
26-8, PgID 946, ¶ 7(d); ECF 26-9, PgID 976 ¶ 7(d).
11.5 of the parties' credit agreement provides:
Upon the occurrence of an Event of Default and at all times
thereafter, the Lender shall be entitled to the immediate
appointment of a receiver for all or any part of the
Collateral, whether such receivership is incidental to the
proposed sale of the Collateral, pursuant to the Uniform
Commercial Code or otherwise. Each Loan Party hereby consents
to the appointment of such a receiver without notice or bond,
to the full extent permitted by applicable statute or law;
and waives any and all notices of and defenses to such
appointment and agrees not to oppose any application therefor
by the Lender, but nothing herein is to be construed to
deprive the lender of any other right, remedy, or privilege
the Lender may have under law to have a receiver appointed,
provided, however, that, the appointment of such receiver
shall not impair or in any manner prejudice the rights of the
Lender to receive any payments provided for herein. Such
receivership shall at the option of the Lender, continue
until full payment of all the Obligations.
26-5, PgID 760. The mortgage agreements between Huntington
and Sakthi America Corporation and Sakthi Automotive Group
USA, Inc. contain similar clauses. See ECF 26-8, PgID 946,
¶7(d); ECF 26-9, PgID 976, ¶7(d).
do not dispute the validity of the contracts or that they
have defaulted under the terms of the contracts. Appointment
of a receiver is "an extraordinary equitable remedy that
is justified in only extreme situations." Meyer
Jewelry Co. v. Meyer Holdings, 906 F.Supp. 428, 432
(E.D. Mich. 1995) (citations omitted). Here, it is a remedy that
Sakthi Defendants explicitly agreed to in their contracts
with Huntington. Courts disagree about whether a party's
advanced contractual consent to the appointment of a receiver
is dispositive of the issue of appointment or simply a factor
that favors appointment. Mapletree, 2010 WL 1753112, at *3.
Under either scenario, Huntington is entitled to appointment
of a receiver. As discussed in the Court's order granting
Huntington's renewed motion for appointment of a
receiver, the relevant legal and equitable factors clearly
favor appointment of a receiver here. See ECF 49, PgID
Defendants focus on the phrase "to the full extent
permitted by applicable statute or law" contained in
Section 11.5 of the parties' contract and argue that case
law does not support appointment of a receiver. The argument
is unavailing. The Court fully considered the following
factors that were discussed in Meyer:
 the existence of a valid claim by the moving party; 
the probability that fraudulent conduct has occurred or will
occur to frustrate the claim;  imminent danger that
property will be lost, concealed, or diminished in value; 
inadequacy of legal remedies;  lack of a less drastic
equitable remedy; and  the likelihood that appointment of
a receiver will do more harm than good.
PgID 2489 (quoting Meyer Jewelry Co., 906 F.Supp. at
432); see also Pension Benefit Guar. Corp. v. Evans
Tempcon. Inc., 630 Fed.Appx. 410, 414 (6th Cir. 2015)
(discussing factors a district court considers when
appointing a receiver). The Court found, based not only on
the testimony provided at the evidentiary hearing, but also
on the arguments and evidence contained in the parties'
filings, that the factors favored appointment of a receiver.
ECF 49, PgID 2489-91. And Sakthi Defendants have failed to
provide evidence in their motion for reconsideration that
warrants a different ruling.
motion for reconsideration focuses on three of the factors
previously evaluated by the Court: "(a) the probability
that fraudulent conduct has occurred or will occur; (b)
imminent danger that property will be lost, concealed, or
diminished in value; and (c) the likelihood that the
appointment of a receiver will do more harm than good."
ECF 56, PgID 2623. The evidence Sakthi Defendants submitted
fails to establish that these factors weigh in their favor or
that appointment of a receiver is not otherwise
"permitted by applicable statute or law" as