United States District Court, E.D. Michigan, Southern Division
IN RE GRIFFUS et al., Debtors.
WILDFIRE CREDIT UNION, Appellee. THOMAS W. McDONALD, as Trustee of the Estate of GRIFFUS et al., Appellant,
ORDER AFFIRMING THE BANKRUPTCY COURT'S DENIAL OF
APPELLANT'S MOTION FOR RECONSIDERATION
Gershwin A. Drain United States District Court Judge.
the Court is Appellant Thomas W. McDonald's appeal of a
final order entered by the Bankruptcy Court denying
Appellant's Motion to Alter/Amend Judgment or for
Reconsideration. Dkt. No. 5. Appellant asserts that the
Bankruptcy Court erred by 1) excluding from its motion for
sanctions order its finding that Appellee Karl Wenzloff was
not authorized to sign a creditor's Proof of Claim; 2)
failing to order sanctions against opposing counsel for
signing and filing an unauthorized proof of claim; and 3)
allowing opposing counsel to inform the Bankruptcy Court
about a pending grievance and altering deadlines to
accommodate opposing counsel's request for an order
without sanctions to help him in his grievance proceeding.
For the reasons discussed below, the Court will affirm the
Bankruptcy Court's denial of Appellant's motion for
of 2014, Debtor Elizabeth Lara-Griffus obtained a loan from
Appellee Wildfire Credit Union (“Wildfire”). Dkt.
No. 6, pg. 5 (Pg. ID 382). A 2004 Chevrolet Trailblazer
secured the loan, such that Wildfire could take possession of
the vehicle in the event of a default. Id. The
Debtor defaulted on making payments on the loan, and Wildfire
repossessed the Trailblazer on April 8, 2017. Id.
Best Recovery Storages in Saginaw stored the vehicle.
Debtor filed for bankruptcy on May 17, 2017. Dkt. No. 5, pg.
10 (Pg. ID 347). Appellant Thomas W. McDonald was appointed
to administer the Chapter 13 bankruptcy case for the Debtor.
Id. Mr. McDonald contacted Wildfire and requested
the Debtor's vehicle be returned. Id. Wildfire
was willing to comply, but Best Recovery Services would not
release the vehicle until the Debtor paid $1.035.00 in
storage fees. Id. Wildfire arranged with Best
Recovery Services for immediate release of the Trailblazer in
order to avoid a stay violation action. Id. at pg. 6
(Pg. ID 383). Wildfire would then file a claim in the
bankruptcy case for the storage fees, which could be
recovered from the estate. Id. Best Recovery
Services sent an invoice to Wildfire Credit Union totaling
$1, 035.00 for the Trailblazer storage fees. Id.
then advised its attorney, Karl Wenzloff, about the agreement
reached with Best Recovery Services for release of the
Trailblazer. Id. Wildfire forwarded Mr. Wenzloff the
invoice it received from Best Recovery Services so that he
could file a Proof of Claim on behalf of Best Recovery
Services. Id. Mr. Wenzloff believed that Best
Recovery Services agreed to release the Trailblazer
immediately before any payment of storage fees, and Wildfire
would file a Proof of Claim on behalf of Best Recovery
Services. Id. at pgs. 6-7 (Pg. ID 383-384).
Therefore, Mr. Wenzloff prepared and filed a Proof of Claim
on September 27, 2017. Id. at pg. 7 (Pg. ID 384).
Mr. McDonald, the Chapter 13, Trustee, filed an objection to
the claim on October 23, 2017. Id. Mr. Wenzloff
withdrew the claim on November 30, 2017 after talking to
Wildfire and learning that Wildfire would pay the storage fee
directly to Best Recovery Services. Id. Mr. McDonald
then withdrew his objection to the Proof of Claim.
year later, on November 1, 2018, Appellant, Mr. McDonald,
filed a motion for sanctions against Karl Wenzloff, Paul
Wenzloff, and Wildfire. Id. at pgs. 7-8 (Pg. ID
384-85). The motion alleged that Wildfire had not given Mr.
Wenzloff authority to file a Proof of Claim on its behalf.
Id. at pg. 8 (Pg. ID 385). The motion argued that
filing a Proof of Claim without authority to do so
constituted perjury and fraud. Id. On December 21,
2018, the Bankruptcy Court held a hearing on the motion for
sanctions and Appellant agreed to dismiss Wildfire as a
defendant to the motion. Id. The Bankruptcy Court
concluded that Mr. Wenzloff did not have authorization from
Best Recovery to file a Proof of Claim. Dkt. No. 3, pg. 214
(Pg. ID 255). However, the court noted that “he ha[d]
authorization through [Wildfire] which had an agency
relationship and a contract relationship with Best
Recovery[.]” Id. Therefore, the court did not
issue any sanctions against Mr. Wenzloff, other than
admonishing him for signing the Proof of Claim. Id.
January 4, 2019, Appellant contends that the Bankruptcy Court
held an in-chambers, off-the-record meeting in an unrelated
case between the parties. Dkt. No. 5, pg. 13 (Pg. ID 350).
During the meeting, Appellee Paul Wenzloff informed the court
about a grievance filed against him and requested the court
expedite an entry of an order in the Griffus matter
so that Mr. Wenzloff could include it in his response to the
grievance commission's investigation. Id.
Appellant then states that the court entered an order on
January 9, 2019 with an accelerated deadline for the parties
to submit proposed orders on the court's motion for
sanctions in order to accommodate Mr. Wenzloff's request.
January 10, 2019, the Bankruptcy Court denied the
Appellant's Motion for Sanctions. Dkt. No. 3, pgs. 250-51
(Pg. ID 264-65). The order denying sanctions stated that the
Court directed both parties to submit proposed orders on the
motion for sanctions. Id. at pg. 250 (Pg. ID 264).
The order further stated that the parties could not agree on
the language for the order, so the Bankruptcy Court entered
its own order. See Id. The order concluded that
Wildfire Credit Union was dismissed from the motion for
sanctions and that no sanctions would be awarded for the
reasons stated in court. Id. On January 23, 2019,
Appellant filed a motion to alter, amend judgment or for
reconsideration of the Court's January 10, 2019 order
denying sanctions. Dkt. No. 3, pg. 252 (Pg. ID 266). The
Bankruptcy Court denied Appellant's reconsideration
motion on February 13, 2019, stating that any additional
findings requested by the Appellant were not relevant to the
case. Dkt. No. 1, pg. 8-9 (Pg. ID 8-9).
filed a Notice of Appeal with this Court on February 26,
2019. Dkt. No. 1. Appellant filed his appeal brief on April
26, 2019, requesting that this Court review the Bankruptcy
Court's denial of Appellant's motion for
reconsideration. Dkt. No. 5. Appellees Wildfire Credit Union,
Paul Wenzloff, and Karl Wenzloff filed their response brief
on May 23, 2019. Dkt. No. 6.
Court reviews the denial of a motion for reconsideration
filed pursuant to Fed.R.Civ.P. 59(e) under the abuse of
discretion standard. In re J & M Salupo Dev.
Co., 388 B.R. 795, 800 (B.A.P. 6th Cir. 2008). The abuse
of discretion standard requires that the lower court's
decision making process be “reasonable.”
Id. Motions for relief from a final judgment or
order pursuant to Fed.R.Civ.P. 60(b) are also reviewed for
abuse of discretion. Id. at 801.