United States District Court, E.D. Michigan, Southern Division
IN RE OAKLAND MEDICAL CENTER, LLC d/b/a DOCTOR'S HOSPITAL OF MICHIGAN Debtor,
BASIL SIMON, as Trustee Appellee. YATINDER SINGHAL, Appellant,
MEMORANDUM AND ORDER ADOPTING BANKRUPTCY COURT'S
REPORT AND RECOMMENDATION (Doc. 11)
COHN, UNITED STATES DISTRICT JUDGE
a bankruptcy case. Basil Simon, as trustee of the Oakland
Physician Medical Center, LLC Liquidation Trust
(“Trustee”), sued Yatinder Singhal
(“Singhal”) in bankruptcy court (Adv. Doc.
102). The second amended complaint contains
• Count I: Re-characterization of Any Advances by
• Count II: Fraudulent Transfers (11 U.S.C.
§§544, 548, 550, 551)
• Count III: Avoidance of Fraudulent Transfers (MCL
§§566.31 et seq.)
• Count IV: Breach of Statutory Duty (MCL 450.4401 et
• Count V: Conversion - Common law and Statutory (MCL
• Count VI: Equitable Subordination (11 U.S.C.
• Count VII: Claim Disallowance (11 U.S.C. § 502)
(Adv. Doc. 102). Singhal objected to bankruptcy court
jurisdiction and filed a motion to withdraw the reference,
which the Court granted as to the Count IV (Breach of
Statutory Duty) and Count V (Conversion). Specifically, the
Singhal has the right to withdraw Counts IV and V because
they are “non-core” proceedings that entitle him
to an Article III court determination. However, this Court
has the authority to direct the bankruptcy court to
“recast its judgment as to [the] claims as proposed
findings of fact and conclusions of law, which the district
court shall review de novo.” Waldman v.
Stone, 698 F.3d at 910, 922 (2012); see also
Fed.R.Bankr.P. 9033(d); 28 U.S.C. § 157.
(Doc. 10). Accordingly, the bankruptcy court filed a report
and recommendation (“R&R”) regarding the
withdrawn claims. (Doc. 11). The bankruptcy court's
R&R recommends: (1) granting summary judgment in favor of
Trustee on Count V (Conversion) in the amount of $1, 078,
500.00; (2) granting summary judgment in favor of Singhal on
Count V (Statutory Conversion); and (3) denying Singhal's
summary judgment motion on Count IV (Breach of Statutory
Duty). (Doc 11).
filed objections relating to the bankruptcy court's
R&R, specifically, the portion that recommends granting
summary judgment on the common law conversion claim. (Doc.
12). Because there are no objections before the Court as to
the R&R's other findings, the Court adopts that
portion of the R&R verbatim; summary judgment in favor of
Singhal on Count V (Statutory Conversion) is GRANTED, and
Singhal's summary judgment motion on Count IV (Breach of
Statutory Duty) is DENIED. The Court need only decide
Singhal's objections to the common law conversion claim.
Court held oral argument on the issue of common law
conversion. The Court noted that although Singhal says he is
entitled to dispute “the quantum of damages for which
[he] would be liable, ” he did not submit evidence (or
even argument) that contests the amount of damages shown by
Trustee. (Doc. 12). Accordingly, the Court permitted Singhal
to submit supplemental briefing for the purposes of disputing
damages. Singhal submitted a supplemental brief (Doc. 16),
and Trustee filed a responsive brief. (Doc. 17).
before the Court is the bankruptcy court's R&R and
the related objections. (Docs. 11, 12, 13, 16, 17). For the
following reasons, the bankruptcy court's R&R is
adopted in full; Trustee's motion for summary judgment
for common law conversion in the amount of $1, 078, 500.00 is
Physicians Medical Center, LLC, d/b/a Doctor's Hospital
of Michigan, operated a student program that accepted
students from different medical schools for clinical
rotations. In return, the medical schools agreed to
compensate the Trustee, which was memorialized by several
contracts. Relevant here were the Ross University School of
Medicine (“Ross”) agreement and the Windsor
University School of Medicine (“Windsor”)
relevant times, Singhal was a member of Trustee's board
of directors. Also, Singhal held a 50% interest in two
corporate entities with other doctors: American Medical
Education Group, LLC (“AMEG”) and DHOM Education.
Although Singhal was not authorized to “take action on
behalf of the [Trustee] in his  individual capacity except
pursuant to specific authorization by the Board of Directors,
” Singhal redirected payments under the Ross and
Windsor agreements to AMEG and DHOM. (Doc. 11, p. 10).
Singhal's actions redirecting payments to AMEG and
DHOM-in which he had a 50% interest-that the Trustee was
entitled to under the Ross and Windsor agreements, forms the
basis for Trustee's common law conversion claim.
BANKRUPTCY COURT'S R&R
bankruptcy court found no evidence that Singhal had board
approval to redirect the payments under the Ross and Windsor
agreements. The R&R discusses Singhal's deposition,
which Singhal says creates an issue of material fact. The
R&R illustrates that nothing Singhal said evidences that
he had authorization to redirect the payments. See
(Doc. 11, p. 11-12).
R&R also addresses the issue of missing board minutes.
There are no meeting minutes for the board from October 17,
2011 to December 21, 2012 and from May 13, 2013 to November
27, 2013. There is no evidence that suggests board approval
is contained in the missing minutes, however, there
is evidence that neither AMEG nor
DHOM had authorization to redirect payments. (Doc. 11, p.
13). The R&R says that Singhal cannot point to the
absence of evidence to create a factual dispute, especially
when there is affirmative evidence to the contrary.
R&R engages in a detailed legal discussion and concludes
that Singhal's redirection of payments (and/or the right