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In re Bush

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

September 16, 2019

In re Adrienne Bush, Debtor.
Kenneth Nathan, Appellee. Adrienne Bush, Appellant



         After Adrienne Bush's bankruptcy trustee discovered her separate, then-pending employment discrimination lawsuit, he agreed to settle it for $20, 000. Unhappy with this settlement, Bush claimed an exemption in the lawsuit and moved to convert her Chapter 7 proceeding to a Chapter 13 proceeding. The bankruptcy court (1) sustained the trustee's objection to the claimed exemption; (2) denied Bush's motion to convert; and (3) granted the trustee's motion to compromise Bush's employment discrimination claim. Bush now appeals these decisions. Finding no error, the Court will affirm the bankruptcy court's decisions.


         This appeal touches on two distinct legal proceedings: Bush's employment discrimination lawsuit and Bush's bankruptcy case.

         First, the employment discrimination lawsuit. On May 18, 2016, Adrienne Bush filed a pro se action against her former employer, Lumileds LLC. Bush v. Lumileds, LLC, et. al., No. 16- 11761 (E.D. Mich. filed on May 18, 2016). This case was assigned to United States District Court Judge Laurie J. Michelson, who referred all pre-trial motions to Magistrate Judge Elizabeth A. Stafford.

         In her amended complaint, Bush alleged that Lumileds had discriminated against her because she is African Amerian and had retaliated against her for reporting the discrimination, in violation of Title VII of the Civil Rights Act of 1964 and Michigan's Elliott-Larsen Civil Rights Act. (ECF No. 11, PageID 1176-1207; No. 16-11761, ECF No. 30). During the discovery and summary judgment phases, Bush actively litigated her case by stipulating to a protective order (No. 16-11761, ECF No. 38), filing two motions to extend deadlines (No. 16-1176, ECF Nos. 39 and 75), filing three witness lists (No. 16-11761, ECF Nos. 42, 74, and 84), opposing a motion to stay (No. 16-11761, ECF No. 44), filing two motions to compel (No. 16-11761, ECF No. 46 and 58), attending two status conferences, a settlement conference, and a hearing, objecting to four orders issued by Magistrate Judge Stafford (No. 16-11761, ECF Nos. 53, 62, 86, and 88), filing a motion for sanctions (No. 16-11761, ECF No. 63), amending her motion for sanctions (No. 16-11761, ECF No. 70), filing a motion to strike (No. 16-11761, ECF No. 78), filing a motion to amend her complaint (No. 16-11761, ECF No. 85), and responding to the Lumileds's motion for summary judgment. (No. 16-11761, ECF No. 79).

         On July 10, 2018, Magistrate Judge Stafford issued a Report and Recommendation, wherein she recommended that summary judgment be granted in favor of Lumileds. (No. 16-11761, ECF No. 89). On July 25, 2019, Bush objected to this recommended disposition. (No. 16-11761, ECF No. 94).

         Now, the bankruptcy proceeding comes into play. On August 9, 2018, Bush filed a petition for bankruptcy relief under Chapter 7 of the Bankruptcy Code. (ECF No. 11, PageID 954-971). Bush's bankruptcy case was assigned to United States Bankruptcy Court Judge Maria L. Oxholm, and Appellee Kenneth Nathan was appointed as trustee of Bush's bankruptcy estate. On August 22, 2018, Bush filed her Schedules and Statement of Financial Affairs. (ECF No. 11, PageID 977-1025). In Part 3 of Schedule A/B, Bush was asked, “Do you own or have any legal or equitable interest in any of the following items?” Item 33 of this part described “Claims against third parties, whether or not you have filed a lawsuit or made a demand for payment.” (ECF No. 11, PageID 989). Item 33 offered several examples, including “accidents, employment disputes, insurance claims or rights to sue.” Id. (emphasis added). Despite actively litigating her pending employment discrimination claims for the previous two years, Bush checked the “No” box in response to Item 33. Id.

         Similarly, in her Statement of Financial Affairs, Bush failed to list her employment discrimination lawsuit in response to the question, “Within 1 year before you filed for bankruptcy, were you a party in any lawsuit, court action, or administrative proceeding.” (ECF No. 11, PageID 1017). And, at a September 12, 2018 creditors' meeting, Bush responded “No” to the question “Have you sued anybody in the last five years?” (ECF No. 11, PageID 1108).

         Back to the employment action. On September 26, 2018, Judge Michelson adopted Judge Stafford's recommendation “save for her recommendation to grant Lumileds summary judgment on Bush's discriminatory discharge claims under Title VII and ELCRA.” (No. 16-11761, ECF No. 105, PageID 3519). In other words, only Bush's discriminatory discharge claims survived summary judgment.

         Now the employment action and the bankruptcy proceeding meet. On October 3, 2018, Lumiled's counsel contacted Trustee Nathan and informed him of Bush's employment lawsuit. Nathan evaluated Bush's remaining claims and agreed to settle the case for $20, 000.

         This proposed settlement did not sit well with Bush. On January 3, 2019, Bush filed a motion to convert her Chapter 7 proceeding to a Chapter 13 proceeding (ECF No. 11, PageID 1042) and amended her schedules. (ECF No. 11, PageID 1051). In her amended Schedule A/B, she identified the employment discrimination case and, in her amended Schedule C, she claimed it as exempt under 11 U.S.C. § 522(d)(11)(E). (ECF No. 11, PageID 1064). Nathan opposed the motion to convert and filed an objection to the amended exemption. The United States Trustee also opposed both of Bush's filings.

         On March 11, 2019, Nathan filed a motion to approve the compromise of Bush's remaining employment discrimination claims against Lumileds. (ECF No. 11, PageID 1170-1175). In his motion, Nathan described, in detail, why he concluded that it was in the estate's best interest to settle the case for $20, 000. First, he noted that Bush had “expressly disclaimed the intent to seek any damages for the time period following the termination of her employment or emotional distress damages . . . and as a pro se plaintiff, [Bush] is not entitled to attorneys' fees.” (ECF No. 11, PageID 244). Then, he noted that Bush had found new, more lucrative employment only six months after she had been discharged and that “had [Bush] remained employed with Lumileds during that six-month period, she would have received approximately $20, 000 in base salary-the amount of the proposed settlement at issue.” (ECF No. 11, PageID 1174). Nathan concluded that “[t]he proposed settlement, therefore, is more than reasonable as it represents the amount of damages the estate could be awarded if it were to prevail on the sole remaining civil claim at trial, which is far from certain and would be costly for the estate to pursue.” Id.

         Bush filed a response to the motion to approve compromise of claim, arguing that “[t]he settlement is not reasonable and furthermore should be denied because the debtor is no longer within the Chapter 7, the stated exemption is valid, this will not satisfy the debtors [sic] creditors and ...

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