Opinion
Case No. 22-40755
2022-11-22
IN RE: Lynn Beth BAUM, Debtor.
Scott M. Kwiatkowski, Goldstein Bershad & Fried PC, Southfield, MI, Attorney for Debtor, Lynn Beth Baum. David Findling, The Findling Law Firm, PLC, Royal Oak, MI, Attorney for creditors, David Findling and The Findling Law Firm, PLC. Marilyn R. Somers-Kantzer, Detroit, MI, Attorney for Tammy L. Terry, Chapter 13 Trustee. Joseph K Grekin, Leon N. Mayer, Michael E. Baum, Schafer and Weiner, PLLC, Bloomfield Hills, MI, Attorneys for Howard Baum; Fraser Equities, LLC; Madison Equities, LLC; and Joseph K. Grekin. Jerome D. Frank, Tami R. Salzbrenner, Frank & Frank, PLLC, Farmington Hills, MI, Attorneys for Alliance Equities, LLC; Jerome D. Frank, and Tami R. Salzbrenner. David T. Lin, SK Detroit Law Partners, P.C., Southfield, MI, Attorney for Henry Nirenberg, State Court Receiver. John W. Polderman, Simon PLC Attorneys & Counselors, Troy, MI, Attorney for John W. Polderman, former State Court Receiver.
Scott M. Kwiatkowski, Goldstein Bershad & Fried PC, Southfield, MI, Attorney for Debtor, Lynn Beth Baum.
David Findling, The Findling Law Firm, PLC, Royal Oak, MI, Attorney for creditors, David Findling and The Findling Law Firm, PLC.
Marilyn R. Somers-Kantzer, Detroit, MI, Attorney for Tammy L. Terry, Chapter 13 Trustee.
Joseph K Grekin, Leon N. Mayer, Michael E. Baum, Schafer and Weiner, PLLC, Bloomfield Hills, MI, Attorneys for Howard Baum; Fraser Equities, LLC; Madison Equities, LLC; and Joseph K. Grekin.
Jerome D. Frank, Tami R. Salzbrenner, Frank & Frank, PLLC, Farmington Hills, MI, Attorneys for Alliance Equities, LLC; Jerome D. Frank, and Tami R. Salzbrenner.
David T. Lin, SK Detroit Law Partners, P.C., Southfield, MI, Attorney for Henry Nirenberg, State Court Receiver.
John W. Polderman, Simon PLC Attorneys & Counselors, Troy, MI, Attorney for John W. Polderman, former State Court Receiver.
OPINION AND ORDER DENYING HOWARD BAUM'S MOTION TO CONVERT OR DISMISS THIS CASE (DOCKET # 196)
Thomas J. Tucker, United States Bankruptcy Judge
This case came before the Court for a telephonic hearing on November 10, 2022, on several motions, including the motion filed by Howard Baum, entitled "Howard Baum's Motion To Convert Or Dismiss Bankruptcy Proceeding For Bad Faith" (Docket # 196, the "Motion"). In the Motion, Howard Baum primarily seeks an order converting this case to Chapter 7, and in the alternative, seeks dismissal of the case. Alliance Equities, LLC filed a concurrence in the Motion (Docket # 216). State court receiver Henry Nirenberg filed a limited concurrence, arguing for a dismissal of this case, with a 180 day bar to refiling, rather than a conversion to Chapter 7 (Docket # 231). The Debtor and the creditor The Findling Law Firm, PLC, filed objections to the Motion (Docket ## 212, 213). Howard Baum then filed replies to the objections (Docket ## 233, 234).
At the conclusion of the November 10, 2022 hearing, the Court took the Motion under advisement. For the following reasons, the Court will deny the Motion.
The Court has considered all relevant parts of the record of this bankruptcy case, all of the exhibits filed by the parties, and all of the oral and written arguments of the parties regarding the Motion. And the Court has considered, among other things, the totality of the circumstances and all of the factors identified in Alt v. United States (In re Alt), 305 F.3d 413, 420 (6th Cir. 2002).
1 The Court finds and concludes as follows:
1. The Debtor filed this Chapter 13 case, and has prosecuted the case to date, for all of the following reasons: (a) to use the bankruptcy automatic stay, this bankruptcy case, and the principles established by such cases as Honigman v. Comerica Bank (In re Van Dresser Corp.), 128 F.3d 945, 947-48 (6th Cir. 1997) ; and In re Spiech Farms, LLC, 603 B.R. 395, 407-08 (Bankr. W.D. Mich. 2019), to maximize the value and the ultimate amount of proceeds from the Debtor's assets, which consist mainly of the Debtor's lawsuit claims, pending in state court; (b) thereby both to benefit the Debtor's creditors (including the Debtor's attorney in the state court lawsuits as well as all of the Debtor's other creditors) and to benefit the Debtor herself; and (c) to pay the Debtor's creditors in full. Taken together, this combination of reasons is not improper, does not amount to bad faith, and does not amount to any abuse of the bankruptcy system.
During a lengthy hearing held in this case on July 14, 2022, the Court explained its view of these two cases and how they appear to impact this case. A transcript of that hearing was filed in this case on September 27, 2022, at Docket # 215. The Court incorporates its statements about this subject by reference, and reiterates them now. See Tr. of July 14, 2022 Hr'g. (Docket # 215) at 42-43, 53-54.
2. The Debtor has a large pre-petition judgment against Fraser Equities, LLC ("Fraser"). Pre-petition, and without any request by the Debtor, the state court appointed a receiver over the property of Fraser. The current state court receiver is Henry Nirenberg ("Nirenberg"). The Debtor feared that Nirenberg would successfully attempt, without the Debtor's consent, to settle certain claims that the Debtor believes she has, as a judgment creditor of Fraser, to the Debtor's detriment. The Debtor filed this bankruptcy case, in large part, at least, in order to try to prevent that outcome. The Debtor hoped, and continues to hope, ultimately to obtain from her state court litigation enough in proceeds to pay all of her creditors in full, including but not limited to her state court attorney, and still to have a significant surplus amount left for herself.
3. The Court finds the following statements and arguments by the Debtor, and by the Debtor's counsel who filed this bankruptcy case (David Findling), (a) to be accurate statements of why the Debtor filed and has prosecuted this Chapter 13 bankruptcy case; and (b) as showing that the Debtor filed this bankruptcy case in good faith and not for an improper purpose:
Statements by the Debtor:
Contrary ... to the typical case when a receiver is appointed and a debtor files bankruptcy to avoid the potential collection action and seizure of assets[, i]n the Debtor's case the roles are reversed. The judgment creditor (Debtor), whom did not request a receiver, was forced to seek bankruptcy protection and invoke the automatic stay to protect her claims (assets) due to [the] receiver[’]s stated purpose to compromise her claims to her detriment.
The Debtor was not using the bankruptcy court as a court of appeals regarding the receivership motions, the Debtor was invoking the automatic stay to protect her assets.
...
The Debtor fully intends to use the Chapter 13 filing to liquidate her claims pending in the state court and pay off her debts through the Chapter 13 plan. [The Debtor is a]ttempting to pay creditors in full using not only funds from the claims that the Debtor has related to the fraudulent scheme of Howard Baum, but also her own non exempt funds.
...
The Debtor was acting to protect her interest in her claims pending in the state court. The Debtor's action by filing the Chapter 13 also increased her recovery since the state court receiver is unable to pay himself from recovered funds. Further, the bankruptcy estate was enhanced because a creditor and the estate cannot both recover on the same claims, the estate's recovery takes precedence. In re Spiech Farms, LLC 606 [603] B.R. 395 (2019) and In re Van Dresser 128 F.2d [F.3d] 945.
...
The Debtor filed chapter 13 for two reasons[:] ... 1) to pay her unsecured creditors in full and 2) to protect her assets by invoking the automatic stay.
...
The facts of this case are a special circumstance. The Debtor was faced with the stark reality that after years of attempting to collect the funds that were transferred out the martial estate a third party was going to compromise her claims and get paid a premium to do so. The Debtor had to protect her rights and invoke the automatic stay.
...
The Debtor is paying all of the fimds collected in her state court claims to the Chapter 13 Trustee and has $35,398.33 of her own funds to help fund the plan.
...
The Debtor[ ] is not funding her 100% to unsecured creditors plan solely from the recovery of claims of her bankruptcy estate. The Debtor has paid $35,398.23 from non-exempt funds, of which no charging lien of any attorney attaches. Therefore, the sources of recovery as outlined in the Debtor's current plan pending in this case are as outlined as follows:
A. Payment of $35,398.33- paid from non exempt funds of Debtor's bankruptcy estate
B. Payment of $12,786.20 from American Express-settlement approved and being processed by American Express....
C. Payment of $86,521.00 from funds held by the Oakland County Circuit Court stemming from the violation of an injunction by Frank & Frank- ... [O]n September 20, 2022 the state court ordered those funds released to the Chapter 13 Trustee....
D. Payment of Balance to pay off case (Oakland County Circuit Court is holding $370,000.00 of funds related to the violation of an injunction)- ...
...
[Unsecured claims filed, according to the claims register for this case [which are to be paid 100%] include] Claim[ ] #1 Ford Motor Credit LLC $3,236.19, Claim[ ] #2 Aidvantage on behalf of Dept of Ed Loan Service $17,933.81, Claim #8 Sheldon Olson $10,000.00.
...
The Debtor's filing was not done with an improper purpose. The Debtor having been the victim of a fraudulent scheme by the movant and her ex spouse saw that her claims would be compromised over her objection and diluted by the fees and costs of a receiver and filed bankruptcy to protect her claims and invoke the bankruptcy stay. The Debtor filed her bankruptcy to protect her claims and to also and importantly pay her creditors in full over the course of her Chapter 13 plan.
"Debtor's Response to Howard Baum's Motion to Convert or Dismiss Bankruptcy Proceeding for Bad Faith" (Docket # 212) at 2-5, 7-8, 10.
Statement by David Findling:
Debtor filed for bankruptcy to seek protection from the Receiver. Debtor did not file in an attempt to reverse the State Court's denial of her motion to discharge the Receiver. Her filing was born out of her fear that Howard Baum and the Receiver would reach a settlement which was not in her best interests or those of her creditors.
"Creditor, The Findling Law Firm Response and Objections to Howard Baum's Motion to Convert or Dismiss Bankruptcy Proceeding for Bad Faith" (Docket # 213) at 6.
4. The combination of reasons for the Debtor's filing and prosecution of this Chapter 13 case, summarized in paragraphs 1 and 2 above, is fully consistent with what Howard Baum argues is "the underlying purpose and spirit of Chapter 13," namely "financial rehabilitation through repayment of debt." See "Brief if Support of Howard Baum's Motion to Convert or Dismiss Bankruptcy Proceeding for Bad Faith" (Docket # 196-1) at 15 (citing Condon v. Brady (In re Condon), 358 B.R. 317, 326 (B.A.P. 6th Cir. 2007) ).
5. Contrary to Howard Baum's argument, the Debtor's first proposed plan filed in this case (Docket # 22) does not demonstrate bad faith on the Debtor's part. That plan certainly was something less than a stellar work product by the Debtor's then-attorney, David Findling. But that plan did state in at least one place (Section II.C on page 2) that the Debtor was proposing to pay "a 100% dividend to [her] unsecured creditors," and the "Plan Summary" on the first page of that plan stated that the "[m]inimum dividend to Class 9 creditors" (i.e., the general unsecured creditors) was "$1,573,359.15." This is the same amount that the Plan's "Liquidation Analysis" (Attachment 1 on page 10) listed as the "Amount Available in Chapter 7." In context, that clearly implied that in order to confirm a plan, the Debtor would have to pay her unsecured creditors either 100% of their allowed claims or at least $1,573,359.15, whichever was less. See 11 U.S.C. § 1325(a)(4).
6. In any event, the Debtor later amended her plan, three times, and each time, beginning with her first amended plan, filed April 27, 2022, the Debtor clearly proposed to pay 100% of the allowed unsecured claims, plus 3.00 % interest per annum.
Docket ## 105, 111, 160.
Docket # 105.
7. There is no "cause" under Fed. R. Bankr. P. 1307(c) to convert or dismiss this case.
8. The Debtor did not file this Chapter 13 bankruptcy case for an improper purpose.
9. The Debtor did not file this Chapter 13 bankruptcy case in bad faith.
10. The Debtor's filing of this Chapter 13 bankruptcy case was not an abuse of, or an attempt to abuse, the bankruptcy system.
11. The Debtor's filing of this Chapter 13 bankruptcy case was not an attempt to collaterally attack, or otherwise impermissibly to evade or avoid, any orders of the state court in the pending Fraser receivership proceeding. Rather, it was merely a bona fide attempt to take advantage of federal bankruptcy law, and to do so in a way that could only be helpful, and perhaps very helpful, to the Debtor's creditors and to the Debtor herself.
12. There is no valid basis shown, in connection with the Motion, for this Court to sanction the Debtor or any other party in any way. None of the positions, arguments, or papers filed by any of the parties relating to this Motion were frivolous or made in bad faith or for any improper purpose.
For these reasons,
IT IS ORDERED that the Motion (Docket # 196) is denied, in its entirety.
IT IS FURTHER ORDERED that any and all requests by any party for sanctions are denied.
OPINION AND ORDER DENYING THE DEBTOR'S CONTEMPT MOTION (DOCKET # 190), AND GRANTING FURTHER STAY RELIEF
This case came before the Court for a telephonic hearing on November 10, 2022, on several motions, including the Debtor's motion entitled "Motion For A Finding Of Contempt For Violation Of The Automatic Stay, [etc.]" (Docket # 190, the "Motion"). The Findling Law Firm, PLC and David Findling jointly filed a concurrence in the Motion (Docket # 205). The Motion respondents (the "Respondents") are attorneys Jerome Frank, Tami Salzbrenner and Joseph Grekin, and their clients Howard Baum, Fraser Equities, LLC, and Madison Equities, LLC. The Respondents filed objections to the Motion (Docket ## 202, 208).
At the conclusion of the November 10, 2022 hearing, the Court took the Motion under advisement.
The Court has considered all relevant parts of the record of this bankruptcy case, all of the exhibits filed by the parties, and all of the oral and written arguments of the parties regarding the Motion. For the following reasons, the Court will deny the Motion.
2 The Court finds and concludes that none of the actions by the Respondents, alleged in the Motion to have violated the automatic stay, violated the automatic stay. More specifically, no such actions violated the automatic stay provisions of either 11 U.S.C. §§ 362(a)(1) or 362(a)(3). Respondents’ actions at issue all were done in response to, and in defense against, actions taken by the Debtor in the pending state court litigation. As such, the Respondents’ actions were not violations of the automatic stay. See Madison Capital Co. v. Smith, No. 07-27-ART, 2009 WL 1119411, at * 1-2 (E.D. Ky., April 27, 2009) (and cases cited therein); Hayes v. Liberty Mutual Grp. Inc., No. 11-15520, 2012 WL 1564697, at * 4 (E.D. Mich., May 2, 2012) (and cases cited therein); Jandous Electric Constr. Corp. v. City of New York (In re Jandous Electric Constr. Corp.), 106 B.R. 48, 50 (Bankr. S.D.N.Y. 1989) (and cases cited therein). And this is so regardless of whether any given Respondent had standing to take the action(s) or assert the position(s) that they did in the state court.
In addition, in an Order filed on July 14, 2022 (the "July 14 Order"), before the Respondents took any of the actions complained of, this Court granted relief from stay (to the extent the stay even applied), in favor of the following parties (defined in the Order as the "Movants"): Alliance Equities, LLC; Howard Baum; Law Office of Jerome D. Frank, P.C.; and Jerome D. Frank. The July 14 Order provided, in relevant part:
Order Granting, in Part, Motion Regarding the Automatic Stay Applicable to Removed Claims (Docket # 152).
Order Granting, in Part, Motion Regarding the Automatic Stay Applicable to Removed Claims (Docket # 152).
At the November 10, 2022 hearing, this Court was informed that the most recent state court order regarding John Polderman's request for approval of fees and costs is the order dated October 22, 2021, entitled "Order Regarding Receiver's Fees and Costs." A copy of that order appears in the record of this bankruptcy case at Docket # 168, Ex. D.
IT IS FURTHER ORDERED that to the extent the automatic stay under 11 U.S.C. § 362(a) applies, that automatic stay is modified to permit each of the Movants to defend against those claims pending in the state court action entitled Lynn Beth Baum v. David Baum, et al., Oakland County Circuit Court Case No. 2015-149725-CZ.
IT IS FURTHER ORDERED that to the extent the automatic stay under 11 U.S.C. § 362(a) applies, that automatic stay is modified ... to permit each of the Movants to defend against those claims pending in the state court action entitled Lynn Beth Baum v. Law Office of Jerome D. Frank, et al., Oakland County Circuit Court Case No. 2021-188235-CZ.
Id.
Id.
During a hearing held in this case on July 14, 2022, this Court explained its view of these two cases and how they may impact this case. A transcript of that hearing was filed in this case on September 27, 2022, at Docket # 215. The Court incorporates its statements about this subject by reference, and reiterates them now. See Tr. of July 14, 2022 Hr'g. (Docket # 215) at 42-43, 53-54.
This July 14 Order permitted the actions complained of that were taken by the Respondents who were among the "Movants" as defined by the Order — i.e., Howard Baum and Jerome D. Frank. All those actions were actions "to defend against" claims pending in the referenced state court actions.
Furthermore, the Court finds cause, under 11 U.S.C. § 362(d)(1), to extend the stay relief that was provided by the July 14 Order to all of the Respondents, and to all other persons or entities other than the state court receiver, and to do so retroactively by annulling the automatic stay to that extent. Under 11 U.S.C. §§ 105(a) and 362(d)(1), the Court will order that relief now, sua sponte, in the Order below.
The Debtor's Motion alleges, among other things, that one or more of the Respondents made certain false oral and/or written statements to the state court, including false statements about what this Court had stated and/or ruled during and after the July 14, 2022 hearing in this Court. But even if any of the Respondents made any false statements to the state court, that would not in and of itself constitute a violation of the automatic stay. Rather, making any false statements to the state court would be a matter for the state court to address, if and as that court sees fit.
For all of these reasons, the Debtor's Motion must be denied in its entirety.
The Respondents request that the Court sanction the Debtor and award them fees and expenses. The Court will deny that relief, because there is no valid basis for such relief. The Motion was not frivolous and was not filed in bad faith.
Accordingly,
IT IS ORDERED that the Motion (Docket # 190) is denied.
IT IS FURTHER ORDERED that the Respondents’ request for sanctions, including an award of attorney fees and expenses, is denied.
IT IS FURTHER ORDERED that to the extent the automatic stay under 11 U.S.C. § 362(a) applies, that automatic stay is modified to permit each and every person and entity, other than any state court receiver, to defend against any claims brought by the Debtor, Lynn Beth Baum, in any action in state court, including in the state court actions entitled Lynn Beth Baum v. David Baum, et al., Oakland County Circuit Court Case No. 2015-149725-CZ and entitled Lynn Beth Baum v. Law Office of Jerome D. Frank, et al., Oakland County Circuit Court Case No. 2021-188235-CZ.
IT IS FURTHER ORDERED that under 11 U.S.C. § 105(a), and for cause under 11 U.S.C. § 362(d)(1), the automatic stay is annulled, to the extent of granting the stay relief provided by the preceding paragraph of this Order, retroactive to the date of the bankruptcy petition in this case (February 2, 2022).
IT IS FURTHER ORDERED that the entirety of this Order is effective immediately upon entry of this Order, and the 14-day stay under Fed. R. Bankr. P. 4001(a)(3) does not apply to this Order.
OPINION AND ORDER DENYING CREDITOR THE FINDLING LAW FIRM, PLC'S CONTEMPT MOTION (DOCKET # 183)
This case came before the Court for a telephonic hearing on November 10, 2022, on several motions, including the motion filed by the creditor The Findling Law Firm, PLC ("Findling"), entitled "Motion By Creditor, The Findling Law Firm, PLC For A Finding Of Contempt For Willful Violation Of The Automatic Stay, [etc.]" (Docket # 183, the "Motion"). The Motion respondents (the "Respondents") are attorneys Jerome Frank, Tami Salzbrenner and Joseph Grekin, and their clients Howard Baum, Fraser Equities, LLC, Madison Equities, LLC, and Alliance Equities, LLC. The Respondents filed objections to the Motion (Docket ## 193, 195).
At the conclusion of the November 10, 2022 hearing, the Court took the Motion under advisement.
The Court has considered all relevant parts of the record of this bankruptcy case, all of the exhibits filed by the parties, and all of the oral and written arguments of the parties regarding the Motion. For the following reasons, the Court will deny the Motion.
The Court finds and concludes that none of the actions by the Respondents, alleged in the Motion to have violated the automatic stay, violated the automatic stay. More specifically, no such actions violated the automatic stay provisions of either 11 U.S.C. §§ 362(a)(1) or 362(a)(3). Respondents’ actions at issue all were done in response to, and in defense against, actions taken by the Debtor in the pending state court litigation. As such, the Respondents’ actions were not violations of the automatic stay. See Madison Capital Co. v. Smith, No. 07-27-ART, 2009 WL 1119411, at * 1-2 (E.D. Ky., April 27, 2009) (and cases cited therein); Hayes v. Liberty Mutual Grp. Inc., No. 11-15520, 2012 WL 1564697, at * 4 (E.D. Mich., May 2, 2012) (and cases cited therein); Jandous Electric Constr. Corp. v. City of New York (In re Jandous Electric Constr. Corp.), 106 B.R. 48, 50 (Bankr. S.D.N.Y. 1989) (and cases cited therein). And this is so regardless of whether any given Respondent had standing to take the action(s) or assert the position(s) that they did in the state court.
In addition, in an Order filed on July 14, 2022 (the "July 14 Order"),1 before the Respondents took any of the actions complained of, this Court granted relief from stay (to the extent the stay even applied), in favor of the following parties (defined in the Order as the "Movants"): Alliance Equities, LLC; Howard Baum; Law Office of Jerome D. Frank, P.C.; and Jerome D. Frank. The July 14 Order provided, in relevant part:
IT IS FURTHER ORDERED that to the extent the automatic stay under 11 U.S.C. § 362(a) applies, that automatic stay is modified to permit each of the Movants to defend against those claims pending in the state court action entitled Lynn Beth Baum v David Baum, et al., Oakland County Circuit Court Case No. 2015-149725-CZ.
IT IS FURTHER ORDERED that to the extent the automatic stay under 11 U.S.C. § 362(a) applies, that automatic stay is modified ... to permit each of the Movants to defend against those claims pending in the state court action entitled Lynn Beth Baum v Law Office of Jerome D. Frank, et al., Oakland County Circuit Court Case No. 2021-188235-CZ.2
This July 14 Order permitted the actions complained of that were taken by the Respondents who were among the "Movants" as defined by the Order — i.e., Alliance Equities, LLC, Howard Baum, and Jerome D. Frank. All those actions were actions "to defend against" claims pending in the referenced state court actions.
Furthermore, the Court finds cause, under 11 U.S.C. § 362(d)(1), to extend the stay relief that was provided by the July 14 Order to all of the Respondents, and to all other persons or entities other than the state court receiver, and to do so retroactively by annulling the automatic stay to that extent. Under 11 U.S.C. §§ 105(a) and 362(d)(1), the Court today is ordering that relief, sua sponte, in a separate Order concerning the Debtor's contempt motion (Docket # 190).
The Debtor's Motion alleges, among other things, that one or more of the Respondents made certain false oral and/or written statements to the state court, including false statements about what this Court had stated and/or ruled during and after the July 14, 2022 hearing in this Court. But even if any of the Respondents made any false statements to the state court, that would not in and of itself constitute a violation of the automatic stay. Rather, making any false statements to the state court would be a matter for the state court to address, if and as that court sees fit.
For these reasons, the Motion must be denied in its entirety.
The Respondents request that the Court sanction Findling and award them fees and expenses. The Court will deny that relief, because there is no valid basis for such relief. The Motion was not frivolous and was not filed in bad faith.
Accordingly,
IT IS ORDERED that the Motion (Docket # 183) is denied in its entirety.
IT IS FURTHER ORDERED that the Respondents’ request for sanctions, including an award of attorney fees and expenses, is denied.
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART JOHN POLDERMAN'S MOTION FOR RELIEF FROM THE AUTOMATIC STAY (DOCKET # 168)
This case came before the Court for a telephonic hearing on November 10, 2022, on several motions, including the former state court appointed receiver John Polderman's motion, entitled "Motion of State Court Appointed Receiver John Polderman, For Relief From The Automatic Stay To Proceed With State Court Proceedings" (Docket # 168, the "Motion"). The Debtor filed an objection to the Motion (Docket # 177). Howard Baum and Fraser Equities, LLC jointly filed what they called a "limited concurrence" in the Motion (Docket # 182).
At the conclusion of the November 10, 2022 hearing, the Court took the Motion under advisement. The Court has considered all relevant parts of the record of this bankruptcy case, all of the exhibits filed by the parties, and all of the oral and written arguments of the parties regarding the Motion. For the following reasons, the Court will grant the Motion in part and deny it in part.
The Court finds and concludes as follows.
1. First, the Motion in part is now moot. It is moot to the extent the Motion sought relief from stay with respect to a hearing that was held in the state court on August 3, 2022.
2. Second, the Motion otherwise is not moot.
3. Third, the Court finds cause, under 11 U.S.C. § 362(d)(1), to grant limited stay relief, in the form of the relief ordered below.
4. On the one hand, it is appropriate, and there is cause, to modify the automatic stay to permit all of the following: (a) for John Polderman to continue to seek approval by the state court of attorney fees and costs, and for the Debtor and any other person or entity to respond to such efforts by John Polderman; (b) for the state court to decide the amount of fees and costs to be approved, if any; and (c) for the state court to decide what the source of John Polderman's approved fees and costs would be under applicable state law, but for the filing and pendency of this Chapter 13 bankruptcy case.1 The state court, and not this Court, should determine those issues, and stay relief will be granted to permit this.
5. On the other hand, it is appropriate for this Court, rather than the state court, to decide whether, how, and to what extent the filing and pendency of this Chapter 13 bankruptcy case affect what source(s) of payment are still permissible, if any, for the payment of any of John Polderman's fees and costs that are approved by the state court. This question may arise in this bankruptcy case, depending on what the state court rules about the issues described in paragraph 4 above, in light of such cases as Honigman v. Comerica Bank (In re Van Dresser Corp. ), 128 F.3d 945, 947-48 (6th Cir. 1997) ; and In re Spiech Farms , LLC , 603 B.R. 395, 407-08 (Bankr. W.D. Mich. 2019).2 So to the extent the automatic stay applies, it will not be modified at this time to permit the state court to actually order the payment of any fees and costs to John Polderman from any particular source.
For the foregoing reasons,
IT IS ORDERED that:
A. The Motion is granted to the extent of the relief provided by this Order, and otherwise is denied.
B. To the extent the automatic stay applies, it is modified to permit all of the following: (a) for John Polderman to continue to seek approval by the state court of attorney fees and costs, and for the Debtor and any other person or entity to respond to such efforts by John
Polderman; (b) for the state court to decide the amount of fees and costs to be approved for John Polderman, if any; and (c) for the state court to decide what the source(s) of John Polderman's approved fees and costs would be under applicable state law, but for the filing and pendency of this Chapter 13 bankruptcy case.
C. To the extent the automatic stay applies, it will not be modified at this time to permit the state court to actually order the payment of any fees and costs to John Polderman from any particular source.
D. If and after the state court rules on the issues described in paragraph B of this Order, above, John Polderman may file a new motion in this Court, seeking further relief from the automatic stay, including stay relief that would permit the state court to actually order the payment of any fees and costs to John Polderman from a particular source.
E. This Order is effective immediately upon the entry of this Order, and the 14-day stay under Fed. R. Bankr. P. 4001(a)(3) does not apply to this Order.