In the matter of: JOSEPH EDWARD KLOIAN, Chapter 7, Debtor.
Case No. 99-51514-WS.United States Bankruptcy Court, E.D. Michigan, Southern Division.
November 14, 2007
SCHEDULING ORDER IN CONNECTION WITH THE TRUSTEE’S MOTION FOR AN ORDER SETTING ASIDE A LAND CONTRACT TO THE DAY LIVING TRUST COVERING, 228 PACKARD, ANN ARBOR, MICHIGAN (“MOTION”), INCIDENT TO THE TRUSTEE’S AND GUARDIAN AD LITEM’S MOTION TO SETTLE CONTROVERSY WHICH IN PART RELATES TO SAID PROPERTY (“SETTLEMENT MOTION”)
WALTER SHAPERO, Bankruptcy Judge
The Court having heard both the Motion and the Settlement Motion; the said Settlement contemplating the transfer of the title to said 228 Packard, free and clear of liens and interests; one of those potential interests being a Land Contract to the Day Living Trust covering the 228 Packard property (the “Land Contract Problem”); a provision of the proposed order approving the Settlement Motion being that the Trustee be authorized to execute and deliver a Quit Claim Deed on behalf of Financial Associates of America, Ltd. (“FAA”) (the Land Contract Vendor), to Peter J. Kelley and Catherine Kelley, his wife; the ability of the Trustee to do that being largely dependent upon the success of the Trustee in the Motion; the Court having concluded the Settlement Motion as being in the best interest of the Debtor, creditors and other parties in interest, subject to the resolution of the Land Contract Problem; the Court having also concluded that an appropriate hearing is required to properly dispose of the Motion; and, having solicited the views of the parties as to the contents of this Order; It is hereby ordered as follows:
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1. Upon disposition of the Land Contract Problem, in a manner that permits effectuation of the
Settlement Motion, the Court will enter a comprehensive order approving the Settlement
Motion;
2. The evidentiary hearing (the “Hearing”) on the Land Contract Problem will be commencing
on January 30, 2008, at 9:30 a.m.;
3. The parties entitled to participate in that Hearing are the Trustee, the Debtor through his
Guardian Ad Litem, Peter J. Kelley and Catherine Kelley, the Day Living Trust, and, any
shareholders of FAA other than Debtor given the Trustee’s interests in the shares of FAA and
the permitted participation of any shareholders of FAA other than Debtor, and, the largely
identical and otherwise represented interests of the Day Living Trust (whose Trustee is
allegedly a shareholder of FAA), the Court having concluded that the interests of FAA, as a
separate entity to the extent it is required to be represented, are sufficiently represented
thereby; Hugh M. Davis, an attorney who filed a response to the Motion on behalf of Debtor
and FAA and appeared at the initial hearing on behalf of FAA, is not entitled to appear on
behalf of that entity as such (or the Debtor), at the evidentiary hearing; however, he or any
other attorney will be entitled to appear on behalf of any shareholders of FAA other than
Debtor who can verify the nature and extent of their interest(s) as such in FAA and files and
serves an appropriate responsive pleading to the Motion within 10 days of the date hereof
including therein, the indicated verification and documentation of his clients interest in FAA.
The foregoing is not intended to limit or preclude the participation of anyone as a witness or
from being the subject of discovery in this proceeding;
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4. Discovery will be permitted between the date hereof and January 14, 2008, in the form of
depositions only. Any discovery other than any such depositions or that required by
Paragraphs (5) and (6) of this Order shall be only pursuant to an order of the Court.
Corporate and entity or individual records and filings which are either public or available to
the filer or filer’s designee, and which are filed with the State of Michigan or the Internal
Revenue Service or other such state, county, local, and federal agencies or offices, shall be
considered for purposes of this Order as being under the care, custody, and control of those
persons set forth in Exhibit A required to produce same;
5. On or before December 17, 2007, documents and records as enumerated in Exhibit A
attached hereto, shall be produced by the persons indicated and be delivered by said persons
to the Chapter 7 Trustee or his attorney, who shall give (a) detailed receipt therefore; and (b)
prompt written notice of receipt of same and the details of what was received to the other
parties. All other parties shall be given timely and full access thereto and rights to copy same
by the Trustee and his attorney;
6. On or before December 17, 2007, additional documents and records as enumerated in Exhibit
B attached hereto, shall be produced by the persons indicated, and be delivered by said
persons to the attorney for the Day Living Trust who shall give (a) a detailed receipt therefor,
and (b) prompt written notice of receipt of same and the details of what was received to the
other parties. All other parties shall be given timely and full access and rights to copy same
by the attorney for the Day Living Trust;
7. A hearing (and the only hearing), with respect to any discovery issues will be held on
December 20, 2007, at 9:30 a.m. The only matters which will be considered thereat will be
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those set forth in a pleading directed thereto, and, filed and served no later than December
18, 2007;
8. On January 23, 2008, at 2:00 p.m., a final pre-evidentiary hearing status conference, will be
held, at which time, the Trustee, the Debtor through his Guardian Ad Litem, the Day Living
Trust and appearing shareholders, shall prepare, sign, present, and submit for entry by the
Court (with the Trustee being considered for such purposes as Plaintiff), a Joint Final Pretrial
Order complying with the content requirements of LBR 7016-1, (a) and (b)(1) through (4),
and (7), (8) and (9); and, complying as well with LBR 7016-1(d). It is the Court’s
expectation that such Order will, among other things, contain extensive stipulations of fact
resulting from joint efforts to produce same — the nature and extent of such efforts to be set
forth in detail in the Order submitted.
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EXHIBIT A (Pertaining to the November 14, 2007, Scheduling Order in Connection With the Trustee’s Motion for an Order Setting Aside A Land Contract to the Day Living Trust Covering, 228 Packard, Ann Arbor, Michigan (“Motion”), Incident to the Trustee’s and Guardian Ad Litem’s Motion to Settle Controversy Which in Part Relates to Said Property (“Settlement Motion”)
To the extent any of the following documents, books, and records are within the possession, care, custody, and/or control of any of J. Edward Kloian, Financial Associates of America, LTD, the Day Living Trust and/or the latter’s trustee and beneficiary, and, any appearing shareholder of Financial Associates of America, LTD (“FAA”), or counsel therefor, such shall be produced at the time and place set forth in Paragraph 5 of the Order to which this Exhibit is attached:
I. Documents, books, and records of, or relating to FAA
1. Stock (or membership or partner) ownership, issuance and stock or interest transfer records
detailing dates and times of transfers; and, copies of issued and outstanding stock certificates
or evidences of ownership, (a) held currently, and (b) held as of July 20, 1999;
2. Articles of Incorporation, as amended to date; and by laws including such as existed as of July
20, 1999, and any amendments thereto post filing to date; copies of all filed corporate (or
similar for entities) annual reports and corporate or entity federal and state income tax returns
commencing with the calendar year 1998, and to date;
3. Minute book and copies of any consent or other resolutions of the directors or managers;
commencing with calendar year 1998, and to date;
4. Documents evidencing election or appointment of corporate directors and officers or
managers commencing with calendar year 1998, and to date;
5. Documents relating to the initial acquisition by FAA of the property that is covered by the
Land Contract to the Day Living Trust, including any deeds or instruments of conveyance,
financing, closing documents, title insurance, and evidence of payment of consideration;
6. Documents relating to the execution of the Land Contract in favor of the Day Living Trust,
including the Land Contract, any title insurance commitment or policy, closing, and other
written documents incident thereto as well as (a) a full, complete and unredacted copy of the
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Day Living Trust and any amendments thereto, and (b) any written communications between
FAA and the Day Living Trust relating to the Land Contract and the property covered
thereby;
7. Any and all documents reflecting the sale, assignment, transfer (whether for security or
otherwise), or lease by the Day Living Trust of its Land Contract interest, and/or property
covered by the Land Contract;
8. Records; including bank statements, deposit slips, or similar, of receipt by FAA, and payments
made by the Day Living Trust, of any payments of principal and interest made by or on behalf
of the Day Living Trust under the Land Contract, and, payments or evidence of payments of
taxes, insurance or repairs, on the property, by either the Day Living Trust, its beneficiary,
or FAA; and, the manner in which any principal and interest payments were applied to the
balance due under the Land Contract and any calculations of any remaining balance due
thereunder; and, records of the dates and amounts of any rentals received from any occupants
of the property from July 20, 1999, to date;
9. Ledgers, journals, and checkbooks evidencing corporate or similar entity transactions
commencing with calendar year 1998, and to date.
II. Documents, Books and Records of, or Relating to the DayLiving Trust
1. The same as is set forth in Paragraphs I (Subparagraphs 6, 7, 8, and 9 above).
2. Ledgers, journals, checkbooks and bank statements or other records evidencing the financial
activities of the Day Living Trust as relates to the Land Contract and the property covered
thereby, from its inception to date.
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EXHIBIT B (Pertaining to the November 14, 2007, Scheduling Order in Connection With the Trustee’s Motion for an Order Setting Aside A Land Contract to the Day Living Trust Covering, 228 Packard, Ann Arbor, Michigan (“Motion”), Incident to the Trustee’s and Guardian Ad Litem’s Motion to Settle Controversy Which in Part Relates to Said Property (“Settlement Motion”)
To the extent that any of the following documents, books, and records are within the possession, care, custody and/or control of any of the Trustee and his attorney, and the Guardian Ad Litem and his attorney, and Peter J. Kelly and Catherine Kelley, such shall be produced at the time and place set forth in Paragraph 6 of the Order to which this Exhibit is attached.
1. Records and communications, including bank statements, checks, etc., relating to the dates
and amounts and nature of all funds received by the Trustee from, and which were paid by,
or on behalf of, Peter J. Kelley;
2. Documents and communications written to, and received from, FAA, commencing with July
20, 1999, and to date;
3. Documents reflecting direct written communications to and from the Day Living Trust
commencing July 20, 1999, and to date;
4. Documents reflecting written, communications to any of said persons and from persons or
entities other than FAA, relating to (a) exercise of control over FAA by the Trustee; (b)
payments to the Trustee of any amounts related to the property pursuant to the Land
Contract, whether Land Contract payments or otherwise; and (c) matters relating to the
transaction with, and execution of the Land Contract, to the Day Living Trust and the
property covered thereby;
5. Any of the documents and records set forth in Exhibit A, Paragraphs 1 through 9, which are
actually and presently in their physical possession;
6. Documents relating to Michael Hollis.
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