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CONTRACTS 10: The bankruptcy court order did not require the trial court to do anything.

The parties entered into a contract for plaintiff to repair fire and water damage to defendant’s home. Defendant was dissatisfied with plaintiff’s work and terminated the contract. Plaintiff filed a breach of contract action to recover $13,580.08 that it believed it was owed. Four months later, defendant filed for bankruptcy and this action was stayed.

Plaintiff initiated an adversary proceeding in the bankruptcy court, and the bankruptcy court subsequently entered an order (the bankruptcy court order) against Defendant and in favor of Plaintiff.

The bankruptcy court order reflected that it was entered “upon stipulation of the parties” and provided in relevant part that judgment shall enter against Defendant in the amount of $29,000 if the Oakland County Circuit Court case settles; or $35,000 if the case has to go to trial.

The bankruptcy court also lifted the stay in this case to allow Plaintiff to proceed with prosecution of its claim.

This case then was reopened, and plaintiff filed a Motion for Entry of Judgment. The motion represented that the bankruptcy court had signed an order that settled the case and entered a judgement against Defendant in favor of Plaintiff. It further represented that defendant had signed a stipulation to the order and judgement.  And on that basis plaintiff requested that the trial court enter the $29,000 judgement against Defendant and close circuit court case. Plaintiff attached the bankruptcy court order as the sole exhibit in support of its motion.

Defendant argued in part that the bankruptcy court order was not for defendant to pay a judgment in the trial court, but merely ordered that the case pending in the trial court should proceed, and provided for a judgment to be entered in the bankruptcy court’s adversary proceeding, contingent upon the outcome of proceedings in the trial court.

The bankruptcy court is a division of the federal district court. Although state courts are bound by the decisions of the United States Supreme Court construing federal law, there is no similar obligation with respect to decisions of the lower federal courts.

The trial court therefore was not bound by the bankruptcy court order. Moreover, the bankruptcy court order did not require the trial court to do anything; it merely provided for a future judgment in the bankruptcy court as informed by later results in the trial court proceeding.

The language of the order explicitly lifted the stay in the trial court so that plaintiff could proceed with the prosecution of its claim against defendant. Read as a whole, it is clear that the parties did not agree to the entry of a judgment in the trial court, but instead agreed to the entry of a judgment in the bankruptcy court, with the amount contingent on the outcome of future proceedings in this case in the trial court.

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FAMILY LAW 83: A trial court can terminate a parent’s rights and permit a stepparent to adopt a child.

A trial court has discretion to terminate a parent’s rights and permit a stepparent to adopt a child when the conditions of MCL 710.51(6) are met. MCL 710.51(6)(b) requires the petitioner to establish that the other parent had the ability to visit, contact, or communicate with the children, and substantially failed or neglected to do so for a period of two years.

PROBATE 53: The trust agreement included an Incontestability Provision.

A settlor’s intent is to be carried out as nearly as possible. Generally, in terrorem clauses are valid and enforceable. However, a provision in a trust that purports to penalize an interested person for contesting the trust or instituting another proceeding relating to the trust shall not be given effect if probable cause exists for instituting a proceeding contesting the trust or another proceeding relating to the trust.

FAMILY LAW 82: Court stated it would terminate the personal protection order (PPO) after the parties present documentation of the initiation of the divorce proceedings.

However, the trial court concluded that these matters should, in fact, be in the province and the jurisdiction of the Family Division and in that respect, having issued a personal protection order, the Court stated it would terminate the personal protection order after the parties present documentation of the initiation of the divorce proceedings.

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FAMILY LAW 77: Court awarded plaintiff sole legal custody; defendant was unwilling to work with plaintiff.

For joint custody to work, parents must be able to agree with each other on basic issues in child rearing including health care, religion, education, day to day decision making and discipline and they must be willing to cooperate with each other in joint decision making. If two equally capable parents are unable to cooperate and to agree generally concerning important decisions affecting the welfare of their children, the court has no alternative but to determine which parent shall have sole custody of the children.

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