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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