Whether a party committed “fraud on the court”; Buell v Anderson; Direct & vicarious liability for fraud on the court; Damages/award of only partial attorney fees; Whether post-petition transfers were avoidable under 11 USC § 549(a); Claims for conversion of bankruptcy estate assets

[This appeal was from the ED-MI.] The court affirmed the district court decision that affirmed the bankruptcy court’s grant of summary judgment to appellees, concluding that appellee-creditor (Comerica) could not be held directly liable for fraud on the court where it was not an “officer of the court” and that it was also not vicariously liable. The court further held that (1) the bankruptcy court did not abuse its discretion by awarding appellant-trustee (Vining) only partial attorney’s fees for fraud on the court committed by two other appellees, and (2) the bankruptcy court properly rejected his avoidance and conversion claims. Vining is the current trustee of the Chapter 7 debtor, MTG, Inc. He challenged some of the actions taken during the prior disqualified trustee’s (appellee-Taunt) tenure, but the bankruptcy court largely granted appellees summary judgment. On appeal, the court first rejected Vining’s argument that the bankruptcy court erred by ruling that Comerica was not liable for fraud on the court based on Taunt’s nondisclosure of a conflict of interest involving Comerica. As to direct liability, “only an ‘officer of the court’ can commit fraud on the court and” Comerica was not itself an officer of the court in this proceeding. It also could not be held vicariously liable because under Michigan law, “the bankruptcy court did not clearly err in concluding that Comerica did not have the ‘right to control’ Taunt under the Comerica Fee Agreement,” and thus, they did not have an agency relationship. Further, even if “Comerica could be liable for fraud on the court based on its attorney’s actions here, Vining” failed to show “the bankruptcy court abused its discretion in denying relief.” The court also upheld the award of only partial attorney’s fees to Vining for two appellees’ fraud on the court, where Vining’s pursuit of this litigation resulted in “only a ‘small financial benefit’ to the estate.” As to his avoidance claims, the post-petition transfers at issue “were authorized when made” and remained “authorized to this day.” Finally, it rejected Vining’s claim for “conversion of estate assets” where it was foreclosed by the fact that “Taunt, as trustee, was entitled to control the property at issue.”