Appeal puts Schwartz back in dispute with neighboring land owner over claimed trespassing
By Jameson Cook Macomb Daily Staff Writer
PUBLISHED: Tuesday, September 2, 2008
A former Macomb County judge was reinstated as a defendant in a lawsuit accusing him and his company of trespassing onto a neighboring commercial property in Clinton Township, in a state Court of Appeals ruling announced last week.
Appellate judges reversed a Macomb County circuit judge's removal of former circuit judge Michael D. Schwartz from a civil case in which he, his son Grant, and a company he owned, Five Star Land Co., were sued for trespassing.
Venice Square Inc. owners Alphonso "Enzo" and Anna Lieghio accused Schwartz of using the Venice Square shopping plaza on Garfield Road as a "staging area" for construction of two adjacent office buildings in fall 2003.
"(Alphonso) Lieghio testified that Five Star dumped concrete on Venice Square's parking lot, had an office trailer, construction equipment and construction materials on Venice Square property for a month and a half, and that Five Star accessed its property by crossing over Venice Square property," the appeals panel says in the ruling.
Schwartz argued that even though he was the owner, president and financial backer of Five Star, he was "rarely on the site" and "played no active role" in the project. He contended that Grant Schwartz "was the only employee/agent of Five Star who was responsible for general supervising the site."
But his testimony was countered by testimony by Gerald Martin, a Five Star contractor, who said, "Schwartz was on the project site to check progress every couple of days," according to the appeals ruling. Also, Lieghio said Schwartz told him Five Star was properly using a public easement, and if Lieghio disagreed he should "notify him of that by certified letter."
Macomb Circuit Judge John Foster in August 2006 granted Schwartz summary disposition. Foster later that year approved the plaintiffs filing for a reconsideration on the issue of whether Schwartz was using Venice Square for parking. A trial date was set, but Judge Mark Switalski - who took over Foster's docket in January 2007 when the two switched positions to the civil/criminal division and the family division - in February 2007 dismissed the case and ordered the two parties to "arbitrate certain claims."
An appeals panel of Kurtis T. Wilder, Henry W. Saad and Michael R. Smolenski overturned the circuit court resolution.
"There was a genuine issue of material fact regarding whether Schwartz participated in committing the alleged trespass,"the panel says, due to conflicting testimony and Schwartz's alleged comments to Lieghio.
The case should be returned to circuit court, the appeals court ruled.
Michael Schwartz served as a circuit judge in Macomb from 1986 to 2000. Since retiring, he has served as a visiting judge for several years. His last known case in Macomb circuit was in August 2007.
Grant Schwartz, 35, was removed from the case after he filed for bankruptcy, according to court records.
Grant Schwartz in the mid-2000s was charged with several crimes, including possession of less than 25 grams of cocaine. In 2005, he was accused spray painting anti-Semitic graffiti on the the facade of the Five Star office building and blaming it on Lieghio. For that incident, he pleaded no contest to false report of a felony and in September 2005 was placed on three years probation by Judge Peter J. Maceroni.
Re: MI COA restores Ex-Judge Schwartz to lawsuit after Judges Foster and Mark Switalski granted Summary D
guest wrote:
It is all a game, the lawyers are the players and to hell with the public.
A game or greed? Each person gain considerable amount of wealth because they had access to something the general public would not have access to.
They used their elected position for personal reasons.
What is happening in Macomb County appears very wrong.
A reasonable person would believe it is criminal conduct - a felony.
Based on the information that persons elected to office used their position for personal gain - they should immediately be removed from office.
A combination of poorly timed investments and the collapse of the real estate market put former circuit court judge Michael Schwartz in such a financial bind that he filed for bankruptcy.
Schwartz, 79, who served as a Macomb County Circuit Court judge from 1986 to 2000, filed a Chapter Seven bankruptcy — liquidation — in federal Bankruptcy Court in Detroit last August and may emerge from it later this year.The case is assigned to Judge Marci B. McIvor.
Schwartz still presides over cases as a substitute, visiting judge.
Bankruptcy documents show that Schwartz appears to have lost money in investments in a local pizza chain and construction of a Clinton Township office plaza, and is “upside down” on three properties — his Clinton Township home, his son’s Macomb Township home and a vacant parcel in Macomb Township. He also appears to be paying the mortgage for an out-of-state property.
Jeffrey Randa, a longtime Macomb County bankruptcy attorney, said Schwartz appeared to continue to funnel money into Louie’s Pizzeria and Five Star Office Plaza, built in 2003 before the real estate market went bad.
“It looks like it’s a by-product of the sagging economy,” Randa said. “It looks like a real estate development and commercial enterprise went bad.”
George Dakmak, trustee for the unsecured creditors, agreed: “I know he made some bad deals along the line.”
Schwartz’s bankruptcy does not affect his status to serve as a visiting judge, in which he earns $390 per day, according to Marcia McBrien, spokeswoman for the State Court Administrative Office. She said records show Schwartz worked three times so far this year, one time each in January, February and March in Macomb Circuit Court. In 2007, he earned $7,000 from visiting judge assignments.
Court records show Schwartz has $885,000 in assets, all but $18,000 in real property, and slightly less than $3.5 million in liabilities divided between $1.54 million owed to secured creditors and $1.95 million owed to unsecured creditors.
His monthly net income of $8,400 — judge pension,U.S. Coast Guard pension, visiting judge wages and Social Security— is exceeded by his monthly liability of $13,300, records say.
Schwartz’s home telephone number was disconnected. His attorney, Charles Lane, initially said he and Schwartz would not comment and did not respond to subsequent telephone calls.
Schwartz for years had a reputation as a shrewd businessman who one attorney quipped was rumored to have “owned 19 Mile Road” and was an early investor in property around the Lakeside Mall area.But there are no signs of properties in those areas in bankruptcy records.
Records show Schwartz got involved with a longtime friend — former Detroit Tigers pitcher and later convicted felon Denny McLain — with whom he owes $94,000 to Fifth Third Bank for a debt incurred by McLain and “his business entity known as Cloudvoice Telecom LLC,” records say. Cloudvoice, believed to be out of business, also owes $7,000 to Nextel.
Schwartz received a $100,000 unsecured personal loan from renowned local beer distributor Dean Pettigrew of East China Township and $5,000 from Public Works Commissioner Anthony Marrocco, who Randa noted was “smart enough or was advised” to gain a lien on Schwartz’s home, making him a secured creditor.
Schwartz used his homes as collateral for substantial loans that likely went into the office plaza and pizzerias.
Schwartz says in document in 2006 and 2007 he lost $344,000 in Five Star Land Co., which built Five Star Office Plaza.
He lost $21,000 for his involvement in American Steel LLC, a recycling facility located on Eight Mile Road in Warren. Schwartz says he was a consultant for the company for one year.
Schwartz was heavily involved in Louie’s and its owner, Louie Sardy Jr. “Obviously, Michael Schwartz and Louie Sardy were in business together with Louie’s Pizza,” said attorney James Tocco, representing Dakmak.
Schwartz says he lost $60,000 in 2007 from investment in Louie’s. Schwartz appeared to dissolve ties with Louie’s when in July 2007 he sold his “membership interest in Louie’s Pizza LLC to remaining member” for $15,000, records say. Additional credit card debt may be attributed to Louie’s, too.
Schwartz in February gained a circuit-court default judgment of $34,000 against Sardy for “numerous loans” to him from February 2004 to December 2005, Tocco said.
Sardy has failed to respond to the lawsuit, and a subpoena was sent to him last week demanding he testify about his assets. “As far as we are concerned, he is hiding out from us,” Tocco said.
Sardy could not be reached for comment Friday.
If collected, the $34,000 would go into a fund to pay off unsecured creditors, who are expected to collect only pennies on the dollar. That fund now has only $5,000 in it from a warranty for a repair on a Ford F-150 pickup truck with minimal hope for it growing much beyond the possible addition of $34,000 from Sardy, Tocco said.
Eleven unsecured creditors — eight of them financial institutions such as banks and credit card companies — so far have asked for $191,000. The claim deadline is June 30.
Schwartz’s losses in his properties is dramatic.
He owes $576,000 in a first and second mortgage on his home on Alpinia Way in Clinton Township, which is worth $429,000, bankruptcy records say. He owes $11,000 in property taxes to the township.
He jointly owns a home with his son, Grant, on Niles Way in Macomb Township in which they owe $453,000 in two mortgages, and the home has a value of $337,000, records say. The property has $1,700 in unpaid property taxes.
He owes $459,000 on a loan he obtained to buy equipment for Louie’s Pizzeria, using as collateral a vacant parcel on Romeo Plank Road in Macomb Township valued at $100,000 and the Five Star site. He owes $1,200 in property taxes on the vacant parcel.
Related to Five Star, Schwartz and the company are defendants in a lawsuit filed by the owners of the neighboring Venice Square Plaza, claiming Schwartz used Venice Square as a “staging area” to construct Five Star office plaza. The lawsuit is scheduled to go to arbitration.
Randa said he expects the secured creditors — primarily the financial institutions — likely will foreclose on all but one of the residential properties and the vacant parcel. First priority for payment will be the first mortgage holders, followed by the remaining secured creditors including the taxing units.
Schwartz will give up the Alpinia Lane home, and apparently will reside in the Niles Way home.
He proposes to keep $10,000 in a bank account, $7,000 worth of furniture and fixtures, $1,000 in clothing and a .22 caliber rifle and .38 caliber Smith & Wesson, records say. He is paying vehicle leases for a 2008 Chrysler 300, and two ’08 Dodge Rams.
Schwartz also owes $127,000 to Premier Steel LLC in Detroit because Schwartz backed an agreement between Premier and American Steel in 2007.
Randa said he feels badly for Schwartz, who was known for a direct, tough-talking style in 14 years on the bench.
“Judge Schwartz was one of the best judges I ever appeared in front of,” Randa said. “He was not afraid to say what needed to be said. It’s a shame a guy like that has to be reduced to bankruptcy. It was a case of very poor timing.”
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