A federal bankruptcy judge on Wednesday raised serious concerns about whether displaced tenants of Detroit’s historic Leland House were ever given proper notice or a meaningful opportunity to participate in court proceedings that affect what happens to their homes and their belongings.
U.S. Bankruptcy Judge Maria Oxholm adjourned a hearing on residents’ request to reconsider a court order allowing only moving contractors, rather than the tenants, to enter the 22-story building at 400 Bagley St. to remove personal property. The court set the matter for further proceedings on Feb. 24, with Oxholm saying she was not prepared to rule and noting concerns that tenants have not been included in the case.
Patrick Foley, an attorney representing residents through the Leland House Tenants Union, argued on behalf of tenants, saying there was fundamental notice and due process failures. He told the court that an earlier December order authorized bankruptcy funds for repairs and utility stabilization, but that a Jan. 13 order, which was entered without notice to tenants, redirected those funds toward removing residents’ belongings instead.
Foley argued that the shift was a major change in the direction of the case and occurred without tenants being served or given an opportunity to be heard.
“Yesterday’s ruling is a major victory for the Leland House residents,” Donovan McCarty, director of the Housing Justice Clinic at Michigan State University’s College of Law, which is helping represent tenants, said in a statement to Metro Times. “Judge Oxholm affirmed what they’ve been saying all along: they deserve a seat at the table in these bankruptcy proceedings. The residents are deeply disappointed by the City of Detroit. From the very beginning, they asked the City to intervene on their behalf. Instead, the City has not only refused to help, but has actively obstructed their efforts, going so far as to characterize their motion as frivolous. Thankfully, the court did not see it that way.”
When counsel for the building’s owner defended the notice process, the judge asked whether tenants had been included at all. Under questioning, the owner’s lawyer conceded on the record that tenants had not been listed, scheduled, or served in the bankruptcy proceedings. The attorney then suggested that some residents had consented to having their belongings removed through informal agreements, a claim Foley disputed later in the hearing, saying tenants’ attorneys are not aware of any such pacts and that none has been presented to them.
The city of Detroit opposed the tenants’ motion and took a hard line during the hearing, characterizing the request as frivolous and arguing that residents cannot be allowed back into the historic building.
The city’s position has not changed since Mayor Mary Sheffield became mayor on Jan. 1. Previously, then-Mayor Mike Duggan, who has received tens of thousands of dollars in political donations from DTE Energy, declined to support the tenants’ rights.
City attorneys also told the court that some residents had to be carried out during the December evacuation, a claim that Foley emphatically denied, telling the court that no one was carried out.
DTE Energy, which remains involved in the case because of ongoing utility and repair issues, told the court that partial power could be restored for roughly $70,000. The disclosure came as tenants’ attorneys argued that limited, supervised access for residents is being blocked.
The U.S. Trustee, a federal watchdog in bankruptcy cases, also addressed the court and said it has serious concerns about the lack of financial transparency in the case and how debtor-in-possession funds have been handled and redirected.
On rebuttal, Foley told the court that there is no coherent distinction between barring tenants from entering the building while allowing moving crews inside under temporary lighting and insurance coverage. He argued that safety and insurance concerns are being used to block residents from entering the building, even though temporary lighting and limited, supervised access could be arranged at minimal cost.
Foley also argued that no private agreement or informal workaround can make up for the fact that tenants were never notified before key decisions were made.
At the close of the hearing, Oxholm declined to rule against the tenants and formally recognized their role going forward. She directed Foley to meet with the owner, the city, DTE, and other parties to attempt to reach a resolution before the case returns to court on Feb. 24. She also expressed concern about the lack of notice to tenants and their exclusion from the proceedings.
The hearing came days after Oxholm halted a proposed fast-track auction of the Leland House and an adjacent parking lot, rejecting the owner’s attempt to quickly sell the property while multiple disputes over tenant rights remain unresolved.
Residents were forced out of the building in December after an electrical equipment failure knocked out power, heat and elevators. Tenants said they were told at the time that the displacement would be temporary and that they would be able to access their apartments to retrieve their belongings. Instead, they have remained locked out as the bankruptcy case moves forward.
Leland House filed for Chapter 11 bankruptcy on Nov. 3, more than two years after the death of the building’s longtime owner, Michael Higgins, in 2023.
After Wednesday’s hearing, Luis Ramirez, a representative for the building’s ownership, issued a statement on the case.
“We understand how important residents’ personal belongings are,” he said. “We are working closely with the City of Detroit, the Detroit Fire Department, the court and residents to establish a safe process that will allow them to retrieve their belongings, and we hope that process is finalized soon.”