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Judge Jacqueline P. Cox - Opinions

Description Date Issued
In re Pasquinelli Homebuilding, LLC, et al. (11 A 14829 Jointly Administered)

Movants, Individual Insureds of a D & O Liability Insurance Policy, sought relief from the automatic stay as necessary to allow access to liability insurance policy proceeds to fund certain defense costs. The Chapter 7 Trustee and Bank of America, NA objected to the Motion on the grounds that allowing the Individual Insureds to draw on the available policy limit could deplete the Estate’s property by diminishing the limits of the policy proceeds that might otherwise have been available to satisfy judgments rendered against the Estate or obtained against the Individual Insureds. The Court granted the Motion and noted that there was no risk of prejudice to the Estate as no claims have been filed against the Estate by third party creditors and the Trustee has not initiated any litigation against the Individual Insureds. Further, there was no showing that the $10,000,000 Limit of Liability was near depletion. The Court also expressed its reluctance prohibit Illinois National from exercising its contractual rights to pay defense costs given the circumstances present herein.

01/17/2012
In re Republic Windows & Doors, LLC. (08 B 34113); D. Levey, as duly appointed Chapter 7 Trustee of the Bankruptcy Estate of Republic Windows & Doors, LLC v. Hanson’s Window & Construction, Inc...(10 A 02526)

The Defendant brought a motion to dismiss Counts I - VII of the Trustee’s First Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) arguing that the Court lacked subject matter jurisdiction due to the jurisdictional limits imposed on bankruptcy judges by Stern v. Marshall. In support of its argument, the Defendant suggested that even the submission of findings of fact and conclusions of law to the district court would be an impermissible exercise of judicial power reserved to the district court. The Court first noted that the Stern decision does not implicate matters of subject matter jurisdiction, and held that it had related-to jurisdiction over the claims pursuant to 28 U.S.C. § 157(c)(1), as each of the claims in Counts I - VII, if successful will bring money into the bankruptcy estate affecting the allocation of estate funds among creditors. Further, the Court declined to read the Stern opinion so expansively as to preclude the submission of proposed findings of fact and conclusions of law for de novo review to the district court. The Defendant also moved to dismiss Count VIII for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). The Court dismissed this count which sought disallowance of claims pursuant to sections 502(d) and 502(j), noting that the Defendant had not yet filed a proof of claim in the bankruptcy case.

12/12/2011
In re Republic Windows & Doors, LLC. (08 B 34113); Phillip D. Levey, not individually but solely in his capacity as duly appointed Chapter 7 Trustee of the Bankruptcy Estate of Republic Windows & Doors, LLC v. Richard Gillman, et al. (10 A 02513)

In this Amended Memorandum Opinion, the Court granted the Defendants’ Motion to Dismiss the Chapter 7 Trustee’s Adversary Proceeding in part. The Trustee alleges in the First Amended Complaint that insiders of the Debtor engaged in a series of complex transactions by which the Debtor was stripped of its real estate, funds and business opportunities. The Court dismissed counts alleging fraudulent transfer claims under Illinois law because the transfers in issue occurred more than four years before the bankruptcy case was filed. Illinois law provides generally for a four-year limitations period for the prosecution of fraudulent transfer claims. 11 U.S.C § 544(b) allows a trustee to avoid any transfer of an interest of a debtor in property that is avoidable under applicable law by a creditor holding an allowable unsecured claim. The trustee can use that creditor's more favorable limitations period. 26 U.S.C. § 6502 allows the IRS 10 years to collect taxes under certain circumstances. Relying on a 7th Circuit ruling in In re Leonard, 125 F.3d 543, 544 (7th Cir. 1997) where that court held that "the trustee can assume the position of any one of them" in referring to 13 filed claims, the Court held that the Trustee cannot rely on 11 U.S.C. § 544(b) to take advantage of the IRS' 10-year limitations period because the IRS had not filed a proof of claim. The Court noted that Federal Rule of Bankruptcy Procedure 3004 allows a trustee or a debtor to file a proof of claim on behalf of a creditor

10/17/2011
In re Richard Sharif; Ragda Sharifeh v. Horace Fox. Jr.

09 B 05868,10 A 02239

The Court granted Trustee’s Motion to Dismiss Plaintiff’s adversary complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), and separately on res judicata and collateral estoppel grounds. The Court found that the Plaintiff failed to sufficiently plead her claims for conversion and declaratory judgment, and that some of the claims raised in the complaint are barred by the doctrines collateral estoppel and res judicata.

08/30/2011
In re Steven Artstein;Prime LaSalle/Madison Partners LLC v. Steven Artstein

09 B 22180,10 A 01051

 Plaintiff filed an adversary proceeding seeking to deny Debtor Steven Artstein (“Debtor”) a discharge under 11 U.S.C. §§ 727(a)(2) and 727(a)(4). The Court entered judgment in favor of Debtor on both counts. On Count I, the Court found that Debtor’s failure to disclose his home in his SOFA did not amount to fraud when the home was listed in Debtor’s Schedules A and D. As to Count II, the Court gave credence to Debtor’s testimony regarding certain undisclosed claims and after viewing the errors and omissions in their entirety, the Court held that Debtor did not knowingly and fraudulently make false oaths.

08/18/2011
In re Chris T. Lymberopoulous A/K/A Christos T Lymberopoulous; Jan S. Weinstein & Associates, Ltd. v. Chris Lymberopoulous

10 B 26209,1 0 A 02055

In this adversary proceeding, plaintiff sought a determination that a certain debt was nondischargeable pursuant to 11 § U.S.C. 523(a)(6), which provides an exception to discharge for a debt “for willful and malicious injury by the debtor to another entity or to the property of another entity.” The debt consisted primarily of an attorney’s fee award in connection with an order of protection case in state court. Because this debt arose out of the willful and malicious injury caused by the debtor, the court ruled in favor of the plaintiff and held that the attorney’s fees are nondischargeable.

07/13/2011
In re John William Klacz

11 B 08863

The Court found that the Creditor’s filing of an Objection to Discharge pursuant to 11 U.S.C. § 523(a)(6) although deficient in form, was sufficient to constitute a complaint and provided notice that Creditor objected to Debtor’s discharge based on pending sexual assault allegations.

06/27/2011
In re Lancelot Investors Fund, L.P., et al

08 B 28225, 10 A 01805

The court denied the Defendants' Motion to Dismiss as to four fraudulent conveyance Counts in Trustee Peterson's adversary complaint concerning the Premium Payment Debtors' payment of nearly $6,000,000 for insurance against the risk of certain retailers becoming insolvent. It was later revealed that Certain Petters Entities were operating a Ponzi Scheme and that the accounts receivable being insured did not exist. The court relied on the Seventh Circuit Court of Appeals ruling in Leibowitz v. Parkway Bank & Trust Co. ( In re Image Worldwide, Ltd .), 139 F.3d 574, 576 (7th Cir. 1998) in finding that such matters are issues of fact which cannot be decided on a motion to dismiss. Trustee Peterson requested rescission based on lack of consideration. The court dismissed the two rescission Counts without prejudice. The court ruled that rescission was not available as to Counts V and VI because the Premium Payment Debtors were provided with consideration in the form of insurance coverage. The Motion to Dismiss was granted with prejudice as to the Count alleging unjust enrichment. The court ruled that unjust enrichment is a quasi-contract theory of recovery that permits courts to imply the existence of a contract where none exists in order to prevent unjust results. Because the parties had an express contract, unjust enrichment as a theory of recovery is not available.

06/06/2011
In re Lancelot Investors Fund, L.P., et al.; Ronald L. Peterson, as Chapter 7 Trustee for Lancelot Investors Fund L.P., et al v. Brightwater Club Property Owners Association

08 B 28225,11 A 00646

Trustee Ronald L. Peterson filed a Motion seeking a Preliminary Injunction pursuant to 11 U.S.C. §§ 362 and 105 of the Bankruptcy Code. He asked the court to enjoin the Brightwater Club Property Owners Association from pursuing its foreclosure rights under Colorado law as to property owned by Clearwater Development, Inc. The court held that the Trustee failed to show by clear and convincing evidence that a preliminary injunction was warranted.

04/15/2011
DENTAL PROFILE, INC. and DENTIST, P.C.

08 B 17148, 08 B 17149

Movant asked the court to impose sanctions against the Debtors, Dental Profile, Inc. and Dentist, P.C. (the “Debtors”), Dr. Husam Aldairi ("Aldairi" ) the sole owner of the Debtors, Paul M. Bach ("Bach") former counsel for the Debtors, and Cindy M. Johnson, counsel for Aldairi, pursuant to Federal Rule of Bankruptcy Procedure 9011 and section 105(a) of the Bankruptcy Code. Movant argued that the Debtors, Aldairi, and Bach violated Rule 9011 by filing the bankruptcy cases for the improper purpose of delaying her from collecting her judgment and that, accordingly, the filing was an abuse of the bankruptcy process in violation of section 105(a). The court found that the Debtors’ Chapter 11 bankruptcy petitions were filed for the improper purpose of frustrating, hindering, and delaying the Movant in the collection of her judgment and imposed sanctions pursuant to Bankruptcy Rule 9011 solely against the Debtors and Aldairi. The court issued a separate judgment order herein imposing sanctions in the amount of $314,536.34.

03/31/2011
In re Richard Sharif

09 B 05868

Movant Ragda Sharifeh requested that the court vacate (1) the part of the July 6, 2010 judgment order which held that the Soad Wattar Revocable Trust of 1992 was the alter ego of the Debtor, Richard Sharif (“the Debtor”) and (2) the August 5, 2010 order directing Wells Fargo Financial Advisors to turn over assets held in the name of the Trust to Horace Fox, Jr. the Trustee of the Debtor’s bankruptcy estate, pursuant to Federal Rule of Civil Procedure 60. Alternatively, she requested that pursuant to Federal Rule of Bankruptcy Procedure 8005, enforcement of the August 5, 2010 order be stayed pending the final disposition of a related adversary proceeding. The court found that the Movant failed to establish the requirements for entry of a stay pursuant to Federal Rule of Bankruptcy Procedure 8005, that Rule 60 was not the proper vehicle for asserting her legal error argument, and that the court has no jurisdiction to act on the orders which are now on appeal to the district court. The court denied Ragda Sharifeh's motion to intervene herein on March 10, 2011.

03/14/2011
In re Richard Sharif

09 B 05868

Movant Ragda Sharifeh asked leave to intervene as to two orders: a July 6, 2010 order which held, in part, that the Soad Wattar Revocable Living Trust was the alter ego of the Debtor, Richard Sharif (“the Debtor”) and an August 5, 2010 order directing Wells Fargo Financial Advisors to turn over assets held in the name of the Trust to Horace Fox, Jr. the Trustee of the Debtor’s bankruptcy estate. The court held that the Trust assets were property of the Debtor’s estate as of the commencement of the bankruptcy case, that Ragda Sharifeh could have sought leave to intervene before this matter was adjudicated, and that pursuant to Federal Rule of Civil Procedure 24(b)(3), intervention five months after the entry of the orders at issue would unduly delay and prejudice the adjudication of the original parties’ rights.

03/10/2011
In re Nancy Hall-Walker

10 B 42783

Debtor filed a motion seeking sanctions pursuant to 11 U.S.C. § 362(k), after the Respondent attended and continued a civil contempt status hearing in the Domestic Relations Division of the Circuit Court of Cook County after she was given notice that the Debtor had filed for Chapter 13 relief under the Bankruptcy Code. The court found that the Respondent’s action in attending and continuing the status hearing to a later date was a willful violation of the automatic stay. The court also found that an oral settlement agreement that the Debtor would receive $5,000 for damages and attorneys' fees for the Respondent’s violation of the automatic stay was binding under Illinois law.

02/22/2011
In re James Malec and Rita Malec; James Malec and Rita Malec v. Cook County Clerk and Cook County Treasurer

04 B 17796, 10 A 01455

In this adversary proceeding, the court found that the County violated the discharge injunction under 11 U.S.C. § 1328(a) by failing to release its lien on Debtors’ property by continuing to assess interest and penalties and selling the property taxes at a tax sale. The County argued that its lien against Debtors’ property was an in rem lien, and as such the discharge eliminated Debtors’ personal liability only, and that the in rem debt for real estate taxes remains after discharge. The court found in favor of the Debtors, and held that the County’s lien on Debtors’ property is a “claim” within the meaning of 11 U.S.C. § 101(5) and further held that the provisions of Debtors’ confirmed plan are binding pursuant to 11 U.S.C. § 1327(a). The court noted that the County failed to object to the proposed treatment of its tax claim prior to plan confirmation, and that the County acted improperly when it assessed additional interest on the tax debt and sold the taxes at a tax sale after the Debtors completed the payments required by the plan and the entry of the chapter 13 discharge that covered the tax debts.

01/11/2011
In re John R. Mateyko; ExpressDrop, Inc. v. John R. Mateyko and John R. Mateyko d/b/a EncoreDrop and Matey Corp.

08 B 32684, 09 A 00718

In this adversary proceeding involving the dischargeability of a debt, the court found in favor of the debtor on a count under 11 U.S.C. section 523(a(2)(A) as the plaintiff did not prove that the debt was incurred by a false pretense, a false representation or actual fraud. The court found in favor of the plaintiff under a count seeking an exception to discharge under 11 U.S.C. section 523(a)(6) finding that the debtor acted willfully and maliciously in causing injury to the plaintiff when in violation of a franchise agreement he operated a competing business using the franchisor's software, trademarks, forms, distinctive signs and procedures.

09/27/2010
In re Edward Joseph Signore and Kanella Virginia Signore; James Kafantaris v. Kanella Signore

09 B 13534, 09 A 00667

The court stuck most of the plaintiff's responses to the defendant's Local Rule 7056-1 statement of facts in support of her motion for summary judgment. The plaintiff admitted many of the facts asserted by the defendant. The court deemed as admitted many of the defendant's statements of fact that the plaintiff attempted to dispute because the plaintiff failed to assert them in a separate statement and because the facts the plaintiff asserted did not reference affidavits, parts of the record or other supporting material as required by Local Rule 7056-2.

09/17/2010
In re Edward Joseph Signore and Kanella Virginia Signore; James Kafantaris v. Kanella Signore

09 B 13534, 09 A 00667

The court ruled in favor of the defendant on a count under 11 U.S.C. section 523(a)(4) charging defalcation or fraud while acting in a fiduciary capacity, finding as a matter of law that the defendant did not owe her brother or mother a fiduciary duty regarding their mother's financial transactions. The defendant held the mother's power of attorney when she helped the mother make banking transactions, some of which resulted in the brother being replaced as a surviving co-owner of the mother's accounts. Illinois law provides that the execution of a power of attorney creates a fiduciary relationship. However, federal law requires that in addition to the execution of a power of attorney that the principal entrust the agent with money or property to be used for the principal's benefit. The defendant was not entrusted with money or property to be administered for the benefit of the principal. The defendant merely helped their mother fill out bank forms to achieve transactions that the mother desired. The court found in favor of the defendant on a count under 11 U.S.C. section 523(a)(6) charging willful and malicious injury to the plaintiff's property. The plaintiff could not show that the defendant exercised the power of attorney or that she executed any of the transactions in issue. The court found in favor of the defendant on a count under 11 U.S.C. section 523(a)(2)(A) charging that the debt was incurred by way of false representations, false pretenses or actual fraud. The Plaintiff did not allege in his complaint or in a Local Rule 7056-2 Statement a false promise, a false representation or actual fraud leading to the formation of the debt in issue.

09/17/2010
In re Gander Partners LLC; In re Copper Peak Development Corporation; In re Prairie View Development Corporation jointly administered under case number 10 B 00887;Gander Partners LLC, et al v. Harris Bank, NA

10 B 08877, 10 B 08882, 10 B 08879, 10 A 00981

The court granted Debtors' motion for a preliminary injunction staying various lawsuits pending against Debtors' guarantors. Harris Bank, N.A. objected to the entry of a preliminary injunction and argued, among other things, that the court lacked "related to" jurisdiction based upon the Seventh Circuit's ruling in In re Teknek LLC, 563 F.3d 639 (7th Cir. 2009). The court overruled Harris' objection and determined that the Teknek ruling did not address the propriety of a bankruptcy court temporarily enjoining lawsuits against a debtor's guarantors. In the instant case each of the Debtors' guarantors, principals of the Debtors, testified at the hearing that they contribute significant amounts of time and money to the Debtors' reorganization effort, and that if the pending lawsuits were to continue their time, money and energy would no longer be available for the Debtors' reorganization efforts. Based upon this and rulings in Walsh v. Abrams, 45 B.R. 668 (Bankr. E.D.N.Y. 1985), Baptist Medical Center v. Singh, 80 B.R. 637 (Bankr. E.D.N.Y. 1987) and In re Philadelphia Newspapers, LLC, 407 B.R. 606 (E.D. Pa. 2009), the court found that the lawsuits pending against the Debtors' guarantors were sufficiently "related to" the bankruptcy cases because their resolution could hinder this court's ability to help the reorganization process by diverting funds necessary for a successful reorganization. The court enjoined Harris Bank from commencing or continuing any legal actions against the guarantors, including the pending lawsuits, for a period of 120 days through November 12, 2010.

07/16/2010
In re IFC Credit Corporation; David P. Leibowitz, the Chapter 7 Trustee of the Estate of IFC Credit Corporation v. First Chicago Bank and Trust

09 B 27094, 09 A 01230

The court granted Robert D. Leavitt and Lowis & Gellen LLP's Motion to Dismiss the Third Party Complaint of First Chicago Bank and Trust (FCBT), which alleged that as a result of the professional malpractice of Mr. Leavitt and the Lowis & Gellen law firm: (1) IFC Credit Corporation double pledged approximately $4.5 million of collateral, (2) FCBT's secured claim has been challenged by the Trustee, (3) the Trustee is seeking to avoid and recover payments made by the Debtor to FCBT and (4) that the Trustee is seeking to avoid FCBT's interest in the collateral. This court determined that there is no "related to" jurisdiction between FCBT's claims against Lowis & Gellen and the bankruptcy case because FCBT's potential recovery against Lowis & Gellen and Mr. Leavitt does not affect the amount of property for distribution in the bankruptcy case because any recovery by FCBT does not come into the bankruptcy estate. This court also determined that the FCBT's professional malpractice claim against Lowis & Gellen and Mr. Leavitt is not ripe for resolution because the Trustee's adversary proceeding against FCBT has not been resolved; until its resolution FCBT can not prove that it has suffered damages as a result of the alleged professional negligence of the defendants.

06/24/2010
In re Daniel and Roberta Fenn

09 B 49343

On May 17, 2010 the court denied confirmation of the Debtors' proposed Chapter 13 Plan because it did not provide for retention of the totally unsecured junior mortgage creditor's lien until discharge under 11 U.S.C. Section 1328 or payment under nonbankruptcy law as required by 11 U.S.C. Section 1325(a)(5)(B). The Debtors then asked that the creditor's junior mortgage claim be disallowed because it was unsupported by collateral value, i.e., unsecured due to the operation of 11 U.S.C. Section 506(a). Because the Debtors have not asserted any legal authority in support of their position, the court has overruled the effort to disallow the junior mortgage claim because it is totally unsecured.

06/08/2010

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