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
Judge Jacqueline P. Cox - Opinions
Judge Jacqueline P. Cox
October 17, 2011
August 30, 2011
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.
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.
July 13, 2011
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.
June 27, 2011
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.
June 6, 2011
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.
April 15, 2011
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.
March 31, 2011
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.
March 14, 2011
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 egoof 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.
March 10, 2011
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.