Opinions

The District of Northern Illinois offers a database of opinions for the years 1999 to 2013, listed by year and judge. For a more detailed search, enter the keyword or case number in the search box above.

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Judge Pamela S. Hollis

09 B 26595, 09 A 01045

Debtor/Defendant had a successful remodeling and construction business. He and Plaintiff, a salaried and less-successful tool and die designer, became close friends. When Plaintiff sold his home and found himself with some extra cash, they agreed to invest in new construction. Defendant chose the location, acted as the general contractor and arranged for construction financing. Plaintiff put up the money and his name alone was on the title and loan. The house was completed just in time for the real estate market to crash. The bank foreclosed and got a deficiency judgment against Plaintiff, who asked Defendant where all the money had gone. Defendant could only account for about three-quarters of the funds. Plaintiff sought a finding that Defendant's debt was nondischargeable under 523(a)(2) and (a)(4). Following a multi-day trial, the parties briefed the issues and Plaintiff dropped the 523(a)(2) count. HELD: The parties had a fiduciary relationship because of the difference in knowledge and power which gave Defendant a position of ascendancy over Plaintiff. The debt was caused by Defendant's defalcation while acting in a fiduciary capacity, and is nondischargeable pursuant to 523(a)(4)

Judge Jack B. Schmetterer

Judge Timothy A. Barnes

In re Anthony P. Montalbano
February 12, 2013

09 B 30477

In considering the trustee’s objection with respect to claims pursuant to sections 502 of title 11, United States Code and Rule 3007 of the Federal Rules of Bankruptcy Procedure, the court addresses the sole issue – one on which there is no direct binding case law in the Seventh Circuit – as to whether the debtor, as the 100% shareholder, sole director, CEO and President of the corporation, is personally liable with respect to wage claims against the corporation under the Illinois Wage Payment and Collection Act. The Court finds that the trustee’s objection to the wage claims is well taken as the debtor is not be held personally liable for such claims solely because the debtor discontinued infusing personal funds into the corporation to keep it alive as a going concern. In so doing, the court notes that piercing the corporate veil is not favored, that deepening insolvency does not stand as an independent ground for relief, and that absent fraud, of which there is no indication, the claimant’s claims against the debtor individually are not well founded.

Judge Carol A. Doyle

Judge Janet S. Baer

In re Richard J. Klarchek
January 30, 2013

10 B 44866

The debtor moved for sanctions against TCF Bank pursuant to section 362(k) of the Bankruptcy Code, alleging that after he filed his bankruptcy petition, TCF willfully violated the automatic stay by proceeding with a state court lawsuit filed against him and other parties. The sole issue addressed by the Court was whether the debtor has standing to pursue the sanctions motion. The Court found that because the debtor’s claim for damages in the sanctions motion is property of his bankruptcy estate and has not been abandoned by the chapter 7 trustee, the trustee is the real party in interest with standing to pursue the cause of action against TCF. Accordingly, the Court denied the motion for sanctions due to the debtor’s lack of standing.

12 B 26203, 12 B 21218

Tax purchasers moved for relief from the automatic stay to continue with their petitions for issuance of a tax deed in the Circuit Court of Cook County. The issue before the Court was whether the debtors in these two cases could cure delinquent property taxes through their chapter 13 plans even though the redemption periods expired during pendency of the bankruptcy cases. The Court acknowledged the split of authority in this jurisdiction concerning the interplay between 11 U.S.C. § 1322(b)(2) and 11 U.S.C. § 108(b), as well as the nature of a tax purchaser’s interest arising out of the Illinois tax sale procedure. Agreeing with the recently issued opinion in La Mont, the Court found that the debtors could provide for payment of the purchasers’ claims in installments through their chapter 13 plans. Accordingly, the Court denied the tax purchasers’ motions.

Judge Jacqueline P. Cox

11 B 40944 (jointly administered)

In this memorandum opinion, the Court denied confirmation of the Debtor’s Amended Plan of Reorganization. The Court noted that to satisfy the Bankruptcy Code’s requirement that the Debtor’s Plan be fair and equitable, a plan must propose an interest rate adequate to assure the realization of the Bank’s claim. In this case, the Court determined that the interest rate advanced by the Debtor did not sufficiently capture the risk that the Debtor would not satisfy the Bank’s claim. The Court also determined that the Plan was not feasible because the Debtor failed to prove that the property would increase in value enough to give the Debtor sufficient equity to facilitate refinancing at the end of 7 years to fund a balloon payment to the Bank. The Court also granted the Bank’s request for relief from the automatic stay because the Debtor failed to show that there is a reasonable possibility of a successful reorganization.

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