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.

Subscribe to All Opinions

Judge Jacqueline P. Cox

In re John F. Walsh
September 24, 2015

08 B 06424
This is a case stressing the importance of counsel representing a debtor in an underlying state court action to get approval, even if retroactive, of the Bankruptcy Court under 11 U.S.C. § 327 for such representation in order to be paid from the bankruptcy estate.

Freeborn & Peters LLP (“Freeborn”) represented the debtor in a pre-petition state court action for defamation brought by a real estate developer against the debtor and two local newspaper organizations in late 2007.  The case was litigated and appealed up to the Illinois Supreme Court, which remanded the case to the trial court to award the debtor reasonable attorney’s fees and costs.  Ultimately, the trial court entered judgment in the amount of $339,010 in favor of the debtor and against the developer.  Freeborn proceeded to attempt collection on the judgment.

Unbeknownst to Freeborn, six months after the lawsuit was filed, the debtor filed for Chapter 13 bankruptcy relief, converted his case to Chapter 7 before the judgment had been entered and eventually received a discharge.  However, the debtor failed to disclose the state court lawsuit in both his Schedules and his Statement of Financial Affairs.  The developer discovered the debtor’s bankruptcy filing and moved to have the judgment vacated on the basis that the debtor was judicially estopped from enforcing the judgment because he failed to disclose the lawsuit in his bankruptcy case.  Rather than contact the Chapter 7 Trustee and get authorization to be employed as special counsel, Freeborn continued to litigate the case and actually argued that the judgment was not property of the bankruptcy estate.

After the developer appealed the state trial court’s denial of its motion to vacate, its counsel notified the Trustee of the civil case.  The debtor’s bankruptcy case was reopened.  More than a year later, in 2014, the Illinois Appellate Court dismissed the appeal and determined that the debtor’s claim against the developer belonged to the Trustee and the judgment was an asset of the bankruptcy estate.  Only then did Freeborn file an application for fees and reimbursement of expenses related to services performed during the debtor’s Chapter 13 case and requested that such fees and expenses be allowed as a secured administrative expense under 11 U.S.C. § 503(b)(1)(A) or (b)(2).  Both the Chapter 7 Trustee and the condominium association, which had indemnified the debtor for legal fees, objected to the fee application.

After a hearing, the Court denied Freeborn’s fee application and request for an administrative claim because it did not secure approval of its employment before performing services.

13 B 36813
The Court held evidentiary hearings over three days on the objection of the successor lessor of a downtown commercial food court to the claims for rejection damages filed by certain food court tenants to determine the amount of damages due to them pursuant to 11 U.S.C. § 365(g) and (h). The Court also considered the good faith and fair dealing doctrine under Illinois contract law regarding the timing of the formation of the leases and the rejection of the leases under the Code as some of the leases were entered into within only a few months, weeks, or even days in the case of two tenants, before the motion to reject them was filed.

As of the petition date, Debtor Dearborn Retail, LLC, owned the food court space located at 201 N. Clark Street in Chicago. Subsequently, Garvey Court, LLC, an entity controlled by Bighorn Capital, Inc. acquired the property. The Court granted Debtor’s motion, in connection with the acquisition, to reject the leases of eighteen food court tenants. As part of the rejection order, Garvey Court agreed to assume the obligations, if any, to pay damages and/or termination fees that resulted from such rejections. Neither Debtor nor Garvey Court issued a notice of early termination pursuant to the leases.

Under the terms of an agreed claims resolution order, an evidentiary hearing was held to determine the amount of damages owed to tenants whose claims were not settled. Nine of the eighteen tenants filed proofs of claim, to which Garvey Court objected; one tenant settled before the hearing. The claimants generally sought damages for build-out costs, replacement rent, advertising/promotion for the new locations, moving costs, return of security deposits and attorneys’ fees. Garvey Court argued that the claimants could not recover any damages because of their failure to pay rent and the resulting termination of the leases because of such default. Alternatively, Garvey Court generally sought to limit the build-out and replacement rent damages to only a two-year period pursuant to the early termination provision.

The Court found that the rejection damages were not limited by the early termination provision because it was never triggered. The Court also found that build-out costs, replacement rent, etc. were the proximate result of the lease rejections. Individual orders were entered for each tenant.

 

Judge Jack B. Schmetterer

In re Robert J. Meier
September 15, 2015

14 B 10105

Judge A. Benjamin Goldgar

In re Enesco Group, Inc.
September 2, 2015

07 B 00565

In re Michael H. Meltzer
August 25, 2015

13 B 31151

13 B 31151

Judge Janet S. Baer

09 B 30029
Debtors’ financial advisor FBR Capital Markets & Co. (“FBR”) filed an amended application for compensation, which included a request for a restructuring fee and reimbursement of expenses, the majority of which were attorneys’ fees incurred in defense of FBR’s fee request.  Plan transferee Bletchley Hotel at O’Hare LLC (“Bletchley”) filed an objection, asking the Court to:  (1) reconsider its prior decision, which found that FBR was entitled to the restructuring fee, and (2) deny or substantially reduce both the restructuring fee and the requested attorneys’ fees for work performed in defending the original fee application.  As to the restructuring fee, the Court denied the request for reconsideration because Bletchley primarily rehashed arguments already considered and rejected in the prior proceeding and, thus, failed to sustain its burden under Rule 60(b).  The Court further found that, based on the express language of the governing documents, the restructuring fee was subject to review under the improvidence standard of § 328(a) and that the requested amount of the fee would not be reduced because Bletchley failed to identify any developments incapable of being anticipated at the time the order approving FBR’s retention was entered.  As to the reimbursement of expenses, the Court found that FBR is not entitled to the attorneys’ fees incurred for fee-defense work because the reimbursement under the pre-approved engagement letter is subject to review under § 330 and the U.S. Supreme Court’s decision in Baker Botts L.L.P. v. ASARCO LLC held that § 330(a)(1) does not allow a bankruptcy court to award attorneys’ fees for work performed in defending a fee application.  Accordingly, the Court awarded FBR a restructuring fee in the requested amount of $2,568,145.89 and reimbursement of expenses not related to the defense of FBR’s fees in the amount of $62,466.60.

Judge Timothy A. Barnes

In re David J. Hardesty
August 7, 2015

14 B 42906
Upon the chapter 7 Trustee’s objections to the Debtor’s claimed exemptions in (1) installment payments under a personal injury settlement agreement and (2) proceeds from a life insurance policy received post-petition following the death of the Debtor’s step-father, held: Under the terms of the marital settlement agreement, entered into by and between the Debtor and his ex-wife and incorporated into the state court divorce decree, the Debtor’s limited interest in and control over the installment payments is insufficient to bring the installment payments into the estate, therefore, the Trustee’s objection to the Debtor’s exemption in the personal injury settlement is OVERRULED. With respect to the life insurance proceeds, however, the Debtor has failed to establish that he is “dependent upon the insured” for the purposes of 735 ILCS 5/12-1001(f) and, therefore, cannot claim an exemption in the life insurance proceeds, thus, the Trustee’s objection to the Debtor’s exemption in the life insurance proceeds is SUSTAINED.

In re Mesha E. Ware
July 17, 2015

15B03414
Upon an objection to confirmation of the debtor’s chapter 13 plan, wherein a creditor alleged that the debtor could not comply with the requirements of “surrender” in section 1325(a)(5)(C) of the United States Bankruptcy Code as the debtor proposed to surrender a vehicle that had been previously stolen and that, therefore, could not be delivered to the creditor, held: “Surrender” in section 1325(a)(5)(C) does not always require the debtor to physically deliver the vehicle.  Because the Debtor proposes surrender in good faith, physical delivery is not required.  As a result, the creditor’s objection is overruled.

Pages