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Judge Jacqueline P. Cox - Opinions
Description | Date Issued |
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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 |
In re Michael C. Brace 09 B 44558 The court granted the U.S. Trustee's Motion to Dismiss the Debtor's chapter 7 case pursuant to 11 U.S.C. section 707(b)(3) because granting the Debtor a chapter 7 discharge would result in substantial abuse of the Bankruptcy Code given the totality of the circumstances. The Trustee asserted that the Debtor and his wife's annual income was nearly double the applicable median family income for a comparable household in Illinois. Additionally, the Trustee argued that the Debtor could pay at least a portion of his unsecured debt through a chapter 13 plan by reducing or eliminating a number of expenses, including expenses in connection with a second home at which the Debtor and his family did not reside. The court also determined that the Debtor would not be allowed to deduct as necessary living expenses funds used to repay a loan from the Debtor's 401(k) plan. The court will dismiss the Debtor's chapter 7 case on July 16, 2010 unless the Debtor moves to convert to a case under chapter 13 within 14 days. |
05/25/2010 |
In re Daniel and Roberta Fenn 09 B 49343 The court sustained Wells Fargo Bank's Objection to Confirmation of the Debtors' April 12, 2010 chapter 13 plan which proposed to avoid Wells Fargo's wholly unsecured junior lien on a residential property. The court found that while debtors may generally avoid wholly unsecured junior liens in a chapter 13 plan, these particular Debtors were not eligible for such relief because they were not eligible for a discharge because they had received a chapter 7 discharge in 2009. Additionally, the court denied confirmation of the Debtors' April 12, 2010 plan because the plan did not contain the appropriate lien retention language. |
05/17/2010 |
In re Computer World Solution, Inc.; Computer World Solution, Inc. v. Apple Fund, L.P. and Astor Partners, LLC 07 B 21123, 08 A 00180 This is an amended opinion; the original opinion was signed on March 17, 2010. This case involved a preference action under 11 U.S.C. sec. 547 to recover three payments made to the Defendants during the pre-petition preference period. The court found that the Debtor met its burden under 11 U.S.C. sec. 547 and proved by a preponderance of the evidence that the payments at issue were in fact preferential. The Defendants set forth twelve affirmative defenses, most notably the ordinary course of business defense. The court determined that the Defendants failed to meet their burden with regard to any of the affirmative defenses. The court found that the Defendants' ordinary course of business defense failed because the fraud that the Debtor's officers engaged in pre-petition and during the preference period could not serve as an exception to preference liability because ordinary businesses do not defraud their customers and lenders. |
04/15/2010 |
In re J.S. II, LLC, et al. 07 B 03856 This is an amended order; the original order was issued on April 1, 2010. The court found that two creditors willfully violated the automatic stay by pursuing a District Court action against several Debtors despite the creditors' knowledge of the ongoing bankruptcy case. The creditors had an opportunity to pursue their grievances in the bankruptcy court but decided to withdraw their proof of claim. At a hearing the creditors argued that the District Court action was based upon facts that were personal and peculiar to the creditors and that the District Court complaint was based upon facts that arose after the bankruptcy petition was filed. The court found that the creditors' claims were not personal and peculiar because they were similar to the other homeowners' claims against the Debtors. The court also determined that the entire District Court complaint was based upon events that occurred prior to the filing of the bankruptcy petition. The creditors' attorney was ordered to show cause why he has not violated Federal Rule of Bankruptcy Procedure 9011(b) by signing a pleading that might not be based upon legally and factually sound representations. |
04/09/2010 |
In re IFC Credit Corporation 09 B 27094 The court granted the Trustee’s motion for a preliminary injunction staying various lawsuits pending against former directors and officers of the Debtor. The court found that the Trustee was entitled to a preliminary injunction because the pending lawsuits would likely deplete the Debtor’s entire directors and officers insurance policy, leaving nothing for the bankruptcy estate should the Trustee decide to pursue similar claims against former officers and directors. The Trustee also made a successful showing that the creditors' claims were not unique and personal, and that the creditors’ claims overlapped and were based in the same facts and circumstances as the Trustee’s potential claims against former directors and officers of the Debtor. |
01/27/2010 |
In re IFC Credit Corporation 09 B 27094 The court denied a motion to dismiss the bankruptcy case due to the initial petition being filed by a non-lawyer on behalf of the corporation based upon laches and Federal Rule of Bankruptcy Procedure 1009 after the movants waited three months to file the motion once the preference period had passed. |
12/16/2009 |
In re: Tekena USA, LLC 09 B 16969 The court dismissed this Chapter 11 case finding that it was not filed in good faith due to the Debtor's involvement in efforts that amounted to abuse of the judicial system. |
11/19/2009 |
In re Local Union 722 International Brotherhood of Teamsters 09 B 20825 In this matter, a judgment creditor moved to dismiss the debtor’s chapter 11 case under 11 U.S.C. § 1112(b) arguing that the bankruptcy was really a two-party dispute between the debtor and the creditor. The Court granted the motion, after determining that the debtor could not propose a confirmable plan since the creditor held over two-thirds of the total amount of claims and would not vote for any plan that would impair his claim. |
10/06/2009 |
In re Lancelot Investors Fund, L.P.; Peterson v. Ellerbrock Family Trust, LLC 08 B 28225, 09 A 00413 In this case, the chapter 7 trustee sought to enjoin a lawsuit brought by a group of investors who invested in the Debtors against a third non-debtor party accounting firm. The investors filed suit in Minnesota state court for negligent misrepresentation and professional negligence regarding the accounting firm’s financial reports concerning the Debtors’ financial position. The investors theory is that the accounting firm, with proper due diligence, would have uncovered an alleged Ponzi scheme. The Court agreed with the Trustee’s argument that the suit against the accounting firm was property belonging to the bankruptcy estate that only the Trustee could pursue and stayed the investors’ lawsuit. |
07/17/2009 |
In re Lunkes 09 B 00583 In this matter, the debtor claimed his interest in a trust was exempt from inclusion in his bankruptcy estate under 11 U.S.C. § 541(c)(2) because the trust was a spendthrift trust. The chapter 7 trustee objected, arguing that the trust was not a spendthrift trust. The Court agreed with the chapter 7 trustee and sustained the objection. |
07/02/2009 |
In re Howard 08 B 32998 The issue in this case was whether the hanging paragraph of 11 U.S.C. § 1325 applied to so-called “negative equity” in connection with the purchase of a motor vehicle that is subject to that provision. In this case, the debtor purchased a motor vehicle within 910 days of filing his bankruptcy petition for $29,798.00. Along with a $4,500.00 down payment, the debtor traded in his old car valued at $14,450.00. However, the debtor still owed $22,498.68 on the trade-in, leaving a difference of $8,048.68. This difference is referred to as “negative equity” in motor vehicle financing. The debtor entered into a financing agreement with Americredit Financial Services, Inc. (Americredit) to purchase the motor vehicle and for payment of the negative equity to pay off the debt owed on his trade-in. After the debtor filed his bankruptcy petition, Americredit filed its proof of secured claim for $34,698.07. However, the debtor’s proposed plan listed a secured claim for Americredit of $13,250.00, the motor vehicle’s current value. Americredit objected to the debtor’s plan, arguing that the debtor may not bifurcate the motor vehicle debt under the hanging paragraph of § 1325. The debtor argued that it may bifurcate the debt, stating that the negative equity component of the financing is not included under the hanging paragraph of § 1325. The Court held that the entire claim was a subject to the hanging paragraph of § 1325. The court certified the matter under 28 U.S.C. § 158 for direct appeal to the Circuit. The Seventh Circuit affirmed the ruling on March 1, 2010. See In re Howard, 597 F. 3d 852. |
06/16/2009 |
In re Sharif;Wellness Int’l Network v. J.P. Morgan Chase, N.A.; Khan v. Wellness Int’l Network 09 B 05868, 09 A 00384, 09 A 00385 In this matter, the Debtor and two non-debtor parties (“Respondents”) were held jointly and severally liable for attorney’s fees awarded by the U.S. District Court for the Northern District of Texas after initiating a lawsuit and failing to conduct any discovery in the case. Ultimately, summary judgment was entered against them. The judgment creditors then commenced collection proceedings to satisfy the award in both a Texas state court and in the Texas U.S. District Court. The Debtor’s bankruptcy followed. The other two respondent parties each filed adversary proceedings before this Court in an attempt to remove the collection actions from the state and federal courts in Texas to this Court. The Court agreed with the judgment creditors that there was no basis to remove the Texas proceedings and dismissed both adversary proceedings. |
06/02/2009 |
n re Oien; Regis Technologies, Inc. v. Oien 07 B 08526, 07 A 01058 In this case, the plaintiff moved to amend its adversary complaint. The original complaint sought to deny the debtor’s discharge under 11 U.S.C. § 727(a)(4)(A) alleging the debtor asserted a false oath at his § 341 creditors’ meeting. The amended complaint sought to add additional defendants and causes of action under 11 U.S.C. § 523(a), § 727(a)(3), civil conspiracy, and unjust enrichment. The motion was granted to amend the original § 727(a)(4)(A) count and the § 727(a)(3) count. The motion was denied as to amending the complaint to add the additional defendants and the § 523(a) claim, the civil conspiracy claim, and the unjust enrichment claim. |
04/24/2009 |
In re Teknek, LLC 05 B 27545 Chapter 7 trustee sought approval of a settlement agreement resolving all litigation between the defendants in an adversary proceeding for recovery of pre-petition transfers. The settlement agreement was opposed by one of the administrative creditors who argued that the settlement amount was too low. The objecting creditor argued that little of the estate’s resources would be needed to realize a potentially $4 million dollar judgment. The Court approved the settlement agreement, finding the agreement to be in the best interests of the estate. |
03/13/2009 |
In re Hunter;Herzog v. Countrywide Home Loans 07 B 19360, 08 A 00300 Prior to filing his chapter 7 bankruptcy petition, the debtor sought to rescind two mortgage loans from the defendants. After the bankruptcy case commenced, the chapter 7 trustee filed an adversary complaint requesting enforcement of the debtor's right to rescind the loans. The trustee alleged that the debtor did not receive two copies of the Notice of Right to Cancel in connection with each loan as was required by the Truth in Lending Act (“TILA”). The trustee asserted that the debtor properly exercised his right to rescission through written notice to the defendants within the three-year time limit provided in 15 U.S.C. § 1635(f) of TILA. The defendants filed a motion to dismiss the trustee's rescission claims as time-barred because he did not file those claims in court within three years after seeking rescission of the loans. At issue was whether a consumer who provides timely notice to a creditor is also required to file a lawsuit seeking to enforce rescission within the time limit set forth in § 1635(f). The Court found that TILA does not preclude the trustee’s suit to enforce the debtor’s right of rescission after the passing of the three-year period because the debtor timely exercised his right to rescind the loans within the three-year period. Therefore, the defendants’ motion to dismiss was denied. |
03/10/2009 |
In re Hearthside Baking Co., Inc.; Official Unsecured Creditors’ Committee of Hearthside Baking Co., Inc., et al. v. Cohen, et al. 08 B 01187,08 A 00237 In this chapter 11 matter, the shares of the Debtor were held in a trust. Wayne and Terry Cohen were beneficiaries of the trust and two co-trustees were named as trustees of the trust. Wayne was the President of the Debtor and Terry was its CEO. Both were the sole directors of the Debtor. Beginning in 2000, Wayne suspected Terry of looting the Debtor’s assets and notified the co-trustees on several occasions. Pursuant to the trust agreement, the co-trustees had the ability to appoint or remove directors and officers. Despite numerous assurance that they would investigate, the co-trustees did not act. Wayne eventually filed a shareholder’s derivative suit in the Chancery Court of Cook County, Illinois against Terry and the co-trustees for breach of fiduciary duty and civil conspiracy. Eventually, the Debtor was placed into bankruptcy and a creditors’ committee was formed. The committee removed the derivative action to this Court and filed its own adversary proceeding against, inter alai, Terry, Wayne, and the co-trustees. The committee’s complaint also sought relief for breach of fiduciary duty, recovery of fraudulent transfers, and other relief. Wayne eventually amended his complaint to include a RICO cause of action against Terry. The co-trustees moved to dismiss Wayne’s complaint on standing, causation, damages, and mitigation grounds. The co-trustees similarly moved against the committee. Terry moved to dismiss Wayne’s complaint on standing grounds. Wayne moved for judgment on the pleadings regarding the committee’s complaint against him alleging fraudulent transfers. The Court granted the motions to dismiss in part and denied them in part. Wayne’s motion for judgment on the pleadings was denied. |
02/27/2009 |