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Judge Timothy A. Barnes - Opinions

Description Date Issued
In re James Hicks, Jr.

On the City of Chicago’s objection to the chapter 7 trustee’s final report, held:  Despite a provision in title 28 defining “the legal rate” as the federal judgment rate, the legal rate for postpetition interest in bankruptcy matters is that prescribed by bankruptcy law under title 11.  Legislative history and long-extant bankruptcy law known as the solvent debtor exception indicates that using a contractually agreed upon interest rate or the applicable state interest rate is the proper interest rate for postpetition interest to a creditor in bankruptcy matters.  The adoption of the Bankruptcy Code did not change that prior practice.  For these reasons, the City’s objection is SUSTAINED.

Andrew J. Maxwell, trustee for the estate of Horizon Group Management, LLC, v. Daniel Michael, et al. (In re Horizon Group Management, LLC)

14bk41230, 16ap00394
Upon crossing motions for summary judgment in an adversary proceeding seeking fraudulent transfer and other relief from the prepetition management and owners of the debtor, held:  The plaintiff/trustee failed to establish grounds for summary judgment in his favor on the sole legal issue on which it was sought—whether a finding of no value in a bankruptcy sale order as to an asset was preclusive on the value of the asset prepetition for the purposes of establishing the elements of a fraudulent transfer.  The defendants fare better, having shown that the plaintiff/trustee has offered no golden creditor on which to predicate state law avoidance of transfer earlier than captured by bankruptcy avoidance.  In all other respects, the defendants’ motion fails.  The plaintiff/trustee’s motion is therefore DENIED.  The defendants’ motion is GRANTED in part, but otherwise DENIED.

In re Edward Johnson

On the debtor’s motion seeking an order compelling the chapter 13 trustee to refund to the debtor the full amount of payments made by the debtor on his chapter 13 plan prior to the dismissal of the case prior to confirmation of the plan, held:  The trustee is not authorized to deduct from held plan payments her statutory fee if a chapter 13 case is dismissed without having a plan confirmed.  As a result, the trustee is required to return to the debtor all payments not excluded from such return under 11 U.S.C. § 1326(a)(2).  The motion is, therefore, GRANTED.

Donald A. Stukes, Liquidating Trustee v. John Argoudelis (In re NCW Properties, LLC)

20ap00246, 18bk20215
Upon the motion for summary judgment, brought by the defendant, alleging that the plaintiff has failed to provide any evidence to support two of the elements of fraudulent transfer counts—that the transfer the plaintiff seeks to avoid was property of the debtor and that the debtor was insolvent at the time of the transfer—and, in the alternative, that the defendant should be granted summary judgment with respect his good faith for value defense, held:  The defendant has not satisfied his burden in demonstrating that the material facts are undisputed and thus the defendant is entitled to summary judgment in his favor on the fraudulent transfer claims or on his good faith for value defense.  The motion is, therefore, DENIED as set forth in the attached Memorandum Decision.

Collum v. City of Chicago, Illinois (In re John C. Collum)

22ap00178, 16bk36530
Upon the motion to dismiss, brought by the defendant, alleging that the court should apply a five-year statute of limitations under limitations borrowing for actions under 11 U.S.C. § 362(k), held:  The defendant has failed to present binding or even persuasive case law that supports limitation borrowing for actions under 11 U.S.C. § 362(k).  Further, the binding Seventh Circuit case law declines to apply a statute of limitations in similar actions.  The motion is, therefore, DENIED as set forth in the attached Memorandum Decision.

In re Ace Track Co., Ltd., Debtor in a Foreign Proceeding


In re Jewel Carter

On the competing motions of the chapter 13 trustee to dismiss a debtor’s case for failure to make plan payments and the debtor’s motion to modify his plan to allow it to complete without further payment, held:  Both the debtor’s defense to the trustee’s motion and the debtor’s motion addresses the understandable confusion that arises when a chapter 13 trustee neglects over an extended period of time to act in a way consistent with a debtor’s plan obligations.  While the debtor correctly contends that the trustee should be estopped from enforcing conditions that the trustee has neglected, that contention ignores the fact that the underlying default to the plan remains even with the motion to dismiss denied.  The debtor is in an unfortunate position—a plan that cannot be extended and obligations that cannot be met by an elderly debtor on fixed retirement income within the time of the plan—through actions not entirely of his own making.  Though it is unlikely Congress anticipated these exact circumstances, this is the type of conundrum that Congress and the United States Supreme Court have empowered the court to resolve when the former granted the court broad-sweeping authority under 11 U.S.C. § 105(a) and the latter empowered the court to address the equitable enforcement of its orders under Rule 60(b)(5) of the Federal Rules of Civil Procedure.  As a result, the court exercises that authority to determine that the debtor has fulfilled all the conditions of the plan that he might reasonably be required to perform under the circumstances and vacates the debtor’s confirmation order as to any remaining unfulfilled condition in it.  The debtor’s plan is therefore complete.  As a result, the trustee’s motion is DENIED and the debtor’s motion is GRANTED, insofar as it is necessary to effectuate that relief.

In re Marshall Spiegel

On a debtor’s objection to the claim of the issuing bank which holds a letter of credit to back the debtor’s appeal of litigation sanctions against, held: The debtor argues that the terms of the letter of credit should be strictly enforced against the issuing bank, while not challenging that the overall circumstances regarding the draw on the appellate bond had been met. As the debtor believes the bank’s honoring of the letter of credit was inappropriate, the debtor presumes that such strict enforcement results in the denial of the bank’s claim. The debtor, however, has failed at the most basic level to show how the letter of credit’s own language favors the debtor’s interpretation, which the court finds to be unreasonable. The letter of credit is not ambiguous, it is imprecise. Further, the debtor has failed to account for application of relevant Illinois statutes, the state whose law governs the letter of credit. Taken together with the terms of the letter of credit, that law permits the bank to honor letter of credit draws that appear valid, which is what the bank did here. Accordingly, even if the debtor were successful with its strict compliance argument, the debtor has failed to carry its burden to rebut the presumed allowance of the filed claim.  As a result, the objection to the claim is OVERRULED.

In re Bruce K. Propst

Following the debtor’s reopening of a discharged, no asset chapter 7 case nearly six years after the case’s first closure and on the debtor’s motion seeking avoidance of a previously unavoided judgment lien, held:  While the avoidance of a lien might be considered ordinary under other circumstances of another case, under the circumstances of this case, the relief is both extraordinary and problematic.  The debtor previously reopened the case and sought avoidance of the same lien four years after the case first closed.  Though that motion went through a complicated procedure in part due to the debtor’s previous counsel’s errors, it was ultimately heard on its merits and denied.  No reconsideration was sought or appeal taken.  It is now nearly two years later and too late under Fed. R. Civ. P. 60(c)(1) to seek relief under Fed. R. Civ. P. 60(b)(1), which rule appears to otherwise apply.  Because Fed. R. Civ. P. 60(b)(1) applies, relief under Fed. R. Civ. P. 60(b)(6) is also unavailable.  While the court might be able to entertain the request as an independent action under Fed. R. Civ. P. 60(d)(1), the debtor has failed to demonstrate that the court should ignore the law of this case to do so.  As a result, the motion to avoid the lien is DENIED.

Cordova v. City of Chicago (In re Emelida Cordova)

19bk06255, 19ap00684
Upon the motion to dismiss the plaintiffs’ complaint, brought by the defendant for failure to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6), held:  the motion to dismiss is largely predicated on the belief that the Supreme Court’s ruling in City of Chicago v. Fulton, — U.S. —, 141 S. Ct. 585 (2020), forecloses the plaintiffs’ claims for violation of the automatic stay under sections 362(a)(4), (6) and (7) of the Bankruptcy Code.  Fultonwas, however, expressly limited to section 362(a)(3) of the Bankruptcy Code.  As a result, Fulton does not directly foreclose claims under sections 362(a)(4), (6) and (7) and the court declines to extend Fulton as requested by the defendant.

As to the sufficiency of the counts pled, the plaintiffs have sufficiently alleged violation of sections 362(a)(4), (6) and 542(a), but have failed to do so with respect to section 362(a)(7).  As a result, the plaintiffs’ claim under section 362(a)(7) will be dismissed as insufficiently pled but without prejudice and with leave to amend, while claims under sections 362(a)(4), (6) and 542(a) survive the motion.

The motion to dismiss also raises the propriety of imposing punitive damages against a municipality.  In this regard, the motion is well taken and the plaintiffs’ request for punitive damages is dismissed.  Section 106(a)(3) of the Bankruptcy Code governs, and the abrogation of sovereign immunity contained therein expressly omits immunity from punitive damages.  The motion to dismiss will be granted in this respect.

Finally, the defendant seeks to dismiss the plaintiffs’ request for class certification.  Class certification is a matter of consideration in a separate motion and not properly the subject of a motion to dismiss.  The defendant’s motion to dismiss is thus denied in this respect.  The court will set a separate deadline for a motion to certify the class and any opposition thereto.

The defendant’s motion to dismiss is, therefore, GRANTED IN PART AND DENIED IN PART.

Herzog v. Ferguson (In re Eric Ferguson)

20bk17679, 20ap00426
Upon the complaint, brought by plaintiff/trustee, objecting to the defendant/debtor’s discharge under 11 U.S.C. § 727(a)(5) based on the debtor’s failure to satisfactorily explain the dissipation of $70,159.22 in the year prior to filing for bankruptcy, following trial, held:  The plaintiff has made a prima facie showing that, prior to the commencement of the debtor’s chapter 7 case, the debtor had funds sufficient to satisfy the $51,617.00 in unsecured claims that he now seeks to discharge and that the debtor has, despite his claims of gambling losses, failed to sufficiently explain the dissipation of the funds.  Judgment is, therefore, entered in favor of the plaintiff.

Bertha McGee v. Nottia M. Reed (In re Nottia M. Reed)

18bk19801, 18ap00837
Upon the judgment creditor’s complaint for determination of nondischargeability of debt pursuant to 11 U.S.C. §§ 523(a)(2)(A) and (a)(4) based on the Debtor’s alleged fraud with respect to creation and execution of a power of attorney for her father while he was in a rest home, followed by producing said power of attorney to withdraw funds held in a joint back account for Debtor’s father and his wife, held:  The plaintiff has satisfied the elements of section 523(a)(2)(A) by proving that the debt due to the plaintiff was procured by actual fraud and is, therefore, nondischargeable.  Judgment is entered in favor of the plaintiff on count I of the complaint.  The plaintiff, however, failed to establish that the debt due to her was procured through larceny and judgment is entered in favor of the Debtor on count II of the complaint.

In re Kimball Hill, Inc., et al.

After a decision of this court confirming, on remand from an appeal of an earlier decision of this court and in light of the issues raised by the District Court, its earlier finding of violations of the release and injunction set forth in the debtor’s confirmed plan of reorganization and awarding actual damages in relation thereto, and after a motion seeking an augmented award of damages in relation to ongoing violations, held:  While the request goes beyond the mandate from the District Court, the court nonetheless has jurisdiction to hear it.  The request is, however, improvident in light of the pending, second appeal and uncertain application of the court’s earlier stay pending appeal and related bond.  The movant has failed to convince the court that an award of supplemental damages is appropriate at this time.  The motion for supplemental damages is, therefore, DENIED without prejudice.  The underlying motion remains granted according to its terms and the court’s decision on remand, pending the outcome of the presently pending second appeal.

In re Condor Flugdienst GmbH

Upon the Foreign Representatives’ Motion for Order Granting Full Force and Effect to German Confirmation Order Pursuant to 11 U.S.C. §§ 105(a), 1521(a), 1525(a), and 1527 and Granting Related Relief and upon the pro se objection raised by a creditor of the debtor in this chapter 15 case, held: The relief requested by the foreign representatives is both common and authorized by chapter 15 of the Bankruptcy Code. The relief is necessary to effectuate the purpose of chapter 15 and to protect the assets of the debtor or the interests of the creditors, is consistent with the principles of comity and will reasonably assure the protections afforded by 11 U.S.C. § 1507(b), is in the spirit of cooperation with the Frankfurt am Main County Court, Insolvency Court and is an appropriate means of cooperation regarding the administration and supervision of the debtor’s assets and affairs. The relief is also within the power of the court under 11 U.S.C. § 105(a) to issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. While the recoveries to United States creditors under the debtor’s foreign plan are low, that is not the measure of determining the appropriateness of the request. The court is satisfied that United States prepetition creditors were afforded treatment no different than that afforded prepetition creditors of the debtor as a whole, that creditors had a reasonable opportunity to be heard in the foreign proceeding and that the German insolvency proceeding has been otherwise conducted in a manner consistent with the spirit and goals of chapter 15 of the Bankruptcy Code. As a result, the motion will be GRANTED.

Joel F. Handler v. Emily Moore (In re Emily Moore)

19bk31162, 20ap00074
Upon the debtor-defendant’s default in this nondischargeability adversary proceeding, held: the plaintiff has established by a preponderance of the evidence that the debtor made certain misrepresentations. While those misrepresentations are generally not actionable as mere broken promises to pay, on default, the well pled allegations of liability are taken as true and the plaintiff has therefore shown that the debtor made a specific representation knowing it was false or with reckless disregard for the truth. The plaintiff has only shown, however, that he justifiably relied on the debtor’s false representations until December 1, 2016, when by his own admission to the debtor further work on the matter was ill-advised; his reliance after that date was not justified. Accordingly, the reasonable fees and expenses charged by the plaintiff prior to December 1, 2016, not to exceed $15,759.97, are nondischargeable under section 523(a)(2)(A). The remaining balance billed to the debtor by the plaintiff is dischargeable.

David P. Liebowitz, as Chapter 7 Trustee for the Estate of Gayety Candy Co., Inc. v. Kalamata Capital LLC,... (In re Gayety Candy Co., Inc.)

18bk32437, 20ap00010
Upon the crossing motions for summary judgment brought by the Internal Revenue Service and the Illinois Department of Revenue to determine priority of liens under section 506, the IRS and IDOR each assert that no genuine issue of material fact exists necessitating a trial on the complaint. The trustee, as plaintiff in the matter, concurs and, but for the existence of an undetermined motion to vacate a previous court order upon which this issue turns, the court agrees...

In re Kimball Hill, Inc., et al.

Upon the vacation, in part, and remand by the District Court of this court’s order granting a motion seeking enforcement of this court’s confirmation order and damages arising from the alleged violation committed by the debtors’ prepetition surety, filed by successor to the purchaser of assets in the above-captioned bankruptcy cases, the District Court having confirmed that this court’s determination that the surety violated the injunction and release set forth in the court’s confirmation order and the debtors’ plan, but remanding for a determination of whether damages are appropriate under the standard set forth by the Supreme Court in the since determined Taggart v. Lorenzen, 139 S. Ct. 1795 (2019), held: The evidence presented by the parties and undisturbed on appeal demonstrates that the surety’s actions were “persistent violations” and “persistent contumacy” of this court’s orders, shifting the burden to the surety to demonstrate that the surety’s belief that its pursuit of the purchaser was lawful is objectively reasonable. The surety has failed to demonstrate such. A finding of civil contempt is appropriate under Taggart and that the previously awarded actual damages for reduced property value, legal costs, consulting costs and project management costs remain supported. The motion remains GRANTED and this decision concludes the issues on remand.

Joel F. Handler v. Emily Moore (In re Emily Moore)

19bk31162, 20ap00074
Upon the debtor’s motion to dismiss a single-count adversary complaint brought under 11 U.S.C. § 523(a)(2)(A) for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), held:  As is required, the court draws all reasonable inferences in the favor of the plaintiff.  As a result, the complaint states a claim for relief, though only just.  Were it not for the liberal pleading standards for intent set forth in Federal Rule of Civil Procedure 9(b), the complaint would fail to rise above mere speculation.  But for the plaintiff’s speculation as to the debtor’s intent, the plaintiff pleads a case that is merely breach of contract, not false pretenses, false representation, or actual fraud.  Given the sophistication of the plaintiff and the plaintiff’s extensive experience bringing matters such as this to this court, the court would otherwise expect more so as to demonstrate that the complaint is not being brought for improper purposes.  As it stands, however, despite the narrowness of this ruling, the motion to dismiss must be denied.

In re Rosebud Farm, Inc.

On the chapter 7 trustee’s objection to the secured status and amount of a claim for fees and costs of counsel for the plaintiff in a prepetition action against the debtor, held: The claim for attorney’s fees and costs is unsecured as the order awarding such fees and costs in the underlying prepetition action was not recorded and the amount of such claim is limited to amount of fees awarded in the prepetition lawsuit. The trustee’s objection is, therefore, SUSTAINED.

In re D/C Distribution, LLC

Upon the motion for relief from the automatic stay brought by certain asbestos claimants, alleging cause exists for relief from the automatic stay to pursue only available insurance coverage, held: The movants have met the cause requirement under 11 U.S.C. § 362(d)(1). Though the Seventh Circuit’s Fernstrom factors are not clearly applicable, they are instructive nonetheless. All three factors thereunder weigh in favor of the claimants. The movants have also established that the debtor lacks equity in the subject property under 11 U.S.C. § 362(d)(2), the sole showing required for such relief in a chapter 7 case. The motion is, therefore, GRANTED as set forth in the attached Memorandum Decision.