15 B 35358, 15 A 00876
The Debtor filed an adversary complaint against Walsh Construction Company and the Clerk of the Circuit Court of Cook County, seeking:  (1) a determination that certain funds deposited with the Clerk pursuant to a judgment order entered by the Circuit Court are property of the bankruptcy estate, and (2) turnover of those funds to the Debtor.  Walsh filed a 12(b)(6) motion to dismiss the complaint.  The judgment order awarded Walsh $27,500,000 on its breach of contract claim against the Debtor, awarded the Debtor a total of about $8,300,000 on its breach of contract claim against Walsh and an interpleader claim filed by the Debtor’s subcontractor, and provided that the amounts awarded to the Debtor be set off against the amount awarded to Walsh.  The Court found that the Rooker-Feldman doctrine did not bar its jurisdiction over the adversary proceeding because the Court did not need to overturn the Circuit Court’s decision to determine the interests of the parties.  As to the substantive issue, the Court found that, based on applicable law and the language in the judgment order, the setoff was accomplished pre-petition, through and at the time of the entry of the order; the setoff therefore effectuated a transfer; the deposited funds were thus not property of the Debtor’s bankruptcy estate; and, as a result, the funds could not be turned over to the Debtor.  Accordingly, the Court held that the Debtor failed to state a claim upon which relief can be granted and, in fact, could not assert any set of facts establishing its entitlement to the relief it sought.  Therefore, the Court granted Walsh’s motion to dismiss the complaint, and the complaint was dismissed with prejudice.