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Judge Timothy A. Barnes

Upon the Motion for Entry of an Order (I) Enforcing Confirmation Order; (II) Awarding Damages; and (III) Granting Related Relief, brought by assignee of personal property administered by the liquidating trust in the above-captioned bankruptcy cases, held: The movant has established that it is a party protected by the release in the confirmation order entered in the case and that the claims brought in the state court actions are attempts by the surety to recapture losses stemming from the debtors’ released liability.  The motion is, therefore, GRANTED in part, as set forth in the attached Memorandum Decision.  A separate hearing on damages will follow.

16bk01335, 16ap00141
On cross motions for summary judgment concerning the validity as a matter of law of the debtor/defendant’s lack of authority defense, wherein the debtor/defendant alleged that the plaintiff LLC lacked standing as the authority of the plaintiff’s lender to manage and thus cause the plaintiff to file its complaint had expired under the applicable statute of limitations, held: Statutes of limitations bar specific legal remedies by creating an affirmative defense to a time-barred action, but statutes of limitation are neither self-executing nor dispositive of the parties’ underlying rights.
Further, a security agreement or mortgage is incident to the underlying debt for limitations purposes and the security remains enforceable so long as the debt remains unpaid and enforceable. As such, the lender’s authority to manage the LLC was unaffected and the debtor/defendant’s affirmative defense fails as a matter of law. The debtor/defendant’s motion is, therefore, DENIED and the plaintiff’s motion is GRANTED.

In re Larry Shelton
September 14, 2018

Upon an objection to a chapter 13 plan brought by the standing chapter 13 trustee assigned to the matter, wherein the trustee asserted that the plan’s reduction of payments to secured creditors in order to allow debtor’s counsel fees to be paid earlier in the case both violated the express requirements of the Bankruptcy Code and was not proposed in good faith, held: The plan’s treatment of secured creditors violates the express prohibition in the Bankruptcy Code against such treatment. As a result, the plan is not confirmable. Further, such improper treatment benefits counsel alone and does not treat the debtor or the debtor’s other creditors fairly. As a result, the plan has not been proposed in good faith and is not confirmable. The trustee’s objection is sustained and confirmation of the plan is denied.

Judge Janet S. Baer

15 B 26538, 15 A 00771
Raymond Michael Chuipek filed an adversary complaint against his former employer Scott C. Gilmore, seeking a determination that a debt owed to him by Gilmore by virtue of a state court judgment entered on a jury verdict was not dischargeable pursuant to § 523(a)(2)(6). Chuipek subsequently filed a motion for summary judgment, arguing that the questions answered by the jury were sufficient to meet the willful and malicious standard of § 523(a)(2)(6) and that, thus, Gilmore was precluded from re-litigating the factual issues decided in the state court under the doctrine of collateral estoppel. Gilmore contended that although the jury found in Chuipek’s favor, there was no finding of subjective intent to willfully and maliciously injure Chuipek. Therefore, Gilmore asserted, collateral estoppel could not be applied. Based on a close inspection of the entire state court record, the Court found that the facts necessarily implied by the jury’s verdict established that Gilmore’s conduct was willful and malicious and that it caused injury to Chuipek for purposes of § 523(a)(6). Accordingly, the Court concluded that the prior case presented the same issues and that collateral estoppel applied to the factual record in the nondischargeability action, thus barring Gilmore from relitigating the underlying facts decided in the state court case. As such, the Court granted Chuipek’s motion and entered judgment in his favor.

15 B 28696, 16 A 00026
Plaintiff Tillman Enterprises, LLC (“Tillman”) filed a three-count adversary complaint against Todd S. Horlbeck (“Horlbeck”), seeking a determination that a debt owed to it by Horlbeck for alleged securities violations and fraud was not dischargeable pursuant to 11 U.S.C. §§ 523(a)(19), (a)(2)(A), and (a)(2)(B).  After Tillman amended the complaint and Horlbeck’s motion to dismiss was denied, the parties’ filed cross-motions for summary judgment.  No material facts were in dispute.  Tillman argued that Horlbeck had violated securities laws by reporting inflated account values while managing a hedge fund in which Tillman had invested.  In addition, Tillman alleged that Horlbeck misrepresented and omitted material information while the parties negotiated the settlement of those securities claims.  Horlbeck admitted to reporting inaccurate values but contested whether Tillman could prove the requisite elements of its claims.  After establishing that it had jurisdiction to determine liability for the violation of securities laws under § 523(a)(19), the Court found that Tillman had failed to prove that Horlbeck violated any securities laws.  As such, the Court granted Horlbeck’s motion for summary judgment under § 523(a)(19) and denied Tillman’s cross-motion.  Turning to §§ 523(a)(2)(A) and (a)(2)(B), the Court first found that Tillman could maintain claims under both subsections because they were based on separate alleged misrepresentations.  On the merits, the Court found that Horlbeck had failed to disclose liabilities on a financial statement, and that he had misrepresented information about a regulatory investigation and his management of the hedge fund.  Tillman, in turn, had relied on those misrepresentations and omissions while deciding to enter into a settlement agreement and extend credit under a promissory note.  Thus, the Court found that the debt Horlbeck owes under the settlement agreement and promissory note is not dischargeable under §§ 523(a)(2)(A) and (a)(2)(B), granted Tillman’s motion for summary judgment, and entered judgment in its favor.

Judge A. Benjamin Goldgar

In re Aurora Memory Care, LLC
September 27, 2018

18 B 11289

Judge Deborah L. Thorne


Judge Thomas M. Lynch

In re Plichta
September 5, 2018

Creditor’s motion to dismiss case under 11 U.S.C. § 707(b)(1), (2) and (3) denied.

Judge Carol A. Doyle

In re Timothy Shannon
September 7, 2018

18 B 04116