In re Evans

656 B.R. 776

IN RE: Geraldine D. EVANS, Debtor.

Case No. 22bk06249

United States Bankruptcy Court, N.D. Illinois, Eastern Division

Signed February 2, 2024

Attorney for LaSalle Street Financial Services, LLC: Paul M. Bach, Bach Law Offices, Inc., Northbrook, IL

Attorney for Geraldine D. Evans: Chad M. Hayward, The Law Offices of Chad Hayward, Naperville, IL

Attorney for Thomas H. Hooper: Autumn Knight, Offices of Thomas H. Hooper, Chapter 13 Trustee, Chicago, IL

MEMORANDUM DECISION

TIMOTHY A. BARNES, Judge.

The matter before the court comes on for consideration on LaSalle Street Financial Services, LLC's Motion to Vacate Order Confirming Chapter 13 Plan (Docket 24) for Lack of Due Process as to LaSalle Street Financial Services, LLC [Dkt. No. 50]¹ (the "Motion") filed by LaSalle Street Financial Services, LLC ("LaSalle") in the above-captioned case. In the Motion, LaSalle argues that it was deprived of due process in the confirmation of the chapter 13 plan in the above-captioned case.

LaSalle's Motion is poorly conceived in many ways. It buries the lede; arguing general issues of constitutional due process and service, only making passing mention to the fact that LaSalle had no claim when notice of the case, the bar date and the confirmation hearing were provided. LaSalle took no steps of its own to protect its rights, but complains loudly of those rights being violated. Even after supplemental briefing necessitated by LaSalle's failure to address its status as the postpetition acquirer of a claim, LaSalle's arguments fared no better.

For the reasons more fully discussed below, LaSalle's Motion will be, by order entered concurrent with this Memorandum Decision, DENIED.

JURISDICTION

The federal district courts have "original and exclusive jurisdiction" of all cases under title 11 of the United States Code, 11 U.S.C. §§ 101, et seq. (the "Bankruptcy Code"). 28 U.S.C. § 1334(a). The federal district courts also have "original but not exclusive jurisdiction" of all civil proceedings arising under the Bankruptcy Code or arising in or related to cases under the Bankruptcy Code. 28 U.S.C. § 1334(b). District courts may refer these cases to the bankruptcy courts for their districts. 28 U.S.C. § 157(a). In accordance with section 157(a), the District Court for the Northern District of Illinois has referred all of its bankruptcy cases to the Bankruptcy Court for the Northern District of Illinois. N.D. Ill. Internal Operating Procedure 15(a).

A bankruptcy court judge to whom a case has been referred has statutory authority to enter final judgment on any core proceeding arising under the Bankruptcy Code or arising in a case under the Bankruptcy Code. 28 U.S.C. § 157(b)(1). Bankruptcy court judges must therefore determine, on motion or sua sponte, whether a proceeding is a core proceeding or is otherwise related to a case under the Bankruptcy Code. 28 U.S.C. § 157(b)(3). As to the former, the bankruptcy court judge may hear and determine such matters. 28 U.S.C. § 157(b)(1). As to the latter, the bankruptcy court judge may hear the matters, but may not decide them without the consent of the parties. 28 U.S.C. §§ 157(b)(1)&(c). Absent consent, the bankruptcy court judge must "submit proposed findings of fact and conclusions of law to the district court, and any final order or judgment shall be entered by the district judge after considering the bankruptcy judge's proposed findings and conclusions and after reviewing de novo those matters to which any party has timely and specifically objected." 28 U.S.C. § 157(c)(1).

In addition to the foregoing considerations, a bankruptcy court judge must also have constitutional authority to hear and determine a matter. Stern v. Marshall, 564 U.S. 462, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011). Constitutional authority exists when a matter originates under the Bankruptcy Code or, in noncore matters, where the matter is either one that falls within the public rights exception, id., or where the parties have consented, either expressly or impliedly, to the bankruptcy court judge hearing and determining the matter. See, e.g., Wellness Int'l Network, Ltd. v. Sharif, 575 U.S. 665, 669, 135 S.Ct. 1932, 191 L.Ed.2d 911 (2015) (parties may consent to a bankruptcy court judge's jurisdiction); Richer v. Morehead, 798 F.3d 487, 490 (7th Cir. 2015) (noting that "implied consent is good enough").

The Supreme Court has made clear that judges of bankruptcy courts have, as do all judges, jurisdiction to hear matters relating to their own orders. Travelers Indem. Co. v. Bailey, 557 U.S. 137, 151, 129 S.Ct. 2195, 174 L.Ed.2d 99 (2009) ("[T]he Bankruptcy Court plainly had jurisdiction to interpret and enforce its own prior orders."); In re Kimball Hill, Inc., 565 B.R. 878, 890 (Bankr. N.D. Ill. 2017) (Barnes, J.). Confirmation of a chapter 13 is specified as a core proceeding, 28 U.S.C. § 157(b)(2)(L), and may only rise in a bankruptcy case. In re Woodruff, 600 B.R. 616, 621 (Bankr. N.D. Ill. 2019) (Barnes, J.). It follows that a motion to vacate an order of confirmation remains within the bankruptcy court's jurisdiction and "stems from the bankruptcy itself," thus such a motion may constitutionally be decided by a bankruptcy court judge. Stern, 564 U.S. at 499, 131 S.Ct. 2594.

As a result, the court has the jurisdiction, statutory authority and constitutional authority to hear and determine the Motion.

HISTORY

On June 1, 2022 (the "Petition Date"), Geraldine D. Evans (the "Debtor") commenced the above-captioned chapter 13 case by filing a voluntary petition for relief. See Voluntary Petition for Individuals Filing for Bankruptcy (Official Form 101) [Dkt. No. 1] (the "Petition"). In addition to the Petition, the Debtor filed the required Schedules and Statement of Financial Affairs, id. (the "Schedules"), and her proposed chapter 13 plan. Chapter 13 Plan (Official Form 113) [Dkt. No. 2] (the "Plan").

Included with the Petition is Debtor's Schedule D, which in turn includes a creditor named Pine Valley One Real Estate ("Pine Valley"), scheduled with a $76,700.00 secured claim for "Real Estate Taxes." Petition, Schedule D: Creditors Who Have Claims Secured by Property (Official Form 106) ("Schedule D"), at ¶ 2.4. Pine Valley's address was scheduled as "Pine Valley One Real Estate LLC, 100 N. LaSalle St., Ste. 710, Chicago, IL 60602." Id. A substantially similar secured claim was scheduled for Cook County Clerk ("Cook County") in the identical amount of $76,700.00. Schedule D, at ¶ 2.1.

Notice of the commencement of the case was filed with the court on June 2, 2022, Notice of Chapter 13 Bankruptcy Case (Official Form 309I) [Dkt. No. 9] (the "Notice of Commencement"), and sent to all creditors by the Bankruptcy Noticing Center on June 4, 2022. Certificate of Notice [Dkt. No. 12] (the "Certificate of Notice"). The Certificate of Notice shows that the Notice of Commencement was sent on that same date to Pine Valley at the address on Schedule D by first class mail and to Cook County electronically by the method it has requested for such notices.

The Certificate of Notice did not just notify creditors of the Petition Date. It notified them of, among other things, the Petition Date, the date for the meeting of creditors under section 341 of the Bankruptcy Code, the deadline for filing non-governmental claims (in this case, August 10, 2022) (the "General Bar Date"), the deadline for filing claims by governmental units (in this case, November 28, 2022) (the "Governmental Bar Date") and the date and location of the hearing on confirmation of the Plan (in this case, July 19, 2022, before now-retired Judge Carol A. Doyle) (as and including continued hearings, the "Confirmation Hearing"). Id. Included with the Certificate of Notice was a copy of the Plan, id., which provided no specific treatment of Pine Valley's secured claim, but did seek a valuation of the claim of Cook County secured by 15830 S. Campbell Ave. Harvey, IL 60426 with PIN 28-13-413-027-0000 (the "Property"). Plan, at § 3.2.

On July 19, 2022, the court conducted the first Confirmation Hearing in the case. At that time, no party had objected to confirmation of the Plan. While it is unclear what transpired at the July 19, 2022, hearing, the court can intuit that Thomas H. Hooper, the chapter 13 trustee assigned to the above-captioned case (the "Chapter 13 Trustee"), observed deficiencies in the Plan and informed the court of the same. See 11 U.S.C. § 1302(b)(2)(B) (making it a duty of chapter 13 trustees to appear and be heard at hearings concerning the confirmation of a plan).

The Confirmation Hearing was continued in open court to August 16, 2022, and that continuance was memorialized on the docket of the case. See Confirmation Hearing Continued [Dkt. No. 16].

In between July 19, 2022, and August 16, 2022, the Debtor modified the Plan twice, see Amended Chapter 13 Plan (Official Form 113) [Dkt. No. 19] (the "First Amended Plan"), Amended Chapter 13 Plan (Official Form 113) [Dkt. No. 22] (the "Second Amended Plan"), and the Chapter 13 Trustee filed his Trustee's Objection to Confirmation of Plan [Dkt. No. 18] (the "Trustee Objection"). Neither the First Amended Plan nor the Second Amended Plan changed the lack of treatment of Pine Valley. The Trustee Objection addressed only Cook County's treatment therein.

Also between those dates, the General Bar Date passed. Pine Valley filed no claim—not by the General Bar Date and not after. Cook County did file a claim on August 12, 2022, well before the Governmental Bar Date. Proof of Claim (Official Form 410) [Claim No. 8] (the "Cook County Claim"). The Cook County Claim made clear that its claim was for the sold taxes contingent upon a Sale in Error. See Cook County Claim, Attachment 1. The total claim amount asserted was $27,565.67 for tax years 2009, 2010, 2011, 2013, 2020 and 2021 for real property taxes sold under certificate of purchase 19S-0000608 for the Property. Id.

As to the Cook County Claim, the Plan amendmen...