In re Gomez

655 B.R. 738

IN RE: Felipe Nery GOMEZ, Debtor.

No. 23 B 3023

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

Signed December 29, 2023

Attorneys for debtor Felipe Nery Gomez: Felipe Nery Gomez, pro se, Villa Park, IL.

Attorneys for chapter 7 trustee Frank J. Kokoszka: Frank J. Kokoszka, Kokoszka & Janczur, P.C., Chicago, IL.

MEMORANDUM OPINION

A. Benjamin Goldgar, United States Bankruptcy Judge

Felipe Nery Gomez is a former lawyer with a penchant for litigation - his own. Some of that litigation, perhaps all of it, is frivolous. Faced with large sanctions awards, Gomez filed a chapter 7 bankruptcy case in early 2023. On his Schedule C, he claimed exemptions for more than one hundred lawsuits. He then amended his Schedule C twice, first adding legal grounds for his exemptions (as Schedule C requires), then changing those grounds. The trustee objected to Gomez's Second Amended Schedule C. That objection was continued for several months until at last a briefing schedule was set. Meanwhile, Gomez amended his Schedule C a third time, and the trustee did not object.

Before the court for ruling is the trustee's fully briefed objection to the exemptions Gomez claimed in his Second Amended Schedule C. Gomez opposes the objection. Because the trustee did not object to the Third Amended Schedule C, he says, and because the time to object has passed, the objection is moot.

For the reasons discussed below, Gomez is right. The trustee's objection will be overruled.

1. Jurisdiction

The court has subject matter jurisdiction of the bankruptcy case under 28 U.S.C. § 1334(a) and the district court's Internal Operating Procedure 15(a). This is a core proceeding. 28 U.S.C. §§ 157(b)(2)(A), (B); see In re Paulsen, 640 B.R. 147, 151 (Bankr. N.D. Ill. 2022), aff'd in part, dismissed in part, No. 22 C 50111, 2023 WL 8019393 (N.D. Ill. Nov. 20, 2023).

2. Background

The facts come from the docket in the bankruptcy case, papers (including claims) filed in the case, the website of the Illinois Attorney Registration and Disciplinary Commission, and the dockets of the court of appeals and district court. This court can take judicial notice of information on government web sites, Denius v. Dunlap, 330 F.3d 919, 926 (7th Cir. 2003), of its own docket, and of the dockets of other courts in related matters, In re Prate, 634 B.R. 72, 75 n.1 (Bankr. N.D. Ill. 2021). No facts are in dispute.

a. The Litigation and the Bankruptcy Case

Gomez is an Illinois lawyer who was suspended from the practice of law in 2022 and is not currently authorized to practice. He calls himself "retired." Rather than represent clients, Gomez has taken to representing himself. Federal court records show eleven lawsuits in this district with Gomez as plaintiff since 2018 and fourteen appeals since 2021. Some (if not all) of Gomez's litigation has been frivolous and drawn sanctions. In July 2022, the Circuit Court of Cook County awarded Gomez's opponents $91,393 in attorney's fees and costs for having to defend themselves against his efforts. In December 2022, the district court awarded his opponents $127,081. In February 2023, the court of appeals awarded his opponents - the same ones - $47,434.

On the hook for $265,908 in sanctions in these matters alone, the next month Gomez sought relief pro se under chapter 7 of the Bankruptcy Code. Gomez filed the schedules that all chapter 7 debtors file. On lines 33 and 34 of his Schedule A/B, a list of his property, he checked "yes" to affirm that he had "claims against third parties" as well as "other contingent and unliquidated claims." Submitted with Schedule A/B was an "Attachment 1," a list of 118 lawsuits and other matters, some pending and some apparently concluded, identified by court and case number. Of the 118, fourteen had been filed in Texas state courts, two in California state courts, forty-four in the Circuit Court of Cook County, Illinois, and fifty-eight in assorted federal district courts and courts of appeals.

b. The Schedules C

Along with his Schedule A/B and other schedules, Gomez filed Schedule C, listing the property he claimed as exempt. On his Schedule C, he checked the box in Part 1 stating that he was "claiming federal exemptions." In Part 1, he claimed exemptions for "auto," "personal property," and "cash." In Part 2, he claimed exemptions for (among other things) all the litigation he had listed in Schedule A/B. He listed on a single line "All Plaintiff Cases," with a reference to "Att. 1." On the next line he listed "All Potential Claims" with the same reference. On each of those lines, he gave a value of "$0.00" for the value of the portion he owned and checked the box giving the claimed exemption amount as "100% of fair market value, up to any applicable statutory limit." On every line of Schedule C, he left blank the space for "specific laws that allow exemption."

Two months later, Gomez filed a "First Amended Schedule C." The new Schedule C was identical to the original, except that this time Gomez completed the space asking the legal basis for the claimed exemption. On the line for his "auto," Gomez added "735 ILCS 5/12-1001(b)," the Illinois "wild card" exemption for equity interests in personal property. On every other line, Gomez added: "735 ILCS 5/12-1001(a), (b), (d), (f), (g), (h), (i)," all but one provision of the Illinois personal property exemption statute, and "11 USC 552," not an exemption statute but the Bankruptcy Code provision concerning the post-petition effect of security interests.

Three weeks later, Gomez filed a "Second Amended Schedule C." This Schedule C (a copy of which is attached to this opinion) was identical to its predecessor, except that:

• On the line for the "auto," Gomez changed the statutory citation to "735 ILCS 5/12-1001(c)," the exemption for an interest in a motor vehicle.

• On the line for "personal property," he added a reference to "Att.1 hereto, and Lines 33, 34" of Schedule A/B and changed the statutory citation to "735 ILCS 5/12-1001(a), (b)," the exemption for clothing and other items and the wild card exemption.

• On the lines in Part 2 for his lawsuits, he added this parenthetical phrase below the $0.00 value he claimed to own: "Claimed as Zero Present Value, and as exempt Personal Property."

• On the line for "cash," as well as on the lines in Part 2 for the lawsuits, he trimmed the statutory reference to "735 ILCS 5/12-1001(b)," the wild card exemption.

The Second Amended Schedule C drew an objection from the trustee. He complained that Gomez was using the wild card exemption to "100% exempt each one of his lawsuits," when the exemption only permits a debtor to exempt his "equity interest, not to exceed $4,000 in value, in any other property," 735 ILCS 5/12-1001(b) (2022). Not only was Gomez exempting the lawsuits in their entirety but he was claiming the full wild card exemption more than once, which is impermissible. See Golden Eagle Distrib. Corp. v. Wise Equip. & Rentals, No. 15 C 8235, 2017 WL 4574967, at *6 (N.D. Ill. Oct. 12, 2017) ("[T]he Illinois personal property exemption statute does not permit debtors to use the wildcard exemption more than once.").

A month later, Gomez amended his Schedule C yet again. On the Third Amended Schedule C (a copy of which is also attached to this opinion), Gomez checked the box in Part 1 stating that he was claiming "state and federal nonbankruptcy exemptions" rather than "federal exemptions." The rest of the form stayed the same, except that Gomez added the citation for the wild card exemption to an exemption he claimed in Part 2 for "other property" and also added "11 USC 522" before the statutory citation on each line.

Eleven days after filing the Third Amended Schedule C, Gomez filed what he called a "2nd Amended Attachment I to Schedules A/B and C" for the supposed purpose of "Clarifying, Adding, and Listing Exempted Cases." The relationship between the "2d Amended Attachment" and the list of cases Gomez originally attached to his Schedule A/B is unclear. The "2d Amended Attachment" was shorter, listing only some of the matters on the original list, but it also added new ones, including three appeals to the Illinois Appellate Court.

The trustee did not object to the Third Amended Schedule C.

c. The Creditors Meeting

The first date for the creditors meeting in Gomez's case was April 14, 2023. The April 14 meeting was rescheduled to May 15. The trustee then continued the meeting repeatedly (to June 6, to July 12, to August 22, to September 12, to September 27, and then to October 18), each time filing a formal statement adjourning the meeting to the next date. The docket shows no dates after October 18 for a continued meeting. The trustee filed no statement after October 18 adjourning the meeting to another date.

d. The Trustee's Objection

Aware that the trustee had objected to the exemptions in the Second Amended Schedule C but not that Gomez had filed a Third Amended Schedule C (let alone the "2d Amended Attachment"), the court set a briefing schedule on the trustee's objection. In his response, Gomez did not challenge the substance of the objection, arguing only that the trustee had failed to object to the Third Amended Schedule C, and the time to object had passed. The trustee disagrees.

3. Discussion

Gomez has the better of the argument. Under the Bankruptcy Rules, the deadline for parties in interest to object to the exemptions Gomez claimed in the Third Amended Schedule C was November 17, 2023. The trustee did not ask for an extension of the deadline, as he could have, and he did not object before the deadline passed. That means the exemptions Gomez claimed are final and can no longer be contested. The trustee's objection to the Second Amended Schedule C, though well taken, is moot.

a. The Exemption Scheme

The filing of a bankruptcy petition "creates an estate," 11 U.S.C. § 541(a), consisting of "all legal or equitable interests of the debtor in property as of the commencement of the case,...