In re Gonzalez

1

In re:CECILIA GONZALEZ, Debtor.

No. 21 B 1498

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

December 17, 2021

Chapter 13

MEMORANDUM DECISION

DAVID D. CLEARY, United States Bankruptcy Judge

This matter comes before the court on Byline Bank's Verified Motion to Vacate Order Confirming Plan ("Motion to Vacate"). At the original hearing on the Motion to Vacate, the court entered a scheduling order. Cecilia Gonzalez ("Debtor") filed her response, and Byline Bank filed its reply. The court then set the matter for oral argument on November 1, 2021. Having reviewed the papers filed and heard the arguments of the parties, the court will deny the Motion to Vacate.

BACKGROUND

In 2003 and again in 2007, Debtor and her husband, Amado Acosta executed notes in favor of Plaza Bank ("Byline").^[1] The borrowers are identified in both notes as Amado Acosta and Cecilia Acosta. The 2003 note includes this statement regarding notice:

All notices and other communications required or permitted hereunder shall be in writing and shall be deemed effectively served if personally delivered or three (3) days after having been mailed by United States Mail, postage prepaid to the parties hereto at the addresses shown below or at such other addresses as the parties hereto may by notice specify:

(a) If to Lender: PLAZA BANK

7460 West Irving Park Road

Norridge, Illinois 60706 (b) If to Borrower: AMADO ACOSTA and CECILIA ACOSTA

327 S. Sacramento

Chicago, IL 60634

Motion to Vacate, Ex. A.

The 2007 note, as well as a Change in Terms Agreement effective February 16, 2012, provides the lender's information as:

Plaza Bank

7460 W. Irving Park Road

Norridge, IL 60706

Motion to Vacate, Ex. C.

The 2003 note is secured by a mortgage against the real property and improvements located at 3612 W. Roosevelt Road, Chicago Illinois (the "3612 Property"). The mortgage states on the first page that mortgagee Plaza Bank maintains an office and place of business at 7460 W. Irving Park Road Norridge, Illinois 60634. Motion to Vacate, Ex. B. The mortgage provides that same address for written notice.

The 3612 Property is a two-story building with a commercial space on the first floor and two residential units on the second floor. Debtor uses the commercial space to operate a wholesale food distribution company. She also occupies one of the second-floor units.

The 2007 note is secured by a mortgage against the real property and improvements located at 3623-25 W. Roosevelt Road, Chicago, Illinois (the "3623 Property"). The mortgage states on the first page that the address for lender Plaza Bank is 7460 W. Irving Park Road, Norridge, IL 60706. Motion to Vacate, Ex. D. It provides that notices shall be "directed to the addresses shown near the beginning of this Mortgage." Id. The 3623 Property is a vacant lot used as parking for the 3612 Property.

Both the 2003 and 2007 notes went into default. Byline filed a complaint to foreclose the mortgage on the 3612 Property in the Circuit Court of Cook County on March 22, 2017 (the "First Foreclosure Action"). A few months later, attorney Fernando Carranza ("Carranza") filed an appearance in the First Foreclosure Action on behalf of "Acosta Amado; Acosta Cecilia; Gonzalez Cecilia". Motion to Vacate, Ex. H.

The Circuit Court dismissed the First Foreclosure Action on February 20, 2018. The caption of the dismissal order, prepared by attorney Scott H. Kenig ("Kenig"), Byline's counsel, lists several defendants. The first two named defendants are Amado Acosta and Cecilia Acosta a/k/a Cecilia Gonzalez. Motion to Vacate, Ex. I.

Byline filed a second complaint to foreclose the mortgage on the 3612 Property on July 23, 2019 (the "Second Foreclosure Action"). About six months later, the Circuit Court entered a judgment of foreclosure and sale along with a money judgment against Amado Acosta and Cecilia Acosta a/k/a Cecilia Gonzalez. Motion to Vacate, Ex. K. Kenig prepared the judgment and order. Id. A judicial sale was scheduled but never held, at first due to the COVID-19 pandemic and then because Debtor filed bankruptcy case 20 B 10918.

Debtor filed 20 B 10918 under the name Cecilia Gonzalez, and on the petition she listed other names she has used in the last 8 years as Cecilia Gonzalez-Burciaga and Cecilia Acosta. 20 B 10918, EOD 1. Carranza filed the petition as her attorney.

Debtor did not file her Schedules and Statement of Financial Affairs with the petition on May 13, 2020, but she did include a list of creditors. Plaza Bank is on the list but without a mailing address. Byline did not receive notice of 20 B 10918 from the court. Id., EOD 7; Motion to Vacate, Ex. M.

Byline learned about 20 B 10918 through an email to Kenig from Carranza's paralegal on May 18, 2020. Motion to Vacate, Ex. N. Kenig filed an appearance in the bankruptcy case the next day. 20 B 10918, EOD 8. Byline participated in 20 B 10918, filing an objection to confirmation. Id., EOD 30. On the motion of the chapter 13 Trustee, the court dismissed the case on November 3, 2020, for unreasonable delay pursuant to 11 U.S.C. § 1307(c)(1).

Debtor filed this case on February 3, 2021. She again filed under the name Cecilia Gonzalez and listed other names she has used in the past 8 years as Cecilia Gonzalez-Burciaga and Cecilia Acosta. 21 B 1498, EOD 1. In this case, Debtor filed her schedules and SOFA with her petition. On Schedule D she listed Byline Bank fka North Community Bank at 7460 W. Irving Park Road / Norridge, IL 60634 as holding a claim in the amount of $102, 021.85, secured by a mortgage on the 3612 Property. She disclosed the Second Foreclosure Action in answer to Question 9 on her Statement of Financial Affairs and indicated that it is still pending.

Byline Bank appears twice in the list of creditors attached to Debtor's petition:

Byline Bank fka North CommunityBank

7460 W. Irving Park Road

Norridge, IL 60634

Byline fka / Plaza Bank

7460 W Irving Park Road

Harwood Heights, IL 60706

The court sent notice of this case to Byline at these two addresses on February 6, 2021.^[2] The first page of the notice includes Debtor's name and the two other names she used in the past 8 years. It includes the last 4 digits of her Social Security number as well. 21 B 1498, EOD 11. On the same date, the court also sent a copy of Debtor's chapter 13 plan to Byline at these two addresses. Id., EOD 12.

The court confirmed Debtor's chapter 13 plan on June 7, 2021. An attorney first appeared in this case for Byline on June 23, 2021. About a month later, Kenig filed an appearance, followed by this Motion to Vacate.

LEGAL DISCUSSION

"A confirmed plan acts as a court-approved contract that binds both the debtor and all the creditors." In re Bird, 624 B.R. 841, 843 (Bankr. N.D.Ill. 2021). Orders confirming plans are final judgments. Byline did not file an appeal of the confirmation order.

Ordinarily, the finality of a Bankruptcy Court's orders following the conclusion of direct review would stand in the way of challenging their enforceability. Rule 60(b), however provides an exception to finality that allows a party to seek relief from a final judgment, and request reopening of his case, under a limited set of circumstances.

United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 269 (2010) (quotations omitted).

Byline asks the court to vacate the order confirming Debtor's chapter 13 plan under three of the six subsections of Fed.R.Civ.P. 60(b) (made applicable in bankruptcy cases by Fed.R.Bankr.P. 9024).^[3]

The Bankruptcy Code provides a basis for revoking a confirmation order

According to 11 U.S.C. § 1330(a): "On request of a party in interest at any time within 180 days after the date of the entry of an order of confirmation under section 1325 of this title, and after notice and a hearing, the court may revoke such order if such order was procured by fraud." Byline did not seek relief under section 1330, although it suggested that Debtor's failure to include Kenig in her list of creditors was motivated by fraudulent intent. Since Byline did not pursue a claim under section 1330, the court will not address it.

Relief is not appropriate under Fed.R.Civ.P. 60(b)(1)

Byline first asks the court to vacate the confirmation order under Rule 60(b)(1), because of "mistake, inadvertence, surprise, or excusable neglect." It points out that the bankruptcy court notice of this case stated that the debtor was Cecilia Gonzalez, but that its loans are in the name of Cecilia Acosta. "Byline failed to connect the Second Bankruptcy with the subject loans in the name of Cecilia Acosta because Byline also has a separate outstanding loan to a different Cecilia Gonzalez and Byline mistakenly assumed that this Second Bankruptcy pertained to that other Cecilia Gonzalez." Motion to Vacate, p. 7.

The argument that Debtor's confirmation order should be vacated because Byline confused one debtor with another does not support the relief requested. Rule 60(b) relief "is an extraordinary remedy and is granted only in exceptional circumstances." McCormick v. City of Chicago 230 F.3d 319, 327 (7th Cir. 2000) (quotation omitted). The bankruptcy court's notice provided the alternative name of Cecilia Acosta - the name on all of her loan documents - immediately below the name Cecilia Gonzalez. It also provided the last four digits of her Social Security number, and the address listed for Debtor is at the 3612 Property. Even if Byline initially assumed that this notice pertained to a different Cecilia Gonzalez, it had more than enough information to double-check this assumption and easily discover its error. "Neither ignorance nor carelessness on the part of a litigant or his attorney provide grounds for relief under Rule 60(b)(1)." Ben Sager...