In re Quade

482 B.R. 217

In re Victoria C. QUADE, Debtor.

No. 12–bk–26779.

United States Bankruptcy Court,

N.D. Illinois,

Eastern Division.

Oct. 10, 2012.

Donna B. Wallace, Baldi Berg and Wallace Ltd., Chicago, IL, for Debtor.

MEMORANDUM DECISION

TIMOTHY A. BARNES, Bankruptcy Judge.

The matter before the court arises out of two motions: (1) the Motion for Relief from the Automatic Stay (the “ Stay Relief Motion ”) [Docket No. 18] of Entertainment Events, Inc. (“ EEI ”) and (2) Debtor's Motion To Avoid Judicial Lien on Exempt Property and Recover Exempt Property (the “ Lien Avoidance Motion ”) [Docket No. 21] of Victoria C. Quade (“Debtor”). The Stay Relief Motion and the Lien Avoidance Motion are referred to collectively herein as the “ Motions ”.

This Memorandum Decision constitutes this court's findings of fact and conclusions of law in accordance with Rule 7052 of the Federal Rules of Bankruptcy Procedure (the “ Bankruptcy Rules ”). Separate Orders will be entered pursuant to Bankruptcy Rule 9021.

JURISDICTION

The federal district courts have “original and exclusive jurisdiction” of all cases under title 11 of the United States Code (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 title 11 of the Bankruptcy Code, or arising in or related to cases under title 11. 28 U.S.C. § 1334(b). District courts may, however, refer these cases to the bankruptcy judges 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 judge to whom a case has been referred may enter final judgment on any core proceeding arising under the Bankruptcy Code or arising in a case under title 11. 28 U.S.C. § 157(b)(1). A request for relief from stay under section 362(d) of the Bankruptcy Code arises in a case under title 11 and is specified as a core proceeding. 28 U.S.C. § 157(b)(2)(G); In re Mahurkar Double Lumen Hemodialysis Catheter Patent Litig., 140 B.R. 969, 976–77 (N.D.Ill.1992). A motion to avoid a judicial hen under section 522(f)(1) of the Bankruptcy Code arises in a case under title 11, and a determination of the validity, extent, or priority of liens is specified as a core proceeding. 28 U.S.C. § 157(b)(2)(K); In re Rosol, 114 B.R. 560, 562 (Bankr.N.D.Ill.1989).

Accordingly, final judgment is within the scope of the court's authority.

PROCEDURAL HISTORY

In considering the Motions, the court has considered the arguments of the parties at the July 24, 2012 hearing and the August 29, 2012 hearing, and has reviewed and considered the Motions themselves, the various attached exhibits submitted in conjunction therewith, as well as:

(1) The Response to Debtor's Motion To Avoid Judicial Lien on Exempt Property and Recover Exempt Property, and Creditor's Objections to Claimed Exemption [Docket No. 22] (the “ Response ”);

(2) The Debtor's Reply to Entertainment Events Inc.'s Response to Debtor's Motion To Avoid Judicial Lien on Exempt Property and Recover Exempt Property [Docket No. 23];

(3) The Debtor's Response to Motion To Modify Stay Filed by Entertainment Events, Inc. [Docket No. 25];

(4) The court's Order Setting Briefing Schedule [Docket No. 30];

(5) The Stipulated Statement of Procedural Facts [Docket No. 31];

(6) The Memorandum in Opposition to Debtor's Lien Motion and in Support of Creditor's Stay Motion [Docket No. 32];

(7) The Debtor's Memorandum in Support of Debtor's Motion To Avoid Judicial Liens and in Opposition to Motion to Modify Stay Filed by Entertainment Events, Inc. [Docket No. 33];

(8) The Memorandum in Opposition to Debtor's Lien Motion and in Support of Creditor's Stay Motion [Docket No. 34];

(9) The Complaint To Avoid and Recover Preferential Transfers of Exempt Property Pursuant to Section 522(h) [Docket No. 35] [Adv. Pro. 12–01295, Docket No. 1];

(10) The Debtor's Memorandum in Reply to Entertainment Event Inc.'s Memorandum in Opposition to

Debtor's Lien Motion and In Support of Creditor's Stay Motion [Docket No. 36]; and

(11) The Response to Debtor's Memorandum in Support of Lien Motion and in Opposition to Stay Motion [Docket No. 37].

Though the foregoing is not an exhaustive list of the filings in the above-captioned adversary proceeding, the court has taken judicial notice of the contents of the docket in this matter. See Levine v. Egidi, No. 93C188, 1993 WL 69146, at *2 (N.D.Ill. March 8, 1993), In re Fin.Partners, 116 B.R. 629, 635 (Bankr.N.D.Ill.1989) (authorizing a bankruptcy court to take judicial notice of its own docket).

FACTUAL HISTORY

From the foregoing review and consideration, the court finds the following facts to be undisputed:

(1) EEI possesses against Debtor a judgment in the amount of $884,056.55 (the “ Judgment ”), registered on September 29, 2011 with the Circuit Court of Cook County, Illinois (the “ State Trial Court ”).

(2) On October 4, 2011, EEI served third party citations (the “ Original Third Party Citations ”) on Nuns4Fun Entertainment, Inc., Quade Productions, Ltd. and Quade/Donovan Entertainment, Inc. (the “ Corporations ”), three corporations in which the Debtor was an officer, director and shareholder.

(3) On October 7, 2011, EEI recorded a memorandum of judgment (the “ Memorandum of Judgment ”) with the Cook County Recorder of Deeds.

(4) On October 20, 2011, the Debtor answered the Original Third Party Citations as agent of the Corporations, certifying that none of the Corporations were holding any personal property or monies belonging to the Debtor, individually.

(5) On October 21, 2011, EEI issued an alias citation to discover assets (the “ Alias Citation ”) to Debtor.

(6) On October 27, 2011, the examination on the Original Third Party Citations was continued.

(7) On November 2, 2011, the Alias Citation was served upon the Debtor.

(8) On November 14, 2011, EEI issued a non-wage garnishment (the “ Garnishment ”) to Merrill Lynch & Co. (“ Merrill Lynch ”) that was served on Merrill Lynch that same day, with notice being mailed to the Debtor the following day.

(9) On November 17, 2011, the Debtor appeared in response to the Alias Citation with her counsel, Andre & Diokno. The Debtor was sworn and produced some, but not all, documents in the rider attached to the Alias Citation. The State Trial Court set a deadline for the Debtor to produce documents and continued the Debtor's examination on the Original Third Party Citations.

(10) On November 17, 2011, an order was entered granting EEI a judicial lien on any proceeds that may become due and owing to the Debtor in the lawsuit pending in the United States District Court for the Northern District of Illinois known as Maripat Donovan v. Victoria C. Quade, Case No. 05 C 3533 (the “ District Court Lawsuit ”).

(11) On November 23, 2011, the Original Third Party Citations were again continued.

(12) On December 9, 2011, counsel for EEI received Merrill Lynch's answer on the Garnishment revealing that Merrill Lynch was holding funds belonging to the Debtor.

(13) On December 14, 2011, EEI filed a motion for turnover requesting liquidation of the funds being administered by Merrill Lynch (the “ ML Turnover Motion ”) and scheduled the ML Turnover Motion for presentation on January 12, 2012.

(14) On December 22, 2011, the Debtor produced the additional documents requested in the attachment to the Alias Citation.

(15) On December 28, 2011, the Debtor appeared for the continued examination on the Original Third Party Citations.

(16) On December 28, 2011, EEI issued to and served on the Debtor as Trustee of the Victoria Quade Revocable Trust dated July 17, 1997 (the “Trust”) an additional third party citation (the “ Second Third Party Citation ” and together with the Original Third Party Citations, the “ Citations ”). The Debtor was the settlor, beneficiary and trustee of the Trust.

(17) On January 4, 2012, the Debtor, as trustee, answered the Second Third Party Citation served on the Trust, certifying that the Trust was not holding any personal property or monies belonging to the Debtor, individually.

(18) On January 9, 2012, EEI filed its Second Motion for Turnover of the assets in the Quade Trust (the “ Trust Turnover Motion ” and together with the ML Turnover Motion, the “ Turnover Motions ”).

(19) On January 12, 2012, the Citations were continued and the State Trial Court set a briefing schedule on the Turnover Motions.

(20) On February 8, 2012, the Debtor filed her response to the ML Turnover Motion wherein the Debtor argued that her Roth IRA and Individual IRA were exempt.

(21) On February 22, 2012, EEI filed its reply to Debtor's response to ML Turnover Motion wherein EEI argued that the Debtor had waived her right to claim exemptions.

(22) On February 23, 2012, the Citations were again continued.

(23) On March 27, 2012, the State Trial Court heard arguments on the Turnover Motions and all the pending Citations were continued.

(24) On April 5, 2012, EEI filed a Motion for Rule To Show Cause and Sanctions against the Debtor.

(25) On April 5, 2012, the Debtor filed an Emergency Motion To Supplement her Response to the ML Turnover Motion, a Motion for Citation Hearing To Declare Exempt Assets and a Claim and Declaration of Exemptions.

(26) On April 11, 2012, EEI filed its Notice of Third Party Claim in the District Court Lawsuit.

(27) On April 12, 2012, the State Trial Court ordered, inter alia, that the Debtor was to turn over and assign to EEI the judgment that had been entered in her favor in the District Court Lawsuit.

(28) On April 17, 2012, EEI filed a Motion To Intervene in Post Judgment Proceedings in the District Court Lawsuit (the “ Motion To Intervene ”).

(29) On April 19, 2012, United States Magistrate Judge Nan R. Nolan granted EEI's Motion To Intervene.

(30) On ...