In re Robinson

577 B.R. 294

IN RE: Jennifer ROBINSON, Debtor.

Case No. 17bk12405

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

Signed December 4, 2017

James J. Burns Jr., The Burns Law Firm P.C., Chicago, IL, Attorney for Debtor.

Paul M. Bach, Bach Law Offices, Northbrook, IL, Attorney for Axert, LLC—6402 S. Ingleside Series, and U.S. Bank Custodian for TLCF 2012A, LLC.

TIMOTHY A. BARNES, Judge.

MEMORANDUM DECISION

Before the court is Axert, LLC—6402 S. Ingleside Series and US Bank Custodian for TLCF 2012A, LLC's Motion to Modify the Automatic Stay as to 6402 S. Ingleside, Chicago, Illinois Regarding PIN 20–23–104–053–0000 (the "Motion") brought jointly by U.S. Bank Custodian for TLCF 2012A, LLC ("U.S. Bank") and Axert, LLC—6402 S. Ingleside Series ("Axert" and collectively with U.S. Bank, the "Tax Purchaser").¹ The Tax Purchaser seeks to modify the automatic stay with respect to the real property known as 6402 S. Ingleside Avenue, Chicago, Illinois (the "Property"), owned by Jennifer Robinson, the debtor in the above-captioned case (the "Debtor").

The determination of the Motion rests on whether the Tax Purchaser has met the necessary elements to be granted relief from stay, which in turn rests on whether the Debtor has a right to treat the Debtor's Property and thereby the Tax Purchaser's claim through her chapter 13 plan. For the reasons set forth more fully below, upon review of the parties' respective filings and after conducting hearings on the matter, the court finds that a debtor whose period for redeeming taxes sold in Illinois has passed prior to commencing his or her bankruptcy case may nonetheless treat those taxes under a chapter 13 plan if a tax deed has not yet been issued and recorded. As a result, the Tax Purchaser has not established grounds to be granted relief from stay.

JURISDICTION

The federal district courts have "original and exclusive jurisdiction" of all cases undertitle 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, 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 the Bankruptcy Code. 28 U.S.C. § 157(b)(1). Bankruptcy 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 court may hear and determine such matters. 28 U.S.C. § 157(b)(1). As to the latter, the bankruptcy court may hear the matters, but may not decide them without the consent of the parties. 28 U.S.C. § 157(b)(1) & (c) ; Wellness Int'l Network, Ltd. v. Sharif, ––– U.S. ––––, 135 S.Ct. 1932, 1939, 191 L.Ed.2d 911 (2015) ; Richer v. Morehead, 798 F.3d 487, 490 (7th Cir. 2015) (noting that "implied consent is good enough"). Instead, the bankruptcy court 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).

Motions to terminate, annul, or modify the automatic stay are core proceedings arising under the Bankruptcy Code, in which the bankruptcy court is empowered to enter orders. 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) ; In re Quade, 482 B.R. 217, 221 (Bankr. N.D. Ill. 2012) (Barnes, J.), aff'd, 498 B.R. 852 (N.D. Ill. 2013). For the same reason, the court has constitutional authority to hear and determine this Motion. The Klarchek Family Tr. v. Costello(In re Klarchek), 508 B.R. 386, 389 (Bankr. N.D. Ill. 2014) (Barnes, J.). Nothing in Stern v. Marshall, 564 U.S. 462, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011), or its progeny stands as or could reasonably be interpreted as an impediment to the bankruptcy court dispensing with routine motions arising out of the Bankruptcy Code.

Accordingly, determination of the Motion is within the scope of the court's jurisdiction and constitutional authority.

BACKGROUND

The facts of this matter are essentially undisputed. Prior to the commencement of her bankruptcy case, the Debtor fell behind in her property tax payments to Cook County, Illinois ("Cook County") with respect to the Property. On August 6, 2013, Cook County sold certain of the Debtor's taxes to U.S. Bank for $2,120.69. Subsequent tax arrearages were paid by U.S. Bank, in the amount of $11,309.05.²

On August 3, 2016, one day before U.S. Bank alleges that the Debtor's right to redeem the purchased taxes would have expired, the Debtor commenced a bankruptcy case. In re Robinson, Case No. 16bk24964 (Bankr. N.D. Ill. filed Aug. 3, 2016) (Thorne, J.) (the "First Case"). In the First Case, the Debtor scheduled U.S. Bank as a secured creditor in the amount of $11,309.00.³ The Debtor confirmed her chapter 13 plan (the "First Plan") on December 12, 2016. While the First Plan did not initially provide for payments to U.S. Bank, it did provide for payments to the Cook County Clerk for $17,130.89 and the Cook County Treasurer in the amount of $19,496.36. On the date of confirmation, the Debtor by minute order amended the First Plan to provide that she would "continue to make regular monthly payments to US Bank for their lien secured to Debtor's property."⁴ The Debtor was not able, however, to complete the First Plan. As a result, the chapter 13 trustee pursued and received dismissal of the First Case on April 19, 2017.

One day later, on April 20, 2017 (the "Petition Date"), the Debtor filed a second chapter 13 bankruptcy case, the above-captioned case (the "Present Case"). In the Present Case, the Tax Purchaser has participated, bringing the Motion less than two weeks after the Petition Date.

PROCEDURAL HISTORY

This matter has given rise to an extraordinary number of hearings and filings.

In addition to reviewing the Motion, the court has considered the arguments of the parties at the hearings on May 18, 2017, June 29, 2017, July 20, 2017, August 31, 2017, September 21, 2017, September 28, 2017 and November 16, 2017 (the "Hearings"). The court has also reviewed and considered the following filed documents relating to the Motion:

(1) Debtor's Response to Motion To Modify Automatic Stay Filed by Axert, LLC—6402 S. Ingleside Series and US Bank Custodian for TLCF 2012A, LLC [Dkt. No. 21];

(2) Axert, LLC—6402 S. Ingleside Series and US Bank Custodian for TLCF 2012A, LLC's Reply to the Debtor's Response to the Motion To Modify the Automatic Stay [sic] 6402 S. Ingleside, Chicago, Illinois Regarding Pin 20–23–104–053–0000 [Dkt. No. 22];

(3) Axert, LLC—6402 S. Ingleside Series and US Bank Custodian for TLCF 2012A, LLC's Supplemental Brief in Support of Its Motion To Modify the Automatic Stay as to 6402 S. Ingleside, Chicago, Illinois Regarding Pin 20–23–104–053–0000 [Dkt. No. 41];

(4) Debtor's Response to Movant's Supplemental Brief in Support of Its Motion To Modify Automatic Stay [Dkt. No. 45];

(5) Axert, LLC—6402 S. Ingleside Series and US Bank Custodian for TLCF 2012A, LLC's Supplemenal [sic] Brief to the Court's Tenative [sic] Ruling Filed on September 14, 2017 to the Motion To Modify the Automatic Stay [sic] 6402 S. Ingleside, Chicago, Illinois Regarding Pin 20–23–104–053–0000 [Dkt. No. 81]; and

(6) Debtor's Response to Movant's Supplemental Brief to the Court's Tenative [sic] Ruling Filed on September 14, 2017 to the Motion To Modify the Automatic Stay [Dkt. No. 94].

The court has taken into consideration any and all exhibits submitted in conjunction with the foregoing. In addition, there have been numerous scheduling orders and motions seeking extensions of the time periods set thereby—too numerous to set forth herein. Finally, in an accommodation to the parties and their concerns regarding time frames applicable to this matter, and in a step not previously taken by the court, the court issued a Scheduling Order and Tentative Ruling [Dkt. No. 58] (the "Tentative Ruling") on September 14, 2017. In the Tentative Ruling, the court shared its observations on the parties' arguments to date, but reserved a final ruling on the matter. This Memorandum Decision supersedes the Tentative Ruling in all respects.

Though these items do not constitute an exhaustive list of the filings in the bankruptcy, the court has taken judicial notice of the contents of the docket in this matter. See Levine v. Egidi, Case No. 93C188, 1993 WL 69146, at *2 (N.D. Ill. Mar. 8, 1993) (authorizing a bankruptcy court to take judicial notice of its own docket); In re Brent, 458 B.R. 444, 455 n.5 (Bankr. N.D. Ill. 2011) (Goldgar, J.) (recognizing same).

DISCUSSION

The central question here, whether the Tax Purchaser is entitled to relief from stay under section 362(d) of the Bankruptcy Code, is inextricably intertwined with the much-beleaguered Illinois tax purchase system. That system is set forth at length in an earlier opinion of the court. In re Bates, 270 B.R. 455, 459–61 (Bankr. N.D. Ill. 2001) (Wedoff, J.). Bates provides so much detail, in fact, that setting it forth herein would more than double the length of this opinion. Bates, however, is no longer good law on the central point here, as discussed below. Three fairly recent...