Nat'l Life Real Estate Holdings, LLC v. Int'l Bank of Chi.

51 N.E.3d 934

402 Ill.Dec. 182

NATIONAL LIFE REAL ESTATE HOLDINGS, LLC, Plaintiff–Appellant

v.INTERNATIONAL BANK OF CHICAGO, Citation Respondent–Appellee (Ronald S. Scarlato, Defendant).

No. 1–15–1446.

Appellate Court of Illinois, First District, First Division.

March 14, 2016.

Donald A. Murday, of Chittenden, Murday & Novotny LLC, Chicago, for appellant.

Michael Lee Tinaglia, Park Ridge, for appellee.

OPINION

Justice CONNORS delivered the judgment of the court, with opinion.

¶ 1 This matter stems from a third-party citation to discover assets issued by the judgment creditor, National Life Real Estate Holdings, LLC (National Life) and directed against the citation respondent, International Bank of Chicago (IBC), regarding judgment debtor, Ronald S. Scarlato (Scarlato). National Life appeals the circuit court's order, which denied its motion for entry of judgment against IBC based on an alleged violation of section 2–1402 of the Code of Civil Procedure (Code) (735 ILCS 5/2–1402 (West 2012) ). We find that this court does not have jurisdiction and dismiss.

¶ 2 BACKGROUND

¶ 3 On either November 14, 2012 or November 28, 2012,¹ National Life obtained a judgment in the amount of $3,424,228.97 against Scarlato and two limited liability corporations, jointly and severally. Subsequently, National Life initiated supplementary proceedings. On April 12, 2013, National Life filed a third-party citation to discover assets directed to IBC. The citation was served via certified mail on April 13, 2013. The citation that was served upon IBC contained the following prohibitive provision:

“[You are prohibited] from making or allowing any transfer or other disposition of, or interfering with, any property not exempt from execution or garnishment belonging to the judgment debtor or to which the judgment debtor may be entitled or which may be acquired by or become due to the judgment debtor and from paying over or otherwise disposing of any money not so exempt, which is due or becomes due to the judgment debtor, until further order of court or termination of the proceedings. You are not required to withhold the payment of any money beyond double the amount of the judgment.”

¶ 4 On August 1, 2013, Scarlato, Bellwood Place, LLC (BP), and Scarlato Holdings Bellwood Place, LLC (SHBP) entered into a construction loan agreement and promissory note with IBC wherein IBC agreed to loan $3.5 million to Scarlato, BP, and SHBP. From August 2013 to March 2014, IBC disbursed $3.5 million in loan proceeds to various third-parties. None of the loan proceeds were disbursed to Scarlato.

¶ 5 On July 18, 2014, National Life filed a motion for entry of judgment against IBC for violating the third-party citation to discover assets that was served on April 13, 2013. The motion sought judgment pursuant to section 2–1402 of the Code (Id. ) and argued that IBC violated the prohibitive provision of the citation and the lien created thereby when it transferred $3.5 million in assets that belonged to Scarlato. On July 30, 2014, IBC filed its response and asserted that it never violated the citation because the loan proceeds never amounted to Scarlato's “property” as contemplated by the citation's prohibitive provision. National Life filed its reply on August 19, 2014, and the court held an evidentiary hearing on December 16, 2014.

¶ 6 The court set forth its ruling in a written memorandum decision and order that was entered on April 15, 2015. The court's order denied National Life's motion for entry of judgment against IBC, finding that the loan proceeds were not Scarlato's individually. Specifically, the court's order read, “[T]he checks clearly show the amounts were delivered to entities and not Scarlato individually. The [c]ourt recognizes the frustration in this matter. However, the parties do have remedies remaining.”

¶ 7 National Life filed its timely notice of appeal on May 14, 2015.

¶ 8 ANALYSIS

¶ 9 National Life contends that the sole issue on appeal is whether the court erred in ruling that IBC's issuance of a $3.5 million loan to Scarlato and subsequent disbursement of that loan's proceeds to various entities was not a violation of National Life's third-party citation to discover assets because the loan's proceeds were not paid to Scarlato. In response, IBC again² raises the argument that this court does not have jurisdiction to review this appeal because the order from which National Life appeals was not final and appealable. We agree with IBC.

¶ 10 Even if IBC had not raised the jurisdictional issue, this court has an independent duty to consider our jurisdictional authority and dismiss the appeal where it is lacking. Palmolive Tower Condominiums, LLC v. Simon, 409 Ill.App.3d 539, 542, 350 Ill.Dec. 931, 949 N.E.2d 723 (2011). Illinois Supreme Court Rule 304(b)(4) (eff. Feb. 26, 2010) provides that “[a] final judgment or order entered in a proceeding under section 2–1402 of the Code” is appealable without the finding required for appeals under Rule 304(a). An order is said to be final if it “disposes of the rights of the parties, either upon the entire controversy or upon some definite and separate part thereof.” (Internal quotation marks omitted.) D'Agostino v. Lynch, 382 Ill.App.3d 639, 641–42, 321 Ill.Dec. 144, 888 N.E.2d 663 (2008). Section 2–1402 of the Code sets forth the rules regarding supplementary proceedings “for the purposes of examining the judgment debtor or any other person to discover assets or income of the debtor not exempt from the enforcement of the judgment * * *. A supplementary proceeding shall be commenced by the service of a citation issued by the clerk.” 735 ILCS 5/2–1402(a) (West 2012). “An order in a section 2–1402 proceeding is said to be final when the citation petitioner is in a position to collect against the judgment debtor or a third[-]party, or the citation petitioner has been ultimately foreclosed from doing so.” D'Agostino, 382 Ill.App.3d at 642, 321 Ill.Dec. 144, 888 N.E.2d 663.

¶ 11 In this case, the court's order that denied National Life's motion for entry of judgment did not contain Rule 304(a) language. Ill. S.Ct. R. 304(a) (eff. Feb. 26, 2010). As a result, we examine whether that order is appealable under Rule 304(b)(4). The order at issue here was entered in a section 2–1402 proceeding; thus, we must determine whether the court's order denying entry of judgment against IBC put National Life in a position to collect against IBC, or whether National Life was ultimately foreclosed from doing so. D'Agostino, 382 Ill.App.3d at 642, 321 Ill.Dec. 144, 888 N.E.2d 663.

¶ 12 It is pertinent to note that Illinois courts have recognized that “ ‘[f]ew cases discuss which orders in supplementary proceedings are final orders.’ ” PNC Bank, N.A. v. Hoffmann, 2015 IL App (2d) 141172, ¶ 24, 394 Ill.Dec. 680, 36 N.E.3d 971 (quoting In re Estate of Yucis, 382 Ill.App.3d 1062, 1069, 322 Ill.Dec. 45, 890 N.E.2d 964 (2008) ). Of the cases that address the issue of final orders in supplementary proceedings, most do not involve orders similar to the one at issue here. See Id. ¶ 27 (holding that order was a final judgment where it conclusively determined that a debtor was not entitled to damages for her claim that bank had wrongfully seized her independent retirement account); Inland Commercial Property Management, Inc. v. HOB I Holding Corp., 2015 IL App (1st) 141051, ¶ 26, 391 Ill.Dec. 820, 31 N.E.3d 795 (determining that order denying substitution of judge was not a final judgment under Rule 304(b)(4) because it did not put the plaintiff in a position to collect the judgment amount or direct the third-party respondents to turn over funds or substantively determine any of the parties' rights as to the merits of any claim in the postjudgment action); Yucis, 382 Ill.App.3d at 1069, 322 Ill.Dec. 45, 890 N.E.2d 964 (finding that order directing the sheriff to conduct a sale of debtor's personal property was a final order because it “finally decide[d] the debtor's right to possess a given piece of property”).

¶ 13 Although precedential guidance is limited, we find the circumstances of this case to be in line with In re Marriage of McElwee, 230 Ill.App.3d 714, 719, 172 Ill.Dec. 377, 595 N.E.2d 738 (1992). In McElwee, the court examined whether it had jurisdiction over a divorce petitioner's appeal of an order that allowed the divorce respondent's nonwage garnishment to go forward in order to collect a foreign judgment. Id. The case in McElwee involved a dissolution of marriage action filed by petitioner against respondent in Illinois after respondent had already filed a dissolution proceeding in Tennessee. Id. at 715, 172 Ill.Dec. 377, 595 N.E.2d 738. The Tennessee court distributed the couple's marital property, which included, inter alia, a judgment in favor of respondent as a result of her interest in a drag strip. Id. at 715–16, 172 Ill.Dec. 377, 595 N.E.2d 738. Respondent subsequently filed a petition to register the foreign judgment in the pending dissolution action. Id. at 716, 172 Ill.Dec. 377, 595 N.E.2d 738. Seeking to collect her judgment, respondent filed an affidavit for nonwage garnishment, requesting that summons issue against a bank as garnishee. Id. at 717, 172 Ill.Dec. 377, 595 N.E.2d 738. Petitioner moved to dismiss the garnishment proceeding and his motion was granted. Id. However, the trial court granted respondent's motion to reconsider, finding the garnishment proceeding to be valid, and petitioner appealed. Id. Determining that it must dismiss the appeal for lack of jurisdiction, the court held,

“What is essential for purposes of Rule 304(b)(4) [citation] is that there be finality with respect to the supplemental garnishment proceeding. We fail to see how the circuit court's * * * order can be regarded as possessing such finality. It did not operate to terminate any part of the garnishment. Rather, its effect was simply to allow that garnishment to go forward. In other words, it merely placed the parties at the beginning

...