Spangler v. Byrne (In re Spangler)

653 B.R. 573

IN RE: Michael T. SPANGLER, Debtor.

Michael T. Spangler, Plaintiff, v. Catherine M. Byrne, Defendant.

No. 21 B 12581

No. 22 A 167

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

Signed September 5, 2023

Attorney for debtor Michael T. Spangler: David R. Herzog, Law Offices of David R. Herzog, Chicago, IL.

Attorney for Catherine M. Byrne: John S. Delnero, Pederson & Houpt, Chicago, IL.

MEMORANDUM OPINION

A. Benjamin Goldgar, United States Bankruptcy Judge

Before the court for ruling in this adversary proceeding are cross-motions for summary judgment on plaintiff Michael T. Spangler's complaint against defendant Catherine M. Byrne. Byrne is Spangler's former lawyer and a creditor in Spangler's chapter 13 case. She maintains she is a secured creditor because of judgments she obtained against Spangler for unpaid fees, judgments she recorded in Cook County, Illinois. Spangler has sued to contest the secured status of Byrne's claim. He argues that the judgments she recorded failed to meet Illinois statutory requirements for judgment liens, making her claim unsecured. Byrne disagrees.

Spangler has the better of the argument. For the reasons below, his motion for summary judgment will be granted and Byrne's motion denied. Judgment will be entered for Spangler finding Byrne's claim unsecured.

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)(K); see Porst v. Deutsche Bank Nat'l Trust Co. (In re Porst), 480 B.R. 97, 103 (Bankr. D. Mass. 2012) (chapter 13 debtor's adversary proceeding challenging creditor's secured status was core), aff'd, No. MW 12-080, 2013 WL 7118196 (B.A.P. 1st Cir. Nov. 20, 2013).

2. Background

a. Summary Judgment Standard

Under Rule 56(a) of the Federal Rules of Civil Procedure, Fed. R. Civ. P. 56(a) (made applicable by Fed. R. Bankr. P. 7056), summary judgment must be granted if "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." The court's task on summary judgment is to decide whether any material dispute of fact requires a trial. Gupta v. Melloh, 19 F.4th 990, 996-97 (7th Cir. 2021). These standards "remain unchanged on cross-motions for summary judgment." Blow v. Bijora, Inc., 855 F.3d 793, 797 (7th Cir. 2017). Each movant has an independent burden to show no there is no genuine issue of material fact, and he is entitled to judgment as a matter of law, Wooten v. Taking Care of Our Seniors, Inc., No. 17 C 5570, 2022 WL 1663417, at *1 (N.D. Ill. May 25, 2022).

b. Summary Judgment Procedure

To streamline summary judgment decisions, the bankruptcy court's local rules set out a procedure similar to the one the district court employs. See L.R. 7056-1, 7056-2.¹ The movant must submit a statement of facts consisting of short, numbered paragraphs with citations to evidence supporting each statement. L.R. 7056-1(B). The nonmovant must then respond to each statement, admitting or denying it, with references to evidence supporting a denial. L.R. 7056-2(A)(2)(a). The nonmovant may also submit a statement of additional facts, again with citations to supporting evidence. L.R. 7056-2(A)(2)(b). If he does, the movant may reply, admitting or denying each statement, with references to evidence supporting a denial. L.R. 7056-1(C).

Responding to a statement of facts should be straightforward. Weltman v. Hakalir (In re Hakalir), Nos. 19 B 5093, 19 A 817, 2021 WL 3164786, at *2 (Bankr. N.D. Ill. July 26, 2021). The respondent can admit facts, deny facts (with references to supporting evidence), or suggest under Rule 56(d) that for specific reasons he cannot present essential facts. Id. The respondent can also object that evidence supporting a particular fact is inadmissible. Id. But "[t]here are no other options." Id. (internal quotation omitted). Responses of any other kind admit the facts asserted. Id.; see also L.R. 7056-1(C), 7056-2(B).

c. Facts

The material facts come from the parties' statements of fact and responses under L.R. 7056-1 and 7056-2, from the parties' pleadings, and as needed to produce a coherent narrative, from other materials in the record, particularly Byrne's proof of claim, Fed. R. Civ. P. 56(c)(3); see, e.g., Ayazi v. United Fed'n of Teachers Local 2, 487 F. App'x 680, 681 (2d Cir. 2012) (on summary judgment a court can consider record evidence "not specifically cited" in the parties' papers). No facts are disputed.

In 2016, Michael Spangler brought a dissolution of marriage action against his wife in Illinois state court. (Compl. ¶ 6 and Ex. A; Answer ¶ 6; see Proof of Claim No. 1-1, Ex. 1). Catherine Byrne is an Illinois lawyer. (D. L.R. 7056-2(A)(2)(b) Stmt. of Add'l Facts, Aff. of C. Byrne, ¶ 2, Adv. Dkt. No. 37). Byrne represented Spangler in the action. (Id., ¶ 4).

In October 2019, the state court entered a "consent judgment for attorney's fees" awarding Byrne $79,796.64 against Spangler. (Proof of Claim No. 1-1, Ex. 1). Several months later, the state court entered a second "consent judgment for attorney's fees" awarding Byrne another $17,012.50 against Spangler. (Id.).

In November 2019, Byrne recorded with the Cook County Recorder of Deeds a document entitled "Claim of Lien." (D. L.R. 7056-2(A)(2)(a) Resp. ¶ 12, Adv. Dkt. No. 40; Proof of Claim No. 1-1, Ex. 1). Attached to the document was an uncertified photocopy of the October 2019 judgment. (Id.). The copy bore the signatures of the parties showing their agreement to its entry, but no signature appeared on the signature line for the judge. (D. L.R. 7056-2(A)(2)(a) Resp. ¶ 13, Adv. Dkt. No. 40; Proof of Claim No. 1-1, Ex. 1).² Below the blank signature line was a partial ink stamp with an October 2019 date and the words "Circuit Court - 1878." (Proof of Claim No. 1-1, Ex. 1). The top portion of the stamp was illegible. (Id.). Overlapping the stamp was an unidentified handwritten mark. (Id.).

In February 2020, Byrne recorded with the Cook County Recorder of Deeds a second document entitled "Claim of Lien." (D. L.R. 7056-2(A)(2)(a) Resp. ¶ 11, Adv. Dkt. No. 40; Proof of Claim No. 1-1, Ex. 1). Attached was an uncertified photocopy of the February 2020 judgment. (Id.). The copy bore the signatures of the parties showing their agreement, but once again no signature appeared on the signature line for the judge. (D. L.R. 7056-2(A)(2)(a) Resp. ¶ 13, Adv. Dkt. No. 40; Proof of Claim No. 1-1, Ex. 1).³ Below the blank signature line was a stamp with the date "Feb 11 2020" and "Circuit Court - 1878." (Proof of Claim No. 1-1, Ex. 1). Above the date was the word "Judge," but the name following "Judge" was illegible. (Id.).⁴

In November 2021, Spangler filed a chapter 7 bankruptcy case later converted to a case under chapter 13. After conversion, Byrne filed a proof of claim. Her proof of claim asserts a secured claim of $85,217.87 for the unpaid attorney's fees, with the secured status based on the recorded judgments.

Spangler then filed this adversary proceeding contesting the secured status of Byrne's claim. See Fed. R. Bankr. P. 7001(2) (stating that an adversary proceeding includes "a proceeding to determine the validity, priority, or extent of a lien"). In his complaint, Spangler alleged that the judgments Byrne recorded failed to meet the requirements under Illinois law for the creation of judgment liens. Byrne moved to dismiss the complaint for failure to state a claim, but her motion was denied. (Adv. Dkt. No. 12).⁵ Byrne then answered and asserted affirmative defenses.

Both sides now cross-move for summary judgment.⁶

3. Discussion

Spangler's motion will be granted. As he correctly argues, the judgments Byrne recorded did not create judgment liens. Her claim in the chapter 13 case is therefore unsecured. Byrne's cross-motion, premised largely on a misunderstanding of Spangler's claim, will be denied.

a. Spangler's Motion

The judgments Byrne recorded did not create judgment liens because they did not meet Illinois statutory requirements for judgment liens.

At common law, a judgment imposed no lien on the judgment debtor's real property. Blewitt v. Urban, 438 Ill. Dec. 779, 146 N.E.3d 848, 855 (Ill. App. Ct. 3d Dist. 2020); Maniez v. Citibank, F.S.B., 383 Ill. App. 3d 38, 41, 321 Ill.Dec. 940, 890 N.E.2d 662, 665 (1st Dist. 2008). Judgment liens in Illinois are "purely a statutory creation," Maniez, 383 Ill. App. 3d at 41, 321 Ill.Dec. 940, 890 N.E.2d at 665; Dunn v. Thompson, 174 Ill. App. 3d 944, 947, 124 Ill.Dec. 477, 529 N.E.2d 297, 299 (4th Dist. 1988), "in derogation of the common law," Blewitt, 438 Ill.Dec. 779, 146 N.E.3d at 855; Schindler v. Watson, 411 Ill.Dec. 598, 73 N.E.3d 1197, 1200 (Ill. App. Ct. 2d Dist. 2017).

Section 12-101 of the Illinois Code of Civil Procedure is the statute permitting a judgment to impose a lien. It says that "a judgment is a lien on the real estate of the person against whom it is entered in any county in this State . . . only from the time a transcript, certified copy or memorandum of the judgment is filed in the office of the recorder in the county in which the real estate is located." 735 ILCS 5/12-101 (2018). These statutory requirements are "specific." Maniez, 383 Ill. App. 3d at 41, 321 Ill.Dec. 940, 890 N.E.2d at 665; Northwest Diversified, Inc. v. Desai, 353 Ill. App. 3d 378, 386, 288 Ill.Dec. 818, 818 N.E.2d 753, 760 (1st Dist. 2004). Because they are, Illinois courts demand strict compliance with them. See Blewitt, 438 Ill.Dec. 779, 146 N.E.3d at 855; Schindler, 411 Ill.Dec. 598, 73 N.E.3d at 1200 ("[S]trict statutory compliance is . . . required.").

The judgments Byrne recorded did not comply with section 12-101 because in neither instance did she record a "transcript," a "certified copy . . . of the judgment," or a "memorandum of the judgment." She recorded as an attachment to each "Claim of Lien" a mere photocopy of the judgment, nothing more.

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