Epstein v. Galuska

839 N.E.2d 532, 362 Ill. App. 3d 36, 298 Ill. Dec. 209, 2005 Ill. App. LEXIS 1058
CourtAppellate Court of Illinois
DecidedOctober 27, 2005
Docket1-04-1659
StatusPublished
Cited by88 cases

This text of 839 N.E.2d 532 (Epstein v. Galuska) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Epstein v. Galuska, 839 N.E.2d 532, 362 Ill. App. 3d 36, 298 Ill. Dec. 209, 2005 Ill. App. LEXIS 1058 (Ill. Ct. App. 2005).

Opinion

JUSTICE GREIMAN

delivered the opinion of the court:

Defendants Richard and Joy Lynn Galuska, husband and wife, appeal from the circuit court’s order granting summary judgment in favor of plaintiff Barry Epstein on his complaint for fraudulent conveyance brought under section 5 of the Uniform Fraudulent Transfer Act (740 ILCS 160/5 (West 2002)). For the reasons that follow, we dismiss defendants’ appeal.

The instant litigation stems from a 1992 lawsuit and subsequent judgment secured by plaintiff against Richard Galuska (Richard) to enforce guarantees and collect on several loans he had made to Richard in the 1980s. Richard’s partnership in National Gas Associates (NGA) and that company’s involvement in National Gas & Electric Corp. (NGEC) had resulted in substantial losses which necessitated loans from plaintiff both to Richard personally and to NGEC. In September 1993, plaintiff and Richard reached a settlement agreement, which included a warranty by Richard of the source of losses both by NGA partnership and in Richard’s personal accounts with Goldman Sachs & Co.

The settlement agreement required Richard to pay $30,000 by February 28, 1994, on his personal debt and an additional $25,000 on the loan to NGEC by December 31, 1997. The agreement also provided that, upon default, judgment would be entered against Richard in the amount of $37,450 as to his personal loan and in the amount of $25,000 as to the NGEC loan, including postjudgment interest. Plaintiff agreed to dismiss the lawsuit with prejudice, with the stipulation that the circuit court would retain jurisdiction for the purpose of enforcing the settlement agreement.

Richard defaulted on the first payment and plaintiff subsequently obtained a judgment against him in the amount of $37,450 in May 1994. A year later, the circuit court reaffirmed the judgment, reinstated the case nunc pro tunc, and stayed the execution of the judgment until the conclusion of the proceedings. Richard also failed to make the second payment by the agreed deadline, and plaintiff moved the circuit court to reinstate the case and enter judgment.

Richard filed multiple motions to dismiss, alleging that the 1993 settlement agreement released him from any claims plaintiff might have had against him. The initial motion additionally alleged that plaintiff had sought to have the circuit court’s chief judge intervene and overrule the court’s prior rulings staying judgment. The circuit court denied each motion.

In his response to plaintiffs motion, Richard argued that his prior dealings with plaintiff, specifically plaintiffs loans to NGEC, raised issues of partnership obligations between the parties and realleged plaintiffs dealings with the chief judge as an improper method of influencing the proceedings. Following arguments, the circuit court entered judgment against Richard in the amount of $41,977.85, which was comprised of the earlier judgments plaintiff sought plus statutory and prejudgment interest.

Richard filed a motion to reconsider, alleging that the 1993 settlement agreement had been amended and that the loans plaintiff had made to Richard in 1986 implicated a partnership between the parties in NGEC and that partnership obligations required plaintiff to turn over NGEC securities related to a federal lawsuit filed by Richard against Geoquest, Inc. Richard again raised the allegation that plaintiff had improperly communicated with the chief judge. The circuit court denied the motion on December 18, 1998.

Richard appealed the judgment, but later voluntarily dismissed the appeal, alleging that it was not a final and reviewable order.

Plaintiff commenced supplementary proceedings to cite Richard’s assets in July 1999. Richard filed a motion to quash, alleging that the judgment was nonfinal, that the proceedings were still subject to the 1995 stay order, and that plaintiff’s attorneys had sought review of the disparate orders entered by the trial judge and the judge presiding over the enforcement proceedings. The circuit court denied Richard’s motion, and the citation proceedings commenced.

During the citation examination, Richard revealed that, in September 1998, while plaintiff’s motion to reinstate and for judgment was pending, he recorded a declaration of trust conveying his interest in his and Joy Lynn’s marital residence, located at 643 Park Road in LaGrange Park (Property), to Joy Lynn, and that, in March 1999, he ordered a quitclaim deed conveying the Property from tenancy of the entirety in fee simple to Joy Lynn. At that time, the only asset Richard claimed was a 1996 federal default judgment he had obtained against Geoquest, which, at the time of Richard’s suit and ever since, was a dissolved corporation with no assets.

The Property had originally been held in joint tenancy and was conveyed into a tenancy by the entirety in October 1990. In July 1991, Richard executed a declaration of trust conveying the property to Joy Lynn in trust. He recorded the declaration of trust and the warranty deed conveying the Property into tenancy by the entirety in September 1998.

Plaintiff thereafter filed the instant complaint for fraudulent conveyance against both defendants, alleging violations of the Uniform Fraudulent Transfer Act (740 ILCS 160/1 et seq. (West 2002)) and seeking orders to set aside the 1999 conveyance from tenancy of the entirety to Joy Lynn and to set aside Richard’s transfer of his interest in the Property into trust.

Richard filed a counterclaim alleging a breach of fiduciary duty by plaintiff as a result of his failure to abide by partnership obligations incurred through his loans to Richard and NGEC. The counterclaim also alleged that plaintiffs letter to the chief judge amounted to an abuse of process and set forth claims for breach of promise of cooperation and quasi contract, conversion, interference with prospective advantage, and negligence.

The parties filed cross-motions for summary judgment. Plaintiff argued that the sole purpose of the transfers was for Richard to avoid payment on the judgment awarded to plaintiff. Defendants argued that plaintiffs claims for fraudulent transfer lacked merit since the conveyances took place before plaintiff had filed any judgment liens and that the conveyances were not subject to the Act. In a written order, the circuit court found that the trust conveyance had been made for no consideration and was not effective until after Epstein became a creditor in 1994 and 1998, and that defendants failed to provide clear and convincing evidence to rebut the presumption that interspousal transfers that take place pending litigation are fraudulent. The circuit court granted summary judgment in favor of plaintiff on all counts alleged in his complaint and against defendants on each of their counterclaims. The court ordered that the conveyances be voided and awaited plaintiffs motion for foreclosure.

Defendants now appeal, contending that the circuit court erred in allowing plaintiff to pursue enforcement of the 1994 judgment and that issues of material fact remained as to the conveyances and the affirmative defenses raised by defendants.

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Cite This Page — Counsel Stack

Bluebook (online)
839 N.E.2d 532, 362 Ill. App. 3d 36, 298 Ill. Dec. 209, 2005 Ill. App. LEXIS 1058, Counsel Stack Legal Research, https://law.counselstack.com/opinion/epstein-v-galuska-illappct-2005.