In re Flowers

572 B.R. 901, 2017 Bankr. LEXIS 2314
CourtUnited States Bankruptcy Court, N.D. Illinois
DecidedAugust 14, 2017
DocketCase No. 09 B 44925
StatusPublished

This text of 572 B.R. 901 (In re Flowers) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Flowers, 572 B.R. 901, 2017 Bankr. LEXIS 2314 (Ill. 2017).

Opinion

MEMORANDUM OF DECISION ON DEBTOR’S MOTION TO AVOID LIEN OF JUDGMENT CREDITOR BELL AUTO FINANCE [DKT. NO. 70]

Jack B. Schmetterer, United States Bankruptcy Judge

Leonard R. Flowers (“Debtor”) has moved to avoid the lien of judgment creditor Bell Auto Finance (“Bell”).

For the reasons discussed below, Debt- or’s motion will be denied.

UNDISPUTED FACTS
1. On July 21, 2009, the Circuit Court of Cook County entered a judgment against Debtor and in favor of Bell in the amount of $8,241.00 plus costs. (Dkt. No. 70.)
2. On July 30, 2009 Bell filed a Memorandum of Judgment as document number 0921139021 with the Cook County Recorder of Deeds against real property at 20849 Corinth Road, Olympia Fields, Illinois 60462 (the “Property”). (Dkt. No. 76.)
3. The Property has been held in an Illinois Land Trust with Chicago Title Land Trust to Bridgeview Bank and Trust Company since April 3, 1990 under the Trust Number 1-1881. (Dkt. No. 76.)
4. Post-judgment, Bell pursued other proceedings against Debtor, including serving the debtor with a Citation to Discover Assets on November 9, 2009. (Dkt. No. 75.)
5. On November 25, 2009, debtor filed a petition pursuant to Chapter 13 of Title 11 of the United States Bankruptcy Code. (Dkt. No. 1.)
6. Bell filed its Proof of Claim as a secured creditor on February 10, 2010. (Dkt. No. 75.)
7. On March 21, 2012, Debtor converted his case from Chapter 13 to Chapter 7. (Dkt. No. 36.)
8. This court entered a discharge order in the Debtor’s Chapter 7 case on June 25, 2012. (Dkt. No. 51.)
9. On June 30, 2016 Debtor was served with Notice and Petition for Revival of Bell’s judgment. (Dkt. No. 75.)
10. On July 20, 2016, Bell appeared before the Cook County court on its [903]*903Motion for Revival. No one appeared on behalf of the Debtor and the motion was granted. (Dkt. No. 75.)
11. On March 30, 2017, Debtor’s Chapter 7 case was reopened in order to file its Motion to Avoid Bell Auto Finance’s Judgment Lien. (Dkt. No. 56.)
12. Debtor did not move to avoid any lien created by service of the Citation.

JURISDICTION AND VENUE

Subject matter jurisdiction lies under 28 U.S.C. § 1334. Subject matter jurisdiction lies under 28 U.S.C. § 1334. The district court may refer cases arising under title 11 to a bankruptcy judge under 28 U.S.C. § 157, and this matter is referred here by District Court Operating Procedure 15(a) of the United States District Court for the Northern District of Illinois. Venue lies under 28 U.S.C. § 1409. This is a core proceeding under 28 U.S.C. §§ 157(b)(2)(A), (K) and (O).

DISCUSSION

Avoidance of liens is governed by 11 U.S.C. § 522(f). A debtor may “avoid the fixing of a lien on an interest of the debtor in property to the extent that such a lien impairs an exemption to which the debtor would have been entitled.” 11 U.S.C. § 522(f). The party moving to avoid the lien bears the burden of proof. 11 U.S.C, § 522(f)(1)(A).

In his initial Motion, Debtor argues that he never had legal or equitable title to the Property and that a judgment creditor’s hen against a beneficiary does not affect property held in a land trust. (Dkt. No. 70.) In its Response, Bell asserts that even though Debtor was never legal title holder to the Property, the hen should not be avoided. (Dkt. No. 75.) Bell contends that pursuant to Illinois law, a beneficial interest in a land trust constitutes personal property of the Debtor, and that a Citation hen was created on November 9, 2009 that continues to have legal effect against Debt- or’s personal property. (Dkt. No. 75.) In his Reply, Debtor contends that he is still treated as the true owner of the land trust property-under Illinois law and lawfully exempted his beneficial interest under the Illinois Homestead Exemption statute. (Dkt. No. 76.)

A. Bell’s Citation Lien On Debtor’s Beneficial Interest Has Not Terminated

Debtor argues that Bell’s hen created by the Citation to Discover Assets served upon him on November 9, 2009 does not affect his beneficial interest in the land trust and, alternatively, that the Citation lien has since terminated. Debtor has correctly stated that under Illinois law, a creditor’s hen does not attach to the title of property held in trust. Chicago Title & Tr. Co. v. Mercantile Tr. & Sav. Bank, 300 Ill.App. 329, 20 N.E.2d 992, 996 (1939). However, as the Debtor indicates in its Reply, Illinois law treats beneficial interests in land trusts as personal property. Bennett v. Chicago Title and Trust Co., 20 N.E.2d 992, 996. Pursuant to 735 ILCS 5/2-1402(m)(1), once a Citation to discover assets is served, all personal property belonging to the debtor becomes subject to the creditor’s Citation hen. In In re Barone, the Seventh Circuit held that personal property within the meaning of the Illinois statute included beneficial interests in Illinois land trusts. 184 B.R. 747, 749 (N.D. Ill. 1995).

Thus, in the instant case, while Bell’s judgment hen filed against the Property on July 30, 2009 cannot reach the title to the trust property, its Citation hen reaches Debtor’s beneficial interest in the land trust as personal property pursuant [904]*904to 735 ILCS 5/2-1402(m)(l), so long as the Citation lien has not terminated.

The termination of a Citation lien is governed by Illinois Supreme Court Rule 277(f) which states that a Citation proceeding will continue until (1) the judgment creditor moves to terminate the proceeding, the court so orders it or judgment is satisfied (2) automatically, within 6 months of the respondent’s first personal appearance pursuant to the Citation or (3) automatically, within 6 months of the respondent’s first personal appearance pursuant to subsequent process to enforce the Citation. II. Sup. Ct. R. 277(f). The Seventh Circuit applied this statute to a similar situation involving a debtor’s beneficial interest in a land trust. Barone, 184 B.R. at 749-750.

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Related

Burditt v. Brown (In Re Barone)
184 B.R. 747 (N.D. Illinois, 1995)
In Re Ross
210 B.R. 320 (N.D. Illinois, 1997)
Cacok v. Covington
111 F.3d 52 (Seventh Circuit, 1997)
In re Kuzniewski
508 B.R. 678 (N.D. Illinois, 2014)
Chicago Title & Trust Co. v. Mercantile Trust & Savings Bank
20 N.E.2d 992 (Appellate Court of Illinois, 1939)

Cite This Page — Counsel Stack

Bluebook (online)
572 B.R. 901, 2017 Bankr. LEXIS 2314, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-flowers-ilnb-2017.