In re Prochnow

474 B.R. 607, 2011 WL 4424269, 2011 Bankr. LEXIS 3603
CourtUnited States Bankruptcy Court, C.D. Illinois
DecidedSeptember 20, 2011
DocketNo. 09-72295
StatusPublished
Cited by3 cases

This text of 474 B.R. 607 (In re Prochnow) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, C.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 Prochnow, 474 B.R. 607, 2011 WL 4424269, 2011 Bankr. LEXIS 3603 (Ill. 2011).

Opinion

OPINION

MARY P. GORMAN, Bankruptcy Judge.

Before the Court is the request of the Debtor to hold his former employer, Apex Properties, Inc., d/b/a ReMax Choice of Bloomington, Illinois, in contempt for violating the automatic stay by withholding real estate commissions the Debtor claims are due to him. Unfortunately for the Debtor, the commissions, which were earned pre-petition but payable post-petition, were not disclosed by him on his schedules and, therefore, he is judicially estopped from claiming an enforceable interest in them. Further, the actions of his employer in withholding the commissions were in the nature of recoupment and, accordingly, those actions did not violate the automatic stay.

I. Factual and Procedural Background

Jeffrey R. Prochnow (“Debtor”), represented by Attorney Jason S. Bartell, filed his voluntary petition under Chapter 7 on August 3, 2009. At that time, he was employed as a real estate salesperson by Apex Properties, Inc., d/b/a ReMax Choice (“ReMax”). On his Schedule F, Debtor listed an unsecured debt to ReMax in the amount of $51,027.47. On his Schedule B, Debtor affirmatively represented that he had no accounts receivable, no liquidated debts owed to him, and no contingent or unliquidated claims of any nature. Debt- or’s meeting of creditors was held on September 3, 2009, and, on that same date, A. Clay Cox, the Chapter 7 Trustee, filed a Report of No Distribution stating that he found no assets to administer in the case. The Debtor was granted a discharge on December 3, 2009. His case was closed on February 23, 2010.

On June 16, 2010, the Debtor, now represented by Attorney Mercer Turner, filed [611]*611a Motion to Reopen Case. In his Motion to Reopen Case, the Debtor alleged that he had earned $15,323 in real estate commissions from ReMax after his case was filed but that none of that amount had been paid to him. He claimed that ReMax had applied all of his post-petition commissions to the payment of the over $51,000 Debtor owed ReMax pre-petition. Debtor claimed that ReMax’s conduct violated the automatic stay and asked that the case be reopened so that he could pursue contempt proceedings. A proposed Motion for a Finding of Contempt was attached as an exhibit to the Motion to Reopen Case.

At the hearing on the Motion to Reopen Case, ReMax appeared by counsel and objected to the reopening claiming that the Debtor was not entitled to the relief requested in his proposed Motion for a Finding of Contempt. Over ReMax’s objection, the case was reopened. Subsequently, the Debtor filed a Motion For A Ruling Against A Creditor Based on Violation of the Automatic Stay (“Contempt Motion”). The Contempt Motion contains essentially the same facts and arguments as set forth in the Motion to Reopen Case.1 The parties have completed discovery and filed a Joint Stipulation of Facts.

Debtor was, at all relevant times, a licensed real estate salesperson and ReMax was a duly licensed real estate broker. Debtor and ReMax, through a predecessor entity, signed a Broker-Realtor-Associate Contract (“Associate Contract”) on August 23, 2006. The Contract provided, inter alia, for the Debtor to sell real estate through the ReMax brokerage and to receive commissions for such sales. The Associate Contract also required ReMax to maintain offices and to provide the Debtor with office equipment, telephone systems, open house signs, advertising, and other assistance necessary for the Debtor to sell real estate in a gainful manner. The Debtor was required, however, to reimburse ReMax for some of those expenses. The Associate Contract refers to various schedules and manuals for the amounts of the commissions to be paid and the expenses to be charged. The parties agree that, since October 2007, Debtor was to be paid 70% of the commissions he earned with ReMax retaining the remaining 30% in exchange for ReMax not charging the Debtor monthly rent. Other expenses continued to be billed to the Debtor from time to time by ReMax, and portions of commissions earned by the Debtor were applied to pay outstanding expenses. Debtor admits that, at the time he filed this case, he owed ReMax $51,027.47 for accrued expenses.

On June 22, 2009, Debtor, in his capacity as a salesperson for ReMax, procured buyers for a parcel of real estate in Hudson, Illinois. The buyers entered into a contract with the sellers and agreed to pay $785,000 for the real estate. An initial Real Estate Purchase Agreement was signed on June 22, 2009, and an updated final Contract for Sale of Real Estate (“Hudson Contract”) was signed on July 25, 2009. The Hudson Contract closed on August 21, 2009. As the listing broker, ReMax received a 6% commission in the amount of $47,100 at the closing. The parties agree that Debtor’s share of that commission as the selling agent was [612]*612$13,829.27. ReMax retained the entire amount of the Debtor’s commission and applied it to the balance due for his expenses. Although Debtor had filed his case on August 3, 2009, he did not list his entitlement to the Hudson Contract commission on his schedules. Debtor made no complaint to this Court about ReMax retaining the Hudson Contract commission until he filed his Motion to Reopen in June 2010.

After filing his bankruptcy case, Debtor also assisted in procuring buyers for two other properties and was entitled to commissions when those transactions closed in the total amount of $1494.39. The parties stipulated that the Debtor incurred post-petition indebtedness to ReMax for office expenses in an amount of at least $1600.50. ReMax billed the Debtor $3596.03 in post-petition expenses. However, the Debtor asserts that he does not owe $1995.53 of that amount which is for post-petition interest on the pre-petition balance due. ReMax retained the entire $1494.39 and applied that amount to the Debtor’s post-petition expenses.

In addition to their Joint Stipulation of Facts, the Debtor filed a Motion for Summary Judgment and ReMax filed a Motion for Summary Determination. Both parties have had an opportunity to fully brief the issues and the matter is ready for decision.

II. Jurisdiction

This Court has jurisdiction to hear the pending matter pursuant to 28 U.S.C. § 1334. The issues to be decided are core proceedings. See 28 U.S.C. § 157(b)(2)(A) and (O).

III. Legal Analysis

A. Summary Judgment Standards

Summary judgment is an encouraged method of resolving cases where no material facts are in dispute. See Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 2555, 91 L.Ed.2d 265 (1986). The party moving for summary judgment has the burden of establishing that there are no material facts in dispute and that the party is entitled to judgment as a matter of law. Id. at 322-23, 106 S.Ct. at 2552. A factual dispute is material only if the disputed fact is determinative of the outcome of the issues to be decided. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986); Frey v. Fraser Yachts,

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Andrew B Zezas
D. New Jersey, 2023
In re Cranberry Growers Coop.
588 B.R. 50 (W.D. Wisconsin, 2018)
Lakewood Credit Union v. Goodrich
2016 WI App 77 (Court of Appeals of Wisconsin, 2016)

Cite This Page — Counsel Stack

Bluebook (online)
474 B.R. 607, 2011 WL 4424269, 2011 Bankr. LEXIS 3603, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-prochnow-ilcb-2011.