Sullivan v. Thies (In Re Dergance)

218 B.R. 432, 1998 Bankr. LEXIS 324, 1998 WL 134044
CourtUnited States Bankruptcy Court, N.D. Illinois
DecidedMarch 20, 1998
Docket13-43576
StatusPublished
Cited by2 cases

This text of 218 B.R. 432 (Sullivan v. Thies (In Re Dergance)) 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
Sullivan v. Thies (In Re Dergance), 218 B.R. 432, 1998 Bankr. LEXIS 324, 1998 WL 134044 (Ill. 1998).

Opinion

MEMORANDUM OPINION

JACK B. SCHMETTERER, Bankruptcy Judge.

This Adversary proceeding relates to the bankruptcy case filed by Andrew G. Der-gance, Sr. (“Debtor”) under Chapter 7 of the Bankruptcy Code, 11 U.S.C. § 101, et seq. (“Code”) on April 17, 1997. Thomas Sullivan (“Trustee”) was appointed Chapter 7 trustee. Trustee filed this two-count Adversary Complaint seeking to avoid a fraudulent transfer of Debtor’s property to his daughter pursuant to 11 U.S.C. § 544(b) and 740 ILCS 160/1, et seq., and to void the transfer of Debtor’s property from his daughter to Chicago Title and Trust pursuant to 11 U.S.C. § 550(a). Defendants have moved to dismiss both counts of the adversary under Fed. R. Bankr.P. 7012. For reasons stated below, the motion to dismiss is denied.

*434 JURISDICTION

This matter properly lies here pursuant to 28 U.S.C. § 157 and Local General Rule 2.33(A) of the Northern District of Illinois. Subject matter jurisdiction arises under 28 U.S.C. § 1334(b). Venue lies properly under 28 U.S.C. § 1409. This matter constitutes a core proceeding under 28 U.S.C. § 157(b)(2)(H).

BACKGROUND AND FACTS PLEADED

All well plead facts are taken as true for purposes of this motion to dismiss.

On April 29, 1993, Debtor quitclaimed his interest in real estate to his daughter defendant Mary L. Thies (“Thies”) for ten dollars. The quitclaim deed was recorded on May 3, 1993. As a result of the transfer, Debtor became insolvent. Although Debtor transferred the property interest to his daughter, he continues to reside at the property.

At the time of this transfer, Debtor had several creditors including Illinois Valley Community Hospital (“IVCH”). In December 1992, IVCH had filed suit against Debtor to collect a debt. This lawsuit was still pending at the time of the transfer.

On July 12, 1993, Thies quitclaimed the same property to Chicago Title & Trust (“Chicago Title”) under the provisions of a Trust Agreement dated June 30, 1993, and known as Trust No. 1098768. The deed was recorded July 19,1993.

Debtor initially filed a Chapter 7 petition on July 23, 1993, which was dismissed on or about May 20, 1994. On April 17, 1997, Debtor filed his current Chapter 7 petition. On November 19, 1997, Trustee filed this adversary proceeding seeking to recover the transferred property or its value from either Thies or Chicago Title as Trustee and Trustee pursuant to 740 ILCS 160/1 et seq. of the Uniform Fraudulent Transfer Act as adopted in Illinois (“UFTA”). The transferred property is alleged to be worth between $20,000 and $25,000. At the time this adversary was filed, there were no liens against the property-

DISCUSSION

Defendants’ motion to dismiss is brought under Fed. R. Bankr.P. 7012 which makes Fed.R.Civ.P. 12 applicable to adversary proceedings in bankruptcy. In order to prevail on this motion to dismiss, it must clearly appear from the complaint that the Trustee can prove no set of facts in support of his claims which would entitle him or the estate to relief. McKown v. Dun & Bradstreet, Inc., 744 F.Supp. 1046, 1047 (D.Kan.1990) (citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957)). Both pleaded facts and reasonable inferences drawn from pleaded facts must be considered in a light most favorable to the plaintiff. Ed Miniat, Inc. v. Globe Life Ins. Group, Inc., 805 F.2d 732, 733 (7th Cir.1986), cert. denied, 482 U.S. 915, 107 S.Ct. 3188, 96 L.Ed.2d 676 (1987).

Defendants argue several grounds for dismissal of this adversary.

Statute of Limitations

It is argued that the action should be dismissed as the statute of limitations has run. As stated, Trustee brings this action pursuant to UFTA. Section 544(b) of the Bankruptcy Code permits a trustee to “avoid any transfer of an interest of the debtor in property ... that is voidable under applicable law by a creditor holding an unsecured claim that is allowable under section 502....” 11 U.S.C. § 544(b). UFTA is the “applicable law.” Pursuant to 740 ILCS 160/10, such a cause of action must be brought within the later of four years after the transfer was made or within one year after the transfer was or reasonably could have been discovered. As stated, the transfers were alleged to have occurred April 29, 1993, and July 12, 1993, the first by Debtor and the second by his daughter. This action was not filed until November 19,1997. Thus, the asserted transfers occurred more than four years prior to initiation of this action. However, this does not necessarily mean that the statute of limitations has run.

Trustee argues that he brought this action within one year after he discovered the transfer. However, the transfers were not made in secret. The deeds were promptly *435 recorded and the Trustee reasonably could have discovered the transfer at any time after he was appointed. However, the Trustee is correct that the statute of limitations has not run on this action. Pursuant to 11 U.S.C. § 108(a), which provides for extensions of time periods:

If applicable nonbankruptcy law ... fixes a period within which the debtor may commence an action, and such period has not expired before the date of the filing of the petition, the trustee may commence such action only before the later of — (1) the end of such period including any suspension of such period occurring on or after the commencement of the case; or (2) two years after the order for relief.

11 U.S.C. § 108(a) (emphasis added). Applicable non-bankruptcy law includes state law. See Patterson v. Shumate,

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Bluebook (online)
218 B.R. 432, 1998 Bankr. LEXIS 324, 1998 WL 134044, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sullivan-v-thies-in-re-dergance-ilnb-1998.