65 F.3d 78 (7th Cir. 1995), 94-1945, Chapman v. Currie Motors, Inc.

Docket Nº:94-1945.
Citation:65 F.3d 78
Party Name:Lamar CHAPMAN, III, Plaintiff-Appellant, v. CURRIE MOTORS, INC., Defendant-Appellee.
Case Date:August 31, 1995
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

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65 F.3d 78 (7th Cir. 1995)

Lamar CHAPMAN, III, Plaintiff-Appellant,


CURRIE MOTORS, INC., Defendant-Appellee.

No. 94-1945.

United States Court of Appeals, Seventh Circuit

August 31, 1995

Submitted July 13, 1995.

Rehearing and Suggestion for Rehearing En Banc Denied Jan.

12, 1996. *

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Steven Bernstein (submitted), Berger & Associates, Lincolnwood, IL and Burton Berger, Dordek, Rosenburg & Associates, Lincolnwood, IL, for appellee.

Lamar Chapman, III, Matteson, IL, pro se.

Before POSNER, Chief Judge, and PELL and CUDAHY, Circuit Judges.

POSNER, Chief Judge.

The question presented by this appeal, a new question in this circuit, is whether and in what circumstances a federal district court may or must relinquish jurisdiction over an adversary proceeding based solely on state law when the underlying bankruptcy proceeding is dismissed.

Lamar Chapman, the debtor in a bankruptcy proceeding under Chapter 13 of the Bankruptcy Code (a counterpart, for small debtors, see 11 U.S.C. Sec. 109(e), of Chapter 11 of the Code, the reorganization chapter), filed, in his capacity as debtor in possession, an adversary proceeding against one of his creditors, Currie Motors. He claimed that Currie owed him some $200,000. In support of this claim, Chapman (unrepresented by counsel), presented a judgment that a state court had issued in Chapman's favor against the creditor. The judgment is captioned a "default and conditional judgment," which, Currie contends, under state law is not enforceable without further actions, such as

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service of process on the defendant, that Chapman had failed to take.

We cannot find any reference in Illinois statutes or cases, or anywhere else for that matter, to the term "default and conditional judgment." The term "conditional judgment" is found in the Illinois statutes dealing with garnishment, 735 ILCS 5/12-706, 5/12-807; but garnishment, of course, is a procedure for collecting a judgment out of money owed the judgment debtor by a third party, not a procedure for collecting the judgment from the debtor himself. Nevertheless Chapman purported to bring his suit against Currie--the alleged debtor--as a garnishment proceeding, and somehow managed to obtain, apparently without notice to Currie, and thus "by default," a "conditional judgment": so "default and conditional judgment." That judgment was unenforceable, since Chapman was not a judgment creditor and hence was not entitled to bring a garnishment proceeding against anyone, let alone the alleged debtor. Not surprisingly, the bankruptcy judge dismissed Chapman's claim, which had been based exclusively upon the "default and conditional judgment."

Chapman appealed the dismissal to the district judge, 28 U.S.C. Sec. 158(a)(1), and in the oral argument of the appeal claimed that he had obtained a final judgment in state court, not merely the "default and conditional judgment." The district judge remanded the case with directions that the bankruptcy judge add that judgment to the record. The bankruptcy judge did so, and the case returned to the district judge. The judgment, it turned out, far from being a final judgment in Chapman's favor, was a dismissal of the "default and conditional judgment" (presumably...

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