899 F.2d 694 (7th Cir. 1990), 89-2057, Matter of Rosteck

Docket Nº:89-2057.
Citation:899 F.2d 694
Party Name:In the Matter of William N. ROSTECK and Joyce M. Rosteck, Debtors. Appeal of OLD WILLOW FALLS CONDOMINIUM ASSOCIATION.
Case Date:April 13, 1990
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

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899 F.2d 694 (7th Cir. 1990)

In the Matter of William N. ROSTECK and Joyce M. Rosteck, Debtors.


No. 89-2057.

United States Court of Appeals, Seventh Circuit

April 13, 1990

Argued Dec. 11, 1989.

S. Keith Collins, Lita Brody, Arlington Heights, Ill., for appellant.

John P. Brundage, Brundage & Associates, Chicago, Ill., for debtor-appellee.

Before BAUER, Chief Judge, FLAUM and MANION, Circuit Judges.

MANION, Circuit Judge.

In July 1981, William Rosteck and his wife, Joyce, purchased a condominium unit in Prospect Heights, Illinois. The condominium

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was subject to a Declaration made pursuant to the Illinois Condominium Property Act, Ill.Ann.Stat. ch. 30, para. 301-331, that obligated the Rostecks to pay assessments levied by the Old Willow Falls Condominium Association (an association of condominium owners that we shall refer to as "Old Willow") for payment of common expenses. Old Willow's by-laws (to which the Declaration specifically referred) provided for its Board of Directors to establish an annual budget for common expenses. The Board was then to assess a portion of the budget to each condominium owner; each owner's assessment was payable in equal monthly installments.

In March 1983, the Rostecks purchased a new home. The Rostecks moved out of the condominium on April 1, 1983, without having sold it. After moving out of the condominium, the Rostecks failed to pay the monthly installments for assessments levied by Old Willow.

In September 1983, the Rostecks filed a petition for relief under Chapter 7 of the Bankruptcy Code. In their schedules, they listed Old Willow as a creditor, and described their debt as "possible liability for condo assessments...." The trustee filed a no-asset report, and abandoned his interest in the condominium. In December 1983, the bankruptcy court ordered the Rostecks' debts discharged. The discharge order, consistent with 11 U.S.C. Sec. 524(a)(2), specifically provided that "All creditors whose debts are discharged by this order ... are enjoined from instituting or continuing any action or employing any process or engaging in any act to collect such debts as personal liabilities of the debtor." 1

After their bankruptcy case closed, the Rostecks continued to own the condominium, although they did not live in it. In the meantime, the delinquent installments continued to accrue. Two weeks after the Rostecks' discharge, Glenview State Bank, holder of a first mortgage on the condominium, filed a foreclosure action in state court naming the Rostecks and Old Willow as defendants. In November 1984, the court entered a judgment of foreclosure against the Rostecks. The judgment also allowed Old Willow a lien for assessments Old Willow had levied against the condominium after the Rostecks had filed their bankruptcy petition. Old Willow's lien, however, was junior to Glenview's mortgage. In December 1984, the condominium was sold at a sheriff's sale. The sale, however, did not fetch sufficient funds to pay both Glenview's mortgage and Old Willow's lien, so Old Willow received nothing from the sale.

In May 1986, Old Willow obtained a deficiency judgment against the Rostecks for $6,421.75, the amount of post-petition assessments Old Willow had charged against the condominium. Old Willow subsequently attempted to collect this judgment from the Rostecks. The Rostecks responded to Old Willow's collection efforts by filing a petition for a rule to show cause against Old Willow in the bankruptcy court. The Rostecks contended that the bankruptcy court had discharged its obligation to pay post-petition assessments, and...

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