Cervac v. Littman (In re Littman)
| Decision Date | 11 September 2014 |
| Docket Number | Adversary No. 12ap00155.,Bankruptcy No. 11bk38875. |
| Citation | 517 B.R. 847 |
| Parties | In re Kimberly A. LITTMAN, Debtor. Susan K. Cervac, Plaintiff, v. Kimberly A. Littman, Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
Joel A. Schechter, Esq., Law Offices of Joel Schechter, Chicago, IL, for Plaintiff.
William J. Factor, The Law Office of William J. Factor, Ltd., Northbrook, IL, Jeffrey K. Paulsen, The Law Office of William J. Factor, Ltd., Chicago, IL, for Defendant.
Norman B. Newman, Much Shelist, P.C., Chicago, IL, Trustee.
The matter before the court is the Second Motion to Vacate Judgment and for Leave to File Response to Cervac's Summary Judgment Motion (the “Motion to Vacate ”) brought by debtor Kimberly A. Littman (the “Debtor ”) seeking relief from the court's Order Granting Plaintiff's Motion for Summary Judgment (the “Order Granting Motion ”) and Rule 7058 Judgment Order (the “Judgment Order ” and collectively with the Order Granting Motion, the “Orders ”) under Rules 59 and 60 of the Federal Rules of Civil Procedure(the “Civil Rules ”) on the grounds that the underlying state court judgment has been satisfied. The matter before the court is whether and if so, to what extent, this court should set aside its previous grant of summary judgment in favor of Susan Kathleen Cervac (the “Plaintiff ”) in adversary proceeding no. 12ap00155 (the “Adversary ”).
In short, the Debtor argues under Civil Rules 59 and 60 that the court's grant of an unopposed motion for summary judgment was procedurally inappropriate given the existence of an affirmative defense of satisfaction of the obligation set forth in the Debtor's answer. Further, the Debtor asserts arguments under Civil Rule 60(b)(5) based, essentially, on accord and satisfaction. The latter matter is not a typical, to the extent there is a typical, Civil Rule 60(b)(5) proceeding. This is primarily because the Debtor argues that the state court judgment upon which this court's Orders were predicated was satisfied, at least in part, before that state court judgment was entered.
Upon a review of the parties' respective filings and after holding a three-day evidentiary hearing on the matter, the court finds that the Debtor has failed to establish grounds to set aside or modify the Orders. Accordingly, the Motion to Vacate is denied.
This Memorandum Decision constitutes the court's findings of fact and conclusions of law in accordance with Rule 7052 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules ”).
The federal district courts have “original and exclusive jurisdiction” of all cases under title 11 of the United States Code (the “Bankruptcy Code ”). 28 U.S.C. § 1334(a). The federal district courts also have “original but not exclusive jurisdiction” of all civil proceedings arising under title 11 of the United States Code, or arising in or related to cases under title 11. 28 U.S.C. § 1334(b). District courts may, however, refer these cases to the bankruptcy judges for their districts. 28 U.S.C. § 157(a). In accordance with section 157(a), the District Court for the Northern District of Illinois has referred all of its bankruptcy cases to the Bankruptcy Court for the Northern District of Illinois. N.D. Ill. Internal Operating Procedure 15(a).
A bankruptcy judge to whom a case has been referred may enter final judgment on any core proceeding arising under the Bankruptcy Code or arising in a case under title 11. 28 U.S.C. § 157(b)(1). A proceeding for determination of the dischargeability of a particular debt may only arise in a case under title 11 and is specified as a core proceeding. 28 U.S.C. § 157(b)(2)(B) and (I) ; Birriel v. Odeh (In re Odeh ), 431 B.R. 807, 810 (Bankr.N.D.Ill.2010) (Wedoff, J.); Baermann v. Ryan (In re Ryan ), 408 B.R. 143, 151 (Bankr.N.D.Ill.2009) (Squires, J.).
It follows, therefore, that motions for relief under Civil Rules 59 and 60 relating to the foregoing are also core proceedings. 28 U.S.C. § 157(b)(1) & (2). Accordingly, final judgment is within the scope of the court's authority.
This is a dispute between sisters, the Plaintiff and the Debtor, over the assets of their deceased mother's estate. Prior to the commencement of the Debtor's chapter 7 bankruptcy case, an action in the Illinois courts (the “State Court Action ”) resulted in the entry of an agreed judgment order (the “State Court Judgment ”) providing for restitution to the Plaintiff for funds that the Debtor had improperly disbursed from their mother's estate, a loan that the Debtor had failed to repay to the Plaintiff and fees related thereto.
The State Court Judgment also provided that the Debtor would make total restitution to the Plaintiff within two years of its entry. On September 24, 2011 (the “Petition Date ”), just short of the two-year anniversary of the State Court Judgment and thus prior to the two-year restitution deadline set forth therein, the Debtor filed a petition for relief under Chapter 7 of the Bankruptcy Code. In that petition, the Debtor listed the Plaintiff as the holder of a disputed claim.
Thereafter the Plaintiff commenced the Adversary. The circumstances regarding this court's grant of summary judgment in favor of the Plaintiff in the Adversary and the present Motion to Vacate are discussed in detail, below.
In considering these matters, the court first reflects upon the procedural posture of the matter. In the first instance, this matter arises out of an adversary complaint (the “Complaint ”) [Docket No. 1]1 dated January 31, 2012, wherein the Plaintiff sought to have a $49,541.60 claim against the Debtor resulting from the State Court Judgment deemed nondischargeable under 11 U.S.C. § 523(a)(2), (4) and (6).
The Debtor, who was initially represented by counsel other than those presently before the court in the Adversary, answered the Complaint with the assistance of that prior counsel on May 31, 2012 (the “Answer ”) [Docket No. 17]. Prior counsel continued to represent the Debtor in the matter for a period of time thereafter, including in a series of status hearings on the Adversary and two motions to dismiss filed by the prior counsel.
On April 3, 2013, after the court denied the Debtor's second motion to dismiss the Adversary, the court authorized the withdrawal of the Debtor's prior counsel and, in so doing, expressly advised the Debtor both of her pro se status and that she must comply with all procedural rules and deadlines. In that order, the court stayed proceedings for 21 days for the Debtor to obtain replacement counsel if she so desired. The Debtor, instead, elected to proceed pro se.
Nearly four months later and after a series of additional status hearings, the Motion of Plaintiff, Susan Kathleen Cervac, for Summary Judgment (the “Summary Judgment Motion ”) [Docket No. 48], was filed on August 7, 2013. The court thereafter conducted an initial hearing on August 20, 2013 on the Summary Judgment Motion which was attended by both parties, where the court set briefing deadlines and again cautioned the Debtor that her compliance was required. Nonetheless, the Debtor failed to file any response to the Summary Judgment Motion.
On October 15, 2013, at a hearing following the conclusion of the briefing schedule, neither the Debtor nor any replacement counsel for the Debtor appeared. At that hearing, the court considered the merits of the Summary Judgment Motion and documents filed in support thereof, the Complaint and the Answer and ruled in favor of the Plaintiff on some, but not all, of the relief requested in the Summary Judgment Motion, thereafter entering the Orders. All remaining counts other than those on which summary judgment had been granted were dismissed.
The following day, and prior to the entry of the Orders, the Debtor's newly retained and present counsel appeared in the Adversary. After the Orders were entered on October 17, 2013, on October 18, 2013, the Debtor's new counsel promptly moved to vacate the nondischargeability judgment, alleging that the Debtor's excusable neglect as a pro se litigant warranted relief from the Orders.
The court, after relying on the well-established precedent in the Seventh Circuit that the deference extended to pro se litigants does not include an abrogation of deadlines2 and the court's express and repeated warnings to the Debtor to comply with the deadlines, and finding that the Debtor's explanation for missing the deadline did not to establish excusable neglect, denied the Debtor's first motion to vacate.
Shortly thereafter, and still within the time period to seek both Civil Rule 59 and Rule 60 relief,3 the Debtor asserted a new request to vacate or modify the Orders by filing the Motion to Vacate. Thereafter, the Debtor appealed the Orders.
In considering the Motion to Vacate, the court has considered the evidence and argument presented by the parties at the three-day evidentiary hearing that took place on March 11, 2014, March 12, 2014 and March 19, 2014 (the “Hearing ”), has reviewed the Motion to Vacate [Docket No. 65], the attached exhibits submitted in conjunction therewith, and has reviewed and found each of the following of particular relevance:
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