Ebner v. Kaiser (In re Kaiser)
| Decision Date | 31 December 2014 |
| Docket Number | Adversary No. 13ap01243.,Bankruptcy No. 11bk41555. |
| Citation | 525 B.R. 697 |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
| Parties | In re Jordon H. KAISER, Debtor. Deborah Kanner Ebner, not individually but as Trustee of the Bankruptcy Estate of Jordon H. Kaiser, Plaintiff, v. Doris Kaiser, individually and as Trustee of the Shellie Kaiser Trust, and as Trustee of the Amy Kaiser Wickersham Trust, and as Trustee of the Doris Kaiser Trust, et al., Defendants. |
OPINION TEXT STARTS HERE
William J. Factor, David Paul Holtkamp, Factorlaw, The Law Office of William J. Factor, Ltd., Chicago, IL, for Plaintiff.
Ben L. Schneider, Matthew Stone, Schneider & Stone, Skokie, IL, John N. Hourihane, Jr., Rachel Beattie, Smith | von Schleicher + Associates, Georgia L. Joyce, Chittenden, Murday & Novotny LLC, Helen Arnold, Paul Catanese, McGuireWoods LLP, Lauren Kim, Jason M. Kuzniar, Wilson Elser Moskowitz Edelman & Dicker LLP, Chicago, IL, for Defendants.
The matters before the court arise out of seven 1 motions to dismiss (the “ Motions to Dismiss”) filed by nine defendants, seeking dismissal of counts IV and V of the adversary complaint filed by Deborah Kanner Ebner (the “ Trustee”) in her capacity as representative of the bankruptcy estate of Jordon H. Kaiser (the “ Debtor”), and an objection, filed by several of the same defendants, to a proof of claim against the Debtor's bankruptcy estate. 2 Counts IV and V of the adversary complaint seek to avoid alleged actual and constructive fraudulent transfers under 11 U.S.C. §§ 544 and 548 and the Uniform Fraudulent Transfers Act (the “ UFTA ”) as enacted in Illinois.
The Motions to Dismiss present arguments that the majority of the Trustee's actions are predicated on transfers that took place outside of the four-year statute of limitations provided for under the UFTA. The Trustee, in turn, argues that she may avoid transfers within the statute of limitations applicable to any creditor of the bankruptcy estate, including, but not limited to, the Internal Revenue Service (the “ IRS ”). In response, some of the moving defendants filed an objection to the underlying IRS claim.
For the reasons stated below, the motion to disallow the IRS's claim will be denied and the motions to dismiss will be granted in part and denied in part.
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 the Bankruptcy 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 the Bankruptcy Code. 28 U.S.C. § 157(b)(1). An objection to allowance of a claim against the bankruptcy estate may only arise in a bankruptcy case and, thus, is a core proceeding under 28 U.S.C. § 157(b)(2)(B) in which this court has constitutional authority to enter final orders. In re C.P. Hall Co., 513 B.R. 540, 543 (Bankr.N.D.Ill.2014) (Goldgar, j.). Proceedings to avoid fraudulent conveyances under sections 544 and 548 and applicable state law are core proceedings in which the bankruptcy court also has constitutional authority to enter final orders. 28 U.S.C. § 157(b)(2)(H); KHI Liquidation Trust v. Wisenbaker Builder Services, Inc. (In re Kimball Hill, Inc.) , 480 B.R. 894, 907 (Bankr.N.D.Ill.2012) (Barnes, J.).
Accordingly, final judgment is within the scope of the court's authority.
In considering the Motion to Disallow (as defined below) the IRS's claim, claim no. 7–1 filed on September 30, 2013 (the “ IRS Claim”), the court has considered the arguments of the parties at the December 17, 2014 hearing (the “ Hearing”), and has reviewed and considered the following documents in the Bankruptcy Case:
(1) Motion to Disallow Claim No. 7–1 of the Department of Treasury—IRS (the “ Motion to Disallow”) filed by defendants Shellie Kaiser (“ Shellie”). Amy Kaiser Wickersham (“ Amy”) and John Wickersham (“John”) (collectively, the “ Objecting Defendants”) [Dkt. No. 187];
(2) Trustee's Response [sic] Objection to IRS Claim [Dkt. No. 192], and;
(3) Shellie, Amy and John's Reply in Support of the IRS Claim Objection [Dkt. No. 193].
In considering the Motions to Dismiss, the court has considered the arguments of the parties at the Hearing and has reviewed and considered the following filed documents in the Adversary Case:
(1) The Trustee's Complaint for Accounting, Turnover, and Invalidation of Transfers With Corrected Caption (the “ Complaint ”) [Adv. Dkt. No. 31]; 3
(2) The Motions to Dismiss filed by nine individual defendants (collectively the “Moving Defendants”), as follows:
a. Motion to Dismiss Plaintiff's Complaint filed by MB Financial Bank N.A. (“ MB ”) [Adv. Dkt. No. 151];
b. Motion to Dismiss Adversary Complaint filed by Metropolitan Life Insurance Company (“ Metlife”) [Adv. Dkt. No. 170] and Memorandum in support thereof [Adv. Dkt. No. 171];
c. Motion to Dismiss filed jointly by Shellie, Amy and John [Adv. Dkt. No. 174];
d. Motion to Dismiss Counts 4–6 of Plaintiff's Complaint filed by Transamerica Life Insurance Company (“ Transamerica”) [Adv. Dkt. No. 193];
e. Motion to Dismiss Counts 4–6 of Plaintiff's Complaint filed by North American Company for Life and Health Insurance (“ North American”) [Adv. Dkt. No. 194];
f. Motion to Dismiss Amended Complaint filed by Doris Kaiser (“ Doris”) [Adv. Dkt. No. 195]; and
g. Motion to Dismiss Plaintiff's Complaint filed by American General Life Insurance Company (“ American General ”) [Adv. Dkt. No. 196].
(3) The Trustee's Omnibus Response to the Motions to Dismiss Filed by the Moving Defendants [Adv. Dkt. No. 226]; and
(4) The replies filed by the Moving Defendants in support of their respective Motions to Dismiss, as follows:
b. MB's Reply in Support of Its Motion to Dismiss Plaintiffs Complaint [Adv. Dkt. No. 260];
c. MetLife's Reply in Support of Its Motion to Dismiss the Adversary Complaint [Adv. Dkt. No. 261];
d. Transamerica's Reply in Support of Its Motion to Dismiss Counts 4–6 of Plaintiff's Complaint [Adv. Dkt. No. 262];
e. Doris's Reply in Support Motion to Dismiss Amended Complaint [Adv. Dkt. No. 264];
f. North American's Reply in Support of Its Motion to Dismiss Counts 4–6 of Plaintiff's Complaint [Adv. Dkt. No. 265]; and
g. Shellie, Amy and John's Reply in Support of Motion to Dismiss.
Though the foregoing items together do not constitute an exhaustive list of the filings in the Bankruptcy Case and the Adversary Case, the court has taken judicial notice of the contents of the dockets in these matters. See Levine v. Egidi, No. 93C188, 1993 WL 69146, at *2 (N.D.Ill. Mar. 8, 1993); In re Brent, 458 B.R. 444, 455 n. 5 (Bankr.N.D.Ill.2011) (Goldgar, J.) ().
Prior to the commencement of the Bankruptcy Case, the Debtor, a resident of Illinois, was a businessman who held interests in many corporations, including a majority interest in a group of health clubs. The Debtor accumulated real property in a number of different states and substantial amounts of personal property. At one property alone, the Debtor and his spouse had personal property insured for more than $500,000. The Debtor's spouse, Doris, was unemployed during their 6–year marriage.
In the early 2000s, it appears that the Debtor began to have financial troubles related to his interest in the health clubs.
Around that same time, it is alleged that the Debtor engaged in a series of transfers benefiting his relatives. The Trustee alleges that the Debtor obtained large life insurance policies with many of his relatives listed as the beneficiaries. The Trustee also alleges that, as early as 2003, the Debtor transferred his interests in real property to Doris for allegedly no consideration, and also transferred his interests in various companies and partnerships to trusts, with his relatives largely the beneficiaries of such conveyances.
On October 12, 2011, the Debtor filed a voluntary petition for bankruptcy relief under Chapter 7 of the Bankruptcy Code (the “ Petition Date ”). The Debtor's schedules listed fully exempt assets totaling $1,500 and liabilities totaling $18,570,778.80. The Debtor scheduled a current monthly income of $1,971 in the form of Social Security income and monthly expenses of $3,175. The Debtor also scheduled his interest in various trusts and companies, but provided that the value of all such interests was unknown.
On May 1, 2012, notice of the Debtor's death was filed. The Certification of Death Record indicates that the Debtor died on February 17, 2012.
On September 30, 2013, the IRS filed proof of claim 7–1 reflecting a $5,000 liability for failure to file a tax return for the year 2010.
On October 15, 2013, the Trustee filed the Complaint, naming as defendants relatives of the Debtor other than the Moving Defendants, nine trusts of which the Debtor's relatives are beneficiaries, four related companies, one related partnership and the Moving Defendants.5 In the Complaint, the Trustee requests that the court (I) issue declaratory judgment against Amy and Shellie and in favor of the Trustee declaring that...
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