Erhardt v. Baldassarre (In re Erhardt), No. 20 C 0006

Decision Date15 July 2020
Docket NumberNo. 20 C 0006,Bankruptcy No. 19 B 31952
Parties IN RE: Arthur T. ERHARDT, Debtor, Arthur T. Erhardt, Appellant, v. Thomas Baldassarre, as executor of the estate of Mary Baldassarre, decedent, Appellee.
CourtU.S. District Court — Northern District of Illinois

Richard L. Hirsh, Richard L. Hirsh, P.C., Lisle, IL, for Appellant.

Lauren Newman, Thompson Coburn, LLP, Chicago, IL, for Appellee.

OPINION AND ORDER

SARA L. ELLIS, United States District Judge

In June 2019, the Circuit Court of DuPage County ordered Debtor-Appellant Arthur T. Erhardt to be incarcerated as a sanction for civil contempt. Erhardt was to remain in jail until he turned over several items of Mary Baldassarre's ("Ms. Baldassarre") personal property to Appellee Thomas Baldassarre ("Baldassarre"), the executor of Ms. Baldassarre's estate. Still in jail five months later, Erhardt filed a Chapter 7 bankruptcy petition. Shortly thereafter, he asked the bankruptcy court to enforce the automatic stay provided by 11 U.S.C. § 362 and sanction Baldassarre for not seeking to obtain Erhardt's release from jail based on the stay. The bankruptcy court denied Erhardt's motion, finding that Erhardt's continued incarceration was not prohibited by the automatic stay. Erhardt now appeals that order.1 Because the bankruptcy court legally erred in determining that Erhardt's incarceration is outside the scope of the automatic stay, the Court vacates the bankruptcy court's order and remands the case for further proceedings in accordance with this opinion.

BACKGROUND2
I. The Underlying State Trial Court Proceedings

Erhardt and Ms. Baldassarre were domestic partners for over three decades. In May 2003, they jointly purchased a home (the "Residence"). The couple lived together until September 2016, when Ms. Baldassarre was diagnosed with an inoperable brain tumor. After Ms. Baldassarre's hospitalization and biopsy surgery, she began living with her daughter, Denise Bosh-Williams.

Shortly after Ms. Baldassarre's diagnosis, conflicts arose between Erhardt and Ms. Baldassarre's children from her previous marriage, Baldassarre and Bosh-Williams. In November 2016, Baldassarre and Bosh-Williams jointly petitioned for guardianship over Ms. Baldassarre in the Circuit Court of DuPage County. Erhardt filed a counterpetition seeking guardianship over Ms. Baldassarre and the estate. The following month, the state court appointed a guardian ad litem , set dates and times for Erhardt to visit Ms. Baldassarre, and affirmed Bosh-Williams' health care power of attorney.

In March 2017, Ms. Baldassarre discovered that since September 2016, Erhardt had been moving some of her money into accounts solely in his name. Erhardt admitted this, and Ms. Baldassarre terminated their relationship. A month later, on April 13, Ms. Baldassarre filed an emergency motion for entry of the Residence and return of her personal property, alleging that Erhardt had repeatedly denied her access to the home and her belongings. The state court granted Ms. Baldassarre's motion on April 14 and ordered Erhardt to return specific items to Ms. Baldassarre, including her clothing, jewelry, baking items, and make-up. The same day, Ms. Baldassarre's children filed a citation to discover assets against Erhardt.

On April 20, the state court suspended Erhardt's power of attorney for property and froze all but one of his accounts, pending the turnover of certain financial documents. The court then conducted a hearing on the citation to discover assets on April 27. During the hearing, Erhardt admitted that after he had Ms. Baldassarre sign over the title to her vehicle, he had sold it for less than fair market value without telling her; that he had changed the locks and alarm codes to the Residence the previous fall; and that he had reviewed a letter from Ms. Baldassarre's counsel requesting the return of specific items of her personal property. Erhardt also testified that despite the April 14 order to turn over property, he had donated Ms. Baldassarre's baking items without her knowledge. The court ordered all parties not to remove any personal property from the Residence.

Later, at a hearing held on May 11, Erhardt testified that he did in fact possess Ms. Baldassarre's baking items, despite his previous testimony that he had donated them all. The state court ordered Erhardt to provide the garage access code for the Residence so that Ms. Baldassarre could pick up some of her items. On May 19, the parties entered into an agreed order that permitted Ms. Baldassarre to remove certain personal items from the Residence, and on June 1, Erhardt and Ms. Baldassarre entered into an agreed order listing the Residence for sale. The June 1 order also provided that Erhardt would return any property that he had removed from the Residence within 24 hours and provide the location of, and access to, all personal property that had been relocated from the house.

Ms. Baldassarre subsequently learned that Erhardt had cleaned out nearly all the property in the Residence, including many of the belongings that the state court had ordered to be returned to her, without the court's permission and without notifying Ms. Baldassarre. On August 9, Ms. Baldassarre and her children filed a petition for a rule to show cause against Erhardt. The petition alleged that by removing all or substantially all of the personal property from the Residence without returning it, Erhardt had violated the state court's April 27 and June 1 orders and was in "indirect civil contempt."3 In re Estate of Baldassarre , 2018 IL App (2d) 170996, ¶ 12, 432 Ill.Dec. 282, 129 N.E.3d 170. The same day, Erhardt filed an emergency motion to continue the hearing on the April 14 citation to discover assets based on an alleged potential Fifth Amendment issue. The state court continued the citation hearing and ordered that no property be removed from the Residence.

Ms. Baldassarre filed a citation to discover assets against Erhardt two days later, on August 11. Ms. Baldassarre alleged that Erhardt had removed, destroyed, or converted all of her personal property in violation of the court's orders and had previously admitted that he gave away some of her personal property and sold her car. The citation included a list of personal property that had not been returned to Ms. Baldassarre despite the court orders.

On August 23, the state court issued a rule to show cause against Erhardt and set a hearing regarding any personal property not returned to the Residence for September 20. At the September 20 evidentiary hearing, the guardian ad litem and Bosh-Williams testified as to which items of personal property had been inside the Residence, which items remained missing, and who had access to the Residence and on what terms. Erhardt did not present any evidence of his own, and when he was called to testify, he asserted his Fifth Amendment right against self-incrimination.

On September 22, the state court found Erhardt in "deliberate and ongoing indirect civil contempt" of its April 27 and June 1 orders for removing and then failing to return numerous items of personal property to the Residence. Id. ¶ 17. Erhardt, however, could purge the contempt by returning "all missing items of personal property" to Ms. Baldassarre by the next court date. Id. Erhardt did not do so. Instead, he only returned some of the missing items of personal property to the Residence.

The state court thereafter held a hearing on December 6 to determine whether Erhardt had purged himself of indirect civil contempt. The court found that he had not and reiterated its holding that Erhardt was in "deliberate and ongoing indirect civil contempt" of its April 27 and June 1 orders by removing numerous items of personal property that were ordered not to be removed from the Residence and not returning them. Id. ¶ 19. On December 8, the court ordered Erhardt to serve 30 days' incarceration but stayed enforcement of this order until December 13 to again give Erhardt a chance to purge his contempt.

Erhardt appealed the state court's contempt finding and its order of incarceration. Erhardt also filed an emergency motion with the appellate court to stay the incarceration pending appeal. The appellate court granted Erhardt's emergency motion on January 2, 2018. Ms. Baldassarre passed away the following month.

II. Erhardt's Appeal and the State Trial Court's Subsequent Contempt Order

On appeal, Erhardt argued that because the contempt finding was criminal rather than civil, the state trial court had impermissibly made Erhardt prove that he was not in contempt. In the alternative, Erhardt argued that the civil contempt finding was an abuse of discretion because it "did not contain a valid purge provision or list the specific items that he must return." Id. ¶ 25.

The Illinois Appellate Court decided Erhardt's appeal on October 25, 2018. The appellate court affirmed the state court's contempt finding, which it found to be a finding of indirect civil contempt because "the dominant purpose for which the trial court imposed sanctions was to secure [Erhardt's] compliance with the" April 27 and June 1 orders. Id. ¶¶ 29, 39. Critically, "[t]he trial court's actions were remedial and for [Ms. Baldassarre's] benefit," as opposed to "a punitive effort to vindicate the authority of the court." Id. ¶ 30. However, the appellate court found that the state court's 30-day sentence allowed Erhardt to "evade the coercive nature of the sanctions": if Erhardt was "willing to sit in jail for 30 days rather than turn over [Ms. Baldassarre's] personal property to her estate," the coercive effect of the contempt order was lost. Id. ¶ 39. The appellate court also noted that the state court's September 22 order, which stated that Erhardt could purge his contempt by returning all missing items of personal property, "did not specify the items that must be returned." Id. ¶¶ 17, 38. Thus, the appellate court vacated the sentence and remanded the case to...

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