In re Aleksyuk

• Docket Number: 23-08893
• Decision Date: 15 February 2024
• Parties: In re: Lyudmila Aleksyuk, Debtor.
• Court: U.S. Bankruptcy Court — Northern District of Illinois

1

In re: Lyudmila Aleksyuk, Debtor.

No. 23-08893

United States Bankruptcy Court, N.D. Illinois, Eastern Division

February 15, 2024

Chapter 7

MEMORANDUM DECISION

Thomas M. Lynch, United States Bankruptcy Judge

Before the court is the Debtor's objection under Fed.R.Bankr.P 3007 to the proof of claim filed by Five Star Bank asserting a security interest in certain real property the Debtor owns.^[1] The parties do not dispute that the Circuit Court of Cook County awarded Five Star Bank money judgment against the Debtor and a business entity. The bank maintains that the judgment was recorded prepetition by the Kane County Recorder respecting real property owned by the Debtor in Elgin, Illinois, and that Five Star Bank now holds a valid judgment lien on the property. The Debtor objects arguing that the documents the bank recorded did not meet the Illinois requirements for a valid judgment lien.

The parties fully briefed and argued the matter and submit that the question is ready for disposition on the record now before the Court. The Court finds that the parties have raised no material dispute of fact and that it can now rule as a matter of law based on the proof of claim, the Debtor's amended objection to the claim (ECF No. 45) and the parties' briefs^[2] and argument.^[3] At the regularly scheduled hearing held on January 26, 2024, the court issued its preliminary oral determination that creditor Five Star Bank failed to satisfy the statutory requirements to obtain a judgment lien subject, noting that the Court would then issue its a written memorandum. For the reasons discussed below, the Court will now sustain the objection and disallow Claim 5.

I. JURISDICTION

The Court has subject matter jurisdiction under 28 U.S.C. § 1334(b) and the district court's Internal Operating Procedure 15(a). This matter contesting a creditor's claim is a core proceeding under 28 U.S.C. § 157(b)(2)(J), see e.g., Spangler v. Byrne (In re Spangler), 653 B.R. 573, 581 (Bankr. N.D.Ill. 2023), in which this court has constitutional authority to enter final orders. See, e.g., Johnson v. S.A.I.L. LLC (In re Johnson), 649 B.R. 735, 748 (Bankr. N.D.Ill. 2023) ("Disputed matters that 'stem[] from the bankruptcy itself or would necessarily be resolved in the claims allowance process,' are constitutionally core.") (quoting Stern v. Marshall, 564 U.S. 462, 499 (2011)).

II. PROCEDURAL CONTEXT AND UNDISPUTED FACTUAL BACKGROUND

On July 7, 2023, Ms. Aleksyuk filed a petition for chapter 13 relief. She had previously received a chapter 7 discharge in a prior case on March 1, 2022.^[4] In this chapter 13 case, Five Star Bank timely filed a Proof of Claim for $478,524.24, describing the basis of the claim to be a "judgment lien" which it obtained in the Cook County case. Its Proof of Claim asserted that this claim is fully secured by unspecified real estate on the basis of a "recorded judgment lien." (Claim No. 5). An "Itemized Statement of Interest or Charges" was attached to the Proof of Claim, which alleges the judgment amount of $375,653.68 and accrued interest of $98,558.32, described as "9% statutory interest from 08/07/2020 to 07/07/2023 - $92.63 per diem x 1064 days." The attachment also identifies an additional $4,315.50 for prepetition legal fees and costs.

Also attached to the proof of claim is a copy of a three-page document stamped:

2020K045984 SANDY WEGMAN RECORDER - KANE COUNTY, IL RECORDED: 8/17/2020 2:23 PM REC FEE: $52.00 PAGES: 3

The parties do not dispute for purposes of this matter that this is an accurate copy of a document recorded in Kane County on the date indicated. Its first page bears the stamp at the top, the word "ORDER" in the middle of the page, and a typed indication that the page was prepared by an attorney. (Debtor's Objection, Ex. A; ECF No. 45.) The second page is not stamped. It begins with another reference to a preparing attorney followed by what is styled as a caption for the case: "FIVE STAR BANK, Plaintiff, v. WEST & EAST CARRIERS, INC. and LYUDMILA V. ALEKSYUK, Defendants, Case No. 20 L 1060 in the Circuit Court of Cook County, Illinois, County Department - Law Division." Two sentences follow the caption:

On August 6, 2020, an Order, copy of which is attached, was entered in the Circuit Court of Cook County, Illinois, in Case No. 20 L 1060, in favor of Plaintiff FIVE STAR BANK and against Defendants, WEST & EAST CARRIERS, INC. and LYUDMILA V. ALEKSYUK in the amount of $375,653.68 with interest to accrue thereafter at the statutory rate. The last known address of LYUDMILA V. ALEKSYUK is 206 Atwell Street, Elgin, IL 60124.

(Id.) What appears to be a document file identifier is included in the bottom margin of the page.^[5]

The third page, also unstamped, again bears the same circuit court case number and caption and concludes with the same reference to the attorney-preparer and another, slightly different, file number at the bottom. This page is entitl e d "ORDER", following which it states:

THIS matter coming before the Court on Plaintiffs Motion for Rule to Show Cause and Enter Judgment on Counts II and III of the Complaint, due notice having been given and the Court having jurisdiction over the parties and subject matter, and being fully advised in the premises, IT IS HEREBY ORDERED:

1. Judgment is hereby entered in favor of FIVE STAR BANK and against the defendants WEST & EAST CARRIERS, INC. and LYUDMILA V. ALEKSYUK in the amount of $375,653.68. Post Judgment interest to accrue at the Illinois statutory rate.

2. Motion for Rule to Show Cause on Count 1 is moot.

3. This case is dismissed.

ENTERED:

(Id.) Below the quoted text is a signature line for: "Honorable Thomas R. Mulroy, Supervising Judge." The signature is stamped: "AUG 6 2020" and "JUDGE ___," with "Mulroy" handwritten in the stamp's blank after the word "JUDGE."^[6]

The parties do not dispute that the third page of the recorded document bears no certification statement and is not a certified copy of a judgment. They also do not quarrel that the first and the second page contain no signature of a judge or clerk and were not part of any judgment or order signed by or entered by a judge or court. The Debtor questions whether the handwritten word on the stamp was an actual signature of Judge Mulroy, speculating that "at most" some of the documents attached to proof of claim may have been written by "a deputy clerk." (Objection, ¶ 20; ECF No. 45.) The court, however, need not address that issue because even had the Order attached as the third page of the recorded document been signed by the judge, the recording still fails to satisfy the statutory requirements to create a valid judicial lien in Illinois.

III. DISCUSSION

Section 12-101 of the Illinois Code of Civil Procedure governs the creation of a judicial lien. The statute provides that "a judgment is a lien on the real estate of the person against whom it is entered in any county in this State, including the county in which it is entered, only from the time a transcript, certified copy or memorandum of the judgment is filed in the office of the recorder in the county in which the real estate is located." 735 Ill. Comp. Stat. Ann. 5/12-101. Illinois courts have recognized that "[a] judgment lien, as provided in section 12-101, is a statutory creation in derogation of the common law. . . . Thus, the case law overwhelmingly indicates that, 'since the creation and revival of a judgment lien are statutory in nature, courts require strict compliance with section 12-101.'" Blewitt v. Urban, 2020 IL App (3d) 180722, ¶38 (Ill. App. Ct., 3rd Dist., 2020).

Five Star Bank does not contend that it recorded a "transcript of a judgment" or a "certified copy of a judgment" as provided by the statute.^[7] Instead, it argues, the recorded document falls within the statutory category "memorandum" of judgment. (ECF No. 59, p. 3.) As defined by section 12-101,

The term "memorandum" as used in this Section means a memorandum or copy of the judgment signed by a judge or a copy attested by the clerk of the court entering it and showing the court in which entered, date, amount, number of the case in which it was entered, name of the party in whose favor and name and last known address of the party against whom entered. If the address of the party against whom the judgment was entered is not known, the memorandum or copy of judgment shall so state.

735 Ill. Comp. Stat. Ann. 5/12-101. To fall within this definition the recorded document must show specific information called for in addition to being signed by a judge or a copy attested by the clerk of the court that entered the judgment. The undisputed facts unequivocally reveal that the third page of the recording, the copy of the "Order" and the only (potentially) signed document filed by Five Star Bank, did not disclose the last known address of the party against whom judgment was entered or state that such information was not known as required by the statute and, therefore, is not a "memorandum of judgment" within the meaning of section 12-101.

Relying on a 1992 Illinois appellate decision to support its claim First Nat'l Bank v. Fryman, 236 Ill.App.3d 754 ( Ill. App. Ct., 4^th Dist., 1992), Five Star Bank makes three related arguments that to create a valid judgment lien under the statute: (1) a recorded signed judgment order need not contain the address of the defendant, (2) a memorandum of judgment need not be signed by a judge or clerk so long as it contains the specified information, and (3) so long as the recorded documents provide sufficient notice of the details of the judgment they need not otherwise comply with the requirements of the statute. These points were all rejected by the Illinois appellate court in a recent decision strikingly similar to...