In re Bovino

• Decision Date: 26 July 2013
• Docket Number: No. 12bk48031.,12bk48031.
• Citation: 496 B.R. 492
• Parties: In re Derrick A. BOVINO, Debtor.
• Court: U.S. Bankruptcy Court — Northern District of Illinois

496 B.R. 492

In re Derrick A. BOVINO, Debtor.

No. 12bk48031.

United States Bankruptcy Court,

N.D. Illinois,

Eastern Division.

July 26, 2013.

Michael M. Tannen, Zachary Sehy, Law Offices of Michael Murphy Tannen, P.C., Chicago, IL, for Movant.

David P. Lloyd, David P. Lloyd, Ltd., LaGrange, IL, Steven J. Rotunno, Kubasiak, Fylstra, Thorpe & Rotunno, P.C., Chicago, IL, for Debtor/Respondent.

MEMORANDUM DECISION

TIMOTHY A. BARNES, Bankruptcy Judge.

This matter comes before the court on Old Plank Trail Community Bank's (the “ Movant ”) Motion To Dismiss (the “ Motion To Dismiss ”) [Docket No. 102] and the Movant's Motion for Relief from Stay (the “ Stay Motion ”) [Docket No. 100]. The Movant reasons that the Debtor's case should be dismissed for a lack of good faith, alleging “cause” under section 1112(b). In addition, the Movant seeks relief from stay pursuant to section 362(d) on three real estate investment properties of Derrick A. Bovino (the “ Debtor ”), alleging that relief should be granted both under section 362(d)(1) “for cause” and under section 362(d)(2) as two of the properties allegedly have no equity and are not necessary for an effective reorganization.

JURISDICTION

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 bankruptcyjudges 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 motion for relief from stay arises in a case under title 11 and is specified as a core proceeding. 28 U.S.C. § 157(b)(2)(G). In re Mahurkar Double Lumen Hemodialysis Catheter Patent Litig., 140 B.R. 969, 976–77 (N.D.Ill.1992); In re Quade, 482 B.R. 217, 221 (Bankr.N.D.Ill.2012) (Barnes, J.). It follows that a motion to dismiss under section 1112(b) also arises in a case under title 11. 28 U.S.C. § 157(b)(2)(G). In re Iberis Int'l, Inc., 72 B.R. 624, 626 (Bankr.W.D.Wis.1986).

Accordingly, final judgment is within the scope of the court's authority.

PROCEDURAL HISTORY

In considering the motions, the court has considered the arguments of the parties at the July 8, 2013 hearing on the motions (the “ Hearing ”), as well as evidence adduced at the Hearing, and has reviewed and considered the Stay Motion and the Motion To Dismiss themselves, as well as:

(1) The Farleys' Motion To Dismiss Bankruptcy Case [Docket No. 86];

(2) Response to Farleys' Motion To Dismiss [Docket No. 107];

(3) Response to Old Plank Trail Community Bank's Motion for Relief from Stay [Docket No. 108];

(4) Response to Old Plank Trail Community Bank's Motion To Dismiss [Docket No. 109];

(5) Old Plank Trail Community Bank's Combined Reply in Support of its Motion To Lift Stay and its Section 1112 Motion To Dismiss [Docket No. 110]

(6) The Farleys' Reply in Support of their Motion To Dismiss Bankruptcy Case and Bar Debtor from Refiling [Docket No. 112]; and

(7) Joint Pretrial Statement [Docket No. 114].

The court has also taken into consideration any and all exhibits submitted in conjunction with the foregoing. Though these items together do not constitute an exhaustive list of the filings in the above-captioned bankruptcy case, the court has taken judicial notice of the contents of the docket in this matter. See Levine v. Egidi, No. 93–C–188, 1993 WL 69146, at *2 (N.D.Ill. March 8, 1993); In re Fin. Partners, 116 B.R. 629, 635 (Bankr.N.D.Ill.1989) (Sonderby, J.) (stating that a bankruptcy court may take judicial notice of its own docket).

BACKGROUND

In this matter, the facts are essentially undisputed. For the purposes of determining the motions, the court therefore finds as follows:

The Debtor is the owner of three real estate investment properties, the property located at 110 Golfview, Frankfort, Illinois (the “ Golfview Property ”) and the property located at 7324 Heritage Court, # 2H, Frankfort, Illinois (the “ Heritage Property ”) (collectively referred to as the “ Will County Properties ”), and the property located at 333 W. Hubbard Street, # 1011, Chicago, Illinois (the “ Hubbard Property ”). In addition to these properties, the Debtor is presently employed at New York Life as a sales agent, generating a solely commission-based income. While the Debtor's employment income fluctuates, his net monthly employment income is approximately $3,500.

The Movant holds two mortgages, one that secures the Will County Properties and another that secures the Hubbard Property. In February of 2012, First United Bank, the previous mortgage holder, refused to accept mortgage payments after the Debtor filed his petition for relief in Chapter 7 of the Bankruptcy Code. From November 29, 2011 to February 14, 2013, the Debtor did not make any mortgage payments on the properties. The Debtor has failed to pay any real estate taxes on the three properties since 2008.

Subsequently, both Cook County (where the Hubbard Property is located) and Will County (where the Will County Properties are located) proceeded with tax sales to gain payment for the delinquent taxes. Sabre Investments, LLC and Interstate Funding (collectively referred to as the “ Tax Purchasers ”) each purchased the delinquent taxes on separate properties of the Debtor. On November 16, 2010, Will County sold the delinquent 2009 real estate taxes on the Golfview Property to Sabre Investments, LLC. Sabre Investments also purchased the subsequent delinquent taxes on the Golfview Property through 2011. On November 16, 2010, Will County sold the delinquent 2009 real estate taxes on the Heritage Property to Interstate Funding. Interstate Funding also purchased the subsequent delinquent taxes on the Heritage Property through 2012. On July 22, 2011, Cook County sold the delinquent 2009 real estate taxes on the Hubbard Property to Interstate Funding. Interstate Funding also purchased the subsequent delinquent taxes on the Hubbard Property, last paying a portion of the 2012 taxes on March 18, 2013.

On February 8, 2012, the Debtor filed a petition for relief under Chapter 7 of the Bankruptcy Code. The Debtor failed to list Brian Farley, Philip Farley, Pam Farley, Shawn Farley, Motorcycle of Joliet, LLC, Indian Motorcycle of Joliet LLC, Joliet Lenox LLC, and 1443 Astor LLC (collectively referred to as the “ Farleys ”), as creditors in his case. The Chapter 7 Trustee determined that the case was a no-asset case, and the Debtor received his Chapter 7 discharge on May 1, 2012.

On September 24, 2012, the Debtor filed a petition for relief under Chapter 13 of the Bankruptcy Code. Assets were available for distribution in the Chapter 13 case. On November 21, 2012, the Debtor's Chapter 13 case was dismissed for failure to file his 2011 tax return, which the Debtor alleged that was not filed because he failed to receive necessary documentation from the Farleys.

On December 6, 2012, the Debtor filed a petition for relief under Chapter 11 of the Bankruptcy Code. In the schedules submitted along with the petition, the Debtor includes his non-debtor spouse's income as a part of his current monthly income. On February 8, 2013, the Debtor's Chapter 7 case was reopened at the request of the Farleys, so that the Farleys would be given the opportunity to object to the discharge. As it currently stands, the Farleys and the Debtor have a proposed agreement to close the Chapter 7 case and give the Farleys a $10,000 unsecured claim in the Chapter 11.

Since the commencement of this Chapter 11 case, there have been issues surrounding the Debtor's monthly operating reports. The Debtor has failed to produce timely operating reports and failed to disclose accurate receipts and disbursements on the operating reports. As of June 30, 2013, the Debtor had $2,317 in his post-petition bank account (the “ DIP Account ”).

On April 5, 2013, the Debtor filed his Chapter 11 plan, in which he failed to address directly the debt owed to the Tax Purchasers. Instead, the Debtor lists the Will County Treasurer and Cook County Treasurer as the creditors for the delinquent taxes. On May 16, 2013, the Movant filed its Stay Motion alleging as its grounds the lack of equity in the Will County Properties, the inability of the Debtor to propose a feasible plan, and the Debtor's lack of ability to pay delinquent real estate taxes before the end of the redemption periods, further explained below. That same day, the Movant also filed its Motion To Dismiss alleging as its grounds the Debtor's abuse of the bankruptcy process and inability to propose a feasible plan.

Originally, the redemption periods on the Will County Properties were set to expire on August 5, 2013, but the Tax Purchasers extended the redemption periods to November 14, 2013, on which date the redemption period of the Debtor's delinquent taxes on the Heritage Property will expire, enabling Interstate Funding to obtain a tax deed on the property. Interstate Funding has already petitioned for a tax deed with respect to the Heritage Property. On November 15, 2013, the redemption period of the Debtor's delinquent taxes on the Golfview Property will expire. On January 22, 2014, the redemption period of the Debtor's delinquent taxes on the Hubbard Property will expire.

DISCUSSION

The matters before the court involve two separate, but intertwined motions. First, a determination must be...