In re Halko
| Decision Date | 31 December 1996 |
| Docket Number | Bankruptcy No. 96 B 9796. |
| Citation | 203 BR 668 |
| Parties | In re Michael G. HALKO, Debtor. |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
Keevan D. Morgan, Timothy C. Culbertson, Morgan & Bley, Chicago, IL, for Debtor.
Steven B. Towbin, D'Ancona & Pflaum, Chicago, IL, for Parker, Aleshire & Co.
John K. Kneafsey, Nisen & Elliott, Chicago, IL, Former Attorney for Parker, Aleshire & Co.
This matter comes before the Court on the motion of Parker, Aleshire & Company ("Parker") pursuant to Federal Rules of Bankruptcy Procedure 9023 and 9024 for entry of an order vacating the Court's order (the "Confirmation Order") confirming the Debtor's amended Chapter 13 plan, and the objection thereto filed by Michael G. Halko (the "Debtor"). For the reasons stated herein, the Court denies the motion. In addition, this matter will be referred to the United States Attorney for the Northern District of Illinois pursuant to 18 U.S.C. § 3057(a).
The Court has jurisdiction to entertain this matter pursuant to 28 U.S.C. § 1334 and General Rule 2.33(A) of the United States District Court for the Northern District of Illinois. This matter constitutes a core proceeding under 28 U.S.C. § 157(b)(2)(L).
Parker is a judgment creditor of the Debtor. On February 7, 1995, Parker received a $116,418.77 judgment plus costs against the Debtor. See Parker's Exhibit F. Parker also holds an additional unliquidated claim against the Debtor which has not been reduced to judgment. Parker has been represented by the law firm of Nisen & Elliott, through John K. Kneafsey ("Kneafsey") and Jeffrey S. Torosian ("Torosian").
The Debtor filed the instant Chapter 13 petition on April 17, 1996. Parker moved to dismiss the case under 11 U.S.C. § 1307(c) contending that the Debtor's filing was not in good faith, but merely an improper means of avoiding Parker's post-judgment collection and enforcement proceedings and to avoid posting a supersedeas bond while appealing from the judgment. The Debtor opposed the motion to dismiss and the matter was set for trial on October 24, 1996.
The Debtor's current attorneys of record, the law firm of Morgan & Bley, through Keevan D. Morgan ("Morgan") and Timothy C. Culbertson ("Culbertson"), filed the Debtor's original Chapter 13 plan on August 15, 1996. Notice of the confirmation hearing was sent in September 1996 to both Parker and its attorneys at their respective addresses of record by two separate notices.
On the day of trial on the motion to dismiss, Kneafsey and Morgan advised the Court that after extensive negotiations, the parties had settled their differences. That settlement was reflected in the Debtor's amended Chapter 13 plan (the "Amended Plan") filed that day.1 Kneafsey signed the Amended Plan indicating support thereof on behalf of Parker. See Parker's Exhibit R at p. 17. The Court entered orders granting the Debtor leave to file the Amended Plan and Parker leave to withdraw its motion to dismiss. The case was continued to November 15, 1996 for a confirmation hearing on the Amended Plan. On October 24, 1996, Culbertson certified that he mailed a copy of the Amended Plan to all creditors and parties in interest, including Parker and its attorneys.
At the continued confirmation hearing on November 15, 1996, one of Kneafsey's associates and Morgan appeared before the Court and made representations in support of the Amended Plan. The Court entered the Confirmation Order on their recommendation and that of the attorney for the Standing Chapter 13 Trustee who also appeared. No party in interest appeared in opposition to the Amended Plan nor filed an objection thereto. The Confirmation Order was entered on the docket on November 22, 1996. The Amended Plan's terms provided for a discounted settlement of Parker's claims against the Debtor to be secured by a mortgage on the residence to be funded, in part, by new financing obtained by the Debtor.
Parker's instant motion was filed on November 27, 1996, by the law firm of D'Ancona & Pflaum through Steven B. Towbin ("Towbin"). Parker asserts that the Confirmation Order must be vacated as a manifest error of fact and law because of the allegedly defective deed of conveyance regarding the Debtor's residence and that the "cornerstone" of the Amended Plan and "presumably one of the principal factor (sic) in this court's decision to confirm the Plan, was the court's understanding that the Debtor's prepetition transfer of his Residence created a valid tenancy by the entirety, thereby exempting the property under this court's decision in In re Allard, 196 B.R. 402 (Bankr.N.D.Ill. 1996)." In addition, as a second ground, the motion alleges that neither of Parker's principals, Donald W. Aleshire nor Suzanne M. Aleshire, had even seen, let alone agreed to, the Amended Plan and that Kneafsey was not authorized to support the Amended Plan or its purported settlement of Parker's claims. The instant motion is supported with copies of the quit claim deed for the Debtor's residence (Parker's Exhibit D) and the verified declarations of the Aleshires. See Parker's Exhibits G and J. On December 5, 1996, Nisen & Elliott filed a motion to withdraw as counsel for Parker2, supported by verified declarations of both Kneafsey and Torosian.
On December 9, 1996, the Debtor filed his objection to the motion at bar. He contends that Parker has not met the requisite burden to establish that the Court committed either a manifest error of fact or law in entering the Confirmation Order; that relief under Fed. R. Bankr.P. 9024 is inapposite and premature; and that there is no new evidence which was not available at the time the Confirmation Order was entered. He further argues that Parker's motion is fatally flawed by improperly presuming that the status of the title to the residence was a principal factor in the Court's decision to confirm the Amended Plan. In sum, the Debtor contends that the statements of the Aleshires that they never saw the Amended Plan until after the Confirmation Order was entered and that they never authorized Kneafsey to represent to the Court that the disputes were settled in the Amended Plan are false. The Debtor concludes that Mrs. Aleshire's hatred for the Debtor has prompted their filing of false affidavits and an attempt to renege on the settlement.
On the record, counsel for the Standing Chapter 13 Trustee joined the Debtor's position opposing the motion, asserting that it shows no proper grounds for the relief requested. Parker filed its reply to the Debtor's response. Therein, Parker further asserts that the Amended Plan was not filed in good faith pursuant to 11 U.S.C. § 1325(a)(3).
Parker seeks to vacate the Confirmation Order under Federal Rule of Bankruptcy Procedure 9023, which incorporates by reference Federal Rule of Civil Procedure 59 and, alternatively, under Federal Rule of Bankruptcy Procedure 9024, which incorporates by reference Federal Rule of Civil Procedure 60. The Seventh Circuit has made it clear that under the former version of Rule 59, the time of a motion's service controlled whether it was treated as a Rule 60(b) or Rule 59(e) motion. See Helm v. Resolution Trust Corp., 43 F.3d 1163, 1166 (7th Cir. 1995). If such a motion was served within ten days of a final judgment, it was considered a Rule 59(e) motion. United States v. Deutsch, 981 F.2d 299, 301 (7th Cir.1992); Charles v. Daley, 799 F.2d 343, 347 (7th Cir.1986). On the other hand, if the motion was served more than ten days after a final judgment, it was considered a Rule 60(b) motion. Deutsch, 981 F.2d at 301. Effective December 1, 1995, Rule 59(e) was amended to require that "any motion to alter or amend a judgment shall be filed no later than 10 days after entry of the judgment." Fed.R.Civ.P. 59(e) (emphasis supplied). Parker's motion was filed on November 27, 1996, within 10 days of the entry of the Confirmation Order on the docket. The standards for relief under Rule 59(e) therefore control. Parker's motion is premature under Rule 60 and relief thereunder is inappropriate.
Rule 59(e) motions serve a narrow purpose and must clearly establish either a manifest error of law or fact or must present newly discovered evidence. Federal Deposit Ins. Corp. v. Meyer, 781 F.2d 1260, 1268 (7th Cir.1986); Publishers Resource, Inc. v. Walker-Davis Publications, Inc., 762 F.2d 557, 561 (7th Cir.1985). The function of a motion to alter or amend a judgment is not to serve as a vehicle to relitigate old matters or present the case under a new legal theory. King v. Cooke, 26 F.3d 720, 726 (7th Cir. 1994), cert. denied, ___ U.S. ___, 115 S.Ct. 1373, 131 L.Ed.2d 228 (1995). Moreover, the purpose of such a motion "is not to give the moving party another `bite at the apple' by permitting the arguing of issues and procedures that could and should have been raised prior to judgment." Yorke v. Citibank, N.A. (In re BNT Terminals, Inc.), 125 B.R. 963, 977 (Bankr.N.D.Ill.1990) (citations omitted). The rulings of a bankruptcy court "are not intended as mere first drafts, subject to revision and reconsideration at a litigant's pleasure." See Quaker Alloy Casting Co. v. Gulfco Indus., Inc., 123 F.R.D. 282, 288 (N.D.Ill.1988). "A motion brought under Rule 59(e) is not a procedural folly to be filed by a losing party who simply disagrees with the decision; otherwise, the Court would be inundated with motions from dissatisfied litigants." BNT Terminals, 125 B.R. at 977. The decision to grant or deny a Rule 59(e) motion is within the Court's discretion. LB Credit Corp. v. Resolution Trust Corp., 49 F.3d 1263, 1267 (7th Cir.1995).
Contrary to Parker's first argument, the Court's decision to enter the...
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