In re Paris

Docket Number23 B 16481
Decision Date19 January 2024
PartiesIn re FRANK MARTIN PARIS, JR., Debtor.
CourtU.S. Bankruptcy Court — Northern District of Illinois

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In re FRANK MARTIN PARIS, JR., Debtor.

No. 23 B 16481

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

January 19, 2024


Chapter 7

MEMORANDUM OPINION

DAVID D. CLEARY, UNITED STATES BANKRUPTCY JUDGE

This matter came before the court on the emergency motion of Frank Martin Paris, Jr. ("Marty" or "Debtor") to enforce the automatic restraining provisions of section 362 of the Bankruptcy Code ("Motion to Enforce") and the emergency motion of Kerry Paris ("Kerry") for order clarifying that the automatic stay does not apply or, in the alternative, to lift the automatic stay nunc pro tunc, and authorizing filing of motion in excess of 15 pages ("Motion to Clarify"). For the reasons stated below, the court will deny the Motion to Enforce. The court will grant the Motion to Clarify in part, to the extent it requests a finding that the contempt proceedings are excepted from the automatic stay. The remainder of the Motion to Clarify is moot.

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 is a core proceeding under 28 U.S.C. § 157(b)(2)(G). Venue is proper under 28 U.S.C. § 1409(a).

BACKGROUND

Kerry and Marty were married in 2002 and had seven children. Divorce proceedings began around 2016 and have been ongoing for nearly eight years.

The Circuit Court of Cook County ("State Court") entered a judgment for dissolution of marriage on December 2, 2022 ("JDOM"). In the JDOM, the State Court found that Marty controls his own salary as well as the issuance of dividends and interest in various entities in

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which he holds financial interests. See Motion to Clarify, Ex. A, p. 69. It determined that the marital estate consisted of two retirement accounts (one 401(k) and one IRA), Kerry and Marty's interest in two condominiums, certain corporate entities, and real property in River Forest, Illinois. Id., pp. 71-73. Having made these findings and reviewed the factors required by Illinois law, the State Court made the following awards to Kerry or for her benefit:

■ The 401(k) account
■ Both condominiums
■ Temporary exclusive possession of the real property in River Forest, with Marty remaining responsible for the mortgage, real estate taxes and homeowners' insurance
■ Monthly maintenance in the amount of $5,500 until the youngest child graduates from eighth grade, at which time Kerry will have a duty to seek employment
■ Child support in the monthly amount of $7,500
■ A section 503(g) trust funded by Marty in the initial amount of $150,000
■ Payment of the balance due to the children's representative
■ Life insurance on Marty in the amount of $2,500,000
■ Marty must hold Kerry harmless from any federal or state income taxes that accrued to date

Id., pp. 76-78; 97-100. On Kerry's motion to clarify the JDOM, the State Court entered an order holding, among other findings, that Marty remained solely obligated to pay uncovered medical bills and maintenance of the marital home. See Motion to Clarify, Ex. V.

Marty did not comply with the JDOM and other State Court orders. In order to collect the amounts awarded, Kerry sought the intervention of the State Court. Marty was adjudicated in contempt of court on several occasions. See Motion to Clarify, Exs. L, M, N, O, P, Q.

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See also In re Marriage of Paris, 2020 IL App (1st) 181116, ¶ 3 (affirming State Court orders holding Marty in indirect civil contempt and requiring him to contribute $550,000 for the interim fees and costs of Kerry's counsel and expert witness).

More recently, on September 29, 2023, the State Court entered an Order of Adjudication of Indirect Civil Contempt against Marty, and he was ordered to appear in person on October 17, 2023. See Motion to Clarify, Ex. J. When he failed to do so, and for willful failure to obey the court's judgment and orders, the State Court issued a Body Attachment Order. See Motion to Clarify, Ex. I.

The Cook County Sheriff eventually arrested Marty pursuant to the Body Attachment Order, and the State Court held a hearing on December 8, 2023, on the status of Marty's purge of contempt. At that hearing, the State Court judge found ("December 8 Order") that Marty had not:

--paid any money to purge his contempt, including overdue child support and maintenance obligations
--produced the life insurance policies to purge his contempt
--executed or caused to be executed the paperwork required to document title of the transferred assets previously awarded to Kerry; or
--funded the 503(g) trust to protect the interests of the Paris children.

The State Court ordered Marty remanded to the custody of the Sheriff of Cook County, stating that he would not be released until he produced his life insurance policies, transferred the assets awarded to Kerry in the judgment, and paid $500,000 to the 503(g) Trust. See Motion to Clarify, Exs. BB, CC, DD. Each of these were awards that Kerry sought to collect in furtherance of the JDOM.

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In the December 8 Order, the State Court judge indicated that she had been advised that while the hearing before her was pending, Marty had filed a petition for relief under the Bankruptcy Code. She found, however, that pursuant to In re Posner, 610 B.R. 586 (Bankr. N.D.Ill. 2019), "assets awarded to Kerry in the Judgment are not part of any bankruptcy estate and not subject to any automatic stay. Further, pursuant to 11 U.S.C. Section 362(b)(2), the filing of a petition for bankruptcy does not stay a divorce proceeding, the establishment or modification of a domestic support obligation, or the collection of a domestic support obligation from property that is not property of the estate." See Motion to Clarify, Exs. BB and DD; Motion to Enforce, Ex. A.

Marty did in fact file a petition for relief under chapter 7 of the Bankruptcy Code on December 8, 2023. Shortly thereafter, Marty filed the Motion to Enforce in this court. Marty has since filed his schedules and Statement of Financial Affairs. A chapter 7 trustee has been appointed. The initial date of Marty's § 341 meeting of creditors was January 8, and the trustee adjourned the meeting to February 7, 2024.

DISCUSSION

I. The Automatic Stay

Section 362 provides debtors an automatic stay of nearly all actions against them, allowing breathing room in which they may reorganize their affairs. See Kimbrell v. Brown, 651 F.3d 752, 755 (7th Cir. 2011) (the stay "permits the debtor to attempt a repayment or reorganization plan, or simply to be relieved of the financial pressures that drove him into bankruptcy") (quotation omitted). The stay benefits creditors as well, replacing "an unfair race to the courthouse with an orderly liquidation procedure designed to treat all creditors equally." United States v. Nicolet, Inc., 857 F.2d 202, 207 (3d Cir. 1988).

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A. Marty alleges a violation of the automatic stay

In his Motion to Enforce, Marty asks the court to find that the December 8 Order is a violation of the automatic stay as set forth in 11 U.S.C. § 362(a)(1), and to void that order:

(a) Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this title, or an application filed under section 5(a)(3) of the Securities Investor Protection Act of 1970, operates as a stay, applicable to all entities, of--
(1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title[.]

11 U.S.C. § 362(a)(1).

Marty also asks the court to direct Kerry to take immediate action with respect to freeing him from incarceration, and to enter such sanctions as the court finds appropriate. Section 362(k) provides the statutory basis for an award of damages when there is a willful violation of the automatic stay in an individual debtor's bankruptcy case: "[A]n individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys' fees, and, in appropriate circumstances, may recover punitive damages." 11 U.S.C. § 362(k).

B. Exceptions to the automatic stay

While the protection of the automatic stay is broad, it is not limitless. See In re Chellino, No. 18BK25452, 2022 WL 1180621, at *5 (Bankr. N.D.Ill. Apr. 13, 2022) ("the automatic stay is not without limits or exceptions"). 11 U.S.C. § 362(b) lists several exceptions to the automatic stay, including:

(b)The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay--
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(2) under subsection (a)-
(A) of the commencement or continuation of a civil action or proceeding-
(i)for the establishment of paternity;
(ii) for the establishment or modification of an order for domestic support obligations;
(iii) concerning child custody or visitation;
(iv) for the dissolution of a marriage, except to the extent that such proceeding seeks to determine the division of property that is property of the estate; or
(v) regarding domestic violence;
(B) of the collection of a domestic support obligation from property that is not property of the estate;
(C) with respect to the withholding of income that is property of the estate or property of the debtor for payment of a domestic support obligation under a judicial or administrative order or a statute;
(D) of the withholding, suspension, or restriction of a driver's license, a professional or occupational license, or a
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