In re Propst
| Decision Date | 04 March 2022 |
| Docket Number | Case No. 15bk12654 |
| Citation | 637 B.R. 489 |
| Parties | IN RE: In re Bruce K. PROPST, Debtor. |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
Attorney for Bruce K. Propst: Paul M. Bach, Bach Law Offices, Inc., Northbrook, IL.
Attorney for Robert S. Clark: Jeffrey A. Meyer, Klein, Stoddard, Buck & Lewis, LLC, Sycamore, IL.
The matter before the court comes on for consideration on the Motion to Avoid Judicial Lien Related to Real Estate Commonly Known as 1892 Liberty Court, Elk Grove Village, Illinois Pursuant to 11 U.S.C. [§] 522(f) as to Robert S. Clark [Dkt. No. 52] (the " Motion ") filed by debtor Bruce K. Propst (the " Debtor ").
While the relief requested might be considered ordinary under other circumstances of another case, under the circumstances of this case, the relief is both extraordinary and problematic. The Debtor previously reopened the case and sought avoidance of the same judicial lien four years after the case first closed. Though that motion went through a complicated procedure in part due to the debtor's previous counsel's errors, it was ultimately heard on its merits and denied. No reconsideration was sought or appeal taken. It is now nearly two years later and too late to seek reconsideration by the ordinary means. While the court might be able to entertain the request as an independent action, the Debtor has failed to demonstrate that the court should exercise its discretion and ignore the law of this case to do so.
As a result, the Motion will be DENIED. Because there is no conceivable manner in which the Debtor could revisit these same issues without running afoul of the concerns voiced herein, that denial will be expressly with prejudice.
The federal district courts have "original and exclusive jurisdiction" of all cases under title 11 of the United States Code, 11 U.S.C. §§ 101, et seq. (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 the Bankruptcy Code or arising in or related to cases under the Bankruptcy Code. 28 U.S.C. § 1334(b). District courts may refer these cases to the bankruptcy judges for their districts. 28 U.S.C. § 157(a). In accordance with section 157(a), the District Court 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 has statutory authority to enter final judgment on any proceeding arising under the Bankruptcy Code or arising in a case under the Bankruptcy Code. 28 U.S.C. § 157(b)(1). Bankruptcy judges must therefore determine, on motion or sua sponte, whether a proceeding is a core proceeding or is otherwise related to a case under the Bankruptcy Code. 28 U.S.C. § 157(b)(3). As to the former, the bankruptcy court may hear and determine such matters. 28 U.S.C. § 157(b)(1). As to the latter, the bankruptcy court may hear the matters, but may not decide them without the consent of the parties. 28 U.S.C. §§ 157(b)(1) & (c). Absent consent, the bankruptcy court must "submit proposed findings of fact and conclusions of law to the district court, and any final order or judgment shall be entered by the district judge after considering the bankruptcy judge's proposed findings and conclusions and after reviewing de novo those matters to which any party has timely and specifically objected." 28 U.S.C. § 157(c)(1).
12 In addition to the foregoing considerations, a bankruptcy judge must also have constitutional authority to hear and determine a matter.
Stern v. Marshall, 564 U.S. 462, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011). Constitutional authority exists when a matter originates under the Bankruptcy Code or, in noncore matters, where the matter is either one that falls within the public rights exception, id., or where the parties have consented, either expressly or impliedly, to the bankruptcy court hearing and determining the matter. See, e.g., Wellness Int'l Network, Ltd. v. Sharif, 575 U.S. 665, 669, 135 S.Ct. 1932, 191 L.Ed.2d 911 (2015) (); Richer v. Morehead, 798 F.3d 487, 490 (7th Cir. 2015) ().
345 A motion to avoid a judicial lien under section 522(f) of the Bankruptcy Code is clearly within a bankruptcy court's jurisdiction, statutory authority and constitutional authority. Such a motion may only arise in a bankruptcy case and is expressly a core proceeding. 28 U.S.C. § 157(b)(1) ; see also 28 U.S.C. § 157(b)(2)(A) & (K). The bankruptcy courts may enter final judgment with respect thereto. In re Quade, 482 B.R. 217, 221 (Bankr. N.D. Ill. 2012) (Barnes, J.), aff'd in part, 498 B.R. 852 (N.D. Ill. 2013). Because motions to avoid judicial liens originate under the Bankruptcy Code, determination of such motions is within the constitutional authority of the bankruptcy courts. Stern, 564 U.S. at 475, 131 S.Ct. 2594 ; In re Yotis, 518 B.R. 481, 483 (Bankr. N.D. Ill. 2014) (Schmetterer, J.).
It follows that the court has the jurisdiction, statutory authority and constitutional authority to hear and determine the Motion.
As noted at the outset, the Motion in this case arises in a difficult context. While the context is difficult, the facts and history of this matter are relatively straightforward.
The Debtor commenced the above-captioned chapter 7 case on April 9, 2015. At the time, the Debtor was represented by attorney R. Winston Slater (" Slater "). By the docket, the administration of the case was uncomplicated. A trustee was appointed, the meeting under section 341 of the Bankruptcy Code was conducted and the trustee filed a report of no assets. By July of 2015, the Debtor had received a discharge and the case was closed.
Of worth noting in the case is that the Debtor scheduled his principal residence, 1892 Liberty Court, Elk Grove Village, IL (the " Residence ") with a value of $330,000.00. Voluntary Petition [Dkt. No. 1] (the " Petition "), Sch. A. While the Debtor scheduled secured claims, only one appears to be against the Residence. That claim, what the court presumes to be by the mortgage lender, Loancare Servicing Ctr, was in the amount of $301,644.00 (the " Mortgage "). Pet., Sch. D. Robert S. Clark (" Clark ") is scheduled as holding a $95,000.00 unsecured claim from a contract dispute. Pet., Sch. F. Unsurprisingly, in light of the scheduling, no relief was sought by Slater under section 522(f) of the Bankruptcy Code.1
Over four years after the Debtor was discharged and the case closed, the Debtor through separate counsel, Philip F. Maksymonko (" Maksymonko "), sought to reopen the case and avoid a putative judicial lien held by Clark (the " Clark Lien "). See Motion to Reopen [Dkt. No. 16] (the " First Reopen Motion "). The First Reopen Motion was filed without a notice of motion and was scheduled by Maksymonko for a day on which the undersigned hears only chapter 13 matters. The hearing on the First Reopen Motion was therefore stricken, see Dkt. No. 17, and Maksymonko was notified by the Clerk's Office to correct and refile the First Reopen Motion. Dkt. No. 18.
Maksymonko then filed a new Motion to Reopen [Dkt. No. 19] (the " Second Reopen Motion "). The Second Reopen Motion was, however, defective in a number of ways. It failed to include a proposed order as required by Local Rule 9013-1(C)(5),2 it was not double-spaced as required by Local Rule 5005-3(C)(2) and it failed to be accompanied by a certificate of service as required by Local Rule 9013-1(C)(3). As a result, the court denied the Second Reopen Motion without prejudice, notice or a hearing. Order [Dkt. No. 20]; see also Local Rule 9013-1(G).
Undaunted, Maksymonko tried again, filing a newer still Motion to Reopen [Dkt. No. 21] (the " Third Reopen Motion "). As with the Second Reopen Motion, the Third Reopen Motion failed to comply with Local Rule 9013-1(C)(5).3 Nonetheless, the court determined that the best way to prevent ongoing errors was to hear the Third Reopen Motion in spite of them. The court therefore allowed the hearing scheduled by Maksymonko for December 10, 2019 (the " Initial Hearing ") to go forward.
While the court does not do so for every attorney appearing before it, as Maksymonko was unfamiliar to the court and given his repeated errors, prior to the Initial Hearing, the court sua sponte sought to confirm Maksymonko's status as an attorney authorized to practice before it. It is worth noting here that this court has no bar qualifications or admission process. Attorneys practicing before it must only be members in good standing of the bar of the United States District Court for the Northern District of Illinois.
What the court discovered was concerning—that Maksymonko was not a member in good standing of the District Court bar. Apparently Maksymonko was suspended from practice by the State of Illinois on January 23, 2003. As a result, he was reciprocally suspended by the District Court on March 6, 2003. While Maksymonko had returned to practice in Illinois, he had not petitioned the District Court to lift the reciprocal suspension and thus remained unauthorized to practice before it (or this court, by extension).
At the Initial Hearing, the court informed Maksymonko of this and discussed with him the previous errors. The court explained that if the Debtor wanted relief from the court, his counsel must first and foremost be entitled to seek such relief. To afford the Debtor this chance, the court did not deny the Third Reopen Motion for this reason, but instead denied it without prejudice for its procedural violations. Order [Dkt. No. 25]. Maksymonko was instructed to fix his admission status and thereafter to remake his request in a manner that complied with the Local Rules.
That same day,...
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