LaSalle Nat. Bank Ass'n v. Paloian
Decision Date | 17 March 2009 |
Docket Number | No. 07 C 5232.,No. 07 C 2815.,No. 07 C 5231.,No. 07 C 2722.,07 C 2722.,07 C 2815.,07 C 5231.,07 C 5232. |
Citation | 406 B.R. 299 |
Parties | LaSALLE NATIONAL BANK ASSOCIATION, f/k/a LaSalle National Bank, as Trustee for Certificate Holders of Assets Securitization Corporation, Commercial Pass-Through Certificates Series 1997, D5, Appellant, v. Gus A. PALOIAN, Chapter 11 Trustee of Doctors Hospital of Hyde Park, Inc., Appellee. |
Court | U.S. District Court — Northern District of Illinois |
Jeffrey Lawrence Gansberg, John W. Costello, John E. Frey, Scott Allen Semenek, Wildman, Harrold, Allen & Dixon, LLP, Chicago, IL, for Appellee.
Adam Phillip Silverman, Howard L. Adelman, Adelman, Gettleman, Merens, Berish & Carter, Ltd., James M. Witz, Freeborn & Peters LLP, Michael Nicholas Ripani, Chuhak & Tecson PC, John Lawrence Conlon, Robert D. Nachman, Schwartz, Cooper, Greenberg & Krauss, Jane B. McCullough, Kimberly Marie Deshano, Nancy A. Peterman, Greenberg Traurig, LLP., David Thomas Beech Audley, Michael T. Benz, Richard Alan Wohlleber, Chapman & Cutler, John E. Frey, John W. Costello, Peter N. Moore, Wildman, Harrold, Allen & Dixon, LLP, Chicago, IL, Michael D. Warner, Warner, Stevens & Doby LLP, Fort Worth, TX, for Appellant.
Doctors Hospital of Hyde Park, Inc.(hereinafter "Plaintiff" or "Doctors Hospital" or "Debtor") filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Northern District of Illinois on April 17, 2000.On April 15, 2002, Doctors Hospital filed an adversary complaint in the bankruptcy court for the Northern District of Illinois, pleading a total of 28 counts against a number of individuals and entities.Counts VIII, IX, and X of the complaint assert claims against LaSalle Bank National Association, f/k/a LaSalle National Bank ("Defendant" or "Trust"), as trustee for certain asset certificateholders of Asset Securitization Corporation Commercial Mortgage Pass-Through Certificates, Series 1997, D5.1On April 22, 2004, Gus A. Paloian was appointed the Chapter 11trustee for Doctors Hospital.In its claims against Defendant, Doctors Hospital sought (1) to void as fraudulent transfers a guaranty and related security agreements that Doctors Hospital made in connection with a loan from Defendant's predecessor, Nomura Asset Capital Corporation, to Doctors Hospital's landlord (the "Nomura Loan," discussed below)(Count VIII); and (2) to void a lease (the "HPCH Lease", discussed below) held by Defendant as Nomura's assignee or to recover as fraudulent transfers payments of rent that Doctors Hospital had made to Defendant in excess of the property's fair market rental value (Counts IX and X).
Defendant filed a proof of claim in the bankruptcy case and a counterclaim in the adversary case, seeking approximately $60 million based on Doctors Hospital's guaranty and security agreements in connection with the Nomura Loan.Because the proof of claim in the bankruptcy case and Count VIII of the adversary proceeding were factually related to the guaranty and related security agreements between the parties, the bankruptcy court consolidated the adversary claims against the Trust and objections to the proof of claim for resolution at a trial on the issue of whether the agreements were voidable as fraudulent transfers.
Judge Schmetterer of the bankruptcy court conducted a bench trial on Counts VIII, IX, and X, and on March 2, 2007, issued his Initial Findings of Fact and Conclusions of Law.In re Doctors Hosp. of Hyde Park, Inc.,360 B.R. 787(Bankr. N.D.Ill.2007).The findings relevant to this appeal are as follows:
(1) Doctors Hospital was insolvent at all times between August 28, 1997 and April 17, 2000, the date it filed for bankruptcy;
(2) Doctors Hospital's guaranty and security payments to Defendant pursuant to a loan Defendant made to Doctors Hospital's landlord were void as fraudulent transfers;
(3)Defendant was the initial transferee of lease payments from Doctors Hospital prior to July 7, 1998;
(4) Doctors Hospital's lease payments to Defendant were payments of rent, not debt;
(5) Doctors Hospital's payments of rent prior to July 7, 1998 were fraudulent transfers to the extent they exceeded fair market value; and
(6) Rental payments made after July 7, 1998 were not fraudulent transfers because they were not made with assets of Doctors Hospital.
The bankruptcy court also denied Defendant's...
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