Wells Fargo Bank Minn., NA v. EnviroBusiness, Inc.

• Decision Date: 05 November 2014
• Docket Number: No. 1–13–3575.,1–13–3575.
• Citation: 22 N.E.3d 125
• Parties: WELLS FARGO BANK MINNESOTA, NA, as Trustee for the Registered Holders of J.P. Morgan Chase Commercial Mortgage Securities Corp., Commercial Mortgage Pass–Through Certificates, Series 2002–C3, Plaintiff, v. ENVIROBUSINESS, INC., a Massachusetts Corp., d/b/a EBI Consulting, formerly d/b/a EBI Consultants, Defendant. Wells Fargo Bank Minnesota, NA, Plaintiff–Appellee, v. Craig J. Walker, Defendant–Appellant (CIBC, Inc., Defendant–Appellee; 318 West Adams, LLC, and Steven Byers, Defendants).
• Court: United States Appellate Court of Illinois

22 N.E.3d 125

WELLS FARGO BANK MINNESOTA, NA, as Trustee for the Registered Holders of J.P. Morgan Chase Commercial Mortgage Securities Corp., Commercial Mortgage Pass–Through Certificates, Series 2002–C3, Plaintiff

v.ENVIROBUSINESS, INC., a Massachusetts Corp., d/b/a EBI Consulting, formerly d/b/a EBI Consultants, Defendant.

Wells Fargo Bank Minnesota, NA, Plaintiff–Appellee

v.Craig J. Walker, Defendant–Appellant (CIBC, Inc., Defendant–Appellee; 318 West Adams, LLC, and Steven Byers, Defendants).

No. 1–13–3575.

Appellate Court of Illinois, First District, Third Division.

Nov. 5, 2014.

A. Craig Fleishman, of Fleishman & Shapiro, PC, of Denver, Colorado, for appellant.

Daniel S. Hefter, of Hefter Law, Ltd., of Chicago, for appellee.

OPINION

Justice LAVIN

delivered the judgment of the court, with opinion.

¶ 1 This interlocutory appeal arises from supplemental proceedings filed by Wells Fargo Bank Minnesota, N.A. (Wells Fargo), to enforce a monetary judgment against Craig Walker. In those proceedings, commenced pursuant to section 2–1402 of the Code of Civil Procedure

(the Code) (735 ILCS 5/2–1402 (West 2012) ), the circuit court ordered Walker to turn over certain stock to Wells Fargo. On appeal, Walker asserts that the circuit court erred by ordering him to turn over stock in non-Illinois corporations and by denying his request to stay the enforcement of the turnover order. We affirm.

¶ 2 I. BACKGROUND

¶ 3 As a threshold matter, we note that the parties have entered into a stipulation to limit the record on appeal, likely due to the cumbersome nature of the proceedings below. Such stipulations are permitted by Illinois Supreme Court Rule 321(a)

(eff. Feb. 1, 1994). Nonetheless, it remains the appellant's burden to present a sufficiently complete record. Fleming v. Moswin, 2012 IL App (1st) 103475–B, ¶ 113, 364 Ill.Dec. 169, 976 N.E.2d 447. The limited record before us does not contain the original complaint or the subsequently filed pleadings that led to the underlying judgment. Similarly, the parties' briefs improperly present facts without citation to the record. Ill. S.Ct. R. 341(h)(6), (i) (eff. Feb. 6, 2013). Thus, we are unable to say with certainty what claims were filed against any given party or even verify the accuracy of the caption on appeal. We further note that the record does not contain a report of proceedings. See Ill. S.Ct. R. 323 (eff. Dec. 13, 2005). While the record on appeal is sufficient to review most of the issues raised, we remind litigants that stipulating to a limited record pursuant to Rule 321 does not excuse them from supporting facts with citations to the record, as required by Rule 341, and that reviewing courts must be able to accurately comprehend the procedural context in which an appeal arises. See In re Estate of Lundahl, 332 Ill.App.3d 646, 649, 266 Ill.Dec. 21, 773 N.E.2d 756 (2002).

¶ 4 It appears that on December 5, 2002, CIBC, Inc. (CIBC), issued an $11 million commercial mortgage loan to 318 West Adams, LLC (the borrower), secured by the borrower's office building (the property). Walker was a principal on the loan, which was eventually sold to J.P. Morgan Chase Commercial Mortgage Securities Corporation (J.P. Morgan) and placed in an investment trust. In addition, Wells Fargo, as trustee, subsequently foreclosed on the property. Wells Fargo then purchased the property and sold it to a third party in July 2005.

¶ 5 Wells Fargo apparently filed a complaint against CIBC and Walker, as well as other parties not before us, after discovering that certain misrepresentations were made with respect to the loan and the property. Pertinent to this appeal, it appears that the circuit court entered judgment in favor of Wells Fargo and against Walker for approximately $18 million. The court also apparently entered judgment in favor of CIBC and against Walker for approximately $5 million. Walker then filed related appeals from that judgment (Nos. 1–13–2714, 1–13–2745, 1–13–2746 and 1–13–2763 (consolidated)). Walker did not, however, obtain a stay of the monetary judgment against him. Accordingly, on August 28, 2013, Wells Fargo pursued enforcement of that judgment by starting supplementary proceedings against Walker under section 2–1402

of the Code.

¶ 6 During those proceedings, Wells Fargo filed an amended motion for an order requiring Walker to turn over for sale his stock in 12 Colorado corporations. Wells Fargo alleged that with two exceptions, Walker owned 100% of each company. In addition, Wells Fargo asked that the court order Walker to turn over the stock to a business broker who could value and sell it. Wells Fargo suggested that if the parties could not agree on a broker, the court could select one. We further note that Wells Fargo also filed two collection proceedings against Walker in Colorado (case No. 2013–CV–30582; case No. 2013–CV–30490). Moreover, CIBC filed a “cross-motion for turnover order” in light of CIBC's judgment against Walker. CIBC asked that it be permitted to participate in the stock's valuation and sale.

¶ 7 In response, Walker argued that his stock held in Colorado corporations was exempt from turnover. Walker, relying on subsection 2–1402(j) of the Code (735 ILCS 5/2–1402(j)

(West 2012)), argued that the circuit court lacked power to compel the delivery of property that was statutorily exempt from levy. Additionally, case law interpreting statutes found in article XII of the Code (see 735 ILCS 5/12–170 et seq. (West 2012)) had found non-Illinois stock to be property statutorily exempt from levy. Alternatively, Walker requested that the court permit him to deposit stock into the court's registry pending Walker's appeal from the judgment against him.

¶ 8 In reply, Wells Fargo argued that only three statutory exemptions from turnover existed: the homestead exemption (735 ILCS 5/12–901 et seq.

(West 2012)), exemptions for certain personal property (735 ILCS 5/12–1001 (West 2012) ), and the retirement plan exemption (735 ILCS 5/12–1006 (West 2012) ). Accordingly, in its view, foreign stock was not exempt from turnover. Wells Fargo further argued that article XII of the Code was irrelevant because Wells Fargo had not sought an order of levy.

¶ 9 On November 18, 2013, the circuit court entered a written order requiring Walker to turn over his stock for sale. Specifically, the court ordered Walker to deliver the stock to Wells Fargo's attorney, “to be held by him in escrow” pending further order. The court also ordered the parties to attempt to agree upon a broker to sell the stock. If the parties failed to agree, however, the court could appoint a broker. In addition, the court granted CIBC's motion for turnover and permitted CIBC to participate in the valuation and sale process. Furthermore, the court denied Walker's request to place the stock in the court's registry. Walker now appeals.¹

¶ 10 II. ANALYSIS

¶ 11 A. Turnover of Non–Illinois Stock

¶ 12 On appeal, Walker once again asserts that because stocks in non-Illinois corporations are exempt from levy, they are also exempt from turnover in supplemental proceedings under section 2–1402

.

¶ 13 A citation to discover assets, also known as a supplementary proceeding, is the predominant procedure for enforcing judgments. Robert G. Markoff, Jeffrey A. Albert, Steven A. Markoff & Christopher J. McGeehan, Citations to Discover Assets, in Creditors' Rights in Illinois § 2.42 (Ill. Inst. for Cont. Legal Educ. 2014) (citing 735 ILCS 5/2–1402(c)

). That procedure, found in section 2–1402 of the Code, provides judgment creditors with a mechanism to initiate supplementary proceedings against a judgment debtor or third party in order to discover the judgment debtor's assets and apply them to satisfy the underlying judgment. Eclipse Manufacturing Co. v. United States Compliance Co., 381 Ill.App.3d 127, 133, 319 Ill.Dec. 586, 886 N.E.2d 349 (2007)

. To that end, this statute provides a circuit court with broad powers to compel parties to satisfy a judgment with discovered assets. Stonecrafters, Inc. v. Wholesale Life Insurance Brokerage, Inc., 393 Ill.App.3d 951, 958, 333 Ill.Dec. 530, 915 N.E.2d 51 (2009). Actions that a creditor may accomplish by another type of enforcement may be accomplished in supplemental proceedings, as a citation to discover assets has features of a creditor's bill, execution, garnishment, levy and sale. Robert G. Markoff, Jeffrey A. Albert, Steven A. Markoff & Christopher J. McGeehan, Citation to Discover Assets, in Creditors' Rights in Illinois § 2.42 (Ill. Inst. for Cont. Legal Educ. 2014). Additionally, supplemental proceedings are intended to be expeditious and efficient. In re FBN Food Services, Inc., 158 B.R. 756, 761 (Bankr.N.D.Ill.1993). The debtor bears the burden of demonstrating that property is exempt from being applied to satisfy a judgment. See In re Marriage of Takata, 383 Ill.App.3d 782, 788, 321 Ill.Dec. 966, 890 N.E.2d 688 (2008).

¶ 14 Section 2–1402

states, in pertinent part, as follows:

“(c) When assets or income of the judgment debtor not exempt from the satisfaction of a judgment, a deduction order or garnishment are discovered, the court may, by appropriate order or judgment:

(1) Compel the judgment debtor to deliver up, to be applied in satisfaction of the judgment, in whole or in part, money, choses in action, property or effects in his or her possession or control, so discovered, capable of delivery and to which his or her title or right of possession is not substantially disputed.

* * *

(j) This Section does not grant the power to any court to order installment or other payments from, or compel the sale, delivery, surrender, assignment or conveyance of any property exempt by statute from the enforcement of a judgment thereon, a deduction order, garnishment, attachment, sequestration, process or other levy or seizure.” 735 ILCS 5/2–1402 (West 2012)

.

¶ 15 Wells Fargo, relying on Gonzalez v. Profile Sanding Equipment, Inc., 333 Ill.App.3d 680, 692–93, 267 Ill.Dec. 295, 776 N.E.2d 667 (20...