JUDGMENT CREDITORS' MOTION FOR A JUDGMENT AGAINST GLOBAL BUILDERS, INC. FOR ALLOWING A TRANSFER OF ASSETS BELONGING TO A JUDGMENT DEBTOR IN VIOLATION OF A THIRD-PARTY CITATION TO DISCOVER ASSETS

MANISH S. SHAH, District Judge.

Introduction

Judgment Creditors FOX VALLEY LABORERS' HEALTH AND WELFARE FUND, THE FOX VALLEY LABORERS' PENSION FUND, and PAT SHALES, Administrator of the Funds (collectively, "the Funds"), through their attorneys, Dowd, Bloch, Bennett, Cervone, Auerbach & Yokich, pursuant to Federal Rules of Civil Procedure 64 and 69, 735 ILCS 5/2-1402, and Illinois Supreme Court Rule 277, respectfully move this Court for relief in aid of the execution of this Court's judgment of August 17, 2017 against Judgment Debtors HUGH HENRY CONSTRUCTION INC., an Illinois corporation, TRACEY BIESTERFELDT, individually, and MICHAEL GALLAGHER, individually (collectively, "the Debtors"). The evidence establishes that after the Funds served Global Builders, Inc. ("Global") with a citation prohibiting Global from allowing any transfer of assets belonging to the Debtors, Global allowed First American Title Insurance Company National Commercial Services ("First American") to transfer assets First American was holding for Judgment Debtor Hugh Henry Construction, Inc. ("Hugh Henry"), in the total amount of $75,523.77, notwithstanding Global's effective control to prevent the transfer of those assets of Hugh Henry in First American's possession. Therefore, the Funds request that this Court enter judgment against Global for failing to abide by the Third Party Citation to Discover Assets served upon it on October 29 (all dates 2018 unless otherwise noted) and enter a judgment against Global for the $75,523.77 it allowed to be transferred in violation of the citation.

In support of this motion, Plaintiffs state as follows:

1. On August 17, 2017, the Court entered an Agreed Judgment against Judgment Debtors Hugh Henry Construction Inc. ("Hugh Henry"), Tracey Biesterfeldt, and Michael Gallagher, in the amount of $419,221.93 (Agreed Judgment [Docket No. 66]), of which the principal balance of $153,494.97 remains unsatisfied.

2. On October 26, the District Court Clerk issued a Third Party Citation to Discover Assets against Global (the "Citation"), regarding any amounts held belonging to Judgment Debtors. (A copy of the Third Party Citation to Discover Assets is attached hereto as Exhibit A.) Pursuant to 735 ILCS 5/2-1401(f) the Citation stated that Economy was "PROHIBITED from making or allowing any transfer or other disposition of, or interfering with, any property not exempt from the enforcement of a judgment therefrom, a deduction order or garnishment, belonging to the judgment debtor or to which it may be entitled or which may thereafter be acquired by or become due to him or it, and from paying over or otherwise disposing of any moneys not so exempt which are due or to become due to the judgment debtor, until the further order of the court or the termination of the proceeding, whichever occurs first."

3. The Funds served the Citation on Global by certified mail, return receipt requested. The return receipt addressed to Global's president, Carmen Gratace, was signed on October 29 (copy attached as Exhibit B).

4. Hugh Henry had been performing work as a subcontractor of Global on a construction project at 635 W. Roosevelt Road in Chicago, Illinois ("Roosevelt Project") for which Global was the general contractor. First American was retained as title company for that project. In short, the process for distributing payment for work on that project was that Global would give First American confirmation of the amount due to Hugh Henry, and then First American would distribute that amount to Hugh Henry or to entities to which Hugh Henry owed money, as Hugh Henry directed. First American's representative assigned to that Roosevelt Project was Barbara Kimberly. (Transcript of April 12, 2019 deposition of Barbara Kimberly attached as Exhibit C, see pages 9-24.)

5. On or about October 17, Hugh Henry submitted a final waiver of lien, requesting that money due to Hugh Henry from the Roosevelt Project be distributed to other entities to which Hugh Henry owed money in specified amounts. (Exhibit D, Final Waiver of Lien; Ex. C at 14-24.)

6. Over the next few weeks, First American distributed Hugh Henry's money to entities to which Hugh Henry owed money as directed in the Final Lien Waiver, once those entities provided sufficient documentation to First American. Specifically, First American distributed the following:

7. With these three checks, First American distributed $75,523.77 of assets belonging to Hugh Henry after Global received the Citation on October 29 (Ex. E, F & G). But First American only distributed this money with permission from Global. Ms. Kimberly testified that First American would have put a hold on these payments, had Global directed First American to cease distributing Hugh Henry's assets in this way (Ex. C at 25-28).

8. The Citation prohibited Global "from making or allowing any transfer or other disposition of ... any property ... belonging to the judgment debtor." (Ex. A at 2, emphasis added). Thus, the Citation's prohibition applied not just to money Global may have been holding itself, but further to allowing any transfer of Hugh Henry's assets by other parties. 735 ILCS 5/2-1402(f)(1).

9. As of October 29 when Global was served with the citation, Global had already given authority to First American to distribute Hugh Henry's money to creditors of Hugh Henry specified in the Final Waiver of Lien. But Ms. Kimberly testified that she would not have issued these checks from Hugh Henry's funds had Global retracted that authorization (Ex. C at 24-28). Thus, Global impermissibly allowed a transfer of Hugh Henry's assets that Global had control over.

10. A parallel factual situation was presented in Laborers' Pension Fund v. A&C Envtl., Inc., 2005 U.S. Dist. LEXIS 7892, *11 (Apr. 19, 2005) (Schenkier, Magistrate J.), involving checks issued by the judgment debtor prior to service of a citation on it, but which were only presented to the bank after service of the citation. The Court in that case held that, when the debtor "received the citation, it had the ability to stop payment on any checks not yet cashed. By failing to do so, [the debtor] violated the terms of the citation by allowing the funds represented by the checks to be transferred to the payees." Id. at *10-11. The Court specifically relied upon the prohibition in 735 ILCS 5/2-1402(f)(1) from "allowing any transfer" of the debtor's assets. Id.

11. Likewise here, Global authorized the transfer of Hugh Henry's assets before Global was served with the Citation. But once served, Global was prohibited from "allowing" these pre-arranged transfers of Hugh Henry's assets to continue. A&C Envtl., Inc., 2005 U.S. Dist. LEXIS 7892 at *10-11. The remedy for a third-party's violation of a third-party citation to discover assets is for the Court to "enter judgment against him or her in the amount of the unpaid portion of the judgment and costs allowable under this Section, or in the amount of the value of the property transferred, whichever is lesser." 735 ILCS 5/2-1402(f)(1).

12. The Funds respectfully request that a judgment be entered against Global for $75,523.77 which is the amount of assets of Hugh Henry that Global allowed to be transferred to other creditors of Hugh Henry after Global was served with the Citation on October 29.

13. In the event that there are disputes of material fact that would be determinative of the Funds' right to the requested judgment against Global, this Court has the authority to order a trial to resolve those disputes. Ill. S. Ct. R. 277(e); Xcel Supply LLC v. Horowitz, 2018 IL App (1st) 162986 ¶¶43-45. The Funds request a trial should the Court conclude that disputes of material fact must be resolved to properly adjudicate the parties' rights.

WHEREFORE, the Funds request that this Court enter judgment against Global Builders, Inc., in the amount of $75,523.77.

EXHIBIT A

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

THIRD-PARTY CITATION TO DISCOVER ASSETS

THIS COURT HAS ISSUED A THIRD-PARTY CITATION AGAINST GLOBAL BUILDERS, INC. This Citation directs Carmen Gratnre, President of GLOBAL BUILDERS, INC., to appear before Josiah A. Groff, attorney for the Plaintiffs/Judgment-Creditors, at 8 South Michigan Avenue, Suite 1900, Chicago, Illinois 60603 on November 28, 2018 at 9:30 a.m. to be examined under oath concerning the indebtedness owed to the Plaintiffs. IF YOU FAIL TO APPEAR AS DIRECTED IN IRIS NOTICE, YOU MAY BE ARRESTED AND BROUGHT_BEFORE THE COURT TO ANSWER TO A CHARGE OF CONTEMPT OF COURT, WHICH MAY BE PUNISHABLE BY IMPRISONMENT IN THE COUNTY JAIL.

The Citation was issued on the basis of a judgment order entered on August 17, 2017 by Judge Manish S. Shah against Hugh Henry Construction Lac., Tracey Biesterfeldt, and Michael Gallagher (collectively, "Judgment-Debtors"), jointly and severally, in the total amount of $419,221.93. To date, Plaintiffs have received $265,726.96 towards the judgment, leaving a principal balance of $153,494.97 unsatisfied. On or after the court date stated above, the court may compel the application of any discovered income or assets toward payment on the judgment.

You are commanded to produce at the examination:

All books, records and documents reflecting the assets and financial status of the Judgment-Debtors for the period of January 1, 2018 through the present, including, but not limited to, the following:

YOU ARE PROHIBITED from making or allowing any transfer or other disposition of, or interfering with, any property not exempt from execution or garnishment belonging to the Judgment-Debtors, which they may be entitled to or which may be acquired by or become due to them and from paying over or otherwise disposing of any money not so exempt, that is due or becomes due to the Judgment-Debtors until further order of court or termination of the proceedings. You are not required to withhold the payment of any money beyond double the amount of the balance due on the judgment.

The amount of income or assets that may be applied toward the judgment is limited by Federal and Illinois law. THE JUDGMENT-DEBTORS HAVE THE RIGHT TO ASSERT STATUTORY EXEMPTIONS AGAINST CERTAIN INCOME OR ASSETS OF A JUDGMENT-DEBTORS WHICH MAY NOT BE USED TO SATISFY THE JUDGMENT IN THE AMOUNT STATED ABOVE:

1) Under Illinois or Federal law, the exemptions of personal property owned by a debtor include a debtor's equity interest, not to exceed $4,000.00 in value, in any personal property as chosen by the debtor; Social Security and SSI benefits; public assistance benefits; unemployment compensation benefits; workers compensation benefits; veteran's benefits; circuit breaker property tax relief benefits; the debtor's equity interest not to exceed $2,400.00 in value, in any one motor vehicle, and the debtor's equity interest, not to exceed $1,500.00 in value, in any implements professional books, or tools of the trade of the debtor;

2) Under Illinois law, every person is entitled to estate in homestead, when it is owned and occupied as a residence, to the extent in value of $15,000.00, which homestead is exempt from judgment;

3) Under Illinois law, the amount of wages that may be applied toward a judgment is limited to the lesser of (i) 15% of gross weekly wages or (ii) the amount by which disposable earnings for a week exceed the total 45 times the federal minimum hourly wage.

4) Under Federal law, the amount of wages that may be applied toward a judgment is limited to the lesser of (i) 25% of disposable earnings for a week or (ii) the amount by which disposable earnings for a week exceeds 30 times the federal minimum hourly wage.

5) Pension and retirement benefits and refunds may be claimed as exempt under Illinois law.

The Judgment Debtors may have other possible exemptions under the law.

THE JUDGMENT-DEBTORS HAVE THE RIGHT AT THE CITATION REARING TO DECLARE EXEMPT CERTAIN INCOME OR ASSETS OR BOTH. The Judgment-Debtors also have the right to seek a declaration at an earlier date by notifying the clerk in writing at the Office of the Clerk of the United States District Court for the Northern District of Illinois, Eastern Division, 219 South Dearborn Street, 20th Floor, Chicago, Illinois. When so notified, the Clerk of the Court will obtain a prompt hearing date from the court and will provide the necessary forms that must be prepared by the Judgment-Debtors or the attorney for the Judgment-Debtors and sent to the Judgment-Creditors and Judgment-Creditors' attorney regarding time and location of the hearing. This notice may be sent by regular first class mail.

CERTIFICATION OF ATTORNEY

The foregoing Citation was issued on the basis of a judgment order entered on August 17, 2017 by Judge Manigh. S. Shah against Hugh Henry Construction, Inc., Tracey Biesterfeldt, and Michael Gallagher, jointly and severally, in the total amount of $419,221.93. To date, Plaintiffs have received $265,726.96 towards the judgment, leaving a principal balance of $153,494.97 unsatisfied.

I, the undersigned, certify to the Court, under penalties as provided by law pursuant to 735 ILCS 5/1-109, that all information stated herein is true.

CERTIFICATE OF SERVICE

I, Josiah A. Groff, an attorney, hereby certify that I will cause to be served the attached Third-Party Citation to Discover Assets on the party listed below by certified mail, return receipt requested, on October 26, 2018:

CERTIFICATE OF MAILING CITATION

I, Josiah A. Groff, an attorney, hereby certify that within three business days of serving the above Third-Party Citation to Discover Assets upon the third-party citation respondent, I will cause to be served the Third-Party Citation to Discover Assets on the debtors listed below via regular first-class mail:

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

ORDER ON JUDGMENT CREDITORS' MOTION FOR A JUDGMENT AGAINST GLOBAL BUILDERS, INC. FOR ALLOWING A TRANSFER OF ASSETS BELONGING TO A JUDGMENT DEBTOR IN VIOLATION OF A THIRD-PARTY CITATION TO DISCOVER ASSETS

This matter coming before the Court on Judgment Creditors' Motion for a Judgment Against Global Builders, Inc. for Allowing a Transfer of Assets Belonging to a Judgment Debtor in Violation of a Third-Party Citation to Discover Assets, the Court having reviewed the motion along with the supporting materials, hereby FINDS, ORDERS, and ADJUDGES as follows:

1. The motion is granted. Judgment is entered in favor of the Judgment Creditors Fox Valley Laborers' Health and Welfare Fund, the Fox Valley Laborers' Pension Fund, and Pat Shales (together, "Funds") and against Third-Party Citation Respondent Global Builders, Inc., in the amount of $75,523.77.

2. This Judgment against Economy Currency Exchange, Ltd. is joint and several with the Agreed Judgment in this case of August 17, 2017 in favor of the Funds and against Judgment Debtors Hugh Henry Construction Inc., Tracey Biesterfeldt, and Michael Gallagher.

SO ORDERED: