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In re Wildman

decided: October 12, 1988.

IN THE MATTER OF: PAUL C. WILDMAN, ET AL., DEBTORS. APPEALS OF: HARRIS TRUST AND SAVINGS BANK, PLAINTIFF-APPELLEE, CROSS-APPELLANT,
v.
MITCHELL EDELSON, DEFENDANT-APPELLANT, CROSS-APPELLEE



Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. Nos. 86 C 2162 & 86 C 7696 -- John A. Nordberg, Judge.

Wood, Jr. and Posner, Circuit Judges, and Eschbach, Senior Circuit Judge.

Author: Wood

WOOD, JR., Circuit Judge.

Plaintiff Harris Trust and Savings Bank (Harris) brought this action against defendant Mitchell Edelson, seeking a judgment that Harris has a valid and enforceable lien against certain property owed by Edelson. Harris prevailed before the bankruptcy court on summary judgment; the bankruptcy court also denied a motion by Edelson to vacate the judgment pursuant to Federal Rule of Civil Procedure 60(b)(2). On appeal, the district court affirmed both rulings, but denied Harris's request for costs and attorney's fees. Edelson now appeals the district court's affirmance of the grant of summary judgment and the denial of Edelson's Rule 60(b)(2) motion. Harris cross-appeals the district court's denial of its request for costs and attorney's fees. In addition, Harris seeks costs and fees in connection with this appeal.

I. FACTUAL BACKGROUND

This adversary proceeding arose from the consolidated bankruptcy cases of Paul Wildman, Steven Horowitz, Stephen Wolf, Kenneth Fogelberg, Stuart Kaiserman (the debtors), and numerous partnerships. On March 31, 1977, the debtors, Edelson, and Marvin Kamensky purchased property at 6830 North Sheridan Road, Chicago, Illinois. The purchasers executed an agreement directing that the property be held in Trust No. 3200 at Amalgamated Trust and Savings Bank (the land trust). The trust agreement provided that Edelson and the debtors jointly owned a fifty percent undivided beneficial interest in the land trust. Kamensky owned the remaining fifth percent undivided beneficial interest in the land trust.*fn1

In the spring of 1978, Harris extended several loans to partnerships controlled by the debtors. The debtors personally guaranteed the loans. In October 1978, Harris made an additional $45,000 loan to one of the debtors' partnerships, Devon Partnership, which the debtors also personally guaranteed. As security for the loan, and for all outstanding and future indebtedness to Harris, the debtors assigned to Harris a fifty percent beneficial interest in the land trust.*fn2

Between May and July 1981, the debtors and the Devon Partnership all filed individual petitions under Chapter 11 of the Bankruptcy Code.*fn3 The bankruptcy court consolidated the cases, along with others, for joint administration. At the time of filing, the debtors owed Harris approximately $238,086 in principal and $65,000 in interest.

Edelson filed numerous claims against the various bankruptcy estates. In October 1982, Edelson entered into an agreement with the bankruptcy trustee settling certain of his claims. Among other things, the agreement required the bankruptcy trustee to transfer to Edelson the debtors' beneficial interest in the land trust, subject to Harris's claims under the October 1978 collateral assignment. In November 1983, pursuant to an order of the bankruptcy court, the trustee completed the transfer to Edelson.

On January 10, 1984, Harris initiated this adversary action, seeking to enforce its lien and security interest in the land trust. Edelson contended that Harris does not have a valid security interest in the land trust. The parties filed cross-motions for summary judgment. On February 4, 1986, the bankruptcy court granted Harris's motion and denied Edelson's motion, finding that Harris has an enforceable lien on five-twelfths of the land trust. Edelson appealed that finding to the district court.

After filing his notice of appeal, Edelson filed a motion for relief from judgment with the bankruptcy court under Federal Rule of Civil Procedure 60(b)(2). The bankruptcy court denied the motion and Edelson also appealed that ruling to the district court. Harris cross-appealed for costs and attorney's fees related to Edelson's appeal of the bankruptcy court's denial of the Rule 60(b)(2) motion.

The district court affirmed both the bankruptcy court's grant of summary judgment and its denial of Edelson's Rule 60(b)(2) motion. The district court, however, denied Harris's request for costs and fees. Edelson appeals the district court's decision affirming the bankruptcy court. Harris cross-appeals the district court's denial of costs and fees and also seeks double costs and attorney's fees related to this appeal.

II. DISCUSSION

Edelson asserts, as he did before both the bankruptcy court and the district court, that Harris does not have a valid security interest in the land trust. According to Edelson, he and the debtors were members of the 6830 North Sheridan Road Partnership. Edelson asserts that, at the time of the collateral assignment to Harris, the 6830 North Sheridan Road Partnership owned the fifty percent undivided interest in the land trust.*fn4 Therefore, Edelson argues that because he had no knowledge of and did not consent to the collateral assignment to ...


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