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July 29, 1994


Appeal from the Circuit Court of Du Page County. No. 91-CH-1031. Honorable Bonnie M. Wheaton, Judge, Presiding.

Released for Publication September 1, 1994.

Colwell, Geiger, Bowman

The opinion of the court was delivered by: Colwell

JUSTICE COLWELL delivered the opinion of the court:

The State appeals from the order of the circuit court of Du Page County which directed the citation respondent, Gary-Wheaton Bank (Bank), to turn over $58,439.11 from the bank account of defendants, Howard Olson and the Horizon Group, to plaintiff, William A. Bloink III. On appeal, the State claims that the trial court (1) erroneously concluded that the service of a citation to discover assets created a lien in favor of plaintiff; (2) did not provide the State with a sufficient opportunity to assert its claim against the bank account funds; and (3) erred by ordering the Bank to turn over the funds in the account when, in a separate and pending action, the circuit court of Cook County had previously ordered the Bank not to transfer those funds.

Plaintiff filed a complaint against defendant, Howard Olson individually and d/b/a the Horizon Group (Horizon). The complaint alleged that defendant was in the business of providing brokerage services. On April 10, 1991, plaintiff executed a conditional offer to purchase the dental practice of Dr. Russel Fu. In connection with this offer, plaintiff tendered to Horizon $40,000 in earnest money. Horizon was to serve as the escrowee in this transaction. Plaintiff and Fu were unable to reach an agreement, and the sale was never executed.

Plaintiff informed Horizon of the failed negotiations and requested a refund of the earnest money. Despite repeated demands, Horizon refused to refund the earnest money. The complaint further alleged that Horizon commingled the funds tendered as earnest money with its own funds and used the earnest money for its own benefit. The theories that plaintiff advanced in support of recovery were breach of fiduciary duty, conversion, fraud, and consumer fraud. Plaintiff sought $40,000 in compensatory damages, $100,000 in punitive damages, and an order enjoining Horizon and its agents from transferring, assigning, dissipating, or encumbering the funds.

On November 27, 1991, the trial court issued a preliminary injunction ordering Horizon to create an earnest money escrow account and deposit into it $40,000. Olson filed for protection underthe Bankruptcy Code (11 U.S.C.A. § 101 et seq. (West 1993)), and on April 29, 1992, in accordance with the automatic stay provisions of the Bankruptcy Code (11 U.S.C.A. § 362(a)(1) (West 1993)), the trial court placed the case on inactive status. On January 13, 1993, after the bankruptcy court dismissed Olson's bankruptcy petition, the court removed the case from inactive status.

On April 8, 1993, plaintiff filed citations to discover assets directed against Horizon and the Bank. Both citations incorrectly referred to the November 27, 1991, preliminary injunction as a final judgment which remained unsatisfied. On that same date, the trial court ordered the Bank to hold and retain all of Horizon's property in the Bank's possession, including but not limited to $58,439.11 that Horizon had deposited in a checking account at the Bank.

On April 21, 1993, the trial court entered a judgment in plaintiff's favor in the amount of $58,439.11 and granted plaintiff leave to commence supplementary proceedings against the Bank. The order stated that the court was entering the judgment by the consent of the parties. Also on this date, plaintiff notified the State of the pending supplementary proceedings and of plaintiff's claim against the checking account funds and moved for a turnover order.

On April 28, 1993, plaintiff filed another citation against the Bank. This citation referred to the April 21 judgment. At a hearing held on this same date, the State appeared for the purpose of objecting to the turnover of the disputed funds. The State produced evidence that it commenced in the circuit court of Cook County an action alleging violations of the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 1992)) by Horizon. The Bank was listed as a nominal defendant in this action.

On June 17, 1992, the Cook County court issued a temporary retraining order that prevented the bank from disposing of, transferring, or otherwise alienating the funds in Horizon's checking account. This order remained in effect until June 26, 1992. On November 2, 1992, the Cook County circuit court entered a summary judgment in favor of the State and against Horizon. In its November 2 order, the Cook County court directed that Horizon's checking account at the Bank remain frozen "until further order of Court." The court also reserved ruling on the issue of damages. An employee of the Bank testified that the Bank received via mail a copy of each of the above-mentioned orders. The employee also testified that, to her knowledge, the Bank was never served with a summons requiring it to appear in the Cook County proceedings. The Cook County court scheduled a hearing for May 7, 1993, at which time it would distribute the frozen funds to the rightful claimants.

The trial court concluded that whether the Bank received service in the Cook County proceeding was not dispositive. It found that, notwithstanding the freeze the Cook County court placed on Horizon's account, plaintiff's claim against the funds was superior to the State's. Accordingly, the trial court ordered the Bank to turn over to plaintiff the funds in dispute.

On April 29, the State filed an emergency motion for leave to intervene and an emergency motion to reconsider. The trial court allowed the State to intervene and found that a perfected lien against the checking account funds and in favor of plaintiff attached upon the service of the citation to discover assets. It also found in the alternative that the lien attached, at the latest, upon the trial court's issuance of the turnover order. According to the trial court, the State's claim to the funds was inchoate because the State had not yet obtained a ...

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