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Schak v. Blom

September 25, 2002

DONALD SCHAK, PLAINTIFF-APPELLANT,
v.
ROBERT BLOM, DEFENDANT, AND CATHY RIEHS-VLAD, ADVERSE CLAIMANT-APPELLEE)



Appeal from the Circuit Court of Cook County. Honorable Thomas Quinn, Judge Presiding.

The opinion of the court was delivered by: Presiding Justice South

UNPUBLISHED

Plaintiff, Donald Schak, operated a commercial office building on 800 E. Northwest Highway in Palatine, Illinois. Defendant, Robert Blom, rented Suite 90 on 800 E. Northwest Highway from plaintiff. On November 23, 1994, the parties entered into an agreement whereby defendant acknowledged and agreed to pay $11,000 over a twenty-four month period for back rents due since December 1, 1992. On October 1, 1996, the parties entered into another agreement in which defendant acknowledged a $56,734.78 debt and granted plaintiff a security interest in his business equipment.

On May 23, 1997, plaintiff filed a complaint for breach of contract against defendant. On June 7, 1997, Lee Michaels, the special process server, served defendant at 21235 Linden Street in Kildeer, Illinois, the address defendant listed as his residence in the October 1, 1996, agreement. On January 27, 1998, after defendant had failed to appear and answer, the trial court entered a judgment by default in favor of plaintiff and against defendant in the amount of $56,734.78.

Adverse Claimant, Cathy Riehs-Vlad, originally owned 21235 Linden. In March 1995, she entered into a real estate sale contract with defendant for 21235 Linden. She quit claimed her interest in 21235 Linden into a land trust where she was the beneficiary. Defendant jointly held the power of direction in the trust with Riehs-Vlad via the contract and installment agreement to purchase.

On April 29, 1997, Riehs-Vlad notified defendant by certified mail that she planned to declare him in default under the contract unless payments were made by May 10, 1997. Defendant had failed to make payments from October 1, 1996 through April 1, 1997. The 1995 real estate taxes were also outstanding. In June 1997, defendant vacated the premises and executed an assignment of beneficial interest stating that he assigned any and all interest he had in the trust to Riehs-Vlad.

On March 18, 1998, plaintiff issued a citation to discover assets to defendant at 21235 Linden. Plaintiff later learned that the property at 21235 Linden that defendant had listed as his residence was held in a land trust, No. 1101240, by the Chicago Title and Trust Company (Chicago Title). On April 17, 1998, plaintiff issued a third party citation to discover assets to Chicago Title for information regarding the land trust. On April 20, 1998, plaintiff filed an emergency motion to prohibit transfer of assets and subsequently block the pending sale of 21235 Linden which was to take place on April 22, 1998. Plaintiff served Chicago Title with notice of this motion. On April 21, 1998, the trial court entered an order that Chicago Title direct that $85,102.17 of the sale proceeds of 21235 Linden be placed in a title indemnity escrow account at Attorneys' Title Guaranty Fund, Inc. (Attorneys' Title), which was Riehs-Vlad's closing agent for 21235 Linden. On April 22, 1998, plaintiff issued a citation to discover assets to Attorneys' Title, which failed to respond. That same day, Chicago Title deeded out title to 21235 Linden, and the funds were deposited into the escrow account.

On May 19, 1998, plaintiff filed a motion for turnover of funds, which the trial court granted on May 27, 1998. The notice attached to the motion stated that it was an emergency motion to prohibit transfer of assets. Attorneys' Title forwarded $58,887.01 to plaintiff's counsel. Subsequent thereto, Riehs-Vlad filed a motion to quash the turnover order based upon the fact that defendant, Blom, had no interest in the property. Defendant filed for bankruptcy on October 5, 1999. On July 26, 2000, the trial court granted Riehs-Vlad's motion to quash the turnover order. The trial court stated that defendant had no interest in the assets turned over to plaintiff, and that a turnover order should not have been entered pursuant to the notice given by plaintiff. Plaintiff filed a motion to reconsider, which was denied. The court also stated in that order that the emergency notice of motion to prohibit transfer of assets that accompanied the motion for turnover of assets was an error. Riehs-Vlad also filed a motion for interest and attorney fees, which was granted. Subsequently, Riehs-Vlad filed a motion to clarify, which the trial court did, stating that: "(1) plaintiff failed to serve Riehs-Vlad with proper notice of the motion for hearing on the motion for a turnover order (Order of July 26, 2000); (2) defendant had no interest in the funds that were subsequently turned over to plaintiff by virtue of the turnover order (Order of July 26, 2000); (3) the turnover order entered on May 28, 1997 was void (Order of July 26, 2000); this court has the inherent authority to return these parties to their pre-May 27, 1998 status (Order of November 30, 2000); and (4) Riehs-Vlad was entitled to the return of $58,887.01 (Order of September 19, 2000) as well as interest and attorney fees (Order of November 30, 2000)."

Plaintiff raises five issues: (1) whether the trial court erred in vacating the May 27, 1998, turnover order; (2) whether the trial court erred in denying plaintiff's motion to reconsider its July 26, 2000, order; (3) whether the trial court erred in entering a judgment in favor of the adverse claimant in its September 19, 2000, order; (4) whether the trial court erred in denying plaintiff's motion to reconsider the November 30, 2000, order; and (5) whether the trial court erred in awarding adverse claimant attorney fees and interest.

We first consider whether the trial court erred in vacating the May 27, 1998, turnover order, which granted the motion for turnover.

"Supplementary proceedings.

(a) A judgment creditor, or his or her successor in interest when that interest is made to appear of record, is entitled to prosecute supplementary proceedings for the purposes of examining the judgment debtor or any other person to discover assets or income of the debtor not exempt from the enforcement of the judgment, a deduction order or garnishment, and of compelling the application of non-exempt assets or income discovered toward the payment of the amount due under the judgment. A supplementary proceeding shall be commenced by the service of a citation issued by the clerk.

***

(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 ...


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