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Dexia Credit Local v. Rogan

March 12, 2009

DEXIA CREDIT LOCAL, PLAINTIFF,
v.
PETER G. ROGAN, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Matthew F. Kennelly, District Judge

MEMORANDUM OPINION AND ORDER

As part of supplementary proceedings to enforce a judgment Peter Rogan, Dexia Credit Local (Dexia) has filed a motion requesting turnover of certain assets. Intervenors Brian, Sara, and Robert Rogan (the Rogan children) oppose that motion. Dexia and the Rogan children have moved for summary judgment with respect to some of the trusts holding the assets that Dexia seeks. The Rogan children have also moved to strike Dexia's Local Rule 56.1 statement in support of one of its summary judgment motions and to strike a declaration submitted with Dexia's opposition to the Rogan children's motion for summary judgment. For the reasons set forth below, the Court denies the Rogan children's motions to strike, grants in part and denies in part Dexia's motions for summary judgment, and denies the Rogan children's motion for summary judgment.

Background*fn1

On cross-motions for summary judgment, the Court construes facts and draws inferences "in favor of the party against whom the motion under consideration is made." In re United Air Lines, Inc., 453 F.3d 463, 469 (7th Cir. 2006).

Dexia sued Peter Rogan and others for fraud, conspiracy, and other torts. It eventually obtained a judgment against Rogan in excess of $124 million. Dexia subsequently pursued supplementary proceedings before this Court to satisfy its judgment. This Court entered temporary restraining orders freezing various assets that Dexia contends belong to Rogan or that he fraudulently transferred. Brian, Sara, and Robert Rogan (Peter Rogan's adult children) and Judith Rogan (his wife) then intervened to oppose the freeze orders. The Court ultimately entered preliminary injunctions that had the effect of extending the freeze orders in large part.

On December 8, 2008, Dexia filed, pursuant to the Court's instruction, a renewed motion for turnover pertaining to the Rogan children's interests in four categories of assets: those held by (1) the Peter G. Rogan Irrevocable Trust (PGR trust); (2) the RPP Finance Trust (RPP trust); and (3) various trusts domiciled in Florida and Belize that Peter Rogan created in the names of each of his children; and (4) assets the Rogan children received from those trusts.

Five of the trusts identified in Dexia's renewed motion for turnover are the subjects of the parties' summary judgment motions. Dexia's first motion for summary judgment seeks turnover of the assets of the PGR trust. The Rogan children have moved to strike Dexia's Local Rule 56.1 statement in support of the PGR trust summary judgment motion but have not otherwise responded to either the motion or Dexia's Local Rule 56.1 statement.

Peter Rogan settled the PGR trust in 1996 with his own assets. The trust identifies Peter and Judith Rogan, as well as the Rogan children, as beneficiaries of the trust. The PGR trust provides for a trust protector to ensure that the trustees comply with the wishes of the settlor, i.e., Peter Rogan. At the time the PGR trust was created, Peter Rogan submitted a "letter of wishes" stating "[p]lease distribute all of the income of the Trust to me upon receipt by the Trustee. I will provide you with wire transfer information . . . to accomplish the transfer of the funds for my use." Dexia Local Rule 56.1 Statement, Ex. 72. "There is no evidence that the trustees of the PGR trust ever denied a or considered denying a request Rogan made for Trust funds." Dexia Local Rule 56.1 Statement ¶ 17.

The RPP trust is another one of the trusts addressed by Dexia's turnover motion. Dexia has filed a separate summary judgment motion with respect to the RPP trust. Peter Rogan established the RPP trust in 1995. He and Fred Cuppy were its first trustees. Peter Rogan ceased serving as a trustee in 1996. Cuppy continued to serve as the sole trustee for the RPP trust until December 5, 2006. The Rogan children admit that the RPP trust does not prevent creditors of trust beneficiaries from "accessing the trust's assets prior to the demise of both Peter Rogan and Fred Cuppy." Rogan Children Resp. to Dexia Local Rule 56.1 Statement ¶ 28. Peter Rogan is a beneficiary of the RPP trust (as are the Rogan children), but the Rogan children contend that he never received a distribution from the trust.

In 1992, Peter and Judith Rogan settled three trusts for the benefit of their children, the Brian Rogan Domestic Trust, the Sara Caitlin Rogan Domestic Trust, and the Robert Rogan Domestic Trust (collectively the Rogan domestic trusts). The Rogan children are the only named beneficiaries of the Rogan domestic trusts, though each trust names contingent beneficiaries in the event the named beneficiary dies. A ten percent stock interest in Edgewater Operating Company (EOC) was the initial corpus for each of the Rogan domestic trusts. After EOC was sold in August 1994, the Rogan domestic trusts received money in exchange for the EOC stock they held. The Rogan children contend that the Rogan domestic trusts were created for estate planning purposes. Dexia disputes that contention.

Discussion

Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). To determine whether a genuine issue of material fact exists, the Court must view the record in the light most favorable to the nonmoving party and draw reasonable inferences in that party's favor. Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986); Lesch v. Crown Cork & Seal Co., 282 F.3d 467, 471 (7th Cir. 2002). A genuine issue of triable fact exists only if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248. "The fact that plaintiff and defendants have filed cross-motions for summary judgment does not change the applicable standard. The Court must consider each motion independently and must deny both motions if there is a genuine issue of material fact." Egan Marine Corp. v. Great Am. Ins. Co. of N.Y., 531 F. Supp. 2d 949, 953 (N.D. Ill. 2007) (citations omitted).

1. The PGR trust

a. The Motion to Strike Dexia's Local Rule 56.1 Statement

The Rogan children have not filed a response to Dexia's PGR trust motion, nor have they responded to Dexia's statement of facts filed pursuant to Local Rule 56.1. Rather, they have moved to strike Dexia's statement of facts pursuant to Federal Rule of Civil Procedure 56(e). That rule provides that an affidavit in support of a motion for summary judgment must be made on "personal knowledge" and that "[i]f a paper or part of a paper is referred to in an affidavit, a sworn or certified copy must be attached to or served with the affidavit." Fed. R. Civ. P. 56(e)(1).

The Rogan children attack two affidavits that Dexia cites in support of its motion. The first is the affidavit of Matthew Gibbons. Gibbons is the chairman of Oceanic Bank and Trust Limited (Oceanic). Dexia submitted the affidavit to authenticate documents produced by Oceanic that Dexia cites in support of its motion. Gibbons swears that he has reviewed the documents with the identifying numbers OB00001 to OB01914 and that they are true and correct copies of Oceanic's business records.

The Rogan children contend that the affidavit and Dexia's entire statement of facts should be stricken because Dexia did not attach each of the 1,914 pages identified in the affidavit. Though Dexia did not attach each of those pages, it made them available for copying and inspection by the Rogan children on at least three separate occasions, as early as November 18, 2008. Thus the documents have been made available to the Rogans, even if they were not all attached to the affidavit. Moreover, Dexia has submitted with its Local Rule 56.1 statement all of Oceanic's documents it offers in support of its motion for summary judgment. This was all Dexia was required to do. See Edlund v. St. Anthony Med. Ctr., No. 00 C 50216, 2002 WL 596358, at *1 (N.D. Ill. Apr. 16, 2002).

The cases the Rogan children cite are inapposite. G. D. Searle & Co. v. Charles Pfizer & Co., 231 F.2d 316, 318 (7th Cir. 1956), merely notes that inadequate affidavits should be disregarded; it does not address the issue raised with respect to Gibbons' affidavit. In Logan v. Denny's, Inc., 259 F.3d 558, 570 (6th Cir. 2001), the Sixth Circuit disregarded an affidavit because the document referenced in it had not been "attach[ed] or produce[d]." As noted above, Dexia made the Oceanic documents available to the Rogan children and attached the subset of documents that it contends support its motion.

Additionally, the Rogan children target an affidavit signed by one of Dexia's attorneys, Gabriel Aizenberg. In that affidavit, Aizenberg states that he has not seen any documents produced in discovery indicating that the trustees of the PGR trust denied or considered denying a request made by Peter Rogan. Aizenberg also states that the other attorneys he worked with and/or supervised on this matter have not seen any such documents. Essentially, with respect to this subject, Aizenberg contends that none of Dexia's lawyers have found a needle in the haystack of documents they reviewed.

The Court need not address the propriety of Aizenberg's affidavit. The point of the affidavit was to advance the contention that no evidence reflects that the PGR trust's trustees ever denied or considered denying any of Peter Rogan's requests. Even without the affidavit, Dexia has made the point in its motion for summary judgment in a way sufficient to put the Rogan children on notice of Dexia's contention that no such evidence existed. Specifically, Dexia argued that "there is no evidence that the Trustees ever denied or considered denying a request Rogan made for Trust funds." Dexia Mot. for Summ. J. at 5. The Rogan children have not submitted any contrary evidence.

b. Self-settled Spendthrift Trusts

Even though the Rogan children have failed to respond to either Dexia's motion for summary judgment or its accompanying Local Rule 56.1 statement, this means only that the Rogan children have admitted the facts set forth in that statement. See, e.g., Raymond v. Ameritech Corp., 442 F.3d 600, 608 (7th Cir. 2006). Dexia must still establish that it is entitled to judgment as a matter of law based on those uncontroverted facts. See id.; Flynn v. Sandahl, 58 F.3d 283, 288 (7th Cir. 1995). Dexia contends it is entitled to turnover of the assets of the PGR trust because, under the trust's terms and based on the circumstances of its formation, the trust holds the assets of Peter Rogan.

The first step is to determine which jurisdiction's law governs the interpretation and operation of the PGR trust. The PGR trust deed of settlement provides that the trust was established under the law of the Bahamas and that Bahamian governs its enforcement and construction. The fact that the trust documents specify Bahamian law does not necessarily mean, however, that this Court will honor that choice of law provision.

A district court sitting in diversity applies the choice-of-law rules of the state in which it sits. E.g., Malone v. Corrections Corp. of Am., 553 F.3d 540, 543 (7th Cir. 2009). Under Illinois law, courts will not honor a choice of law provision specified to govern the interpretation and enforcement of a contract where doing so would violate Illinois public policy. E.g., Thomas v. Guardsmark, Inc., 381 F.3d 701, 704-06 (7th Cir. 2004). That rule of contract interpretation also applies to the interpretation of trusts.

E.g., Ranger v. Ranger, 379 Ill. App. 3d 752, 757, 883 N.E.2d 750, 754 (2008).

A trust created for a settlor's own benefit is a self-settled trust. Schechter v. Balay (In re Balay), 113 B.R. 429, 437 n.14 (Bankr. N.D. Ill. 1990); Black's Law Dictionary 1518 (7th ed. 1999). The PGR trust is a self-settled trust because Peter Rogan both established and is a beneficiary of the trust. A spendthrift trust is "'a trust that prohibits the beneficiary's interest from being assigned and also prevents a creditor from attaching that interest.'" Mattis v. State Univs. Retirement Sys., 212 Ill. 2d 58, 81, 816 N.E.2d 303, 316 (2004) (quoting Black's Law Dictionary 1518 (7th ed. 1999)). The PGR trust is a ...


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