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In Re: Craig R. Ockerlund v. Craig R. Ockerlund

January 25, 2011

IN RE: CRAIG R. OCKERLUND, TRAVELERS CASUALTY AND SURETY COMPANY, A CONNECTICUT STATE CORPORATION,
DEBTOR, PLAINTIFF-APPELLEE,
v.
CRAIG R. OCKERLUND, DEFENDANT-APPELLANT.



Appeal from the Bankruptcy Court, Case No. 05 B 59801 Adversary No. 06 A 1034

The opinion of the court was delivered by: Judge Harry D. Leinenweber

MEMORANDUM OPINION AND ORDER

Before the Court is Appellant Craig Ockerlund's ("Ockerlund") appeal of the Bankruptcy Court's decision to reopen Appellee Travelers Casualty and Surety Company's ("Travelers") adversary complaint and enter a $634,566.68 judgment against Ockerlund. For the reasons stated below, the Court affirms the Bankruptcy Court's rulings.

I. INTRODUCTION

Ockerlund was the President and principal shareholder of Ockerlund Construction Company (hereinafter, "OCC"). Travelers issued performance and payment bonds on behalf of OCC for various construction projects, including additions to Fairmont School District #89 buildings in Lockport, Ill., and the public safety building for the Village of Riverdale, Ill. The bonds included an agreement in which Ockerlund and other signatories agreed to indemnify Travelers for losses incurred under the bonds.

On October 15, 2005, Ockerlund filed a Petition for Chapter 7 Bankruptcy Relief in the Northern District of Illinois. A few months later on April 21, 2006, Travelers filed an adversary complaint alleging that OCC had defaulted on the construction projects secured by the bonds, and pursuant to the indemnity agreement, Ockerlund was liable to Travelers for losses it sustained under the bonds. It argued that certain debts Ockerlund owed it were not dischargeable under 11 U.S.C. § 523, and that Ockerlund should be denied discharge under 11 U.S.C. § 727. Rather than fully litigate this complaint, however, Travelers and Ockerlund entered into a Settlement Agreement (the "Agreement") on May 1, 2007, under which Ockerlund would initially pay Travelers $25,000 and thereafter pay $15,000 in $500 monthly payments, which would commence on October 1, 2007. The Agreement contained the following default clause:

4. Default Under this Agreement.

(a) If Ockerlund fails to pay, when due, the amounts described in Paragraph 1, Ockerlund's failure shall be an event of default under the Agreement. In the event of a default, Travelers shall give a notice of default to Ockerlund . . . and Ockerlund shall have twenty-one days from the date of the default notice to cure the default. Travelers may enforce its rights under this Agreement at any time in its discretion. Ockerlund waives any claims or defenses related to waiver or otherwise in connection with Travelers [sic] rights and remedies as provided in this Agreement.

(b) If an event of default occurs and goes uncured, then Travelers may, without further notice to Ockerlund,

(I) Ockerlund shall be immediately liable for the sum of $664,566.68 (Travelers [sic] judgment amount) less any payments made hereunder, plus interest at 9% per annum of the unpaid principle [sic] balance, plus Travelers' reasonable attorneys' fees, costs and expenses in collecting said amounts and (ii) Travelers may exercise any rights available to it under Illinois law including but not limited to any rights and remedies expressly granted to Travelers pursuant to the Agreement.

(c) Upon Ockerlund's default, as stated above, (I) a judgment order shall be entered in favor of Travelers against the Ockerlunds in the amount of $664,566.68 less any payments made hereunder, plus interest at 9% per annum of the unpaid principle [sic] balance, plus Travelers' reasonable attorneys' fees, costs and expenses in collecting said amounts in the exact form attached hereto as Exhibit B and (ii) Travelers shall be entitled to pursue its judgment previously entered against Susan Ockerlund in Case Number 04 C 3963.

With the parties having entered into this Agreement, the Bankruptcy Court dismissed Travelers's complaint on October 3, 2007. The Court's Order incorporated the Agreement, as it included the following language: "The terms and conditions of the proposed settlement are contained in the attached Settlement Agreement identified as 'Exhibit A'. . . ." The Agreement, however, was not attached to this Order as an exhibit in the Court's file. The Court closed Ockerlund's bankruptcy case on December 3, 2007.

Ockerlund paid Travelers the initial $25,000 and four payments - the last of which occurred in August 2008 - which totaled $5,000. In July 2009, Travelers sent Ockerlund a letter by certified mail indicating that he had defaulted on the Agreement. The letter was incorrectly dated July 6, 2008 (rather than 2009), and Ockerlund claims he received it on July 13, 2009. The letter also incorrectly stated that Ockerlund had not paid the initial $25,000. The letter gave Ockerlund twenty-one (21) days from the date of the letter to get current, or otherwise become liable to Travelers for $664,566.68. On August 3, 2009, Ockerlund sent an e-mail to Travelers's attorney John Sebastian ("Sebastian"), in which he acknowledged receipt of the letter, indicated that the letter failed to acknowledge the initial $25,000 payment, and stated that he did not know the amount he needed to send Travelers to become current. It also requested another letter from Travelers with the correct amount to get current on the Agreement. The e-mail also acknowledged that he sent it twenty-one (21) days after he received the letter.

Sebastian responded to Ockerlund's e-mail on August 3, 2009, and in his e-mail wrote that Travelers acknowledged receipt of the initial $25,000. Sebastian's e-mail also stated that "[p]ursuant to paragraph 4b [of the Agreement], Travelers will seek to enter a judgment in the ...


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