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In Re: Prime Development, Inc v. Donald Samson

September 26, 2011

IN RE: PRIME DEVELOPMENT, INC., DEBTOR, HEARTLAND BANK, APPELLANT,
v.
DONALD SAMSON, TRUSTEE FOR PRIME DEVELOPMENT, INC., APPELLEE.



The opinion of the court was delivered by: Stiehl, District Judge:

MEMORANDUM & ORDER

Before the Court is appellant's brief (Doc. 6), appellee's brief (Doc. 10), appellant's reply brief (Doc. 13), and appellant's supplemental reply brief (Doc. 18).

In its supplemental reply brief, appellant Heartland Bank ("Heartland") brings to the Court's attention the Honorable Michael J. Reagan's Memorandum and Order entered February 4, 2011, in the companion appeal*fn1 of First Clover Leaf Bank v. Samson, No. 3:10-cv-442-MJR. Judge Reagan's Order vacated the Bankruptcy Court's Orders of April 16, 2010, and May 24, 2010, and denied the Trustee's Application to Employ Attorney Specially. The Bankruptcy Court's Order dated April 16, 2010, granted the Trustee's Application to Employ Attorney Specially for the purpose of pursuing a class action claim, with the Debtor as a class representative. The Bankruptcy Court's Order dated May 24, 2010, denied First Clover Leaf Bank's motion to vacate order of April 16, 2010 and objection to Trustee's application to employ attorney specially.

Appellant in this case appeals from an Order entered by the Bankruptcy Court on August 24, 2010*fn2 , which denied the following two motions filed by Appellant: (1) the motion to vacate, which sought to set aside the Order dated April 16, 2010*fn3 , granting the Trustee's Application to Employ Attorney Specially for the purpose of pursuing a class action claim against Heartland, with the Debtor as a class representative, alleging that Heartland wrongfully charged interest on promissory notes; and (2) the motion to enforce, which sought to enforce a final, non-appealable order granting relief from the automatic stay entered May 14, 2008.

Appellant asserts that the Order entered by the Bankruptcy Court on April 16, 2010 authorizing special counsel, which was vacated by Judge Reagan in the companion appeal, is the very same Order at issue in this appeal, and therefore, Judge Reagan's Order renders the issues underlying this current appeal fully decided in favor of Heartland. Appellee filed nothing to dispute the assertions made in appellant's supplemental brief.

BACKGROUND

Relevant to this case are proceedings that occurred in both the Bankruptcy Court and in state court, and both will be discussed in the order of their occurrence.

On October 16, 2007, an involuntary petition for bankruptcy, In Re Bankruptcy of Prime Development, Inc., BK 07-32082, was filed in the United States Bankruptcy Court for the Southern District of Illinois ("Bankruptcy Court") against Prime Development, Inc. ("Debtor") under Chapter 7 of the United States Bankruptcy Code. On November 26, 2007, Heartland filed a complaint of foreclosure in Illinois State Court. On January 23, 2008, the Bankruptcy Court entered its Order of Relief for debtor under Chapter 7, and directed the United States Trustee to appoint a trustee. On February 4, 2008, Donald M. Samson was appointed as the successor interim trustee ("Trustee"), and is the current Trustee according to the parties' pleadings. On March 26, 2008, Heartland filed a motion for relief from automatic stay, and on April 10, 2008, the Trustee filed an objection to this motion. On May 14, 2008, the Bankruptcy Court granted the motion for relief from automatic stay. Heartland obtained a judgment of foreclosure in its State Court foreclosure action on May 1, 2008. A judicial sale was conducted, Heartland purchased the property, and on August 21, 2008, the State Court entered its order confirming the sale, and listing a deficiency judgment against Debtor in the amount of $255,472.40.

Nearly two years later, on April 15, 2010, the Trustee filed an application to employ attorneys specially to pursue a potential class action against Heartland, based upon allegations that Heartland wrongfully charged interest on a promissory note.

One day later, on April 16, 2010, Bankruptcy Judge Kenneth J. Meyers entered an Order granting the Trustee's application and allowing him to employ attorneys to pursue the potential class action against Heartland.

On April 29, 2010, the Trustee, through special counsel, filed in Illinois State Court, a petition to vacate and for relief from May 1, 2008, Judgment and August 21, 2008, Order confirming sale, and attached to that petition was a proposed complaint asserting a class action counterclaim against Heartland alleging that Heartland overcharged interest on its loans, as well as requesting a setoff.

On August 6, 2010, Heartland sent to the Trustee a letter and checks in the amount of $104.60 and $102.80 in an attempt to fully satisfy and discharge any claim that the debtor may have against Heartland under the promissory notes. According to appellee, Heartland was trying to "pick off" the claims with checks that represented only a fraction of the value of the claim.

On August 9, 2010, Heartland filed a motion to vacate the April 16, 2010, order of the bankruptcy court, and a motion seeking to enforce the final, non-appealable stay relief order. On August 23, 2010, the Bankruptcy Court held a hearing on Heartland's motion to vacate and motion to enforce. On August 24, 2010, United States Bankruptcy Judge William V. ...


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