The opinion of the court was delivered by: Amy J. St. Eve, District Court Judge:
MEMORANDUM OPINION AND ORDER
Before the Court is Defendant/Counter-Plaintiff Kevin Shields' motion for the entry of an order directing Stanley, LLC, BNR Revocable Trust, Bret A. Broaddus, Associated Bank, Lake Forest Bank & Trust and Wayne Hummer Investments, LLC (d/b/a Wintrust Wealth Management), to immediately turn over certain assets to Shields' undersigned counsel. For the following reasons, the Court grants Shields' motion.
On June 2, 2010, the Court granted Shields' motion for summary judgment against Plaintiff/Counter-Defendant Bret A. Broaddus as to Broaddus' breach of fiduciary duty claim. On September 1, 2010, the Court granted Shields' motion for summary judgment as to his counterclaims against Broaddus, which included a counterclaim for Shields' attorney's fees. Based on the fee-shifting provisions in the parties' agreements, the Court awarded Shields, as the prevailing party, $798,619.16 in attorney's fees on November 12, 2010. On December 16, 2010, the Court entered final judgment in favor of Shields and against Broaddus in the amount of $798,619.16, plus post-judgment interest pursuant to 28 U.S.C. § 1961.*fn1 The Seventh Circuit affirmed the Court's summary judgment order and fee award on December 21, 2011. See Broaddus v. Shields, --- F.2d ----, No. 11-1117, 2011 WL 6396542 (7th Cir. Dec. 21, 2011).
Broaddus has not paid Shields the amount he owes pursuant to the final judgment. Accordingly, Shields has issued a number of citations to discover assets to Broaddus and various trusts, banks, and financial institutions in an effort to recover his attorneys' fees. Shields now seeks an order from this Court ordering Associated Bank, Lake Forest Bank & Trust Co., and Wayne Hummer Investments, LLC (d/b/a Wintrust Wealth Management) to turn over certain of Broaddus' assets to satisfy, in part, the judgment.
I. Wintrust Wealth Management and Lake Forest Bank & Trust Co.
On March 1, 2011, the Clerk of the Court issued, and Shields served, a Citation to Discover Assets on Wintrust Wealth Management Company ("Wintrust") through its Authorized Agent Jim Sommerfield ("Wintrust Citation").*fn2 (R. 280.) Wintrust filed an answer to the Wintrust Citation on April 15, 2010. (R. 293.) In its answer, Wintrust stated that it has an account titled "Lake Forest Bank & Trust Collateral Account FBO Stanley LLC" ("Wintrust Investment Account") with assets containing $1,411,010.63 as of February 28, 2011. (Id. ¶ 2.) It further stated that Broaddus is an authorized signator on that account. (Id.)
On March 3, 2011, the Clerk of the Court issued, and Shields served, a
Citation to Discover Assets on Lake Forest Bank & Trust Co. ("Lake
Forest"), which service was accepted
by David Stein, its attorney ("Lake Forest Citation").*fn3
(R. 285.) Lake Forest filed an answer to the Lake Forest
Citation on April 15, 2010. (R. 292.) Lake Forest's answer states that
it is holding $11,745.47 in checking account number *****587 in
Stanley, LLC's ("Stanley") name ("Lake Forest Checking Account").
(Id.) Stanley is a Florida limited liability company formed on
December 8, 2010, after the Court granted summary judgment against
Broaddus and Shields' Fee Petition, and mere days before the Court
entered final judgment against Broaddus. (R. 315-7.) Broaddus, as
Trustee of the BNR Revocable Trust, holds a 99% interest in Stanley.
Broaddus' daughter, Rachel Broaddus, owns the remaining 1%. (R. 315-8;
315-9.) Broaddus is an authorized signator on the Lake Forest Checking
Account. (R. 292 ¶ 5.)
Lake Forest made two loans to Broaddus that are relevant to this case. Broaddus took out both loans on August 30, 2010 in his name only, and he pledged assets as collateral to secure both loans. (R. 320 at 2.) The first loan was loan number ***354-1 in the amount of $500,000.00 ("354-1 Loan"). (Id. at 2-3; R. 320-2; R. 320-3.) Broaddus pledged the Wintrust Investment Account, which at that point in time was account number ***9130, as collateral for that loan. (Id.; R. 320-3.) During late November and early December 2010, Broaddus initiated a refinance of the 354-1 Loan by a credit agreement in which the borrowers were Broaddus and Stanley. (R. 320-5.) The refinance was given loan number ***913-1, and Broaddus executed the loan documents on December 28, 2010. (Id.) At the same time, he initiated a transfer of the Wintrust Investment Account from his own name to Stanley's name, and the account was renumbered to ***1110.*fn4 (R. 315-12.) The assets in the previous Wintrust Investment Account (account ***9130) were moved into the new Wintrust Investment Account (account ***1110) between January and February 2011, and the name on that new account is "Lake Forest Bank & Trust Collateral Account FBO Stanley LLC." (R. 320 at 3; R. 320-5; R. 320-6.)) Broaddus is currently in default on the loan, and the balance due is $299, 354.10, inclusive of interest and late fees. (R. 320 at 4; R. 292 ¶ 11.)
Broaddus and Standard Bank & Trust Company, as Trustee under a trust agreement dated September 27, 2007, took out a second loan from Lake Forest in the amount of $910,000.00. (R. 320-10.) This loan is in default and in foreclosure in the Circuit Court of Cook County. See Lake Forest Bank & Trust v. Standard Bank and Trust, et al., No. 11 CH 27994. As of November 15, 2011, the balance due on this loan is $962,140.13 plus attorney's fees and costs.
(R. 320 at 4.) The foreclosure remains pending and judgment has not been entered. Broaddus pledged the Wintrust Investment Account, along with other assets, as collateral for this loan. (R. 320 at 5-12; R. 320-2; R. 320-11.)
On December 22, 2011, Shields filed a Motion to Approve a written stipulation entered between Shields, Wintrust and Lake Forest regarding priority to the funds in the Wintrust Investment Account and the Lake Forest Checking Account. (R. 324.) The Court approved the stipulation and entered an order re same on January 3, 2012 (the "Stipulation and Order"). (R. 326; R. 327.) Pursuant to that Stipulation and Order, Wintrust and Lake Forest are entitled to set off $1,307,396.19 from the assets in the Wintrust Investment Account. Wintrust and Lake Forest shall hold the balance of that account, in the approximate amount of $147,318.00, pursuant to the pending Citations under further order of the Court. (Id.) Wintrust and Lake Forest also shall hold the amount of $11,745.47 in the Lake Forest Checking Account pending Citations until further order of the Court. (Id.)
II. Broaddus, Associated Bank, Stanley, and the BNR Revocable Trust
On February 9, 2011, the Clerk of the Court issued, and Shields served, a Citation to Discover Assets on Broaddus ("Broaddus Citation") via certified mail. (R. 266.) Proof of service was returned on March 21, 2011. (R. 315-1.) Broaddus has not answered the Citation, nor has he appeared in Court to respond to it.
On March 8, 2011, the Clerk of the Court issued, and Shields served, a Citation to Discover Assets on Associated Bank, NA ("Associated Bank Citation"). Associated Bank filed an answer dated March 14, 2011, stating that it is holding $1,500.41 in an account in the name of Bret A. Broaddus. (R. 289.)
On October 4, 2011, the Clerk of the Court issued, and Shields served, a Citation to Discover Assets on Stanley through its Registered Agent Carlos Arazoza ("Stanley Citation").
(R. 315-5.) Stanley has not answered the Citation, nor has it appeared in Court to respond to it. On October 4, 2011, the Clerk of the Court issued, and Shields served, a Citation to
Discover Assets on BNR Revocable Trust ("Revocable Trust") via the Trustee, Bret A. Broaddus by certified mail ("Revocable Trust Citation"). (R. 315-6.) The Revocable Trust has not answered the Citation, nor has it appeared in Court to respond to it. Broaddus is the Settlor of the Revocable Trust with the right to all income from the trust and the authority to revoke and terminate the trust as well as the authority to distribute the assets of the trust as he wishes. (R. 315-9 at 2, 5.) The Revocable Trust is a self-settled spendthrift trust and is established under Florida law.*fn5 (Id. at 7-8; 14.) Broaddus executed the trust agreement on October 20, 2010 (id. at 15-17), approximately two months after the Court granted summary judgment against Broaddus and during the time the parties were briefing Shields' Fee Petition. See R. 204 and R. 205 (September 1, 2010). When it was created, the Revocable Trust's corpus consisted of $100.00.
I. Supplementary Proceedings
District courts follow the "law of supplementary proceedings of the state in which they sit." Laborers' Pension Fund v. Pavement Maint., Inc., 542 F.3d 189, 191 (7th Cir. 2008);
Fed.R.Civ.P. 69(a). Accordingly, the Court proceeds under the Illinois statute governing supplementary proceedings, 735 ILCS § 5/2-1402. Supplementary proceedings under § 2-1402 are designed to assist a judgment creditor in discovering assets of the judgment debtor in order to satisfy an unpaid judgment. Pyshos v. Heart-Land Dev. Co., 258 Ill. App.3d 618, 622-23, 196
Ill. Dec. 889, 630 N.E.2d 1054 (1st Dist. 1994). "Section 2-1402 is to be construed liberally, not only providing for the discovery of a debtor's assets and income, but also vesting the courts with 'broad powers to compel the application of discovered assets or income to satisfy a judgment.'" City of Chicago v. Air Auto Leasing Co., 297 Ill. App.3d 873, 878, 232 Ill. Dec. 46, 697 N.E.2d 788, 791 (1st Dist. 1998) (citing Kennedy v. Four Boys Labor Serv., Inc., 279 Ill. App.3d 361, 367, 216 Ill. Dec. 160, 664 N.E.2d 1088 (2d Dist. 1996)); accord Society of Lloyd's v. Estate of McMurray, 274 F.3d 1133, 1135 (7th Cir. 2001). The relevant inquiries in a supplemental proceeding are "(1) whether the judgment debtor is in possession of assets that should be applied to satisfy the judgment; or (2) whether a third party is holding assets of the judgment debtor that should ...