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Harris N.A v. Sheri Harris

September 4, 2012

HARRIS N.A.,
PLAINTIFF-APPELLEE,
v.
SHERI HARRIS, DEFENDANT-APPELLANT STUART LEVINE, DEFENDANT.



Appeal from the Circuit Court of Cook County. No. 10 CH 07536 The Honorable Nancy J. Arnold, Judge Presiding

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

PRESIDING JUSTICE HOFFMAN delivered the judgment of the court. Justices Hall and Karnezis concurred in the judgment.

OPINION

¶ 1 The appellant, Sheri Harris, appeals from the circuit court's ruling granting summary judgment in favor of the plaintiff, Harris N.A., on several counts of its complaint against her and her former husband Stuart Levine, who is not a party to this appeal. The complaint alleged that Levine had defaulted on a note and had fraudulently transferred assets to the appellant to avoid their being recouped by the bank. On appeal, the appellant argues that the trial court erred in finding most of the disputed transfers to be fraudulent, because (1) Levine had no ownership interest to transfer after his assets had been forfeited to the United States government; (2) the transfers were not fraudulent because they were effected for the purpose of maintaining the defendants' home, as required by a forfeiture agreement with the United States; (3) the transfers were not fraudulent because they were made in exchange for adequate consideration; (4) to the extent the transfers were fraudulent, the plaintiff was entitled to only one-half of their value, because the transferred assets were marital property; (5) the circuit court should not have ruled the transfer of a Moore sculpture to be fraudulent, because the plaintiff never so alleged; and (6) the circuit court should not have ruled the transfer of an Andy Warhol portfolio to be fraudulent, because Levine never had an ownership interest in the portfolio. For the reasons that follow, we affirm the circuit court's judgment.

¶ 2 In February 2002, the plaintiff filed its complaint, which alleged that Levine had defaulted on a note and that judgment had been entered against him for more than $3,300,000. The complaint further alleged that, knowing that he was insolvent and acting with the intention of preventing full collection of the judgment, Levine had either transferred several valuable assets to the appellant for no consideration or had sold the assets and then transferred the proceeds to the appellant for no consideration. The complaint specifically mentioned an ownership in Hidden Beach Records, LLC (sold for $50,000); a Mitoraj sculpture (sold for approximately $130,000); "certain artwork" (one sale for $63,500, another for approximately $25,000); a Moore sculpture (sold for $100,000); a federal income tax refund (approximately $25,000); a Jeanne Duval painting (sold for $39,550); a dining room set and other personal property (sold for approximately $63,000 in one instance and $100,000 in another); an Andy Warhol portfolio (sold for $55,000); a car (valued at $32,000); his ownership interest in a Weston, Florida residence (valued at $600,000); and approximately $431,000 of the proceeds of the sale of his and the appellant's Highland Park home. The plaintiff alleged that these transfers violated the Uniform Fraudulent Transfer Act (Act) (740 ILCS 160/1 et seq. (West 2010)), and it asked, among other things, that the court declare the transfers void and enter judgment against the appellant.

¶ 3 The appellant responded by filing a motion to dismiss that argued, inter alia, that Levine had forfeited to the government his interest in the disputed property and that she gave reasonable consideration in exchange for the property because she had legal right to half of it. In support of her motion, the appellant presented Levine's 2006 plea agreement in case number 05-CR-691 in the Northern Division of the United States District Court. That agreement contains the following provision regarding Levine's forfeiture:

"[Levine] further acknowledges that the government will file a civil complaint against certain property, namely $5 million, alleging that the property is subject to forfeiture. [Levine] relinquishes all right, title, and interest he may have in this property that is used to satisfy the amount due and further agrees to the entry of a judgment against him, extinguishing any interest or claim he may have had in the property subject to forfeiture, regardless of where they may have been transferred or hidden. *** [Levine] agrees that no transfers of property available to satisfy this judgment can be effectuated by [him] or his agents without concurrence of the government or approval of the Court. To the extent that [Levine] owns any property available to satisfy this judgment jointly, he agrees that any efforts to sell, to transfer, or otherwise convey his interest shall be subject to the same conditions. Further, [Levine] agrees [to] maintain all financial obligations relating to any property so as to preserve and protect the availability of the property to satisfy the forfeiture judgment."

¶ 4 The appellant also presented a March 2008 stipulated agreement between her and federal prosecutors. That agreement recited Levine's liability in a forfeiture suit, and it described the forfeiture suit as follows:

"5. On February 21, 2008, the United States filed a verified complaint for forfeiture *** for funds in the amount of five million dollars, *** to be satisfied by proceeds of the real properties located [in Highland Park, Illinois] and [Weston, Florida].

7. On March 5, 2008, [Levine] entered into a stipulated agreement with the United States resolving his interests in and claims to the defendant properties and *** agreed to the entry of a judgment against him in the amount of five million dollars and waived any right ***, title or interest he may have in the defendant properties or the proceeds from the sale of the properties ***.

8. The defendant properties representing the substitute res to be sold so that proceeds may be applied to the aforementioned outstanding agreed five million dollar judgment against [Levine] are held jointly by [Levine] and [the appellant], his spouse, as part of their marital estate. The parties agree that the assets of the marital estate of [Levine and the appellant] have an aggregate value of approximately $4,230,256. [The appellant] understands and acknowledges [Levine's] obligation to satisfy this forfeiture judgment ***. The United States understands and acknowledges that [the appellant] has a legal right, title and interest to 50 percent of the value of the assets of the marital estate she shares with [Levine], and that the United States may not seek to satisfy the forfeiture judgment against [Levine] with [her] interests in the marital estate.

9. In consideration of the foregoing and in resolution of the respective interests of [the appellant] and the United States in the assets of the marital estate, [the appellant] and the United States agree to the forfeiture of fifty percent (50%) of the aforementioned agreed value of the marital estate less $250,000 which amount the parties agree approximately equals $1,865,128, in partial satisfaction of the forfeiture judgment. On March 4, 2008, a purchase and sale agreement *** was executed between [Levine, the appellant], and a prospective buyer for [the Highland Park property] in the amount of $3,850,000.00. *** From the closing of the [Highland Park property], the United States, in satisfaction, will receive approximately $1,865,128 of the net proceeds ***. ***

10. *** [T]he United States agrees that upon the partial satisfaction of the forfeiture judgment described above, it will have no further claim and will take no further action, including administrative, civil or other criminal proceeding against any [of] the property, real or personal, in which [the appellant] presently has an interest or claim.

11. [The appellant] further agrees that while the [Highland Park] property is in the process of being marketed for sale and until such time as the completed sale has closed ***, she must maintain the defendant real properties and continue to satisfy all financial obligations associated with the real properties in order to preserve and protect these real ...


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