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Prasad v. Szilagyi

United States District Court, Seventh Circuit

November 18, 2013



JAMES F. HOLDERMAN, District Judge.

Debtor Vineeta Prasad ("Prasad") appeals from an order of the United States Bankruptcy Court for the Northern District of Illinois ("Bankruptcy Court") approving a settlement between Gregg Szilagyi, Trustee ("Trustee") of the chapter 7 estate ("Estate") of Prasad, and Acxiom Corporation ("Acxiom"). For the reasons set forth below, the order (Bankr. Dkt. No. 96[1]) of the Bankruptcy Court is affirmed. Civil Case Terminated.


On July 3, 2009, Prasad filed a voluntary petition for Chapter 7 bankruptcy, and the Bankruptcy Court appointed the Trustee as administrator. After reviewing Prasad's bankruptcy filings-which included no mention of any pending legal claims-and examining Prasad personally at a meeting with her creditors, the Trustee on August 14, 2009 reported that Prasad had no assets to administer. (Bankr. Dkt. No. 12.) In October 2009, the Bankruptcy Court issued an order closing the case and discharging Prasad's debts, which totaled $1, 250, 179.67. (Bankr. Dkt. No. 19.)

In October 2008, approximately one year before filing for bankruptcy, Prasad had filed a charge of discrimination with the Illinois Department of Human Rights ("IDHR") and cross-filed the same charge with the Equal Employment Opportunity Commission ("EEOC") alleging that her former employer, Acxiom, discriminated against her because of her race and her sex, subjected her to sexual harassment, and retaliated against her after she complained about the alleged treatment. (Adv. Dkt. No. 50, 1.)

On September 20, 2010, the EEOC issued Prasad a Notice of Right to Sue on her discrimination charges and Prasad filed a complaint in this district court, captioned Vineeta Prasad v. Acxiom Corporation, Case No. 10-cv-05943 (the "district court case"). The complaint alleged essentially the same conduct by Acxiom about which Prasad complained to the EEOC, but was eventually amended to include a claim for breach of contract under Illinois law. (Adv. Dkt. 18.)

On March 17, 2011, after learning that Prasad failed to disclose her legal claims in her bankruptcy petition, Acxiom moved for summary judgment on the basis that Prasad was judicially estopped from bringing the discrimination action. (Adv. Dkt. No. 24.) The same day, Prasad moved to reopen her bankruptcy case in the Bankruptcy Court. (Bankr. Dkt. No. 20.) On April 5, the Bankruptcy Court granted Prasad's motion to reopen the bankruptcy case, (Bankr. Dkt. No. 23), and on April 11, Prasad amended her Statement of Financial Affairs and other schedules to include the charges filed with the EEOC (Bankr. Dkt. Nos. 24, 25.). Curiously, Prasad amended her schedules to list the EEOC charge as "Dismissed, " but failed to mention the district court case she had filed as a result of the EEOC's decision. (Bankr. Dkt. No. 24, ¶ 4.) One day later, on April 12, the Bankruptcy Court closed Prasad's bankruptcy case again. (Bankr. Dkt. No. 27.)

On April 25, 2011, after learning from attorneys for Acxiom that the district court case was "pending before the [district] court and had the potential to yield assets to administer for [Prasad's] creditors, " the Trustee filed a motion to reopen the bankruptcy case for a second time. (Bankr. Dkt. No. 28.) The Bankruptcy Court granted the Trustee's motion to reopen Prasad's bankruptcy case and Prasad subsequently filed two Amended Schedules B: one on May 13 and another on July 19. Each Amended Schedule B reported the value of the district court case as $80, 000. (Bankr. Dkt. Nos. 32, ¶ 21; 47, ¶ 21.)

Shortly thereafter, the Trustee reached an agreement with Acxiom to settle the district court case and filed a motion asking the Bankruptcy Court to approve the settlement. (Bankr. Dkt. No. 49.) Prasad objected to the settlement, arguing that she was entitled to a portion of the proceeds in the district court case under the personal injury exemption. (Bankr. Dkt No. 55.) After further negotiations, all parties-including Prasad-agreed to a revised settlement agreement. Pursuant to the revised agreement, Acxiom agreed to pay $25, 000 to settle the district court case, $12, 000 of which the Trustee agreed to pay directly to Prasad and her attorney in the district court case. On October 3, 2011, the Bankruptcy Court approved the settlement. (Bankr. Dkt. No. 61.) Following the Bankruptcy Court's approval, however, Prasad refused to sign the revised settlement agreement. As a result, the Bankruptcy Court granted the Trustee's motion to vacate the order approving the settlement (Bankr. Dkt. No. 64) and Prasad continued to litigate her claims against Acxiom in the district court case.

Following the collapse of the settlement agreement, the Trustee moved to substitute for Prasad as the plaintiff on all pending claims in the district court. (Adv. Dkt. No. 41.) The district court granted the motion and substituted the Trustee as the plaintiff for all claims for monetary relief, but permitted Prasad to remain in the case as a plaintiff to pursue non-monetary relief, including reinstatement. (Adv. Dkt. No. 50.)

On June 12, 2013, the district court granted Acxiom summary judgment on all claims other than Prasad's breach of contract claim, in which Prasad alleged Acxiom breached its contract with her when it failed to pay her approximately $27, 000 in commissions allegedly owed Prasad under her compensation plan. (Adv. Dkt. No. 117, 14.) On July 21, 2013, the district court denied Prasad's motion for reconsideration of the court's decision granting Acxiom's motion for summary judgment on Prasad's Title VII claims. (Adv. Dkt. No. 121.)

After the district court's ruling, the Trustee and Acxiom again engaged in settlement discussions and reached an agreement to resolve the breach of contract claim. On June 17, 2013, the Trustee filed a motion asking the Bankruptcy Court to approve that settlement agreement. (Bankr. Dkt. No. 80.) Under the agreement, Acxiom would pay a total of $20, 000 to the Trustee: $17, 500 to settle the Estate's breach of contract claim and $2, 500 to settle the Trustee's claim for attorney's fees. Prasad would receive $1, 200 from the total amount as compensation for her personal property exemption to the settlement. (Bankr. Dkt. No. 80.) Prasad objected to the settlement. (Bankr. Dkt. No. 89.) On August 6, 2013, the Bankruptcy Court held a hearing on the Trustee's motion to approve the settlement (Bankr. Dkt. No. 103) and entered an order approving the settlement the same day (Bankr. Dkt. No. 96).

On October 17, 2013, pursuant to the parties' stipulation, the district court dismissed with prejudice the remaining contract claim in the district court case. (Adv. Dkt. No. 131.)

Prasad now appeals the Bankruptcy Court's ruling, arguing that the Bankruptcy Court abused its discretion by approving the settlement ...

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