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Xcel Supply LLC v. Horowitz

Court of Appeals of Illinois, First District, Fourth Division

February 8, 2018

XCEL SUPPLY LLC, Plaintiff-Appellee,
v.
VICTOR HOROWITZ, Defendant Hydra Properties, LLC; Ahuva Horowitz; and Sundance Methadone Treatment Center, LLC, Third-Party Citation Respondents, Hydra Properties, LLC, Third-Party Citation Respondent-Appellant.

         Appeal from the Circuit Court of Cook County. No. 2009 L 004771, The Honorable Ann Collins-Dole, Judge, presiding.

          GORDON JUSTICE delivered the judgment of the court, with opinion. Presiding Justice Burke and Justice Ellis concurred in the judgment and opinion.

          OPINION

          GORDON JUSTICE.

         ¶ 1 This is an appeal by a third-party citation respondent from a postjudgment proceeding.

         ¶ 2 In the underlying case, plaintiff Xcel Supply, LLC, obtained a judgment against defendant Victor Horowitz in the amount of $468, 021.87. Plaintiff then served a citation on Hydra Properties, LLC (Hydra), the only appellant in this appeal, informing Hydra that it was prohibited from transferring any property to defendant. On September 16, 2015, the trial court entered "a conditional judgment" in favor of plaintiff. On the very next day, Hydra, which is fully owned by defendant's wife, wrote the first of the checks in question to defendant.[1] Between September 17, 2015, and December 17, 2015, Hydra wrote six checks to defendant, totaling $5220, which he admittedly cashed. On October 13, 2016, the trial court ordered Hydra to turnover $5220 to plaintiff within 30 days. On November 14, 2016, Hydra filed a notice appealing this order, as well as an earlier order.

         ¶ 3 On this appeal, Hydra makes several claims. First, Hydra claims that the trial court failed to hold an evidentiary hearing prior to issuing a turnover order, although (1) the trial court stated repeatedly in written orders that it was going to hold a hearing and did, in fact, hold a hearing, (2) Hydra failed to include in the appellate record a transcript or bystander's report for the hearing date or any other court date, and (3) Hydra stated a week before the scheduled hearing that, in its opinion, it was not limited "in any way" in what it could present at the hearing. Second, Hydra claims that the trial court had no evidentiary basis to find that the six checks were defendant's property, although defendant averred in an affidavit that the checks were made out to "A. Horowitz, " that he cashed them and that he spent the money on his family's expenses. Both an order[2] of the trial court and defendant's deposition transcript indicate that he uses the first name "Avigdor, " as well as the first name "Victor, " and Hydra concedes on this appeal that it issued the checks to defendant. Third, Hydra claims that the trial court abused its discretion by failing to consider his late response to plaintiff's turnover motion. However, we have fully considered it, and we fail to see how this response, which included defendant's affidavit that he received and cashed the checks in question, could have undermined the conclusion that the checks were his property.

         ¶ 4 For the reasons more fully explained below, we do not find Hydra's claims persuasive and affirm the trial court's turnover order directing Hydra to pay plaintiff $5220. Plaintiff has not asked this court for interest, so we did not consider that issue.

         ¶ 5 BACKGROUND

         ¶ 6 On April 22, 2009, [3] plaintiff Xcel Supply, LLC, filed a one-count complaint for breach of contract against defendant Victor Horowitz. Xcel Supply, LLC v. Horowitz, 2017 IL App (1st) 152277-U, ¶ 5. After six years of discovery and motion practice, the suit proceeded to a bench trial in 2015. Xcel Supply, 2017 IL App (1st) 152277-U, ¶¶ 15, 22. After trial, the trial court found in favor of plaintiff and awarded it $468, 021.87 in damages on July 17, 2015, and $3312.75 in costs and $153, 746.25 in attorney fees on October 21, 2015. Xcel Supply, 2017 IL App (1st) 152277-U, ¶¶ 30, 32. On June 30, 2017, this court affirmed. Xcel Supply, 2017 IL App (1st) 152277-U, ¶ 112.

         ¶ 7 On August 27, 2015, after the bench trial and the damages award, plaintiff served a citation to discover assets on Hydra. The citation stated, in relevant part:

"You are PROHIBITED from making or allowing any transfer or other disposition of, or interfering with, any property not exempt from the enforcement of a judgment, a deduction order or garnishment, property belonging to the judgment debtor or to which s/he may be entitled or which may thereafter be acquired by or become due to him or her, and from paying over or otherwise disposing of any monies not so exempt, which are due to the judgment debtor. This prohibition shall remain in effect until further order of court or termination of the proceeding. You are not required to withhold the payment of any monies beyond double the amount of the total sum due the judgment creditor."

         ¶ 8 After Hydra failed to appear and answer the citation, [4] the trial court entered an order on September 16, 2015, stating "that a conditional judgment in the amount of $468, 021.87, is entered in favor of Xcel Supply, LLC and against Hydra Properties, LLC as Third Party Citation Respondent in this proceeding." The order further directed the clerk of the court to "issue a summons to confirm the conditional judgment against Hydra Properties, LLC, commanding Hydra Properties, LLC to show cause why the conditional judgment should not be made final." On October 14, 2015, an attorney filed an appearance on behalf of Hydra.

         ¶ 9 On November 24, 2015, Hydra filed a response, in which Ahuva Horowitz certified that, on the date of the service of the citation, Hydra did not have in its possession "any personal property or monies belonging to" defendant. Ahuva Horowitz is defendant's wife and the owner of Hydra. At her deposition, Ahuva testified that she was an owner of Hydra, although she did not know how or when it was first organized, who organized it, or whether it did anything or owned anything. She further testified that she had never done anything for Hydra. In his affidavit, defendant averred that Ahuva Horowitz was the sole owner.

         ¶ 10 On May 12, 2016, plaintiff filed a motion for rule to show cause and for turnover. Attached to its motion was an exhibit containing copies of six cancelled checks. Plaintiff stated in its motion that it had received these copies in an e-mail from Hydra's attorney on January 19, 2016, and plaintiff claimed that they established that defendant was "an authorized signer on Hydra's checking account" and "had signed numerous checks payable to himself."

         ¶ 11 The copies of the six checks show that they were all payable to "A. Horowitz"; were dated between September 17, 2015, and December 17, 2015; and totaled $5220. As noted above, an order of the court and defendant's deposition transcript indicate that he uses the first name "Avigdor, " as well as the first name "Victor." Specifically, the checks were: (1) No. 2014, dated September 17, 2015, for $250; (2) No. 2019, dated October 19, 2015, for $300; (3) No. 2020, dated October 19, 2015, for $1820; (4) No. 2160, dated October 29, 2015, for $570; (5) No. 2162, dated November 13, 2015, for $1780; and (6) No. 2165, dated December 17, 2015, for $500. The copies indicate that the checks were all cashed on the same day that they were written and the signature, which is a series of illegible loops, appears to be the same signature on both the front and back of the checks. In its motion, plaintiff asked the court to order Hydra "to immediately turn over an amount which is not less than $5, 220.000 [sic]" to plaintiff.

         ¶ 12 In an order dated June 2, 2016, the trial court ordered defendant to file its response by June 30, 2016. Instead, defendant filed its response on July 1, 2016, one day late. The trial court subsequently denied defendant's motion to file its late response.

         ¶ 13 Although the trial court denied defendant's motion to file its late response, the response is in the appellate record, and one of the issues that Hydra raises on appeal is whether the trial court abused its discretion by not considering it. In its response, Hydra emphasized that "the checks at issue were all made payable to 'A. Horowitz, ' " without specifying whether "A."-or the payee-was "Avigdor, " defendant, or "Ahuva, " his wife.[5]Hydra did concede that the checks were all "negotiated" by defendant, and that it had produced the copies attached to plaintiff's motion. Hydra argued that these checks were "loans or gifts" to defendant, rather than his assets or income.

         ¶ 14 In its response, Hydra stated that Hydra's manager is Ahuva Horowitz, defendant's wife, and that she owns 100% of the membership interests of Hydra a limited liability corporation.

         ¶ 15 Similarly, in defendant's affidavit, attached to Hydra's response, defendant averred that Ahuva Horowitz is his wife, that she owns 100% of the membership interests of Hydra, and that he "negotiated" the six checks in question, which "were used to pay expenses related to the health and welfare of our children." Defendant's affidavit used the passive voice, stating that the monies "were used, " and thus did not expressly state that he was the one who used the monies to pay the expenses. However, that fact is a reasonable inference, since he admits to being the one who cashed them to use for "our children." Defendant averred that, "[a]t no time between September 17 and December 17, 2015[, ] did Hydra owe" him any money.

         ¶ 16 In his affidavit, defendant argued that, "if the Court rules that such payments were subject to Citation proceedings, then [he] assert[ed] the $4, 000 exemption available to [him] pursuant to 735 [ILCS] 5/12-1001(b)." Section 5/12-1001(b) of the Code of Civil Procedure (Code) provides in relevant part that:

"The following personal property, owned by the debtor, is exempt from judgment, attachment, or distress for rent: ***
(b) The debtor's equity interest, not to exceed $4, 000 in value, in any other property[.]" 735 ILCS 5/12-1001(b) (West 2016).

         ¶ 17 In addition, defendant averred that "Ashman Law Offices" had filed a prior lien against his assets on June 23, 2015. "Ashman & Stein" was the firm that represented plaintiff in the court below. As noted above, after trial in the underlying matter, the trial court had awarded plaintiff $153, 746.25 in attorney fees. Xcel Supply, 2017 IL App (1st) 152277-U, ¶ 32.[6]

         ¶ 18 On August 2, 2016, the trial court entered an order stating that it had held a "hearing on Motion for Turnover, " heard arguments, and would shortly issue a ruling. The appellate record does not contain a transcript or bystander's report for either August 2, 2016, or August 22, 2016, the date when a ruling issued.

         ¶ 19 On August 22, 2016, the trial court entered an order, stating:

"This matter is before the Court on [plaintiffs] Motion for Rule to Show Cause and for Turnover against Third Party Citation Respondent Hydra Properties, LLC. Hydra allegedly repeatedly violated the Citation served upon it on August 28, 2015. [Plaintiff] requests turnover of $5, 220.00, an amount paid to Judgment Debtor Avigdor[7] Horowitz after service of the Citation to Hydra Properties. Hydra failed to respond to [plaintiffs] Motion within the time set by this Court for doing so. It is hereby ordered that:
A. [Plaintiffs] Motion for a Rule to Show Cause is granted.
B. The matter is set for hearing on Thursday, September 29 *** regarding Hydra Properties, LLC's alleged ...

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