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Fox Valley Laborers' Health and Welfare Fund v. Hugh Henry Construction Inc.

United States District Court, N.D. Illinois, Eastern Division

March 20, 2018

FOX VALLEY LABORERS' HEALTH AND WELFARE FUND, THE FOX VALLEY LABORERS' PENSION FUND, and PAT SHALES, Administrator of the Funds, Judgment Creditors,
v.
HUGH HENRY CONSTRUCTION INC., an Illinois corporation, TRACEY BIESTERFELDT, and MICHAEL GALLAGHER, individuals, Judgment Debtors, and CENTAUR CONSTRUCTION CO., INC., Third-party Citation Respondent.

          Honorable Judge Manish S. Shah

          JUDGMENT CREDITORS FOX VALLEY LABORERS' FUNDS' REPLY IN OPPOSITION TO JUDGMENT CREDITOR STEVEN D. BLANC, LTD'S OBJECTION TO TURNOVER ORDER DIRECTED AT CENTAUR CONSTRUCTION CO., INC.

         Factual Background Two creditors have judgments against Hugh Henry Construction, Inc. The Fox Valley Laborers' Health and Welfare Fund, the Fox Valley Laborers' Pension Fund, and Pat Shales (collectively, “the Funds”), obtained their judgment in this case and are filing this reply. The Funds' judgment has an outstanding principal balance of $301, 121.83 as of the date of this filing. Judgment debtor Steven D. Blanc., Ltd. (“Blanc”) has a judgment for $14, 184.55 in a state court case in Cook County Circuit Court.

         Hugh Henry is owed $20, 257.13 by Centaur Construction Company, Inc. (“Centaur”). Both the Funds and Blanc served third-party citations to discover assets on Centaur. The Funds and Blanc now dispute who is entitled to that money held by Centaur.

         In his Blanc's Response to Judgment Creditor Fox Valley's Motion for Turnover Order Directed at Centaur Construction, Co., Inc. (“Response” [Docket No. 121]), Blanc asserts that on January 12 (all dates 2018 except as noted), Centaur “accept[ed] service of the Third Party Citation to Discover Assets” through Centaur's president, Peter Alexopoulos(Response ¶6). Blanc does not provide any details on how service was achieved, but an email Blanc provided shows that, on January 12, Blanc's lawyer sent a copy of the third-party citation to discover assets to Alexopoulos by email. Alexopoulos responded that day, “I will review and respond over the weekend as I am out in the field today.” Later, on February 8, Alexopoulos responded, “I accept service of the Citation and have also received the Citation via Certified Mail.” (A copy of this email exchange is attached as Exhibit A.) On February 8, Blanc obtained a turnover order to Centaur for the total balance of his judgment, issued by the Circuit Court of Cook County, based on Centaur's answer dated February 6 that it was holding $20, 257.13 (answer attached as Exhibit B).

         The Funds served their third party citation by certified mail, return receipt requested, to Centaur's registered agent, which received it on February 1. (A copy of the certified mail return receipt showing tracking No. 7017 1450 0002 1167 6220 is attached as Exhibit C. A copy of the USPS tracking information is attached as Exhibit D.)

         The Funds also assert a lien through the Uniform Commercial Code, filed with the Illinois Secretary of State on June 20, 2017. (Relevant filings were attached as Exhibits G and H to the Funds' original Motion for Turnover Order Directed at Centaur [Docket No. 107-1]).

         Argument

         The Funds have priority over Blanc in two respects. First, the Funds have priority back to June 20, 2017, based on their UCC Financing Statement. Second, the Funds have priority based on service of their citation through certified mail, which created a judgment lien on February 1. The January 12 emails between Blanc's counsel and Alexopoulos do not establish service of the third-party citation to discover assets for purposes of creating a judgment lien.

         Despite this, Blanc contends that this Court must defer to his February 8 turnover order from the Circuit Court of Cook County under the Rooker-Feldman doctrine. But that doctrine only prevents state court losers from appealing their losses into federal district courts. Here, Blanc is the winner in the state court and the Funds are not challenging his victory. The Rooker-Feldman doctrine does not apply to post-judgment proceedings. Blanc has no other arguments so the Centaur money should be turned over to the Funds.

         I. The Funds Have a Priority Judgment Lien Over Blanc's Judgment Lien Based on The Funds' UCC Filing of June 20, 2017.

         Blanc's Response does not address the Funds' UCC filing of June 20, 2017. Lien priorities between citation-created judgment liens and UCC liens are resolved by looking to the date a Financing Statement was filed in connection with the UCC lien. Laborers' Pension Fund v. A & C Envtl., Inc., 2005 U.S. Dist. LEXIS 7892, *7-8 (N.D.Ill. 2005) (Schenkier, Magistrate J.). Thus, there should be no question that the Funds have a priority lien over Blanc by several months due to this UCC financing statement.

         II. Emailing a Citation to Discover Assets Does Not Create a Judgment Lien.

         Blanc and the Funds both contend they have judgment liens based on their service of a citation to discover assets on Centaur. “The judgment or balance due on the judgment becomes a lien when a citation is served in accordance with subsection (a) of this Section.” 735 ILCS 5/2-1402(m). Where there are two citations served, the earlier-served citation creates the higher-priority judgment lien. Pontikes v. Perazic, 295 Ill.App.3d 478, 485 (2d Dist. 1998).

         Blanc has not presented proof that he served his citation on Centaur “in accordance with subsection (a) of this Section [735 ILCS 5/2-1402]” prior to the Funds' service of their lien, because the only form of service Blanc undertook prior to February 1 was service by ...


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