United States District Court, S.D. Illinois
MEMORANDUM & ORDER
HERNDON, District Judge
an appeal from the bankruptcy court’s November 30, 2016
Order filed by Talat Mahammad Bashir and Naheed Talat Bashir
(hereinafter “Appellants”) concerning Claim 9-2
filed by Kevin and Mary Sievers (hereinafter
“Appellees”). Following a trial on the matter,
the bankruptcy court ultimately allowed Appellees an
unsecured claim in the amount of $57,595.77 against
Appellants. (In re Talat Mahammad Bashir and Naheed Talat
Bashir, BK Case No. 15-31677, Doc. 1). For the reasons
set forth below, the Court AFFIRMS in part and REVERSES in
part the bankruptcy court’s Order.
2008, Appellee Kevin Sievers, a general contractor, built a
seven bedroom residential property at 61 Solar Circle,
Litchfield, Illinois. Sievers was unable to sell the property
because of the market crisis, so in 2010, he entered into a
two-year lease with Appellants Talat and Naheed Bashir. Prior
to the Bashirs, Appellee’s sons were residing on the
lease provided that the Appellants would pay $3000 per month
in rent, the home would remain on the market to be shown
during the rental period, and the Appellants would return the
home “in its present condition” upon vacating the
premises. When the lease expired, Appellants stayed in the
home and continued renting the property month-to-month until
June 30, 2012, when a one-year lease renewal was executed.
The lease renewal agreement raised rent to $4000 per month,
of which $1000 was designated for the cost of repairs to the
home each month. Appellants later vacated the premises in
early July 2013.
moving out of the home in July 2013, Appellees sent
Appellants a bill for $67,000 to cover repairs to the home
following their residency. This amount was above the
approximately $15,000 Appellants had already paid for
repairs. Appellees allege that the Appellants family severely
damaged the property to a tune of roughly $80,000. Appellants
challenged the bill and Appellees ultimately filed suit in
Montgomery County, Illinois, on October 22, 2013.
to the Montgomery County action, on October 23, 2015,
Appellants filed a Chapter 13 bankruptcy petition.
(Bk.Doc. 173). Thereafter, they filed a Schedule F,
setting forth creditors with unsecured non-priority claims,
which identified Appellees Kevin and Mary Sievers as holding
a “contingent, unliquidated, disputed” claim of
unknown value, subject to the pending litigation in
Montgomery County (Bk.Doc. 27). Appellees filed a
“Proof of Claim” (Claim 9-1) on January 28, 2016,
which was later amended in February (Claim 9-2), alleging a
claim of $65,232.96 for damages pursuant to the
aforementioned lease and lease renewal. Appellants objected
to the claim on various grounds. (Bk.Doc. 81).
19, 2016, the bankruptcy court entered a pre-trial order
setting a discovery deadline of July 18, 2016, and scheduled
trial on the Appellees’ claim for August 18, 2016.
(Bk.Doc. 115). On July 22, 2016, Appellants filed a
memorandum regarding the status of the case, in which they
notified the Court that Appellants’ counsel received no
discovery responses from Appellees on or before the July 18,
2016 deadline. (Bk.Doc. 124). Thereafter, on July 26, 2016,
Appellants filed a motion to show cause for Appellees failure
to comply with the bankruptcy court’s May 19, 2016
Order. (Bk.Doc. 129). The motion requested that
Appellees’ claim be disallowed entirely, or in the
alternative, sanctions be imposed in the form of
attorneys’ fees and stricken pleadings. (Id.).
provided discovery on August 1, 2016, and later filed an
objection to the motion to show cause. They argued that the
documents provided were virtually identical to those
documents already provided in the Montgomery County case
(Bk.Doc. 146). A hearing on the motion took place on August
11, 2016, during which the bankruptcy court held that
“Kevin & Mary Sievers are prohibited from
introducing at the trial any new documents that were not
previously in discovery.” (Bk.Doc. 147). Appellants
request for sanctions was denied. The trial on
Appellee’s Claim 9-2 was also continued until October
6, 2016. (Id.). Thereafter, on the Appellants’
motion (Bk.Doc. 164), the evidentiary hearing was again
continued until November 22, 2016 (BK.Doc. 165).
bankruptcy court held a trial concerning Claim 9-2 and
Appellants’ objection to the claim on November 22,
2016, and November 29, 2016. At the conclusion of the trial,
the bankruptcy court announced its’ findings of fact
and conclusions of law on the record (Bk.Doc. 173).
Thereafter, the bankruptcy court issued a written Order
finding that Appellees had an allowed unsecured claim in the
amount of $57,595.77 (id.).
subsequently filed a notice of appeal to have the matter
reviewed by this Court on December 8, 2016 (Doc. 1).
Appellants filed their brief in support of the appeal on
April 7, 2017 (Doc. 17). Thereafter, on May 16, 2017,
Appellees filed their brief seeking that the bankruptcy
court’s order be affirmed in its entirety (Doc. 27), to
which Appellants replied (Doc. 37). The Court set the matter
for hearing, and on July 20, 2017, the Court heard oral
arguments on the appeal (Doc. 41).
Standard of Review
to 28 U.S.C. § 158, a federal district court has
jurisdiction to hear appeals from the rulings of the
bankruptcy court. District courts apply a dual standard of
review in bankruptcy appeals. The bankruptcy judge's
findings of fact are reviewed for clear error, while
conclusions of law are reviewed de novo. First
Weber Group, Inc. v. Horsfall, 738 F.3d 767, 776 (7th
Cir. 2013); Stamat v. Neary, 635 F.3d 974, 979 (7th
Cir. 2011); Wiese v. Cmty. Bank of Cent. Wis., 552
F.3d 584, 588 (7th Cir. 2009) In re ABC-Naco, Inc.,
483 F.3d 470, 472 (7th Cir. 2007). “A finding is
‘clearly erroneous' when although there is evidence
to support it, the reviewing court on the entire evidence is
left with a definite and firm conviction that a mistake has
been committed.” Anderson v. Bessemer City,
470 U.S. 564, 573, 105 S.Ct. 1504, 84 ...