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Independent Locomotive Leasing, LLC v. Permian Basin Railways, Inc.

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

September 23, 2019

INDEPENDENT LOCOMOTIVE LEASING, INC., Plaintiff,
v.
PERMIAN BASIN RAILWAYS, INC., Defendant.

          MOTION FOR DETERMINATION AS TO WHETHER BIG SHOULDERS CAPITAL LLC HAS A SECURED INTEREST IN ASSETS OF DEFENDANT AND IF IT DOES TO DETERMINE PRIORITY THEREOF TO CITATION LIEN

          Bucklo, Judge.

         Now comes plaintiff Independent Locomotive Leasing, Inc. by its attorney Richard M. Kates and moves for a determination as to whether Big Shoulders Capital LLC has a secured interest in the Assets, and if it/does to determine priority thereof to the citation lien of plaintiff and as grounds states as follows:

         1. Plaintiff in this case has a judgment against defendant entered on November 28, 2018 in the sum of $582, 720.00.

         2. Unless federal statutes govern the particular circumstances which is not the case here, collection proceedings on federal court judgments are governed by state law. Federal Rules of Civil Procedure, Rule 69, Resolution, Trust v. Ruggiero, 994 F.2d 1221, 1226 (7th Cir., 1993), In re Emerald Casino, 223 F.Supp. 3d 740, 745 (N.D. Ill., 2016).

         3.. A third party .citation in this case issued by the clerk of the United States District Court in Chicago on July 29, 2019 was served on citation respondent Big Shoulders Capital LLC in Northbrook, Illinois which is attached hereto as Exhibit A which was followed by an amended third party citation issued July 29, 2019 which was also served on said citation respondent and is attached hereto and made a part hereof as Exhibit B.

         4. Service of the citation on Big Shoulders Capital LLC made that entity subject to the jurisdiction of this court by Illinois law and service of the citation creates a judgment lien upon all personal property belonging to the judgment debtor in the possession or control of a third party served with the citation, 735 ILCS 5/2-1402(m), City of Chicago v. Air Auto Leasing Co., 297 Ill.App.3d 871 at 874.

         5. Under Illinois citation law if it appears that any property, chose in action, credit or effect discovered, or any interest therein is claimed by any person, the court shall, as in garnishment proceedings, permit or require the claimant to appear and maintain his or her right and the rights of the person cited and the rights of any adverse claimant shall be asserted and determined pursuant to the law related to garnishment proceedings. 735 ILCS 5/2-1402(g).

         I. BIG SHOULDERS CAPITAL IS NOT A SECURED CREDITOR OF.DEFENDENT

         6. Through subpoena and the citation proceedings plaintiff has received materials from Big Shoulders Capital LLC including a Loan and Security Agreement between Iowa Pacific Holdings and its Material Subsidiaries and Big Shoulders Capital LLC which is the basis of the claim of Big Shoulders Capital LLC that it is a secured creditor of defendant Permian Basin and a copy of the relevant provisions of that agreement is attached hereto as Exhibit C.

         7. On page 2 thereof the Borrower under that agreement has the meaning as set forth in the preamble. The preamble on page 1 includes as Borrowers Material Subsidiaries. "Material Subsidiaries" are defined on page 7 as six entities which include defendant Permian Basin. On pages 17-18 is a grant of security interests to secure payment which is stated to include assets of the Material Subsidiaries" which by definition ...includes assets of defendant Permian Basin Railways, Inc.

         8. Of even date with the Loan and Security Agreement, an Equity Pledge Agreement was signed under which defendant Permian Basin Railways as pledgee to Big Shoulders Capital LLC granted it a first priority security interest to all issued and outstanding shares of San Luis & Rio Grande Railroad, Inc. its whollyoowned subsidiary and all additional Equity Interests to secure the due and punctual payment and performance to Big Shoulders Capital, LLC under the Loan and Security Agreement, and the relevant portions of that Equity Pledge Agreement are attached hereto as Exhibit D.

         9. Both the Loan and Security Agreement and the Equity Pledge Agreement included signature lines for defendant Permiann Basin Railways, Inc. which reads:

         PERMIAN BASIN RAILWAYS, INC.

         By: Iowa Pacific Holdings, LLC, ...


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