United States District Court, N.D. Illinois, Eastern Division
DANIEL E. BUDORICK, Appellant,
HEATHER BUDORICK, MARLIYN MANERI, VINCENT MANERI and HOLLISTER INCORPORATED, Appellees.
MEMORANDUM OPINION AND ORDER
D. Leinenweber, United States District Judge.
an appeal of three Orders the Bankruptcy Court issued in the
course of Daniel Burdock's Chapter 13 bankruptcy
proceedings. For the reasons stated herein, the judgment of
the Bankruptcy Court is affirmed.
Budorick (“Daniel”) appeals three Orders issued
in his bankruptcy proceedings, with an Illinois divorce court
decree regarding the disposition of non-transferrable stock
at the heart of Daniel's appeal. (See Judgment
of Dissolution of Marriage (“Dissolution J.”),
Ex. 1 to Mot. to Stay, Dkt. No. 4.) Heather Budorick
(“Heather”) filed for divorce from Daniel in Cook
County in March 2014. (Dissolution J. at 2.) Heather works
for Hollister Incorporated (“Hollister”).
(Id. at 3.) Heather owns common stock in
Hollister's parent company, John Dickinson Schneider,
Inc. (“JDS”) (Id. at 8.) Heather can
purchase JDS stock as a benefit of her employment.
(See Daniel's Resp. to Heather's Obj. to
Daniel's Exemption Claim at 26, Ex. 6 to Suppl. to
Bankruptcy Appeal, Dkt. No. 6.) JDS's articles of
incorporation set restrictions on who can own JDS common
stock and whether and when that stock can be transferred:
absent JDS's express consent, the shares cannot be
transferred to any other person or entity other than JDS
under any circumstances. (Id.) JDS repurchases its
stock from the employee once the employee leaves Hollister.
judgment dissolving Heather and Daniel's marriage, issued
on November 28, 2018, the divorce court found that 2/7 of
Heather's JDS stock was traceable to funds from her
parents' bank accounts; because those shares were
purchased with gift funds, they were not marital property.
(Dissolution J. at 8.) The court held that the other 5/7 of
JDS stock, valued at $105, 268, was marital property to be
split between Heather and Daniel. (Id.) The
Dissolution Judgment provides:
JDS stock - The Court finds that HEATHER traced the funds
from her parents to separate back accounts on which DANIEL
was not named, and checks were written by HEATHER from those
accounts to the company to purchase the JDS stock. HEATHER
traced by clear and convincing evidence the use of these
gifted funds to purchase the stock in 2013 and 2014. .
.HEATHER's JDS stock is therefore 2/7 non-marital
property and 5/7 marital. The value provided by the company
was as of May 18, 2018 indicating that the stock was worth
$147, 375 as of December 31, 2017, the latest valuation date.
Accordingly, 2/7 of that amount ($42, 107) shall be assigned
to HEATHER as her non-marital property and 5/7 ($105, 268)
shall be deemed marital property to be divided equally
between HEATHER and DANIEL.
(Id. (internal citations omitted).) The Dissolution
Judgment also awarded Daniel half of Heather's 401(k)
account and half of the value of Heather's
“Hollishares” account. (Dissolution J. at 14-
15.) Hollishares is a “non-contributory, tax qualified
defined contribution profit sharing plan designed to provide
retirement benefits to Hollister's non-union employees in
the United States.” See DeFazio v. Hollister,
Inc., 854 F.Supp.2d 770, 776 (E.D. Cal. 2012).
January 7, 2018-after Heather filed for divorce but before
the state court issued the Dissolution Judgment-Daniel filed
a petition for Chapter 13 bankruptcy in the Northern District
of Illinois. (See In re Daniel E. Budorick, No. 18 B
426, Dkt. No. 1.) In Bankruptcy Court, Daniel argued that the
Dissolution Judgment requires that Heather transfer to him
half of the marital JDS shares, and prohibits Heather from
compensating Daniel by giving him the cash value of his
portion of the shares. Daniel also claimed his JDS shares
were an exemption from the bankruptcy estate because they are
a retirement plan under 735 ILCS 5/12-1006. Daniel issued
subpoenas to Hollister, demanding a broad range of
information, including reports to shareholders and year-end
reports that Hollister claimed were confidential and
unrelated to the bankruptcy litigation.
Bankruptcy Court subsequently ruled that: (1) Daniel received
a money judgment from the state court rather than the JDS
shares; (2) regardless, the JDS stocks were not part of a
qualified retirement plan and thus not exempt from the
bankruptcy estate; and (3) the subpoenas to Hollister were
irrelevant given the court's other rulings and must be
quashed. (See Order on Mot. to Vacate, Dkt. No. 1-5;
Order on Obj. to Debtor's Claim of Exemption Dkt. No.
1-6; Order on Mot. to Quash, Dkt. No. 1-4 (collectively, the
“Orders”).) Daniel now appeals the Orders.
appeal, a bankruptcy court's legal conclusions are
reviewed de novo. In re Airadigm
Communications, Inc., 616 F.3d 642, 652 (7th
raises the following arguments on appeal: (1) the Bankruptcy
Court violated the Rooker-Feldman doctrine and erred
when it held that Daniel had a money judgment rather than a
right to have JDS shares transferred to him; (2) the
Bankruptcy Court erred in granting Hollister's Motion to
Quash Daniel's subpoenas; (3) the Bankruptcy Court erred
in granting Heather's objection to Daniel's Claim of
Exemption and ruling that the JDS shares were not a qualified
retirement plan and therefore an asset exempt from the
bankruptcy estate; and (4) the Bankruptcy Court erred in
issuing the Orders because the state court order was stayed
and unenforceable under 735 ILCS 5/2-1203.
contends that the Bankruptcy Court violated the
Rooker-Feldman doctrine in holding that the
Dissolution Judgment was a money judgment because that
finding contradicted the state court judgment. The
Rooker-Feldman doctrine is a subject matter
jurisdictional bar on federal court claims that seek to set
aside a state court judgment in any forum other than the
United States Supreme Court. See e.g., Jakupovic v.
Curran, 850 F.3d 898, 902 (7th Cir. 2017). Federal court
claims “that directly seek to set aside a state court
judgment are de facto appeals that are barred
without further analysis.” Id. A claim is also
barred if it is “inextricably intertwined with a state
court judgment.” Id. (citing Sykes v. Cook
Cty. Cir. Ct. Prob. Div., 837 F.3d 736, 741- 42 (7th
Cir. 2016)). The ultimate question is whether the district
court is “essentially being called upon to review the
state court decision.” Id. The determination
of whether a federal claim is inextricably intertwined with a
state court judgment “hinges on whether the federal
claim alleges that the injury was caused by the state court
judgment, or alternatively, whether the federal claim alleges
an independent prior injury that the state court failed to
remedy.” Id. If a federal claim is
inextricably intertwined with a state court judgment and
indirectly seeks to set that state court judgment aside, the
federal court must determine “whether the plaintiff had
a reasonable opportunity to raise the issue in state court
proceedings.” Id. If a plaintiff had a
reasonable opportunity to raise the claims in state court and