Friday, February 25, 2011

Job Openings at NIU-COL

The NIU College of Law has two Support Professional (SPS) job openings.  They are looking to hire an Assistant Director of Admissions and Financial Aid and a Director of Major Gifts.

These positions are JD preferred and an alum would probably benefit the law school. Very few applications have been submitted. 

Click HERE for a link to the NIU human resources page.  The Director of Major Gifts position is currently posted.  The Assistant Director of Admissions and Financial Aid position has not been posted to the website yet, but it should be up next week.

Tuesday, February 22, 2011

The Co-Debtor Stay.

As you know, the filing of a bankruptcy petition operates as an automatic stay against the commencement or continuation of any act to collect money or property from the debtor (more specifically, the bankruptcy estate), subject to certain exceptions.  See 11 USC 362.

In cases filed under Chapter 13, the automatic stay is extended to co-debtors.  See 11 USC 1301.  Therefore, upon the filing of a Chapter 13 petition, creditors are prohibited from attempting to enforce their rights against other people who did not file bankruptcy, but who are jointly liable with the debtor on a particular debt. 

It is worth noting, however, that the co-debtor stay only applies to consumer debts of the debtor. Consumer debts are defined in Section 101 as those debts incurred by an individual primarily for a personal, family, or household purpose.  There are tons of cases dealing with this issue.  Err on the side of caution, but if the debt is clearly not personal in nature, the creditor may proceed against the co-debtor.

Also, even if it is a consumer debt, the co-debtor stay does not apply if the co-debtor became liable on the debt in the ordinary course of the co-debtor's business.  See Section 1301(a)(1). 

So, there are two considerations.  For the co-debtor stay to apply, the original debt must be consumer in nature and the co-debtor's obligations must not have occurred in the normal course of business.  If one of these factors does not apply, neither will the co-debtor stay.  

Thursday, February 10, 2011

Immigration Enforcement: Laws and "Outlaws" at NIU College of Law

Northern Illinois University College of Law will host Immigration Enforcement: Laws and "Outlaws" on Thursday, March 3, 2011 from 9:00 a.m. – 12:00 p.m. at the NIU College of Law in the Francis X. Riley Courtroom.

This timely symposium on immigration and homeland security law will feature presentations from a distinguished panel of leading experts on a breadth of topics including the Fourteenth Amendment and Birthright Citizenship; media treatment of immigrants; litigation brought by immigrants’ advocates against Immigration and Customs Enforcement (ICE); and state efforts to enforce internal immigration law, with special focus on the controversial Arizona SB1070.

The symposium will feature keynote speaker Lt. Col. Margaret Stock (ret. US Army) from the University of Alaska Anchorage. It will also include presentations from Professor Gabriel Chin and Dr. Celeste Gonzalez de Bustamante of the University of Arizona, as well as Professor Bridget Kessler, Clinical Teaching Fellow from the Benjamin N. Cardozo School of Law. The event will be moderated by NIU College of Law Professor Guadalupe Luna.

The symposium is free of charge and open to the public. Lunch will be provided immediately following the symposium in the Thurgood Marshall Gallery. RSVP is required. To RSVP online and/or view detailed information on the symposium presenters, go to or call 815.753.9655.

3 hours of CLE credit will be available for attorneys.

Wednesday, February 9, 2011

Does Electronic Home Monitoring Constitute "Imprisonment"?

In the Second District's recent decision in People v. Horsman, No. 2-09-0554, slip op. (2d Dist. January 28, 2011), the court considered, for the first time, whether "electronic home monitoring fulfilled the imprisonment requirement" of Section 6-303(d-3) of the Criminal Code. See id. at 2, 3. In Horsman, defendant was charged with felony driving while license revoked and entered an open plea of guilty. Id. at 1. At sentencing, the defendant requested that "he be placed on electronic home monitoring as a means of fulfilling the statutory requirement that he be sentenced to imprisonment." Id. at 2. The defendant argued that electronic home monitoring constituted "imprisonment" under the statute. See id. The trial court rejected the argument, and the defendant appealed. Horsman, No. 2-09-0554, slip op. at 2.

On appeal, the issue was whether electronic home monitoring could be substituted as an alternative for jail under 625 ILCS 5/6-303(d-3) (West 2006). See id. Section 5/6-303(d-3) provides that "Any person convicted of a fourth [or subsequent] violation of this Section is guilty of a Class 4 felony and must serve a minimum term of imprisonment of 180 days if the revocation was for a violation of section 11-401 of 11-501 of this Code…" Id. Defendant had "at least" four prior convictions for driving while license revoked. Id. Therefore, he had to serve a minimum imprisonment term of 180 days because he violated 11-401 or 11-501. Defendant admitted that he had to serve 180 days, but he argued that 303(d-3) allows for those 180 days to be served in home confinement. See id. Defendant argued that "'imprisonment requires that a person be in custody; electronic home monitoring is a form of custody; therefore, home electronic monitoring satisfies the 'imprisonment' condition of section 6-303(d-3)." Horsman, No. 2-09-0554, slip op. at 4.

Lacking a definition for "imprisonment" in the statute, the court began its analysis by first looking to the dictionary's definition of imprisonment," which defined it as "'the act of imprisoning or the state or begin imprisoned.'" Id. "Imprisoned" was defined as "'to put in prison: confine in a jail.'" Id. at 4-5. The court then looked at the definition of "imprisonment" from the Unified Code of Corrections, which defined it as "incarceration in a correctional institution under a sentence of imprisonment…'" Id. at 5 (quoting 730 ILCS 5/5-1-10 (West 2008). This plain meaning analysis of "imprisonment," which the State urged the court to adopt, would seem to indicate that electronic home monitoring would not constitute imprisonment because it takes place outside the confines of a jail or correctional institution. However, the court entertained the defendant's argument that, pursuant the Electronic Home Detention Law (730 ILCS 5/5-8A-3 (West 2008)), there are several instances where a defendant may be permitted to serve a portion of his sentence in electronic home detention, and that a defendant is subject to arrest and prosecution for the crime of escape if he does not comply with his home monitoring conditions. Id. at 5,6. The crime of escape, the court notes, requires that the offender "escaped from a penal institution or from the custody of an employee of a penal institution." Horsman, No. 2-09-0554, slip op. at 6 (citing 720 ILCS 5/31-6 (West 2008). The argument concludes, then, that because failure to comply with home monitoring conditions subjects an offender to escape charges, and because escape charges require that the escape must be from a penal institution, home monitoring must therefore be a penal institution and must therefore be a form of imprisonment. That's the argument, anyway.

The appellate court, though, did not buy defendant's argument. The court determined from the legislative history that legislators intended to use imprisonment as a form of punishment. See id. at 8. The court, noting the freedoms that a defendant on home monitoring would enjoy at home versus the freedoms he would relinquish in a traditional prison setting, held that electronic home monitoring was not a "punishment" that legislators sought to inflict under 6-303. See id. at 8,10. The purpose of 6-303, the court reasoned, was to punish "incorrigible offenders," like the defendant, who "prompted the legislature to enact high penalties." Id. at 9. Further, "The legislature's intent to punish these serial offender would be inconsistent with availability of the relative nonpunishment of electronic home monitoring in lieu of actual incarceration, which includes a county jail." Id. at 9,10. The trial court's judgment denying defendant home electronic monitoring in lieu of jail was therefore affirmed. Id. at 10.

The defendant's argument was not really off-the-mark. The function of both jail and home electronic monitoring is to confine the offender and limit the freedoms he would enjoy as a "free man." I believe the court erroneously reasoned that home confinement is not a punishment because an offender can "eat, sleep, make phone calls, watch television, and entertain guests at his leisure" while at home, Horsman, No. 2-09-0554, slip op. at 8, whereas he cannot in jail. Though inmates may not be able to do these things "at their leisure," inmates in modern penal institutions can still do many of these things quite freely, especially in low-security institutions like jails (vis-a-vis supermax prisons). So the difference is not that an offender in jail has no freedom while an offender on home confinement has freedom (and therefore that an inmate in jail is being punished while an offender at home is not); rather, it is only a matter of the degree to which the offender's freedom is restricted. To be sure, a jail inmate's freedom is more restricted than someone on home confinement. But the freedom of both offenders' is restricted by the boundaries of their confines. Just because someone on home confinement has less restrictions on his freedom within his home than an inmate has on his freedom in jail, does not mean that the freedom of an offender on home confinement is not restricted and that he is not confined. That is akin to saying that five years in prison is not a punishment because it is not as bad as being lethally injected. Both are punishments--just one is more severe than the other. Because freedom is restricted by being confined in one's home, that offender is therefore punished in the same way, though not to the same degree, that an inmate is punished by being sent to jail. Therefore, courts should entertain the idea of electronic home confinement, especially at time when prisons are overcrowding and state's are attempting to trim their budgets.

Tuesday, February 8, 2011

Obstacles to Bringing Chain of Custody Challenges on Appeal Under the Plain Error Doctrine

The Illinois Supreme Court's recent decision in People v. Alsup, No. 108354, slip op. (Ill. January 21, 2011) contemplates what constitutes a "complete breakdown" in the chain of custody. In Alsup, police officers observed what they concluded was the defendant selling drugs near a trash can in an alley in Chicago. See id. at 2. Police approached defendant near the trash can, around which police suspected defendant was hiding drugs. See id. Behind one trash can, officers "found a ziplock bad containing 10 smaller ziplock bags of suspected cocaine and five tinfoil packets of suspected heroin." Id. Defendant was then arrested. Id. The "10 ziplock bags had a total weight of 1.05 grams of cocaine and the 5 tin foil packets contained a total weight of less than 0.1 gram of heroin." Alsup, No. 108354, slip op. at 3.

At trial, the officer who found the drugs testified that he personally transported them back to the station, where he gave them to another officer, who placed the drugs in a tagged bag, inventoried the bag with a number, and gave the bag to a sergeant, who dropped the bag in a "narcotics vault." See id. at 3. The forensic scientist provided stipulated testimony that he had tested ten packets of cocaine and nine packets of heroin. See id. The State then rested, and the defendant moved for a directed verdict, which was denied. Id. at 4. The defendant was convicted on two counts of possession of controlled substances with intent to deliver, in violation of 720 ILCS 570/401(c)(2) and 401(d) (West 2004). See id. at 1, 5.

Defendant appealed, arguing that "the State failed to prove beyond a reasonable doubt the items tested positive for heroin were the same five tinfoil packets of suspected heroin retrieved from the behind the black city garbage can." Alsup, No. 108354, slip op. at 5. Defendant's argument rested on evidence in the record that the officer at the scene had "testified that he recovered five items of heroin," while the forensic scientist testified that he had tested "nine items of heroin." Id. at 5. The appeal was denied, and defendant petitioned for rehearing, which the appellate court granted. Id. The appellate court then held that the State failed to prove that the items seized and the items tested by the chemist were linked because of the discrepancy in the number of packets. See id. at 6. Defendant's conviction on the heroin count was therefore reversed, and the the State appealed to the Illinois Supreme Court. See id.

Before the Supreme Court, the defendant persisted in his argument that "the five-versus-nine discrepancy indicates a 'complete breakdown' in the chain of custody," which "constitutes a failure to prove the identity of the substance which is an element of the offense." Alsup, No. 108354, slip op. at 7. Citing People v. Woods, 214 Ill. 2d at 471, the Court "acknowledged that under limited circumstances defendant may raise a challenge to the chain of custody for the first time on appeal in "'[T]hose rare instances where a complete breakdown in the chain of custody occurs--e.g., the inventory number or description of the recovered and tested items do no match--raising the probability that the evidence sought to be introduced at trial was not the same substance recovered from defendant…" Id. at 8. The Woods decision further states that in order for a challenge to the chain of custody to result in "the conclusion that the State could not prove an element of the offense," the defendant first had to show that there was a "complete failure of proof, there is no link between the substance tested by the chemist and the substance recovered at the time of defendant's arrest." Id. (citing Woods, 214 Ill. 2d at 471). Therefore, so long as the State proves that there is any link between the evidence discovered on the defendant and the evidence tested by the chemist, the defendant cannot successfully argue that there was a "complete breakdown in the chain of custody." The Supreme Court ultimately reversed the appellate court because it found that there was at least some link between the officer's testimony regarding the five packets he found on defendant and the forensic scientist's testimony regarding the ten packets he tested. See id. at 11.

The Alsup holding does not bar defendants from asserting challenges to the chain of custody. Its holding is only limited to chain of custody challenges brought on appeal under the plain error doctrine. The court has essentially ruled in Alsup that chain of custody challenges cannot succeed on appeal under the the plain error doctrine if there is any link between what is found on the defendant and what is analyzed by the lab tech. As you can see in Alsup, it does not take much to show any link--even if the lab tech testified to analyzing almost twice the number of the packets as the officer had found on the defendant. The problem, however, as shown at the original trial, is that the defendant's conviction was initially based on the number of packets that the lab tech analyzed, not the number of packets that the officer testified to finding on defendant. If the State needs to only show that there is any link, it really only has to show that the officer found some packets of heroin on defendant and that the lab tech analyzed some packets of heroin. In many cases this won't make a difference, but it cases were the defendant could face harsher punishment for possessing larger quantities of packets or packets with greater weight, it very much matters how many packets there are and how much they weigh. Because it is so difficult to bring chain of custody challenges under the plain error doctrine, it is therefore best practice for defense counsel to make these challenges during post-trial motions or sooner so that the defendant does not have to resort to challenging the chain of custody on appeal under the plain error doctrine.

Wednesday, February 2, 2011

Advanced Collection Techniques in Third Party Citations

A recent case from the Seventh Circuit Court of Appeals involved several sophisticated collection issues. In Dexia Credit Local v. Rogan, 629 F.3d 612 (2010), the plaintiff had secured a $124 million judgment against Rogan relating to a Medicare and Medicaid fraud scheme that he executed out of a hospital on Chicago's north side.  Rogan abandoned his defense several years into the fraud case and moved to Canada.  The judgment was eventually entered against him by default.

The plaintiff then commenced supplementary proceedings against Rogan, his wife, and trusts controlled by his three adult children.  Supplementary proceedings are post-judgment processes that support the judgment creditor in asset discovery and final satisfaction of judgment, and specifically include citations, garnishments, wage deductions, etc.  This appeal followed the district court's turnover of assets held by the children's trusts during the course of a third party citation to discover assets.

The Court found that none of the issues raised on appeal required  reversal.  Every point decided by the Court was favorable to the plaintiff, and to creditors' lawyers in general.  The Court issued a 40 page opinion which is overflowing with instructions for creditors' lawyers pursuing third parties in search of the debtor's assets.  Below I have linked to four separate posts examining different issues discussed in the opinion, including a review of the statutes and case law involved. 
Supplementary proceedings (citations to discover assets) are governed by Supreme Court Rule 277 and Section 2-1402 of the Code of Civil Procedure.  Every lawyer trying to collect a debt on behalf of his or her client should read these statutes.  They clearly set forth the procedures and remedies available in collection proceedings.  And then for further reference, you should refer back to this blog the next time you think a third party is holding funds on behalf of your debtor.

Finality of Judgments

[This is Part 1 of a four part series concerning advanced collection techniques. The introductory post can be found HERE.]

In the Dexia case, one of the issues raised on appeal was that the plaintiff was attempting to enforce a judgment that was not a final order.  Because that case took place in federal court, the defendants cited Federal Rule of Civil Procedure 54(b).  That rule is substantially similar to Illinois Supreme Court Rule 304(a).  For purposes of this blog, I will refer to the Illinois Supreme Court Rule.

Rule 304(a) is titled "Judgments As To Fewer Than All Parties or Claims--Necessity for Special Finding."  When your judgment order resolves all claims against all parties, it is deemed a final order and there is no need for a special finding.  However, if the judgment does not resolve all claims against all parties--for instance, when there is another defendant out there who you can't get served, or a defendant consents to judgments involving certain claims, but contests other claims--the court must issue a 304(a) finding for the order to be final and enforceable.  A 304(a) finding requires language that the trial court finds "no just reason for delaying either enforcement or appeal or both" of the order.  The rule provides that such a finding may be made at the time of the entry of the judgment or thereafter on the court's own motion or on motion of any party.

Supreme Court Rule 277(a) provides that supplemental proceedings authorized by Section 2-1402 of the Code of Civil Procedure may be commenced at any time with respect to a judgment which is subject to enforcement.  In the absence of a 304(a) finding, any judgment that adjudicates fewer than all the claims against all the parties is not subject to enforcement.

In the Dexia case, the original judgment did not resolve all claims against all parties, nor did it contain a special finding making it a final order.  However, after citations were issued, the trial court entered an order nunc pro tunc dismissing two remaining parties.  At that point, the judgment resolved all claims against all parties and became final.  The Dexia defendants argued on appeal that the citations were invalid, and the turnover orders entered during the citations were void, because the citations stemmed from a non-final judgment order.  They argued that the plaintiff should have started over and reissued new citations after the judgment became final.   

The Court disagreed.  They noted that the defendants made no attempt to explain what purpose would be served by requiring the citations to be re-issued.  They reasoned that requiring the plaintiff  "jump through the procedural hoop" of refiling their citations does not "comport with the efficient administration of justice."

Moreover, the Court found that the district court's actions were consistent with considerations of finality in those situations where a judgment becomes final during an appeal.  The Court cited Lovelette v. S. Ry. Go., 898 F.2d 1286 (7th Cir. 1990) for the proposition that the failure to certify a judgment as final under Rule 54(b) can be cured where the rest of the claims and parties are dismissed during the pendency of an appeal.

So, it is important for creditor's lawyers to consider the finality of their judgments before beginning collections.  But even if the defendant does raise a valid finality argument later in the proceedings, it is worth considering the possibility that the judgment could be finalized retroactively to "comport with the efficient administration of justice," using the Dexia case for authority.

Equitable Theories of Recovery in Third Party Citations

[This is Part 2 of a four part series concerning advanced collection techniques. The introductory post can be found HERE.]

In Dexia, the plaintiff used equitable theories such as alter ego and constructive trusts to recover assets from third parties.  You will recall that the judgment was only against Mr. Rogan, but the court ordered trusts controlled by his children to turnover assets during the course of a third party citation.

The Rogan children argued that the court exceeded its authority when it ordered the turnover of assets. They argued that the equitable theories used against them do not fall within the scope of supplemental proceedings.  They argued that these claims should have been brought against them in new lawsuits.

The Court looked to Supreme Court Rule 277 and Section 2-1402 of the Code of Civil Procedure.  Rule 277(a) allows a judgment creditor to commence supplemental proceedings against a third party the judgment creditor believes has property of or is indebted to the judgment debtor.  Section 2-1402 allows the court to order that third party to deliver up those assets to satisfy the judgment. 

The Court found that the Rogan children's property rights had not been adjudicated in the third party citations.  The Court explained that plaintiff had not tried to hold the children's trusts directly liable for anything.  The plaintiff was only trying to recover assets of Mr. Rogan that were in the possession of the children's trusts.  Basically, the plaintiff alleged that the money still belonged to Mr. Rogan even though he had given it away.

The Court noted that the provisions of Section 2-1402 are to be liberally construed and the courts shall have broad powers to compel the application of discovered assets or income to satisfy a judgment.  The Court found that it was proper to use equitable theories of recover in supplementary proceedings to determine if third parties are holding assets of the debtor.  It would be different, however, if the plaintiff had sought to hold the third parties directly liable.

The Court examined the elements of alter ego and constructive trusts in a separate part of its opinion, so I wrote a separate post about them, which can be found HERE.

Alter Ego and Constructive Trusts

[This is Part 3 of a four part series concerning advanced collection techniques. The introductory post can be found HERE.]

The Rogan children claim error with respect to the district court's imposition of constructive trusts on assets that formerly belonged to their father.  Under Illinois law, a constructive trust is imposed to prevent unjust enrichment by imposing a duty on the person receiving the benefit to convey the property back to the person from whom it was received. Martin v. Heinold Commodities, Inc., 643 N.E.2d 734, 745 (Ill. 1994).  It is a restitutionary remedy which arises by operation of law, and is imposed by a court . . . in situations where a person holding money or property would profit by a wrong or be unjustly enriched at the expense of another if he were permitted to retain it." People ex rel. Daley for Use of Cook County v. Warren Motors, Inc., 483 N.E.2d 427, 430 (Ill. App. Ct. 1985)

A party seeking a constructive trust must establish "the existence of identifiable property to serve as the res upon which a trust can be imposed and possession of that res or its product by the person who is to be charged as the constructive trustee." People ex rel. Hartigan v. Candy Club, 501 N.E.2d 188, 191 (Ill. App. Ct. 1986).  But the Dexia Court did not give much guidance on what exactly the plaintiff had to prove to obtain the constructive trust.  Along those lines, the Court noted that particular circumstances in which equity will impress a constructive trust are as numberless as the modes by which property may be obtained through bad faith and unconscientious acts.

Also, the Court made brief mentions to the theory of alter ego, although the specific issue was not examined on appeal.  So, just to give you a little background, I did a quick Westlaw search.   The alter ego theory would be used when you cannot identify specific property to serve as the res of a constructive trust.  In order to prevail on an alter ego theory in a third party citation, the plaintiff must show a high  degree of control  by the debtor through "evidence of misrepresentation; commingling of funds, assets, or identities; undercapitalization; failure to operate at arm's length; and failure to comply with corporate formalities."  In addition, the plaintiff must show that adherence to the corporate form would give rise to fraud or injustice.  See Main Bank v. Baker, 86 Ill.2d 188 (1981). 

Tuesday, February 1, 2011

Tracing Commingled Assets

[This is Part 4 of a four part series concerning advanced collection techniques. The introductory post can be found HERE.]

So, apparently the Rogan children admitted that the district court traced some of their father's property to their trusts, but they argued that the court never determined whether their trusts still owned any of that property, or if they money in their trusts had come from other sources.  They contend that "no one knows precisely what the trusts own and, therefore, what assets are subject to a constructive trust."

On appeal, they argued that plaintiff was required to establish what happened to their father's assets after they were transferred. They essentially proposed that legitimate funds may have been commingled with their father's assets. They did not offer evidence of such commingling or equivocally argue that commingling occurred. Instead, they argued that nobody knows for sure.

However, even if such commingling occurred, it would not have imposed an additional burden of proof on plaintiff. See In re Estate of Wallen, 633 N.E.2d 1350, 1360 (Ill. App. Ct. 1994) ("[O]nce claimant made a specific showing that the administrator commingled the assets of the corporation with those of the estate, the burden shifted to the administrator to sort out and account for those assets as he was in the best position to know of them."); De Fontaine v. Passalino, 584 N.E.2d 933, 942 (Ill. App. Ct. 1991) (holding that when a trustee commingles his own property with that of the beneficiaries, the burden rests on the trustee to show which property belonged to the trustee before the commingling).

Because the Rogan children did not account for what they claimed to be legitimate funds in their trusts, the Court had no option but to affirm the district court's turnover of assets.

Courthouse Closings

The Kane and DuPage County Courthouses will be closed tomorrow, February 2, 2011.  Click HERE for a copy of the DuPage Count administrative order and HERE for the Kane County order.

I have also received notices that the U.S. Bankruptcy Courthouses in Chicago and Rockford will be closed tomorrow, as will the rest of the Dirksen Federal Building.  See the District Court's website for further details.