New Proof of Claim forms in Bankruptcy Court

Proof of claim forms in bankruptcy court have been revised.  The new forms will become effective December 1, 2011.

HERE is a link to the new form.  HERE is a link to the Committee Notes explaining the changes on the new form.  I have updated the link in the Forms Archive so you can still come to the Northern Law Blog every time you need a POC form.

You will also recall that the Northern District of Illinois no longer mails out claim forms.  I discussed that issue several weeks ago in THIS post.

Illinois College Expenses: Child who is Third-Party Beneficiary of Marital Settlement Agreement can Sue for Breach of Contract

Last month the Illinois Supreme Court ruled that a Petition to Allocate College Expenses is a modification request which only applies to expenses accruing post-filing. (IRMO Petersen, 2011 IL 110984) This month the First District held that the bar to retroactive awards does not apply to the third party beneficiary of a Marital Settlement Agreement suing for breach of contract.

The Spircoffs entered a Marital Settlement Agreement (MSA) on January 28, 1988 in which the parties agreed that each “shall contribute” to their child’s college expenses. The MSA became part of the divorce judgment. In 2009, after he finished his college education, the Spircoffs’ son filed a breach of contract action as a third party beneficiary of the MSA. The court agreed that the son was a third party beneficiary and had standing to enforce the MSA.

The court then distinguished the Spircoff situation from Petersen because in Spircoff i) the issue of college expenses was not expressly reserved, and ii) “the obligations of the parties for educational expenses was clearly and affirmatively stated” in the MSA. The lack of an expense allocation or allocation methodology in the MSA – for example, by dollar amount or percentage – did not bother the court. It reasoned that because college expenses are in the nature of child support they are always modifiable and the trial court retained jurisdiction to “make specific allocations” to resolve any dispute that later developed between the parties.

The court also said Petersen was “inapplicable” because Spircoff was not an action to modify a support obligation: it was a breach of contract action by a third party beneficiary.

See IRMO Spircoff, 2011 IL App (1st) 1103189

Submitted by
Brian D. Moore
www.napervilledivorcelaw.com
brian@napervilledivorcelaw.com

Inside Job

Some of you may have heard about the theft of nearly 4 kilograms of heroin from outside a Will County sheriff's substation last week.  According to the Chicago Tribune, heroin retails on the street for more than $500,000 per kilo when broken down and sold in smaller amounts.  

Not only was the heroin worth about $2 million, but it was probably worth more than that to the people responsible for transporting it through Will County.  A guy named Jose A. Zamago-Mena was arrested with the heroin in February.  Mr. Zamago-Mena's former employers probably have a pretty strong interest in preventing him from testifying against them in exchange for a reduction of his own charges.  

There is no need for Mr. Zamago-Mena to testify against anybody, however, if the charges against him are dismissed.  Will County can't make a case against anybody without the drugs.  No evidence, no case.  I'm completely speculating here, but it is entirely possible whoever stole the heroin was paid off by the bad guys.  Either way, whether it was bribery or only theft of evidence, several serious crimes were committed, and it sure looks like an inside job.  

The heroin was apparently stored in a shipping container that was placed in an outdoor parking lot ordinarily used to store seized vehicles.  I don't know exactly where the theft occurred, or how secure that lot was, but I have been to a storage lot used by the Aurora Police Department for the same purpose.  The lot that I visited was simply surrounded by chain link fence.  Not too secure.  Also, the storage container was apparently just locked with a standard padlock.  If someone can cut through a chain link fence, they can also cut open a padlock.  Why was $2 million worth of drugs that could probably fit inside a suitcase stored outside at a "substation" out in the middle of nowhere?  Why wasn't it stored inside the police department in a secured area where all visitors would have to show credentials and sign a visitor's log?  

Another article in the Chicago Tribune stated that the FBI has taken over the investigation into the stolen heroin.  I bet there were several Will County employees with butterflies in their stomachs when that news was announced.  I'm glad the FBI got involved though.  I wasn't too surprised to read that in the Tribune.  This was obviously an inside job and Will Count can't be trusted to investigate. The Tribune article stated that a "buffet" of various other narcotics from closed cases were left untouched during the theft.  All that was stolen was the heroin from the open prosecution of Mr. Zamago-Mena.  There is no other explanation.  A cop did this.  

There were some statements in that article that did surprise me, however.  First, Will County Sheriff Paul Kaupas said that it was his daughter, Jana Schaeffer, a coordinator who works in the evidence section of the department, who moved the heroin outside into the shipping container.  Then, Sheriff Kaupus acknowledged that it was his son-in-law, and Jana's husband, Brett Schaeffer, who leads the gang suppression unit that arrested Mr. Zamago-Mena with the heroin.  Then, Deputy Chief Ken Kaupas, another relative of the Sheriff, said in a statement that "a mistake was made but we've already taken steps so this will never happen again."

But, apparently neither Paul Kaupas, Ken Kaupas, Jana Schaeffer, nor Brett Schaeffer have lost their jobs.  That is what surprised me, although I am certainly not accusing any one of them of doing anything illegal.  What also surprised me was that Will County is such a family-friendly place to work.  I neither live nor work in Will County, so it just took me by surprise to see the Sheriff's whole family in leadership positions in the department. 

Anyway, hopefully it won't be too much longer before the FBI announces big time arrests at the Sheriff's department.  I'll keep you posted if I learn anything new.      

College Expenses are Child Support and subject to Modification Rule

College Expenses are Child Support and subject to Modification Rule

The Illinois Supreme Court has ruled that college expenses are a form of child support and a petition to allocate them is a modification request subject to Section 510 of the Illinois Marriage and Dissolution of Marriage Act.

Janet and Kevin Petersen had three sons, then divorced. The divorce decree reserved the issue of college expenses. Eight years later Janet filed a Petition to Allocate College Expenses. At that time the oldest boy had finished college, the middle boy was in college, and the youngest was still in high school. The trial court allocated 75% of all college expenses to Kevin, including expenses incurred before Janet filed her Petition. Kevin appealed.

The Supreme Court held that college expenses are a form of child support and are subject to the section addressing modification. Reserving the issue in the divorce decree made no difference because the word modify plainly includes any post-decree change to the parties’ obligations. Because the original decree did not require either parent to pay college expenses the Petition “sought to change the status quo” which made it a request to modify child support.

Because the Petition was a request to modify support, and by rule such requests were not retroactive, Kevin could not be required to pay amounts incurred before the Petition was filed.

BUT the Court’s instructions on remand said that when determining how to allocate the college expenses, the trial court needed to analyze each parent’s financial resources including “the fact that Janet’s financial resources may have been depleted” by paying for the earlier college expenses.

IRMO Petersen, 2011 IL 110984

Submitted by
Brian D. Moore
http://www.napervilledivorcelaw.com/
brian@napervilledivorcelaw.com

Indiana lawyers have more fun.

We need to sign up this guy as a contributor to the Northern Law Blog.

Welcome Midwest IEC!

I had the opportunity to speak to the Midwest Independent Electrical Contractors Association late last week.  I want to thank Kevin McNulty and the rest of the Board for the hospitality and the pizza.

Some of the members in attendance that evening had questions about the mechanics lien process.  I directed people to this blog, but there is a lot of information on this site so I wanted to make it easier to find the stuff that you guys were looking for.

HERE is a link to all of the mechanics lien articles I have written on this blog.

HERE is a link to the mechanics lien cheat sheet that I told the members about last week.

HERE is a link to the subcontractor's notice to homeowners that must be sent out within 60 days of your first performing work or delivering materials to the job site.  Again, this notice only applies to subcontractor jobs involving owner occupied, single-family residences.  And remember that I do not practice law in Indiana.  On the form, remember to fill in the date that you first provided services into the middle of the document.

Lastly, always remember that it is generally advisable to speak to a lawyer about your specific situation.  Mechanics liens are very technical and even a minor mistake can defeat the whole process.  

The Northern District of Illinois will no longer mail Proof of Claim forms.

Effective Wednesday, September 21, 2011, the U.S. Bankruptcy Court for the Northern District of Illinois, will no longer include a Proof of Claim form with 341 notices or Chapter 7 notices establishing a claims deadline. This is a cost-savings measure following a study that showed less than 5% of the Proof of Claims included with the Court's notices were returned. 

This makes sense to me.  I haven't used the mailed forms the past couple of times that I have filed claims.  As soon as I receive notice of a Chapter 13 filing, I usually print the form myself from the Northern Law Blog's forms archive and have it filed long before the official form arrives in the mail 7-10 days later.  

Visit the Forms Archive on the right for the latest version of the POC form.

Condo/Homeowners Assessments in Bankruptcy

Section 523(a)(16) of the BAPCPA provides for an exception to discharge for assessments that come due after the bankruptcy petition is filed.  Associations can, therefore, pursue their members for assessments that accrue after the date of filing, but not those that accrue before the date of filing.

A new opinion issued this week by Judge Squires deals with an interesting situation where the debtors' unit flooded just two days before their bankruptcy filing.  Then, several months after the bankruptcy filing, the association levied a special assessment against all unit owners to cover the cost of the flooding.

The association sent several letters and notices to the debtors without obtaining relief from the stay or otherwise seeking the guidance of the bankruptcy court.  When those notices went unanswered, the association filed suit in state court.  The debtors then moved for sanctions against the association in bankruptcy court for a willful violation of the discharge order.

The issue for the bankruptcy court was whether this special assessment was a pre-petition or post-petition debt.  The court looked to the language of Section 523(a)(16), which excepts from discharge any assessments that "come due and payable" after the petition is filed.  The court did not give much weight to debtors' argument that the special assessment was related to a pre-petition obligation that arose on the date of the flooding.  Rather, the court looked to the date on which the special assessment came due and payable, which was after the petition date. 

HERE is a link to the opinion.

Protecting Client Confidentiality When Using Work Email Accounts

A recent ABA Ethics Opinion states that lawyers have a duty to warn clients about using an employer’s device, such as a work computer or work email account, to correspond with their lawyers. Clients may not be afforded a ‘reasonable expectation of privacy’ when they use an employer’s computer to send e-mails to their attorneys or receive e-mails from their attorneys. As you know, the attorney-client privilege will be destroyed if the communication is viewed by a third party.

ABA Model Rule of Professional Conduct 1.6 (a) explains that a lawyer must not reveal any information relating to representation of the client without consent, and must competently protect the confidentiality of the client. Considering that employers often have policies reserving a right of access to employees’ communications via the employer’s e-mail account, computers or other devices, such as smart phones and tablet devices, it is essential to warn the client to be careful of what he or she says, especially in an employment case involving the employer.