Woolard v. Woolard

Filing 216

MEMORANDUM Opinion and Order Signed by the Honorable Nan R. Nolan on 6/26/2012.Mailed notice(lxs, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
JOHN WOOLARD,
Plaintiff,
v.
ROBERT WOOLARD,
Defendant.

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Case No. 05 C 7280
Magistrate Judge Nan R. Nolan

MEMORANDUM OPINION AND ORDER
Before the Court is Defendant Robert Woolard’s Amended Motion to Terminate
Third Party Citations to Discover Assets. On January 31, 2012, Magistrate Judge
Ashman held a hearing on the motion and determined that additional briefing was
necessary to decide the issue. After the hearing, Respondent Charles Woolard
(“Respondent”), Defendant’s son, also filed his Motion to Terminate Third Party
Citations to Discover Assets seeking substantially the same relief as Defendant.
Plaintiff John Woolard, Defendant’s nephew, subsequently filed the supplemental
briefing Judge Ashman requested on April 25, 2012. For the reasons stated below,
the Court finds that both Defendant’s and Respondent’s motions should be granted
in part and denied in part.
The facts underlying this case were fully discussed in Judge Ashman’s earlier
summary judgment order and are not repeated here. See Woolard v. Woolard, No.
05 C 7280, 2007 WL 2789097 (N.D. Ill. Sept. 19, 2007), aff’d, 547 F.3d 755 (7th Cir.

2008). In short, Plaintiff alleged that Defendant, the trustee of a trust created for
Plaintiff’s benefit, breached his fiduciary duty to Plaintiff and failed to keep proper
accounting records. Judge Ashman granted summary judgment in favor of Plaintiff
and eventually found that Defendant was liable to him in the amount of
$1,624,613.61. [Dckt. 74.] Numerous citations to discover assets followed. These
included a citation to Lake Forest Bank & Trust, issued on March 27, 2008. The
parties allege that Lake Forest Bank is the successor-in-interest to Wayne Hummer
Trust Co. A separate citation was issued to Wayne Hummer Trust on April 3, 2008.
On March 6, 2009, an additional citation was issued to Respondent. Defendant and
Respondent now seek to terminate all three of the citations.
Under Rule 69, supplementary proceedings that aid the enforcement of a
judgment are carried out in accordance with the law of the forum state. Fed. R. Civ.
P. 69(a). In Illinois, a citation to discover assets is governed by Illinois Supreme
Court Rule 277, which states that a supplemental proceeding:
continues until termination by motion of the judgment creditor, order
of the court, or satisfaction of the judgment, but terminates
automatically 6 months from the date of (1) the respondent’s first
personal appearance pursuant to the citation or (2) the respondent’s
first personal appearance pursuant to subsequent process issued to
enforce the citation, whichever is sooner.
Ill. Sup. Ct. R. 277(f). The Rule also provides that a court may grant extensions of
time beyond the six months, “as justice may require.” Id.
Defendant and Respondent argue that, absent any court order or motion after
the three citations were first issued, the citations have already expired under the
terms of Rule 277. Accordingly, these parties ask the Court to enter an order
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decreeing that the three citations at issue are formally terminated. In support,
Defendant and Respondent cite Judge Ashman’s prior ruling that Rule 277 does not
justify extending an expired citation because the purpose of the Rule is to force
judgment creditors to move promptly in enforcing the judgment. See Vance v.
Dispatch Mgmt. Serv., No. 99 C 6631, 2002 WL 773840, at *3 (N.D. Ill. April 26,
2002) (citing King v. Ionization Int’l, Inc., 825 F.2d 1180, 1188 (7th Cir. 1987)).
This argument is unavailing because the parties have failed to consider the
full scope of Vance. Although Supreme Court Rule 277 encourages creditors not to
sit on their rights, Vance was clear that it does not necessarily preclude the
extension of a citation that has already expired under the Rule’s automatic
termination provision. Vance states: “As long as no material harm is done, and the
purposes of Illinois Supreme Court Rule 277(f) are not unduly thwarted, we believe
that trial courts may extend the time of supplemental proceedings beyond the six
months as justice may require regardless of whether the six months provided for by
Illinois Supreme Court Rule 277(f) have expired.” 2002 WL 773840, at *3 (emphasis
added). Subsequent caselaw has echoed this holding. See United States v.
Macchione, 660 F. Supp. 2d 918, 922 n.2 (N.D. Ill. 2009) (“Notably, the language of
the Rule does not require that the request for an extension be made prior to the
expiration of the six-month period.”). As Vance noted, the six-month time
requirement under Rule 277(f) is not jurisdictional. 2002 WL 7783840, at *3 (citing
King, 825 F.2d at 1188). The only limitation is that an order cannot be given

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retroactive effect if doing so would destroy a subsequent lien. Id. Neither Defendant
nor Respondent argues that is the case here.1
The relevant issue, therefore, is whether justice requires the extension of
citations against Respondent and the two trust companies. In his supplemental
brief, Plaintiff concedes that Lake Forest Bank and Wayne Hummer Trust have
fully complied with the citations, and he removes his opposition to terminating the
citations to these institutions. The citation against Respondent presents a very
different picture. Respondent appeared for his citation examination on March 17,
2009. He was asked if his father had transferred “any property, income, assets,
money, anything to you[,] your spouse[,] or your children.” Respondent answered
unambiguously, “No.” (Resp. Ex. A at 18.) Later, a citation to discover assets was
issued to Computershare Trust Company on January 12, 2012. Plaintiff learned
through that citation that on June 17, 2008, Defendant had, in fact, transferred
43,667 shares of stock in a company known as Natural Resources to each of his
three children, including Respondent. (Id. Ex. F.) This fact directly contradicts
Respondent’s citation testimony.
For his part, Respondent claims that Plaintiff was fully apprised at Defendant’s
own citation examination that Defendant had transferred “all of his assets to his
wife and children,” and therefore Plaintiff could not have been surprised by the
Respondent claims that he was unable to sell his home, which he acquired from
Defendant, because of the citations to Lake Forest Bank and Wayne Hummer Trust. On
April 3, 2012, however, Judge Ashman entered an order authorizing Respondent and
Wayne Hummer Trust to sell the property, notwithstanding the citations. Accordingly,
Respondent’s argument that the citations should be terminated so that he can sell his home
is moot.
1

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information received from Computershare. (Reply 8.) Respondent presents no
evidence to support this claim, including no portion of the Defendant’s examination
testimony on which he relies. Instead, Respondent notes that Plaintiff subsequently
filed a fraudulent transfer suit against Defendant in state court after he learned in
the examination that Defendant had transferred “millions of dollars in assets to his
wife, children, and grandchildren.” (Id.) Respondent argues that justice does not
require an extension of the citation because Plaintiff already knew of the property
transfer and can pursue all of his claims against Defendant in state court. (Id. 9–
10.)
This argument is irrelevant on two grounds. First, even if Plaintiff knew that
Defendant had transferred “millions of dollars” to his children, that is not the same
as “all” of his assets, and it certainly does not necessarily include the 43,667 shares
of Natural Resources stock transferred to Respondent. There is no evidence that
Plaintiff was aware of this transfer until Computershare’s response to the citation
revealed it. Second, the critical issue is not whether Plaintiff learned in broad terms
that Defendant had transferred substantial assets to his son, but whether
Respondent himself failed to reveal that fact when he was directly asked if his
father had transferred “any property, income, assets, money, [or] anything” to him.
It is conceivable that Defendant merely transferred the shares without informing
his son of that fact, but Respondent makes no attempt to defend himself on this
ground, or to present any other explanation for stating that no property had been
given to him by his father. The Court concludes that Respondent’s denial, and his

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failure to explain that denial, constitute good cause to extend the citation against
him.2
For these reasons, the Court finds that Defendant Robert Woolard’s and
Respondent Charles Woolard’s motions to terminate third party citations [185, 187,
& 197] are GRANTED IN PART AND DENIED IN PART. The citations to Lake
Forest Bank and Wayne Hummer Trust are terminated. The citation to Charles
Woolard is extended until December 26, 2012. Plaintiff must seek to renew the
citation within the limits provided by Illinois Supreme Court Rule 277 if he wishes
to extend the citation beyond that date.

E N T E R:
Dated: June 26, 2012
NAN R. NOLAN
United States Magistrate Judge

That said, Plaintiff’s response also asks that the Court issue a turnover order
requiring Respondent to turnover all assets allegedly transferred to him after a judgment
was entered against the Defendant by Judge Ashman. However, Plaintiff cannot seek such
a remedy merely by requesting it in a response to the instant motions, and the issue has
not been properly brought before this Court. At the least, Plaintiff is required to present a
properly-noticed motion and to allow Defendant and Respondent the opportunity to respond
to such a request.
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