Society of Lloyd's v. Berkos, 2000 U.S. Dist. LEXIS 2129


THE SOCIETY OF LLOYD’S, Judgment-Creditor, v. CHRISTY BERKOS, et al., Judgment-Debtors.

Case No. 99 C 2651


2000 U.S. Dist. LEXIS 2129
(Not reported in Westlaw)

January 14, 2000, Decided

January 14, 2000, Filed


DISPOSITION:  [*1]  Judgment-creditors motion to strike Lloyd's citations denied.

COUNSEL:  For SOCIETY OF LLOYD'S, THE: Michael T. Hannafan, Cory A. Johnson, Michael T. Hannafan & Associates, Ltd., Chicago, IL.
For CHRISTY S BERKOS, PATRICK - COLLINS, HERBERT GRAHAM GEIST, HENRY DANIEL PASCHEN, JR: Roger J. McFadden, Thomas J. Dillon, Tyrrel J. Penn, McFadden & Dillon, Chicago, IL.
For CHRISTY S BERKOS, PATRICK - COLLINS, HENRY DANIEL PASCHEN, JR: Theodore William Grippo, Jr., Pembroke & Brown, Park Ridge, IL.
For PATRICK - COLLINS, counter-claimant: Roger J. McFadden, Thomas J. Dillon, Tyrrel J. Penn, McFadden & Dillon, Chicago, IL.
For PATRICK - COLLINS, counter-claimant: Theodore William Grippo, Jr., Pembroke & Brown, Park Ridge, IL.
For SOCIETY OF LLOYD’S, THE, counter-defendant: Michael T. Hannafan, Cory A. Johnson, Michael T. Hannafan & Associates, Ltd., Chicago, IL.

JUDGES:  Harry D. Leinenweber, Judge, United States District Court.

OPINIONBY:  Harry D. Leinenweber


Judgment-creditor, The Society of Lloyd’s (“Lloyd’s”;), in an effort to secure enforcement of money-judgments obtained in England, served upon each judgment-debtor citations to discover  [*2]  assets pursuant to 735 ILCS 5/2-1402. Judgment-debtors move to strike the citations.


On April 22, 1999, Lloyd's filed with this Court copies of money-judgments it obtained in England against judgment-debtors pursuant to the Illinois Uniform Foreign Money-Judgments Recognition Act, 735 ILCS 5/12-618-621. The next day, on April 23, Lloyd’s filed Citations to Discover Assets, pursuant to 735 ILCS 5/1-1402, directed to each judgment-debtor. Subsequently, the Court scheduled a citation hearing for May 18, 1999.

However, on May 3, 1999 the judgment-debtors filed a motion to strike Lloyd’s citations on grounds that they were premature and did not conform to the Illinois statutory requirements. On May 18, the citations and the motion to strike were both entered and continued generally until further order of the Court. Meanwhile, the Court considered judgment-debtors objections to recognition of Lloyd’s English judgment and, on November 16, 1999, entered final judgment on the pleadings in favor of Lloyd’s. The judgment-debtors have appealed the order.

The issue now before this Court is the continuing validity of the supplemental proceedings initiated by Lloyd’s with  [*3]  the service of the citations in April. On December 8, 1999, Lloyd's filed a motion seeking a ruling that the citations previously served upon certain judgment-debtors — Eugene Callahan, John Danloe, Robert Flesvig, Harry Hart, Daniel Paschen, Richard Rinella, Barbara Shornack, and John Shornack — are effective and valid. This Court construed the Lloyd’s motion as a response to judgment-debtors’ initial motion to strike and requested the judgment-creditor to reply.


The issue now being fully briefed, the Court denies the judgment-debtors’ motion to strike the citations. First, contrary to the contentions of judgment-debtors, Lloyd’s citations were not premature. Federal Rules of Civil Procedure 69(a) directs the federal courts to employ state procedures to execute judgment, so the Court will look to Illinois law for direction on initiating supplementary proceedings. Cacok v. Covington, 111 F.3d 52, 53 (7th Cir. 1997). In Illinois, a judgment-creditor “is entitled to prosecute supplementary proceedings for the purpose of examining the judgment debtor or any other person to discover assets or income of the debtor not exempt from the enforcement  [*4]  of the judgment…” 735 ILCS 5/2-1402(a). A supplementary proceeding is commenced by the service of a citation issued by the clerk. Id. The actual procedures by which a supplementary proceeding is conducted is governed, in turn, by Illinois Supreme Court Rule 277.

The judgment-debtors here contend that the citations run afoul of Rule 277 because they were not issued "with respect to a judgment which is subject to enforcement." ILCS S. Ct. Rule 277(a). They argue that the citations issued in April were premature because the mere filing of the English judgments with this Court did not make such judgments enforceable in Illinois. According to the judgment-debtors, the Illinois Uniform Foreign Money-Judgments Recognition Act requires that a judgment obtained in a foreign country must first be tested in accordance with the standards prescribed by the Act before the judgment is "enforceable" within the meaning of Rule 277. In other words, the judgment-debtors would have this Court find that Lloyd’s could not have commenced supplemental proceedings until the Court entered final judgment on November 16, 1999 recognizing the English judgments.

This is an issue of first impression. No  [*5]  Illinois court has addressed the precise issue of whether a judgment-creditor may commence supplemental proceedings immediately after filing a money judgment obtained in a foreign country’s court. However, upon consideration of the relevant statutes and existing case law, the Court finds that the citations were not premature. See Allen v. Transamerica Ins. Co., 128 F.3d 462, 466 (7th Cir. 1997) (federal court sitting in diversity in considering question of first impression under applicable state law must best estimate how state’s highest court would rule as to its law).

In Illinois, enforcement of judgments obtained in foreign countries are governed by the Uniform Foreign Money-Judgments Recognition Act, 735 ILCS 5/12-618 through 621. The Act provides that any foreign judgment that is “final and conclusive and enforceable where rendered” is, “except as provided in Section 12-621 of this Act, … conclusive between the parties.” 735 ILCS 5/12-619, 620. Section 12-621 lists the various conditions under which a foreign judgment must or may be denied recognition in Illinois.

While foreign judgments shown by an objecting judgment-debtor to fall within section 2-621 may  [*6]  not be enforceable, nothing in the statute requires a judgment-creditor himself to petition the Court for recognition of the foreign judgment before commencing enforcement proceedings. Cf. Pinnacle Arabians, Inc. v. Schmidt, 274 Ill. App. 3d 504, 654 N.E.2d 262, 265, 210 Ill. Dec. 963 (Ill. App. Ct. 1995) (with respect to foreign-country judgments, the courts accord a “strong presumption" that the judgment is enforceable "and it is defendant’s duty to rebut the presumption.”) As a matter of fact, the statute does not prescribe any procedures for initiating enforcement proceedings under the Act other than to state that &“;the foreign judgment is enforceable in the same manner as the judgment of a sister state which is entitled to full faith and credit.&”; 735 ILCS 5/12-620; see also, Vrozos v. Sarantopoulos, 195 Ill. App. 3d 610, 552 N.E.2d 1093, 1096, 142 Ill. Dec. 352 (Ill. App. Ct. 1990). In other words, the Recognition Act simply incorporates the procedures for enforcing judgments of sister states. See La Societe Anonyme Goro v. Conveyor Accessories, Inc., 286 Ill. App. 3d 867, 677 N.E.2d 30, 33, 222 Ill. Dec. 217 (Ill. App. Ct. 1997)  [*7]  (“the Foreign Judgment Act and the Recognition Act are to be interpreted to complement each other rather than to be mutually exclusive and that they are to be enforceable in the same manner.”)

The Foreign Judgments Enforcement Act provides that an authenticated judgment from the court of a sister state, when filed in an Illinois court, “has the same effect and is subject to the same procedures, defenses and proceedings for reopening, vacating, or staying as a judgment of a circuit court for any county of this State and may be enforced or satisfied in like manner.” 735 ILCS 5/12-652. Therefore, because judgments of foreign countries are to be enforced in the same manner as the judgment of sister states, Lloyd’s was entitled to initiate supplemental proceedings immediately after filing with the Court its English judgments.

Second, the Court also rejects judgment-debtors’ alternative argument that the citations should be struck because they do not contain all the information required by 735 ILCS 5/2-1402. Section 2-1402 states, in relevant part, that:

Any citation served upon a judgment debtor … shall include a certification by the attorney for the judgment-creditor or the  [*8]  judgment-creditor setting forth the amount of the judgment, the date of the judgment, or its revival date, the balance due thereon, the name of the court, and the number of the case, and a copy of the citation notice required by the subsection.

735 ILCS 5/2-1402(b). The citation must additionally contain language regarding the consequences of failing to appear in court as directed and be accompanied by a notice of citation informing the judgment debtor that certain property may be exempted from the proceedings. 735 ILCS 5/2-1402(a),(b). Here, the judgment-debtors contend that the citations are void because Lloyd’s failed to include the statutory language regarding exemptions.

Lloyd’s citations, however, adequately comply with Section 2-1402. Illinois courts have consistently held that the provisions of Section 2-1402 are to be “liberally construed.” See, e.g., Kennedy v. Four Boys Labor Service, Inc., 279 Ill. App. 3d 361, 664 N.E.2d 1088, 1091, 216 Ill. Dec. 160, (Ill. App. Ct. 1996). While Lloyd’s concedes that no separate notice of citation accompanied the service of the citations themselves, the citations do inform the judgment debtor of the existence of  [*9]  exemptions. The citations also include the same information as required in the notice of citation including the name and address of the court, the name of the case, the name of the judgment debtor, the name and address of the attorney for the judgment-creditor, the amount of the judgment, and the court date and time. Since, by the terms of Section 2-1402 itself, the citation notice must only “substantially” comply with that set forth in the statute, the Court finds that Lloyd’s has substantially met the requirements.

Furthermore, judgment-debtors do not argue that they have been prejudiced in anyway by the failure of Lloyd’s to conform to the letter of Section 2-1402. Absent compelling reason for holding Lloyd’s to the exact form of the citations suggested in the statute, this Court will not strike them because of technical deficiencies. See Laborers National Pension Fund v. ANB Investment Management And Trust Co., 26 F. Supp. 2d 1048, 1050-51 (N.D. Ill. 1998) (declining to quash citations to discover assets for mere failure to include exactly all the information required by statute).

Finally, in their reply brief, judgment-debtors raise, for the first time, additional  [*10]  grounds for striking the citations. The Court also rejects these arguments.

The judgment-debtors have waived any objections as to lack of proper service because they were not raised in their opening brief. Arguments raised for the first time in a reply brief, without the benefit of a response from the opposing party, may not be relied upon by the Court in rendering its decision. Spitz v. Tepfer, 171 F.3d 443, 448 (7th Cir. 1999); Local 322, Allied Indus. Workers v. Johnson Controls, Inc., 969 F.2d 290, 293 (7th Cir. 1992).

The judgment-debtors’ contention that this Court should strike the citations because Lloyd’s is ơattempting to invade the province of the Bankruptcy Court as to those defendants who are in bankruptcy” is also not well taken. The judgment-debtors themselves acknowledge that Lloyd’s does not seek to uphold the citations as to those who are in bankruptcy. It is clear that the Court, by merely denying judgment-creditors’ motion to strike, does not encroach on any stay that has been imposed on the various judgment-debtors with respect to the judgment.

The Court also rejects the judgment-debtors’ contention that any valid citation expired  [*11]  in November, six months after the first court appearance of the judgment-debtors pursuant to the citations. Illinois’ supplementary proceeding provision states that “the lien established under this section … is effective for the period specified by Supreme Court Rules.” 735 ILCS 5/2-1402(m). Illinois Supreme Court Rules provide, in turn, that any supplementary proceeding will automatically terminate six 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.” ILCS S. Ct. Rule 277(f). However, extensions may be granted by the court “as justice require.” Id.

The judgment-debtors, by asserting the deadline, ignore the continuance entered by the Court on May 18, 1999 with respect to the citations as well as the motion to strike. It also bears noting that the delay in proceeding with the citation hearings were due to the actions of the judgment-creditors themselves in seeking to strike the citations and oppose recognition of the English judgment. As the Seventh Circuit has noted, the purpose of the deadline  [*12]  is not only to prevent property from being encumbered by judgment liens indefinitely, but also to protect the judgment debtor from being harassed by his creditors. Resolution Trust Corp. v. Ruggiero, 994 F.2d 1221, 1228 (7th Cir. 1993). Where, as here, it is the debtor who caused delay of the citation proceedings, he should be estopped to plead the deadline. Id.


For the foregoing reasons, the Court denies judgment-creditors motion to strike Lloyd’s citations.

IT IS SO ORDERED.Harry D. Leinenweber, Judge
United States District Court
Date: January 14, 2000