Bank of America v. Freed
971 N.E.2d 1087
Ill. App. Ct.2012Background
- Bank of America foreclosed on Block 37 in Chicago and obtained a judgment against Freed and DDL LLC for $110,956,772.20 after prior judgments and refinancing attempts.
- On January 3, 2011, Bank served citations to discover assets on Freed and DDL to enforce the judgment.
- Bank alleged that Freed and DDL dissipated nearly $5 million in assets in violation of the citations.
- The trial court held an evidentiary hearing and ultimately found Freed and DDL in contempt and appointed a receiver with broad investigative and collection powers.
- The purge provision allowing contempt to be discharged was deemed defective, leading to remand for a proper purge mechanism.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the contempt finding was supported by the evidence | Freed and DDL violated the citations by transferring assets. | Transfers were documented and related to ordinary business or JFA/DDL obligations. | Yes; contempt affirmed for asset dissipation violating the citations. |
| Whether appointing a receiver as a contempt sanction was proper | Receiver authorized to collect debt and manage assets is appropriate under 12-718/2-1402. | No statutory basis for such broad investigatory receiver; potential overreach. | Affirmed; appointment proper under statute but remanded for purge provision. |
| Whether the purge provision rendered the contempt remedy valid | Purging via cooperation with the receiver and asset disposition satisfies purge conditions. | Purgeness overly dependent on receiver's determination of completion and report. | Remanded to amend purge provision to provide a viable purge mechanism. |
| Whether the receiver's authority complies with statutory and rule limits | Authority flow from 2-1402 and 12-718 supports investigative receiver. | Broad investigatory authority effectively makes the receiver a party to the action. | Authority upheld but remand for proper purge provisions; overall affirmed in part. |
Key Cases Cited
- Cetera v. DiFilippo, 404 Ill. App. 3d 20 (2010) (indirect civil contempt requires trial court order and willful disobedience)
- In re Marriage of Charous, 368 Ill. App. 3d 99 (2006) (burden on contemnor to show nonwillful noncompliance; appellate review standard)
- Pancotto v. Mayes, 304 Ill. App. 3d 108 (1999) (purge provisions must provide a viable means to discharge contempt)
- Hilkovitch, 124 Ill. App. 3d 401 (1984) (sequestrator powers to seize assets to enforce judgment in dissolution)
- Prassas v. Nicholas W. Prassas & Co., 102 Ill. App. 3d 319 (1981) (receiver appointment appropriate where dissension or misconduct threatens property)