Epstien v. Galuska

Case Date: 10/27/2005
Court: 1st District Appellate
Docket No: 1-04-1659 Rel

                                                                                                                                                                            FOURTH DIVISION
                                                                                                                                                                            October 27, 2005

 

No. 1-04-1659

BARRY EPSTEIN,

               Plaintiff and Counterdefendant-Appellee,

v.

RICHARD GALUSKA,

              Defendant and Counterplaintiff-Appellant

(Joy Lynn Galuska,
                       Defendant-Appellant)

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Appeal from the
Circuit Court of
Cook County.

 

 No. 00 L 8996

 

Honorable
Julia M. Nowicki,
Judge Presiding.

JUSTICE GREIMAN delivered the opinion of the court:

Defendants Richard and Joy Lynn Galuska, husband and wife, appeal from the circuitcourt's order granting summary judgment in favor of plaintiff Barry Epstein on his complaint forfraudulent conveyance brought under section 5 of the Uniform Fraudulent Transfer Act (740ILCS 160/5 (West 2002)). For the reasons that follow, we dismiss defendants' appeal.

The instant litigation stems from a 1992 lawsuit and subsequent judgment secured byplaintiff against Richard Galuska (Richard) to enforce guarantees and collect on several loans hehad made to Richard in the 1980s. Richard's partnership in National Gas Associates (NGA) andthat company's involvement in National Gas & Electric Corp. (NGEC) had resulted in substantiallosses which necessitated loans from plaintiff both to Richard personally and to NGEC. InSeptember 1993, plaintiff and Richard reached a settlement agreement, which included a warrantyby Richard of the source of losses both by NGA partnership and in Richard's personal accountswith Goldman Sachs & Co.

The settlement agreement required Richard to pay $30,000 by February 28, 1994, on hispersonal debt and an additional $25,000 on the loan to NGEC by December 31, 1997. Theagreement also provided that, upon default, judgment would be entered against Richard in theamount of $37,450 as to his personal loan and in the amount of $25,000 as to the NGEC loan,including postjudgment interest. Plaintiff agreed to dismiss the lawsuit with prejudice, with thestipulation that the circuit would retain jurisdiction for the purpose of enforcing the settlementagreement.

Richard defaulted on the first payment and plaintiff subsequently obtained a judgmentagainst him in the amount of $37,450 in May 1994. A year later, the circuit court reaffirmed thejudgment, reinstated the case nunc pro tunc, and stayed the execution of the judgment until theconclusion of the proceedings. Richard also failed to make the second payment by the agreeddeadline, and plaintiff moved the circuit court to reinstate the case and enter judgment.

Richard filed multiple motions to dismiss, alleging that the 1993 settlement agreementreleased him from any claims plaintiff might have had against him. The initial motion additionallyalleged that plaintiff had sought to have the circuit court's chief judge intervene and overrule thecourt's prior rulings staying judgment. The circuit court denied each motion.

In his response to plaintiff's motion, Richard argued that his prior dealings with plaintiff,specifically plaintiff's loans to NGEC, raised issues of partnership obligations between the partiesand realleged plaintiff's dealings with the chief judge as an improper method of influencing theproceedings. Following arguments, the circuit court entered judgment against Richard in theamount of $41, 977.85, which was comprised of the earlier judgments plaintiff sought plusstatutory and prejudgment interest.

Richard filed a motion to reconsider, alleging that the 1993 settlement agreement had beenamended and that the loans plaintiff had made to Richard in 1986 implicated a partnershipbetween the parties in NGEC and that partnership obligations required plaintiff to turn overNGEC securities related to a federal lawsuit filed by Richard against Geoquest, Inc. Richardagain raised the allegation that plaintiff had improperly communicated with the chief judge. Thecircuit court denied the motion on December 18, 1998.

Richard appealed the judgment, but later voluntarily dismissed the appeal, alleging that itwas not a final and reviewable order.

Plaintiff commenced supplementary proceedings to cite Richard's assets in July 1999. Richard filed a motion to quash, alleging that the judgment was nonfinal, that the proceedingswere still subject to the 1995 stay order, and that plaintiff's attorneys had sought review of thedisparate orders entered by the trial judge and the judge presiding over the enforcementproceedings. The circuit court denied Richard's motion, and the citation proceedingscommenced.

During the citation examination, Richard revealed that, in September 1998, whileplaintiff's motion to reinstate and for judgment was pending, he recorded a declaration of trustconveying his interest in his and Joy Lynn's marital residence, located at 643 Park Road inLaGrange Park (Property), to Joy Lynn, and that, in March 1999, he ordered a quitclaim deedconveying the Property from tenancy of the entirety in fee simple to Joy Lynn. At that time, theonly asset Richard claimed was a 1996 federal default judgment he had obtained againstGeoquest, which, at the time of Richard's suit and ever since, was a dissolved corporation with noassets.

The Property had originally been held in joint tenancy and was conveyed into a tenancy bythe entirety in October 1990. In July 1991, Richard executed a declaration of trust conveying theproperty to Joy Lynn in trust. He recorded the declaration of trust and the warranty deedconveying the Property into tenancy by the entirety in September 1998.

Plaintiff thereafter filed the instant complaint for fraudulent conveyance against bothdefendants, alleging violations of the Uniform Fraudulent Transfer Act (740 ILCS 160/1 et seq.(West 2002)) and seeking orders to set aside the 1999 conveyance from tenancy of the entirety toJoy Lynn and to set aside Richard's transfer of his interest in the Property into trust.

Richard filed a counterclaim alleging a breach of fiduciary duty by plaintiff as a result ofhis failure to abide by partnership obligations incurred through his loans to Richard and NGEC. The counterclaim also alleged that plaintiff's letter to the chief judge amounted to an abuse ofprocess and set forth claims for breach of promise of cooperation and quasi contract, conversion,interference with prospective advantage, and negligence.

The parties filed cross-motions for summary judgment. Plaintiff argued that the solepurpose of the transfers was for Richard to avoid payment on the judgment awarded to plaintiff. Defendants argued that plaintiff's claims for fraudulent transfer lacked merit since theconveyances took place before plaintiff had filed any judgment liens and that the conveyanceswere not subject to the Act. In a written order, the circuit court found that the trust conveyancehad been made for no consideration and was not effective until after Epstein became a creditor in1994 and 1998, and that defendants failed to provide clear and convincing evidence to rebut thepresumption that interspousal transfers that take place pending litigation are fraudulent. Thecircuit court granted summary judgment in favor of plaintiff on all counts alleged in his complaintand against defendants on each of their counterclaims. The court ordered that the conveyances bevoided and awaited plaintiff's motion for foreclosure.

Defendants now appeal, contending that the circuit court erred in allowing plaintiff topursue enforcement of the 1994 judgment and that issues of material fact remained as to theconveyances and the affirmative defenses raised by defendants.

This court reviews a trial court's grant of summary judgment de novo. Morris v.Margulis, 197 Ill. 2d 28, 35 (2001). Summary judgment is appropriate only where the pleadings,depositions, and admissions on file, together with any affidavits and exhibits, indicate that there isno genuine issue of material fact and that the moving party is entitled to judgment as a matter oflaw. 735 ILCS 5/2-1005 (West 2002); Morris, 197 Ill. 2d at 35.

We first address plaintiff's motion to strike defendants' brief and dismiss this appeal ongrounds that their brief violates numerous supreme court rules governing appellate briefing andprocedure and attempts to insert evidence that was not properly included in the certified record onappeal. We cannot help but concur.

While defendants appear pro se, their status does not relieve them of their burden ofcomplying with this court's rules. See Twardowski v. Holiday Hospitality Franchising, Inc., 321Ill. App. 3d 509, 511 (2001). In fact, even a cursory glimpse at defendants' involvement in priorproceedings reveals them to be very experienced pro se litigants and appellants. See Galuska v.Edgewood Bank, No. 1-92-3676 (1993) (unpublished order under Supreme Court Rule 23)(plaintiff Richard appealed $2,179 jury award entered against bank for dishonoring his personalcheck, seeking damages of $783,000; we affirmed); Crawford v. Galuska, No. 1-93-2245 (1995)(unpublished order under Supreme Court Rule 23) (defendant Richard appealed $214,284judgment entered against him for defaulting on promissory note; we affirmed); Carlson v.Galuska, No. 1-93-3457 (1995) (unpublished order under Supreme Court Rule 23) (defendant-counterplaintiff Richard appealed $64,093 judgment against him for breach of investment contractand fraud; we affirmed, finding that Richard's prior admissions in pleading contradicted hisarguments as to the terms of the contract); Carlson v. Galuska, No. 1-95-0126 (1996)(unpublished order under Supreme Court Rule 23) (defendant-counterplaintiff Richard appealedcircuit court's dismissal of his counterclaims and denial of his motions to dismiss plaintiffs'complaint; we affirmed, citing Richard's failure to attach his proposed amended counterclaims andfinding that filed counterclaim lacked merit); Galuska v. Hinshaw & Culbertson, No. 1-96-1666(1997) (unpublished order under Supreme Court Rule 23) (plaintiff Richard appealed the circuitcourt's order dismissing his complaint against attorneys representing opposing parties in priorlawsuits for breach of fiduciary duty; we affirmed, again finding that Richard had failed to attachthe propose amendment to his complaint that he argued was wrongfully disallowed and that theallegations contained in Richard's complaint were insufficient to state a cause of action).

Defendants were also parties to an earlier case with similar circumstances, namely, FirstIllinois Bank & Trust v. Galuska, 255 Ill. App. 3d 86 (1993). There, plaintiff First Illinois hadfiled an action to foreclose on defendants' mortgage and later reached an agreement withdefendants whereby they would tender the amount owed by an agreed date or be required todeliver a warranty deed to their then residence, located at 204 Brainard in LaGrange, to FirstIllinois. Defendants conveyed the residence to a land trust pursuant to the agreement, with FirstIllinois as trustee and Joy Lynn as sole beneficiary, with the deed to be held by an escrow agent. When defendants failed to tender the agreed-upon amount despite multiple deadline extensionsand later issued a direction for First Illinois as land trustee to convey the land to First Illinois in itscorporate capacity, First Illinois registered its deed to the residence. After defendants refused tovacate the residence despite multiple demands, First Illinois filed an action for forcible entry anddetainer. First Illinois Bank & Trust, 255 Ill. App. 3d at 88-89. The trial court granted summaryjudgment to First Illinois, and defendants appealed. This court affirmed, rejecting defendants'arguments that First Illinois had altered documents relating to the conveyance, that First Illinoiscontracted away its right to seek possession of the residence when the settlement agreement wasreached, and that the conveyance was invalid. This court also admonished defendants for theirfailure to abide by the rules of appellate procedure and found several deficiencies in the recordfiled on appeal, which included several attachments that amounted to "meaningless paper." FirstIllinois Bank & Trust, 255 Ill. App. 3d at 91-94.

Defendants have also been involved in several appeals in this court's Second District. SeeWitkiewicz v. Galuska, Nos. 2-94-0488, 2-94-0286, 2-94-1190, cons. (1995) (unpublished orderunder Supreme Court Rule 23); Elgin State Bank v. Galuska, No. 2-90-0458 (unpublished orderunder Supreme Court Rule 23) (1991); Elgin State Bank v. Galuska, No. 2-91-1334 (1992)(unpublished order under Supreme Court Rule 23).

Defendants have also been quite active litigating in federal district court. See Carl v.Galuska, 785 F. Supp. 1283 (N.D. Ill. 1992) (defendant Richard sued for alleged violations offederal securities regulations, fraud, breach of fiduciary duty, and conspiracy to defraud); Galuskav. Paine, Webber, Jackson & Curtis, Inc., No. 92 C 0028 (N.D. Ill. 1992) (plaintiff Richard'scomplaint for conspiracy dismissed as a "hopelessly inadequate" attempt to package Richard'sgrievances as a "kind of global conspiracy" against him by nine defendants, and amendedcomplaint later dismissed for Richard's failure to allege federal jurisdiction over his claims ofconspiracy); Galuska v. Goldman, Sachs & Co., No. 92 C 8091 (N.D. Ill. 1993) (plaintiffRichard's motion to vacate arbitration award to defendant Goldman Sachs dismissed); Galuska v.Kanter, No. 93 C 4760 (N.D. Ill. 1995) (plaintiff Richard denied leave to file amended complaintor rejoin dismissed defendants where court found doing so would be futile considering his pastbehavior and numerous pleading deficiencies).

Of particular interest to this court is Galuska v. Blumenthal, No. 92 C 3781 (N.D. Ill1994), where plaintiff Joy Lynn sued the attorney representing First Illinois in its action forforcible entry and detainer, claiming he and his firm had violated the Fair Debt CollectionPractices Act (15 U.S.C.