## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it

N o. 07

- 4034 F O R Y O UR E ASE O NLY, I NC ., Plai nt i f f

-Appe l l ant, v.
C AL GON C ARBON C OR PO RA T I ON, P RODUC T C O NC EP TS C OMPAN Y, an d M AR K S CHNEIDER, D efend a nts-A pp ellees,

an d

HS N, LP, Interv enin g A pp ellee.

Appeal from the United States District Court fo r the N o rthernDi stricto f Illino is, Eas tern Div isi on. No . 02 C7345

—Wayn e R. Ander sen, Judg e.

A RG UE D S EP TE MBE R 24, 2008

— D ECI DE D M AR CH 31, 2009

Befo re P OSNER, W OO D a nd T INDER, C ircu it Judges. W OO D , C ircu it Judge. Thi s ca se i m m er se s us i n the wor l d o foff

- sh o r e fi na nc e, s ha do wy r el at i o ns a m o ng2 N o. 07

- 4034

c o mpa n i e s , a n d a l l e g e d l y f r a u d u l e n t t r a n s f e r s , a l l f o r t he s a k e o fa n t i

- t a r n i s h j e we l r y b o x e s s o l d o n th e H o me Shoppi ng N etwork

. Fo r Your E as e Only, I nc. ( “FYEO ”) sel l s these j ew el rybo xes, and i t pursued l i tiga tio n ag ains t som e ofi ts c o m pet i to r s f o r pa te ntmis us e an d tor ti ous interference w i th busi ness re l ati ons. A l though FYEO o btai ned a $2

. 19 m i l l i on def aul t j ud gm en t agai nst the defend an ts i n that sui t, i t has notm anage d yet to coll ect on i ts ju d g m en t. O ne de fend an t, M ark Sch ne ider, m o ve d t o Co st a Ri ca before th e fi na lj udg m en t was e nter ed, and Schnei de r’s wh ol l y o w ned com pany tr ansf er re d i ts m ai n ass et

— th e ri ght t o paym ents f ro m H SN , L P ( com m onl y c al l ed the H om e S hopping Netwo r k)

— to an enti ty cal l ed Se venquest, LLC , wh i ch ( not so coi nci dental l y) S chnei der a l so own s e xcl usivel y. Seven qu est su bseq ue nt ly tran sferred the right to H SN ’s paym ents to A new co Corp. , a com pany w hol l y ow ned b y S c hn e i de r ’ s b r o the r- i n- l a w, Do ugF o ur ni e r . F YE O be l i eves tha t th es e two t r an sfer s ar e vo i dab l e unde r the I l l i noi s Un i f or m Fr audu l ent Tr ansferA ct ( “U FT A ”), 740 I LC S 160/ 1 et seq ., b u t th e d ist ric t cou rt rej ec te d it s p os iti on. A l though H SN appeared onl y as an obser ver bef or e the di str i ct c ourt, i t fi l ed a m oti on i n thi s co urt on A p ril 23 , 200 8, for p er m i s s ion to int er ve n e o n ap p ea l; th at m otion w as gran ted on A p r il 30, 2008, and H SN has full y par tic ip ated si nce then. The o therdefendantsappell ees have chos en to ta ke a p as s. W e co ncl ud e that ad d i ti onalfi nd i ngs a re nece ssa rybefor e i t i s pos sibl e t o dec i de whethe r UFTA g i ve s F YEO a r i g htt o hav e th e tr an sfer s se t as i de. W e ther efo r e va ca te the j udg m en t an d re m and fo r furtherpro ceedi ngs.N o. 07

- 4034 3 I S i x y ea rs ag o, FY E O su ed M ar k Sc h n eid er , his w h olly o wned c o m pan y Pr o ductCo nc e p t s C o mpan y( “ P C C ” ) , a nd Cal g o n Ca rbo n Co r po r at i o n, f o r pa te ntmis us e an d t o r t i o us i nt e r f e r e nc e . Ats o me po i nt, S c hn e i de r a nd P CC stop p ed resp ond ing to th e d istri ct court’s d iscovery or ders; thei r i nsouc ian ce pr om pted the di str i ct c ourto n J une 27, 20 06, to ente r a def ault ag ainst them f or $2, 120, 150. 70. J ud gm ent was e nter ed on the def aul t o n F e b r ua r y 2 2 , 2 0 0 7, b y whi c h t i me a c c r ui ng i nt e r esthad i ncre ase d the t ota l am ount t o $2, 190, 550. 93. B y t h e t im e F Y E O ’ s ju d gm en t w as en te re d , PC C ’s m ain asset w as th e ri gh t to pa ym en ts from H S N f or the latter’s se rv ice in s ellin g P C C ’s an ti-t ar n ish jew elr y b ox es . Sch n eider, i n hi s ca paci ty as ow ner ofPCC , had execute d an ex c lu siv e p ro d u c t m er c h an d isin g a gr ee m en t w ith H SN in 2004

. N ot l ong after w ar d Schnei der m ove d to Costa Ri ca . I n 2 00 5, S ch ne i dert r an sfer r ed the ri g htt o the H SN busi ness and paym ents f ro m PCC to S eve nquest. J ud gm ent i n hand , FYEO bega n to sea rch for as set s b e l on gin g t o Sc h n eid er or P C C . In D ec em b er 20 06 , i t su bpo en ae d F o ur ni er, S ch ne i der ’ s br o th er - i n- l aw. The subpoena i nfo rm ed F ou rni ero fthe j ud gm ent a gai nst Sc h n eid er an d P C C an d n ot ice d Fou rn ier ’s d ep os itio n ; i t al so r equi r ed hi m t o b r i nga l o nga ny re co r ds r el at i ng to S c h n e i d e r, P C C , HS N, o r S e v e n q u e s t
. Aft e r r e c e i v i ng th e s u b p oe n a, Fo u rn ier flew to C os ta R ica to se e Sc h n eider. On J anuary11 , 20 07, S chnei der g ave Fo u rn i er a l ett eraddr es sed to H SN ; thatl ett erpurport ed to tr an sferS ev enqu est’ s r i g ht s unde r the HSN ag r ee m en t4 N o. 07

- 4034 to Fourn ier’ s com p an y, A n ew co. A t tha t tim e, how ever, A n ew c o d id n ot ex ist

. Fo u rn ier es ta b lish ed it s h o r t ly afterhi s r etur n to the U ni ted S tat es. As it beg a n t o l e a r n a b o utthe s e t r a ns a c t i o ns , F YE O to ok th e p os itio n th at th e rig h t t o t h e H SN b u sin es s is an a ss et o fS chnei der a nd PCC and that i t i s e nti tl ed to r ea chthe HSN pay m en ts t o s at i sfy its j udg m en t. Any at te m p te d t ra n sfe r to A n ew c o, it ad d s, w as vo id ab le und erU FTA

. On A pri l 20 , 20 07, FYEO s er ve d H SN with a thi rd- partyci tat i on o rderto di sco ver a ss ets of Schnei der a nd PCC

. The ci tat i on pro hibite d H SN fro m tr ansfer ri ng any pro pertyo r payi ng any m oney o verto the j ud gm en t d eb to rs . A n acco m panyi ng ci tat i on no tic e, whi chha d b ee n fi l ed wi ththe di st r i ctc o ur t, i nf or m ed H SN thatthe j ud gm ent debt or s were Schn eid er and PC C. The noti ce a l so l i ste d on e ofS chnei der’ s l ast known address es as Se venquest. Fi n al l y, i n conj uncti on w i th the o rderand n ot ice, FYEO peti ti oned the dist ri ct co urt f o r a n o r derr es tr aini ngHSN f r o m t r an sfer r i ng proper ty to the j ud gm ent debt or s o r thei r succes sor enti ti es, i ncl ud i ng S evenqu estand A new co. The peti ti on as k ed th e di st r i ctc o ur t to r equi r e H S N t o de po si t an y paym ents owed to S chnei der, PCC , S eve nquest, o r A ne wco w i th the di str i ct c ourt
. FYEO ’ s i ni ti aleff or ts w er e unavai lin g. O n M ay 5, 20 07, H SN p ai d A new co $84, 856. I n re sponse, o n J une 1, 20 07, FY E O am en d ed i ts p etition to i nc lud e a requ es t for a tu r n over ord er forpa ym en ts m ad e by H SN to Schn eider, PCC, S ev en que st, o r Anewco i n v i o l at i o n o fthe c i tati o n. On June 2 9, 20 07, H SN pai d A new co anothe r $297, 360.N o. 07

- 4034 5 The dis tr i ct c ourthel d a hear i ng i n Octobe r 2007o n F Y E O ’ s p e t i t i o n f o r a tu r n o v e r o r d e r a n d r e s t r a i ni ng or der. The co urt note d that onl y i fthe paym ents to A n ew c o w er e p ro p e rt y of S c h n eid er an d P C C co u ld it fin d th at H SN vio lat ed th e cita tio n . M or eo ve r, th e o n ly w ay that the pay m ents coul d sti l lbe the pr op erty of S ch ne i dera nd PCC was i fthe t r an sfer s to S ev en que sta nd A ne w co w ere voida ble un d er U FT A

. Th e d istri ct cou rt deci ded thatthe fi rs t t ra nsf er fr om PCC to S eve nquest wa s v o i dab l e b e c a us e i twa s fr a ud ul e nt
. S e e 74 0 I LCS 16 0/5( a)

. I n s uppo r t o ftha t co nc l us ion, the c o ur t f o und that the t ra nsacti on pos ses sed suffi cient “badges o f f r au d” to j us ti fy a pr es um pti o n o f f r au dul en t i nt en t: th e tr an sferwas t o a n i ns i derb ec au se S ch ne i derwas the sol e o w ner ofbo th co m pan ies; S chnei der r eta i ned contr olo fthe p ro perty ; the tr ansferwas conce al ed by Schnei der’ s e ff or ts to avo i d disco ver y; S chnei der had been sued bef or e the tr ansfer ; the tr ansferwas ofsubsta nti al l y a l l o fS chnei der’s as set s; S chnei der absco nd ed b y mo v i n gt o C o s t a R i c a ; a n d S c hn e i de r w a s o r b e c a me i nsol ve n t shor tl y a fterthe tr ansfer . N ei therH SN nor the S chnei der par ti es dispute thi s fi nd i ng. The dis tr ict cour t then address ed the tr ansferfro m S e v e nque s tt o A new c o . Und e r UF TA, a t r a ns f e r ma de a ft e r a fr a ud ul e ntt r a ns f e r i s v o i dab l e u nl e s s i ti s m ade to “a perso n w ho t oo k in go od f ai th a nd f ora re ason ab ly eq u iva len t v alu e.” 74 0 IL C S 1 60 /9 (a). (T h is sta nd ar d i s s i m i l arto the one f orhol de rs in d ue co urse of n eg ot iab le i n s t ru m en ts , w h o m u st ta ke for v alu e, in goo d fa i th, and w i thout noti ce o fsuch pro bl em s a s f o r g e r y , de f a ul t, di s ho no r, o r i na uthe nt i c i t y . S e e 8 1 0 I LCS6 N o. 07

- 4034 5/3- 302( a)

. ) A ccor ding to Fo urni er, he a nd S chnei der h ad an ora l ag re em en t u n d er w h ich Fou rn ier w ou ld d ev elo p th e b u sin es s w ith H SN , an d , in ex c h an ge , Sch n eider would t ra nsf erthe H SN busi ness to Fo u rn ierafter thre e y ear s. Duri ng that thr ee- yea r peri od, Fo urni er w ou ld e a rn a sm all c om m iss ion w h ile Sc h n eid er w ou ld re cei ve the pr ofi ts. They m ade thi s o ra l agr eem ent in 200 3 or 20 04 , ap p ar en tly be c au se Sc h n e i d e r ex p ec te d h is m o ve t o Co st a Ric a to ha m perhi s eff o r ts t o ful fi l l the ex cl us i ve c o nt r ac t he ha d r ec en tl y sign ed wi thHSN. The di st r i ctc o ur t ac ce pte d F o ur ni er ’ s des cr i pti o n o fthe tr ansact i on a nd f ou n d t hat F ourni eract ed i n go od f ai th an d pa id rea son ably equ ivalent value f or the H SN r i g ht s. Thi s i s o nl y pa r tl y t r ue, a t l ea sta s f ara s th e fi nd ing of good f aith is con c e r n ed ; Fourn ier ha d m ore to say than thi s i m pli es. F o ur ni ert es ti fi ed th athe k ne w ofthe j udg m en t ag ains t S ch ne i dera nd PCC i n Decembe r 2 00 6, a fte r he r ec ei ve d the s ubpo en a f r o m F YEO a nd b efo r e he ac c ep te d th e t ra n sfe r in Jan u ar y 2 00 7 . D u rin g h is d ep os it i o n he a dmi t t e d tha t he t r a v e l e d t o Co s t a Ri c a t o ef f ect th e tr an sfero fthe b us i ness: “Th e m ain r ea so n Iwent th er e w as to co n c lu d e t h at I’ve d on e m y t h re e y ea rs , th is i s whatwe ag r ee d t o , I ’ m s i cko fy o ur pr o bl em, Iwant to go o n my o wn, a n d y o u p r o mi s e d me th i s . ” Av o i di ng the jud gm ent a l so m oti vate d Four ni erto f or m a new com pany, A new co, to hol d the as set : Q: Bu t i t was yo ur purpose i n for m i ng An ew co to at te m p t t o tr y t o iso lat e y ou rs elf fro m M r. Sc h n eider’ s l ega l i ssues , r i ght? A : Yes, si r. Par t o fthe re aso n anyway.N o. 07

- 4034 7 T h e d ist ric t c ou rtd ec id ed th at Fou r n i e r ac te d in go od fait h be c au se , at t h e t im e o f th e t ra n sfe r, h e d id not hav e a l egal or fina nc ialrel ationsh ip w ith Sch ne ider. A s the c o ur t no t e d, F o ur ni e r di d no t fun ne l money t o S c h n eid er an d d id n ot m ain ta in a b u sin es s re lat ion sh ip w ith Sch ne ider a ft e r the tran sfer. Schn eider, the cou rt concl ud ed, “was n ot fi nanci al l y invol ved and did not ha ve c o nt rol ove r i t [ th e H S N pa y m en ts ]

. ” Las t, the cour t f ound that Fo u rni er ’ s e ff or ts ove r thre e y ear s t o devel op the H SN bu si ness const i tuted r eas onabl y e quiva

l en tv a l ue f o r t r a ns f e r fr o m S e v e nque s t
. Onthi s b a s i s, the c ourthel d that the tr ansferto A new co w as not voi dabl e under U FTA

. The r i ght t o the HSN paym ents was h e l d b y An e wc o , n o t th e j u d g me n t d e b t o r s , a nd H S N the r efo r e di d no t vi o l at e th e ci ta ti o n b y making the pay m ents to A new co.

II Be f o r e we a ddr e s s the me r i t s , a wo r d ab o uta pp e l l a te j uri sdic ti on i s i n or d er . FYE O i s a pp eal i ng fro m an o rder in a su p p lem en ta l p ro c ee d in g t o its law su it aga in st Sc h n eid er, PC C , and Ca lgon C arbon Corp oration. In th e un d erl yi ng ca se, FYEO o btai ned a def aul t j ud gm ent a ga i nst Schnei der a n d P CC , but i ts cl ai m ag ai nst Cal gon Carbon C orp oration is sti llpen d ing. W e n e e d not con cern ourse lve s w ith th at fac t, h ow ev er , bec au se th is a p p ea l is f ro m a fi na l o rd eri n a pr oce edi ng to co l l ect on a j ud gm ent. That i s a l l that28 U

. S. C. § 12 91 r eq uir es. S ee Kin g v. Io niz a tio n In tern., Inc., 825 F.2d 1180, 1184 (7 th Cir. 1987 ). ( W e note f or the record th a t t h e district cou rt8 N o. 07

- 4034 express l y m ade a fi nd i ng pursuant to F ED
. R. C IV
. P. 54 ( b) tha t the r e wa s no j us t r e a s o n t o de l a y e nf o r c em ent o f the j ud gm ent a gai nst S chnei der a nd PCC , and i t e nter ed a fi nal j ud gm ent a gai nst S chnei der a nd P C C fo r $2 .19 m illion on Fe b ru ar y 2 2, 20 07 .) B ecau se t h e p arties do n ot d ispu te th e d istri ct cou rt’s fi nd i ng tha t th e tra nsf erfro m PCC to S eve nquest was f r au dul enta nd v o i dab l e unde r 740 I LCS 16 0/ 8, the onl y quest i on on t h i s a pp eali s whether the di str i ct cour t co rr ectl y f ound that the se cond tr ansfer, fro m S ev en que stt o F o ur nier, was made i n g o o d f ai tha nd f orr eas onabl y e quiva l ent v al ue.

A A cent ra l i ssue here i s w h et h er the tr ansferto Fo urni er w as m ade i n go od f ai th, but a pre ci se definiti on o fthat te rm is h ar d to co m e b y. U FT A d oe s n ot s u p p l y a d efin iti on, and the I l l i noi s co urts have notfi lled t hi s g ap by off er i ng o ne o fthei r ow n . I n thi s r espectU FTA i s s i m i l ar to o th ers ta tu te s th atr equi r e a fi ndi ng of goo d f ai th

. For ex am p le, th e B an krup tcy Cod e us es t h e te rm w i thout defi ni ng i t, and cour ts have si m i l ar l y r esi ste d ar tic u lat in g a p re c ise d efin itio n . See , e . g. , M o gli a v. U niv ers al Au t o. , In c. , N o. 98 C 59 15 , 200 0 U .S. D ist . L E X IS 1 0 4 2 0 , a t* 1 1

- 1 2 ( N. D. I l l

. J ul y 1 2 , 2 0 00) ( l i s t i ngc a s e s a dd ressing good f aith in 11 U

. S. C

. § 548(c)). I t i s s om ew hat e asi erto i d en tify si tuati ons i n w hi ch go od fait h is lac k i n g . T h u s, for ex am p le, go od fait h w ill pr o babl y b e l ac k i ngi fthe t r an sfer ee k now s tha t th eN o. 07

- 4034 9
tr ansferm ay be v oi dable be cause he kno w s o fan o utst an d in g j u d gm en t aga in st th e tra n sfe ro r. T h e Illino is C ou rt of A p p eals h as foun d a l ack of good f aith w he re th e tr an sfer ee k ne w ofa pe ndi ngl aws ui t ag ainstthe tr an sfer o r a nd a cc ept ed th e tr an sferwi th o uti nf o r m i ng th e p l a i n t i f f

. Kenn edy v. Fo ur B o ys L a bo r Servs. , 66 4 N

. E.2 d 1088, 1 09 3 ( I l l

. A pp . Ct. 19 96)

. S i m i l ar l y, i n a c ase d ec id ed be for e t h e e n ac tm en t o f U F T A , th e Illino is Co u r t o f Ap p e a l s f o u n d a l a c k o f g o o d f a i th wh e r e t he tr an sfer ee k ne w ofan ou tst an di ngj udg m en t an d s o ug ht p rotec ti on s houl d any cl ai m to the tr ansfer re d proper ty ar ise from th at j u d gm en t. A lan D rey C o. v. G ene rati on, Inc. , 31 7 N .E .2d 67 3, 68 0 ( Il l . A p p . C t. 19 74 ). In th e c los ely re l ate d are a of b ankr up tcy, thi s co urt defi ned goo d fa i th f orpurposes o f§ 550(b) o fthe bankr up tcy code a s a sta te of m i nd i n w hi ch the perso n i s “w i thou t k now l edge ofvo i dabi l i ty. ” Bonde d F i n. Se r vs . , Inc . v. Eur ope an Am

. Bank, 838 F. 2d 890, 89 7 ( 7th Ci r. 19 88)

. W e c om m ented that k no wl edg e d oes no t r equi r e a “c o m pl et e unde r st an di ng ofthe f acts
. . . so m e l ess erkno w l edge wil l do. ” Id. at89 8. F YEO a r g ue s t hat th e di st r i ctc o ur t appl i ed th e wro ng l ega l st andard f orgo od f ai th and i m proper l y focu sed o n the financi aland l ega l r el ati onshi p between Sc hnei der an d Fourn ier after the tran sfer. I t is un clear w ha t stan d ard o f g o o d f a i th th e d i s t r i c t c o u r t a p p l i e d

. I f wh a tt he cour t m eant to sa y, however, was that goo d fa i th exi sts as a m att ero fl aw as l ong as ther e i s no co n tinu i ng l ega l or fi nanci al re l ati onshi p between Schnei der and F ou rni er after the tr ansfer, then w e m ust di sag re e with i t. W hether th e tr an sfer o r r ec ei ve s be ne fi ts fr o m the a ss eta fte r the tr an s f e r o r r e t a i ns c o nt r o l o v e r the a s s e ta ft e r the t r a ns f er10 N o. 07

- 4034 i s r el evantto wh etherthe tran sferi s fra ud ule nt under 74 0 IL CS 160 /5 ( b) , but i t i s no t the o nl y per ti nent f act. Eve n tho ug h the ex is te nc e o fa c o nt i nui ngl eg alo r fi na nci alr el at i o ns hi p a fte r the t r an sfermay i ndi cate b ad f ai th, the l a c k o f s uc h a r e l a t i o ns hi p do e s no t e s t a b l i s h go od f ai th

. M osti m port antl y, the I l l i noi s ca ses we ci ted ea rl i er sh o w that a tran sfer ee who k no ws abo uta j udg m en t aga i nst the tr ansfer ordoes n ot t ake the ass et i n go od f ai th

. Her e, the fact s s ho w tha t F o ur ni erk ne w ofthe j ud gm ent a gai nst S chnei der a nd PCC befor e he accepte d the tr ansfer of the H SN busi ness. Lik e the tr ansfe re e in Ken ne dy, he kn ew abo ut noto nl y the pending l aw sui t, b u ta l s o th e a c t u a l j u d g me n ta g a i n s tS c h n e i d e r a n d P CC. H e k ne w f r o m the s ubpo en a th atF YEO was s ee k i ng i nfo rm ati on about the HSN busi ness. I n f act, Fo urn ier fl ew t o C osta Ri ca i m m edi at el y a fte r l ea r ni ngo fthe j ud gm ent in or der t o prot ect “his” H SN busi ness f ro m the j ud gm ent. The di st r i ctc o ur t er r ed byf o cus i ngo n the c o nt i nui ng r el at i o ns hi p b etwee n F o ur ni era nd S ch ne i dera fte r the tr ansfer, r atherthan Four ni er ’ s kn ow ledge ofthe j ud gm ent a ga i nst S chnei der a t the ti m e he fl ew to CostaRi ca to sta rtthe proc ess oftr ansfer ri ng the busi ness f ro m Se venquest to A new co ( a t ra nsf erthatwas not com ple ted unti l afterhi s t ri p). S i nce F ourni erknew that the j ud gm en t ha d b ee n e nt er ed an d tha t F YEO was pur su i ng the H SN p a y m en ts , Fou rn ier d id n ot ac c ep t t h e t ra n sfe r in goo d fa i th. The tr ansferi s there f or e v oi dabl e under 740 I LC S 160/9.N o. 07

- 4034 11 B F Y E O arg u es in t h e a lte rn at ive th at th e t ra n sfe r is vo id ab le bec au se Fo u rn ier d id n ot p ay a r ea so n ab ly equi val ent v al ue f orthe H SN busi ness . F Y E O poi nts t o Four ni er ’ s t est i m ony that he d id n ot gi ve Schnei der m oney and chal l enges the e nfo rce abi l i ty ofthe or alag re em en t. B ot h arg u m e n t s la c k m er it. U FT A d oe s n ot lim it re aso nabl y e quiva l ent v al ue to m oney n or to va l ue tr ansferred p urs u a n t t o a vali d cont ract. Th e d istri ct cou rt f o und tha t F o ur ni er ’ s th r ee y ea r s o fl ab o r t o c r ea te the bus i ne ss wi thHSN w as re as o nabl y e qui va l en t to the va l ue o f th e bus i ne ss th at l ab o r cr ea te d. W e se e nothi ng cl ear l y e rr oneo us abo ut thatfi nd i ng.

C The o nl y r emai ni ngi ss ue i s w he th erHSN vi o l at ed th e ci tat i on wh en i t a ccepted th e tr an sfero fthe j ew el rybo x ag r ee m en t f r o m the S ch ne i dere nt i ti es t o Anewco a nd th e r e a ft e r b e g a n ma k i ngi t s p a y me n t s t o th e l a t t e r c o mpan y . S e r v i c e o fa c i t a t i o n pu t s a l i e n o n “ a l l p e r s o nal proper ty bel onging to the j ud gm ent debt ori n the posse ssi on o r contr olo f t h e thi rd party o r w hi ch ther eafter m ay be ac qui r ed o r c o m e due the j udg m en t deb to r a nd com es i nto the pos ses si on o r c on tr ol ofthe thi rd party t o the ti me o fthe di s po s i t i o n o fthe c i t a t i o n. ” 7 3 5 I LCS5 /2

- 1402 ( m )

. I fa re ci pie nt vi ol ate s the r est ra i ni ng pro vi si on ofa c ita ti on a nd tr ansfer s the as set, a cour t “ m ay enter j u d gm en t a ga in st h im or h er in t h e a m ou n t o f th e u n p aid p or t i o n of th e jud gm en t a n d co st s a llow ab le u n d er th is Se cti on, o r i n the am oun t of th e v al ue o fthe proper ty tran sferred , w hich ever is l esser.” 735 I L C S 5/2-1402(f) (1).12 N o. 07

- 4034 H SN pai d A new co f orthe products i t was se l l i ng after i t r ec ei ve d the c i ta ti o n a nd FY EO’ s pet i ti o n f o r a r es tr aini ng o rder

. H SN ar gues that expecti ng it n ot to pay A n ew c o is co m m er c ially u n re as on ab le, ag ain st p u b lic pol i cy, and unfai r, bec ause i t w ou ld r equi re H SN to choos e be tw een def aul ti ng o n i ts contr act w i th A new co an d viol ating th e citation . I t s argu m en t, how ever, overl oo ks the t hi rd choi ce that the l aw pro vi des: ta ki ng a page fro m i nter ple ad erpro cedure, H SN co uld have ar ra nged to pla ce the paym ents ei ther i n a pr i vate es cro w acc ou nto r i n the r eg i st r y o fthe c o ur t. I nde ed, F YEO’s peti ti on f ora re str ai ni ng o rderas ked t he co urt to or der th e latter rel ief, and so i t is obviou s tha t H SN w as aw are o fthi s o pti o n. FYEO urg es thi s co urt to fi nd thatnothi ng r em ai ns to be d ecid ed before a turn over ord er can be ent ered requ irin g HSN to pay i t $ 382, 216. 00, i n additi on t o any a dd iti onalpaym ents m ade to A new co afterA pri l 20 07. N ot so fast, says H SN

. H S N p o in ts ou t tha t the district cou rt neverdeter m i ned w hetherH SN vio lated the ci tat i on an d tha t unr es o l ve d i ss ue s o ff act sh ou ld be l eft to the di st r i ctc o ur t j udg e. I t po ints o ut, f o r e xa m pl e, tha t th e c i t a t i o n do e s n o tn a me A n e wc o , a n d s o th e r e i s s o me q u e s t i o n w h e th e r H S N k n e w th a t A n e w c o w a s , i n l a w, PC C ’s and Seven qu est’s su cce ssor in i nt erest. FYE O ’s pet iti on f o r the r es tr aini ngo r ders o na m es Anewco , b ut H S N was no t r equi r ed to t ak e F YEO’ s wor d f o r i t. The re cor d does co ntai n evidence i nd i cati ng tha t HSN m ay have known thatA new co re cei ved the busi ness f ro m Schnei der, bec ause the J an u ar y 1 1, 20 07 l ett erwas f ro m Schnei der. Fur thersupport f orthati nfe re nce ca n beN o. 07

- 4034 13 fou n d in th e fac t th at H SN u se d t h e sa m e v en d or id en tific at i on num berand product i denti fi cati on num berf or A new co as i t had used f orPCC and Se venq uest. That sa id , up on a fu ll he ar in g H SN m ay h a v e a d d itio n al e vid en c e t h atis p er tin en t. It is th e d ist ric t c ou rt ’ s r o l e in th e fi r s t i n s t a n c e t o a p p ly th e la w to th e fa c ts
. D o o r Sy s., Inc. v. Pro-Line D o o r S y s., Inc. , 12 6 F

. 3d 1028 , 10 32 ( 7th C ir. 19 97 ); Robi ns on v. Sa ppi ngt on , 35 1 F

. 3d 317, 33 8 ( 7th Cir

. 2 0 0 3 )

. We the r e f o r e r e man d thi s c a s e t o the di s t r i ct cour t t o deci de w hetherH SN vi ol ate d the ci tation by tr ansfer ri ng the as set s o fPCC and Schnei der t o A new co. W e V ACATE the j udg m en t o fthe d i st r i ctc o ur t an d R EMA ND for fu rt h er p ro c ee d in gs co n sis te n t w ith t h is o pi ni o n.

3- 31- 09