ILLINOIS OFFICIAL REPORTS

Appellate Court

Harris N.A. v. Harris, 2012 IL App (1st) 113813

Appellate Court

Caption

HARRIS N.A., Plaintiff-Appellee, v. SHERI HARRIS, DefendantAppellant (Stuart Levine, Defendant).

 District & No. First District, First Division

Docket No. 1-11-3813

Filed

Rehearing denied

September 4, 2012

September 18, 2012

Held

(Note: This syllabus

constitutes no part of

the opinion of the court

but has been prepared

by the Reporter of

Decisions for the

convenience of the

reader.)

Summary judgment was properly entered for plaintiff on its complaint

alleging that defendant’s former husband defaulted on a note held by

plaintiff and fraudulently transferred assets to defendant in an attempt to

prevent plaintiff from repossessing them.

Decision Under 

Review

Appeal from the Circuit Court of Cook County, No. 10-CH-07536; the

Hon. Nancy J. Arnold, Judge, presiding.

Judgment Affirmed.
Counsel on

Appeal

Leslie J. Rosen, of Chicago, for appellant.

Chapman & Cutler, LLP, of Chicago (David S. Barritt and James P.

Sullivan, of counsel), for appellee.

Panel PRESIDING JUSTICE HOFFMAN delivered the judgment of the court,

with opinion.

Justices Hall and Karnezis concurred in the judgment and opinion.

OPINION

¶ 1 The appellant, Sheri Harris, appeals from the circuit court’s ruling granting summary

judgment in favor of the plaintiff, Harris N.A., on several counts of its complaint against her

and her former husband Stuart Levine, who is not a party to this appeal. The complaint

alleged that Levine had defaulted on a note and had fraudulently transferred assets to the

appellant to avoid their being recouped by the bank. On appeal, the appellant argues that the

trial court erred in finding most of the disputed transfers to be fraudulent, because (1) Levine

had no ownership interest to transfer after his assets had been forfeited to the United States

government; (2) the transfers were not fraudulent because they were effected for the purpose

of maintaining the defendants’ home, as required by a forfeiture agreement with the United

States; (3) the transfers were not fraudulent because they were made in exchange for

adequate consideration; (4) to the extent the transfers were fraudulent, the plaintiff was

entitled to only one-half of their value, because the transferred assets were marital property;

(5) the circuit court should not have ruled the transfer of a Moore sculpture to be fraudulent,

because the plaintiff never so alleged; and (6) the circuit court should not have ruled the

transfer of an Andy Warhol portfolio to be fraudulent, because Levine never had an

ownership interest in the portfolio. For the reasons that follow, we affirm the circuit court’s

judgment.

¶ 2 In February 2002, the plaintiff filed its complaint, which alleged that Levine had

defaulted on a note and that judgment had been entered against him for more than

$3,300,000. The complaint further alleged that, knowing that he was insolvent and acting

with the intention of preventing full collection of the judgment, Levine had either transferred

several valuable assets to the appellant for no consideration or had sold the assets and then

transferred the proceeds to the appellant for no consideration. The complaint specifically

mentioned an ownership in Hidden Beach Records, LLC (sold for $50,000); a Mitoraj

sculpture (sold for approximately$130,000); “certain artwork” (one sale for $63,500, another

for approximately $25,000); a Moore sculpture (sold for $100,000); a federal income tax

refund (approximately $25,000); a Jeanne Duval painting (sold for $39,550); a dining room

set and other personal property (sold for approximately $63,000 in one instance and

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$100,000 in another); an Andy Warhol portfolio (sold for $55,000); a car (valued at

$32,000); his ownership interest in a Weston, Florida, residence (valued at $600,000); and

approximately $431,000 of the proceeds of the sale of his and the appellant’s Highland Park

home. The plaintiff alleged that these transfers violated the Uniform Fraudulent Transfer Act

(Act) (740 ILCS 160/1 et seq. (West 2010)), and it asked, among other things, that the court

declare the transfers void and enter judgment against the appellant.

¶ 3 The appellant responded by filing a motion to dismiss that argued, inter alia, that Levine

had forfeited to the government his interest in the disputed property and that she gave

reasonable consideration in exchange for the property because she had legal right to half of

it. In support of her motion, the appellant presented Levine’s 2006 plea agreement in case

number 05-CR-691 in the Northern Division of the United States District Court. That

agreement contains the following provision regarding Levine’s forfeiture:

“[Levine] further acknowledges that the government will file a civil complaint

against certain property, namely $5 million, alleging that the property is subject to

forfeiture. [Levine] relinquishes all right, title, and interest he may have in this property

that is used to satisfy the amount due and further agrees to the entry of a judgment against

him, extinguishing any interest or claim he may have had in the property subject to

forfeiture, regardless of where they may have been transferred or hidden. *** [Levine]

agrees that no transfers of property available to satisfy this judgment can be effectuated

by [him] or his agents without concurrence of the government or approval of the Court.

To the extent that [Levine] owns any property available to satisfy this judgment jointly,

he agrees that any efforts to sell, to transfer, or otherwise convey his interest shall be

subject to the same conditions. Further, [Levine] agrees [to] maintain all financial

obligations relating to any property so as to preserve and protect the availability of the

property to satisfy the forfeiture judgment.”

¶ 4 The appellant also presented a March 2008 stipulated agreement between her and federal

prosecutors. That agreement recited Levine’s liability in a forfeiture suit, and it described the

forfeiture suit as follows:

“5. On February 21, 2008, the United States filed a verified complaint for forfeiture

*** for funds in the amount of five million dollars, *** to be satisfied by proceeds of the

real properties located [in Highland Park, Illinois,] and [Weston, Florida].

***

7. On March 5, 2008, [Levine] entered into a stipulated agreement with the United

States resolving his interests in and claims to the defendant properties and *** agreed to

the entry of a judgment against him in the amount of five million dollars and waived any

right ***, title or interest he may have in the defendant properties or the proceeds from

the sale of the properties ***.

8. The defendant properties representing the substitute resto be sold so that proceeds

may be applied to the aforementioned outstanding agreed five million dollar judgment

against [Levine] are held jointly by [Levine] and [the appellant], his spouse, as part of

their marital estate. The parties agree that the assets of the marital estate of [Levine and

the appellant] have an aggregate value of approximately $4,230,256. [The appellant]

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understands and acknowledges [Levine’s] obligation to satisfy this forfeiture judgment

***. The United States understands and acknowledges that [the appellant] has a legal

right, title and interest to 50 percent of the value of the assets of the marital estate she

shares with [Levine], and that the United States may not seek to satisfy the forfeiture

judgment against [Levine] with [her] interests in the marital estate.

9. In consideration of the foregoing and in resolution of the respective interests of

[the appellant] and the United States in the assets of the marital estate, [the appellant] and

the United States agree to the forfeiture of fifty percent (50%) of the aforementioned

agreed value of the marital estate less $250,000 which amount the parties agree

approximately equals $1,865,128, in partial satisfaction of the forfeiture judgment. On

March 4, 2008, a purchase and sale agreement *** was executed between [Levine, the

appellant], and a prospective buyer for [the Highland Park property] in the amount of

$3,850,000.00. *** From the closing of the [Highland Park property], the United States,

in satisfaction, will receive approximately $1,865,128 of the net proceeds ***. ***

10. *** [T]he United States agrees that upon the partial satisfaction of the forfeiture

judgment described above, it will have no further claim and will take no further action,

including administrative, civil or other criminal proceeding against any [of] the property,

real or personal, in which [the appellant] presently has an interest or claim.

11. [The appellant] further agrees that while the [Highland Park] property is in the

process of being marketed for sale and until such time as the completed sale has closed

***, she must maintain the defendant real properties and continue to satisfy all financial

obligations associated with the real properties in order to preserve and protect these real

properties *** so that the proceeds from their sale can be applied to the agreed judgment

***.”

¶ 5 The appellant’s motion to dismiss included a copy of a similar stipulated agreement

between the government and Levine. That agreement stated that Levine agreed to relinquish

his interest in property used to satisfy the forfeiture claim against him and that the forfeiture

claim was “to be satisfied by proceeds from the sale of” the Highland Park and Weston

properties. It furtherstated that the government’s forfeiture complaint had been filed “against

five million dollars and the [Highland Park and Weston] properties, the proceeds from the

sales of those real properties being substituted for the five million dollar judgment and

subject to forfeiture.” As with the appellant’s stipulated agreement, Levine’s agreement

included a clause stating that he would maintain the real properties so that their value would

be protected until they were sold.

¶ 6 Also attached to the motion to dismiss was a copy of the forfeiture complaint filed

against Levine in February 2008. That complaint stated that it was a forfeiture action “for

forfeiture of funds in the amount of five million dollars, to be satisfied by proceeds from the

sale of real properties located [in Highland Park and Weston].”

¶ 7 In addition, the appellant provided a copy of the July 1, 2008, judgment dissolving her

and Levine’s marriage. According to the agreed property distribution attached to that

judgment, the appellant kept an A.G. Edwards account and two Chase Bank accounts, while

Levine kept a third Chase Bank account.

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¶ 8 Finally, the appellant attached to her motion to dismiss a partial transcript of a deposition

in which Levine claimed not to have owned anyAndyWarhol artwork. Levine explained that

the Warhol art at issue was owned by someone else but kept in his house for several years

for safekeeping.

¶ 9 The circuit court denied the appellant’s motion to dismiss, and the appellant answered

the plaintiff’s complaint. In her answer, the appellant admitted that assets or proceeds of

asset sales identified in the complaint had been placed into her bank accounts. Among these

admissions was an admission that she sold the Andy Warhol portfolio for $55,000. The

appellant added several affirmative defenses, including a defense that she used the proceeds

for ordinary financial affairs such as household expenses.

¶ 10 The plaintiff and the appellant thereafter filed cross-motions for summary judgment. In

her motion, the appellant reiterated her arguments that Levine never had an interest in the

disputed assets, had lost his interest by forfeiture, or had transferred his interest to the

appellant pursuant to the dissolution of their marriage. The appellant attached to her motion

the above-quoted documents. She also attached an affidavit in which she averred that she

liquidated marital assets in order to meet household expenses because “most of [their]

liquidated marital assets were frozen.” In her affidavit, the appellant accounted for her use

of some of the proceeds of the asset sales. She listed household expenses as well as credit

card bills, laundry services, cleaning services, living expenses for her children, personal

training expenses, medical expenses, legal fees, automobile expenses, and taxes. She

supported her affidavit with excerpts from her accounting register and with sometimesredacted bank statements.

¶ 11 In its motion for summary judgment, the plaintiff argued, among other things, that

Levine’s forfeiture encompassed only the two named parcels of real property and that the

appellant’s and Levine’s divorce did not shield their other assets from liability.

¶ 12 After hearing argument on the cross-motions, the circuit court granted the plaintiff’s

motion for summary judgment with respect to several of the transferred or sold assets,

including the Moore sculpture, the Warhol portfolio, some personal property, an income tax

refund, and the Hidden Beach Records ownership interest. The circuit court fixed the total

value of these assets at $546,325.73. However, the circuit court granted summary judgment

to the appellant with respect to an automobile and the proceeds of the sales of the Highland

Park and Weston properties. The appellant now timely appeals the circuit court’s order.

¶ 13 Because all of the appellant’s arguments on appeal challenge the circuit court’s decision

to grant summary judgment partly in favor of the plaintiff, we begin our analysis with the

well-established standards for review of a circuit court’s decision to grant summary

judgment. Summary judgment is proper where “the pleadings, depositions, and admissions

on file, together with the affidavits, if any, show that there is no genuine issue as to any

material fact and that the moving party is entitled to a judgment as a matter of law.” 735

ILCS 5/2-1005(c) (West 2010). “The function of a reviewing court on appeal from a grant

of summary judgment is limited to determining whether the trial court correctly concluded

that no genuine issue of material fact was raised and, if none was raised, whether judgment

as a matter of law was correctly entered.” American Family Mutual Insurance Co. v. Page,

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366 Ill. App. 3d 1112, 1115, 852 N.E.2d 874 (2006). “The propriety of a trial court’s

decision to grant summary judgment presents a question of law, which we review de novo.”

Bigelow Group, Inc. v. Rickert, 377 Ill. App. 3d 165, 168, 877 N.E.2d 1171 (2007).

¶ 14 The circuit court here granted summary judgment to the plaintiff on its claims that the

appellant received fraudulent transfers of assets, in violation of section 6 of the Act. That

section provides, in pertinent part, as follows:

“A transfer made or obligation incurred by a debtor is fraudulent as to a creditor whose

claim arose before the transfer was made or the obligation was incurred if the debtor

made the transfer or incurred the obligation without receiving a reasonably equivalent

value in exchange for the transfer or obligation and the debtor was insolvent at that time

or the debtor became insolvent as a result of the transfer or obligation.” 740 ILCS

160/6(a) (West 2006).

If its elements aremet, the Act creates a presumption of the debtor’s fraud. See Cordes &Co.

v. Mitchel Cos., 605 F. Supp. 2d 1015, 1020-21 (N.D. Ill. 2009) (discussing the Act).

¶ 15 The appellant does not dispute that Levine’s indebtedness to the plaintiff arose before the

transfers now at issue, nor does she dispute that Levine was insolvent at the relevant times.

Instead, she raises six distinct challenges to the circuit court’s finding that his transfers to her

were fraudulent under the Act.

¶ 16 First, the appellant argues that the property transfers could not have been fraudulent,

because Levine had no assets to transfer to her in the first place. According to the appellant,

Levine “had nothing to transfer because he had forfeited all of his assets to the United States

government.” We disagree with the appellant’s interpretation of the federal forfeiture

proceedings against Levine. Instead, we agree with the plaintiff that the scope of Levine’s

forfeiture was limited to his interest in the Highland Park and Weston properties.

¶ 17 We draw this conclusion from the documentation the appellant presented to the circuit

court. That documentation begins with Levine’s plea agreement, which states that the United

States would pursue a $5 million forfeiture complaint against “certain property” of Levine’s

and encumber Levine’s ability to transfer property “available to satisfy this judgment.” Later

documents clarifyexactlywhat “certain property” would satisfythe forfeiture judgment. The

stipulated agreement between the appellant and the United States, like the agreement

between Levine and the United States, indicates that the forfeiture judgment was “to be

satisfied by the proceeds of the real properties located [in Highland Park and Weston].”

Likewise, the forfeiture complaint itself states that the forfeiture judgment was “to be

satisfied by proceeds from the sale of real properties located [in Highland Park and

Weston].” These passages unequivocallylimit the reach of the forfeiture judgment to the two

real properties.

¶ 18 To urge a different interpretation, the appellant points out that her stipulated agreement

with the United States included (1) a valuation of her and Levine’s marital estate and (2) the

government’s agreement to leave just over half of that value for the appellant. In the

appellant’s view, these passages indicate that the government seized the entirety of Levine’s

portion of the marital estate, not just his real estate holdings. We disagree. The passage to

which the appellant refers does indeed set a value for the marital estate, but it does so for

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purposes of shielding the appellant from Levine’s forfeiture. The fact that the government

put a value on the marital estate does not change the scope of Levine’s forfeiture, which, as

we have stated, was limited to his interest in the two named real properties. For that reason,

we reject the appellant’s argument that Levine’s forfeiture bereaved him of any property

interests he could have transferred fraudulently.

¶ 19 The appellant’s second argument on appeal is that the transfers here were not fraudulent,

because they were necessary to allow her to maintain her and Levine’s real property, an

obligation that she and Levine assumed pursuant to their agreements with the United States.

As support for this argument, the appellant points out that household expenses were paid out

of her personal account. Based on this, the appellant argues that she and Levine had no

choice but to sell the disputed assets and place them in her account. However, among its

several responses to this point in its brief, the plaintiff points out that, at the time of the

disputed asset transfers, the appellant had access to over $1 million in her own funds. This

fact belies her claim that she and Levine needed to sell the assets in order to pay for

household expenses.

¶ 20 The appellant’s third argument on appeal is that the transfers should not be considered

fraudulent because Levine received adequate consideration for them. Because the lack of

adequate consideration is one of the three elements necessaryto establish fraud under section

6(a) of the Act, the appellant argues that the exchange of consideration defeats the plaintiff’s

fraud claim. The appellant argues that Levine transferred the assets to her so that she would

pay household bills as required by the terms of his criminal bond, and thus that he obtained

a benefit–his own liberty–in exchange for the assets. However, as the plaintiff observes in

its brief, neither the appellant nor Levine raised this “liberty” argument at the circuit court

level. Moreover, as even the appellant observes in her brief, “[t]here was no evidence

presented on these cross motions for summary judgment as to what [Levine’s] liberty ***

meant to him.” Because neither this argument nor any evidence supporting it was presented

to the circuit court, we deem the argument forfeited on appeal. See Cooney v. Magnabosco,

407 Ill. App. 3d 264, 268, 943 N.E.2d 290 (2011) (stating that an appellant that fails to raise

an issue in the circuit court waives that issue for purposes of appeal).

¶ 21 The appellant’s fourth argument is that much of the disputed property was marital

property in which the appellant already held a one-half interest. Thus, she argues, at least half

of the proceeds from the sale of those assets belonged to her irrespective of any fraudulent

transfer. However, again, the plaintiff failed to raise this argument at the circuit court level,

and we deem it forfeited.

¶ 22 The appellant next argues that the circuit court should not have awarded the plaintiff the

value of the Moore sculpture, because the plaintiff never asserted that Levine’s transfer of

the Moore sculpture to her was fraudulent. We disagree. Count V of the plaintiff’s complaint,

titled “Violation of Illinois Uniform Fraudulent Transfer Act Transfer of Moore Sculputure,”

asserts that “[t]he sale by Levine of the Moore sculpture *** was fraudulent.” That count

prays that the court, among other things, “[d]eclare the sale[ ] of the Moore sculpture *** as

void” and “[o]rder that [the judgment against Levine on the plaintiff’s note] be declared a

lien on the Moore sculpture.” This count unquestionably raises the allegation that Levine

transferred the sculpture to the appellant in order to defraud the plaintiff.

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¶ 23 The appellant’s final argument on appeal is that the circuit court erred in ruling that

Levine fraudulently transferred the Warhol portfolio. In fact, the appellant argues, “[t]he

evidence was undisputed that [Levine] never had an ownership interest in this portfolio.” Be

that as it may, the evidence is also unquestioned that the appellant sold to a third party

whatever interest she and Levine had in the portfolio. The actual value of that interest is a

matter for them and their buyer. For our purposes it is sufficient to know that the appellant

received value for it, and Levine and the plaintiff did not.

¶ 24 For the foregoing reasons, we affirm the judgment of the circuit court.

¶ 25 Affirmed.

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