Door Properties, LLC v. Nahlawi , 2020 IL App (1st) 173163 ( 2020 )

2020 IL App (1st) 173163THIRD DIVISION
December 23, 2020
No. 1-17-3163
______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
FIRST JUDICIAL DISTRICT
______________________________________________________________________________
DOOR PROPERTIES, LLC, )
)
Plaintiff-Appellee, ) Appeal from the
) Circuit Court of
v. ) Cook County
)
AYAD M. NAHLAWI, ) 10 L 12931
)
Defendant, ) Honorable
) Alexander P. White,
(Mago BB, LLC, ) Judge Presiding
Third-Party Citation Respondent-Appellant.) )
_____________________________________________________________________________
JUSTICE ELLIS delivered the judgment of the court, with opinion.
Presiding Justice Howse and Justice Burke concurred in the judgment and opinion.
OPINION
¶1 Plaintiff Door Properties, LLC obtained a judgment against defendant Ayad Nahlawi for
just over $750,000, a judgment we affirmed in all respects in an unpublished order in 2015. See
Door Properties, LLC v. Nahlawi, 2015 IL App (1st) 131256-U. Now a judgment creditor, Door
Properties sought to collect that judgment against Nahlawi (now a judgment debtor) by initiating
supplemental proceedings under section 2-1402 of the Code of Civil Procedure. See 735 ILCS 5/2-
1402(f)(1) (West 2014).
¶2 Specific to this matter, Door Properties served a citation to discover assets on respondent,
Mago BB, LLC (Mago). Nearly three years after the citation was served, Door Properties
No. 1-17-3163
discovered that Mago had paid at least $15,000 of Nahlawi’s attorney fees in various legal matters.
Door Properties moved for judgment against Mago, claiming that, contrary to its responses in the
supplementary proceeding, Mago did possess property belonging to Nahlawi, as evidenced by its
payment of some of Nahlawi’s attorney fees.
¶3 In response, Mago argued that the $15,000 paid on Nahlawi’s behalf was not Nahlawi’s
“property” as defined by section 2-1402. Instead, the payment of attorney fees was “a gift” and
“reciprocation for favors that Nahlawi had done for them in the past.” Without conducting an
evidentiary hearing, in a written memorandum order, the circuit court concluded that “these types
of funds fall within the purview of § 1402(f)(1) and are the type of assets meant to be protected by
the legislature.” Thus, the trial court entered judgment in favor of Door Properties and against
Mago.
¶4 We vacate that judgment, as questions of fact exist that do not permit judgment on the
papers and arguments alone. We remand for an evidentiary hearing.
¶5 BACKGROUND
¶6 In 2012, Door Properties obtained an approximately $750,000 judgment against Nahlawi.
In an effort to collect, Door Properties served a third-party citation to discover assets on Mago, an
LLC owned by Nahlawi’s parents and friends/business partners, Richard Munoz and Juan
Gonzalez. The citation stated, in relevant part:
“YOU ARE PROHIBITED from making or allowing any transfer or other disposition of,
or interfering with, any property not exempt from execution or garnishment belonging to
the judgment debtor or to which the judgment debtor may be entitled or which may be
acquired by or comes due to judgment debtor, until further order of court or termination of
the proceedings. “
-2-
No. 1-17-3163
¶7 In 2014, Munoz, as Mago’s manager, answered the citation and indicated that Mago did
not possess any of Nahlawi’s assets or property. Munoz reiterated the same during his citation
examination.
¶8 More than two years later, in 2016, Nahlawi and his attorney—Kevin Besetzny—appeared
in the United States Bankruptcy Court before the Honorable Jacqueline P. Cox on an unrelated
matter. (Unrelated for our purposes, at least; it involved the bankruptcy of Mark and Carol
Anderson, the latter of whom was a named plaintiff in the original state action that resulted in the
$750,000 judgment, and the former of whom was a principal in at least one of the plaintiff
companies likewise involved in that lawsuit.)
¶9 In the bankruptcy matter, Judge Cox had previously entered judgment against Nahlawi for
violating a stay order and had entered a rule to show cause for Nahlawi’s failure to pay that
judgment. During the hearing on the rule, Besetzny argued that Nahlawi did not willfully fail to
pay the judgment but did so only because he lacked the ability to do so.
¶ 10 In obvious frustration over Nahlawi’s continued claim that he had no money, Judge Cox
directly asked Besetzny who was paying his attorney fees. Besetzny told the court that Mago had
paid approximately $15,000 of Nahlawi’s legal fees. (Recall that Mago, the corporate entity,
consists of Nahlawi’s parents and two friends, Munoz and Gonzalez.)
¶ 11 Nahlawi then requested the opportunity to directly address the court about why he
shouldn’t be held in contempt. As to the payment of his attorney’s fees by Mago, he explained:
“I have two people that have worked with and for me for a long time, Rick Munoz, a chef,
and Juan Gonzalez, a chef. And after our demise of this because of Anderson, there’s a lot
of bad feelings. This guy ruined a lot of lives. So when I—they worked for me, and I paid
-3-
No. 1-17-3163
for their legal fees, and I helped them through life, two Mexican immigrants. They wanted
to pay me back.” (Emphasis added.)
¶ 12 Judge Cox ultimately found Nahlawi in contempt, reasoning that, if Nahlawi could find a
way to get his lawyer paid, he could find a way to pay the judgment she had entered against him.
¶ 13 A year after that bankruptcy hearing, in 2017, Nahlawi sat for a citation examination.
Nahlawi continued to insist that he had no assets and was not earning income. When questioned
about how he was paying his bills, Nahlawi explained that his parents were taking care of nearly
all his expenses. However, he recognized that Mago was paying his attorney fees. He also
acknowledged that his friends and family would often give him cash when he needed it. While not
formally employed, Nahlawi admitted that he occasionally continued to help his former business
partners with their companies.
¶ 14 Shortly after this examination, Door Properties sought a $15,000 judgment against Mago
for the payments it had made towards Nahlawi’s attorney fees. Door Properties noted that its
citation to Mago restrained Mago from transferring any assets or property belonging to Nahlawi,
and the court should thus enter judgment against Mago and in favor of Door Properties “in the
amount of the value of the property transferred.” 735 ILCS 5/2-1402(f)(1) (West 2014).
¶ 15 The motion was supported by the transcripts of the hearing before Judge Cox and
Nahlawi’s citation examination, as described above.
¶ 16 In response, Mago acknowledged that its manager (Munoz) and member (Gonzalez) had
paid those attorney fees but argued that those payments were a gift, gratuitous “reciprocation” for
favors Nahlawi had done in the past. In other words, they did not owe Nahlawi that money; they
paid it as a gratuitous gesture. The money did not belong to Nahlawi in any way.
-4-
No. 1-17-3163
¶ 17 Neither party requested, and the court did not hold, an evidentiary hearing. Instead, the
court heard arguments on the motion, focused on whether Mago’s payment of Nahlawi’s debt
constituted a “transfer” of “property” belonging to Nahlawi under section 2-1402(f)(1). In sum,
Door Properties argued:
“[W]hat he’s just saying is that there is a debt that the third party during the citation paid;
they are saying it’s repayment of a favor. Now they’re saying it’s a gift. The word ‘gift’
isn’t used here. Whether it’s a gift or whether there’s an agreement, some type of contract,
whatever the case may be, they disposed of a debt of the judgment debtor to the preference
of someone else during the pendency of the citation after being served with the citation,
everything.
It is absurd to think that you can say, ‘Well, just because I paid the obligation as a
favor, then it’s not violating the citation.’ ”
¶ 18 Door Properties focused on the fact that Nahlawi, personally, told the bankruptcy judge
that the principals of Mago were “paying him back.” Door Properties argued that describing the
payment as a “favor” was just a clever way of circumventing the fact it was a legitimate debt:
“ ‘Why don’t you do me a favor? You just pay my mortgage for me. You don’t have to pay
me any wages. Just pay my mortgage for me. I have a car payment. Why don’t you do me
a favor? Pay that for me as well. In fact, here. I’ll give you a nice list of all of my bills.
Why don’t you do me a favor?’
That’s violating the garnishment. It’s violating the citation. It prevents that third
party from acting in this manner, and it’s absurd to suggest that anything other than a
violation here has occurred.”
-5-
No. 1-17-3163
¶ 19 Mago, on the other hand, argued that the restraining provision did not prohibit it from
voluntarily, gratuitously paying Nahlawi’s debt, which it claimed is precisely what occurred:
“Mago BB had no assets and has no assets of the judgment debtor. So that is undisputed. There is
[sic] no assets that—of the judgment debtor *** that they are using to pay for the judgment debtor’s
bills. This is repayment of a gift, repayment of a favor, and the testimony is clear on that.”
¶ 20 The circuit court issued a memorandum order entering judgment against Mago. After
acknowledging that it was “unable to locate any case law addressing the narrow issue in this case,”
the court relied on the fact that section 2-1402 is liberally construed. The court recognized Mago’s
claim that “it was never in possession of any funds or assets belonging to Nahlawi, and that the
funds used to pay Nahlawi’s attorney’s fees were transferred as a gift of favor rather than pursuant
to any debt or agreement.” Still, the court found that “these types of funds fall within the purview
of § 1402(f)(1) and are the type of assets meant to be protected by the legislature.” In the court’s
view,
“[t]o rule otherwise would seem to allow any debtor that is owed money from another
party, pursuant to a prior contract or agreement, to dismiss the contract and instead accept
payment in a more informal capacity, as a favor or gift on behalf of prior services. This
would subvert the clear intention of the legislature to protect a debtor’s assets in the
possession of a third party from being dissipated, and allow parties to effectively
circumvent the transfer prohibition language included in the third party citation.”
¶ 21 While the court “recogniz[ed] that not every single favor accepted or gift received by a
judgment debtor during citation proceedings will be improper, the Court finds that this is the type
of transaction that was meant to be prohibited by the legislature in crafting § 1402.”
-6-
No. 1-17-3163
¶ 22 Mago moved for reconsideration, reiterating that the question was not whether Mago paid
Nahlawi’s debts but whether Nahlawi “had any control or legal interest over the money Mago paid
[his] attorneys.” The court denied the motion to reconsider and held it “did not need to determine
whether or not Nahlawi had control over the funds, because that was not the deciding element in
rendering judgment. The fact Mago BB was repaying Nahlawi was the sole purpose behind the
Court’s August 24, 2017 Judgment.”
¶ 23 This appeal follows.
¶ 24 ANALYSIS
¶ 25 On appeal, Mago claims the court erred in finding that Mago violated the restraining
provision of the citation by paying Nahlawi’s attorney’s fees. Whether certain conduct violates the
citation’s restraining provision is a question of law we review de novo. National Life Real Estate
Holdings, LLC v. Scarlato, 2017 IL App (1st) 161943, ¶ 20. Our review would be de novo, in any
event, as we are reviewing trial court findings based solely on the memoranda, exhibits, and oral
argument, and thus we sit in the same position as the trial court, owing no deference to any factual
findings or credibility determinations from an evidentiary hearing. Dinerstein v. Evanston Athletic
Clubs, Inc., 2016 IL App (1st) 153388, ¶ 34.
¶ 26 Section 2-1402 of the Code of Civil Procedure allows a judgment creditor to begin
supplementary proceedings against a third party to discover “assets belonging to the judgment
debtor that the third party may have in its possession.” Bank of Aspen v. Fox Cartage, Inc., 126
Ill. 2d 307, 313 (1989); see 735 ILCS 5/2-1402(a) (West 2014). What constitutes an “asset
belonging to the judgment debtor” is to be liberally construed. See Wells Fargo Bank Minnesota,
NA v. Envirobusiness, Inc., 2014 IL App (1st) 133575, ¶ 16.
-7-
No. 1-17-3163
¶ 27 An “asset belonging to the judgment debtor” includes a debt owed to that judgment debtor.
See Ill. S. Ct. R. 277(a) (eff. Jan. 4, 2013) (section 2-1402 proceeding may be commenced against
“any third party the judgment creditor believes has property of or is indebted to the judgment
debtor” (emphasis added)); Poulos v. Litwin, 193 Ill. App. 3d 35, 40 (1989) (“Read as a whole,
[section 2-1402] is intended to reach debts owed to the judgment debtor which would provide
‘moneys *** which are *** to become due.’ ” (quoting Ill. Rev. Stat. 1987, ch. 110, ¶ 2-
1402(d)(1))).
¶ 28 Section 2-1402(f)(1) authorizes the citation to include a restraining provision (as Door
Properties included here): “The citation may prohibit the party to whom it is directed from making
or allowing any transfer or other disposition of *** any property *** belonging to the judgment
debtor or to which he or she may be entitled or which may thereafter be acquired by or become
due to [the judgment debtor].” 735 ILCS 2-1402(f)(1) (West 2014). Said differently, the restraining
provision requires the third party “to freeze assets” belonging to the judgment debtor that are in
the third party’s possession. Kauffman v. Wrenn, 2015 IL App (2d) 150285, ¶ 25.
¶ 29 The obvious purpose of the restraining provision is to prevent the judgment debtor or third
party from disposing of those assets before the judgment creditor can reach them. Bank of Aspen,
126 Ill. 2d at 314; Scarlato, 2017 IL App (1st) 161943, ¶ 22. Thus, if the citation contains such a
restraining provision, and the third-party respondent violates it by transferring or disposing of the
assets, the court has options at its disposal, including the one Door Properties sought here—the
court may enter judgment against that third party in the amount of the unpaid judgment, or the
value of the property transferred, whichever is less. 735 ILCS 2-1402(f)(1) (West 2014); see Bank
of Aspen, 126 Ill. 2d at 313. The court may also cite the third party for contempt. 735 ILCS 2-
1402(f)(1) (West 2014); Ill. S. Ct. R. 277(h) (eff. Jan. 4, 2013).
-8-
No. 1-17-3163
¶ 30 Of course, this all presupposes that the third party possesses assets belonging to the
judgment debtor. After all, the only reason a third party would ever be responsible for a judgment
against a judgment debtor is if that third party holds assets of the judgment debtor, which the
judgment creditor then seeks to reach by way of supplemental proceedings.
¶ 31 Thus, the relevant question is “whether [the] third party is holding assets of the judgment
debtor that should be applied to satisfy the judgment.” Kauffman, 2015 IL App (2d) 150285, ¶ 26.
And “[i]f the third party possesses no assets of the judgment debtor, then the court has no authority
to enter any judgment against the third party in a supplementary proceeding.” Schak v. Blom, 334
Ill. App. 3d 129, 133 (2002). It is the judgment creditor’s burden of showing that the third-party
respondent possesses assets of the judgment debtor. Kauffman, 2015 IL App (2d) 150285, ¶ 26.
¶ 32 So the question before the trial court was whether Door Properties carried its burden of
proving that Mago violated the restraining provision of the citation order by paying legal fees owed
by Nahlawi to Nahlawi’s attorney. More specifically, the question under the statute is whether
Mago “transfer[red] *** any property *** belonging to the judgment debtor or to which he or she
may be entitled or which may thereafter be acquired by or become due to [the judgment debtor].”
735 ILCS 5/2-1402(f)(1) (West 2014).
¶ 33 This case does not involve tangible property like treasury notes sitting in a bank account,
or proceeds of an insurance policy. See Vendo Co. v. Stoner, 108 Ill. App. 3d 51, 56 (1982)
(treasury notes held as collateral for loan to judgment debtor); TM Ryan Co. v. 5350 South Shore,
L.L.C., 361 Ill. App. 3d 352 (2005) (insurance proceeds owed to judgment debtor). Nor is this a
more complicated situation involving an identifiable pool of money via a line of credit, with the
only question being whether the judgment debtor had sufficient control over the money for it to
constitute his “property.” See Scarlato, 2017 IL App (1st) 161943, ¶¶ 35, 40.
-9-
No. 1-17-3163
¶ 34 This case involves the existence, or non-existence, of a debt. In the view of Door Properties
and the trial court, Mago was repaying a debt it owed Nahlawi.
¶ 35 The parties do not dispute that a debt a third party owes to a judgment debtor would be
considered the judgment debtor’s “property” or “asset.” That is clear enough from the language of
section 2-1402, which applies not only to tangible property but also property to “to which [the
judgment debtor] may be entitled or which may thereafter be acquired by or become due to [the
judgment debtor].” (Emphases added.) 735 ILCS 2-1402(f)(1) (West 2014); see Poulos, 193 Ill.
App. 3d at 40 (“Read as a whole, [section 2-1402] is intended to reach debts owed to the judgment
debtor which would provide ‘moneys *** which are *** to become due.’ ” (quoting Ill. Rev. Stat.
1987, ch. 110, ¶ 2-1402(d)(1))). But as we noted, Rule 277 removes all doubt on this question. See
Ill. S. Ct. R. 277(a) (eff. Jan. 4, 2013) (section 2-1402 proceeding may be commenced against “any
third party the judgment creditor believes has property of or is indebted to the judgment debtor”
(emphasis added)).
¶ 36 Nor do the parties dispute that, if Mago owed Nahlawi a debt that it satisfied by paying his
attorney fees on his behalf, such a payment would be an illegal “transfer” of Nahlawi’s “property”
under section 2-1402. In other words, the parties agree that, if Mago owed Nahlawi $15,000 (or
more) and paid off some or all of that debt by paying the $15,000 to Nahlawi’s lawyer, Mago
would have violated the restraining provision of section 2-1402(f)(1).
¶ 37 So the only question is whether Door Properties carried its burden of proving that Mago
owed Nahlawi a debt in the first place. In our view, Door Properties came nowhere close to
carrying that burden.
¶ 38 There was no evidentiary hearing. The only evidence that Door Properties submitted was
on paper: the transcripts of the hearing before Judge Cox in bankruptcy court and Nahlawi’s
- 10 -
No. 1-17-3163
testimony at the citation examination. The bankruptcy court transcript established that Mago paid
$15,000 to Nahlawi’s lawyer, Mr. Besetzny, but it did not establish that this money was a debt—
a legal obligation—that Mago owed Nahlawi. The evidence, if anything, more fully supported
Mago’s claim that the payment of Nahlawi’s legal fees was a gratuitous gesture on the part of
Mago’s manager (Munoz) and one of its members (Gonzalez).
¶ 39 At the bankruptcy hearing, Nahlawi testified as follows:
“I have two people that have worked with and for me for a long time, Rick Munoz, a chef,
and Juan Gonzalez, a chef. And after our demise of this because of Anderson, there’s a lot
of bad feelings. This guy ruined a lot of lives. So when I—they worked for me, and I paid
for their legal fees, and I helped them through life, two Mexican immigrants. They wanted
to pay me back.
***
So—so my parents and Chef Juan and Chef Rick, who own this, who are being more than
kind to take care of some of the stuff that I’m expenses [sic], they want to see Anderson
brought to justice. They helped me hire Jeff Bunn at the time to pursue Anderson for the
money he owes me.”
¶ 40 Nahlawi’s testimony at the citation examination added little to the analysis. When asked if
anyone had lent him money since 2010, Nahlawi identified his parents, his brother, “Chef Juan”
Gonzalez, and “Chef Rick” Munoz. He could not give specifics on how much or how often
Gonzalez or Munoz gave him money, but it usually consisted of helping pay a bill or expense that
cropped up, and the payment was never formalized by a promissory note or any such document.
He could not specify whether attorney fees paid to Mr. Besetzny or his previous lawyer, Mr. Bunn,
- 11 -
No. 1-17-3163
came from Gonzalez or Munoz personally or from one of the entities they own, such as Mago. He
did agree that he’d previously done “favors” for Munoz and Gonzalez.
¶ 41 So the citation examination testimony added nothing. And the most reasonable takeaway
from Nahlawi’s testimony before Judge Cox was that Nahlawi had helped Munoz and Gonzalez
when they first came to this country, and they wanted to repay the favor when the going got tough
for Nahlawi. Whether that, in fact, is true is not the point. The point here is that this was the sum
and substance of the evidence that Door Properties proffered—sworn testimony on paper, without
an evidentiary hearing—and by no means did Door Properties carry its burden of demonstrating
that Mago BB owed Nahlawi a legally enforceable debt, as opposed to a “debt” in the sense of
gratitude or goodwill. There was no testimony in either of these transcripts that remotely
established the existence of any debt, much less the amount of that debt or the circumstances
surrounding that debt. The mere fact that Nahlawi characterized his friends’ payment of his
attorney fees as a desire to “pay me back” does not, without more, convert what he described into
a legal debt owed to him. Section 2-1402 is not a game of gotcha.
¶ 42 As noted above, while the trial court’s reasoning was not entirely clear, it did seem to be
making a finding that a previous debt existed between Nahlawi and Mago when it wrote that
Mago’s position here “would seem to allow any debtor who is owed money from another party,
pursuant to a prior contract or agreement, to dismiss the contract and instead accept payment in
a more informal capacity, as a favor or gift on behalf of prior services.” For the reasons we have
given, we cannot accept that finding. The record comes nowhere close to establishing that a “prior
contract or agreement” existed, pursuant to which Mago legally owed Nahlawi anything at all.
¶ 43 Notably, however, Door Properties does not really disagree with our take on the facts.
Indeed, in its reply memorandum below, Door Properties acknowledged that “[t]his ‘pay back’
- 12 -
No. 1-17-3163
payment of the attorneys’ fees is either made pursuant to some contractual obligation between
[Nahlawi] and Mago BB, or the payment is a gift.” We agree; it’s one or the other, but the evidence
does not say which.
¶ 44 The difference, however, is that Door Properties mistakenly believes that it doesn’t matter
which one of those facts is true. Either way, says Door Properties, it is fundamentally unfair to
allow Nahlawi to claim he has “no money, assets, occupation, income, or virtually anything of his
own” and thereby avoid his obligations to a judgment creditor, while at the same time his expenses
are paid by his friends and family. This point is encapsulated by a passage from its brief:
“If these funds are not considered Nahlawi’s property, then what incentive is there to
continue holding individuals accountable for their actions? If an individual can persuade a
company, friend, or relative to pay for every single expense in their life so that individual
can continue to live irresponsibly, what remedy is available to a judgment creditor against
this individual’s reckless behavior? At some point there needs to be accountability in these
types of situations. To rule otherwise would completely undermine the debtor/creditor
relationship.”
¶ 45 However sympathetic we may be to Door Properties’ frustration with a judgment debtor
who has managed to remain relatively asset-free while having his expenses subsidized by his
family and friends, that complaint does not implicate section 2-1402. If a parent or friend were
holding “property” of the judgment debtor—for example, if they owed the judgment debtor
money—that, of course, would be subject to garnishment by the judgment creditor, as we have
already explained.
¶ 46 But a gratuitous payment on the judgment debtor’s behalf, out of goodwill or love or
familial obligation? That is not covered by section 2-1402(f)(1). And imagine if it were. Imagine
- 13 -
No. 1-17-3163
parents who pay for their judgment-debtor child’s college tuition and expenses. They don’t “owe”
their child anything, at least not in the legal sense; they’re not paying off a debt to that child.
They’re doing it gratuitously. Under Door Properties’ interpretation of section 2-1402, if the
parents were served with a citation that contained a restraining provision, those parents would not
be permitted to put their child through college—or if they did, they’d have to pay that same amount
in a judgment to the judgment creditor for violating section 2-1402(f)(1), as well as being subject
to a contempt finding.
¶ 47 That is not the law. Section 2-1402 does not forbid gratuitous payments to benefit a
judgment debtor. It requires only that a third party disclose, preserve, and turn over to a judgment
creditor any property or assets in its possession that belong to the judgment debtor.
¶ 48 Our holding is just another way of reiterating the longstanding principle that, in a citation
proceeding, a judgment creditor stands in the shoes of a judgment debtor and “ ‘ “may not recover
from a third-party citation [respondent] unless the judgment debtor could have recovered from the
third-party [respondent].” ’ ” Stonecrafters, Inc. v. Wholesale Life Insurance Brokerage, Inc., 393
Ill. App. 3d 951, 958-59 (2009) (quoting Second New Haven Bank v. Kobrite, Inc., 86 Ill. App. 3d
832, 835 (1980), quoting Sobina v. Busby, 62 Ill. App. 2d 1, 13-14 (1965)). If the third party
(Mago) does not owe a legally enforceable debt to the judgment debtor (Nahlawi), then the
judgment debtor has no right to recover anything from the third party—and thus neither would the
judgment creditor (Door Properties) stepping into the judgment debtor’s shoes.
¶ 49 Make no mistake: If Munoz or Gonzalez, gratuitously, out of the kindness of their hearts,
simply handed $15,000 to Nahlawi, that money would be subject to attachment by Door
Properties—but not because of subsection (f)(1)’s third-party-transfer provision. It would be
subject to attachment because it was now in the possession of Nahlawi, the judgment debtor, and
- 14 -
No. 1-17-3163
the court could compel Nahlawi to “deliver up” the money to help satisfy the judgment against
Nahlawi under subsection (c)(1). See 735 ILCS 5/2-1402(c)(1) (West 2014) (“When assets or
income of the judgment debtor *** are discovered, the court may *** (1) Compel the judgment
debtor to deliver up, to be applied in satisfaction of the judgment, in whole or in part, money ***
so discovered ***.”).
¶ 50 If, as Door Properties claims, subsection (f)(1) also applied to the scenario above, then
Munoz and Gonzalez would have to pay that same amount, again, to Door Properties (and possibly
face a contempt citation), for committing no other crime than trying to gratuitously help a friend.
Third parties, by definition, are entities not involved in the underlying lawsuit between judgment
creditor and judgment debtor that resulted in a judgment. That is why we have consistently and
repeatedly emphasized that, “[i]f the third party possesses no assets of the judgment debtor, then
the court has no authority to enter any judgment against the third party in a supplementary
proceeding.” Schak, 334 Ill. App. 3d at 133. We can think of no reason why the law would punish
that blameless third party for an act of generosity, and we find nothing in the language of section
2-1402 that would suggest otherwise.
¶ 51 It would be an entirely different story, of course, if the person or entity who paid Nahlawi’s
lawyer were, in truth, paying off a legally enforceable debt it owed Nahlawi. As we already said,
a debt Mago owed Nahlawi would constitute an asset belonging to Nahlawi in Mago’s possession,
and satisfying that debt by paying Nahlawi’s lawyer would be an unlawful transfer under section
2-1402(f)(1).
¶ 52 And there is at least some evidence in the record that this may be the case. The record
shows that Mago consists not only of Mr. Munoz and Mr. Gonzalez but also Nahlawi’s parents,
- 15 -
No. 1-17-3163
via a corporate entity called Kiss the Chef. And Nahlawi did testify, in both the bankruptcy hearing
and the citation examination, that he performed various tasks for his parents and for Mago.
¶ 53 Was the $15,000 payment to Nahlawi’s lawyer a way of compensating Nahlawi for work
he performed for Mago or one of Mago’s principals (his parents, Munoz, or Gonzalez)? Was there
some informal agreement between Nahlawi and his parents, Munoz, and Gonzalez, that Nahlawi
would perform some work in exchange for them covering his expenses? There was no testimony
indicating so. As noted above, Door Properties didn’t seem to think it mattered whether Mago paid
those legal fees gratuitously or as repayment of a debt.
¶ 54 As we have explained, it makes all the difference. But we leave room for the possibility
that Door Properties might be able to prove that Nahlawi was owed money for work he performed
for Mago (or one or more of its principals), and the $15,000 payment to Nahlawi’s attorney was
in satisfaction of that debt. If the evidence showed as much, the $15,000 payment would be an
illegal transfer under section 2-1402(f)(1).
¶ 55 For that reason, rather than reverse the judgment outright, the better course is to vacate the
judgment and remand for an evidentiary hearing, as a question of fact existed that did not lend
itself to summary disposition on the papers. See Harmon v. Ladar Corp., 200 Ill. App. 3d 79, 83
(1990) (error for court in supplementary proceeding to determine ownership of property based
solely on arguments of counsel without evidentiary hearing, when credible dispute existed); Roy
Strom Excavating & Grading Co. v. National Bank of Albany Park, 4 Ill. App. 3d 561, 567 (1972)
(same).
¶ 56 CONCLUSION
¶ 57 Section 2-1402 does not prohibit Nahlawi’s family or friends from acts of gratuitous
generosity, such as letting Nahlawi live in a house they own or paying his bills or expenses. If the
- 16 -
No. 1-17-3163
payments are not gratuitous, but rather are to pay off a legally enforceable debt they owe
Nahlawi—in exchange for work Nahlawi performed, for example—section 2-1402 is implicated.
But if the latter scenario is true, Door Properties has the burden of proving it. Because we find a
disputed question of fact existed, and the matter was thus not amenable to summary disposition on
the papers alone, we vacate the judgment of the circuit court and remand for an evidentiary hearing
consistent with this opinion.
¶ 58 Vacated and remanded.
- 17 -
No. 1-17-3163
No. 1-17-3163
Cite as: Door Properties, LLC v. Nahlawi, 2020 IL App (1st) 173163Decision Under Review: Appeal from the Circuit Court of Cook County, No. 10-L-
12931; the Hon. Alexander P. White, Judge, presiding.
Attorneys Kevin S. Besetzny, of Besetzny Law P.C., of Chicago, for
for appellant.
Appellant:
Attorneys Kevin K. McCormick, of DeWald Law Group PC, of Arlington
for Heights, for appellee.
Appellee:
- 18 -