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

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Door Properties, LLC v. Nahlawi, 2020 IL App (1st) 173163Appellate Court DOOR PROPERTIES, LLC, Plaintiff-Appellee, v. AYAD M.
Caption NAHLAWI, Defendant (Mago BB, LLC, Third-Party Citation
Respondent-Appellant).
District & No. First District, Third Division
No. 1-17-3163
Filed December 23, 2020
Decision Under Appeal from the Circuit Court of Cook County, No. 10-L-12931; the
Review Hon. Alexander P. White, Judge, presiding.
Judgment Vacated and remanded.
Counsel on Kevin S. Besetzny, of Besetzny Law P.C., of Chicago, for appellant.
Appeal
Kevin K. McCormick, of DeWald Law Group PC, of Arlington
Heights, for appellee.
Panel 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 (Door Properties), obtained a judgment against defendant
Ayad M. 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unpublished order in 2015.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
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.”
¶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).
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¶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 should
not 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 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 toward 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.
¶ 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
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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.”
¶ 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.”
¶ 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
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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.
¶ 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).
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¶ 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.
¶ 34 This case involves the existence, or nonexistence, 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.
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¶ 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
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, came from Gonzalez or Munoz personally or from one of the
entities they own, such as Mago. He did agree that he had 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.” (Emphasis added.)
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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’
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 is one or the other, but the
evidence does not say which.
¶ 44 The difference, however, is that Door Properties mistakenly believes that it does not 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 parents who pay for their judgment-debtor child’s college tuition and expenses. They
do not “owe” their child anything, at least not in the legal sense; they are not paying off a debt
to that child. They are 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 would
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 long-standing 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.
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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 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,
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 did not 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).
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¶ 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 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.
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