Judicial candidate’s actions questioned
A federal bankruptcy judge says that a case involving a candidate for Sangamon County Circuit Court judge is riddled with questions.
“I don’t know what’s true or not true here, but I look at this and I think this is just fundamental mistake after mistake,” U.S. Bankruptcy Judge Mary Gorman said during a Tuesday hearing on a case involving David Reid, who is running against Sangamon County Circuit Court Judge April Troemper. “To me, it’s just a mess.”
Reid is accused of not notifying a state court of a bankruptcy action and concealing the bankruptcy from a creditor. He says that he’s done nothing wrong.
“I fully expect to be exonerated when it’s all said and done,” Reid said in an interview.
Reid represents Kent DeLay, who is suing Ryan Bandy, and vice versa, in state court for ownership of the Station House bar in downtown Springfield. While the case was pending, DeLay in 2014 declared bankruptcy, which should have halted the state court lawsuit.
But neither the state court nor Bandy was notified of the bankruptcy, even though Bandy’s name appears on a list of creditors who must receive notice. Notice of bankruptcy and four other letters from the bankruptcy court to Bandy were mailed to Reid, even though Reid wasn’t Bandy’s lawyer and represented Bandy’s adversary in state court litigation.
Reid, who didn’t represent DeLay in bankruptcy proceedings, never gave letters from bankruptcy court to Bandy or his lawyer, nor did he inform the state court of the bankruptcy filing. Bandy said that he found out about the bankruptcy in late July from a bar patron, after he’d lost his fight for the bar in state court. Had he known that DeLay had declared bankruptcy, Bandy says that he would have tried to buy a disputed share of the bar from the bankruptcy estate. Instead, state court proceedings continued, with DeLay winning the fight.
But DeLay’s victory in state court might be for naught. On Tuesday, Judge Gorman said that actions taken in state court are void when bankruptcy should have triggered a halt to proceedings, and the Station House case qualifies.
“Nobody should be over in state court litigating anything in this lawsuit, period, end of story,” Gorman said. While not pinpointing blame, Gorman said that another hearing is needed to get explanations.
“Mr. DeLay put down Mr. Reid as the address for Mr. Bandy, even though Mr. Bandy was the adverse party in the state court action, and neither Mr. DeLay nor Mr. Reid ever corrected that mistake before this court,” Gorman said. “There is a problem with that. We wouldn’t be here if Mr. Bandy had gotten correct notice from the get-go.”
Reid in an interview said that after getting the first letter addressed to Bandy, he told DeLay to tell his bankruptcy attorney to correct the court record so that correspondence would go to Bandy.
“At that point, I thought it was resolved,” said Reid, who did not attend Tuesday’s hearing. He said that he didn’t know how his office address first appeared in bankruptcy files as the mailing address for Bandy.
Bankruptcy trustee Mariann Pogge took the blame for failing to notify Gorman of the state court lawsuit and getting her approval to have what should have been an automatic stay lifted so that state court proceedings could continue.
“It was not Mr. DeLay’s fault, it was not Mr. Reid’s fault, it was my fault,” Pogge said.
“They both should have known,” the judge responded.
David Hall, Bandy’s lawyer, said that Reid had a duty to inform the state court of the bankruptcy regardless of what Pogge did or did not do.
When Pogge said that she didn’t believe that DeLay had purposefully misdirected mail, Gorman interjected.
“How would you know?” Gorman asked. “I wouldn’t know,” said Pogge, who supports Reid in the campaign and has held a fundraiser for him. “I just don’t see this as Mr. DeLay’s fault.”
Gorman responded that there should be consequences.
“There are, certainly, defenses, probably, that Mr. DeLay can raise,” the judge said. “If he wants to come in and say he thought Mr. Reid was the appropriate address for Mr. Bandy, he can come in and explain why. It’s odd that he would have listed his attorney as the address for someone involved in what appears to be contentious litigation.”
The judge said she’s not certain what duty Reid had to put things right when he kept receiving mail from the bankruptcy court that was addressed to Bandy, but she said that other people who get misdirected mail from her courtroom contact her court. Apparently, DeLay at some point listed his own lawyer’s address as Bandy’s address in court documents, the judge said.
“Mr. DeLay did something that is inexplicable,” Gorman said. “Mr. Reid is the only one we know who knew about it. I can’t say who’s at fault, but we need to have a hearing.”
Gorman said she didn’t believe that Reid made the initial mistake in misdirecting mail, but the fact that Bandy’s mail went to Reid’s office is an issue now. She referred to the case of John Narmont, a Springfield bankruptcy lawyer who was suspended in 2012 after a notice of bankruptcy intended for a creditor was instead sent to Narmont’s office.
“The last lawyer who put a creditor down care of the debtor’s own lawyer in front of this court was suspended by the ARDC (Attorney Registration and Disciplinary Commission), so this is a big, big issue,” Gorman told Pogge. “I’m not saying you’re to blame, but if people don’t even get notice of a bankruptcy, then we’ve got another whole issue, and that’s a fraud on this court.”