Stolfo v. Kindercare Learning Centers, LLC, et al.
MEMORANDUM Opinion and Order, Civil case terminated. Signed by the Honorable Harry D. Leinenweber on 6/21/2017: Mailed notice (jk, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
DENNIS J. STOLFO,
Case No. 17 C 854
Judge Harry D. Leinenweber
Case USBC No. 12 A 01796
Appeal from the United States
Bankruptcy Court, Northern
District of Illinois, Eastern
KINDERCARE LEARNING CENTERS,
LLC, ARNETTA TERRY, JOHN
RANIERI, and SERVICE LIST,
MEMORANDUM OPINION AND ORDER
Bankruptcy Court denying his Motion to revisit its ruling that
his court-ordered sanctions were not discharged in bankruptcy.
For the reasons stated herein, the Court affirms the decision of
disciplinary authority for his conduct in this litigation.
The facts of this case read like a mockery of the idea that
KinderCare Learning Centers and some of the other appellees in
this case (collectively, “KinderCare”) on behalf of a client.
10942 (the “Underlying Case”).
Stolfo’s conduct in that lawsuit
caused him to be sanctioned on at least five separate occasions
All in all, Stolfo appealed the underlying case six
KinderCare Learning Ctrs., Inc., 51 N.E.3d 906, 911 n.1 (App.
Ct. 2016) (internal quotation marks omitted).
After exhausting his remedies in the state courts in the
Underlying Case and succeeding only in racking up KinderCare’s
legal bills, Stolfo filed for bankruptcy.
See, In re Stolfo,
No. 12-29479 (Bankr. N.D. Ill. 2012) (“Bankruptcy Case”).
proceeding was a Chapter 7, “no assets” bankruptcy – meaning
that the court determined that Stolfo did not have any assets
with which to pay his creditors.
Per the usual procedure in
such a case, the court gave Stolfo’s creditors notice that they
should not file a proof of claim.
to the creditors stated:
As the standard form sent out
“There does not appear to be any
therefore should not file a proof of claim at this time.”
ECF No. 10, Ex. A (emphasis in original).
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In keeping with the
The bankruptcy case closed in November 2012.
then filed a related proceeding to determine whether the courtordered
KinderCare v. Stolfo, No. 12-01796 (Bankr. N.D. Ill. 2012) (the
“Adversary Discharge Case”).
(The sanctions were payable to
KinderCare to compensate it for the legal expenses it incurred
in defending against Stolfo’s frivolous litigation.)
proceeding is known as an “adversary case,” and it proceeded
much as a case filed in the district court would.
brought a Complaint in which it argued that because Stolfo’s
conduct in the Underlying Case was
“willful and malicious,” the
See, 11 U.S.C § 523(a) (providing that a Chapter 7
bankruptcy “does not discharge an individual debtor from any
debt . . . for willful and malicious injury by the debtor to
He lost both.
In granting summary judgment to KinderCare, Judge Eugene R.
Wedoff relied on the state court proceeding in the Underlying
As the judge stated, the “state court’s factual findings
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and an order for sanctions against the debtor, Dennis J. Stolfo,
collaterally estop Stolfo from relitigating the court’s factual
Moreover, “these factual determinations are sufficient
See, Adversary Discharge Case, ECF No. 61 at
KinderCare parties from his bankruptcy discharge.” Id.
thus still owed KinderCare for the full amount of the sanctions.
The Court’s Order, handed down on September 3, 2013, ended the
dispute, and a docket entry made the day after terminated the
Armed with Judge Wedoff’s ruling, KinderCare returned to
the Illinois circuit court to attempt to collect on the debt.
Not only did he stonewall KinderCare in its
judgment in the Underlying Case.
And he appealed – multiple
By 2016, the Illinois appellate courts had exhausted their
In two separate opinions, the courts lambasted
Stolfo for his actions in the litigation against KinderCare.
frivolous conduct” and “blatant disregard” for the courts.
Stolfo, 51 N.E.3d at 913-14.
It also rejected his arguments as
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ordered him “to obtain leave of this court prior to submitting
any other filings.”
See, id. at 915.
The second court went further.
In an unpublished opinion,
Justice Aurelia Pucinski had this to say about and to Stolfo:
It is abundantly clear that attorney Dennis James
Stolfo is an unrepentant serial filer who will use any
previously resolved, incomplete, incoherent, inane,
frivolous, or just plain concocted to continue to
delay having to pay the properly ordered sanctions.
. . .
Stolfo is once again admonished to cease and desist
from frivolous actions. . . .
He is reminded that the order entered by this court in
appeal number 1-14-2396 requires him to “obtain leave
of court prior to submitting any other filings.”
. . .
Further, Stolfo is admonished that continued frivolous
filings in this mater may result in referral to the
Commission] for vexatious and delaying behavior.
KinderCare v. Stolfo, No. 13 L 11821, 2016 IL App (1st) 143608U, ¶¶ 28-34.
Almost needless to say, the court found Stolfo’s
appeal “frivolous in the extreme” and imposed further sanctions.
Id. ¶ 34.
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As is particularly relevant for the current appeal, Justice
Pucinski also identified a slew of issues that “have already
been decided” and “are no longer available to [Stolfo]” “in any
See, id. ¶¶ 24-29.
These included the argument that
Delaware LLC results in a loss of standing for Kindercare LLC.”
Id. ¶ 26 (“Under the doctrine of res judicata this issue for
Stolfo is now permanently doomed and is not available to him in
subsumed the contention Stolfo raised in the circuit court that
Delaware law because the successor in interest provisions in
corporation to an LLC, so Kindercare LLC is a nullity which
Id. ¶ 21.
No. 1201796 for leave to file his adversary complaint to enforce
the discharge and the barring and voiding and dismissal with
prejudice of the adversary complaint Case No. 1201796 and the
September 3, 2013 order granting the adversary complaint and the
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willful acts that violate 11 U.S.C. 524(a) and 11 U.S.C. 105
See, Adversary Discharge Case, ECF No. 62.
in a case that has been closed for three years, Stolfo brought a
Motion that asked the court to (1) reconsider its ruling from
three years earlier, (2) allow Stolfo to file his own Complaint
in KinderCare’s now-closed case, and (3) award Stolfo sanctions.
Adversary Discharge Case, ECF No. 71.
At the hearing, Chief
Judge Hollis was clipped and to the point, informing Stolfo that
his Motion was “wrong procedurally” but that “I wouldn’t suggest
appellate court said directing you not to raise these arguments
again . . . , and the language was ‘in any court.’”
Judge Hollis then summarily denied Stolfo’s Motion.
True to form, however, Stolfo tried again – this time by taking
an appeal to this Court.
Because Stolfo has given the Court no reason to view this
decision of the Bankruptcy Court and grants KinderCare all the
relief it requests.
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To the extent that Stolfo engages with Chief Judge Hollis’
reasoning at all on appeal, he faults her for relying on Justice
According to Stolfo, it was error for the
judge to have done so because the state court opinion “is not
precedential and may not be cited by any party.”
No. 6 at 23.
The argument is baffling.
See, e.g., ECF
Stolfo seems to mean something like a published opinion.
Justice Pucinski’s opinion does not need to be published to be
Appellant and so binds him even if it is not precedential for
Moreover, to the extent that Illinois limits how
unpublished opinions may be used, those rules do not apply to
the federal courts.
Compare, ILL. SUP. CT. R. 23(e), with U.S.C.
FED. R. APP. P. 32.1 (providing that courts “may not prohibit or
precedential,’ ‘not precedent,’ or the like”).
is nothing inconsistent between the Illinois Supreme Court rule
Hollis’ reliance on the relevant ruling to warn Stolfo that the
arguments he raised in his motion are precluded by res judicata.
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See, ILL. SUP. CT. R. 23 (“An [unpublished] order . . . is not
precedential and may not be cited by any party except to support
contention of double jeopardy, res judicata, collateral estoppel
or law of the case.”) (emphasis added).
As to the rest of Stolfo’s arguments, the majority relates
to issues that he has specifically been warned are “permanently
KinderCare, 2016 IL App (1st) 143608-U, ¶ 26.
instance, Stolfo rehashes the contention that KinderCare, LLC
lacks standing because it is not a proper successor in interest
to KinderCare Learning Centers, Inc. and so “is not an entity,
does not exist and is a nullity.”
See, e.g., ECF No. 6 at 20.
The Court can only echo the previous courts in telling Stolfo
that he is barred from trying to hit “rewind,” “repeat,” or “do
over” in this litigation as if it were a game.
foreclosed to Stolfo in any way, shape or form in any forum and
he is specifically instructed to stop raising them.”).
Insofar as Stolfo says anything that has not already been
rejected, he argues that the debt he owed to KinderCare has been
discharged since the company failed to file a proof of claim
against him. For this proposition, he cites In re Greenig, 152
F.3d 631 (7th Cir. 1998).
The Seventh Circuit in that case
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allowed, a proof of claim must be filed.”
Id. at 633.
course, Stolfo’s bankruptcy was not a Chapter 12 case.
It was a
Chapter 7 proceeding, and more importantly, it was a Chapter 7
“no assets” proceeding.
Proofs of claims are not required in
Indeed, as KinderCare pointed out, the bankruptcy
court informed creditors in Stolfo’s Bankruptcy Case that they
should not file any such proofs.
See, ECF No. 10, Ex. A.
The rule that a creditor need not file a proof of claim in
a Chapter 7 “no assets” case is codified in law.
BANKR. R. 2002(e) (“In a chapter 7 liquidation case, if it appears
dividend can be paid, the notice of the meeting of creditors may
include a statement to that effect; that it is unnecessary to
file claims; and that if sufficient assets become available for
the payment of a dividend, further notice will be given for the
filing of claims.”).
Moreover, the rationale for such a rule
has long been explicated.
Because “a proof of claim serves only
participate in the distribution of the assets of the estate” –
“[i]n a case without assets to distribute the right to file a
proof of claim is meaningless and worthless.”
In re Mendiola,
99 B.R. 864, 867 (Bankr. N.D. Ill. 1989); see also, Nat’l Ass’n
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of Sys. Adm’rs, Inc. v. Avionics Sols., Inc., No. 1:06-cv-159SEB-JMS,
Jan. 10, 2008) (“[U]nder Rule 2002(e) of the Federal Rules of
Bankruptcy Procedure, in a no-asset bankruptcy . . ., creditors
are notified that there is no need to file a claim, since no
distribution will be made.”).
Accordingly, the Court will not
In re Mendiola, 99 B.R. at 867.
Stolfo also appears to argue – although his brief is never
clear on the point – that even if KinderCare was not required to
file a proof of claim in the Bankruptcy Case, it had to do so
when it instituted the adversary discharge proceeding.
cites no authority for this proposition.
Instead, he directs
the Court ad nauseam to the dictum from In re Smith, 582 F.3d
767, 771 (7th Cir. 2009), that “[a] creditor who holds [a debt
nondischargeable under 11 U.S.C. § 523(a)(6)] is obliged to file
a proof of claim and a timely request that the bankruptcy court
determine the debt to be nondischargeable.”
Here, there is no question that KinderCare filed “a timely
This was the adversary proceeding that
Stolfo sought to hijack with the motion he is now appealing.
Stolfo’s argument thus collapses back to the contention that
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KinderCare was required to file a proof of claim in an adversary
proceeding associated with a “no assets” Chapter 7 bankruptcy.
But In re Smith offers no support for such a proposition.
court there never delved the proof of claim issue, which was a
examining a “no assets” bankruptcy.
The court’s quoted comment,
insofar as it relates to the proof of claim issue, was dictum,
and, in any event, inapplicable to the facts of this case.
Simpkins v. City of Belleville, No. 09-cv-912-JPG, 2010 U.S.
Dist. LEXIS 44720, at *14 (S.D. Ill. May 7, 2010) (“Obiter dicta
are comments by a court uttered as an aside and are generally
not binding or precedential.”).
Finally, as Chief Judge Hollis’ remarks indicate, Stolfo’s
Motion was procedurally defective.
If it is treated as a motion
makes – because they were never made to Judge Wedoff – are
(Bankr. N.D. Ill. 2007) (“An argument raised for the first time
Sokolik, 635 F.3d 261, 268 (7th Cir. 2011) (“[W]hen an issue was
not raised in the bankruptcy court, a finding that the issue is
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waived at the district court level is the correct result, since
to find otherwise would permit a litigant simply to bypass the
Bankruptcy Case, then KinderCare’s adversary proceeding may not
be the right forum for such a motion.
Furthermore, the decision
whether or not to reopen a bankruptcy case “is within the broad
discretion of the bankruptcy court.”
Redmond v. Fifth Third
Bank, 624 F.3d 793, 798 (7th Cir. 2010).
Given how long Stolfo
waited before moving to reopen the case and the prejudice caused
to KinderCare by Stolfo’s effort to drag the company back to
federal bankruptcy court only after the state courts turned him
away, the Court cannot say that chief Judge Hollis abused her
discretion in denying Stolfo’s motion.
See, id. at 799 (“The
assessing whether a motion is timely, courts may consider the
prejudice to the nonmoving party caused by the delay.”).
In sum, Stolfo has not provided the Court with any reason
affirms Chief Judge Hollis’ denial of Stolfo’s Motion.
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The Court anticipates that whatever it says, much like what
all the previous courts had said, will not convince Stolfo to
cease and desist.
It here does what it can to compel him to
stop, both to protect the parties he has continually hauled into
court and to keep Stolfo from calling into question the ability
of the court system to restrain a determined litigant.
the Court refers Stolfo to the Illinois Attorney Registration
Appellees their requested relief:
it affirms the decision of
disciplinary authority for his conduct in this litigation.
IT IS SO ORDERED.
Harry D. Leinenweber, Judge
United States District Court
Dated: June 21, 2017
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