Stolfo v. Kindercare Learning Centers, LLC, et al.

Filing 12

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
EASTERN DIVISION

DENNIS J. STOLFO,
Case No. 17 C 854
Appellant,
Judge Harry D. Leinenweber
v.
Case USBC No. 12 A 01796
Appeal from the United States
Bankruptcy Court, Northern
District of Illinois, Eastern
Division

KINDERCARE LEARNING CENTERS,
LLC, ARNETTA TERRY, JOHN
RANIERI, and SERVICE LIST,
Appellees.

MEMORANDUM OPINION AND ORDER
Dennis

J.

Stolfo

(“Stolfo”)

appeals

a

decision

of

the

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
the

Bankruptcy

Court.

It

refers

Stolfo

to

the

appropriate

disciplinary authority for his conduct in this litigation.
I.

BACKGROUND

The facts of this case read like a mockery of the idea that
justice

should

be

swift

and

final.

In

2004,

Stolfo

sued

KinderCare Learning Centers and some of the other appellees in
this case (collectively, “KinderCare”) on behalf of a client.
See, Iacovetti

v.

KinderCare

10942 (the “Underlying Case”).

Learning

Ctrs.,

Inc.,

No.

04

L

Stolfo’s conduct in that lawsuit

caused him to be sanctioned on at least five separate occasions
by

both

the

sanctions
kept

Illinois

totaled

increasing

another.
times,

an
as

circuit

and

eye-popping
Stolfo

filed

appellate

$184,993.52,
one

courts.
an

frivolous

The

amount
appeal

that
after

All in all, Stolfo appealed the underlying case six
each

“rambling,

time

making

jumbled,

and

arguments

mostly

that

the

incoherent.”

courts
See,

called

Stolfo

v.

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”).

The

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:
property

available

to

the

As the standard form sent out

“There does not appear to be any
trustee

to

pay

creditors.

therefore should not file a proof of claim at this time.”
ECF No. 10, Ex. A (emphasis in original).

- 2 -

You
See,

In keeping with the

Bankruptcy

Court’s

instructions,

KinderCare

did

not

file

any

such proof.
The bankruptcy case closed in November 2012.

KinderCare

then filed a related proceeding to determine whether the courtordered

sanctions

were

discharged

in

the

bankruptcy.

See,

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.)

Such a

proceeding is known as an “adversary case,” and it proceeded
much as a case filed in the district court would.

KinderCare

brought a Complaint in which it argued that because Stolfo’s
conduct in the Underlying Case was
debt

was

non-dischargeable

§ 523(a)(6).

per

“willful and malicious,” the
the

operation

of

11

U.S.C

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
another

entity”).

In

response,

Dismiss

and

an

opposition

later,

Summary Judgment.

Stolfo
to

brought

a

KinderCare’s

Motion
Motion

to
for

He lost both.

In granting summary judgment to KinderCare, Judge Eugene R.
Wedoff relied on the state court proceeding in the Underlying
Case.

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
determinations.”
3-8:18.
to

Moreover, “these factual determinations are sufficient

establish

injury

See, Adversary Discharge Case, ECF No. 61 at

under

that

Stolfo

523(a)(6)

inflicted

that

would

a

willful

except

and

his

malicious

debt

to

KinderCare parties from his bankruptcy discharge.” Id.

the

Stolfo

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
case.
Armed with Judge Wedoff’s ruling, KinderCare returned to
the Illinois circuit court to attempt to collect on the debt.
Stolfo resisted.
effort

to

Not only did he stonewall KinderCare in its

discover

assets,

he

judgment in the Underlying Case.

also

filed

for

relief

from

And he appealed – multiple

times.
By 2016, the Illinois appellate courts had exhausted their
forbearance.

In two separate opinions, the courts lambasted

Stolfo for his actions in the litigation against KinderCare.
The

earlier

opinion

recounted

Stolfo’s

“long

history

frivolous conduct” and “blatant disregard” for the courts.
Stolfo, 51 N.E.3d at 913-14.

of
See,

It also rejected his arguments as
- 4 -

barred

by

res

judicata,

imposed

additional

sanctions,

and

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
argument,
no
matter
how
repetitive,
redundant,
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.”
(Emphasis added.)
. . .
Further, Stolfo is admonished that continued frivolous
filings in this mater may result in referral to the
ARDC
[Attorney
Registration
and
Disciplinary
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
forum.”

See, id. ¶¶ 24-29.

“Kindercare’s

conversion

These included the argument that

from

a

Delaware

corporation

to

a

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
any

forum

and

he

is

directed

to

stop

raising

it.”).

This

subsumed the contention Stolfo raised in the circuit court that
“Kindercare

LLC

is

not

a

proper

successor

at

interest

under

Delaware law because the successor in interest provisions in
Delaware

law

apply

only

to

mergers,

not

conversions

from

a

corporation to an LLC, so Kindercare LLC is a nullity which
cannot sue.”
Blocked

Id. ¶ 21.
at

the

federal

adversary

earlier.

In

“Stolfo’s

(Debtor)

state

courts,

proceeding

January

2017,

Motion

Stolfo

turned

closed

more

Stolfo

filed

in

Adversary

than
a

back
three

Motion
Complaint

to

the

years
titled
Case

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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claim

and

debt

held

non-dischargeable

and

relief

from

all

willful acts that violate 11 U.S.C. 524(a) and 11 U.S.C. 105
sanctions.”

See, Adversary Discharge Case, ECF No. 62.

Thus,

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.
Because
Chief

Judge

Judge
Pamela

Wedoff
S.

has

Hollis

retired
heard

Adversary Discharge Case, ECF No. 71.

since

the

Stolfo’s

case

ended,

Motion.

See,

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
you

try

again

because

I

read

the

reply.

I

read

what

the

appellate court said directing you not to raise these arguments
again . . . , and the language was ‘in any court.’”
3:19-4:22.

Id. at

Judge Hollis then summarily denied Stolfo’s Motion.

True to form, however, Stolfo tried again – this time by taking
an appeal to this Court.
II.

ANALYSIS

Because Stolfo has given the Court no reason to view this
as

anything

but

a

frivolous

appeal,

the

Court

affirms

the

decision of the Bankruptcy Court and grants KinderCare all the
relief it requests.
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A.

Affirmance

To the extent that Stolfo engages with Chief Judge Hollis’
reasoning at all on appeal, he faults her for relying on Justice
Pucinski’s opinion.

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

By “precedential,”

Stolfo seems to mean something like a published opinion.

But

Justice Pucinski’s opinion does not need to be published to be
controlling

for

Stolfo.

The

opinion

directly

addresses

the

Appellant and so binds him even if it is not precedential for
anybody else.

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
restrict

the

citation

of

federal

judgments,

or

other

written

designated

as

‘unpublished,’

judicial

opinions,

dispositions
‘not

for

that

have

publication,’

precedential,’ ‘not precedent,’ or the like”).

orders,
been
‘non-

Finally, there

is nothing inconsistent between the Illinois Supreme Court rule
governing

the

use

of

unpublished

opinions

and

Chief

Judge

Hollis’ reliance on the relevant ruling to warn Stolfo that the
arguments he raised in his motion are precluded by res judicata.
- 8 -

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
doomed.”

KinderCare, 2016 IL App (1st) 143608-U, ¶ 26.

For

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.
2016

IL

App

Kindercare,

(1st)
Inc.’s

143608-U,
conversion

¶

11
to

(“All

See, KinderCare,

issues

Kindercare,

related

LLC

are

to
now

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
- 9 -

stated

that

“[i]n

Chapter

12

cases,

if

the

allowed, a proof of claim must be filed.”

claim

is

to

Id. at 633.

course, Stolfo’s bankruptcy was not a Chapter 12 case.

be
Of

It was a

Chapter 7 proceeding, and more importantly, it was a Chapter 7
“no assets” proceeding.
such cases.

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.

See, U.S.C.

BANKR. R. 2002(e) (“In a chapter 7 liquidation case, if it appears
from

the

schedules

that

there

are

no

assets

from

which

a

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.
one

purpose

in

a

Chapter

Because “a proof of claim serves only
7

case”

–

to

assert

“a

right

to

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
- 10 -

of Sys. Adm’rs, Inc. v. Avionics Sols., Inc., No. 1:06-cv-159SEB-JMS,

2008

U.S.

Dist.

LEXIS

2568,

at

*25-28

(S.D.

Ind.

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.”).
fault

KinderCare

worthless.”

for

Accordingly, the Court will not

foregoing

what

is

“meaningless

and

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.

Stolfo

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
request

that

the

bankruptcy

nondischargeable.” Id.

court

determine

the

debt

to

be

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
- 11 -

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.

The

court there never delved the proof of claim issue, which was a
tangent

to

the

case,

and

it

never

examining a “no assets” bankruptcy.

indicated

that

it

was

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.

See,

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.
for

reconsideration

judgment

decision,

of
then

Judge
it

If it is treated as a motion

Wedoff’s

is

untimely

three-year
and

the

old

summary

arguments

it

makes – because they were never made to Judge Wedoff – are
waived
Court.

both

before

See,

In

re

Chief
Polo

Judge

Hollis

Builders,

and

Inc.,

in
374

front
B.R.

of
638,

this
642

(Bankr. N.D. Ill. 2007) (“An argument raised for the first time
in

a

motion

for

reconsideration

is

waived.”);

In

re

Busson-

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
- 12 -

waived at the district court level is the correct result, since
to find otherwise would permit a litigant simply to bypass the
bankruptcy
instead

court.”)

the

motion

(internal
is

quotation

considered

a

marks

request

omitted).
to

If

reopen

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.
passage

of

time

weighs

heavily

See, id. at 799 (“The

against

reopening.

.

.

.

In

assessing whether a motion is timely, courts may consider the
lack

of

diligence

of

the

party

seeking

to

reopen

and

the

prejudice to the nonmoving party caused by the delay.”).
In sum, Stolfo has not provided the Court with any reason
to

reverse

the

ruling

of

the

court

below.

The

affirms Chief Judge Hollis’ denial of Stolfo’s Motion.

- 13 -

Court

thus

B.

Further Relief

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.

Ergo,

the Court refers Stolfo to the Illinois Attorney Registration
and

Disciplinary

Commission

for

the

appropriate

disciplinary

proceedings.
III. CONCLUSION
For

the

reasons

stated

herein,

the

Court

grants

the

Appellees their requested relief:

it affirms the decision of

the

Stolfo

Bankruptcy

Court

and

refers

to

the

appropriate

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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