D.A.N. Joint Venture Iii, L.P. v. Touris

597 B.R. 411

D.A.N. JOINT VENTURE III, L.P., Plaintiff,

v.Dorothea TOURIS, et al., Defendants.

Case No. 18-cv-349

United States District Court, N.D. Illinois, Eastern Division.

Signed March 20, 2019

F. Dean Armstrong, Armstrong Law Firm, Frankfort, IL, for Plaintiff.

Nicholas George Grapsas, Nicholas G. Grapsas, Ltd., Inverness, IL, Jennifer Marie Schwartz, John Chen, Chen Roberts Ltd., Martin John O'Hara, Much Shelist Denenberg Ament & Rubenstein, PC, Scott Andrew Nehls, Fuchs & Roselli, Ltd., Richard H. Fimoff, Robert J. Trizna, Robbins, Salomon & Patt, Ltd., John Joseph Emmett Zummo, John E. Zummo Law, Michael T. Trucco, John James Kakacek, Stamos & Trucco LLP, Howard A. London, Beermann, Pritikin & Mirabelli, Kimberly Elizabeth Blair, Joseph J. Stafford, Wilson Elser Moskowitz Edelman & Dicker, LLP, Matthew David Elster, Beermann LLP, Chicago, IL, Ryan A. Biller, Rolewick & Gutzke, P.C., Wheaton, IL, for Defendants.

Robert M. Dow, Jr., United States District Judge

MEMORANDUM OPINION AND ORDER

Before the Court is the motion for summary judgment [56] filed by Defendants Steven Gouletas, Irene Gouletas, Desiree Witte, Victoria Gouletas, Rosalie Gouletas, Louis Gouletas, and Brittany Gouletas (the "Garvey Court Defendants"). For the reasons set forth below, the motion for summary judgment [56] is denied. Further status hearing set for April 24, 2019 at 9:00 a.m.

I. Background

On January 17, 2016, non-party Nicholas Gouletas ("Debtor'") filed for Chapter 7 bankruptcy in the United States Bankruptcy Court for the Northern District of Illinois. [59, at ¶ 12.] Richard Fogel ("Bankruptcy Trustee") was appointed trustee of the Debtor's Chapter 7 Bankruptcy Estate. [Id. at ¶ 13.] Debtor previously was involved in a real estate development referred to as "Garvey Court." [Id . at ¶ 16.] At one time, Debtor owned an interest in the Garvey Court project through two entities: SEG Garvey LLC and NKM Garvey LLC. [Id. ] In May of 2014, Debtor transferred his interest in SEG Garvey LLC to the Summary Judgement Defendants in the following percentages: (i) Steven Gouletas - 16.66%; (ii) Irene Gouletas - 16.67%; (iii) Desiree Witte - 16.67%; (iv) Victoria Gouletas - 16.67%; (v) Rosalie Gouletas - 16.67%; (vi) Louis Gouletas - 5.53%; (vii) Michael Gouletas - 5.53%; (viii) and Brittany Gouletas - 5.54%.¹ [76-2, at ¶ 10.] In November 2016, each of the Garvey Court Defendants assigned their respective interests in SEG Garvey LLC to the Bankruptcy Trustee ("SEG Garvey Assignments"). [59, at ¶ 20.] On or about November 23, 2016, the Bankruptcy Trustee accepted the SEG Garvey Assignments. [Id. at ¶ 21.] There is no evidence that the Bankruptcy Trustee entered into a settlement agreement or release with the Gouletas Defendants. [76-2, at ¶ 16.] The Bankruptcy Trustee did not file a motion in the bankruptcy court regarding any purported settlement of the claims against the Gouletas Defendants regarding the Garvey Court transfers.² [Id. at ¶ 18.] Nor did the bankruptcy court enter any order authorizing the Bankruptcy Trustee to accept the return of the interests in the Garvey Court project as part of a compromise and settlement of the bankruptcy estate's fraudulent transfer claims against the Garvey Court Defendants. [Id. at ¶ 19.] A manager of 800 SWC Commercial LLC ("800 SWC"), the largest creditor of Gouletas in connection with Gouletas's Chapter 7 bankruptcy filing, represents that 800 SWC would have objected to any motion to approve a purported settlement of the bankruptcy estate's fraudulent transfer claims against the Garvey Court Defendants by the return of the interests in the Garvey Court project alone. [76-1, at ¶¶ 1, 13, 18.]

An involuntary Chapter 7 bankruptcy petition was filed against Garvey Court, LLC on December 17, 2014; that action was dismissed April 10, 2015. See In re Garvey Court, LLC , No. 14-44900 (Bank. N.D. Ill. 2014). A second involuntary Chapter 7 bankruptcy action was filed against Garvey Court, LLC on January 20, 2016. See In re Garvey Court, LLC , No. 16-01700 (Bank. N.D. Ill. 2016). The Bankruptcy Trustee sold his "fraudulent transfer, alter-ego, and common law tort claims" to the Plaintiff for $15,000. [59, at ¶ 14.] The bankruptcy court presiding over Debtor's bankruptcy action authorized the sale on August 18, 2017. [Id. at ¶ 14.] On September 13, 2017, the Bankruptcy Trustee and Plaintiff executed an Assignment of Claims and Causes of Action for the Bankruptcy Trustee's "fraudulent transfer, alter-ego, and common law tort claims." [Id. ]

II. Legal Standard

Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A genuine dispute as to any material fact exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In determining summary judgment motions, "facts must be viewed in the light most favorable to the nonmoving party only if there is a ‘genuine’ dispute as to those facts." Scott v. Harris , 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007). The party seeking summary judgment has the burden of establishing that there is no genuine dispute as to any material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Gibbs v. Lomas , 755 F.3d 529, 536 (7th Cir. 2014) (quoting Jewett v. Anders , 521 F.3d 818, 821 (7th Cir. 2008) ). "A party asserting that a fact cannot be or is genuinely disputed must support the assertion by: (A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials; or (B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed. R. Civ. P. 56(c)(1). "The court need consider only the cited materials, but it may consider other materials in the record." Fed. R. Civ. P. 56(c)(3). With each motion for summary judgment filed pursuant to Rule 56"the moving party shall serve and file—(1) any affidavits and other materials referred to in Fed. R. Civ. P. 56(e) ; (2) a supporting memorandum of law; and (3) a statement of material facts as to which the moving party contends there is no genuine issue and that entitle the moving party to a judgment as a matter of law[.]" LR 56.1 (N.D. Ill.). The statement of material facts "shall consist of short numbered paragraphs, including within each paragraph specific references to the affidavits, parts of the record, and other supporting materials relied upon to support the facts set forth in that paragraph. Failure to submit such a statement constitutes grounds for denial of the motion." Id.

"Once a party has made a properly-supported motion for summary judgment, the opposing party may not simply rest upon the pleadings but must instead submit evidentiary materials that ‘set forth specific facts showing that there is a genuine issue for trial.’ " Harney v. Speedway SuperAmerica, LLC , 526 F.3d 1099, 1104 (7th Cir. 2008) (quoting Fed. R. Civ. P. 56(e) ); see also Anderson , 477 U.S. at 250, 106 S.Ct. 2505. A genuine issue of material fact exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson , 477 U.S. at 248, 106 S.Ct. 2505. The party seeking summary judgment has the burden of establishing the lack of any genuine issue of material fact. See Celotex Corp. , 477 U.S. at 323, 106 S.Ct. 2548. In evaluating a motion for summary judgment, the Court will construe all facts in the light most favorable to the nonmoving party and draw all reasonable inferences in favor of the nonmoving party. Bell v. Taylor , 827 F.3d 699, 704 (7th Cir. 2016).

III. Analysis

Defendants Steven Gouletas, Irene Gouletas, Desiree Witte, Victoria Gouletas, Rosalie Gouletas, Louis Gouletas, and Brittany Gouletas move for summary judgment on Counts II and III of the first amended complaint, arguing that Plaintiff already has obtained all the relief it can obtain with respect to those counts. Counts II and III of Plaintiff's first amended complaint assert avoidance actions against the Garvey Court Defendants pursuant to Sections 5(a)(1) and 6(a) of the Illinois Uniform Fraudulent Transfer Act, 740 ILCS 160/1 et seq. [76, at ¶ 19.] Plaintiff seeks to recover from the Garvey Court Defendants the value of the interests in the SEG Garvey project transferred to them by Gouletas. It is undisputed that that in November 2016, Defendants assigned all interest they received in SEG Garvey LLC to the Bankruptcy Trustee. It also is undisputed that the Bankruptcy Trustee accepted those assignments. Still, Plaintiff argues that the mere acceptance by the Bankruptcy Trustee of Defendants' Assignments did not release Plaintiff's fraudulent transfer claims against the Garvey Court Defendants for the diminished value of the SEG Garvey Assignments.

Defendants argue that the Bankruptcy Trustee (in whose shoes Plaintiff stands by virtue of the bankruptcy court-approved assignment of claims) already recovered the transferred property (i.e. , their interests in the SEG Garvey project transferred to them by Gouletas). According to Defendants, any additional recovery would violate the single recovery rule in Section 550(d) of the Bankruptcy Code. Section 550 of the Bankruptcy Code provides:

(a) Except as otherwise provided in this section

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