Stolfo v. Kindercare Learning Ctrs., LLC, Case No. 17 C 854

DENNIS J. STOLFO, Appellant, v. KINDERCARE LEARNING CENTERS, LLC, ARNETTA TERRY, JOHN RANIERI, and SERVICE LIST, Appellees.

Case No. 17 C 854

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

June 21, 2017

Judge Harry D. Leinenweber

Case USBC No. 12 A 01796

Appeal from the United States Bankruptcy Court, Northern District of Illinois, Eastern Division

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 Learning Ctrs., Inc., No. 04 L 10942 (the "Underlying Case"). Stolfo's conduct in that lawsuit caused him to be sanctioned on at least five separate occasions by both the Illinois circuit and appellate courts. The sanctions totaled an eye-popping $184,993.52, an amount that kept increasing as Stolfo filed one frivolous appeal after another. All in all, Stolfo appealed the underlying case six times, each time making arguments that the courts called "rambling, jumbled, and mostly incoherent." See, 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. As the standard form sent out to the creditors stated: "There does not appear to be any property available to the trustee to pay creditors. You therefore should not file a proof of claim at this time." See, ECF No. 10, Ex. A (emphasis in original). In keeping with theBankruptcy 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 court-ordered 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 "willful and malicious," the debt was non-dischargeable per the operation of 11 U.S.C § 523(a)(6). 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, Stolfo brought a Motion to Dismiss and later, an opposition to KinderCare's Motion for Summary Judgment. 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 findingsand an order for sanctions against the debtor, Dennis J. Stolfo, collaterally estop Stolfo from relitigating the court's factual determinations." See, Adversary Discharge Case, ECF No. 61 at 3-8:18. Moreover, "these factual determinations are sufficient to establish that Stolfo inflicted a willful and malicious injury under 523(a)(6) that would except his debt to the KinderCare parties from his bankruptcy discharge." Id. 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. Not only did he stonewall KinderCare in its effort to discover assets, he also filed for relief from judgment in the Underlying Case. 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 of frivolous conduct" and "blatant disregard" for the courts. See, Stolfo, 51 N.E.3d at 913-14. It also rejected his arguments asbarred 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) 143608-U, ¶¶ 28-34. Almost needless to say, the court found Stolfo's appeal "frivolous in the extreme" and imposed further sanctions. Id. ¶ 34.

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. These included the argument that "Kindercare's conversion 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." Id. ¶ 21.

Blocked at the state courts, Stolfo turned back to the federal adversary proceeding closed more than three years earlier. In January 2017, Stolfo filed a Motion titled "Stolfo's (Debtor) Motion in Adversary Complaint 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 theclaim 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 Judge Wedoff has retired since the case ended, Chief Judge Pamela S. Hollis heard Stolfo's Motion. See, 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 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.'" Id. at 3:19-4:22. 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.

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." See, e.g., ECF No. 6 at 23. The argument is baffling. 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 judicial opinions, orders, judgments, or other written dispositions that have been designated as 'unpublished,' 'not...