Appeal from Bankruptcy Court Case No. 09 B 13534 Hon. Harry D. Leinenweber
The opinion of the court was delivered by: Harry D. Leinenweber, Judge United States District Court
MEMORANDUM OPINION AND ORDER
Before the Court is Plaintiff-Appellant James Kafantaris's (hereinafter, "James") appeal of the Bankruptcy Court's order granting summary judgment in favor of Defendant-Appellee Kanella Signore (hereinafter, "Kanella") on all three counts of James's adversary complaint, which he brought under 11 U.S.C. §§ 523(a)(4), 523(a)(6), and 523 (a)(2)(A). For the reasons stated below, the bankruptcy court's decision is affirmed on all counts.
This case demonstrates money's power to fracture a family. James and Kanella are brother and sister. They have no other siblings. The contested money originates from their late mother, Jean Kafantaris (hereinafter, "Jean"). After Jean's husband, William, died in December 1996, Kanella, her husband, and Jean bought and moved into a townhouse together, in which they shared living expenses. Jean's health deteriorated after moving in with her daughter, and eventually she lost almost all use of her right hand, which deprived her of the ability to, among other things, bathe or dress herself. Around November 2003, Kanella hired Ken Klepper ("Klepper") on a full-time basis to care for Jean. On November 14, 2003, Jean executed a Power of Attorney for her finances, which named Kanella her agent and Kanella's daughter Elaine Schima (hereinafter, "Elaine") her successor agent.
A series of financial transactions that followed Jean's execution of the Power of Attorney are the focus of this case. On November 19, 2003, Kanella and Elaine accompanied Jean to a Charter One Bank branch. Here, they closed three accounts - No. 8053155958 ($86,531.77), held jointly by Jean and James; No. 8052271902 ($9,736.64), held jointly by Jean, Kanella, and James; and No. 8865187115 ($101,416.72), held jointly by Jean and James - and converted them into a $197,685.13 certified check. Jean could not sign the withdrawal slip to close one of the accounts, so she asked Kanella to sign it for her. Kanella refused to do this, but instead placed her hand over Jean's to help her sign. Thereafter, they went to a TCF Bank branch, where Jean closed Account No. 2864057952 - which was held jointly by Jean and James - that had a balance of $117,205.33. Prior to closing this account, Jean issued three $10,000 cashier's checks from it, made out to James, Kanella, and Elaine. Thereafter, Jean combined the remaining balance of this TCF account, and the $197,685.13 certified check, and opened a new TCF account with a balance of $284,890.46 (No. 387935152). This account was held jointly by Kanella, James, and Elaine.
The record also contains an undated withdrawal slip, which allegedly bears Jean's signature, from another TCF account (No. 8865211926). The withdrawal was for $456.42 in cash and an $86,638.19 cashier's check. The record is silent as to what happened with this money after this withdrawal.
Less than one week after opening the new TCF account, Kanella opened an account at Mid America Bank (No. 200266807), funded by two withdrawals totaling $180,000 from the newly created TCF account. The Mid America account was held jointly by Kanella and James. On November 30, 2003, Kanella opened two brokerage accounts, each with an initial balance of $45,000. She funded these with money withdrawn from the new TCF account. The account at Scudder Investments was held jointly by Jean and Elaine, and the account at Franklin Templeton was held jointly by Jean and Kanella.
In November 2003, Jean met with an investment advisor named John "Jack" Flood ("Flood"), who helped Jean shelter her estate from taxes. Kanella did not attend these meetings, at which Flood advised Jean to withdraw money from some of her bank accounts and deposit it into mutual funds.
Jean died on October 21, 2006, at the age of 90. In her Will, which James did not contest, Jean left her real and personal property to Kanella. She forgave James of his remaining balance on a $30,000 promissory note he used to purchase the restaurant Billy's Fountain and Grill - which he still owns and operates - from Jean and William in 1975. On November 24, 2006, Kanella gave James a $35,000 check drawn from the Mid America account.
James, however, contends that Kanella misappropriated money from Jean's estate that belongs to him. He alleges that Jean had an estate plan to split her assets between her children and grandchildren, and that Kanella initiated the aforementioned financial transactions to disrupt this plan. He initially filed a Complaint with these allegations in the Chancery Division of the Circuit Court of Cook County, Illinois. Kanella filed a Petition for Chapter 7 Bankruptcy Protection in the Bankruptcy Court for the Northern District of Illinois while a Motion to Dismiss was pending in James's Circuit Court case. James subsequently filed an Adversary Complaint with the Bankruptcy Court, alleging the same facts as in the Circuit Court case. The crux of his allegations is that Kanella breached her fiduciary duties to Jean and transferred funds out of the accounts in which James had a joint tenancy, thereby taking his money for herself.
The Bankruptcy Court granted Kanella Summary Judgment on all three counts of James's Adversary Complaint, which he brought under 11 U.S.C. §§ 523(a)(4), 523(a)(6), and 523 (a)(2)(A). James' timely ...