Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

In re Morris Senior Living, LLC

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

September 25, 2014

IN RE: MORRIS SENIOR LIVING, LLC, et al., Debtors. MORRIS HEALTHCARE & REHABILITATION CENTER, LLC, and LEWIS BORSELLINO, Appellants,
v.
BRAD A. BERISH, individually and in his capacity as counsel for the Trustee for the estate of MORRIS SENIOR LIVING, LLC., and GREGG SZILAGYI, Appellees

Page 751

Appeal from Bankruptcy No. 12-05364.

For Morris Healthcare & Rehabilation Center LLC, Lewis Borsellino, Appellants: M James Salem, Palos Heights, IL.

For Gregg Szilagyi, Adelman & Gettleman, Appellees: Brad Arnold Berish, LEAD ATTORNEY, Adelman & Gettleman, Ltd., Chicago, IL.

Page 752

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, United States District Judge.

Morris Senior Living LLC, which operated a skilled living facility (SLF) in Illinois, filed for bankruptcy on February 14, 2012. On April 2, 2012, the bankruptcy court appointed a trustee. Following the bankruptcy proceedings, Lewis Borsellino, a former manager of Morris Senior Living, and Morris Healthcare & Rehabilitation Center LLC, both of which claim to have owned the certificate needed to operate the SLF, moved the bankruptcy court for leave to sue the trustee's counsel in his individual capacity for damages for fraudulent inducement. On January 24, 2014, the bankruptcy court denied the motion on the ground that Borsellino and Morris Healthcare failed to make out a prima facie case of fraudulent inducement.

Borsellino and Morris Healthcare have appealed from the bankruptcy court's order. They contend that they made out prima facie cases for both fraudulent inducement

Page 753

and conspiracy to interfere with their civil rights under 42 U.S.C. § 1985(3). For the reasons stated below, the Court affirms the bankruptcy court's order.

Background

A. Procedural history

The appellants maintain that Morris Healthcare acquired an SLF certificate for Morris Senior Living on September 6, 2006. They point to an IDHFS letter " approv[ing] the application" that Morris Healthcare had submitted seeking " a change of ownership for Grundy County Home in Morris . . . ." Appellants' Ex. S at 1.

After Morris Senior Living filed for bankruptcy on February 14, 2012, Northbrook Bank and Trust Company became its new owner by acquiring all of the LLC's membership interests. On March 1, 2012, the bank's counsel filed a Freedom of Information Act (FOIA) request for " a copy of the SLF applications for Morris Senior Living" and " any notices provided to [the Illinois Department of Healthcare and Family Services (IDHFS)] that indicated a change of ownership," to confirm the owner of the SLF certificate for Morris Senior Living. Appellants' Ex. X at 1. On March 5, 2012, the IDHFS e-mailed Morris Healthcare to inform it of the FOIA request and that " [a]n SLF owner can request that proprietary information in the application . . . be excluded from the FOIA response." Appellants' Ex. W. The IDHFS then asked Morris Healthcare to " let [it] know if [it] would like these excluded from the FOIA response for proprietary reasons," indicating that it understood Morris Healthcare owned the SLF certificate for Morris Senior Living at that time. Id. On March 16, 2012, the IDHFS sent the bank's counsel a copy of Morris Healthcare's 2006 application for a change in the facility's approved location. Appellants' Ex. X.

On April 2, 2012, the bankruptcy court appointed a trustee for Morris Senior Living, finding that it was " in the best interests of creditors, any equity holders and other interests of the estate, namely the residents of the debtors' facility." Appellees' Ex. G at 16. On May 15, 2012, the trustee's counsel filed an " APPLICATION FOR A CHANGE OF OWNERSHIP UNDER THE SUPPORTIVE LIVING PROGRAM," which listed " Morris Senior Living, LLC" under " Applicant (Proposed New Owner)," but identified no current or former owner. Appellants' Ex. E. The next day, Morris Healthcare filed an action against Northbrook Bank and Trust in Grundy County state court, seeking, among other things, a declaration that Morris Healthcare owned the certificate. That day, the bank removed the action to the bankruptcy court as an adversary proceeding. On July 2, 2012, the trustee filed a motion seeking to intervene in that proceeding as a defendant and to assert a counterclaim seeking a declaratory judgment that Morris Senior Living, not Morris Healthcare, owned the certificate. The appellants allege that " the Bank and the Trustee's counsel repeatedly stated in the bankruptcy court, in writing and under oath[,] that the Debtor Morris Senior Living always owned the SLF Certification prepetition." Appellants' Opening Br. ¶ 7.

On July 31, 2012, the IDHFS e-mailed Morris Healthcare, the trustee's counsel, and others to " recommend[ ] that the certification for Morris Senior Living (the Facility) be withdrawn from Morris Healthcare and the Department review the pending request by the trustee to change ownership (and certification) of the facility." Appellants' Ex F at 1. On August 7, 2012, the parties agreed to stay the adversary proceeding until the IDHFS could conduct an administrative hearing to determine the owner of the SLF certificate.

Page 754

On December 12, 2012, the IDHFS filed a " Notice of Intent to Terminate Certification/Provider Agreement and Right To Hearing. . . ." Appellants' Ex. H at 1. In this document, the IDHFS stated that it proposed " to terminate the certification and provider agreement of Morris Senior Living (Vendor) aka Morris Senior Living, LLC and Healthcare & Rehabilitation Center, LLC [sic], to operate Morris Senior Living." Id. In the attached " allegations of noncompliance," the IDHFS stated that the

reason for the determination that Morris Healthcare and Rehabilitation Center, LLC owned the certificate . . . was that the Department believed that the owners of Morris Healthcare and Rehabilitation Center, LLC and Morris Senior Living, LLC were the same individuals, Lewis Borsellino and Kimberly Westerkamp, hence Morris Healthcare and Rehabilitation Center, LLC was deemed by the Department to be the owner of the certification based on Morris Senior Living being an enrolled provider. Subsequently discovered information showed that Lewis Borsellino and Kim Westerkamp were not the owners of Morris Senior Living, on or about April 26, 2012 . . . .

Appellants' Ex. H at 7-8. On January 8, 2013, the IDHFS advised the trustee that it had approved his application for a change of ownership for Morris Senior Living, " effective February 15, 2012." Appellants' Ex. L. The following day, the IDHFS withdrew the matter from the administrative hearing process without prejudice.

On January 14, 2013, Morris Healthcare filed suit against the IDHFS in Grundy County and moved for a temporary restraining order to prevent the IDHFS from transferring the SLF certificate from Morris Healthcare to Morris Senior Living. The Grundy County state court granted the requested order on January 18, 2013. Appellants' Ex. P. The trustee then filed a motion before the bankruptcy court contending that Morris Healthcare had violated the automatic stay by filing and prosecuting the Grundy County suit. On March 5, 2013, the bankruptcy court found that Morris Healthcare had violated the stay and ordered it to dismiss its state court action. On October 22, 2013, this Court affirmed the bankruptcy court's order in this regard. In re Morris Senior Living, LLC, Nos. 13 C 2457, 13 C 2064, 2013 WL 5753834, at *11 (N.D. Ill. Oct. 22, 2013).

The appellants maintain that trustee's counsel failed to disclose at the March 5, 2013 hearing that Morris Healthcare owned the SLF certificate. This contention is at least part of the ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.