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Lardas v. Drcic

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

January 29, 2015

PATTI LARDAS, Plaintiff,
v.
SLAVKO DRCIC. MILOVAN GRCIC, DRAZA GRCIC, THOMAS J. KARACIC and AMALGAMATED BANK of CHICAGO, an Illinois Banking Corporation, Defendants. Danny Christafalos, Debtor-Appellant.
v.
Joseph E. Cohen, Chapter 7 Trustee, Appellee.

OPINION AND ORDER

WILLIAM T. HART, District Judge.

Before the court are two cases involving related issues: Lardas v. Grcic, 14 C 193 (" Lardas "), alleging fraud and breach of contract claims, and In re Christofalos, 14 C 6958, a debtor's appeal from a decision of the Bankruptcy Court permitting the bankruptcy Trustee to sell an asset of the bankruptcy estate, the Debtor's 99% interest in Wauconda Shopping Plaza LLC ("WSP LLC"), which owns the Wauconda Shopping Plaza (the "Plaza"). The Debtor, Danny Christofalos, objected to the sale, contending his entire interest in WSP LLC is an exempt asset. In Lardas, plaintiff Patti Lardas (Christofalos's aunt) alleges that she was fraudulently induced to enter into a settlement of two lawsuits ( Grcic v. Christofalos, No. 09 CH 1789 (Lake Cy. Ill. Cir. Ct.), and Lardas v. Grcic, No. 11 C 4258 (N.D. Ill.)) involving claims made by and against her and Christofalos involving the Plaza, WSP LLC, and other properties and entities. Christofalos had also been a plaintiff in Lardas, but his claims were dismissed without prejudice based on a holding that the claims belonged to the bankruptcy estate.[1]

Defendants move to dismiss Lardas's claims based on a lack of standing or, alternatively, because fraud and breach of contract are not adequately alleged. Lardas is a citizen of Canada. Defendants are Illinois residents. The court has jurisdiction of the parties and the subject matter of both Lardas, see 28 U.S.C. § 1332(a)(2), and Christofalos, see 28 U.S.C. §1334(a), 28 U.S.C. § 158.

I.

Lardas will be addressed first. Although defendants refer to their motion as being pursuant to Fed.R.Civ.P. 12(b)(6), the aspect of the motion requesting dismissal on standing grounds is a jurisdictional issue within the ambit of Rule 12(b)(1). See RWB Serv., LLC v. Hartford Computer Group, Inc., 539 F.3d 681, 683 (7th Cir. 2008); Patel v. City of Chicago, 383 F.3d 569, 571 (7th Cir.2004). Defendants rely on the facts pleaded by Lardas. All facts adequately alleged in the Amended Complaint are accepted as true and all reasonable inferences are drawn in plaintiff's favor. Scanlan v. Eisenberg, 669 F.3d 838, 841 (7th Cir. 2012).

The burden to establish standing is on the party invoking federal jurisdiction-here, [Lardas]-and the elements she must show are:
(i) an injury in fact, which is an invasion of a legally protected interest that is concrete and particularized and, thus, actual or imminent, not conjectural or hypothetical; (ii) a causal relationship between the injury and the challenged conduct, such that the injury can be fairly traced to the challenged action of the defendant; and (iii) a likelihood that the injury will be redressed by a favorable decision.
Lee v. City of Chicago, 330 F.3d 456, 468 (7th Cir. 2003) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)).
To satisfy the injury-in-fact requirement, [Lardas] "must establish that [she] has sustained or is immediately in danger of sustaining some direct injury." Wis. Right to Life, Inc. v. Schober, 366 F.3d 485, 489 (7th Cir. 2004) (quoting Tobin for Governor v. Ill. State Bd. of Elections, 268 F.3d 517, 528 (7th Cir. 2001)). "Mere speculation is not enough to establish an injury in fact." Id.

Scanlan, 669 F.3d at 841-42. At the pleading stage, general factual allegations usually will be sufficient. Alliant Energy Corp. v. Bie, 277 F.3d 916, 920 (7th Cir. 2002). On pleading challenges, facts alleged in response to a motion to dismiss may be considered as long as they are consistent with the allegations of the complaint. See Brokaw v. Mercer County, 235 F.3d 1000, 1006 (7th Cir. 2000); Forseth v. Village of Sussex, 199 F.3d 363, 368 (7th Cir. 2000).

According to the allegations of the Amended Complaint and consistent with the settlement document that is attached as Exhibit A to the Amended Complaint, Lardas did not own an interest in WSP LLC at the time of the settlement agreement. Lardas had previously transferred her entire interest to her nephew Christofalos. According to recitations in the settlement agreement, prior to consummation of the settlement agreement, Slavko Grcic ("Slavko") and Christofalos each were 50% members of WSP LLC. Under the settlement agreement, Christofalos became a 99% member and Slavko was to retain a 1% interest for two years.[2] Lardas's only stated benefit in the settlement agreement was that the opposing parties would dismiss the claims they made against her in two pending lawsuits. Reciprocally, she was to dismiss her claims against the opposing parties. The dismissal provisions also applied to claims between Christofalos and the opposing parties in those two lawsuits.

There is no contention that any party breached the settlement agreement by failing to dismiss the two lawsuits. Thus, Lardas received all the consideration she was promised in the settlement agreement. The alleged fraud and breach of contract relates only to Christofalos's acquisition of the 99% interest in WSP LLC. Defendants allegedly improperly interfered with obtaining financing for the continued operation of the Plaza and attempted to force a UCC sale of the Plaza to Slavko. The UCC sale, however, was never consummated. Instead, Christofalos's 99% interest in WSP LLC and its 99% ownership of the Plaza became an asset of Christofalos's bankruptcy estate.

The fraud and breach of contract that has been alleged has no effect on Lardas; it only affects Christofalos's interest in the WSP LLC. Since Lardas is not injured by any of the alleged misconduct regarding WSP LLC, she has no standing to pursue the Lardas lawsuit. The Lardas lawsuit will be dismissed without prejudice for lack of subject matter ...


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