United States District Court, N.D. Illinois, Eastern Division
In re CHARLES EDWARD TAYLOR, II, Debtor.
CHARLES E. TAYLOR, II, Debtor, Defendants-Appellee. PATRICIA J. CAIARELLI, as Guardian, Plaintiff-Appellant,
from: No. 12 A 1188
MEMORANDUM OPINION AND ORDER
Caiarelli, acting as guardian for her minor son, sought
relief under Federal Rule of Civil Procedure 60(b)(6) from a
2013 bankruptcy court order dismissing for lack of standing
her adversary proceeding against the debtor, Charles Taylor
II (“Taylor”). Docs. 1, 1-4. The bankruptcy court
denied Caiarelli's motion, and she appeals. Doc. 1. The
bankruptcy court's judgment is affirmed.
where noted, the background is taken from the bankruptcy
court's opinion, Caiarelli v. Taylor (In re
Taylor), No. 12 A 1188 (Bankr. N.D.Ill. Oct. 12, 2016)
(reproduced at Doc. 1-4).
2005, William Ross Taylor
(“William”)-Taylor's brother and
Caiarelli's ex-husband-died in a boating accident.
Caiarelli's and William's minor son, Alexander, was
the primary beneficiary of William's estate. Taylor was,
initially, the estate's personal representative; he was
later replaced by Michael Longyear.
2006, on Alexander's behalf, Caiarelli sued Taylor in
Washington state court, alleging that he misappropriated from
the estate funds intended for Alexander. The case proceeded
to a jury trial, after which, in December 2011, the state
court awarded the estate a $1.4 million judgment. On April 3,
2012, Longyear executed a document on the estate's behalf
that purported to assign the state court judgment to
Caiarelli for collection.
weeks later, on April 23, 2012, Taylor filed for Chapter 11
bankruptcy. On July 31, 2012, Caiarelli commenced this
adversary proceeding against Taylor. Caiarelli sought,
essentially, a finding that Taylor's judgment debt to the
estate was non-dischargeable and a ruling that Alexander was
entitled to some of Taylor's property.
moved to dismiss the adversary proceeding on the ground that
Caiarelli lacked standing to enforce the state court
judgment. Taylor argued that Caiarelli had failed to prove
that the judgment was actually assigned to her, pointing to a
letter from the state judge questioning whether Caiarelli had
completed all the steps necessary to effectuate the
assignment. After reviewing the state judge's letter and
hearing argument on its significance, Doc. 10 at 286-322, the
bankruptcy court held that Caiarelli had failed to establish
her standing to bring the adversary proceeding and dismissed
it on March 20, 2013. Id. at 254, 322-329. The
dismissal order was docketed the next day, March 21. Doc. 5-2
at 13. Caiarelli did not appeal the dismissal to the district
court, nor did she move the bankruptcy court for
Caiarelli returned to the Washington state court, where she
filed a motion to ratify the estate's attempted
assignment to her of its judgment against Taylor. The motion
was granted, and the state court entered an order ratifying
the assignment on the morning of April 2, 2013, retroactive
to the date of the assignment's execution. Doc. 12 at 98.
Caiarelli's decision to obtain the ratification order set
off a kerfuffle back in the bankruptcy court; two days later,
on April 4, Taylor moved for sanctions, contending that
Caiarelli's state court motion violated both the
statutory discharge and plan injunctions then in effect. Doc.
15 at 262. The bankruptcy court granted the motion after an
evidentiary hearing and entered a civil contempt order
against Caiarelli and her attorneys, which led to monetary
sanctions and vacatur of the ratification order.
appealed the contempt order; the district court reversed the
order and, on further appeal, the Seventh Circuit affirmed
the district court. See In re Taylor, 793 F.3d 814
(7th Cir. 2015). In relevant part, the Seventh Circuit held
that Caiarelli's seeking the ratification order was
neither an impermissible attempt to collect a debt covered by
the statutory discharge and plan injunctions, id. at
819-21, nor an impermissible “collateral attack”
on the bankruptcy court's dismissal order, id.
at 821-22, but rather simply an effort to “muster
additional evidence” in preparation for bringing a Rule
60(b) motion in the bankruptcy court-which would be, the
Seventh Circuit added, a permissible means by which to seek
to undo the judgment, id. at 821. But the Seventh
The bankruptcy court retains exclusive jurisdiction to
determine whether Caiarelli has standing to pursue the
adversary proceeding against Taylor. Upon receipt of the
ratification order, the bankruptcy court is free to take it,
leave it, or otherwise do with it what it pleases. See
also McCormick, 230 F.3d at 327 (a court's decision
to reinstate a case under Rule 60(b) amounts to
“discretion piled on discretion.”) (internal
quotation marks and citation omitted). As Appellees'
counsel aptly noted at oral argument, the road to collection
is an ‘uphill battle.'
Id. at 822 (citation omitted).
Caiarelli commenced the charge. She first returned to
Washington state court and, on October 9, 2015, secured
reinstatement of the ratification order. More than four
months later, on February 18, 2016, Caiarelli moved the
bankruptcy court for relief from the dismissal order under
Rule 60(b)(6), a catchall provision under which a party may,
“[o]n motion and just terms, ” obtain relief from
a judgment ...