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Lardas v. Grcic

United States Court of Appeals, Seventh Circuit

February 3, 2017

Patti Lardas, Plaintiff-Appellant,
v.
Slavko Grcic, et al, Defendants-Appellees. Danny Christofalos, Debtor- Appellant,
v.
Joseph E. Cohen, Chapter 7 Trustee, Trustee-Appellee. John Laurence Kienlen, Creditor-Appellee,
v.
Danny Christofalos, Debtor-Appellant. Patti Lardas, Plaintiff, and Danny Christofalos, Intervenor-Appellant,
v.
Slavko Grcic, et al, Defendants-Appellees.

          Argued October 28, 2015

          Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. Nos.14 C193, 14 C 6958, 15 C 10832, 14 C193 William T. Hart, Judge.

          Before WOOD, Chief Judge, and Easterbrook and Hamilton, Circuit Judges.

          Hamilton, Circuit Judge.

         These four related appeals arise from a long-running and acrimonious business dispute between appellants Patti Lardas and her nephew Danny Christofalos on one side and appellees Slavko Grcic and associates on the other. Appeal Nos. 15-1685 (Lardas I) and 15-1704 (Cohen) were consolidated for oral argument, which took place on October 28, 2015. Appeal No. 16-4210 (Lardas II) concerns the district court's denial of a motion by Christofalos to reopen proceedings in Lardas I, and we treat it as a successive appeal. Appeal No. 16-2913 (Kienlen) is also successive to the earlier consolidated appeals. We can decide Kienlen and Lardas II without further oral argument. The briefs and record adequately present the facts and legal issues, and oral argument would not significantly aid our decision-making process. See Fed. R. App. P. 34(a)(2)(C). We affirm the judgments and orders on appeal in Lardas I, Lardas II, and Kienlen, and we dismiss the appeal in Cohen as moot.

         I. Lardas I (No. 15-1685)

         In Lardas I, a diversity jurisdiction action, plaintiff Patti Lardas brought claims of fraudulent inducement and breach of contract against defendants Slavko Grcic; his sons, Milovan and Draza Grcic; Thomas Karacic; and Karacic's employer, the Amalgamated Bank of Chicago.[1]

         The crux of Lardas's controlling amended complaint is that the Grcics tricked her into participating in a global settlement agreement pursuant to which, among other things, her nephew Christofalos was to receive a 99% interest in an entity called Wauconda Shopping Plaza, LLC ("WSP"), with Slavko Grcic retaining a 1% interest in the entity as well as a lien on Christofalos's interest. According to Lardas, the Grcics hatched an elaborate scheme-along with Karacic and the Amalgamated Bank-to force WSP to default on a loan and, ultimately, to foreclose on Christofalos's 99% stake and have the Grcics take control.

          The defendants moved to dismiss, arguing that Lardas lacked standing to pursue her claims. Though the defendants cited Federal Rule of Civil Procedure 12(b)(6), the district court reviewed their motion pursuant to Rule 12(b)(1). In so doing, the court treated the motion as a facial attack on Lardas's standing, accepting as true the factual allegations in the amended complaint as well as the contents of the settlement agreement appended to the complaint. The court took no additional evidence. See Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443 (7th Cir. 2009) ("Facial challenges require only that the court look to the complaint and see if the plaintiff has sufficiently alleged a basis of subject matter jurisdiction."); see also Silha v. ACT, Inc., 807 F.3d 169, 174 (7th Cir. 2015) ("[W]hen evaluating a facial challenge to subject matter jurisdiction under Rule 12(b)(1), a court should use Twombly-Iq-bal's 'plausibility' requirement, which is the same standard used to evaluate facial challenges to claims under Rule 12(b)(6)."). The district court dismissed Lardas's case without prejudice, agreeing with the defendants that Lardas lacked standing to pursue her claims. Lardas v. Drcic [sic], Nos. 14 C 193 & 14 C 6958, 2015 WL 444321, at *2 (N.D. 111. Jan. 29, 2015). Because the district court decided the question of standing without resolving factual disputes, we review de novo the court's judgment of dismissal. Berger v. NCAA, 843 F.3d 285, 289 (7th Cir. 2016).

         To pursue a civil claim in federal court, a plaintiff must allege and then prove that she has standing-i.e., that she suffered a concrete and particularized injury-in-fact that is traceable to the defendant's conduct and that is likely to be redressed by a favorable decision. Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOO, Inc., 528 U.S. 167, 180- 81 (2000). Taking Lardas's allegations at face value, the defendants schemed to deprive her nephew Christofalos of his interest in WSP. The problem here is that Lardas had no current or even contingent interest in WSP. In fact, Lardas had transferred her entire interest in a predecessor entity to Christofalos back in 2000. She never held a stake in WSP itself. Through the settlement agreement, Lardas released any and all claims (known and unknown) against the Grcics in exchange for their release of any and all claims (known and unknown) against her. She does not allege that the Grcics violated the terms of that exchange by, for instance, suing her or otherwise seeking to recover anything from her.

         In a post-judgment motion for reconsideration, which the district court correctly treated as a motion under Federal Rule of Civil Procedure 59(e), Lardas argued for the first time that Christofalos was a third-party beneficiary of her settlement agreement with the Grcics, such that the alleged scheme to deprive Christofalos of his interest in WSP in turn deprived Lardas of the benefit of her bargain. As a procedural matter, Lardas should have raised this argument during the initial briefing on defendants' motion to dismiss. Rule 59(e) does not entitle a party to advance after judgment a non-jurisdictional argument that could have been presented prior to judgment. See Bordelon v. Chicago School Reform Board of Trustees, 233 F.3d 524, 529 (7th Cir. 2000). A Rule 59(e) motion may allow a district judge to exercise discretion to consider such a new argument. E.g., Miller v. Safeco Ins. Co. of America, 683 F.3d 805, 813 (7th Cir. 2012); see also Mendez v. Republic Bank, 725 F.3d 651, 658-60 (7th Cir. 2013) (same point for Rule 60(b)). Cases such as Miller and Mendez show, however, that this is a matter of judicial discretion, not a party's entitlement.

          In any event, the new argument is without merit. Christofalos was himself a party to the same settlement agreement-not a third-party beneficiary-and he paid $600, 000 for the LLC membership interest he acquired from Slavko Grcic. Even if we assume that Christofalos might have had his own claims against Grcic or others arising from the settlement agreement (and any such claims would have wound up in his bankruptcy estate, addressed in the other related appeals), Lardas has alleged no injury personal to her. Nor has she offered any plausible reason why she should be able to assert a claim on behalf of Christofalos. Lardas lacks standing to pursue the claims she asserts, and the district court correctly dismissed her case. That dismissal is AFFIRMED.

         II. Cohen (No. 15-1704)

         Before Grcic and his associates could perfect their supposed scheme to acquire Christofalos's interest in WSP, Chrisofalos filed for bankruptcy protection. Cohen represents a challenge by Christofalos to a bankruptcy court order issued under 11 U.S.C. § 363(b) authorizing the trustee to sell Chrisofalos's interest in WSP, as well as any interest he might have in the Lardas litigation and a separate state court case. The ...


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