Lardas v. Grcic
847 F.3d 561
7th Cir.2017Background
- Long-running business dispute among Patti Lardas (plaintiff), her nephew Danny Christofalos, and Slavko Grcic (and associates) concerning ownership and control of Wauconda Shopping Plaza, LLC (WSP) and related litigation.
- Lardas alleged defendants induced her into a global settlement that left Christofalos with 99% of WSP and Slavko with a 1% interest plus a lien, then schemed to force default and foreclose to seize control.
- District court dismissed Lardas’s amended complaint for lack of standing (reviewing facially under Rule 12(b)(1)); Lardas sought reconsideration arguing third‑party beneficiary status for Christofalos.
- Christofalos’s bankruptcy: trustee sold his WSP interest and two lawsuits to the Grcics for $15,000; Christofalos appealed the sale but did not obtain a stay, and the Grcics are now operating the plaza.
- In an adversary proceeding by creditor Kienlen, the bankruptcy court denied Christofalos’s Chapter 7 discharge under 11 U.S.C. § 727(a)(4)(A) for knowingly and fraudulently making false oaths; that denial was affirmed on appeal.
- Christofalos later moved to reopen Lardas’s case and for a receiver; the district court denied relief and the denial was summarily affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing of Lardas to sue over scheme targeting Christofalos’s WSP interest | Lardas: scheme that stripped Christofalos of WSP deprived her of the benefit of the settlement and harmed her | Defendants: Lardas has no present or contingent interest in WSP and released claims in the settlement | Court: Lardas lacks standing; dismissal affirmed |
| Appeal of bankruptcy trustee’s sale of Christofalos’s assets to the Grcics | Christofalos: sale invalid because he listed WSP as $1 exempt (seeking unlimited exemption) and buyer paid too much (bad faith) | Grcics/trustee: sale authorized; buyers were good‑faith purchasers; Christofalos failed to obtain a stay | Court: appeal is moot under §363(m) because sale closed without stay; good‑faith finding not clearly erroneous; appeal dismissed |
| Denial of Chapter 7 discharge under §727(a)(4)(A) | Christofalos: errors in schedules were inconsequential, possibly attorney error, not fraudulent | Kienlen/trustee: schedules contained multiple false statements/omissions material to the estate; Christofalos knew and acted with intent to deceive | Court: factual findings upheld; misstatements were material and intentional; denial of discharge affirmed |
| Christofalos’s motion to reopen Lardas case / appoint receiver / intervene | Christofalos: sought intervention and relief claiming trustee abandoned claims and sought to protect interests | Defendants: trustee sold his claims; Lardas’s suit was dismissed for standing; no live stake for Christofalos to protect | Court: motions denied; relief discretionary and unavailable; affirm denial |
Key Cases Cited
- Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167 (U.S. 2000) (standing requires concrete, particularized injury traceable to defendant and redressable)
- Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440 (7th Cir. 2009) (facial Rule 12(b)(1) challenges use complaint’s allegations for jurisdictional plausibility review)
- Silha v. ACT, Inc., 807 F.3d 169 (7th Cir. 2015) (facial standing challenges use Twombly‑Iqbal plausibility standard)
- In re River West Plaza‑Chicago, LLC, 664 F.3d 668 (7th Cir. 2011) (party must obtain stay pending appeal of bankruptcy sale to avoid mootness under §363(m))
- In re Andy Frain Services, Inc., 798 F.2d 1113 (7th Cir. 1986) (definition of good faith purchaser in bankruptcy sale context: fraud, collusion, or taking grossly unfair advantage)
- Hower v. Molding Systems Eng’g Corp., 445 F.3d 935 (7th Cir. 2006) (good‑faith finding reviewed for clear error)
- Stamat v. Neary, 635 F.3d 974 (7th Cir. 2011) (elements and materiality standard for §727(a)(4)(A) false oath discharge denial)
- Retz v. Samson (In re Retz), 606 F.3d 1189 (9th Cir. 2010) (materiality in bankruptcy disclosures concerns discovery of assets and estate disposition)