IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

IN RE: KAFANTARIS v. SIGNORE

------------------------------

JULIA MANNIX, Attorney for

Plaintiff,

Appellant.

Case No. 12 C 2299

Appeal from

Bankruptcy Court

Case No. 09 B 13534

Adversary No. 09 A 667

Hon. Harry D. Leinenweber

MEMORANDUM OPINION AND ORDER

Before the Court is Appellant Julia Mannix’s appeal of the

Bankruptcy Court’s entry of sanctions against her under Rule 9011. 

Because the Court agrees that the Bankruptcy Court was without

subject matter jurisdiction when it entered the sanctions, the

Order of Sanctions is vacated.

I. BACKGROUND

Julia Mannix (“Mannix”) was the attorney for Plaintiff, James

Kafantaris (“Kafantaris” or “Plaintiff”). Mannix filed a lawsuit

in Cook County Chancery Court (07 CH 38002) on behalf of Plaintiff

on December 21, 2007. The suit accused Plaintiff’s sister, Kanella

Signore (“Signore” or “Defendant”) of essentially taking advantage

of their invalid mother, Jean Kafantaris (“Jean”), to drain her

accounts – accounts that were held in joint tenancy with Plaintiff.

On April 16, 2009, Signore and her husband (collectively, the

“Defendants”) filed for protection under Chapter 7 of Title 11 of

the United States Bankruptcy Code. On August 3, 2009, Attorney
Mannix filed an Adversary Complaint in the bankruptcy action that

was largely factually identical to the Cook County action.

Signore’s attorney served Mannix with a letter pursuant to

Federal Rule of Bankruptcy Procedure 9011 and demanded Mannix

withdraw the suit or face sanctions. Mannix did not and on

October 18, 2009, Bankruptcy Judge Jacqueline P. Cox denied a

Motion to Dismiss as well as the Motion for Sanctions.

On September 15, 2010, Signore moved for sanctions under

Federal Rule of Civil Procedure 16(f) and scheduled a hearing for

September 22, 2010. That motion dealt entirely with alleged

failures by Mannix to meet deadlines, return phone calls, appear at

scheduled court dates and comply with other discovery and

procedural requirements. The motion did not invoke Rule 9011 and

sought dismissal of the adversary complaint and “reasonable

attorney fees and costs incurred in defending the case.” See

Def.’s Mot. for Sanctions, ECF No. 1-1, PageIDs 54-58.

On September 17, 2010, Judge Cox granted a Motion for Summary

Judgment and a docket entry indicates the adversary case was closed

on September 21, 2010. On September 22, 2010, Judge Cox continued

the hearing on the Rule 16(f) sanctions to October 27, 2010.

Plaintiff filed a timely notice of appeal on October 1, 2010. On

October 12, 2010, Plaintiff filed its response to the Motion for

Sanctions. 

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On October 22, 2010, Defendants filed their reply in support

of their motion for sanctions. The reply is somewhat broader than

the original motion, and bolstered the arguments for Rule 16(b)

sanctions by also alleging the action itself was meritless. Still,

the reply did not seek Rule 9011 sanctions. (Nor could it, as

Rule 9011 motions “shall be made separately from other motions.”

FED. R. BANKR. P. 9011(c)(1)(A).).

On November 5, 2010, the Bankruptcy Court entered an order

reopening the case, stating that it had been closed “due to

clerical error” and reopening it pursuant to Rule 60(a). The

appeal was docketed in this Court on November 12, 2010. On May 5,

2011, this Court entered its judgment affirming Judge Cox’s grant

of summary judgment. The hearing on the motion for sanctions was

continued several times until September 8, 2011, when it was

finally argued.

At that hearing, Defendants’ attorney stated “all we’re really

seeking is for reimbursement of expenses and for reimbursement of

those fees associated with what has been outlined to be constant

delay throughout this litigation.” Tr. of Proceedings of Sept. 8,

2011, 3, ECF No. 5-1, PageID 321. Defendants asked for $5,254.22

to cover $2,614.22 in costs and $2,640 in attorneys’ fees

associated with Mannix’s delays. Id. 

But when Mannix denied she should pay anything, and that

Defendants should have filed for sanctions under Rule 26 and 37,

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Defendants’ attorney again bolstered his motion with reference to

the early Rule 9011 attempt and the alleged meritlessness of the

case. Id. at 7-8, ECF No. 5-1, Page ID 325-326. After much back

and forth about whether the case ever had any merit, Mannix tried

to refocus on the Rule 16 motion at hand.

MANNIX: Your Honor, with all due respect, we’re

going, I think, afar from the motion.

THE COURT: But the issue is whether or not the time

and money spent by the defendants was

justified. Whether they should have had

to do this, or whether the plaintiff

acted without cause, without even

probable cause.

MANNIX: But, Your Honor, that’s not a Rule 16

motion. [The] rule 16 motion deals with

[the] pretrial order. This is going

beyond that.

Id. at 16, ECF No. 5-1, PageID 334. Judge Cox then asked

Defendants’ attorney if he had “pursue[d] sanctions under

Rule 9011?” Id. at 18, ECF No. 5-1, 336. Defendants’ attorney did

not contend that his motion was for Rule 9011 sanctions, but noted

that he had filed such a motion early on in the case and it was

denied. However, he added “But the court has the inherent powers

under Chambers v. Nasco to enter sanctions sua sponte for abuse of

judicial process, regardless of Rule 16.” Id.

When Mannix protested that she was being asked to defend a

motion that was not even before the Court, and requested an

opportunity to respond to what was essentially a different

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argument, the Judge replied “I agree there’s a difference between

not doing discovery and then filing a spurious lawsuit.” Id. at

19, ECF No. 5-1, PageID 337.

A few moments later, Judge Cox asked Defendants’ attorney

point-blank: “[Do] you want to amend your motion to proceed under

Rule 9011?” Id. at 21, ECF No. 5-1, PageID. Defendants’ attorney

replied, “I hadn’t thought about that, Your Honor. No, I don’t. 

I want to stand on the motion as it currently stands.” Id. at 21-

22, ECF No. 5-1, PageIDs 339-340. With that, the Court recessed,

returning after a recess to deny the motion without prejudice

because “I just have some trouble with ruling on the basis of

Rules 16 and 37.” Id. at 22, ECF No. 5-1, PageID 340.

Two weeks later, on September 22, 2011, Defendants’ attorney

apparently changed his mind and filed a motion for sanctions under

Rule 9011. Mannix missed the response deadline of October 28, 2011

and the hearing on November 15, 2011. On November 28, 2011, she

filed for leave to file a response, which Judge Cox granted. No

request for another hearing date was made and no hearing was held. 

On December 9, 2011, Judge Cox granted the motion for Rule 9011

sanctions, awarding Defendants the entirety of their costs and

attorney’s fees, $44,951.72. This timely appeal followed.

II. LEGAL STANDARD

The District Court reviews the Bankruptcy Court’s imposition

of Rule 9011 sanctions for an abuse of discretion. Levit v. Savard

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(In re Savard), No. 02-9142, 2003 U.S. Dist. LEXIS 12118, at *5

(N.D. Ill. July 25, 2003). 

III. ANALYSIS

A. Jurisdiction

One of the grounds upon which Mannix appeals involves

jurisdiction. She argues that because the Motion for Rule 9011

Sanctions was filed on September 22, 2011, four months after

judgment was entered on October 1, 2010, the bankruptcy judge had

no jurisdiction to entertain or grant the motion for sanctions. 

They note this Court simply affirmed summary judgment without ever

remanding the case to the Bankruptcy Court. 

Defendants protest Mannix did not identify in her Rule 8006

statement the jurisdictional issue as one to be addressed on

appeal, and it is therefore waived. But Mannix is correct that

subject matter jurisdiction is “a matter than can never be

forfeited or waived.” Union Pacific R.R. Co. v. Bhd. of Locomotive

Eng’rs & Trainmen Gen. Comm. of Adjustment, C. Region, 130 S.Ct.

584, 596 (2009). “Indeed, it is the duty of this court to satisfy

itself not only of its own jurisdiction, but also that of the lower

courts in a cause under review.” Weaver v. Hollywood CasinoAurora, Inc., 255 F.3d 379, 381 (7th Cir. 2001).

“It is a fundamental tenet of federal civil procedure that –

subject to certain defined exceptions – the filing of a notice of

appeal from the final judgment of a trial court divests the trial

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court of jurisdiction and confers jurisdiction upon the appellate

court.” In re Transtexas Gas Corp. v. TransTexas Gas, 303 F.3d

571, 578-579 (5th Cir. 2002) (citing Griggs v. Provident Consumer

Co., 459 U.S. 56, 58 (1982). “This rule applies with equal force

to bankruptcy cases.” Transtexas, 303 F.3d at 578-579 (citing In

re Statistical Tabulating Corp, Inc., 60 F.3d 1286, 1289 (7th Cir.

1995)).

“There are, however, various exceptions to the jurisdictional

rule that jurisdiction is vested with the court of appeals upon the

proper filing of a notice of appeal. For example, jurisdiction

continues in the [trial court] if jurisdiction is reserved

expressly by statute, or if the court expressly reserves or retains

such jurisdiction, or while the court is entertaining motions

collateral to the judgment or motions which would aid in resolution

of the appeal. However, these exceptions only apply to those

motions filed with the [trial] court while the appeal on the merits

is pending.” Overnite Transp. Co. v. Chicago Indus. Tire Co., 697

F.2d 789, 792 (7th Cir. 1983) (vacating district court award of

sanctions under 28 U.S.C. § 1927 where the motion for sanctions was

filed two months after the appellate court affirmed dismissal of

the case) (internal citations omitted).

Mannix argues that, under Overnite, the Court must vacate the

sanctions here, since the motion for sanctions under Rule 9011 was

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not filed until four months after this Court affirmed the grant

summary judgment.

But Appellees argue that because the motion for Rule 16(f)

sanctions was filed before the Bankruptcy Court entered summary

judgment, this case is different from Overnite. “When the

Bankruptcy Court denied the Rule 16 motion without prejudice, it

clearly contemplated that it would entertain a Rule 9011 motion,”

argue appellees. Defendants’ Resp. 14.

The Court notes that the Seventh Circuit has instructed trial

courts that the preferred method for dealing with post-judgment and

collateral motions is to rule on them as quickly possible after

judgment. That way, if parties wish to appeal the post-judgment

ruling, they may do so and the appeal will be combined with the

merits appeal rather than be ruled on piecemeal. See Overnite, 697

F.2d at 793 (“In an effort to avoid delay and wasted effort, the

Terket court adopted a general rule that ‘district courts in this

circuit should proceed with attorneys’ fees motions, even after an

appeal is filed, as expeditiously as possible. Any party

dissatisfied with the court’s ruling may then file an appeal and

apply to this court for consolidation with the pending appeal of

the merits.”) (citing, generally, Terket v. Lund, 623 F.2d 29 (7th

Cir. 1980).

The record is not clear on why both the hearing and judgment

on the Rule 16 motion were delayed until after the entry of this

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Court’s appeal ruling. This Court assumes the bankruptcy judge had

good reason to do so. Overnite does not mean that mere delay of a

collateral decision over which the bankruptcy court properly had

jurisdiction robs that court of jurisdiction. See Cooter & Gell v.

Hartmarx Corp., 496 U.S. 384, 389, 394-399 (1990) (finding

voluntary dismissal did not divest District Court of the collateral

issue of Rule 11 sanctions, even though sanctions were imposed

3 1/2 years after a hearing on the sanction and dismissal of the

complaint) (superseded on other grounds by Rule amendments as

recognized in De La Fuente v. DCI Telecomms., Inc., 259 F.Supp.2d

250, 258 n.4 (S.D.N.Y. 2003).

However, the Seventh Circuit has oft found where

jurisdictional matters or explicit Federal Rules of Civil Procedure

are at issue, a trial court possesses no power to extend deadlines

– even where the parties have relied upon a judge’s assurance that

a case was dismissed without prejudice or an appeal deadline was

extended.

For example, in Blue v. IBEW Local Union 159, the Seventh

Circuit, apparently sua sponte, refused to review the merits of an

appeal where the district court judge had improperly extended the

28-day period to file Rule 50 and 59 motions (said motions being

ones that extend the 30-day period in which to file an appeal). 

Blue v. IBEW Local Union 159, 676 F.3d 579, 582-583 (7th Cir.

2012).

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In the bankruptcy context, Judge John H. Squires dismissed as

untimely a complaint after it was refiled one day after being

dismissed without prejudice as a sanction for missing a pre-trial

order filing deadline. Baermann v. Ryan, 408 B.R. 143, 158-161

(Bankr. N.D. Ill. 2009). The complaint was untimely under

Rule 4007(c), which requires adversary bankruptcy complaints to be

filed within 60 days of the first meeting of creditors. Although

the dismissal had been without prejudice, and the Seventh Circuit

had ruled Rule 4007(c) was not a jurisdictional rule, Judge Squires

felt that “[b]ankruptcy courts lack authority to alter rules of

state law, or depart from those in the Code, to implement their own

views of wise policy.” Id. (citing In re A.G. Fin. Serv. Ctr.,

Inc., 395 F.3d 410, 413-414 (7th Cir. 2005)). As Judge Squires

noted, “without prejudice” does not mean “without consequence.” 

Id. at 160 (quoting Powell v. Starwalt, 866 F.2d 964, 966 (7th Cir.

1989)). “If the case is dismissed and filed anew, the fresh suit

must satisfy the statute of limitations.” Id.

Although Squires was discussing a dismissal, the Court

believes the same logic applies to motions. If a motion is denied

without prejudice, a newly filed motion must not be barred by any

jurisdictional limitations. The Court believes – but need not

decide – that the dismissal without prejudice, coming after final

summary judgment and appellate review, disposed of the collateral

Rule 16(f) sanctions issue being reviewed and divested the

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bankruptcy court of the power to entertain even a renewed

Rule 16(f) motion.

The Court need not reach this question, however, to address

Defendants’ arguments. They argue implicitly that the pendency of

the Rule 16(f) motion at the time the first appeal was decided

invested jurisdiction in the Bankruptcy Court to (1) take up,

again, the 16(f) motion after dismissing it without prejudice and

(2) to convert the Rule 16(f) motion to a Rule 9011 motion. 

However, neither of those actions are what occurred. The judge

clearly ruled that she could not or would not issue sanctions under

Rule 16. The Defendants, at the Rule 16 hearing, explicitly

disavowed the intent and desire even to seek Rule 9011 sanctions or

to convert the Rule 16 motion to a Rule 9011 motion. Neither did

the judge convert it under her own inherent powers to sanction

litigants.

After losing the Rule 16 motion, Defendants did not revive it,

but filed a new motion for Rule 9011 sanctions. This puts this

case squarely in the mold of Overnite, which plainly forbids filing

for sanctions after judgment has been rendered in the appellate

court on the merits.

It might be a different matter if Defendants had stood on

their Rule 16 motion and asked Judge Cox to convert her ruling to

a dismissal with prejudice and then appealed that judgment to this

Court. The Rule 16 motion was a collateral issue properly before

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the Bankruptcy Court post-trial, and appealable in its own right. 

But that is not what happened, and instead Defendants instituted a

motion for sanctions post-appeal. Overnite does not allow that,

and because it is a jurisdictional issue, the bankruptcy was

without power to entertain the motion.

IV. CONCLUSION

For the reasons stated herein, the Court finds that the

Bankruptcy Court was without jurisdiction to entertain the

Rule 9011 Motion for Sanctions. The Rule 9011 Order for Sanctions

is vacated.

IT IS SO ORDERED.

Harry D. Leinenweber, Judge

United States District Court

DATE:9/5/2012

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