IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

DENT-A-MED, INC., d/b/a HC

PROCESSING CENTER,

 Plaintiff,

v.

LIFETIME SMILES, P.C.,

formerly known as WHITE OAK

DENTAL, P.C., an Illinois

corporation; DW MANAGEMENT

COMPANY, formerly known as

LIFETIME SMILES, INC., an

Illinois corporation;

FRED S. WEINER, DAISY WEINER,

JOY A. TEXTER, and SUSAN

YANOWSKY,

 Defendants.

Case No 04 C 4780

 Hon. Harry D. Leinenweber

MEMORANDUM OPINION AND ORDER

Presently before the Court is a Motion for Summary Judgment

filed by Defendants Daisy Weiner (hereinafter, “Ms. Weiner”),

Lifetime Smiles P.C. (hereinafter, “Lifetime Smiles”), and DW

Management Company (hereinafter, “DW Management”) (collectively,

the “Defendants”), with regards to all remaining counts brought

against them by Plaintiff Dent-A-Med, Inc. (hereinafter, “Dent-AMed”) in its Third Amended Complaint. The Motion argues that the

Court should apply the doctrine of collateral estoppel based on

the judgment in a corollary bankruptcy case, In re Fred Weiner

(Dent-A-Med, Inc. v. Fred S. Weiner), No. 06 A 688, 2008
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WL 2699914 (Bkrtcy.N.D.Ill., July 3, 2008). Specifically,

Defendants seek a Summary Judgment ruling on the claims for

common law fraud (Count I) and statutory fraud under the Illinois

Consumer Fraud and Deceptive Practices Act (the “ICFDPA”)

(Count II), brought against all three Defendants (Ms. Weiner on

an alter ego theory). Defendants also move for Summary Judgment

on the claims for breach of contract (Count III) and conversion

(Count IV), brought against all three Defendants (Ms. Weiner

individually). For the reasons stated herein, the Motion is

GRANTED IN PART and DENIED IN PART.

I. BACKGROUND

A. Facts

Dent-A-Med is a company that provides financing to patients

undergoing dental procedures. Defendant Fred Weiner (“Dr.

Weiner”) practiced dentistry under the corporate entity, White

Oak Dental, P.C. (“White Oak”), which changed names to Lifetime

Smiles, P.C. in 2003. Dr. Weiner was the sole shareholder and

director of this entity. Lifetime Smiles, Inc., which changed

names to DW Management, was the entity responsible for the

management operations of White Oak. Ms. Weiner was the sole

shareholder and director of this entity.

On December 20, 2002, Dent-A-Med and White Oak (doing

business as Lifetime Smiles) entered into a Provider Agreement.
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See Defs.’ Ex. A. Ms. Weiner signed the Provider Agreement on

behalf of Lifetime Smiles. In the Provider Agreement (the

“Agreement”), Lifetime Smiles agreed to submit charge slips to

Dent-A-Med for payment for dental goods and services. On its

face, the Agreement does not indicate a prohibition against the

practice of billing before goods or services are provided (“prebilling”), and the Court is aware of no written policy

prohibiting pre-billing prior to January 2004. 

In the course of its business relationship with Dent-A-Med,

Lifetime Smiles pre-billed some services. As evidenced by a

telephone call between Ms. Weiner and a Dent-A-Med employee,

Dent-A-Med knew that Lifetime Smiles submitted charge-slips for

pre-billed goods and/or services, and it accepted the practice of

pre-billing. On January 6, 2004, Dent-A-Med informed Lifetime

Smiles that it would no longer accept pre-billing.

On July 21, 2004, Dent-A-Med filed suit against Lifetime

Smiles, DW Management, Ms. Weiner, Dr. Weiner, and other

individual defendants, alleging common law and statutory fraud,

breach of contract, and conversion. The fraud claims in the

Third Amended Complaint are based on the allegation that

Defendants submitted charge slips for work not completed, work

done improperly, and/or work performed by non-licensed employees.

The contractual claim alleges that Defendants are obligated to
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reimburse Dent-A-Med for funds not paid by and/or credited to

patients by Dent-A-Med pursuant to the Provider Agreement. 

B. Dent-A-Med, Inc. v. Fred S. Weiner

In October 2005, Dr. Weiner filed a voluntary Chapter 7

bankruptcy case. Dent-A-Med then filed an adversary complaint

against Dr. Weiner pursuant to 11 U.S.C. § 523(a)(2)(A), which

provides that a Chapter 7 Discharge does not discharge an

individual debtor from any debt obtained by “false pretenses, a

false representation, or actual fraud.” In re Fred Weiner, 2008

WL 2699914 at *5. The case was tried on September 26 and 27,

2007, and April 17, 2008, before Judge Pamela S. Hollis, who

entered judgment in favor of Dr. Weiner on July 3, 2008. Id.

In her Opinion, Judge Hollis held that “Dent-A-Med failed to

establish fraud or misrepresentation perpetrated specifically

against it by Weiner” under 11 U.S.C. § 523(a)(2)(A). Id. at *2.

According to Judge Hollis, Dent-A-Med “essentially alleg[ed] the

same facts” as those in this case, namely that “Weiner billed for

partially complete work and Weiner’s work was negligently or

improperly performed by unlicensed employees of Weiner’s

companies.” Id. Judge Hollis determined that pre-billing was “a

routine practice” known to Dent-A-Med and that Dent-A-Med failed

to establish that it prohibited pre-billing during the relevant

time period. Id. at *5. Dent-A-Med also failed to show evidence
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of charge slips for work completed improperly. Id. at *7. Judge

Hollis concluded that “the debt at issue was not caused by fraud

perpetuated by Weiner” but instead “arose out of the routinely

accepted pre-billing practice between Lifetime Smiles and Dent-AMed in their course of business under the Provider Agreement.”

Id. Finally, because Dent-A-Med failed to establish fraud, Judge

Hollis found it “unnecessary to even consider” alter ego

allegations against Dr. Weiner. Id. at *2, *7. She noted,

however, that Dent-A-Med “may have a right to reimbursement”

under a breach of contract claim, but she could “not transform

total potential contract damages into total fraud damages.” Id.

at *2, *5 (noting that the Provider Agreement preamble is vague).

C. Current Motion for Summary Judgment

Defendants now contend that the doctrine of collateral

estoppel entitles Ms. Weiner, Lifetime Smiles, and DW Management

to summary judgment. Defendants argue that, in the bankruptcy

proceeding, Dent-A-Med litigated identical facts to those alleged

in this action, and that Judge Hollis’ findings of facts were

essential to her final judgment in favor of Dr. Weiner. With

respect to Counts I and II, Defendants claim that Dent-A-Med is

precluded from alleging that Defendants committed fraud by

submitting charge slips for pre-billed work or work done

improperly. With respect to Counts III and IV, Defendants argue

that Dent-A-Med is precluded from claiming that Ms. Weiner was a
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party to the Party Agreement and from asserting the breach of

contract and conversion claims against the corporate Defendants.

In response, Dent-A-Med argues that the bankruptcy case

against Dr. Weiner does not preclude any of its claims against

Defendants. Dent-A-Med contends that collateral estoppel is

inappropriate because, in the bankruptcy action: (1) findings

were made specifically as to Dr. Weiner; (2) Defendants were not

parties; (3) Judge Hollis only decided the issue of

dischargeability of Dr. Weiner’s debt to Dent-A-Med pursuant to

11 U.S.C. § 523(a)(2)(A); and (4) Judge Hollis’ Findings of Facts

were neither litigated nor essential to the judgment.

II. STANDARD OF REVIEW

Summary judgment is proper if “the pleadings, depositions,

answers to interrogatories, and admissions on file, together with

the affidavits, if any, show that there is no genuine issue as to

any material fact and that the moving party is entitled to a

judgment as a matter of law.” FED. R. CIV. P. 56(c). A fact is

material if it could affect the outcome of the suit under the

governing law, and a dispute is genuine where the evidence is

such that a reasonable jury could return a verdict for the

nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

248 (1986). The Court must view all the evidence and any

reasonable inferences therefrom in the light most favorable to

the nonmoving party. See Miller v. American Family Mut. Ins.
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Co., 203 F.3d 997, 1003 (7th Cir., 2000). The adverse party,

however, may not rest upon the mere allegations or denials in the

pleadings, but “must set forth specific facts showing that there

is a genuine issue for trial. If the adverse party does not so

respond, summary judgment, if appropriate, shall be entered

against the adverse party.” FED. R. CIV. P. 56(e).

III. DISCUSSION

A. Collateral Estoppel

The law is clear that collateral estoppel (“issue

preclusion”) applies to bankruptcy decisions and prevents

litigants from relitigating issues already resolved in an earlier

proceeding. Innkeepers’ Telemanagement & Equipment Corp. v.

Hummert Management Group, Inc., 841 F.Supp. 241, 246 (N.D.Ill.,

1993). A party seeking to invoke preclusion must show four

things: (1) the issue sought to be precluded is the same as that

involved in the prior action; (2) the issue was actually

litigated; (3) the determination of the issue was essential to

the final judgment; and (4) the party against whom estoppel is

invoked was represented in the prior action. Adair v. Sherman,

230 F.3d 890, 893 (7th Cir., 2000); Klingman v. Levinson, 831

F.2d 1292, 1295 (7th Cir., 1987). Because issue preclusion is an

affirmative defense, Defendants have the burden to set forth

facts to satisfy each element. Adair, 230 F.3d at 894. In
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determining whether Defendants have met their burden, the Court

may consult substantive principles of law in order to determine

the scope of the earlier judgment or the parties bound by the

decision. Id.

As a preliminary matter, the Court rejects the argument that

collateral estoppel should not be applied merely because

Defendants were not parties to the bankruptcy case. Collateral

estoppel may be applied “even where the party asserting estoppel

was not a party to the previous action, as long as the party to

be estopped was a party in that action.” Innkeepers’

Telemanagement, 841 F.Supp. at 246. However, the doctrine of

collateral estoppel “treats as final only those questions

actually and necessarily decided in a prior suit.” Klingman, 831

F.2d 1294. Whether the issues in this case and the issues in

the prior action are identical is a question of law. Adair, 230

F.3d at 893. Consequently, the Court begins by examining Judge

Hollis’ Opinion in order to ascertain its nature and scope. The

Court also must determine whether Judge Hollis actually and

necessarily decided any issue that would preclude Dent-A-Med’s

claims in the current action. Id. 

B. Common Law and Statutory Fraud Claims

Defendants first argue that Dent-A-Med is precluded from

alleging that Lifetime Smiles, DW Management, and Ms. Weiner (on
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an alter ego theory) committed fraud by submitting charge slips

for pre-billed work or work negligently or improperly performed.

In response, Dent-A-Med contends that the issue of Defendants’

fraud was not decided in the prior case, and any findings of fact

were neither litigated nor essential to the judgment in favor of

Dr. Weiner. The Court now turns to the specific issues to

determine whether they are identical for purposes of collateral

estoppel.

In the bankruptcy proceeding, Dent-A-Med alleged that, from

December 2002 through April 2004, Dr. Weiner and his employees

and agents submitted fraudulent charge slips on behalf of

Lifetime Smiles to Dent-A-Med for dental services that were never

provided, partially complete, completed in a defective manner, or

provided by unlicensed individuals. Dent-A-Med alleged that it

reasonably and justifiably relied upon deceptive or false

representations of Dr. Weiner and his employees and agents, and

but for those representations, it would not have paid funds on

behalf of the patients. See First Am. Compl. to Determine

Dischargeability ¶¶ 39-51. Dent-A-Med asserted these claims

against Dr. Weiner pursuant to 11 U.S.C. § 523(a), which required

it to establish false pretenses, false representation, or actual

fraud. In re Fred Weiner, 2008 WL 2699914, at *4-5. 

First, Judge Hollis determined that Dent-A-Med failed to

establish false pretenses or false representations. Under
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Section 523(a)(2)(A), Dent-A-Med was required to show that Dr.

Weiner made a false representation of fact, which he knew to be

false or made with reckless disregard for its truth and made with

an intent to deceive, and that Dent-A-Med justifiably relied on

the false representation. Id. Judge Hollis rejected the

argument that pre-billed charge slips were false representations

because Dent-A-Med failed to show that it prohibited pre-billing

during the relevant time period. Rather, the evidence showed

that pre-billing was “a routine practice known to Dent-A-Med.”

Id. Moreover, Dent-A-Med offered no evidence that Dr. Weiner or

his affiliated companies submitted charge slips for substandard

goods or services or provided services by unlicensed individuals.

Id. at *7. 

Judge Hollis next held that Dent-A-Med did not establish

actual fraud under Section 523(a)(2)(A), which required Dent-AMed to show that a fraud occurred, that Dr. Weiner had the intent

to defraud, and that the fraud created the debt at issue in the

discharge dispute. Id. at *6. Judge Hollis found that Dent-AMed failed to prove that Dr. Weiner, Lifetime Smiles, or

affiliated offices intended never to complete the pre-billed

charge slips. Judge Hollis determined that the debt at issue was

not caused by fraud but instead “arose out of routinely accepted

pre-billing practice between Lifetime Smiles and Dent-A-Med in

their course of business under the Provider Agreement.” Id.
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In the present case, Dent-A-Med makes almost identical

allegations in Count I (common law fraud) and Count II (statutory

fraud) against Defendants. See Compl. ¶¶ 38-57. These claims

are based on the same set of facts, namely that, from December

2002 through April 2004, Defendants submitted charge slips to

Dent-A-Med for services which Defendants knew were not provided,

provided in a substandard manner, or provided by unlicensed

employees. See id. ¶ 4. As in its bankruptcy complaint, Dent-AMed claims to have “reasonably relied upon the representations

. . . , and but for those representations, would have paid no

funds. . . .” See id. ¶ 48.

 In order to establish common law fraud, Dent-A-Med must show

the following: (1) Defendants made a false statement of material

fact; (2) Defendants knew the statement was false; (3) Defendants

intended for the false statement to induce Dent-A-Med to act; (4)

Dent-A-Med relied on the truth of the statement; and (5) Dent-AMed suffered damages as a result of its reliance. Geschke v. Air

Force Ass’n, 425 F.3d 337, 345 (7th Cir., 2005). Similarly,

under the ICFDPA, Dent-A-Med must establish: (1) Defendants’

deceptive act or practice; (2) Defendants’ intent that Dent-A-Med

rely on the deception; (3) the deception occurred in the course

of conduct involving trade or commerce; and (4) Dent-A-Med

suffered actual damages that were proximately caused by the

deception. Id. Thus, like the claims for fraud in the prior
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bankruptcy action, Dent-A-Med must prove deception, Defendants’

intent to deceive, and its own reasonable reliance on the

deception.

The Court agrees with Defendants that Dent-A-Med is

precluded from relitigating key issues in this case, namely

certain elements of its fraud claims. After presiding over a

trial with witnesses, Judge Hollis made several findings of fact

and law that were essential to the bankruptcy judgment and that

are fatal to Dent-A-Med’s current claims. First, “Dent-A-Med was

aware that [Dr.] Weiner’s offices submitted charges slips for

work not yet completed” and provided “no evidence” of work

completed negligently or by unlicensed professionals. In re Fred

Weiner, 2008 WL 2699914, at *3. Second, Dent-A-Med failed to

prove “that Weiner, Lifetime Smiles or affiliated offices never

intended to complete the work submitted in the charge slips.”

Id. at *6. Even assuming that Dent-A-Med could establish that

the Defendants, unlike Dr. Weiner, had the requisite intent,

Dent-A-Med is precluded from relitigating whether the pre-billed

charge slips constituted deception as well as its own reliance on

such deception. Consequently, Defendants are entitled to summary

judgment on Counts I and II.
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C. Breach of Contract and Conversion Claims

1. Claims against Defendant Daisy Weiner

Defendants contend that Ms. Weiner is entitled to summary

judgment on the remaining claims against her because Judge Hollis

found or implied that Ms. Weiner was not a party to the Provider

Agreement. Dent-A-Med replies that the issue of Ms. Weiner’s

contractual liability was not litigated in the bankruptcy case

and that Judge Hollis made no finding of fact as to this issue.

The Court agrees with Dent-A-Med that the scope of Ms.

Weiner’s contractual liability was not at issue before the

bankruptcy court. Although Judge Hollis determined that “Dent-AMed entered into the Provider Agreement with White Oak Dental,

P.C., doing business as Lifetime Smiles, Inc.,” id. at *3, she

made no determination about Ms. Weiner’s contractual liability.

Moreover, the bankruptcy court findings regarding the terms and

scope of the contract were not actually litigated, and Judge

Hollis made no findings of fact regarding the contract that were

essential to her determination regarding the alleged fraud. As

a result, Dent-A-Med is not collaterally estopped from pursuing

its contractual claims against Ms. Weiner. See Klingman, 831

F.2d 1294. 

The Court notes, however, that based on the evidence before

the Court at this time, it appears that Ms. Weiner signed the

Provider Agreement on behalf of Lifetime Smiles and not as a
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party to the contract, and she may be entitled to summary

judgment on the remaining claims against her. This issue,

however, was not fully briefed. Consequently, the Court denies

the motion for summary judgment as to Ms. Weiner on Counts III

and IV.

2. Breach of Contract Claims

Finally, Defendants argue that they are entitled to summary

judgment on Counts III and IV because Judge Hollis found that

Defendants did not breach the Provider Agreement. The Court

summarily rejects this argument. 

As a preliminary matter, as discussed above, the doctrine of

collateral estoppel is inappropriate because neither the breach

of contract issue nor the conversion issue was litigated in the

bankruptcy case. Rather, Judge Hollis only found that Dent-A-Med

failed to establish fraud. Furthermore, even a cursory reading

of the bankruptcy opinion supports the Court’s decision that

Defendants’ argument must be rejected. In dicta, Judge Hollis

repeatedly left open the possibility that Dent-A-Med may have a

claim for breach of contract. See In re Fred Weiner, 2008 WL

2699914, at *2 (“Under its contract with the Weiner affiliated

companies, Dent-A-Med may have a right to reimbursement . . .

[and] the court simply cannot transform total potential contract

damages into total fraud damages”); *5 (Dent-A-Med “asserts

nothing more than a breach of contract”); *6 (Dr. “Weiner’s
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suspension certainly was an intervening factor that could have

curtailed the ability to finish” performance of the contract).

The Court agrees with Judge Hollis that questions of material

fact exist as to whether Defendants breached the Provider

Agreement with Dent-A-Med, thus it rejects the motion for summary

judgment on these counts.

IV. CONCLUSION

For the reasons stated herein, Defendants’ Motion for

Summary Judgment is GRANTED IN PART and DENIED IN PART.

IT IS SO ORDERED.

Harry D. Leinenweber, Judge

United States District Court

12/29/2008

Dated: