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DANIELS v. POWELL

March 14, 1985

A. VERBENA DANIELS, LIQUIDATOR OF NORTHERN FINANCIAL AND GUARANTY COMPANY, LIMITED, PLAINTIFF,
v.
WILLIAM L. POWELL, AN INDIVIDUAL, WILLIAM POWELL AND COMPANY, AN ILLINOIS CORPORATION, WESTGATE PROPERTIES, INCORPORATED, A KENTUCKY CORPORATION, AND WILLIAM POWELL AND COMPANY, A KENTUCKY CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Rovner, District Judge.

  MEMORANDUM OPINION AND ORDER

A. Verbena Daniels ("Daniels") filed a complaint against defendant William L. Powell ("Powell"), William Powell and Company, an Illinois corporation ("Powell & Co."), Westgate Properties, Incorporated, a Kentucky corporation ("Westgate"), and William Powell and Company, a Kentucky corporation ("Powell Kentucky") for conversion (Count I), for fraud (Count II), for the imposition of a constructive trust (Count III), and for violation of the Racketeer Influenced and Corrupt Organization Act, 18 U.S.C. § 1961 et seq. (Count IV) ("RICO"). On August 20, 1984, Judge Paul Plunkett of the United States District Court for the Northern District of Illinois entered an order denying defendants' motion to dismiss plaintiff's original complaint.*fn1 That order was subsequently modified on November 20, 1984 to grant the motion to dismiss Powell & Co. only from Count IV of the complaint.

On August 31, 1984, Daniels filed a motion pursuant to Fed.R.Civ.P. ("Rule") 56 for partial summary judgment on Count I. On November 1, 1984, this case was transferred to Judge Rovner. For the reasons stated below, partial summary judgment is granted in favor of Daniels against defendants Powell and Powell & Co.*fn2

In order to prevail on a motion for summary judgment, a party has the burden of establishing that there is no genuine issue of material fact. Korf v. Ball State University, 726 F.2d 1222 (7th Cir. 1984). Any inferences to be drawn from the underlying facts must be viewed in the light most favorable to the non-moving party. Hermes v. Hein, 742 F.2d 350 (7th Cir. 1984). The existence of a factual dispute, however, only precludes summary judgment if the disputed fact is outcome-determinative. Big O Tire Dealers, Inc. v. Big O Warehouse, 741 F.2d 160, 163 (7th Cir. 1984). "`A material issue of fact is one that affects the outcome of the litigation and requires a trial to resolve the parties' differing versions of the truth.'" Korf, 726 F.2d at 1226, quoting Admiralty Fund v. Hugh Johnson & Co., 677 F.2d 1301, 1306 (9th Cir. 1982). In this case, the defendants have not set forth a single fact that disputes the facts propounded by the plaintiff. Thus, the facts set forth below are the facts as presented by the plaintiff.

Origin and Nature of Daniels' Claim

On June 3, 1983, the Supreme Court of Bermuda, on petition of a judgment creditor, Island Reinsurance Company Limited ("Island Re"), placed Northern in involuntary liquidation by the issuance of a Winding-Up Order ("Order"). The Order ended the authority of Powell and other Northern directors and officers to manage the company and vested all such power and authority, as well as title to the property owned by Northern, in Daniels. Daniels' formal title is the Official Receiver and Registrar of Company of the Government of Bermuda.

Powell was advised of the liquidation Order by telegram on June 10, 1983 and replied by letter that he would act on instructions of plaintiff's Bermuda counsel. Thus, defendants knew that title to all of Northern's property had vested in Daniels and that Powell no longer had any legal authority or power to control Northern's affairs or to sell assets belonging to Northern.

In defiance of the Order of the Bermuda Supreme Court, Powell determined that he would sell three parcels of land that had been owned by Northern prior to its liquidation. When Daniels requested deeds to the pieces of realty, Powell falsely represented to her that he was attempting, through negotiations with Northern's creditors, to remove Northern from liquidation. He also assured her that he would not dispose of any of Northern's property. Powell requested that Daniels take no action pending completion of his negotiations, and she acquiesced in that request.

Despite these promises to Daniels, Powell promptly proceeded to negotiate a sale of four adjacent parcels of property he and his corporations owned in Kentucky. Three of these parcels were owned solely by Northern. At a closing in November of 1983, over five months after the Order vested title in Daniels, Powell delivered to a third party buyer, Eaglestone, Inc. ("Eaglestone"), a resolution of the defunct Board of Directors of Northern. The resolution purportedly authorized Powell to convey title to the property. He also delivered to Eaglestone, along with instruments purportedly transferring title to the buyer, a sworn affidavit stating that Powell was authorized to act on behalf of Northern. At no time did Powell advise the directors of Eaglestone that Northern had been placed in liquidation by the Order of the Bermuda Supreme Court. In return for the property, Eaglestone delivered a check to Powell in the amount of $361,219.44 written to the order of Northern.*fn4

Powell endorsed the check as president of Northern and deposited the check in a Northern account. Powell then caused the funds to be transferred from Northern's account to a Westgate account in the same bank. After the payment of some disbursements, the remaining funds were transferred by Powell to a Powell & Co. account at a bank in Chicago, Illinois. The remaining funds were used for the benefit of Powell and Powell & Co., including the payment of an alleged loan from Powell's father to Powell & Co. in the sum of $50,000,*fn5 as well as the payment of a loan in the amount of $170,000 plus interest to Powell & Co. from the Chicago bank.

Presently pending before this Court is Daniels' motion for partial summary judgment on the conversion count (Count I). Daniels' sole right to partial summary judgment for conversion of the check belonging to Northern's estate derives from the Order of the Bermuda Supreme Court. Accordingly, Daniels' claim ...


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