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07/17/89 John E. Washburn, Director v. B. Frederick Becker Iii

July 17, 1989

OF ILLINOIS, PLAINTIFF-APPELLANT

v.

B. FREDERICK BECKER III, ET AL., DEFENDANTS-APPELLEES



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FIRST DIVISION

JOHN E. WASHBURN, Director of Insurance of the State of

Illinois, as Liquidator of Optimum Insurance Company

542 N.E.2d 764, 186 Ill. App. 3d 629, 134 Ill. Dec. 418 1989.IL.1103

Appeal from the Circuit Court of Cook County; the Hon. Roger J. Kiley, Jr., Judge, presiding.

APPELLATE Judges:

JUSTICE BUCKLEY delivered the opinion of the court. MANNING, P.J., and O'CONNOR, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE BUCKLEY

John E. Washburn (plaintiff), Director of Insurance of the State of Illinois and court-appointed liquidator of Optimum Insurance Company of Illinois (Optimum), brought suit in the circuit court to recover damages allegedly suffered by Optimum due to the acts of certain directors and officers of Optimum and its parent companies. The nonresident defendants *fn1 specially appeared for the limited purpose of objecting to jurisdiction of the Illinois courts over their persons. The circuit court granted these defendants' motions to dismiss for lack of personal jurisdiction based upon the fiduciary shield doctrine and denied plaintiff leave to file an amended complaint. Pursuant to Supreme Court Rule 304(a) (107 Ill. 2d R. 304(a)), the circuit court found no just reason for delaying enforcement or appeal of these orders, and plaintiff filed a timely appeal. For the following reasons, we reverse and remand this action to the circuit court.

On April 23, 1986, the circuit court of Cook County found Optimum insolvent and entered an order of liquidation against it. The circuit court appointed plaintiff as Optimum's liquidator.

Optimum, an insurance company organized under the Illinois Insurance Code (Ill. Rev. Stat. 1987, ch. 73, par. 613 et seq.), is wholly owned by Optimum Holding Corporation , a New York corporation with its principal place of business in New York. In turn, 51% of OHC is owned by Ideal Mutual Insurance Company (Ideal), a mutual insurer organized under the law of New York. At the time of this appeal, Ideal was being liquidated in New York, and both OHC and Ideal were insolvent.

On September 17, 1986, plaintiff filed a complaint for injunctive and other relief seeking damages in excess of $21 million from the directors and officers of Optimum, OHC, and Ideal. The complaint alleges that the directors and officers of Optimum and its two parent companies, OHC and Ideal, participated in voidable transfers, acted negligently, and breached fiduciary duties owed to Optimum and its policy holders. It asserts the Illinois long-arm statute (Ill. Rev. Stat. 1987, ch. 110, par. 2-209(a)) as a basis for jurisdiction.

Defendants moved to dismiss plaintiff's complaint or quash service of process based on the court's lack of personal jurisdiction over defendants. In support of their motions, each defendant submitted an affidavit asserting that he was not a resident of Illinois and had not resided in Illinois at any time pertinent to the events alleged in the complaint. Defendants argued that a tortious act was not committed within Illinois so as to subject them to jurisdiction under the Illinois long-arm statute (Ill. Rev. Stat. 1987, ch. 110, par. 2-209(a)), and, in any event, the assertion of jurisdiction over them was barred by the "fiduciary shield doctrine."

In his response to the motions to dismiss, plaintiff sought to establish that defendants submitted themselves to jurisdiction in Illinois by the introduction of four letters. The circuit court denied introduction of these letters for lack of authentication and proper foundation. *fn2

After hearing arguments from both sides on the motions to dismiss, the circuit court granted defendants' motions on the ground that the fiduciary shield doctrine insulates defendants from suits in Illinois. It found that application of the doctrine is mandatory, thereby ...


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