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UNIVERSAL SEC. INS. CO. v. KOEFOED

August 28, 1991

UNIVERSAL SECURITY INSURANCE CO., a Tennessee corporation; PRESTIGE CASUALTY COMPANY, an Illinois corporation; and SAM C. HAKEMIAN, Plaintiffs,
v.
NORMAN KOEFOED, in his individual capacity, Defendant


Marvin E. Aspen, United States District Judge.


The opinion of the court was delivered by: ASPEN

MARVIN E. ASPEN, UNITED STATES DISTRICT JUDGE

 On August 10, 1990, plaintiffs Sam Hakemian, Universal Security Insurance Company ("Universal"), and Prestige Casualty Company ("Prestige") filed this action in the Circuit Court of Cook County, seeking relief under 42 U.S.C. § 1983. On September 10, 1990, the defendant, Norman Koefoed, removed it to this court. Although plaintiffs' allegations are complex and at times disjointed, the essential claim is that defendant, Norman Koefoed, abused his authority as an agent of the State of Illinois in order to carry out a personal vendetta to injure plaintiffs' personal and business reputations and to interfere with business activities in violation of substantive due process and equal protection safeguards secured by the Fourteenth Amendment of the United States Constitution. This matter is before the court on Koefoed's motion to dismiss plaintiffs' complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. For the following reasons, the motion to dismiss is granted.

 I. FACTUAL ALLEGATIONS *fn1"

 Hakemian resides in Florida and is the sole owner of Universal, a Tennessee Corporation which has its principal place of business in Boca Raton, Florida. Hakemian is also the sole owner of Prestige, an Illinois corporation with its principal place of business in Skokie, Illinois. Koefoed is an Assistant Deputy of the Illinois Department of Insurance.

 Hakemian complains of Koefoed's interference with two aspects of his business operations. The first involves Koefoed's actions in relation to a Tennessee Department of Commerce and Insurance investigation of Universal. The second involves Koefoed's actions regarding Hakemian's efforts to purchase Prestige.

 A. Tennessee Investigation

 On March 20, 1989, the Tennessee Department of Commerce and Insurance began an investigation of Universal's financial practices for reasons unspecified in the complaint. Examiners from several states where Universal did business were also involved in the investigation. Pursuant to Tennessee statute, Universal was required to provide these examiners with information about the company and to bear the costs of the investigation. On several occasions, Harold E. Payne, the examiner in charge of the Tennessee investigation, came to Chicago to meet and exchange information with Koefoed. According to the complaint, the meeting was part of Koefoed's plan to unreasonably interfere with Hakemian. *fn2"

 On July 21, 1989, the Tennessee Department issued an "Order of Supervision" which rendered Universal incapable of conducting any business. *fn3" Allegedly, Koefoed illegally obtained a copy of this order and later used it against Hakemian at the Illinois hearings regarding the acquisition of Prestige. The reasons for the order are unspecified, as is the role Koefoed played in its issuance. Although Universal claims that it was rendered incapable of conducting business, the complaint is devoid of any specific allegations of business harm. There are no allegations that Universal lost revenues or customers. Indeed, three days after the order was entered, enforcement of the order was restrained by means of a Temporary Restraining Order.

 B. Illinois Hearings

 The same day the Order of Supervision was entered, Koefoed requested that his department send investigators to Tennessee to join in the audit. Three days later, the Illinois Department of Insurance held its first hearing on Hakemian's proposed acquisition of Prestige. At this time, Hakemian said that he would infuse $ 5,000,000 into Prestige so that the department would not consider Prestige impaired. The next day, July 25, 1989, a Special Investigatory Warrant was issued to permit Illinois Department investigators to go to Tennessee. Hakemian alleges that the agents went to Tennessee to investigate Universal as part of Koefoed's plan to "bring down" Hakemian. Additionally, plaintiffs assert that Koefoed's intent in sending the investigators to Tennessee was to obtain a copy of the Order of Supervision to later use against Hakemian at the hearings regarding the purchase of Prestige.

 On August 15, 1989, the Department held a second hearing on the proposed acquisition. As a result of the two hearings, on November 15, 1989, the Department subsequently approved the acquisition, contingent upon Hakemian's infusion of $ 5,000,000. *fn4"

 Hakemian alleges that, once he secured the right to purchase Prestige, Koefoed attempted to interfere with Hakemian's ability to obtain financing. Koefoed contacted counsel for local Chicago banks and tried to persuade some of them not to make loans to Hakemian and another not to renew a previously negotiated loan. Koefoed told counsel for the banks that the Department was going to take action against Hakemian, and Koefoed disseminated false information designed to ruin Hakemian's reputation. As a result, the banks' counsel requested additional information which delayed renewal of loan arrangements and caused other banks not to participate in the loan package. In addition, Koefoed caused the State of Illinois to make unauthorized inquiries into Hakemian's personal line of credit with the Florida National Bank. Koefoed also gave false information to the bank which resulted in the revocation of Hakemian's personal credit line.

 As a result of these actions, Hakemian claims that he suffered damage to his banking relationships. Additionally, he was subjected to sanctions and a suit by the Department for failure to timely deposit the money he had promised, but the complaint contains no mention ...


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