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April 23, 2002


The opinion of the court was delivered by: Judge Ruben Castillo, United States District Court


Plaintiff Dimmitt & Owens Financial, Inc. ("Dimmitt") moves this Court for a partial summary judgment, pursuant to Federal Rule of Civil Procedure 56, on Plaintiffs claim that individual Defendant Donald Park should be held personally liable for any money judgment made against Defendants Superior Sports Products, Inc. ("SSP"), Superior Sports International, Inc. ("SSII") and Superior Source, Inc. ("SSI"). For the reasons contained herein, Plaintiffs motion for partial summary judgment is granted. (R. 32-1.)


The following facts are derived from Plaintiffs statement of material facts and accompanying exhibits. As we note in further detail herein, this Court is dismayed by Defendants' failure to comply with Local Rule 56.1(b)(3) which, in regard to summary judgment pleadings, governs the nonmovant's response to the movant's statement of material facts in the Northern District of Illinois. The Court is also dismayed that Defendants have provided only minimal corporate records, financial statements or accountant filings in support of their arguments.*fn1 For instance, no corporate or financial records have been provided whatsoever in regard to the operation of SSII or SSI. Because Defendants have failed to properly respond to Plaintiffs 56.1(a) statement, Plaintiffs factual allegations are deemed admitted to the extent they are relied upon by the Court, and form the basis for the following factual summary.

Donald Park ("Park"), a Canadian citizen, moved to Chicago in 1996 with the intent to set up a wholesale sporting goods business, specializing in the sale of sport fishing products. He was attempting to gain entry into the sport fishing product industry which, in 1996, was a $12.6 billion-a-year industry. Park testified that his business strategy was to offer customers better quality products — fishing rods in particular — at certain price points using their own brand name. In September 1996, SSP's Articles of Incorporation were filed with the Illinois Secretary of State. The filing indicates that the amount of paid-in-capital for SSP was $100.*fn2 Park testified that this came in the form of cash from his mother Chong Hyok Park ("Chong"), and was intended to start the business and to open a corporate account for SSP.*fn3

Park and Chong testified that Chong was SSP's sole shareholder. Chong, however, never purchased any shares of stock in SSP, was never issued stock certificates and never received dividends.*fn4 Chong testified that she was president of SSP at the time of its incorporation.*fn5 The Board of Directors meetings, on September 25 and October 14, 1996, also indicate that Chong had been nominated as president.*fn6 Chong, however, testified that she did not actually participate in any way in the operations of SSP. In fact, Chong testified that she had never attended a corporate meeting. Park, himself, testified that his parents solicited sales in Canada, that orders would be sent to SSP to be processed and that his parents would receive a copy of the invoice. Chong was not paid a salary from SSP. She did, however, receive checks from SSP, which she used for both personal expenses and expenses related to the "Canadian end of the business." (R. 32-3, Pl.'s Facts at 15.) Both Chong and Yong subsequently resigned from SSP because of family fighting and disputes over how the family business was being run.

The record is ambiguous as to Park's official role or "status" in SSP.*fn7 Chong testified that it was Park's decision to incorporate in Illinois. Similarly, Park testified that he was involved in the incorporation of SSP. The minutes for the organizational Board of Directors meeting list Park as SSP's secretary. The next corporate meeting lists him as SSP's general manager as well as its secretary.*fn8 However, SSP's 1997 Annual Corporate Report was executed by Park as its president. Moreover, the Report indicates that he was SSP's sole officer. Park testified that he maintained the books for the corporation and signed SSP's 1997 and 1998 U.S. tax returns.*fn9 He drafted and signed the minutes of the annual shareholders meeting for SSP on October 12, 1998 and October 19, 1999, in which he is listed as a shareholder. Park, however, has denied that he was a shareholder in the business and that he never issued stock to himself.*fn10 Park considered himself the managing officer of the business, handling most of the day-to-day activities. There were no other employees of the corporation, other than Park and some commission representatives. Park became SSP's registered agent at some point in time. In regard to the Canadian corporations, SSII and SSI, Park testified that he received the check registers prepared by his parents for these corporations, put them on an Excel spreadsheet and sent them to their accountant in Winnipeg.

SSP operated out of Park's home in Schaumburg, Illinois. Although he was not paid a salary, he would draw money from SSP when he needed to pay personal expenses. Other instances of Park's use of SSP in regard to personal expenses include the following: (1) SSP paid for his personal computer; (2) a portion of his apartment rent was written off as having been used for the business of SSP; (3) expenses related to his car lease and insurance were passed through SSP as an expense; (4) he had multiple credit cards which he used for both personal expenses and expenses related to SSP; (5) checks were written on SSP's corporate account to make payments on preexisting Canadian credit cards; and (6) his cell phone was charged to SSP as an expense. In short, Park testified that he earned his income by passing expenses through SSP. Moreover, he would occasionally draw cash from SSP in order to defray other expenses that he had incurred.*fn11 On one occasion, Park also sent SSP money to his brother, Frank Park, for personal expenses.

On October 27, 1997, Park made a written application to Dimmitt for financial assistance, on behalf of SSP as its president. In addition, the application states that Park owned 100% of the stock in SSP. Dimmitt is in the business of providing financial assistance to companies by, among other things, purchasing accounts receivable from companies that sell products and services to other companies, as well as by assisting with letters of credit so that businesses can purchase goods from overseas suppliers. In January 1998, Dimmitt and each of Defendant corporations (SSP, SSII, SSI) entered into two types of contracts for financing. The first type of contract consisted of three agreements for the issuance of irrevocable commercial letters of credit. The second type of contract was an Accounts Receivable Purchase Agreement with security agreement ("Factoring Agreement"). Park executed these written contracts with Dimmitt on behalf of SSP as its president, on behalf of SSII as its vice president, and on behalf of SSI as its manager.*fn12 Park testified that he entered the agreements so that, when predicted orders were received, the business would have enough capital to bring in products and serve their customers properly.*fn13 Similarly, he testified that they needed extra help from Dimmitt in order to create cash flow and to get money back quicker so that they could reinvest in further inventory. Chong testified that she did not participate in any transactions involving the sale of accounts receivables to Dimmitt. Chong testified that this, as well as anything involving money, was left to Park.

Dimmitt subsequently arranged for the issuance of letters of credit by Michigan National Bank on behalf of Defendants for the benefit of Defendants' suppliers. According to the language of the contract, Defendants agreed to reimburse Dimmitt for all draws made by Defendants' suppliers against the letters of credit within thirty days of any draw. Pursuant to the letters of credit agreement, six draws were made on the agreement totaling $256,326.15, including the draw fee, origination fee, interest and bank fees. Pursuant to the Factoring Agreement, Dimmitt purchased nineteen invoices from Defendants with a total face value of $16,801.94. Dimmitt stamped these invoices with a "notice of assignment," payable only to Dimmitt, and forwarded these invoices to the account debtors.

SSP was involuntarily dissolved by the Illinois Secretary of State on February 1, 1999. Although Park acknowledges receiving the notice of dissolution, he admits that he "did nothing" and continued to operate SSP until June or July 1999. (R. 32-3, Pl.'s Facts at 8.) Defendants admitted that they sent a letter to another business, Captain Ted's Tackle, dated November 29, 2000, to collect on two invoices that had been previously sold by SSP to Dimmitt under the Factoring Agreement. SSP was reinstated on June 5, 2001. The paid-in capital was again listed as $100.00. Chong testified that she became aware that SSP was dissolved at some point but that she has worked with SSP since June 2001.

In regard to the Canadian corporations, SSII and SSI, there is a striking paucity of information. Virtually no documents have been provided regarding these corporations, other than the contracts Park executed with Dimmitt on behalf of SSII and SSI, as its vice president and manager, respectively. The following facts are derived through Park and Chong's deposed testimony. SSII is an Ontario corporation, formed on February 14, 1997, with its principal place of business in the City of Thornhill, Ontario. SSII is also involved in the fishing product industry. Chong testified that it was Park's idea to form SSII, and that he was in charge of the operations of SSII. Chong testified that she is the president and sole shareholder of SSII, but that she did not pay anything for her shares. She did not sign or obtain any bank loans on behalf of SSII. SSII had no employees and operated out of Chong's home in Ontario. SSII did not own any property or equipment in Canada. Park and Chong testified that the 1997 and 1998 tax returns for SSII showed that there was a loss of $57,261 in 1998 and $61,103 in 1997. Chong said that she received wire transfers from Park to pay both personal and SSII expenses. Park testified that he provided funds to his parents in order to run the business in Canada. Chong believes that SSII and SSP are working together at the present time, and she testified that she has filled orders from inventory as late as September or October 2001. She testified that, in May 2000, SSII started using the brand name of Aurora Sports Canada pursuant to a registration filed with the Canadian government. Defendants admitted that inventory purchased by SSP, using letters of credit obtained though Dimmitt, were delivered directly to Canada.

SSI was incorporated on October 1, 1997. Chong testified it was created with some friends, Mr. Kim and Mrs. Yoon. Chong testified she had not seen the agreement between SSI and Dimmitt for issuance of letters of credit. After conducting one sale of plastic bags as a wholesaler, SSI was broken up. SSI never filed any income tax returns. Chong testified to signing SSI's Articles of Dissolution.*fn14

On November 29, 2000, Dimmitt filed a complaint against Defendants SSP, SSII, SSI and Donald Park seeking a judgment in its favor against Defendants in the amount of $273,128.09 plus costs, prejudgment interest, attorney fees and other such relief as this Court deems proper. Count IV of the complaint specifically alleges that individual Defendant Donald Park was the alter ego of these corporations. The Court entered a judgment against Defendant SSP, regarding liability, on May 24, 2001. On August 1, 2001, the Court granted Plaintiffs motion for entry of turnover order and ordered the existing inventory of fishing equipment in Illinois and Wisconsin to be turned over to Plaintiff. On November 30, 2001, Plaintiff ...

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