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Star Insurance Co. v. Risk Marketing Group Inc.

March 31, 2009

STAR INSURANCE COMPANY, A MICHIGAN CORPORATION, WILLIAMSBURG NATIONAL INSURANCE COMPANY, A CALIFORNIA CORPORATION AND AMERICAN INDEMNITY INSURANCE COMPANY, LIMITED, A BERMUDA CORPORATION, PLAINTIFFS-APPELLEES,
v.
RISK MARKETING GROUP INCORPORATED, AN ILLINOIS CORPORATION AND CEBCOR SERVICE CORPORATION, AN ILLINOIS CORPORATION, DEFENDANTS-APPELLANTS.
APPEAL OF: CHARLES E. STEVENSON, DONA. MOORE, ENCOMPASSFINANCIAL SOLUTIONS, LLC, ET AL.



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:06-cv-01364-Elaine E. Bucklo, Judge.

The opinion of the court was delivered by: Bauer, Circuit Judge.

ARGUED DECEMBER 1, 2008

Before BAUER, ROVNER, and EVANS,Circuit Judges.

The United States District Court for the Eastern District of Michigan, Southern Division, entered judgment in the amount of $2,436,290, plus interest, in favor of Star Insurance Company, Williamsburg National Insurance Company, and American Indemnity Insurance Company, Ltd. (collectively, "Plaintiffs") and against Risk Marketing Group, Inc. and Cebcor Service Corp. (collectively, "Defendants"). Plaintiffs registered this judgment, pursuant to 28 U.S.C. § 1963, in the District Court for the Northern District of Illinois and instituted supplementary proceedings to enforce the judgment, pursuant to Federal Rule of Civil Procedure 69 and 735 ILL. COMP. STAT. 5/2-1402 (2007).

In a separate suit, the plaintiffs sued to pierce the corporate veil of the defendant corporations in the same court. Charles E. Stevenson, Don A. Moore, Employ America, LLC, and Encompass Financial Solutions, LLC were also named as defendants in the second suit, based on their respective insider relationships with the corporate defendants and for their failure to observe corporate formalities.

In the collection suit, the plaintiffs filed four motions: (1) to set aside fraudulent transfers; (2) for a preliminary injunction to prevent the disposition of assets; (3) for the appointment of a receiver; and (4) to dissolve the corporate defendants. Defendants failed to respond to these motions even after receiving two extensions of time. Defendants instead filed a motion to consolidate the collection case with the piercing case or, alternatively, to transfer the collection case to the district court judge presiding over the piercing case.

On August 31, 2007, the district court denied the motion to consolidate; it also found that: (1) Defendants fraudulently transferred certain assets to Charles E. Stevenson, Don A. Moore, Employ America, LLC, and Encompass Financial Solutions, LLC; (2) the transferees were in possession of the defendants' property; and (3) ordered the transferees to return the assets within 21 days. The district court also enjoined further disposition of the transferred assets.

On September 21, 2007, the defendants filed a motion requesting the court to reconsider the finding that the transfers were fraudulent. The district court denied the motion on October 1, 2007; it found that the defendants, despite extensions, had not responded to the plaintiffs' motion to set aside the fraudulent transfers and that the motion for consolidation was not an adequate response.

Plaintiffs filed renewed motions for judicial dissolution and for the appointment of a receiver. The district court granted this motion on October 19, 2007; it held that the judgment in the amount of $2,436,290 remained unsatisfied, and that the defendants were (and had admitted to being) insolvent.

The defendants appealed the orders of October 1, 2007 and October 19, 2007. This court questioned whether final and appealable judgments had been entered by the district court and ordered the defendants to show cause why the appeal should not be dismissed for want of jurisdiction or to voluntarily dismiss the appeal. Defen dants then voluntarily dismissed the appeals pursuant to Federal Rule of Appellate Procedure 42(b).

Plaintiffs then moved for the entry of the judgment of $2,436,290 plus interest against the transferees for their failure to return the fraudulently transferred assets as ordered by the district court on August 31, 2007. On January 23, 2008, the district court granted this motion and denied the transferees' motion to reconsider on February 6, 2008.

On February 15, 2008, the various defendants and the transferees appealed the district court's orders of:

(1) August 31, 2007; (2) October 1, 2007; (3) October 19, 2007; and ...


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