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Eei Holding Corp. v. Bragg

United States District Court, C.D. Illinois

May 22, 2013

EEI HOLDING CORPORATION d/b/a EGIZII ELECTRIC, INC., Plaintiff,
v.
GARY L. BRAGG, EDMOND VILLANI, KEN BRIER, NICHOLAS BRATT, JOEL COOPERMAN, MARKUS ROHRBASSER, and TED DRAUSCHAK, Defendants

Decided May 21, 2013.

Page 914

For EEI Holding Corporation, doing business as Egizii Electric Inc, Plaintiff: G Christopher Slick, Michael Joseph Meyer, LEAD ATTORNEYS, TRIBLER ORPETT & MEYER PC, Chicago, IL; James R Potter, LEAD ATTORNEY, LONDRIGAN POTTER & RANDLE PC, Springfield, IL.

For Ken Brier, Gary L Bragg, Nicholas Bratt, Joel Cooperman, Defendants: Alan I Becker, LEAD ATTORNEY, LITCHFIELD CAVO LLP, Chicago, IL.

For Ted Drauschak, Edmond Villani, Markus Rohrbasser, Defendants: Alan I Becker, LITCHFIELD CAVO LLP, Chicago, IL.

OPINION

Page 915

RICHARD MILLS, United States District Judge.

This matter is now before the Court on Defendants' Motion to Dismiss [d/e 6] for lack of personal jurisdiction and failure to state a claim. For the reasons that follow, Defendants' Motion to Dismiss is DENIED on the issue of personal jurisdiction, but GRANTED on the issue of failure to state a claim.

I. FACTUAL BACKGROUND

Plaintiff, EEI Holding Corporation (" Plaintiff" ), is an Illinois corporation with its principal place of business in Springfield, Illinois. Complaint [d/e 1-1] ¶ 1. First Sealord Surety, Inc. (" First Sealord" ) is a Pennsylvania corporation with its principal place of business in Pennsylvania. Id. at 5.

At all times relevant to this action, the following individually-named Defendants were corporate actors of First Sealord: (1) corporate secretary, Gary L. Bragg; (2) corporate officers and/or directors, Edmond Villani and Ken Brier; and (3) corporate directors, Nicholas Bratt, Joel Cooperman, Markus Rohrbasser, and Ted Drauschak (" Defendants" ). See id. at ¶ ¶ 2-4.

On September 24, 2010, Plaintiff purchased two surety bonds from First Sealord and secured them with $225,000, which First Sealord held in trust. See id. at ¶ ¶ 8-10. On April 29, 2011, the collateral funds were transferred into First Sealord's operating account, and ultimately depleted, allegedly at the direction of Defendants. See id. at ¶ ¶ 12, 17. This conversion, however, was not discovered until the Commonwealth Court of Pennsylvania [1] ordered First Sealord into liquidation in February 2012. Id. at ¶ ¶ 11-12.

The Pennsylvania Insurance Commissioner, acting as a statutory liquidator [2]

Page 916

(" liquidator" ), is pursuing recoupment of Plaintiff's collateral funds from the Defendants' directors and officers' liability insurance (" D& O insurance" ). [3] See id. at ¶ 19. Plaintiff has filed a claim with the liquidator seeking to recover any corresponding D& O insurance proceeds. See id. The liquidator, however, has allegedly expressed his intent to treat any such proceeds as an asset of First Sealord by depositing the funds into First Sealord's general estate for disbursement to creditors. See id. Plaintiff has elected to directly pursue recoupment of its converted collateral funds from Defendants.

II. PROCEDURAL BACKGROUND

Plaintiff filed this action on June 29, 2012, in the Circuit Court of Sangamon County, Illinois, No. 2012 L 000172. See Complaint [d/e 1-1]. On October 9, 2012, Defendants removed the case to this Court based on diversity of citizenship. Notice of Removal [d/e 1].

In its Complaint, Plaintiff claims that it is entitled to bring this direct action against Defendants for allegedly directing the conversion of its collateral funds, thereby breaching a fiduciary duty owed to Plaintiff and causing damages in the amount of $225,000. See Complaint [d/e 1-1] ¶ ¶ 17-20.

On November 19, 2012, Defendants moved the Court to dismiss the action for lack of personal jurisdiction and for failure to state a claim. Motion [d/e 6].

III. ANALYSIS

Defendants argue that due process does not permit the Court to exercise personal jurisdiction. See Defs.' Mem. [d/e 7] pp. 5-8. Defendants further argue that they did not owe Plaintiff a fiduciary duty, and thus, Plaintiff has failed to ...


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