United States District Court, N.D. Illinois, Eastern Division
THE CUSTOM COMPANIES, INC. an Illinois corporation, Plaintiff,
AZERA, LLC, a Texas limited liability Company, VAKIL MAMMADOV, an Individual, ISD ENTERPRISES, LLC, a Georgia Limited liability company d/b/a ISD TRANSPORATION and GRAMERCY INSURANCE COMPANY, a Texas corporation, Defendants.
MEMORANDUM OPINION AND ORDER
REBECCA R. PALLMEYER, District Judge.
Plaintiff in this case, The Custom Companies, Inc., entered into a ground-shipping contract with Defendant Azera LLC d/b/a Hun Logistics. The driver Defendant hired to transport Plaintiff's goods from California to Pennsylvania was involved in a roll-over vehicle accident about midway through the journey, resulting in losses exceeding $100, 000. This action, for the value of Plaintiff's lost cargo, followed. Defendant Azera LLC d/b/a Hun Logistics is in default.
Plaintiff has now moved for summary judgment  against Defendant Vakil Mammadov, the sole member of Azera. Plaintiff asks the court to find Mr. Mammadov personally liable for its damages, arguing that Azera LLC forfeited its corporate existence (and accompanying liability protections) prior to the accident. For the reasons discussed below, the court grants Plaintiff's motion.
I. Contract and Accident
Plaintiff, The Custom Companies, Inc. ("Custom"), is an Illinois freight transportation corporation that has its principal place of business in Illinois. ( See Pl. 56.1 Stat. of Mat. Facts, hereinafter "Pl. 56.1" , ¶ 1.) Azera LLC d/b/a Hun Logistics is a "common carrier in the business of receiving, shipping, transporting, and delivering goods" throughout the United States. (Def. Answer  to Pl. First Am Comp. , ¶ 3.) In August 2011, Custom and Hun Logistics agreed to a shipping deal: Custom would pay Hun to transport Custom's goods-a "collection of different shipments" valued at more than $100, 000-from California to Pennsylvania. (Pl. 56.1 ¶ 7; Dep. of Jeffrey Guthman, Ex. 6 to Pl. 56.1 [59-6], 10:3-9.) On August 20, Custom delivered the goods, "in good condition and otherwise undamaged at the time of delivery, " to a Hun agent in California. (Pl. 56.1 ¶¶ 9-10; see Pl. Resp.  to Def. 56.1 Stat. of Mat. Facts, hereinafter "Def. 56.1, " ¶ 4.) Hun arranged for its affiliate, Defendant ISD Enterprises, LLC, a Georgia limited liability company d/b/a ISD Transportation ("ISD") and operating under Hun's contract carrier authority,  to move the goods. (Def. Answer to Pl. First Am Comp. ¶¶ 5-6, 13; First Am. Compl. ¶ 7.) On August 22, the driver hauling Custom's goods from California to Pennsylvania was involved in a non-fatal rollover accident near the Kansas-Oklahoma border, causing significant damage to the goods. (Pl. 56.1 ¶¶ 11, 14.) Mammadov admits that the driver's negligence caused the accident. (Pl. Resp. to Def. 56.1 ¶ 5.) After the accident, between October 2011 and June 2012, Custom submitted several claims to Hun for the damaged goods, but Hun refused to pay. (Pl. 56.1 ¶ 13.)
Prior to entering the contract, on June 3, 2011, Hun had faxed to Custom a Certificate of Liability Insurance listing Defendant Gramercy Insurance Company ("Gramercy") as Hun's insurer. (Def. Answer to Pl. First Am Comp. ¶ 16.) The Gramercy policy provided $100, 000 worth of coverage to Hun for the period from September 28, 2010 through September 28, 2011. ( Id. ) The pending summary judgment motion does not involve Count III, which requests a declaratory judgment against Gramercy. That Count will be resolved at a later date, though the court notes that Gramercy was placed in receivership on December 4, 2012, so Custom's ability to recover any of its damages from Gramercy is uncertain. ( See Gramercy Ins. Co. Receivership FAQ, http://www.gicreceivership.com/pdf/GramercyFAQrevised8-28-12.pdf (last visited July 21, 2015).)
II. Defendant's Corporate Status
On December 10, 2008, Mammadov formed Azera LLC d/b/a Hun Logistics under Texas law. ( See Pl. 56.1 ¶ 15; Certificate of Formation, Ex. 7 to Pl. 56.1 [59-7].) Mammadov is the sole member included in the company's Certificate of Formation, which lists both Azera's business address and Mammadov's home address in Arlington, Texas. ( Id. ) As of December 9, 2014, Mammadov lives in Smyrna, Georgia. ( See Dep. of Mammadov, Ex. 5 to Pl. 56.1 [59-5], 8:11-21.) It is undisputed that Azera LLC ceased to be an active Texas company by the time the accident occurred: On November 19, 2010, the State of Texas terminated Azera's corporate existence for failure to pay annual registration fees; as of January 2015, the company had not been reinstated. (Forfeiture Notice, Ex. 9 to Pl. 56.1 [59-9]; Mammadov's Answers to Pl.'s First Set of Interrogatories, Ex. 10 to Pl. 56.1 [59-10], ¶ 10.)
The parties dispute whether Mammadov successfully converted Azera LLC d/b/a Hun Logistics from a Texas company to a Georgia one before the accident. On November 30, 2009, the State of Georgia granted Azera LLC a "Certificate of Authority" to transact business as a "foreign" limited liability company in the state. (Certificate of Authority, Ex. 8 to Pl. 56.1 [59-8].) Mammadov maintains, however, that he successfully converted the company's status to a Georgia "domestic" limited liability company before he signed the carrier contract with Custom. (Aff. of Vakil Mammadov, Def. Resp to Pl. Mem. in Supp. of Summ. Judg. , ¶ 3.) Attached as an exhibit to his response to Plaintiff's motion is a "Certificate of Conversion, " date-stamped on November 10, 2010 by Georgia's Secretary of State. ( See Ex. 2 to Aff. of Vakil Mammadov.) In addition, Mammadov states that "[f]rom 2010 to 2013, Azera filed registrations with the Georgia Secretary of State indicating [he] was the Registered Agent for Azera, LLC." (Aff. of Vakil Mammadov ¶ 4.) Other exhibits he tendered appear to corroborate this fact: in 2010, Mammadov submitted his annual registration fee and identified Azera LLC's address as in Arlington Texas. (Ex. 3 to Aff. of Vakil Mammadov.) The annual registration documents for 2011 through 2013, on the other hand, list Azera LLC's business address as located in Georgia. ( Id. )
It is not clear from these documents, however, whether Mammadov successfully effected a conversion of his company's state legal status. Custom has produced copies of Georgia Secretary of State's online records, for instance, that state that Azera LLC's status as a "domestic" limited liability company has been classified as "flawed/deficient" since November 8, 2010 (well before Custom and Azera entered into their contract in August 2011). (Georgia Sec'y of State Online Records, Ex. B. to Pl. Resp to Def. 56.1 ¶ 7 [72-2].) These online records state elsewhere that the registration fees Azera LLC paid were in connection with the company's status as a "foreign" limited liability company. ( Id. ) Azera LLC's status as a "foreign" limited liability company is currently classified, without further explanation, as "active/noncompliance." ( Id. )
III. Procedural History
Custom filed an amended complaint on June 12, 2012, against Azera LLC, Mammadov in his personal capacity, ISD, and Gramercy. ( See generally First Am. Compl.) The complaint asserts three counts against the defendants, all stemming from the August 2011 accident. ( See id. at 4-7.) Count I, against Azera and ISD, alleges violations of the Carmack Amendment, which governs liability of common carriers to shippers for damages resulting from interstate shipments. ( Id. ¶ 28). Count III seeks a declaratory judgment that Gramercy is required to provide coverage for Custom's damages related to the shipping accident. ( Id. ¶ 46.) Count II, the subject of the current motion for summary judgment , alleges that Defendant Mammadov is personally liable for Custom's damages under Texas law because Azera LLC forfeited its corporate status (and accompanying liability protections) before the accident took place. ( Id. ¶¶ 33-34.) Custom tallies its damages in the ...