Court of Appeals of Illinois, First District, First Division
from the Circuit Court of Cook County. No. 13 L 2143
(Renumbered as: 15 L 11262) Honorable John. C. Griffin, Judge
JUSTICE MIKVA delivered the judgment of the court, with
opinion. Justice Harris and Justice Simon concurred in the
judgment and the opinion.
1 This is an appeal from an order dismissing claims against
certain defendants as untimely. Plaintiff Guarantee Trust
Life Insurance Company (Guarantee) entered into a reinsurance
agreement with Somerset Reinsurance, Ltd. (Somerset), a
company formed by an independent insurance producer for the
sole purpose of reinsuring policies issued by Guarantee.
Under the agreement, Guarantee forwarded premium payments to
Somerset to hold in a custodial account for the payment of
claims. Guarantee initially sued the founder of the
reinsurance company, Robert Kribbs, alleging that he acted in
concert with "an employee" inside Guarantee's
organization both to secure the agreement and later to
improperly obtain authorization for the release of funds from
the account to Mr. Kribbs for his own use. Nearly six years
after filing its initial complaint, while taking discovery
depositions in the case, Guarantee discovered the identity of
two of its own employees, Keith Lindvig and Larry Graves, who
it claims participated in the scheme and sought to name them
in the suit. Mr. Graves and Mr. Lindvig moved to dismiss the
claims against them as untimely and the circuit court granted
their motion. For the reasons that follow, we affirm the
judgment of the circuit court.
3 Reinsurance is a contract of indemnity in which one insurer
agrees to protect another insurer from a risk it has already
assumed. Vial v. Norwich Union Fire Insurance Society of
Norwich, England, 257 Ill. 355, 358 (1913). The original
policyholder is generally not a party to such an agreement.
In re Liquidations of Reserve Insurance Co., 122
Ill.2d 555, 561 (1988). In this case, plaintiff Guarantee
entered into a reinsurance agreement with Somerset, a
reinsurance company formed by licensed insurance producer
Robert Kribbs to reinsure credit life and disability policies
issued by Guarantee.
4 A. Guarantee's Initial Lawsuit
5 On December 12, 2006, Guarantee brought a five-count
complaint against Mr. Kribbs for unjust enrichment,
conversion, constructive fraud, concert of action, and civil
conspiracy (the 2006 Complaint). Guarantee alleged that it
entered into the reinsurance agreement with Somerset to
reinsure policies sold by Mr. Kribbs and others, pursuant to
which it agreed to deposit premiums paid on the policies into
a custodial account controlled by Somerset and Mr. Kribbs.
Guarantee further alleged that, "[w]ithout regard to the
contractually and statutorily mandated reserve requirements
applicable to both [Guarantee] and Somerset, [Mr. Kribbs]
authorized and requested the release of the ceded premiums to
be paid directly to [Mr. Kribbs], " leaving insufficient
remaining funds to pay claims on the policies. As a result,
Guarantee alleged that it was forced to indemnify
policyholders, using its other reserves and premiums, for
claims that should have been paid by Somerset from the
6 Although Mr. Kribbs was the only individual defendant
originally named in this case, Guarantee specifically alleged
in count IV of the 2006 Complaint, entitled "Concert of
Action, " that Mr. Kribbs could not have unilaterally
withdrawn funds from the custodial account. According to
count IV of the 2006 Complaint, "[t]he approval of an
employee of Guarantee was required for Kribbs to allow the
premium funds to be paid personally to Kribbs" and
"[b]oth Kribbs and the employee of Guarantee knew that
the release of funds directly to Kribbs constituted a breach
of the employee's duty of loyalty to [Guarantee] and its
duty to protect its policyholders."
7 On January 8, 2008, Mr. Kribbs disclosed in his responses
to Guarantee's interrogatories the names of five
individuals with knowledge of the losses allegedly suffered
by Guarantee as a result of the transactions described in the
2006 Complaint, including Guarantee employees Larry Graves,
Keith Lindvig, and Arthur Fess.
8 In the fall of 2012, nearly six years after originally
filing the lawsuit, Guarantee took the discovery depositions
of Mr. Kribbs, Mr. Fess, and Mr. Lindvig. Mr. Kribbs
testified that he and Mr. Lindvig were both working for
Guarantee-Mr. Kribbs as an insurance agent and Mr. Lindvig as
a sales manager-when they were approached by vice president
Larry Graves about forming Somerset. Mr. Kribbs stated that
Mr. Graves explained how Mr. Kribbs could request
"dividends" from the custodial account. During
discovery, Mr. Kribbs produced copies of letters signed by
both Mr. Graves and Guarantee's senior vice president of
finance, Arthur Fess, instructing the bank to disburse funds
from the custodial account directly to Mr. Kribbs.
9 Mr. Fess was also deposed and described how Mr. Graves
prepared the letters and supporting documentation for Mr.
10 Mr. Lindvig, who was at the time of his deposition the
national sales manager for Guarantee's credit life
division, testified that, at Mr. Graves's direction, it
was he who initially approached Mr. Kribbs regarding forming
a reinsurance company. Mr. Lindvig confirmed that, as the
line-of-business manager, Mr. Graves was the one who reviewed
quarterly statements to determine if sufficient excess was
available in the custodial account to make a distribution.
Mr. Lindvig also disclosed during his deposition that he had
been receiving commissions from Mr. Kribbs "for many,
many years back and forth."
11 B. The Re-Filed Action
12 On October 2, 2012, the circuit court granted
Guarantee's request for a voluntary dismissal of the 2006
Complaint and, on February 7, 2013, Guarantee re-filed the
action, this time naming both Mr. Kribbs and Mr. Lindvig as
defendants and Mr. Graves as a respondent in discovery.
13 Guarantee filed a first amended complaint on July 31,
2013, in which it detailed Mr. Graves's involvement in
the alleged scheme to wrongfully withdraw funds from the
custodial account. On October 16, 2013, the circuit court
granted Guarantee's ...