Bentley v. Glenn Shipley Enterprises, Inc., 4-93-0044

• Decision Date: 19 August 1993
• Docket Number: No. 4-93-0044,4-93-0044
• Citation: 189 Ill.Dec. 115,248 Ill.App.3d 647,619 N.E.2d 816
• Parties: , 189 Ill.Dec. 115 Robert L. BENTLEY, Plaintiff-Appellant, v. GLENN SHIPLEY ENTERPRISES, INC., Glenn Shipley and Shirley Shipley, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 816

619 N.E.2d 816

248 Ill.App.3d 647, 189 Ill.Dec. 115

Robert L. BENTLEY, Plaintiff-Appellant, v. GLENN SHIPLEY ENTERPRISES, INC., Glenn Shipley and Shirley Shipley, Defendants-Appellees.

No. 4-93-0044.

Appellate Court of Illinois,

Fourth District.

Argued June 22, 1993.

Decided Aug. 19, 1993.

John McMahon (argued), Zimmerly, Gadau, Selin & Otto, Champaign, for plaintiff-appellant.

Michael J. Tague (argued), Flynn, Palmer & Tague, Champaign, for defendants-appellees.

Justice COOK delivered the opinion of the court:

Plaintiff Robert Bentley commenced a supplementary proceeding to discover assets belonging to the judgment debtor, Glenn Shipley Enterprises, Inc. (Shipley Enterprises). Bentley served Glenn Shipley and Shirley Shipley (the Shipleys) with third-party citations to discover assets of the judgment debtor in their possession. Bentley discovered $18,243.48 in checks written on the Shipley Enterprises corporate checking account by the Shipleys for their own personal expenditures unrelated to the corporation's business. Bentley filed a motion for turnover order, requesting the trial court order the Shipleys to turn over $18,243.48 to him in partial satisfaction of his judgment against Shipley Enterprises. The trial court denied Bentley's motion. Bentley appeals, contending the trial court erred in refusing to order the Shipleys to turn over $18,243.48. We reverse and remand.

On March 28, 1987, Bentley sustained injuries arising out of and in the course of his employment with Shipley Enterprises. Bentley filed an action against Shipley Enterprises with the Industrial Commission of Illinois, pursuant to the Workers' Compensation Act (Ill.Rev.Stat.1985, ch. 48, par. 138.1 et seq.). A hearing was held on April 9, 1990, and on August 3, 1990, the arbitrator awarded Bentley compensation. Shipley Enterprises did not appeal or otherwise move to have the award modified, set aside, or vacated, and the award thus became the final decision of the Industrial Commission. (Ill.Rev.Stat.1985, ch. 48, par. 138.19(b).) Shipley Enterprises did not pay the compensation awarded Bentley.

On January 18, 1991, Bentley filed a two-count complaint in the circuit court of Champaign County seeking judgment on the workers' compensation award. Count I requested judgment against Shipley Enterprises and count II requested judgment against Glenn Shipley and Shirley Shipley, individually. Count II alleged there was a "unity of interest" between Shipley Enterprises and the Shipleys, and the corporation was merely the Shipleys' "alter ego." On March 20, 1991, the trial court entered judgment on count I of the complaint in the amount of $15,720.70 (the amount of the workers' compensation award plus interest) and dismissed count II with prejudice. The judgment on count I was later modified to include reasonable costs, additional interest, and attorney fees, for a total exceeding $18,600.

Bentley commenced supplementary proceedings to discover assets of the judgment debtor, Shipley Enterprises. The Shipleys confirmed they were the sole shareholders, officers, directors, and incorporators of Shipley Enterprises. It was revealed that $18,243.48 in corporate checks were written for the personal expenses of the Shipleys; all of these checks were paid to creditors of the Shipleys prior to September 3, 1990.

On July 14, 1992, Bentley filed a motion for turnover order, with a supporting memorandum, requesting that the trial court order the Shipleys to turn over $18,243.48 to be applied toward satisfaction of the judgment against Shipley Enterprises. The motion asked the court to either pierce the corporate veil and find the Shipleys liable individually, or order the Shipleys to deliver up the assets they misappropriated from Shipley Enterprises. After a hearing on the motion the trial court entered an order finding "Glenn Shipley and Shirley Shipley applied $18,243.48 in money belonging to Glenn Shipley Enterprises, Inc., for their personal benefit." However, the trial court found this money "was not applied in contemplation of defeating the judgment of Plaintiff against the Defendant, Glenn Shipley Enterprises, Inc., and, therefore, is not property of the Defendant * * * which this court may order to be delivered up in satisfaction of the judgment in this cause." Accordingly, the trial court denied Bentley's motion for a turnover order.

The trial court properly refused to pierce the corporate veil at the supplementary proceeding. Bentley advocated piercing the corporate veil in his initial complaint; however, the trial court dismissed that count with prejudice for failure to state a cause of action. Following the trial court's dismissal with prejudice Bentley did not file a motion to amend the complaint, nor did he appeal the dismissal within 30 days. (134 Ill.2d R. 303(a)(1).) Supreme Court Rule 273 provides:

"Unless the order of dismissal or a statute of this State otherwise specifies, an involuntary dismissal of an action, other than a dismissal for lack of jurisdiction, for improper venue, or for failure to join an indispensable party, operates as an adjudication upon the merits." (134 Ill.2d R. 273.)

A dismissal with prejudice for failure to state a cause of action acts as an adjudication on the merits and the doctrine of res judicata bars a subsequent action between the same parties on the same claim or cause of action. (McGann v. Illinois Hospital Association, Inc. (1988), 172 Ill.App.3d 560, 568-69, 122 Ill.Dec. 509, 513-14, 526 N.E.2d 902, 906-07; see Restatement (Second) of Judgments § 19(d) (1982).) As the dismissal with prejudice for failure to state a cause of action acted as a judgment on the merits, a subsequent action based on piercing the corporate veil was barred by res judicata.

Section 13-217 of the Illinois Code of Civil Procedure (Code) (Ill.Rev.Stat.1985, ch. 110, par. 13-217) has been held to be a statute which "otherwise specifies" (emphasis omitted) for purposes of Rule 273. (Kraus v. Metropolitan Two Illinois Center (1986), 146 Ill.App.3d 210, 212, 100 Ill.Dec. 15, 17, 496 N.E.2d 1080, 1082.) Section 13-217 of the Code provides that a plaintiff may commence a new action within one year or within the remaining period of limitation, whichever is greater, in various situations, including where the action is dismissed for want of prosecution. (Ill.Rev.Stat.1991, ch. 110, par. 13-217.) That section, however, has no application to the present case where the count seeking to pierce the corporate veil was dismissed for failure to state a cause of action.

The trial court gave two reasons for denying Bentley's motion for a turnover order. First, the trial court held that because the Shipleys applied the money for their personal benefit prior to Bentley becoming a judgment creditor of Shipley Enterprises, the "money was not applied in contemplation of defeating the judgment of Plaintiff [Bentley] against the Defendant, Glenn Shipley Enterprises, Inc., and, therefore, is not property of the Defendant, Glenn Shipley Enterprises, Inc., which this court may order to be delivered up in satisfaction of the judgment in this cause." Bentley concedes the fact that the corporation's money was applied for the Shipleys' personal benefit before he became a judgment creditor might be significant if he were relying on a fraudulent conveyance theory, because such an action may require an intent to defraud. (See Bank of Aspen v. Fox Cartage, Inc. (1987), 158 Ill.App.3d 939, 944-45, 110 Ill.Dec. 914, 917, 511 N.E.2d 1234, 1237.) Bentley contends, however, the timing of the application of the corporation's money for the Shipleys' personal benefit is irrelevant to the relief requested by him, because section 2-1402(b)(3) of the Code (Ill.Rev.Stat.1991, ch. 110, par. 2-1402(b)(3)) does not require any showing of an intent to defraud the judgment creditor. We agree.

Section 2-1402(b)(3) of the Code as it relates to supplementary proceedings provides as follows:

"When assets or income of the judgment debtor not exempt from the satisfaction of a judgment, a deduction order or garnishment are discovered, the court may, by appropriate order or judgment:

* * * * * *

Compel any person cited, other than the judgment debtor, to deliver up any assets so discovered, to be applied in satisfaction of the judgment, in whole or in part, when those assets are held under such circumstances that in an action by the judgment debtor he or she could recover them in specie or obtain a judgment for the proceeds or value thereof as for conversion or embezzlement." (Ill.Rev.Stat.1991, ch. 110, par. 2-1402(b)(3).)

Supreme Court Rule 277(a), which implements section 2-1402 of the Code, provides in pertinent part as...