Para Dynamic Enters. v. Lamb-Ferrara, 3-21-0259

CourtUnited States Appellate Court of Illinois
Writing for the CourtO'BRIEN PRESIDING JUSTICE.
Citation2022 IL App (3d) 210259 U
PartiesPARA DYNAMIC ENTERPRISES, LLC, as assignee of Purple Shovel, LLC, Plaintiff-Appellant, v. COLLEEN LAMB-FERRARA, as Administrator of the Estate of Matthew J. Lamb, deceased, Defendant-Appellee, and MATT LAMB STUDIOS, LLC, Defendant.
Docket Number3-21-0259
Decision Date22 November 2022

2022 IL App (3d) 210259-U

PARA DYNAMIC ENTERPRISES, LLC, as assignee of Purple Shovel, LLC, Plaintiff-Appellant,
v.

COLLEEN LAMB-FERRARA, as Administrator of the Estate of Matthew J. Lamb, deceased, Defendant-Appellee,

and MATT LAMB STUDIOS, LLC, Defendant.

No. 3-21-0259

Court of Appeals of Illinois, Third District

November 22, 2022


This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1).

Appeal from the Circuit Court of the 12th Judicial Circuit, Will County, Illinois Circuit No. 20-CH-502 Honorable John C. Anderson, Judge, Presiding

PRESIDING JUSTICE O'BRIEN delivered the judgment of the court. Justices Daugherity and Hauptman concurred in the judgment.

ORDER

O'BRIEN PRESIDING JUSTICE.

¶ 1 Held: Trial court erred in granting summary judgment where a genuine issue of material fact exists as to whether the court should pierce the corporate veil.

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¶ 2 Plaintiff Para Dynamic Enterprises, LLC, and defendant Colleen Lamb-Ferrara, as administrator of the Estate of Matthew J. Lamb, deceased, filed cross-motions for summary judgment in Para Dynamic's action to pierce the corporate veil of Matt Lamb Studios, LLC and reach the assets in Lamb's estate. The trial court denied Para Dynamic's summary judgment motion and granted the Estate's summary judgment motion. Para Dynamic appealed. We reverse and remand.

¶ 3 I. BACKGROUND

¶ 4 Matt Lamb Studios, LLC (Studios) was incorporated on September 26, 2007. An amended operating agreement was executed in January 2009 providing for two member classes: A and B. Class A members were Sheila Lamb Gabler and David Sabin, who were designated the managers of Studios and in charge of operations. The Class B member was Matt Lamb, Ltd., which was to contribute assets in the form of pieces of Matt Lamb's artwork. Matt Lamb was a renowned artist who showed his artwork around the world. Gabler and Colleen Lamb-Ferrara were his daughters. Lamb died on February 18, 2012, and an estate was opened and remained pending in Florida. Lamb-Ferrara was designated the estate's personal representative after Gabler was removed as executor.

¶ 5 On July 31, 2012, Studios entered into a contract with Purple Shovel, LLC, a logistics services company, to transport, secure and store Lamb's artwork. Gabler executed the contract. Studios did not pay for the services rendered by Purple Shovel. Purple Shovel assigned its rights to Studios' receivables to Para Dynamic in December 2017. It also assigned any interest, title or right to Lamb's artwork that Purple Shovel held as collateral, of which Para Dynamic took control in January 2018. Para Dynamic filed a complaint in February 2019 against Studios and obtained a $1,178,003.31 judgment by default in September 2019.

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¶ 6 Para Dynamic filed a citation to discover assets against Studios, which Studios did not answer. A citation examination deposition took place with Gabler in December 2019. She testified that she was Lamb's daughter and the sole owner of Studios. Studios was a "shell company" set up during Lamb's lifetime "just in case." Gabler explained that no one used Studios; it was an "empty company" with "no reason for it." She was the company's registered agent "to hold it." Studios currently had no assets, never had any assets, and never generated any revenue. Gabler denied that Studios owned any of the trademarks identified as purportedly owned by Studios. To her recollection, there were no managers or members of Studios. Documents provided by the Secretary of State's office listed her as the manager and she agreed she was the manager. The documents also indicated Studios was not in good standing as of September 1, 2019, and Gabler did not know if it was in good standing prior to that date. Gabler did not know she was listed as a contact on the MattLamb.com website.

¶ 7 Gabler and Lamb operated Studios together during his lifetime. They handled the tax returns together and she managed them after his death. She continued to manage Studios after Lamb died. Lamb had contracted with Purple Shovel before he died to transport his artwork from Spain to Ireland but the art was stolen in transit. She did not know if Lamb had negotiated with Purple Shovel for himself or on behalf of Studios. She did not know if Lamb, and subsequently the Estate, owned Lamb's artwork. Gabler was the initial executor of Lamb's estate prior to being removed. At that time, the estate owned more than 5000 pieces of artwork.

¶ 8 Para Dynamic recorded the $1,178,003.31 judgment against Studios on February 20, 2020. Para Dynamic then filed the instant action the same month, seeking to pierce the corporate veil and satisfy the judgment against Studios from the assets of the Estate. In the complaint, Para Dynamic alleged, in part, that "Following Matt Lamb's death *** Studios contracted with Purple

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Shovel." The complaint further alleged that Gabler and Lamb managed Studios. The Estate answered the complaint and attached a copy of the contract between Gabler and Purple Shovel indicating a $45,750 fee for Purple Shovel's services with 18% interest per year on unpaid balances. Studios was involuntarily dissolved on March 13, 2020. In July 2020, the trial court entered a default judgment against Studios.

¶ 9 Para Dynamic and the Estate both moved for summary judgment in March 2021. In its summary judgment motion, Para Dynamic argued that the Estate was the sole beneficiary of Studios's operation and Studios's entire business was to transport and store Lamb's artwork, which became assets of the Estate, which became the sole beneficiary of Studios's actions. Para Dynamic argued these facts established Lamb's equitable ownership in Studios. In support of its motion, Para Dynamic attached the transcripts from Gabler's deposition.

¶ 10 In its summary judgment motion, the Estate argued that the contract with Purple Shovel was executed after Lamb's death, Lamb was not a member or owner of Studios and was not an alter ego of Studios. Attached to the Estate's summary judgment motion was a list of pieces of artwork and the rights to them that Matt Lamb, Ltd. was to contribute to Studios as an initial capital contribution per the amended operating agreement. Also attached to the Estate's summary judgment motion was an affidavit from David Para, the sole and managing member of Para Dynamic, which held a 47% interest in Purple Shovel. The affidavit, dated October 4, 2018, was submitted in the federal case Para Dynamic initially filed against Gabler and Studios, which was dismissed for lack of jurisdiction. Para Dynamic Enterprises, LLC v. Gabler, No. 18-CV-04579 (N.D. IL 2018). In the affidavit, Para attested that it was after Lamb's death that Gabler and Purple Shovel executed the contract for Purple Shovel to secure and transport Lamb's artwork to several exhibitions held to honor his legacy. Para further attested that the negotiations began around Spring

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2012 and the communications were mainly with Gabler and Jonathan Daudell, whom Para described as the executive director of Studios.

¶ 11 The Estate responded to Para Dynamic's summary judgment motion, arguing that Studios was formed in 2007 to market and sell artwork, enter into licensing agreements, and use the intellectual property rights associated with the artwork, and was not an alter ego of Lamb or the Estate. Para Dynamic responded to Gabler's summary judgment motion, arguing that Gabler said Lamb contacted Purple Shovel; Studios was formed as a shell company with equitable ownership held for Lamb and subsequently, the Estate; Studios failed to observe corporate formalities; and Studios was inadequately capitalized.

¶ 12 Both parties submitted statements of material facts. Para Dynamic's statement provided, in part, that Gabler and Lamb operated Studios; that Studios had no assets or revenue and was a shell company; that Lamb owned his artwork; that Lamb contracted with Purple Shovel to transport paintings from Spain to Ireland; and that the Estate owned the artwork after Lamb's death. Attached to Para Dynamic's statement of facts was a second affidavit of Para, dated April 17, 2021. In that affidavit, Para attested that he was not involved in the contract negotiations between Purple Shovel and Studios. He recanted his earlier statement that the contract was executed after Lamb's death, a fact he said he had surmised but did not know. He changed his statement after hearing Gabler's answers in the citation deposition and deferred to her testimony that Lamb was involved in the contract negotiations. He references a third affidavit, dated September 5, 2019, which he submitted in the breach of contract action as a prove-up for damages. In that affidavit, Para attested that Purple Shovel was engaged by Studios after Lamb's death. Attached to the Estate's statement of material facts was Studios's 2009 amended operating agreement. Attached to the agreement was a schedule listing Lamb's paintings meant to capitalize Studios, a

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compensation schedule for Sabin and Gabler indicating Gabler was to receive $160,000 plus expenses annually, and spousal consents.

¶ 13 The Estate's statement of material facts provided, in part, that Studios was incorporated in 2007; its members entered into an operating agreement; Studios had Class A and Class B members; the Class A members were Gabler and Sabin, who were managers of Studios; Matt Lamb, Ltd. was the Class B member and contributed collateral; Lamb did not operate and was not involved in Studios and he was not an owner or member of Studios. Attached to the statement of material facts was Para Dynamic's proof of claim in the bankruptcy action and attached to the proof of claim was the July 2012 email correspondence between Purple Shovel and Gabler setting forth the terms of the contract. The contractual provisions provided, in part, that Purple Shovel...

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