International Business Machines Corp. v. Martin Property & Cas. Ins. Agency, Inc.

• Decision Date: 07 June 1996
• Docket Number: No. 1-95-1210,1-95-1210
• Citation: 666 N.E.2d 866,281 Ill.App.3d 854,217 Ill.Dec. 197
• Parties: , 217 Ill.Dec. 197 INTERNATIONAL BUSINESS MACHINES CORP., and Scribcor, Inc., Plaintiffs-Appellants, v. MARTIN PROPERTY & CASUALTY INSURANCE AGENCY, INC., an Illinois corporation; Arnold Skoller, an individual; Ernie Skoller, an Individual; and Jack Ebert, an individual, Defendants- Appellees.
• Court: United States Appellate Court of Illinois

Page 866

666 N.E.2d 866

281 Ill.App.3d 854, 217 Ill.Dec. 197

INTERNATIONAL BUSINESS MACHINES CORP., and Scribcor, Inc. Plaintiffs-Appellants, v. MARTIN PROPERTY & CASUALTY INSURANCE AGENCY, INC., an Illinois corporation; Arnold Skoller, an individual; Ernie Skoller, an Individual; and Jack Ebert an individual Defendants- Appellees.

No. 1-95-1210.

Appellate Court of Illinois First District, Sixth Division.

June 7, 1996.

Law Offices of Merle L. Royce, Chicago, for Appellants (Merle L. Royce and Marshall J. Burt, of counsel).

Schoenberg, Fisher & Newman, Chicago, for Appellee (David A. Axelrod, Lori F. Chacos, of counsel).

Presiding Justice ZWICK delivered the opinion of the court:

This case presents the question of whether Illinois courts may exercise personal jurisdiction over a director and officer of an Illinois corporation who resides outside the State. The trial court ruled that such a person is not subject to jurisdiction in Illinois with regard to his official corporate duties pursuant to the so-called "fiduciary shield doctrine." We now reverse.

Plaintiff, International Business Machines, Inc. (IBM), owns One IBM Plaza, a high-rise building located in Chicago. Plaintiff, Scribcor, Inc., manages One IBM Plaza on behalf of IBM. Defendant, the Martin Property & Casualty Insurance Agency, Inc. (the Martin Agency), was formed in 1992 as an Illinois business corporation. Defendant, Arnold Skoller (Skoller), was the president and a director of that corporation. The remaining defendants are no longer part of this appeal.

Plaintiffs' complaint alleges that, in March of 1992, Skoller met in Chicago with James Lannon, the general manager of Scribcor, to discuss the Martin Agency's rental of space in One IBM Plaza. On or about April 3, 1992, IBM entered into an agreement to lease Suite 2616 to the Martin Agency. The term of the lease began May 1, 1992, and continued through April 30, 1997. The annual rent was agreed to be $18,066.24. Skoller signed the lease as president on behalf of the Martin Agency. The Martin Agency subsequently took possession of the premises. Plaintiffs' complaint alleges that, in January or February of 1993, while the property was still under lease, Skoller and the other individual defendants dissolved the Martin Agency and surreptitiously removed corporate assets from the leased premises, including furnishings and equipment. On May 1, 1993, the Illinois Secretary of State dissolved the Martin Agency because the company failed to file its first annual report. Plaintiffs allege, in part, that Skoller and the other individual defendants wrongfully dissolved the Martin Agency by failing to give them statutory notice of the corporation's dissolution. They also allege that the individual defendants distributed the Martin Agency's assets to themselves, to the detriment of the corporation's creditors.

On March 11, 1993, plaintiffs filed their complaint in the circuit court seeking possession of the premises, past and future rent payments and damages for the individual defendant's alleged violations of the Business Corporation Act of 1983. 805 ILCS 5/8.65(a) (West 1994). The defendants failed to appear in the circuit court to answer the claims brought against them. The trial court entered default judgments on November 9, 1993.

On July 6, 1994, Skoller, together with the other individual defendants, filed a petition to vacate the judgments pursuant to the terms of section 2-1401 (735 ILCS 5/2-1401 (West 1994)), and to dismiss the case. The petition and its supporting documents asserted that the judgments against the individual defendants were void because the court lacked personal jurisdiction over them. In support of their position, the defendants invoked the fiduciary shield doctrine, claiming that their only contact with Illinois was as a result of their affiliation with the Martin Agency and that, as such, they were beyond the fair reach of Illinois courts.

The trial court granted the individual defendants' section 2-1401 motion and dismissed the plaintiffs' claims against the individual defendants. While plaintiffs have not contested the court's ruling with respect to defendants Ernie Skoller and Jack Ebert, plaintiffs seek reversal of the court's decision with regard to defendant Arnold Skoller.

We begin our analysis by noting that Skoller's motion challenging jurisdiction was timely filed. It is a well-settled principal of the common law that a void judgment can be attacked at any time, directly or collaterally. Vulcan Materials Co. v. Bee Construction Co., 96 Ill.2d 159, 70 Ill.Dec. 465, 449 N.E.2d 812 (1983); Lakeview Trust & Savings Bank v. Estrada, 134 Ill.App.3d 792, 89 Ill.Dec. 569, 480 N.E.2d 1312 (1985).

From the facts alleged, it is clear that the defendant is a nonresident who may be subjected to the in personam jurisdiction of the Illinois courts only through the State's long-arm statute. 735 ILCS 5/2-209 (West 1992). It is the plaintiffs who carry the burden of establishing a prima facie basis upon which jurisdiction over the defendant can be exercised. R.W. Sawant & Co. v. Allied Programs Corp., 111 Ill.2d 304, 95 Ill.Dec. 496, 489 N.E.2d 1360 (1986). In considering a challenge to personal jurisdiction, conflicts between a defendant's affidavits and the plaintiff's pleadings and affidavits will be resolved in favor of the plaintiff for purposes of determining whether a prima facie case for in personam jurisdiction has been made. Professional Group Travel, Ltd. v. Professional Seminar Consultants, Inc., 136 Ill.App.3d 1084, 91 Ill.Dec. 656, 483 N.E.2d 1291 (1985); Kutner v. DeMassa, 96 Ill.App.3d 243, 51 Ill.Dec. 723, 421 N.E.2d 231 (1981). Since the trial court did not hold an evidentiary hearing on the defendant's motion attacking its jurisdiction, our review of the issue is de novo. Mandalay Associates Ltd. Partnership v. Hoffman, 141 Ill.App.3d 891, 96 Ill.Dec. 225, 491 N.E.2d 39 (1986).

We apply a two-step analysis to determine whether the court acquires personal jurisdiction pursuant the long-arm statute. R.W. Sawant & Co., 111 Ill.2d at 311, 95 Ill.Dec. 496, 489 N.E.2d 1360. The first step is to determine if jurisdiction is proper under the specific language used by section 2-209. If the answer is no, the inquiry ends; but if jurisdiction is found to be proper under the statute, then we reach the second step and determine whether the exercise of jurisdiction comports with due process of law. E.A. Cox Co. v. Road Savers Int'l Corp., 271 Ill.App.3d 144, 148, 207 Ill.Dec. 815, 648 N.E.2d 271 (1995).

Subsection 2-209(a) of the long-arm statute lists activities which may trigger personal jurisdiction in Illinois. Plaintiffs rely upon the following relevant statutory language:

"Any person, whether or not a citizen or resident of this State, who in person or through an agent does any acts hereinafter enumerated, thereby submits such person, and, if an individual, his or her personal representative, to the jurisdiction of the courts of this State as to any such cause of action arising from the doing of any such acts:

* * * * * *

(2) The commission of a tortious act within the State;

* * * * * *

(12) The performance of any duties as a director or officer of a corporation organized under the laws of this State or having its principal place of business within this State."

Plaintiffs claim that Skoller's actions in both improperly dissolving the corporation and in converting its assets to his personal use constitutes a tortious act sufficient to invoke jurisdiction under subsection 2-209(a)(2). Plaintiffs also argue that Skollers' status as an officer and director of the Martin Agency represents an independent basis of jurisdiction under section 2-209(a)(12).

With regard to plaintiffs first argument, that jurisdiction over Skoller is proper because Skoller committed a tortious act within the State, we note that there has been difficulty with the proper construction of subsection 2-209(a)(2). As Professor Michael has pointed out:

"If it is the actual commission of a tort in the state which causes the jurisdiction of the Illinois courts to attach, a court would not be able to determine its jurisdiction until after a determination is made at trial on the issue of whether the defendant's conduct was tortious or not. Jurisdiction to try the defendant would not be determined until after the defendant had been tried, and if the defendant's conduct was found not to be tortious, the case would not be decided on the merits, but dismissed for lack of jurisdiction, leaving the defendant subject to a later suit on the merits in a different jurisdiction."

3 Michael, Illinois Practice, section 6.5 (1989). Our supreme court, in Nelson v. Miller, 11 Ill.2d 378, 143 N.E.2d 673 (1957), recognized this inherent problem and clarified section 2-209(a)(2) by stating that the focus of this section is not on the ultimate question of whether the defendant's acts or omissions were tortious, but rather, on whether the plaintiff has alleged that the defendant "is the author of acts or omissions within the State." Nelson, 11 Ill.2d at 393, 143 N.E.2d 673. As Professor Michael has explained:

"[i]f the defendant or its agent performs an act or omission which causes an injury in Illinois and the plaintiff alleges that the act or omission was tortious in nature, the jurisdictional requirement is satisfied. In an attack on the jurisdiction, the defendant can contest whether he or she was responsible for an act or omission causing an injury in Illinois, and whether or not the contacts with the state satisfy the requirements of due process, but not whether the conduct was, in fact, tortious." 3 Michael, Illinois Practice, section 6.5 (1989).

The question presented under this section is, therefore, whether the plaintiffs have alleged that Skoller committed some act or omission causing injury in Illinois.

We conclude the plaintiffs' allegations are sufficient to confer jurisdiction...