Kreisman Law Offices Professional Corporation
The plaintiff, Michigan Indiana Condominium Association, is a 119-unit residential condominium complex (the “Complex”). Optima was the general contractor and selected a variety of subcontractors to do the construction work. Construction was completed in June 2002. One of the contractors was Jenni and Loucon. Loucon was the masonry contractor. On Sept. 2, 2003, Loucon was dissolved as an Illinois corporation. Jenni was likewise dissolved on Jan. 1, 2006.
In the spring of 2010, the plaintiffs discovered latent defects in the Complex. On Aug. 29, 2011, the plaintiffs filed a complaint for damages against Optima and other defendants. Plaintiffs sought damages under breach of implied warranty of habitability and breach of implied warranty of good workmanship. Optima added as third-party defendants Jenni and Loucon as well as others. Optima alleged breach of contract and breach of implied warranties against Jenni and Loucon. Optima sought indemnification and contribution. Because both corporations had been dissolved, Optima served its notice upon the Secretary of State pursuant to Section 5.25 of the Illinois Business Corporation Act of 1983 (805 ILCS 5/1.01 et seq.)
Jenni and Loucon moved jointly to dismiss Optima’s third-party complaint pursuant to Section 2-615(a)(5) and (a)(9) of the Illinois Code of Civil Procedure. Jenni and Loucon argued that since the third-party action against them was initiated more than 5 years after their dissolution (it was 6 years and 3 months after Jenni’s dissolution and 8 years and 8 months after Loucon’s dissolution), the Illinois Secretary of State was not authorized to act as the dissolved corporation’s agent under the Act. Accordingly, they argued that service of summons on each was improper, and the court lacked personal jurisdiction. On Nov. 29, 2012, the Circuit Court judge granted Jenni’s and Loucon’s joint motion to dismiss and dismissed them with prejudice. This appeal was taken by Optima.
The appellate court stated that the Illinois Section 12.80 of the Illinois Business Corporation Act that was referred here as to survival of remedy after dissolution was not a statute of limitations, but rather a corporate “survival” statute. People v. Parker, 30 Ill.2d 486, 489 (1964).
In this case, the court said that the language of the corporate survival statute is clear and unambiguous. The court also stated that the Supreme Court of Illinois noted that “the 5-year extension to a corporation’s life granted by Section 12.80 establishes a fixed endpoint beyond which a corporation ceases to exist.” Pilet v. Pilet, 2012 IL 112064 (n. 3). After that 5-year point, a dissolved corporation can no longer sue or be sued.
The plain language of Section 12.80 prohibits Optima’s claims against Jenni and Loucon because the claims were filed more than 5 years after the corporations were dissolved; therefore, the trial judge’s decision dismissing the third-party actions was correct. The court also found that Section 5.25 of the Act did not authorize the Illinois Secretary of State to serve as Jenni’s or Loucon’s agent for service of process. This was the result even though the dismissal of Optima’s third-party complaint means that Optima’s right to sue Jenni and Loucon expired even before Optima even knew that it had a cause of action against them. Even still the court said that the language of the Act was clear even though it results in a harsh result.
The right of a corporation to exist beyond its date of dissolution is statutory. Even in the cases where equity allows tolling of the survival, those cases are limited to circumstances involving fraud or misconduct which is absent in this case. As far as indemnification and contribution goes, the cause of action to Optima didn’t arise until it was sued by the plaintiffs. For those reasons, the court’s dismissal of the third-party claims was affirmed by the appellate court.
Michigan Indiana Condominium Association, et al. v. Michigan Place, LLC, et al., No. 2014 IL App (1st) 123764 (Fourth Division, April 24, 2014).
Kreisman Law Offices has been handling construction accident cases, worker injury cases, breach of contract cases, business dispute cases and nursing home abuse cases for individuals, families and businesses for more than 38 years in and around Chicago, Cook County and its surrounding areas, including Bensenville, Harvey, Glen Ellyn, Calumet City, Midlothian, Palos Heights, Palos Hills, Darien, Willowbrook, LaGrange Park, Brookfield, Chicago (Lincoln Square, Lincoln Park, Wicker Park, Logan Square), Norridge, Schiller Park and Elk Grove Village, Ill.
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