Puleo v. Topel

856 N.E.2d 1152, 306 Ill. Dec. 57, 368 Ill. App. 3d 63
CourtAppellate Court of Illinois
DecidedSeptember 29, 2006
Docket1-05-0367
StatusPublished
Cited by18 cases

This text of 856 N.E.2d 1152 (Puleo v. Topel) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Puleo v. Topel, 856 N.E.2d 1152, 306 Ill. Dec. 57, 368 Ill. App. 3d 63 (Ill. Ct. App. 2006).

Opinion

PRESIDING JUSTICE QUINN

delivered the opinion of the court:

Plaintiffs Philip Puleo, Malex Corporation, Amy Derksen, Chani Derus, Robert Filiczkowski, YSPEX, Inc., Jacob Lesgold, Van Ratsavongsay, and Bryan Weiss appeal the order of the circuit court dismissing their claims against defendant Michael Topel (Topel). 1 On appeal, plaintiffs contend that the circuit court erred by finding that Topel could not be held personally liable for obligations incurred on behalf of defendant Thinktank, LLC (Thinktank), after the company was involuntary dissolved.

The record shows that effective May 30, 2002, Thinktank, a limited liability company (LLC) primarily involved in web design and web marketing, was involuntarily dissolved by the. Illinois Secretary of State. The dissolution was due to Thinktank’s failure to file its 2001 annual report as required by the Illinois Limited Liability Company Act (the Act) (805 ILCS 180/35 — 25(1) (West 2004)).

Thereafter, on December 2, 2002, plaintiffs, independent contractors hired by Topel, filed a complaint against Topel and Thinktank in which they alleged breach of contract, unjust enrichment, and claims under the account stated theory. Those claims stemmed from plaintiffs’ contention that Topel, who plaintiffs alleged was the sole manager and owner of Thinktank, knew or should have known of Thinktank’s involuntary dissolution, but nonetheless continued to conduct business as Thinktank from May 30, 2002, through the end of August 2002. They further contended that on or about August 30, 2002, Topel informed Thinktank employees and independent contractors, including plaintiffs, that the company was ceasing operations and that their services were no longer needed. Thinktank then failed to pay plaintiffs for work they had performed.

On or about April 4, 2003, Thinktank and Topel served their answer to the complaint on plaintiffs. In response, plaintiffs filed a motion for summary judgment on April 25, 2003. In that motion, plaintiffs argued that the only allegations that Thinktank and Topel denied in their answer pertained to Lesgold. As such, plaintiffs contended that there was no genuine issue of material fact and, thus, they were entitled to judgment as a matter of law. Subsequently, on June 6, 2003, plaintiffs filed a request to admit.

Although neither Thinktank nor Topel filed a response to plaintiffs’ motion for summary judgment, they filed a response to plaintiffs’ request to admit. Therein, defendants denied that Topel, as sole manager and owner of Thinktank, was in a position to know that Thinktank had been involuntarily dissolved by the Illinois Secretary of State or that the company was operating while dissolved during the period beginning on May 30, 2002.

On September 2, 2003, the circuit court granted plaintiffs’ motion for judgment on the pleadings against Thinktank. Thereafter, on October 16, 2003, plaintiffs filed a separate motion for summary judgment against Topel. 2 Relying on Gonnella Banking Co. v. Clara’s Pasta Di Casa, Ltd., 337 Ill. App. 3d 385 (2003), plaintiffs contended that Topel, as a principal of Thinktank, an LLC, had a legal status similar to a shareholder or director of a corporation, who courts have found liable for a dissolved corporation’s debts. Thus, plaintiffs argued that Topel was personally liable for Thinktank’s debts. Topel did not file a response, and plaintiffs subsequently argued that Topel’s failure to respond should be treated as a failure to contest their motion and that judgment should be entered for them.

On March 25, 2004, the circuit court denied plaintiffs’ motion for summary judgment against Topel. Subsequently, plaintiffs filed a motion to reconsider on July 1, 2004, which the circuit court denied on August 23, 2004.

Plaintiffs then filed a motion for clarification on September 13, 2004, in order to obtain the circuit court’s basis for denying their motion to reconsider. On October 12, 2004, the circuit court granted plaintiffs’ motion for clarification. In doing so, the circuit court acknowledged that Topel continued to do business as Thinktank after its dissolution and that the contractual obligations at issue were incurred after the dissolution. However, the court then stated:

“This court bases its decision on its reading of the Illinois Limited Liability Company Act. Specifically, this court reads 805 ILCS 180/ 10 — 10 in concert with 805 ILCS 180/35 — 7 as well as the legislative notes to 805 ILCS 180/10 — 10 to determine that the Illinois Legislature did not intend to hold a member of a Limited Liability Company liable for debts incurred after the Limited Liability Company had been involuntarily dissolved.”

Finally, on January 6, 2005, the circuit court entered a final order dismissing all of plaintiffs’ claims against Topel with prejudice. The court stated in pertinent part:

“Based upon the Court’s prior finding that the Illinois Legislature did not intend to hold a member of a Limited Liability Company liable for debts incurred after the Limited Liability Company had been involuntarily dissolved, the Court finds that all of Plaintiffs’ claims against Defendant Topel within the Complaint fail as a matter of law, as they are premised upon Defendant Topel’s alleged personal liability for obligations incurred in the name of Thinktank LLC after it had been involuntarily dissolved by the Illinois Secretary of State.”

Plaintiffs now appeal that order.

We initially note that Topel has not filed a brief. Nonetheless, we may proceed under the principles set forth in First Capitol Mortgage Corp. v. Talandis Construction Corp., 63 Ill. 2d 128, 133 (1976).

Our review of a dismissal of a complaint on its pleadings is de novo. Keck & Associates, P.C. v. Vasey, 359 Ill. App. 3d 566, 568 (2005). In doing so, we accept all well-pleaded allegations in the complaint as true. Board of Managers of the Village Centre Condominium Ass’n v. Wilmette Partners, 198 Ill. 2d 132, 134 (2001).

In this court, plaintiffs contend that the circuit court erred in dismissing their claims against Topel. In making that argument, plaintiffs acknowledge that the issue as to whether a member or manager of an LLC may be held personally liable for obligations incurred by an involuntarily dissolved LLC appears to be one of first impression under the Act. That said, plaintiffs assert that it has long been the law in Illinois that an officer or director of a dissolved corporation has no authority to exercise corporate powers and, thus, is personally liable for any debts he incurs on behalf of the corporation after its dissolution. Gonnella Baking Co., 337 Ill. App. 3d at 386; Cardem, Inc. v. Marketron International, Ltd., 322 Ill. App. 3d 131 (2001); Chicago Title & Trust Co. v. Brooklyn Bagel Boys, Inc., 222 Ill. App. 3d 413 (1991). Plaintiffs reason that Topel, as managing member of Thinktank, similarly should be held liable for debts the company incurred after its dissolution.

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Cite This Page — Counsel Stack

Bluebook (online)
856 N.E.2d 1152, 306 Ill. Dec. 57, 368 Ill. App. 3d 63, Counsel Stack Legal Research, https://law.counselstack.com/opinion/puleo-v-topel-illappct-2006.