{ "id": 522025, "name": "JOHNNIE PEETOOM et al., Plaintiff-Appellants, v. RICHARD A. SWANSON, Defendant (D. Michael Gibson et al., Defendants-Appellees)", "name_abbreviation": "Peetoom v. Swanson", "decision_date": "2002-10-04", "docket_number": "No. 2\u201401\u20140609", "first_page": "523", "last_page": "530", "citations": [ { "type": "official", "cite": "334 Ill. App. 3d 523" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "296 Ill. App. 3d 341", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 222630 ], "weight": 2, "year": 1998, "pin_cites": [ { "page": "346" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/296/0341-01" ] }, { "cite": "242 Ill. App. 3d 320", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5121295 ], "weight": 2, "year": 1993, "pin_cites": [ { "page": "323-24" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/242/0320-01" ] }, { "cite": "101 F.3d 1193", "category": "reporters:federal", "reporter": "F.3d", "case_ids": [ 7641813 ], "weight": 3, "year": 1996, "pin_cites": [ { "page": "1195" }, { "page": "1195" }, { "page": "1195" } ], "opinion_index": 0, "case_paths": [ "/f3d/101/1193-01" ] }, { "cite": "232 Ill. App. 3d 1077", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 8499667 ], "year": 1992, "pin_cites": [ { "page": "1081", "parenthetical": "reviewing court held that the plaintiff could not attempt to pierce the corporate veil in supplementary proceedings and admonished the plaintiff to file a separate action to pierce the corporate veil to collect judgment against shareholder" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/232/1077-01" ] }, { "cite": "278 Ill. App. 3d 1084", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 1156778 ], "year": 1996, "pin_cites": [ { "page": "1087", "parenthetical": "plaintiffs filed a complaint to pierce corporate veil to collect workers' compensation judgment from corporation's shareholders" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/278/1084-01" ] }, { "cite": "258 Ill. App. 3d 618", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2883637 ], "weight": 6, "year": 1994, "pin_cites": [ { "page": "621" }, { "page": "621-22" }, { "page": "622" }, { "page": "624" }, { "page": "622" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/258/0618-01" ] }, { "cite": "158 Ill. 2d 166", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 780296 ], "year": 1994, "opinion_index": 0, "case_paths": [ "/ill-2d/158/0166-01" ] }, { "cite": "238 Ill. App. 3d 292", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5154671 ], "weight": 4, "year": 1992, "pin_cites": [ { "page": "299" }, { "page": "300" }, { "page": "300" }, { "page": "300" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/238/0292-01" ] }, { "cite": "262 Ill. App. 3d 61", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2851768 ], "weight": 5, "year": 1994, "pin_cites": [ { "page": "68" }, { "page": "68" }, { "page": "68" }, { "page": "70" }, { "page": "70" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/262/0061-01" ] }, { "cite": "297 Ill. App. 3d 639", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 910271 ], "weight": 2, "year": 1998, "pin_cites": [ { "page": "643" }, { "page": "643" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/297/0639-01" ] }, { "cite": "292 Ill. App. 3d 116", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 1725034 ], "year": 1997, "pin_cites": [ { "page": "122" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/292/0116-01" ] } ], "analysis": { "cardinality": 665, "char_count": 17508, "ocr_confidence": 0.764, "pagerank": { "raw": 1.7362629571705781e-07, "percentile": 0.7063120282302173 }, "sha256": "1b5c4422c79ef1e4f30931a837f6477cdc64acce4084711a33d85d48c83ce7fb", "simhash": "1:0bba942a2fc115fd", "word_count": 2742 }, "last_updated": "2023-07-14T19:16:41.005109+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "JOHNNIE PEETOOM et al., Plaintiff-Appellants, v. RICHARD A. SWANSON, Defendant (D. Michael Gibson et al., Defendants-Appellees)." ], "opinions": [ { "text": "PRESIDING JUSTICE HUTCHINSON\ndelivered the opinion of the court;\nPlaintiffs, Johnnie and Greg Peetoom, appeal from the trial court\u2019s order dismissing their complaint against defendants D. Michael Gibson, John Powers, and Hugh Funderburg. The trial court found that plaintiffs\u2019 complaint was barred by the two-year statute of limitations period for personal injury actions (735 ILCS 5/13 \u2014 202 (West 1992)). We reverse and remand the case for further proceedings.\nOn January 20, 1993, plaintiff Johnnie Peetoom fell while walking on a parking lot owned by The Swanson Group, Inc. (Swanson). On January 11, 1995, she filed a negligence action against Swanson seeking to recover damages for the injuries she allegedly suffered as a result of the fall (the underlying litigation). Her husband, Greg Peetoom, also sought damages for loss of consortium. On May 16, 1997, the trial court in the underlying litigation entered a default judgment against Swanson. On June 1, 1998, the Illinois Secretary of State involuntarily dissolved Swanson for its failure to file a report and pay its taxes. On September 30, 1998, the trial court in the underlying litigation conducted a prove-up to determine plaintiffs\u2019 damages. On November 2, 1998, the trial court entered a judgment awarding Johnnie Peetoom $1 million in damages and Greg Peetoom $100,000 in damages. Plaintiffs initiated citation proceedings against Swanson, but they were unsuccessful in their efforts to collect the judgment because Swanson was insolvent.\nOn September 28, 2000, plaintiffs filed the present action against defendants in their individual capacity. Plaintiffs alleged that defendants were each shareholders and directors of Swanson. Plaintiffs alleged that defendants disregarded the corporate entity and that Swanson was a \u201cmere facade for the operation of its shareholders.\u201d Plaintiffs sought to pierce Swanson\u2019s corporate veil and to collect their judgment in the underlying litigation from defendants personally.\nDefendants subsequently moved to dismiss plaintiffs\u2019 complaint pursuant to section 2 \u2014 619(a)(5) of the Code of Civil Procedure (the Code) (735 ILCS 5/2 \u2014 619(a)(5) (West 2000)). Defendants argued that plaintiffs\u2019 action was barred by the two-year limitations period applicable to personal injury actions (735 ILCS 5/13 \u2014 202 (West 1992)). Defendants argued that, because plaintiffs failed to name them in the underlying litigation, they were now time-barred from bringing a negligence action against them. On May 31, 2001, the trial court granted the motion and dismissed plaintiffs\u2019 complaint with prejudice. Plaintiffs timely appealed.\nOn appeal, plaintiffs contend that the trial court erred when it applied section 13 \u2014 202 of the Code to dismiss their complaint. Plaintiffs argue that their complaint to pierce the corporate veil was not predicated upon a theory of negligence but was instead an attempt to collect from Swanson\u2019s shareholders the judgment entered against Swanson in the underlying litigation. Plaintiffs contend that section 12.80 of the Business Corporation Act of 1983 (the Act) (805 ILCS 5/12.80 (West 1998)), which imposes a five-year limitation on all actions against dissolved corporations and their shareholders, is the limitations period applicable to this case. Plaintiffs argue that their action was filed within five years from the date that the Secretary of State dissolved Swanson.\nSection 2 \u2014 619(a)(5) of the Code (735 ILCS 5/2 \u2014 619(a)(5) (West 2000)) allows for the dismissal of a cause of action if \u201cthe action was not commenced within the time limited by law.\u201d A motion to dismiss pursuant to section 2 \u2014 619 of the Code admits all well-pleaded facts and reasonable inferences drawn therefrom. Becker v. Zellner, 292 Ill. App. 3d 116, 122 (1997). Additionally, a section 2 \u2014 619 motion admits the legal sufficiency of the complaint but asserts affirmative matter to avoid or defeat the claim. Gragg v. Calandra, 297 Ill. App. 3d 639, 643 (1998). We review the trial court\u2019s ruling on a section 2 \u2014 619 motion de novo. Gragg, 297 Ill. App. 3d at 643.\nThe parties\u2019 arguments focus upon three statutory limitations periods, sections 13 \u2014 202 and 12 \u2014 108 of the Code, and section 12.80 of the Act. Section 13 \u2014 202 of the Code requires that \u201c[ajctions for damages for an injury to the person *** be commenced within 2 years next after the cause of action accrued.\u201d 735 ILCS 5/13 \u2014 202 (West 1992). Section 12 \u2014 108 of the Code provides that \u201cno judgment shall be enforced after the expiration of 7 years from the time the same is rendered.\u201d 735 ILCS 5/12 \u2014 108 (West 1998). Section 12.80 of the Act provides as follows:\n\u201cThe dissolution of a corporation either (1) by the issuance of a certificate of dissolution by the Secretary of State, or (2) by a judgment of dissolution by a circuit court of this State, or (3) by expiration of its period of duration, shall not take away nor impair any civil remedy available to or against such corporation, its directors, or shareholders, for any right or claim existing, or any liability incurred, prior to such dissolution if action or other proceeding thereon is commenced within five years after the date of such dissolution. Any such action or proceeding by or against the corporation may be prosecuted or defended by the corporation in its corporate name.\u201d 805 ILCS 5/12.80 (West 1998).\nTo determine which of these statutory limitations governs this case, we must first consider the basic tenets of corporation law and the nature of an action to pierce the corporate veil. A corporation is a legal entity that exists separately and distinctly from its shareholders, officers, and directors, who are not generally liable for the corporation\u2019s debts. In re Estate of Wallen, 262 Ill. App. 3d 61, 68 (1994). One of the primary purposes of doing business as a corporation is to insulate stockholders from unlimited liability for corporate activity. Wallen, 262 Ill. App. 3d at 68. Limited liability will ordinarily exist even though the corporation is closely held or has a single shareholder. Wallen, 262 Ill. App. 3d at 68.\nHowever, a court may disregard a corporate entity and pierce the veil of limited liability where the corporation is merely the alter ego or business conduit of another person or entity. In re Rehabilitation of Centaur Insurance Co., 238 Ill. App. 3d 292, 299 (1992), aff\u2019d, 158 Ill. 2d 166 (1994). This doctrine fastens liability on the individual or entity that uses a corporation merely as an instrumentality to conduct that person\u2019s or entity\u2019s business. Centaur, 238 Ill. App. 3d at 300. Such liability arises from fraud or injustice perpetrated not on the corporation but on third persons dealing with the corporation. Centaur, 238 Ill. App. 3d at 300. The doctrine of piercing the corporate veil is an equitable remedy; it is not itself a cause of action but rather is a means of imposing liability on an underlying cause of action, such as a tort or breach of contract. Centaur, 238 Ill. App. 3d at 300.\nBecause a complaint seeking to pierce the corporate veil is not itself a cause of action, the limitations period applicable to such a complaint is governed by the nature of the underlying cause of action alleged in the complaint. Here, plaintiffs assert that the cause of action alleged in their complaint is an action to collect the judgment for damages awarded in the underlying litigation. As such, the seven-year limitations period for enforcing judgments contained in section 12\u2014 108 of the Code would ordinarily apply to their complaint. However, because Swanson is a dissolved corporation, plaintiffs argue that the five-year limitations period for commencing actions against dissolved corporations and their shareholders contained in section 12.80 of the Act governs this case.\nDefendants respond that plaintiffs cannot collect the judgment entered in the underlying litigation against them because they were not named parties to that suit. Defendants argue that, to collect against them, plaintiffs are required to allege and prove their allegations of negligence anew. Accordingly, defendants conclude that the cause of action underlying plaintiffs\u2019 complaint to pierce the corporate veil must be predicated upon negligence and that such an action is barred by the two-year limitations period contained in section 13 \u2014 202 of the Code.\nWe agree with plaintiffs\u2019 position and find that the five-year limitations period contained in section 12.80 of the Act governs this case. Plaintiffs\u2019 allegations of negligence against Swanson have already been proved in the underlying litigation. The trial court in the underlying litigation found in plaintiffs\u2019 favor and entered a judgment awarding damages. This judgment became a new and distinct obligation of Swanson that was different from plaintiffs\u2019 original negligence action. Plaintiffs\u2019 complaint in this case did not seek to recover damages from defendants on the basis of Swanson\u2019s negligence, but instead sought to pierce Swanson\u2019s corporate veil to enforce the judgment in the underlying litigation against defendants as corporate directors and shareholders. Therefore, the seven-year limitations period for enforcing judgments contained in section 12 \u2014 108 of the Code would ordinarily govern actions of this type. However, because Swanson has been dissolved, section 12.80 of the Act reduces the limitations period to five years.\nWe find support for our conclusion that plaintiffs may seek to pierce Swanson\u2019s corporate veil to enforce the judgment in the underlying litigation against defendants in Pyshos v. Heart-Land Development Co., 258 Ill. App. 3d 618 (1994). In Pyshos, the plaintiff secured a $20,000 judgment against a corporation. Pyshos, 258 Ill. App. 3d at 621. The plaintiff subsequently initiated supplementary citation proceedings to discover the corporation\u2019s assets. As part of the citation proceedings, the plaintiff filed a petition to pierce the corporate veil. The trial court subsequently granted the plaintiffs motion for summary judgment on this petition. Pyshos, 258 Ill. App. 3d at 621-22. The reviewing court reversed, holding that it was improper to pierce the corporate veil in supplementary proceedings because the allegations necessary to support such an action do not fall within the limited scope of what may be heard in supplementary proceedings. Pyshos, 258 Ill. App. 3d at 622. The reviewing court further explained:\n\u201c[A] judgment creditor who has managed to secure a judgment against a corporation and seeks to hold the individual shareholders and directors of a judgment debtor corporation liable for that judgment may consider alternative remedies.\nFirst, a judgment creditor may choose to initiate a supplementary proceeding against the third-party shareholders and directors. The inquiry in such supplementary proceedings, however, is limited to considering the allegation that the shareholders and directors are holding assets of the judgment debtor corporation.\nAlternatively, a judgment creditor may choose to file a new action to pierce the corporate veil to hold individual shareholders and directors liable for the judgment of the corporation. A new proceeding is proper because, where a party obtains a judgment against another party, the underlying claim merges with the judgment and the judgment becomes a new and distinct obligation of the corporation which differs in nature and essence from the original claim.\u201d Pyshos, 258 Ill. App. 3d at 624.\nOther Illinois courts have similarly noted that a judgment creditor may initiate an action to pierce the corporate veil to enforce a judgment against a corporation\u2019s shareholders. See Jacobson v. Buffalo Rock Shooters Supply, Inc., 278 Ill. App. 3d 1084, 1087 (1996) (plaintiffs filed a complaint to pierce corporate veil to collect workers\u2019 compensation judgment from corporation\u2019s shareholders); Lange v. Misch, 232 Ill. App. 3d 1077, 1081 (1992) (reviewing court held that the plaintiff could not attempt to pierce the corporate veil in supplementary proceedings and admonished the plaintiff to file a separate action to pierce the corporate veil to collect judgment against shareholder). None of these authorities supports defendants\u2019 assertion that, in an action to pierce the corporate veil to enforce a judgment against a corporation\u2019s shareholders, a plaintiff must reallege and reprove the underlying cause of action that formed the basis for the judgment.\nAdditionally, we are unpersuaded by the authorities that defendants cite in support of their position. In In re Estate of Wallen, 262 Ill. App. 3d 61, 70 (1994), this court held that the plaintiff could not seek to pierce the corporate veil to collect a foreign judgment from the sole corporate shareholder. We held that, under the full faith and credit doctrine, the plaintiff could not seek to enforce a judgment in Illinois against an individual who was not designated as a party in the foreign litigation. Wallen, 262 Ill. App. 3d at 70. Our decision in Wallen was predicated upon the unique nature of foreign judgments; our holding does not preclude a judgment creditor from filing an action to pierce the corporate veil to enforce a judgment against a corporation\u2019s shareholders.\nDefendants also rely on Matos v. Richard A. Nellis, Inc., 101 F.3d 1193, 1195 (7th Cir. 1996), a case in which the plaintiff sought to pierce the veil of a dissolved corporation in a supplemental proceeding to collect a judgment from the corporation\u2019s shareholder. After noting that Illinois\u2019s courts would not allow an action to pierce the corporate veil in supplemental proceedings (Matos, 101 F.3d at 1195, citing Pyshos, 258 Ill. App. 3d at 622), the reviewing court further commented that it was impossible to pierce the corporate veil after a corporation has been dissolved (Matos, 101 F.3d at 1195). We reject this latter statement because it is contrary to the plain language of section 12.80 of the Act. As noted above, section 12.80 specifically provides that a corporation\u2019s dissolution does \u201cnot take away nor impair any civil remedy available to or against such corporation, its directors, or shareholders.\u201d 805 ILCS 5/12.80 (West 1998). Therefore, despite Swanson\u2019s dissolution, plaintiffs were entitled under section 12.80 to file suit against Swanson and its shareholders within five years from the date of dissolution.\nDefendants\u2019 discussion of Greenfield v. Ray Stamm, Inc., 242 Ill. App. 3d 320 (1993), and Johnson v. St. Therese Medical Center, 296 Ill. App. 3d 341 (1998), is also unpersuasive, as neither case involved an action to pierce the corporate veil. In Greenfield, the plaintiff sued the wrong party and sought to amend his complaint to name a different party after the expiration of the limitations period. Greenfield, 242 Ill. App. 3d at 323-24. In Johnson, the judgment debtor was a partnership, rather than a corporation. Johnson, 296 Ill. App. 3d at 346.\nHaving determined that the five-year limitations period of section 12.80 of the Act governs this case, we briefly consider whether plaintiffs filed their action within the limitations period. Section 12.80 requires that a plaintiff commence an action \u201cfor any right or claim existing, or any liability incurred, prior to [a corporation\u2019s] dissolution\u201d within five years of the date of dissolution. 805 ILCS 5/12.80 (West 1998). Here, the Illinois Secretary of State dissolved Swanson on June 1, 1998. Plaintiffs filed their complaint on September 28, 2000. Plaintiffs therefore commenced their action within five years of Swanson\u2019s dissolution.\nDefendants argue that plaintiffs\u2019 collection action did not exist prior to Swanson\u2019s dissolution as required by section 12.80 because the trial court in the underlying litigation did not enter its damage award until after Swanson\u2019s dissolution. Defendants therefore contend that section 12.80 does not provide plaintiffs a right to sue on the judgment. Defendants\u2019 argument lacks merit. The trial court in the underlying litigation defaulted Swanson prior to the date of Swanson\u2019s dissolution. Therefore, prior to its dissolution, the trial court in the underlying litigation entered judgment against Swanson on plaintiffs\u2019 negligence action. Although the precise measure of plaintiffs\u2019 damages had yet to be determined, Swanson\u2019s obligation on plaintiffs\u2019 complaint had been established prior to the date of dissolution. Accordingly, we conclude that plaintiffs\u2019 right to collect on its complaint accrued prior to Swanson\u2019s dissolution and that plaintiffs\u2019 complaint in this case satisfied the limitations requirements of section 12.80 of the Act. We therefore hold that the trial court erred in dismissing plaintiffs\u2019 complaint as untimely.\nFor the foregoing reasons, we reverse the judgment of the circuit court of Winnebago County and remand the case for further proceedings.\nReversed and remanded.\nGEIGER and BOWMAN, JJ, concur.", "type": "majority", "author": "PRESIDING JUSTICE HUTCHINSON" } ], "attorneys": [ "David F. Monteleone, of Schirger, Monteleone & Hampilos, P.C., of Rockford, for appellants.", "Erik K. Jacobs, of Hyzer, Hyzer & Zimmerman, of Rockford, for appellee D. Michael Gibson.", "Jason H. Rock and James E. Stevens, both of Barrick, Switzer, Long, Balsley & Van Evera, of Rockford, for appellee Hugh K. Funderburg.", "Robert C. Fottinger, of Barrick, Switzer, Long, Balsley & Van Evera, of Rockford, for appellee John E Fowers." ], "corrections": "", "head_matter": "JOHNNIE PEETOOM et al., Plaintiff-Appellants, v. RICHARD A. SWANSON, Defendant (D. Michael Gibson et al., Defendants-Appellees).\nSecond District\nNo. 2 \u2014 01\u20140609\nOpinion filed October 4, 2002.\nDavid F. Monteleone, of Schirger, Monteleone & Hampilos, P.C., of Rockford, for appellants.\nErik K. Jacobs, of Hyzer, Hyzer & Zimmerman, of Rockford, for appellee D. Michael Gibson.\nJason H. Rock and James E. Stevens, both of Barrick, Switzer, Long, Balsley & Van Evera, of Rockford, for appellee Hugh K. Funderburg.\nRobert C. Fottinger, of Barrick, Switzer, Long, Balsley & Van Evera, of Rockford, for appellee John E Fowers." }, "file_name": "0523-01", "first_page_order": 541, "last_page_order": 548 }