{ "id": 4295283, "name": "JOHN W. COURTNEY et al., Plaintiffs-Appellants, v. PENNY S. PRITZKER et al., Defendants-Appellees", "name_abbreviation": "Courtney v. Pritzker", "decision_date": "2010-02-22", "docket_number": "No. 1\u201407\u20141656", "first_page": "675", "last_page": "680", "citations": [ { "type": "official", "cite": "398 Ill. App. 3d 675" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "398 N.E.2d 891", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1979, "opinion_index": 0 }, { "cite": "79 Ill. App. 3d 787", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5609309 ], "year": 1979, "pin_cites": [ { "page": "790" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/79/0787-01" ] }, { "cite": "51 F.3d 1411", "category": "reporters:federal", "reporter": "F.3d", "case_ids": [ 11366661 ], "year": 1995, "pin_cites": [ { "page": "1420-21", "parenthetical": "depositors lacked standing to bring claims against individuals and firms accused of causing banks to fail" } ], "opinion_index": 0, "case_paths": [ "/f3d/51/1411-01" ] }, { "cite": "879 F.2d 754", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 10536656 ], "year": 1989, "pin_cites": [ { "page": "764-65", "parenthetical": "any remedy for fraudulent representations that affects or potentially affects all creditors of bank, belongs to the receiver who asserts such claims for the benefit of all creditors" } ], "opinion_index": 0, "case_paths": [ "/f2d/879/0754-01" ] }, { "cite": "916 F.2d 874", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 10538221, 6119335 ], "weight": 2, "year": 1990, "pin_cites": [ { "page": "887-88" }, { "page": "882" } ], "opinion_index": 0, "case_paths": [ "/f2d/916/0874-01", "/br/120/0874-01" ] }, { "cite": "599 F.2d 1111", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 489593 ], "weight": 3, "year": 1979, "pin_cites": [ { "page": "1117", "parenthetical": "\"As a general rule, wrongdoing by bank officers that adversely affects all depositors creates a liability which is an asset of the bank, and only the bank or its receiver may sue for its recovery\"" }, { "page": "1117" }, { "page": "1117", "parenthetical": "\"wrongdoing by bank officers that adversely affects all depositors creates a liability which is an asset of the bank, and only the bank or its receiver may sue for its recovery\"" } ], "opinion_index": 0, "case_paths": [ "/f2d/599/1111-01" ] }, { "cite": "782 N.E.2d 322", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 2002, "opinion_index": 0 }, { "cite": "335 Ill. App. 3d 1171", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 637079 ], "year": 2002, "pin_cites": [ { "page": "1174" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/335/1171-01" ] }, { "cite": "485 F.3d 942", "category": "reporters:federal", "reporter": "F.3d", "case_ids": [ 4077739 ], "year": 2007, "opinion_index": 0, "case_paths": [ "/f3d/485/0942-01" ] }, { "cite": "12 U.S.C. \u00a71821", "category": "laws:leg_statute", "reporter": "U.S.C.", "year": 2000, "pin_cites": [ { "page": "(j)" } ], "opinion_index": 0 }, { "cite": "12 U.S.C. \u00a71811", "category": "laws:leg_statute", "reporter": "U.S.C.", "year": 2000, "pin_cites": [ { "page": "et seq." } ], "opinion_index": 0 }, { "cite": "02 C 6926", "category": "reporters:state", "reporter": "Cow.", "weight": 3, "year": 2004, "pin_cites": [ { "parenthetical": "Courtney 77" }, { "parenthetical": "Courtney 77" } ], "opinion_index": 0 }, { "cite": "18 U.S.C. \u00a71962", "category": "laws:leg_statute", "reporter": "U.S.C.", "year": 2000, "pin_cites": [ { "page": "(c)" } ], "opinion_index": 0 }, { "cite": "18 U.S.C. \u00a7\u00a71961", "category": "laws:leg_statute", "reporter": "U.S.C.", "opinion_index": 0 } ], "analysis": { "cardinality": 636, "char_count": 12143, "ocr_confidence": 0.791, "pagerank": { "raw": 4.03580807328026e-08, "percentile": 0.14452174624852646 }, "sha256": "41832b3d0794e32d09a0383001d7fc1251f2266711332dc842773aceaec05499", "simhash": "1:b72ed33e7d24d512", "word_count": 1938 }, "last_updated": "2023-07-14T21:50:17.302697+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "GARCIA and LAMPKIN, JJ., concur." ], "parties": [ "JOHN W. COURTNEY et al., Plaintiffs-Appellants, v. PENNY S. PRITZKER et al., Defendants-Appellees." ], "opinions": [ { "text": "PRESIDING JUSTICE HALL\ndelivered the opinion of the court:\nThis suit is brought by a class of former depositors of Superior Bank FSB (Superior Bank), who lost money on deposits exceeding the $100,000 federally insured limit when the bank failed and was placed in receivership by the Federal Deposit Insurance Corporation (FDIC). Suit was filed against several defendants: the bank\u2019s officers and directors; the bank\u2019s auditor, Ernst & Young LLP; as well as the bank\u2019s holding company, Coast-to-Coast Financial Corporation (CCFC), and several of CCFC\u2019s principals, which included Penny S. Pritzker, Thomas J. Pritzker, and Alvin Dworman.\nPlaintiffs filed their initial complaint in the circuit court in January 2002. In the complaint, they alleged violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2002)), and the Illinois Public Accounting Act (Accounting Act) (225 ILCS 450/0.01 et seq. (West 2000)). Defendants removed the matter to the federal district court after plaintiffs amended the complaint by adding a federal civil claim under the Racketeer Influenced and Corrupt Organizations Act (RICO) (18 U.S.C. \u00a7\u00a71961 through 1968 (2000)).\nIn federal district court, plaintiffs filed a five-count fourth amended complaint alleging in count I that defendants violated the Consumer Fraud Act by \u201cproviding false financial statements regarding the financial condition of the bank and erroneous legal advice regarding FDIC insurance coverage\u201d; in count II that CCFC and Ernst & Young violated RICO (18 U.S.C. \u00a71962(c) (2000)), by withdrawing funds from the bank under cover of false financial statements approved by Ernst & Young; in count III that Ernst & Young violated the Accounting Act (225 ILCS 450/30.1 (West 2000)) by knowingly or negligently approving financial statements that drastically overstated the value of the bank\u2019s assets; and in count IV that Ernst & Young knowingly aided and abetted CCFC\u2019s RICO violation. See Courtney v. Hedieran, No. 02 C 6926, slip op. at 1-2 (N.D. Ill. September 17, 2004) {Courtney I).\nIn count V, plaintiffs sought a declaration that a 2001 settlement agreement in which the FDIC settled the bank\u2019s claims against CCFC\u2019s principals for $460 million was null and void because it would divert the bank\u2019s assets (proceeds from Ernst & Young settlement) to CCFC in violation of the priority scheme for distribution of the bank\u2019s assets established by section 1821(d)(11)(A) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. \u00a71811 et seq. (2000)) (FIRREA). See Courtney I, No. 02 C 6926; Courtney v. Halleran, No. 02 C 6926, slip op. at 4 (N.D. Ill. February 1, 2005) (Courtney 77).\nIn September 2004, the federal district court dismissed plaintiffs\u2019 federal claims with prejudice and declined to exercise supplemental jurisdiction over the state-law claims, dismissing those claims without prejudice. Courtney I, slip op. at 8. The district court dismissed the two RICO counts (II and IV) with prejudice, finding that plaintiffs lacked standing to bring these claims because the injuries they suffered were derivative of the injuries the bank itself suffered and therefore the claims must be brought by the FDIC on plaintiffs\u2019 behalf or through a derivative suit after unsuccessful demand upon the FDIC. Courtney I, slip op. at 7.\nThe district court also determined that plaintiffs\u2019 request for injunctive and declaratory relief in count V was not ripe for decision because at the time there was no actual or pending settlement that would cause Ernst & Young funds to be distributed. See Courtney I, slip op. at 8; Courtney II, slip op. at 4.\nIn December 2004, the FDIC and Ernst & Young agreed to a settlement wherein the FDIC agreed to release all claims against Ernst & Young in exchange for $125 million. At a hearing before the court on January 27, 2005, the FDIC indicated that it would not pay out any amounts due on account of the Ernst & Young settlement until February 7, 2005, due to unresolved issues remaining in the litigation. Courtney II, slip op. at 2-3.\nIn February 2005, the district court denied plaintiffs\u2019 motion for reconsideration of counts II and IV of the fourth amended complaint for the same reasons it originally dismissed those counts. Then, after granting the plaintiffs\u2019 motion to reconsider count V on the ground that payments from the Ernst & Young settlement were imminent, thereby making the issue of the legality of the distribution scheme agreed upon in the 2001 settlement ripe for consideration, the court denied plaintiffs\u2019 request to enjoin disbursal of funds from the Ernst & Young settlement.\nThe court determined that pursuant to section 1821(j) of the FIRREA (12 U.S.C. \u00a71821(j) (2000)), it was precluded from granting the requested injunctive relief because the FDIC would be acting pursuant to its enumerated powers as conservator and receiver when it honored the terms of the 2001 settlement in disbursing the funds received from the Ernst & Young settlement. Courtney II, slip op. at 5-7.\nOn January 31, 2006, plaintiffs refiled their state-law claims in the circuit court for violations of the Consumer Fraud Act and Accounting Act, adding a claim for commercial bad faith.\nIn a decision dated May 7, 2007, the Seventh Circuit Court of Appeals, in Courtney v. Halleran, 485 F.3d 942 (7th Cir. 2007), affirmed the district court\u2019s decision of February 2005, which had denied plaintiffs\u2019 motion for reconsideration of the dismissed RICO counts (II and IV), and denied the request for injunctive relief in count V.\nOn May 16, 2007, the circuit court granted defendants\u2019 motions dismissing plaintiffs\u2019 state-law claims. The court granted Alvin Dwor-man\u2019s motion to dismiss for lack of personal jurisdiction pursuant to section 2 \u2014 301 of the Code of Civil Procedure (Code) (735 ILCS 5/2\u2014 301 (West 2006)). The court dismissed all of plaintiffs\u2019 claims with prejudice for lack of standing pursuant to section 2 \u2014 619 of the Code (735 ILCS 5/2 \u2014 619 (West 1996)). The circuit court also dismissed plaintiffs\u2019 claims under the Consumer Fraud Act and Accounting Act with prejudice pursuant to section 2 \u2014 615 of the Code (735 ILCS 5/2\u2014 615 (West 1996)).\nPlaintiffs were given two weeks to advise the circuit court as to whether they would seek leave to amend to cure the section 2 \u2014 615 dismissals. On June 4, 2007, plaintiffs advised the circuit court that they would not seek leave to amend their complaint and instead proceeded with this appeal. We affirm.\nANALYSIS\nPlaintiffs first contend the circuit court erred in dismissing their complaint with prejudice for lack of standing pursuant to section 2 \u2014 619(a)(9) of the Code (735 ILCS 5/2 \u2014 619(a)(9) (West 2002)). The standard of review on appeal from a ruling granting a section 2 \u2014 619(a)(9) motion to dismiss is de novo. Travis v. American Manufacturers Mutual Insurance Co., 335 Ill. App. 3d 1171, 1174, 782 N.E.2d 322 (2002).\nAs a general rule, depositors, as a class, lack standing to pursue claims against bank officers and directors accused of causing a bank to fail, because the cause of action belongs to the bank or its receiver and not to the depositors, whose injuries are generally indistinguishable from one another and derivative of the injuries suffered by the bank. See, e.g., Adato v. Kagan, 599 F.2d 1111, 1117 (2d Cir. 1979) (\u201cAs a general rule, wrongdoing by bank officers that adversely affects all depositors creates a liability which is an asset of the bank, and only the bank or its receiver may sue for its recovery\u201d).\nThe rationale for this rule is that permitting individual depositors to bring actions for such injuries would invariably lead to a multiplicity of suits and potentially impair the rights of other creditors and claimants with superior interests. In re Sunrise Securities Litigation, 916 F.2d 874, 887-88 (3d Cir. 1990). An exception to the rule exists where an individual depositor suffers an injury that is distinct from the injury suffered generally by all depositors. Adato, 599 F.2d at 1117.\nPlaintiffs have attempted to circumvent the \u201cstanding\u201d obstacle by styling their claims as purported direct claims for consumer fraud and negligent misrepresentation. Plaintiffs contend that defendants violated the Consumer Fraud Act by fraudulently inducing them to deposit funds into their accounts by providing false financial statements regarding the financial condition of the bank and erroneous legal advice regarding FDIC insurance coverage. Plaintiffs further maintain that Ernst & Young violated section 30.1 of the Accounting Act (225 ILCS 450/30.1 (West 2000)), by knowingly or negligently approving financial statements overstating the value of the bank\u2019s assets with the knowledge that plaintiffs would rely on these statements in deciding whether to deposit their funds with the bank.\nIn assessing whether a claim is direct or derivative, courts look beyond the labels employed by counsel and instead examine the body of the complaint. In re Sunrise Securities Litigation, 916 F.2d at 882. Here, the essence of plaintiffs\u2019 complaint is that they lost the uninsured portions of their deposits because the defendants looted the bank\u2019s assets and drove the bank into insolvency, all while misleading plaintiffs and other investors into believing that the bank was financially stable. The claims set forth in plaintiffs\u2019 complaint are derivative in nature.\nPlaintiffs fail to allege an injury (lost deposits) which was separate and distinct from that suffered by other depositors or an injury involving a depositor which existed independently of the bank. Plaintiffs alleged that all depositors relied on the same explicit or implicit fraudulent misrepresentations or omissions concerning the solvency of the bank and FDIC deposit insurance.\nSuch claims are derivative in nature and belong to the FDIC in its corporate capacity as receiver for the failed bank. See Downriver Community Federal Credit Union v. Penn Square Bank, 879 F.2d 754, 764-65 (10th Cir. 1989) (any remedy for fraudulent representations that affects or potentially affects all creditors of bank, belongs to the receiver who asserts such claims for the benefit of all creditors); Adato, 599 F.2d at 1117 (\u201cwrongdoing by bank officers that adversely affects all depositors creates a liability which is an asset of the bank, and only the bank or its receiver may sue for its recovery\u201d); Hamid v. Price Waterhouse, 51 F.3d 1411, 1420-21 (9th Cir. 1995) (depositors lacked standing to bring claims against individuals and firms accused of causing banks to fail); see generally M. Smith & B. Lee, Uninsured-Depositor Litigation: an Emerging Threat to Directors and Officers of Troubled Banks?, 14 No. 18 Andrews Sec. Litig. & Reg. Rep. 1 (2009).\nThe plaintiffs, as depositors, lacked standing to assert causes of action properly belonging to the FDIC in its corporate capacity as receiver. Therefore, the trial court properly dismissed plaintiffs\u2019 complaint for lack of standing pursuant to section 2 \u2014 619(a)(9) of the Code.\nIn light of our determination regarding plaintiffs\u2019 lack of standing to maintain this action, we need not consider the other contentions raised by the parties. Tarkowski v. Scott, 79 Ill. App. 3d 787, 790, 398 N.E.2d 891 (1979). Accordingly, for the reasons set forth above, the judgment of the circuit court of Cook County is affirmed.\nAffirmed.\nGARCIA and LAMPKIN, JJ., concur.\nPlaintiffs dropped their claims against Dworman.", "type": "majority", "author": "PRESIDING JUSTICE HALL" } ], "attorneys": [ "Clinton A. Krislov and Elizabeth N. Dixon, both of Krislov & Associates, Ltd., of Chicago, for appellants.", "Stanley J. Parzen and Lauren R. Noll, both of Mayer Brown LLP, of Chicago, for appellee Ernst & Young LLP", "David W Haller and Mark P Gimbel, both of Covington & Burling LLfj of New York, New York, and Stephen Novack and Timothy J. Miller, both of Novack & Macey LLfj of Chicago, for other appellees." ], "corrections": "", "head_matter": "JOHN W. COURTNEY et al., Plaintiffs-Appellants, v. PENNY S. PRITZKER et al., Defendants-Appellees.\nFirst District (1st Division)\nNo. 1\u201407\u20141656\nOpinion filed February 22, 2010.\nRehearing denied December 16, 2009.\nClinton A. Krislov and Elizabeth N. Dixon, both of Krislov & Associates, Ltd., of Chicago, for appellants.\nStanley J. Parzen and Lauren R. Noll, both of Mayer Brown LLP, of Chicago, for appellee Ernst & Young LLP\nDavid W Haller and Mark P Gimbel, both of Covington & Burling LLfj of New York, New York, and Stephen Novack and Timothy J. Miller, both of Novack & Macey LLfj of Chicago, for other appellees." }, "file_name": "0675-01", "first_page_order": 691, "last_page_order": 696 }