Independent Trust Corp. v. Stewart Information Services Corp.
665 F.3d 930
| 7th Cir. | 2012Background
- Intercounty Title Insurance Co. of Illinois acted as Stewart’s exclusive Chicago-area agent and managed an escrow account for Stewart’s insureds.
- Capriotti and Hargrove controlled Intercounty and looted the InTrust funds to cover Intercounty’s escrow shortfall, effectively running a Ponzi-like scheme.
- From 1990–1995, funds from InTrust were transferred to Intercounty to pay Stewart’s insureds and Stewart benefited financially.
- OBRE began investigation in 1994; InTrust placed in receivership in 2000; receiver pursued claims against Stewart and others, yielding judgments against several defendants.
- On July 15, 2010, the Receiver filed a five-count complaint on InTrust’s behalf, alleging, among others, money had and received, unjust enrichment, vicarious liability, aiding and abetting, and conspiracy.
- The district court dismissed the claims as time-barred by a five-year statute of limitations, and the Receiver appealed, pressing adverse domination tolling and conspiracy theories.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether adverse domination tolls the statute of limitations for Stewart. | Receiver asserts Larney tolling applies to Stewart as a non-director co-conspirator. | Stewart should not be tolled because it is not a wrongdoing director or co-conspirator. | Adverse domination tolling does not apply to Stewart; claims barred. |
| Whether a conspiracy is required to apply adverse domination to Stewart. | Larney allows tolling without a formal conspiracy claim. | No conspiracy evidence against Stewart; tolling denied. | No plausible conspiracy; adverse domination tolling not available. |
| Whether the district court properly limited the scope of Illinois adverse domination doctrine to directors and their co-conspirators. | Illinois Supreme Court would extend doctrine beyond directors. | Doctrine bounds set by Larney should be respected. | Boundaries limited to wrongdoing directors and their co-conspirators; Stewart not protected. |
| Whether the complaint plausibly alleges Stewart’s conspiracy with InTrust to misappropriate funds. | Complaint alleges Stewart pressured Intercounty, knew of schemes, and benefitted from them. | Allegations do not plausibly show Stewart’s agreement to collude. | No plausible agreement; conspiracy not proven. |
| Whether the district court abused its discretion regarding judicial notice and leave to amend. | Judicial notice of public documents and need to amend were warranted. | Judicial notice appropriate; amendment would be futile. | No abuse; affirmed dismissal with prejudice; amendment not warranted. |
Key Cases Cited
- Erickson v. Pardus, 551 U.S. 89 (Sup. Ct. 2007) (notice-pleading standard; plausibility not probability)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (Sup. Ct. 2007) (plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (Sup. Ct. 2009) (plausibility standard for plausible claims)
- Tierney v. Vahle, 304 F.3d 734 (7th Cir. 2002) (no conspiracy without agreement)
- Adcock v. Brakegate, Ltd., 645 N.E.2d 888 (Ill. 1994) (no conspiracy absent agreement)
- Larney v. Lease Resolution Corp., 719 N.E.2d 170 (Ill. App. 1999) (adverse domination tolls for nonboard-member co-conspirators within bounds)
- Hartford Accident & Indemnity Co. v. Sullivan, 846 F.2d 377 (7th Cir. 1988) (active participation within larger fraud may render participant liable)