Mepco Finance Corporation v. Warranty Administration Services
1:11-cv-02919
N.D. Ill.Jul 3, 2012Background
- Mepco Finance Corp funds warranty programs for consumers;
- CDWS entered an Illinois-forum agreement with Mepco and sold 1,193 warranties in Illinois, generating over $1M in revenue;
- Chapman (CDWS President) and Sletner (CDWS VP) are the sole officers and 100% CDWS shareholders;
- Defendants failed to answer, leading to default and a judgment against them on Aug. 18, 2011;
- Defendants moved under Rule 60(b)(4) to vacate the default and judgment arguing lack of personal jurisdiction;
- Court held CDWS is subject to Illinois jurisdiction, and thus the individual defendants are subject to personal jurisdiction when fiduciary shield is lowered by their personal interests
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether personal jurisdiction exists over Chapman and Sletner | Individual acts imply personal interest; shield lowered | Jurisdiction should be limited to CDWS, not individuals | Personal jurisdiction over individuals established; 60(b)(4) denied |
| Whether the Rule 60(b)(4) void-judgment standard applies given jurisdiction | Judgment void due to lack of jurisdiction | Jurisdiction exists; no void judgment | Rule 60(b)(4) motion denied; judgment remains |
Key Cases Cited
- Rice v. Nova Biomedical Corp., 38 F.3d 909 (7th Cir. 1994) (fiduciary-shield can be pierced when acts serve personal interests)
- Rollins v. Ellwood, 565 N.E.2d 1302 (Ill. 1990) (fiduciary shield doctrine applicability)
- Glass v. Kemper Corp., 930 F. Supp. 332 (N.D. Ill. 1996) (fiduciary shield doctrine discussion)
- Femal v. Square D Co., 903 N.E.2d 32 (Ill. App. Ct. 2009) (personal-interest factors in shield analysis)
- Philos Techs., Inc. v. Philos & D, Inc., 645 F.3d 851 (7th Cir. 2011) (60(b)(4) standard vs. merits burden)
