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Mepco Finance Corporation v. Warranty Administration Services
1:11-cv-02919
N.D. Ill.
Jul 3, 2012
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Background

  • 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)
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Case Details

Case Name: Mepco Finance Corporation v. Warranty Administration Services
Court Name: District Court, N.D. Illinois
Date Published: Jul 3, 2012
Docket Number: 1:11-cv-02919
Court Abbreviation: N.D. Ill.