WORKFORCE SOLUTIONS, an Illinois Not-for-Profit Company, Plaintiff and Judgment Creditor-Appellant, v. URBAN SERVICES OF AMERICA, INC., an Illinois Corporation, Defendant and Judgment Debtor (The Services Group, LLC, a Delaware Limited Liability Company, c/o Steven Fenzl and/or Doug Ritter as Members and/or Managers; Gordon McTavish, as Director of Urban Services of America, Inc., an Illinois Corporation; USA Franchising, LLC, a Delaware Limited Liability Company, c/o Steven Fenzl as Member and/or Manager; and Doug Ritter, Third-Party Citation Respondents-Appellees). WORKFORCE SOLUTIONS, an Illinois Not-for-Profit Company, Plaintiff-Appellant, v. THE SERVICES GROUP, LLC, a Delaware Limited Liability Company; GORDON MCTAVISH; STEVEN FENZL; DOUG RITTER; RON SWANE; USA FRANCHISING, LLC, a Delaware Limited Liability Company; DRADER MANUFACTURING INDUSTRIES, LTD., a Canadian Corporation, EDCAN, INC., an Arizona Corporation; UNIQUED, LLC, an Illinois Limited Liability Company; CANDO SERVICES MIDWEST, LLC, a Delaware Limited Liability Company; CANDO SERVICES WEST, LLC, a Delaware Limited Liability Company; and CANDO SERVICES PACIFIC NORTHWEST, LLC, a Delaware Limited Liability Company, Defendants-Appellees.
Docket Nos. 1-11-1410, 1-11-3046 cons.
Appellate Court of Illinois, First District, Second Division
August 28, 2012
2012 IL App (1st) 111410
Held
(Note: This syllabus constitutes no part of the opinion of the court but has been prepared by the Reporter of Decisions for the convenience of the reader.)
In proceedings arising from plaintiff‘s attempt to collect a judgment entered against defendant, the denial of one count of plaintiff‘s motion for the turnover of assets held by a citation respondent managed by some of the same individuals who controlled defendant was reversed on the ground that the trial court failed to conduct an evidentiary hearing on the ownership of the assets at issue; the second count was reversed due to the trial court‘s failure to apply the discovery rule in determining whether the claim was timely; the counts alleging breach of the duty of disclosure and candor or fraudulent concealment against entities related to defendant were properly dismissed; and the dismissal of the counts against those entities alleging fraudulent transactions, breach of fiduciary duty and successor liability was reversed.
Decision Under Review
Appeal from the Circuit Court of Cook County, Nos. 06-L-003551, 10-L-008380; the Hon. Elmer J. Tolmaire III and the Hоn. Ronald F. Bartkowicz, Judges, presiding.
Judgment
No. 1-11-1410, Reversed and remanded.
No. 1-11-3046, Affirmed in part and reversed in part; cause remanded.
Counsel on Appeal
Kenneth J. Ashman and Neal D. Kitterlin, both of Ashman Law Offices, LLC, of Chicago, for
David E. Morrison and Kerry D. Nelson, both of Goldberg Kohn Ltd., of Chicago, for appellees.
Panel
JUSTICE CONNORS delivered the judgment of the court, with opinion. Presiding Justice Quinn and Justice Harris concurred in the judgment and opinion.
OPINION
¶ 1 This consolidated appeal arises out of the efforts by plaintiff and judgment creditor, Workforce Solutions, to collect on a judgment entered in its favor following a breach of contract action filed against defendant and judgment debtor, Urban Services of America. In a supplementary proceeding, the circuit court denied Workforce‘s motion for turnover of assets asserted against third-party citation respondents. It determined that one count of the motion was barred by the statute of limitations and the second count was denied because Workforce failed to prove that the entity held assets that could be applied toward Workforce‘s judgment.
¶ 3 BACKGROUND
¶ 4 In 2003, Workforce and Urban entered into a contract whereby Workforce provided contract employees to Urban to operate municipal recycling facilities. Urban fell behind on its payments to Workforce. After failed attempts to collect past-due payments, Workforce filed a breach of contract action against Urban in 2006. In June and July of 2008, Workforce obtained default judgments against Urban totaling $1,026,720.10. With statutory interest, the judgment owed to Workforce totaled nearly $1.4 million.
¶ 5 In October of 2008, Workforce instituted supplementary proceedings pursuant to
¶ 6 The circuit court denied the turnover motion. The court found that the claim against USAF was untimely or “extinguished” under
¶ 7 At about the same time Workforce filed its turnover motion, it also commenced a new action against Urban, USAF, TSG and related entities, and the officers and directors of those entities. Workforce asserted seven counts against the defendants for fraudulent transfer, breach of fiduciary duty, successor liability, breach of the duty of disclosure and candor, “fraudulent concealment,” piercing the corporate veil, and alter ego. The circuit court dismissed the piercing and alter ego claims without prejudice. It dismissed the remaining counts with prejudice for a variety of reasons, some of which were based on the court‘s findings in the turnover proceeding. The details of the claims’ disposition will be discussed furthеr below.
¶ 8 Workforce filed timely notices of appeal in each case. Pursuant to motion, this court consolidated the appeals. We will analyze each case in turn.
¶ 9 A. Appeal No. 1-11-1410 (Supplementary Proceedings)
¶ 10 1. Facts
¶ 11 After obtaining a judgment against Urban in an underlying breach of contract
¶ 12 Workforce, Urban, and the third-party citation respondents engaged in extensive discovery over a two-year period. Workforce discovered that Urban, TSG, and USAF, among other entities, were owned or controlled by some combination of the same four individuals: Gordon McTavish, Steven Fenzl, Doug Ritter, and Ron Swane (the promoters).
¶ 13 The resulting matrix of entities and their ownership is complex. In the simplest terms, McTavish and Swane are thе majority owners of Urban, vis-à-vis their operation of a wholly owned subsidiary of Drader, which is itself owned and controlled by McTavish and Swane. Fenzl and Ritter own the remainder of Urban. All four of the promoters are the sole members of the board of directors of Urban.
¶ 14 The promoters indirectly own 70% of USAF. Ritter and Fenzl own 35% of USAF vis-à-vis their sole ownership of a holding company. McTavish and Swane own another 35% of USAF in a similar arrangement.
¶ 15 The promoters also indirectly own 100% of TSG. Ritter and Fenzl‘s holding company owns half of TSG. McTavish and Swane own the other half as owners and controllers of another wholly owned subsidiary of Drader.
¶ 16 McTavish and Swane are also part owners of 703795 Alberta, Ltd. (Alberta). McTavish is president of Alberta and Swane is secretary-treasurer. Both men are also directors of the company.
¶ 17 According to Workforce, the discovery documents and depositions of McTavish and Swane revealed that Urban engaged in certain financial transactions with Drader, TSG, USAF, and Alberta in an effort to avoid paying its judgment. Workforce then filed a motion for turnover of assets. It asserted two claims under the Act, one challenging a May 2008 transaction between Urban and TSG, and one challenging a May 2005 transaction between Urban and USAF.
¶ 18 a. Count I: The Urban-TSG Transaction
¶ 19 First, Workforce challenged a May 2008 transaction in which Urban transferred all of its assets to TSG. Workforce alleged that Urban owed Drader $787,000 after Drader refinanced a high-interest line of credit Urban took out (Urban loan). To finance this transaction, Drader borrowed $1 million from HSBC Bank (Drader loan). In return, Urban entered into security agreements with Drader and HSBC. In essence, they obtained blanket liens over all of Urban‘s assets. Urban asserted that Drader and HSBC filed financing statements pursuant to the provisions of the
¶ 20 Alberta then purchased the Urban loan debt from Drader for about $187,000. Although Drader “wrote off” the remaining $600,000 for beneficial tax рurposes, indicating that the Urban debt was uncollectable, Urban still remained obligated to repay the full amount of the debt to Alberta. The written agreement between Alberta and Drader with respect to this transaction was signed by McTavish on behalf of both parties.
¶ 21 Urban and TSG then entered into an asset purchase sale. TSG purchased all
“took all of Urban‘s assets and placed them into another entity they all directly or indirectly controlled, and obligated this new entity to make payments only to themselves individually or to other entities that they directly or indirectly controlled.”
Furthermore, Workforce alleged:
“There was no consideration for the purchase of [Urban‘s] assets other than a shuffling of debts among Urban insiders[, i.e., the promoters] designed only to benefit said insiders and leave Urban‘s legitimate creditors, [Workforce] chief amongst them, out in the cold.”
¶ 22 Additionally, Workforce asserted that the timing of this transaction was suspect. It alleged that “[t]he transfer of all of Urban‘s assets to TSG closed on May 2, 2008. Once done, Urban withdrew its defense of the case brought by [Workforce] on May 12, 2008 which ultimately resulted in the [default] judgment.”
¶ 23 Workforce alleged that this transaction met the standards for actual fraud under
¶ 24 b. Count II: The Urban-USAF Transaction
¶ 25 Workforce also challenged an August 2005 transaction in which Urban loaned USAF $400,000. The loan agreement was signed by Ritter on behalf of USAF and by Fenzl on behalf of Urban. The loan agreement also indicated that Urban loaned Ritter $150,000. However, despite Workforce‘s motion to compel, the entities have not produced a promissory note evidencing the Ritter loan.
¶ 26 Workforce challenged the USAF loan as being actually and constructively fraudulent under
¶ 27 In response to both counts, TSG and USAF argued that the challenged transactions were not “transfers” of “assets” as defined by the Act. They maintained that the property that was conveyed was subject to existing secured liens that originated with the Urban and Drader loans. Such encumbered property is specifically excluded from the definition of “assets” contained in the Act. See
¶ 28 c. The Court‘s Ruling on the Turnover Motion
¶ 29 The court heard oral argument on Workforce‘s turnover motion. However, despite Workforce‘s request, the court did not conduct an evidentiary hearing. The circuit court denied both of Workforce‘s claims and refused to order the turnover of any assets.
¶ 30 On count I, the court held that Workforce failed to prove that TSG held or controlled any of Urban‘s assets that could be applied to satisfy the judgment. It acknowledged TSG‘s argument and stated that to determine whether the property conveyed was an “asset” subject to “transfer” under the terms of the Act, it had to first determine whether the initial Urban and Drader loans were valid. It noted that Workforce had the burden of proving by clear and convincing evidence that the blanket liens obtained by Drader and
¶ 31 Relying on a series of federal cases that it collectively referred to as the Wachovia cases,1 the circuit court concluded that Workforce failed to present sufficient evidence to find Drader‘s claimed secured liens invalid, as was done in Wachovia. See Wachovia Securities, LLC v. Jahelka, 586 F. Supp. 2d 972, 1016 (N.D. Ill. 2008). In distinguishing this case from the Wachovia cases, the circuit court specifically noted that the procedural postures of the cases were different. Specifically, the proceedings in Wachovia included more extensive inquiries than those involved in a limited supplementary proceeding such as this one. See Loop Corp., 2010 U.S. Dist. LEXIS 141896, *7-8.
¶ 32 Additionally, it noted that in Wachovia, the district court conducted a bench trial with testimony and evidence provided by the affected parties. Jahelka, 586 F. Supp. 2d at 978. Here, by contrast, it noted that “Workforce obtained a dеfault judgment against Urban and [did] not present a fully developed record.” Moreover, the court concluded, the evidence Workforce did present was rebutted by documentary evidence offered by TSG. Consequently, the circuit court concluded that Workforce “failed to prove by clear and convincing evidence that Drader and HSBC‘s blanket liens were made with actual intent to hinder and delay Workforce‘s efforts to collect its judgment.”
¶ 33 The court held that Workforce also failed to prove constructive fraud. Again the court
concluded that Workforce failed to present sufficient evidence that the Urban loan was made in bad faith or that it was made for less than reasonably equivalent value as required by the Act. See
¶ 34 On count II, the court held that the claim against the USAF loan was extinguished because it was not brought within the time frame prescribed by the Act.
¶ 35 It also concluded that the claim was not made “within one year after the USAF loan could reasonably have been discovered.” The court specifically discussed documents that Workforce received from USAF on December 10, 2008, including a copy of an August 19, 2005, promissory note “evidencing the loan from Urban to USAF.” USAF also produced e-mail correspondence between Drader‘s counsel and Workforce‘s counsel. In it, Workforce requested that Drader ” ‘identify, with specificity, those few documents that you believe are dispositive of the [issue that Urban‘s assets were subject to a
“was filed more than a year after the e-mail correspondence between Drader‘s counsel and Workforce‘s counsel. Thus, Workforce‘s cause of action with respect to Urban‘s loan to USAF is extinguished because it was brought more than a year after it could reasonably have been discovered by Workforce.”
The court also denied Workforce‘s request regarding the production of documents related to Urban‘s loan to Ritter.
¶ 36 2. Analysis
¶ 37 a. Count I: The Urban-TSG Transaction
¶ 38 On appeal, Workforce challenges the circuit court‘s denial of its motion for turnover. First, Workforce contends that the court erred in denying count 1 of its motion without conducting an evidentiary hearing. We agree.
¶ 39
¶ 40 Thus, the only relevant inquiries in a supplementary proceeding are (1) whether the judgment debtor is holding assets that should be applied to the judgment; and (2) whether a third-party citation respondent is holding assets of the judgment debtor that should be applied to the judgment. Schak, 334 Ill. App. 3d at 133. However, when applicable, a claim made under the Act may also be brought in a supplementary proceeding. Kennedy v. Four Boys Labor Service, Inc., 279 Ill. App. 3d 361, 368-69 (1996).
¶ 41 The procedure for conducting supplementary proceedings is prescribed by
¶ 42 In each of the above-cited cases, the circumstances were such that the third-party citation respondent made the demand for an evidentiary hearing. However, the principle is no less applicable here where the judgment creditor is the party demanding the hearing. Indeed, neither the statute nor the rule limits a hearing under Rule 277(e) to a demand made by a third-party citation respondent. See
¶ 43 With that said, there is no rule prohibiting the parties from waiving their right to an evidentiary hearing, as in any other civil action. See
¶ 44 Here, Workforce and TSG each claimed ownership of funds TSG received from Urban and vigorously contested the other‘s claim. Specifically, TSG argued that it took the Urban funds subject to prior perfected secured liens and, therefore, the funds were exempt from turnover. Workforce argued, among other things, that the security interest was abandoned when Drader “released or transferred” its interest to Alberta and Alberta failed to record the lien. During oral argument on the turnover motion, Workforce requested that the court conduct an evidentiary hearing to resolve the simultaneous claims to the Urban funds. Although the court acknowledged Workforce‘s request at oral argument, it nevertheless issued its order based solely on the arguments of counsel, without addressing Workforce‘s hearing request. In essence, thе court ruled that there was no evidence showing that TSG possessed assets of the judgment debtor, but prevented Workforce from obtaining such evidence. See Schak, 334 Ill. App. 3d at 133. As such, the court committed reversible error. Harmon, 200 Ill. App. 3d at 83.
¶ 45 TSG
¶ 46 Accordingly, the court erred in denying Workforce‘s motion for turnover of assets held by TSG without first conducting an evidentiary hearing. Because the matter will be remanded for an evidentiary hearing, we need not address Workforce‘s arguments on the merits.
¶ 47 b. Count II: The Urban-USAF Transaction
¶ 48 Workforce also appeals from the court‘s ruling that count II of its motion was untimely under
¶ 49
“A cause of action with respect to a fraudulent transfer or obligation under this Act is extinguished unless action is brought:
(a) Under paragraph (1) of subsection (a) of Section 5, within 4 years after the transfer was made or the obligation was incurred or, if later, within one year after the transfer or obligation was or could reasonably have been discovered by the claimant[.]”
740 ILCS 160/10 (West 2008) .
¶ 50 Paragraph (a) contains two clauses under which to proceed. The first clause bars a cause of action with respect to a fraudulent transfer brought more than four years after the challenged transfer was made.
¶ 51 In Gilbert Brothers, we recognized that the second clause of
¶ 52 Discovering whether an injury was “wrongfully caused” means the injured party must have (1) sufficient information that its injury was caused by the actions of another and (2) sufficient information “to spark inquiry in a reasonable person as to whether the conduct of the party who caused [the] injury might be legally actionable.” Mitsias, 2011 IL App (1st) 101126, ¶ 22. As to the second element, the injured party must have more than a mere suspicion that wrongdoing might have occurred in order to trigger the limitations period. Mitsias, 2011 IL App (1st) 101126, ¶ 24. A suspicion of wrongful conduct, ” ‘without examining the reasons underlying those suspicions, is not enough to constitute constructive knowledge that an injury was wrongfully caused.’ ” Mitsias, 2011 IL App (1st) 101126, ¶ 24 (quoting Young v. McKiegue, 303 Ill. App. 3d 380, 390 (1999)). Thus, the limitations period “is not triggered during that period in which the party is attempting to discover whether her injury was wrongfully caused.” Young, 303 Ill. App. 3d at 389-90.
¶ 53 On the other hand, the injured party need not have actual knowledge of negligent conduct or know that an actionable wrong was committed before the limitations period begins to run. Knox College, 88 Ill. 2d at 415. Among other things, that ” ‘assumes a conclusion which
must properly await legal determination.’ ” Knox College, 88 Ill. 2d at 415 (quoting Nolan v. Johns-Manville Asbestos, 85 Ill. 2d 161, 170-71 (1981)). Rather,
“[a]t some point the injured person becomes possessed of sufficient information concerning his injury and its cause to put a reasonable person on inquiry to determine whether actionable conduct is involved. At that point, under the discovery rule, the running of the limitations
period commences.” Knox College, 88 Ill. 2d at 416-17.
Determining when the limitations period begins is a question of fact, to which we apply a manifest weight of the evidence standard of review. Knox College, 88 Ill. 2d at 416-17; Eychaner v. Gross, 202 Ill. 2d 228, 251 (2002) (we defer to the findings of a trial court unless they are against thе manifest weight of the evidence).
¶ 54 In this case, the court did not hear any evidence on the timeliness of the claim against the 2005 loan to USAF or make any findings in that regard. In fact, the issue was never briefed by the parties in the filings regarding the turnover motion. The only matter raised relative to a limitations period was in a filing entitled “Reply in Support of [a]
¶ 55 The court also erred as a matter of law because it applied the wrong legal standard in evaluating the timeliness of Workforce‘s claim against the Urban-USAF loan. As discussed above, the second clause of
¶ 56 Here, by contrast, the circuit court ruled that Workforce brought its claim more than one year after discovering the mere fact that the Urban-USAF loan occurred. In support, the court noted that in December of 2008, Workforce received a copy of the purported unsecured promissory note “evidencing the loan from Urban to USAF” and mentioned that USAF produced other unspecified documents responsive to the сitation to discover assets. The court failed to conduct any analysis to determine when Workforce became aware of its injury and whether that injury was wrongfully caused. The standard applied by the court defeats the purpose of the discovery rule as it appears in the second clause of the statute, which is to “alleviate what has been viewed as harsh results resulting from the literal application of the [limitations] statute.” Knox College, 88 Ill. 2d at 414.
¶ 57 The court also concluded that Workforce‘s claim regarding the Urban-USAF loan was time-barred because it was filed more than one year after Drader‘s counsel and Workforce‘s counsel engaged in correspondence regarding Drader‘s security interest in Urban‘s assets. The court cited to e-mail correspondence from December of 2008 in which Drader and USAF “stated that Urban‘s assets were subject to a prior perfected security interest” in Urban‘s assets dating back to
¶ 58 Based on the court‘s order, we fail to see any connection between Workforce‘s awareness of Drader‘s security interest in Urban‘s assets and Workforce‘s awareness of an injury caused by an allegedly fraudulent transfer from Urban to USAF. Although Workforce stated that it was “examining its options with respect to fraudulent conveyance theories,” given the context of that statement, Workforce was referring to fraud relative to Drader‘s security interest in Urban‘s assets. That is not the transaction that Workforce challenged in count II of its motion. Without more, this correspondence does not suggеst that Workforce had knowledge of an injury based on the Urban-USAF loan or that any such injury was wrongfully caused.
¶ 59 Accordingly, the court erred in finding count II extinguished as to the Urban-USAF loan. It failed to properly analyze the claim under the second clause of
¶ 60 B. Appeal No. 1-11-3046 (Direct Action)
¶ 61 1. Facts
¶ 62 Workforce filed a separate cause of action against TSG, USAF, Drader, the promoters, and other entities owned directly or indirectly by some combination of them. It asserted seven counts. TSG and three of its wholly owned subsidiaries (the TSG companies), along with McTavish (collectively, the movants), filed a motion to dismiss the entire complaint.
¶ 63 Count I was a claim under the Act alleging that the Urban-TSG transaction, the Urban-USAF loan, and the alleged loan to Ritter were all actually and constructively fraudulent for reasons similar to those alleged in the supplementary proceeding. The movants sought dismissal under
¶ 64 Count II alleged that each of the promoters breached a fiduciary duty to Workforсe as Urban‘s creditor. The movants also sought dismissal of count II under
¶ 65 Count III was an alter ego claim filed against all of the defendants, alleging that the promoters commingled funds, failed to observe adequate corporate formalities, failed to adequately capitalize some or all of the companies, and failed to treat the various companies as separate entities. Count IV was a claim for piercing the corporate veil asserted against each of the promoters. It asserted that there was unity of interest among the companies such that they ceased to have an independent corporаte existence. The movants sought to dismiss these counts under
¶ 66 Count V asserted a claim for successor liability. Workforce alleged that the TSG companies were mere continuations of Urban after the Urban-TSG transaction; therefore, they were responsible for Urban‘s liabilities. The movants asserted that count V contained insufficient allegations and sought dismissal under
¶ 67 Count VI alleged a breach of the duty of disclosure and candor and count VII alleged fraudulent concealment against the promoters for withholding information during the underlying breach of contract lawsuit. Workforce alleged that these misrepresentations allowed the promoters to “buy time” while they dissipated Urban‘s assets before the judgment was entered. The movants challenged counts VI and VII under
¶ 68 The circuit court first dismissed counts I, VI, and VII with prejudice and deferred its ruling on the remaining counts. However, the record contains only a form order to that effect; no transcript of the hearing was included.
¶ 69 The court later issued a written decision dismissing the remaining counts. It dismissed count II with prejudice under ¶ 70 The court also dismissed count V with prejudice. It concluded that Workforce failed to adequately plead facts to establish a “complete identity” between Urban and the TSG companies. Counts III and IV were dismissed without prejudice and are not before us on appeal. ¶ 71 2. Analysis ¶ 72 a. Section 2-619 Dismissals ¶ 73 The movants challenged counts I and II of Workforce‘s complaint under ¶ 74 However, when a motion is brought under ¶ 75 Although the movants nominally challenged counts I and II of Workforce‘s complaint under ¶ 76 Here, the movants did not present arguments analyzed under the legal framework described above for a ¶ 77 A defendant that seeks dismissal of a claim that is barred by collateral estoppel or res judicata proceeds under ¶ 78 Here, the ¶ 79 b. Section 2-615 Dismissals ¶ 80 The movants also challenged Workforce‘s complaint under ¶ 81 The circuit court dismissed count II of the complaint, reasoning that Workforce could not establish a claim for breach of fiduciary duty against the promoters-Ritter, Fenzl, Swane, and McTavish-because it could not establish proximate cause. Specifically, it found that because Workforce failed to prove during the supplementary procеeding that Drader‘s lien on Urban‘s assets was invalid, Workforce could not establish that its injury was legally caused by the alleged breach. However, because we reversed that finding in the supplementary proceeding, it can no longer support the circuit court‘s reason for dismissal. ¶ 82 We conclude that Workforce stated a claim under the Act and dismissal was improper. To state a claim for breach of fiduciary duty, a plaintiff must allege that the defendant owes him a fiduciary duty; that the defendant breached that duty; and that he was injured as a proximate result of that breach. Alpha School Bus Co. v. Wagner, 391 Ill. App. 3d 722, 747 (2009). The movants asserted that Workforce did not have “standing”2 to assert this claim because Illinois does not recognize a fiduciary relationship among directors and officers and the corporation‘s creditors. The circuit court did not resolve the question of whether a duty existed, but suggested that our holding in Prime Leasing, Inc. v. Kending, 332 Ill. App. 3d 300 (2002) rejected the existence of such a duty. We disagree. ¶ 84 Workforce alleged that Urban was insolvent, which gave risе to a fiduciary duty running from the officers and directors of Urban to Workforce as one of its creditors. It specifically alleged that the promoters, as the officers and directors of Urban, were obligated to manage Urban‘s assets for the benefit of its creditors. It alleged that the promoters breached their duties by causing Urban to make fraudulent transfers to Ritter, USAF, and TSG for little or no consideration. Finally, Workforce alleged that it was injured by its inability to collect the debt owed to it by Urban because of the promoters’ improper self-dealing. It therefore pled a claim for breach of fiduciary duty. ¶ 85 The movants next argued that count V for “successor liability” should be dismissed because Workforce failed to sufficiently allege that TSG was merely a continuation of Urban such that TSG should be liable for Urban‘s debts. The circuit court agreed, concluding that as alleged, “the overlapping interest between Urban & TSG is less than one-third[, which is] a far cry from the standard of ” ‘complete identity’ ” rеquired by law. That is, Workforce did not allege facts “tying any corporate officers and directors of Urban to TSG.” ¶ 86 The doctrine of successor corporate nonliability provides that when a corporation purchases the assets of another corporation, the purchaser is generally not liable for the debts or liabilities of the seller. Pielet v. Pielet, 407 Ill. App. 3d 474, 508 (2010) (quoting Vernon v. Schuster, 179 Ill. 2d 338, 344-45 (1997)). However, there are four exceptions to that doctrine, which are intended to protect the rights of corporate creditors after dissolution: “(1) where there is an express or implied agreement of assumption [of liability]; (2) where the transaction amounts to a consolidation or merger of the purchaser or seller corporation; (3) where the purchaser is merely a continuation of the seller; or (4) where the transaction is for the fraudulent purpose of escaping liability for the seller‘s obligations.” Pielet, 407 Ill. App. 3d at 508 (citing Vernon, 179 Ill. 2d at 345). Here, the third exception is at issue. ¶ 87 The mere continuation exception applies “when the purchasing corporation is merеly a continuation or reincarnation of the selling corporation.” (Internal ¶ 88 However, as we have recently reaffirmed, ” ‘the continuity of shareholders necessary to a finding of mere continuation does not require complete identity between the shareholders of the former and successor corporations.’ ” Dearborn Maple Venture, LLC v. SCI Illinois Services, Inc., 2012 IL App (1st) 103513, ¶ 38 (quoting Park v. Townson & Alexander, Inc., 287 Ill. App. 3d 772, 775 (1997)); Pielet, 407 Ill. App. 3d at 510. In fact, “[a] change of shareholders is consistent with mere continuation as long as the former owners retain a controlling interest in the successor entity.” Pielet, 407 Ill. App. 3d at 510. ¶ 89 In count V, Workforce alleged that “the shareholders, officers and directors of Urban are the members and managers of TSG, and that [the TSG companies], as fully owned subsidiaries of TSG, are also controlled by the same individuals.” As the circuit court also recounted, Workforce alleged that “TSG is a subsidiary of Uniqued (66.67%), which is wholly owned by Ritter and Fenzl, who collectively own 49% of Urban.” The circuit court concluded that these allegations were insufficient to establish “complete unity” between the parties. However, as stated above, complete unity is not required to establish mere continuation. See Dearborn Maple Venture, 2012 IL App (1st) 103513, ¶ 38; Pielet, 407 Ill. App. 3d at 510. Thus, the circuit court erred by applying the wrong legal standard in evaluating Workforce‘s allegations. Accordingly, we remand the matter to the court to conduct a proper analysis of the claim. ¶ 90 In count VI, Workforce alleged that the promoters breached a “duty of disclosure and candor” because they did not produce all documents in their possession in the underlying brеach of contract action. Workforce alleged that such a duty is “imposed by Illinois’ discovery rules,” though it cited none specifically. It sought monetary damages as a remedy for the breach. On appeal and in the court below, Workforce argues that such a cause of action was recognized by our supreme court in Ostendorf v. International Harvester Co., 89 Ill. 2d 273 (1982). We disagree. ¶ 91 In Ostendorf, the plaintiff filed a petition for relief from judgment four years after the judgment was entered. ¶ 92 Workforce points to this holding as support for its contention that the supreme court recognizes an independent cause of action-remedied by a monetary damages award-for violating a duty of disclosure and candor imposed by the discovery rules. However, the context of the court‘s holding is clear: it did no such thing. Rather, it construed the phrase “fraudulent concealment” as it was used in the statute to determine whether a petition was timely filed. Ostendorf, 89 Ill. 2d at 282. Thus, we reject Workforce‘s interpretation of Ostendorf. Additionally, we find no further support for an independent cause of action arising out of an alleged breach of a duty of disclosure and candor. In the one case we found that mentioned such a violation, it wаs brought under a section of the Uniform Partnership Act and the remedy imposed was one prescribed by that statute. See Updike v. Wolf & Co., 175 Ill. App. 3d 408, 419 (1988). Thus, in essence, the claim asserted was a violation of a statute. Accordingly, count VI was properly dismissed. ¶ 93 Finally, in count VII, Workforce alleged a cause of action for “fraudulent concealment” based on the same failure to produce documents in the underlying lawsuit. Although this court recognizes a cause of action for fraud based on the concealment of a material fact, Workforce did not sufficiently allege such a cause of action here and the claim was properly dismissed. ¶ 94 Fraud may consist of “the intentional omission or concealment of a material fact under circumstances creating an opportunity and duty to speak.” (Internal quotation marks omitted.) Hassan v. Yusuf, 408 Ill. App. 3d 327, 345 (2011). In order to maintain such a claim, a plaintiff must establish the existence of a “special or fiduciary relationship, which would raise a duty to speak.” (Intеrnal quotation marks omitted.) Hassan, 408 Ill. App. 3d at 345. Here, Workforce failed to allege that it had a fiduciary relationship with the promoters in this context. It did sufficiently allege the existence of a fiduciary relationship with the promoters in count II arising out of its status as a creditor of Urban. However, no such allegations were made in count VII relative to its position as a plaintiff and the promoters’ positions as defendants. ¶ 95 CONCLUSION ¶ 96 For the foregoing reasons, we reverse the circuit court‘s order in the supplementary proceedings in appeal number 1-11-1410 and remand the matter for an evidentiary hearing. We also reverse the circuit court‘s dismissal of counts I, II, and V of the complaint in appeal number 1-11-3046. We affirm dismissal of counts VI and VII in that case. ¶ 97 No. 1-11-1410, Reversed and remanded. ¶ 98 No. 1-11-3046, Affirmed in part and reversed in part; cause remanded.