FOURTH DIVISION
September 29, 2006
No. 1-05-0367
PHILIP PULEO, MALEX CORPORATION, ) Appeal from the
AMY DERKSEN, CHANI DERUS, ROBERT ) Circuit Court of
FILICZKOWSKI, d/b/a Robert ) Cook County,
Filiczkowski Design Services, )
YSPEX, INC., JACOB LESGOLD, )
VAN RATSAVONGSAY, AND BRYAN WEISS )
d/b/a Gearhouse Studios, )
)
Plaintiffs-Appellants, )
)
v. )
)
MICHAEL TOPEL, Individually and )
d/b/a Thinktank, LLC, and )
THINKTANK, LLC, an Illinois )
Limited Liability Company in )
Dissolution, ) Honorable
) Ronald F. Bartkowicz
Defendants-Appellees. ) Judge Presiding.
PRESIDING JUSTICE QUINN delivered the opinion of the court:
Plaintiffs Philip Puleo, Malex Corporation, Amy Derksen,
Chani Derus, Robert Filiczkowski, YSPEX, Inc., Jacob Lesgold, Van
Ratsavongsay, and Bryan Weiss appeal the order of the circuit
court dismissing their claims against defendant Michael Topel
1
(Topel). On appeal, plaintiffs contend that the circuit court
erred by finding that Topel could not be held personally liable
1
The record shows that plaintiff Jacob Lesgold pursued a
separate summary judgment action against Topel.
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for obligations incurred on behalf of defendant Thinktank, LLC
(Thinktank), after the company was involuntary dissolved.
The record shows that effective May 30, 2002, Thinktank, a
limited liability company (LLC) primarily involved in web design
and web marketing, was involuntarily dissolved by the Illinois
Secretary of State. The dissolution was due to Thinktank's
failure to file its 2001 annual report as required by the
Illinois Limited Liability Company Act (the Act) (805 ILCS
180/35-25(1) (West 2004)).
Thereafter, on December 2, 2002, plaintiffs, independent
contractors hired by Topel, filed a complaint against Topel and
Thinktank in which they alleged breach of contract, unjust
enrichment, and claims under the account stated theory. Those
claims stemmed from plaintiffs' contention that Topel, who
plaintiffs alleged was the sole manager and owner of Thinktank,
knew or should have known of Thinktank's involuntary dissolution,
but nonetheless continued to conduct business as Thinktank from
May 30, 2002, through the end of August 2002. They further
contended that on or about August 30, 2002, Topel informed
Thinktank employees and independent contractors, including
plaintiffs, that the company was ceasing operations and that
their services were no longer needed. Thinktank then failed to
pay plaintiffs for work they had performed.
On or about April 4, 2003, Thinktank and Topel served their
answer to the complaint on plaintiffs. In response, plaintiffs
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filed a motion for summary judgment on April 25, 2003. In that
motion, plaintiffs argued that the only allegations that
Thinktank and Topel denied in their answer pertained to Lesgold.
As such, plaintiffs contended that there was no genuine issue of
material fact and, thus, they were entitled to judgment as a
matter of law. Subsequently, on June 6, 2003, plaintiffs filed a
request to admit.
Although neither Thinktank nor Topel filed a response to
plaintiffs' motion for summary judgment, they filed a response to
plaintiffs' request to admit. Therein, defendants denied that
Topel, as sole manager and owner of Thinktank, was in a position
to know that Thinktank had been involuntarily dissolved by the
Illinois Secretary of State or that the company was operating
while dissolved during the period beginning on May 30, 2002.
On September 2, 2003, the circuit granted plaintiffs' motion
for judgment on the pleadings against Thinktank. Thereafter, on
October 16, 2003, plaintiffs filed a separate motion for summary
2
judgment against Topel. Relying on Gonnella Banking Co. v.
Clara's Pasta Di Casa, Ltd., 337 Ill. App. 3d 385 (2003),
plaintiffs contended that Topel, as a principal of Thinktank, an
LLC, had a legal status similar to a shareholder or director of a
corporation, who courts have found liable for a dissolved
2
Plaintiff Jacob Lesgold filed a separate motion for summary
judgment against Thinktank on October 16, 2003.
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No. 1-05-0367
corporation's debts. Thus, plaintiffs argued that Topel was
personally liable for Thinktank's debts. Topel did not file a
response, and plaintiffs subsequently argued that Topel's failure
to respond should be treated as a failure to contest their motion
and that judgment should be entered for them.
On March 25, 2004, the circuit court denied plaintiffs'
motion for summary judgment against Topel. Subsequently,
plaintiffs filed a motion to reconsider on July 1, 2004, which
the circuit court denied on August 23, 2004.
Plaintiffs then filed a motion for clarification on
September 13, 2004, in order to obtain the circuit court's basis
for denying their motion to reconsider. On October 12, 2004, the
circuit court granted plaintiffs' motion for clarification. In
doing so, the circuit court acknowledged that Topel continued to
do business as Thinktank after its dissolution and that the
contractual obligations at issue were incurred after the
dissolution. However, the court then stated:
"This court bases its decision on its reading
of the Illinois Limited Liability Company
Act. Specifically, this court reads 805 ILCS
180/10-10 in concert with 805 ILCS 180/35-7
as well as the legislative notes to 805 ILCS
180/10-10 to determine that the Illinois
Legislature did not intend to hold a member
of a Limited Liability Company liable for
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No. 1-05-0367
debts incurred after the Limited Liability
Company had been involuntarily dissolved."
Finally, on January 6, 2005, the circuit court entered a final
order dismissing all of plaintiffs' claims against Topel with
prejudice. The court stated in pertinent part:
"Based upon the Court's prior finding that
the Illinois Legislature did not intend to
hold a member of a Limited Liability Company
liable for debts incurred after the Limited
Liability Company had been involuntarily
dissolved, the Court finds that all of
Plaintiffs' claims against Defendant Topel
within the Complaint fail as a matter of law,
as they are premised upon Defendant Topel's
alleged personal liability for obligations
incurred in the name of Thinktank LLC after
it had been involuntarily dissolved by the
Illinois Secretary of State."
Plaintiffs now appeal that order.
We initially note that Topel has not filed a brief.
Nonetheless, we may proceed under the principles set forth in
First Capitol Mortgage Corp. v. Talandis Construction Corp., 63
Ill. 2d 128, 133 (1976).
Our review of a dismissal of a complaint on its pleadings is
de novo. Keck & Associates, P.C. v. Vasey, 359 Ill. App. 3d 566,
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No. 1-05-0367
568 (2005). In doing so, we accept all well-pleaded allegations
in the complaint as true. Board of Managers of the Village
Centre Condominium Ass'n, Inc. v. Wilmette Partners, 198 Ill. 2d
132, 134 (2001).
In this court, plaintiffs contend that the circuit court
erred in dismissing their claims against Topel. In making that
argument, plaintiffs acknowledge that the issue as to whether a
member or manager of an LLC may be held personally liable for
obligations incurred by an involuntarily dissolved LLC appears to
be one of first impression under the Act. That said, plaintiffs
assert that it has long been the law in Illinois that an officer
or director of a dissolved corporation has no authority to
exercise corporate powers and, thus is personally liable for any
debts he incurs on behalf of the corporation after its
dissolution. Gonnella Baking Co., 337 Ill. App. 3d at 386;
Cardem, Inc. v. Marketron International, Ltd., 322 Ill. App. 3d
131 (2001); Chicago Title & Trust Co. v. Brooklyn Bagel Boys,
Inc., 222 Ill. App. 3d 413 (1991). Plaintiffs reason that Topel,
as managing member of Thinktank, similarly should be held liable
for debts the company incurred after its dissolution.
We first look to the provisions of the Act as they provided
the trial court its basis for its ruling. Katris v. Carroll, 362
Ill. App. 3d 1140, 1144 (2005) (in reviewing a circuit court's
summary judgment, this court looked to the applicable provisions
of the Act to determine the fiduciary duties owed by managers and
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No. 1-05-0367
members of an LLC). When reviewing a statute, the cardinal rule
is to ascertain and give effect to the intent of the legislature.
Carroll, 362 Ill. App. 3d at 1145. The plain meaning of the
language in the statute provides the best indication of
legislative intent. Carroll, 362 Ill. App. 3d at 1145. Where
the statutory language is clear, the court must give it effect
without resorting to other aids for construction. Solich v.
George & Anna Portes Cancer Prevention Center of Chicago, Inc.,
158 Ill. 2d 76, 81 (1994). Further, when a statute is amended,
it is presumed that the legislature meant to change the law as it
formerly existed. Department of Transportation v. Drury
Displays, Inc., 327 Ill App. 3d 881, 888 (2002), citing Scribner
v. Sachs, 18 Ill. 2d 400, 411 (1960).
As stated, the circuit court relied on sections 10-10 and
35-7 of the Act in making its ruling. Section 10-10 provides:
"(a) Except as otherwise provided in
subsection (d) of this Section, the debts,
obligations, and liabilities of a limited
liability company, whether arising in
contract, tort, or otherwise, are solely the
debts, obligations, and liabilities of the
company. A member or manager is not
personally liable for a debt, obligation, or
liability of the company solely by reason of
being or acting as a member or manager.
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No. 1-05-0367
(b) (Blank)
(c) The failure of a limited liability
company to observe the usual company
formalities or requirements relating to the
exercise of its company powers or management
of its business is not a ground for imposing
personal liability on the members or managers
for liabilities of the company.
(d) All or specified members of a
limited liability company are liable in their
capacity as members for all or specified
debts, obligations, or liabilities of the
company if:
(1) a provision to that effect is
contained in the articles of organization;
and
(2) a member so liable has
consented in writing to the adoption of
the provision or to be bound by the
provision." 805 ILCS 180/10-10 (West
2004).
Section 35-7 provides:
"(a) A limited liability company is
bound by a member or manager's act after
dissolution that:
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No. 1-05-0367
(1) is appropriate for winding up
the company's business; or
(2) would have bound the company
under Section 13-5 before dissolution, if
the other party to the transaction did not
have notice of the dissolution.
(b) A member or manager who, with
knowledge of the dissolution, subjects a
limited liability company to liability by an
act that is not appropriate for winding up
the company's business is liable to the
company for any damage caused to the company
arising from the liability." 805 ILCS
180/35-7 (West 2004).
Section 10-10 clearly indicates that a member or manager of
an LLC is not personally liable for debts the company incurs
unless each of the provisions in subsection (d) is met. In this
case, plaintiffs cannot establish either of the provisions in
subsection (d). They have not provided this court with
Thinktank's articles of organization, much less a provision
establishing Topel's personal liability, nor have they provided
this court with Topel's written adoption of such a provision. As
such, under the express language of the Act, plaintiffs cannot
establish Topel's personal liability for debts that Thinktank
incurred after its dissolution.
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No. 1-05-0367
As plaintiffs contend, similar to the Business Corporation
Act (BCA) (see 805 ILCS 5/12.30 (West 2004)), the Act explicitly
provides that an LLC continues after dissolution only for the
purpose of winding up its business (805 ILCS 180/35-3 (West
2004)). However, as plaintiffs concede in their brief, the Act
does not contain a provision similar to section 3.20 of the
Business Corporation Act, which provides:
"All persons who assume to exercise corporate
powers without authority so to do shall be
jointly and severally liable for all debts
and liabilities incurred or arising as a
result thereof." 805 ILCS 5/3.20 (West
2004).
Moreover, we observe that section 35-7 of the Act explicitly
provides that a member or manager of an LLC who, with knowledge
of the dissolution, exceeds the scope of his authority during the
wrapping up of a company's business is liable to the company for
any damages arising from the liability. 805 ILCS 180/35-7(b)
(West 2004). The Act, however, contains no language concerning a
member or manager's liability to a third party. That silence
speaks volumes when viewed in conjunction with the legislature's
amendment of the former version of section 10-10.
Prior to its amendment, section 10-10 provided:
"(a) A member of a limited liability
company shall be personally liable for any
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No. 1-05-0367
act, debt, obligation, or liability of the
limited liability company or another member
or manager to the extent that a shareholder
of an Illinois business corporation is liable
in analogous circumstances under Illinois
law.
(b) A manager of a limited liability
company shall be personally liable for any
act, debt, obligation, or liability of the
limited liability company or another manager
or member to the extent that a director of an
Illinois business corporation is liable in
analogous circumstances under Illinois law."
805 ILCS 180/10-10 (West 1996).
In 1998, however, the legislature amended section 10-10 and
in doing so removed the above language which explicitly provided
that a member or manager of an LLC could be held personally
liable for his or her own actions or for the actions of the LLC
to the same extent as a shareholder or director of a corporation
could be held personally liable. As we have not found any
legislative commentary regarding that amendment, we presume that
by removing the noted statutory language, the legislature meant
to shield a member or manager of an LLC from personal liability.
Drury Displays, Inc., 327 Ill App. 3d at 888 ("When a statute is
amended, it is presumed that the legislature intended to change
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the law as it formerly existed").
Nonetheless, plaintiffs ask this court to disregard the 1998
amendment and to imply a provision into the Act similar to
section 3.20 of the Business Corporation Act. We cannot do so.
This court recently rejected a similar request in In re
Application of County Collector, 356 Ill. App. 3d 668, 673-674
(2005). There, petitioner Dream Sites, LLC, purchased property
at an annual tax sale as a result of respondent Grace Apostolic
Church's delinquent general real estate taxes. Petitioner then
filed a petition for issuance of a tax deed and lodged a "Notice
of expiration of period of redemption" pursuant to section 22-10
of the Property Tax Code (Code) (35 ILCS 200/22-10 (West 2002))
which provided in pertinent part "[i]n counties with 3,000,000 or
more inhabitants, the notice shall also state the address, room
number, and time at which the hearing is set." The petition,
however, omitted a street address and merely stated that the
hearing for issuance of the tax deed would be held in "Room 1704,
Richard J. Daley Center in Chicago, Illinois." Respondent filed
an objection arguing that the notice was insufficient due to the
lack of a street address. The circuit court denied the motion
and entered an order granting petitioner's petition.
On appeal, respondent argued that the circuit court's ruling
was against the manifest weight of the evidence because it
ignored the plain language of section 22-10 of the Code.
Conversely, petitioner argued that despite the language of
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section 22-10, this court should find that "Daley Center,
Chicago, Illinois" was an adequate address for purposes of the
petition. This court, however, concluded that by amending
section 22-10 to require that a notice provide an address and not
merely a building name, the legislature intended a notice to
include a street address to denote the physical location of a
building. As such, this court reversed the circuit court's
ruling and remanded the cause for further proceedings.
In the case at bar, we similarly decline plaintiffs' request
to ignore the statutory language. When the legislature amended
section 10-10 (805 ILCS 180/10-10 (West 2004)), it clearly
removed the provision that allowed a member or manager of an LLC
to be held personally liable in the same manner as provided in
section 3.20 of the Business Corporation Act. Thus, the Act
does not provide for a member or manager's personal liability to
a third party for an LLC's debts and liabilities, and no rule of
construction authorizes this court to declare that the
legislature did not mean what the plain language of the statute
imports. Solich, 158 Ill. 2d at 83.
We, therefore, find that the circuit court did not err in
concluding that the Act did not permit it to find Topel
personally liable to plaintiffs for Thinktank's debts and
liabilities. We agree with plaintiff that the circuit court's
ruling does not provide an equitable result. However, the
circuit court, like this court, was bound by the statutory
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language.
Accordingly, we affirm the judgment of the circuit court of
Cook County.
Affirmed.
CAMPBELL and MURPHY, JJ., concur.
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