Personal Jurisdiction - Illinois Can Assert Personal Jurisdiction over Colorado Web Company

The case is captioned Innovative Garage Door Co. v. High Ranking Domains, LLC, 2012 IL App (2d) 120117.

The plaintiff purchased internet leads for its garage door business from a Colorado company, High Ranking Domains.

In 2010, High Ranking Domains cancelled the contract and began selling leads to another Illinois company.

Garage Door sued for breach of contract and High Ranking Domains moved to dismiss for lack of personal jurisdiction. The trial court granted the motion and Garage Door appealed.

The Second District Appellate Court reversed. It held that the contract with the Illinois company and the websites contacts with Illinois were sufficient to confer jurisdiction on the Illinois courts. The court comments "HRD can derive profit only when a consumer in one of those localities uses its services and HRD then provides the information to a business in the same location. Thus, its ability to do business is specifically location-oriented. Illinois is one such location." Because HRD sought to obtain leads from Illinois and sell them to an Illinois company, there were sufficient contacts for personal jurisdiction.

Edward X. Clinton, Jr.

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Court Rejects Broad Ranging Attack on Employment Arbitration Clause

Diggs v. CITIGROUP, INC., Dist. Court, ND Texas 2013 - Google Scholar:

This is an employment case.  Because the employee signed an arbitration clause, the court ordered the parties to proceed to arbitration.  Citigroup sought sanctions.  The employee argued that arbitration clauses were systematically unfair to employees.  The argument was based on a research study.

This looks like a test case, designed to attack arbitration clauses.

Edward X. Clinton, Jr.

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Illinois Supreme Court Answers Corporate Law Question

Pielet v. Pielet, Ill: Supreme Court 2012 - Google Scholar:

The Illinois Supreme Court has answered an important corporate law question.  Can you sue a dissolved corporation? The Illinois Business Corporation Act says "yes." The next question is: can you sue the corporation when the claim does not accrue until the corporation has dissolved? The Illinois Supreme Court has answered "No" to that question.

The court sets forth the statutory provision:

"¶ 31 The section of the Business Corporation Act of 1983 relevant to this appeal is section 12.80 (805 ILCS 5/12.80 (West 2006)), which provides:

"The dissolution of a corporation *** shall not take away nor impair any civil remedy available to or against such corporation, its directors, or shareholders, for any right or claim existing, or any liability incurred, prior to such dissolution if action or other proceeding thereon is commenced within five years after the date of such dissolution. Any such action or proceeding by or against the corporation may be prosecuted or defended by the corporation in its corporate name."

¶ 32 The first question we must resolve today is whether this provision permits a claim for breach of contract to be asserted against P.B.S. One, Inc., a dissolved corporation, where the alleged breach did not take place until after the corporation was dissolved.^[3]"

In this case, Pielet was owed certain funds by a corporation.  The corporation was dissolved and the liability was transferred.  Pielet could not sue the corporation because the obligation did not accrue until after the corporation dissolved.

Comment: from a policy standpoint the opinion makes sense.  It is not a good idea to allow a corporation to incur and obligation, dissolve, and leave the other party without a remedy.  Letting someone sue when the breach occurs after the corporation is dissolved is more problematic.  My concern with this case is that it may create a loophole for clever corporate planning.  A corporation might be able to use this case to avoid payment of an obligation.

Edward X. Clinton, Jr.

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Plaintiffs Lose Coverage Case Based Upon Limitations Period In Insurance Policy

Hoover v. Country Mutual Insurance Co., Ill: Appellate Court, 1st Dist., 3rd Div. 2012 - Google Scholar:

This case has a harsh result.  Plaintiffs home burned down, together with their homeowners insurance policy. They filed a lawsuit two years after the fire.  Their case was dismissed based upon the one-year limitation period in the insurance policy.  The court reasoned as follows:

"¶ 35 The suit limitation provision in the Hoovers' insurance policy provided that all suits against Country Mutual must be brought within one year of the date of the occurrence. In Cramer v. Insurance Exchange Agency, 174 Ill. 2d 513 (1996), our supreme court held that compliance with a suit limitation provision within a policy is a condition precedent to recovery under the policy. Cramer, 174 Ill. 2d at 530 (citing Schoonover v. American Family Insurance Co., 214 Ill. App. 3d 33, 44 (1991)). In Cramer, the insurance policy at issue had a one year suit limitation provision similar to the one in this case. The policy provision provided that a suit on the policy must be brought within one year of the loss. The court found that the plaintiff's suit was untimely because the plaintiff filed the complaint more than one year after the loss. Cramer, 174 Ill. 2d at 530. Here, the Hoovers' home was destroyed on January 12, 2008. The Hoovers filed their initial complaint against Country Mutual on March 3, 2010, more than two years after the explosion. Therefore, based on the one-year suit limitation provision in the policy, the Hoovers' breach of contract claim was untimely. Cramer, 174 Ill. 2d at 530."

Comment:  While this result is technically correct, this situation cries out for reform of insurance policies in Illinois.

Edward X. Clinton, Jr.

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Duty to Defend - Long Delay Before Insurer Is Notified Of Claim

Farmers Auto. Ins. Ass'n v. Burton, 967 NE 2d 329 - Ill: Appellate Court, 4th Dist. 2012 - Google Scholar:

In this case, Farmers was notified of an automobile accident two years after it occurred and only after the insured was convicted of leaving the scene of an accident. The accident (a hit and run accident allegedly) occurred on May 11, 2008. The policyholder did not notify the insurance company until July 8, 2010. That long delay was sufficient to absolve the insurance company of any duty to defend or indemnify.

The court explains:

"¶ 16 In its declaratory judgment action, Farmers alleged it had neither a duty to defend nor a duty to indemnify Burton as a result of the accident because Burton did not provide the company with prompt notice. The insurance policy in question contained a provision requiring the insured to provide prompt notice of any accident or loss. Our supreme court has stated: "A provision in an insurance liability policy requiring an insured to give the insurer notice of an accident is a reasonable policy requirement, one which affords the insurer an opportunity to make a timely and thorough investigation and to gather and preserve possible evidence." Barrington Consolidated High School v. American Insurance Co., 58 Ill.2d 278, 281, 319 N.E.2d 25, 27 (1974)."

The policyholder denied that he was involved in the accident. However, his arrest on charges (in September 2008) that he left the scene of an accident was sufficient to give him notice that he was involved in the accident. The court explains:

"While being arrested does not equate to an "accident or loss," Burton's arrest for the hit and run death of Timothy placed him on notice of both his potential criminal and civil liability for the accident which resulted in Timothy's death. Regardless of his claim he was not involved in this accident, he should have known he could be found legally responsible for Timothy's death. As a result, his insurance policy required him to provide prompt notice of the accident and loss. Burton's policy clearly stated: "We will pay damages for `bodily injury' or `property damage' for which any `insured' becomes legally responsible because of an auto accident." (Emphasis added.)"

Comment: failure to give prompt notice to an insurance company is an easy way to lose coverage. It can be a terrible mistake.

Edward X. Clinton, Jr.


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Illinois Supreme Court Rejects Account Stated Theory Where Invoices Were Disputed

PATRICK ENGINEERING, INC. v. City of Naperville, Ill: Supreme Court 2012 - Google Scholar:

An account stated can be an easy way to collect a bill.  To recover the creditor must show that the debtor and the creditor agreed that the invoices were correct.  The Illinois Supreme Court defined it in these terms:

"¶ 56 "An account stated has been defined as an agreement between parties who have had previous transactions that the account representing those transactions is true and that the balance stated is correct, together with a promise, express or implied, for the payment of such balance." W.E. Erickson Construction, Inc. v. Congress-Kenilworth Corp., 132 Ill. App. 3d 260, 267 (1985). Further, "an account stated cannot be created merely by furnishing an account unless the creditor or debtor specifically intends to establish a balance due or to agree upon a final settlement to date between the parties."Toth v. Mansell, 207 Ill. App. 3d 665, 672 (1990). That is, an account stated is "merely a final determination of the amount of an existing debt," and an action for an account stated is founded upon a promise to pay that debt, not the original promise to pay under the contract. Motive Parts Co. of America, Inc. v. Robinson, 53 Ill. App. 3d 935, 941 (1977)."

Here the plaintiff, an engineering firm, sued the City of Naperville under an account stated theory.  The Supreme Court held that the account stated count did not state a claim because the amount was disputed.  The discussion lists all of the flaws that can doom an account stated claim to failure.

"¶ 57 Because of the discrepancy between the amounts allegedly billed and the amounts actually billed, count IV does not present a true and correct statement of the account between the parties. Additionally, because the fifth and final invoice never provided to the City a final statement of account, indicating the total amount owed by the City, count IV does not, and cannot, allege that the City promised to pay that amount. Although count IV contains an allegation that the City never objected to the five invoices, and consequently the City acknowledged their correctness, count I contains allegations that the City "failed to approve the invoices" and "failed and refused to pay" for Patrick Engineering's services. The City never acquiesced to the invoices; there was simply no meeting of the minds. We affirm the trial court's decision to dismiss count IV."

Comment: an account stated is a great legal theory because the plaintiff avoids litigation about the performance of the plaintiff.  Where the account is disputed, the account stated theory will not work.  The account stated theory might have worked in this case if there was a final invoice listing the total amount and if the city did not object to the invoice.

Edward X. Clinton, Jr.

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The Account Stated - A Useful Legal Tool for Creditors

American Express Centurion Bank v. Gabay, 94 AD 3d 795 - NY: Appellate Div., 2nd Dept. 2012 - Google Scholar:


A creditor can often pursue payment on many theories. One of the most useful is the account stated. An account stated requires the creditor to show that there was a history of transactions and that the conduct of the debtor demonstrates that the debtor did not dispute the balance due. The advantage of account stated is that it avoids the defense to a breach of contract action that the goods or services were inferior. The other advantage is that a lawsuit based on an account stated can rely on the debtor's failure to challenge invoices as proof that the invoices stated the correct amounts.


This is some language from a New York case that sets out the requirements for an account stated:


"An account stated is an agreement between parties to an account based upon prior transactions between them with respect to the correctness of the account items and balance due" (Fleetwood Agency, Inc. v Verde Elec. Corp., 85 AD3d 850, 851 [2011][internal quotation marks omitted]). "An agreement may be implied where a defendant retains bills without objecting to them within a reasonable period of time, or makes partial payment on the account" (American Express Centurion Bank v Cutler, 81 AD3d 761, 762 [2011])."


Comment: if you have series of uncontested invoices and no real defense to payment the account stated is often the legal theory of choice. However, if the debtor complained promptly or contested the invoices, the account stated theory will not work. The best alternative is a breach of contract claim.
Edward X. Clinton, Jr.

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