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Gonnella Baking Co. v. Clara's Pasta Di Casa, Ltd.
State: Illinois
Court: 1st District Appellate
Docket No: 1-01-3039 Rel
Case Date: 03/04/2003

SECOND DIVISION
March 4, 2003



No. 1-01-3039
   
GONNELLA BAKING COMPANY, an Illinois
Corporation,

          Plaintiff-Appellant,
v.

CLARA'S PASTA DI CASA, LTD., an Illinois
Corporation,

          Defendant

(Clara Melchiorre,

          Defendant-Appellee).

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Appeal from the
Circuit Court of
Cook County


00 M1 160394


Honorable
James J. Jorzak,
Judge Presiding


PRESIDING JUSTICE McBRIDE delivered the opinion of the court:

Plaintiff Gonnella Baking Company filed suit againstdefendants Clara's Pasta di Casa, Ltd., an Illinois corporation(count I), and Clara Melchiorre, the president of the corporation(count II), for failing to pay for goods delivered to defendants.The trial court granted Melchiorre's motion to dismiss count IIpursuant to section 2-619(a)(9) of the Code of Civil Procedure(Code)(735 ILCS 5/2-619(a)(9)(West 2000)), which alleged thatMelchiorre was not personally liable for the corporation's debts.On appeal, plaintiff argues the trial court erred in dismissingcount II because the motion to dismiss did not establish that theclaim was defeated by affirmative matter. We reverse the circuitcourt's judgment and remand the cause for further proceedings.

Background

Clara Melchiorre was the president and secretary of Clara'sPasta di Casa (the corporation), an Illinois corporation. OnDecember 1, 1997, the corporation was involuntarily dissolved forfailing to file an annual report and pay an annual franchise tax. During 1998 and 1999, Melchiorre ordered bread and bakery goodsfrom plaintiff on behalf of the corporation. In response toMelchiorre's oral request, plaintiff delivered the bread andbakery goods to the corporation. Throughout 1998 and 1999,plaintiff received partial payments for the delivered goods;however, as of May 1, 1999, the corporation's remaining balanceowed to plaintiff was $12,895.31. Despite plaintiff's repeatedrequests for payment, neither Melchiorre nor the corporation paidany portion of the outstanding balance.

In January 2001, plaintiff filed suit against thecorporation and Melchiorre seeking damages in the amount of$12,895 plus costs for breach of contract. In count I of thecomplaint, plaintiff alleged the corporation breached an oralagreement for the sale of goods by failing to pay the agreed sumof $12,895. In count II, plaintiff alleged Melchiorre waspersonally liable for the corporation's debt because she orderedthe goods purporting to be an agent of the corporation. Insupport of the complaint, plaintiff attached copies of thecorporation's account statement.

Melchiorre filed a motion to dismiss count I under section2-615 and count II under section 2-619(a)(9) of the Code. 735ILCS 5/2-615, 2-619(a)(9) (West 2000). Melchiorre alleged thatthe action against the corporation should be dismissed forfailure to state a cause of action because the complaint did notsufficiently allege an oral contract between the parties.Melchiorre further alleged the action against her personally wasbarred by an affirmative matter, because although the corporationwas dissolved at the time of the disputed transactions, it waslater reinstated pursuant to section 12.45 of the IllinoisBusiness Corporation Act of 1983. 805 ILCS 5/12.45 (West 2000). Accordingly, the corporation is deemed to have continued withoutinterruption, and Melchiorre could not be held personally liablefor the corporation's debts.

In lieu of a response to Melchiorre's motion to dismiss,appellant filed a motion for summary judgment with a supportingaffidavit. The trial court continued the summary judgment motionpending a decision on Melchiorre's motion to dismiss.

Melchiorre later amended her motion to dismiss to includeallegations that she did not know the corporation had beeninvoluntarily dissolved in 1997. Specifically, she allegedneither her attorney, who was the registered agent for thecorporation, nor the Secretary of State notified her personallythat the corporation had been dissolved. In support of heramended motion, Melchiorre filed an affidavit stating she hadpersonal knowledge of the facts alleged in the motion and thatthe allegations were true.

The trial court dismissed the count against the corporationpursuant to section 2-615, with leave to amend the complaint.However, rather than amending count I, plaintiff voluntarilydismissed with prejudice the action against the corporation. Thetrial court also dismissed count II against Melchiorre pursuantto section 2-619(a)(9); plaintiff now appeals this determination.

Standard of Review

A section 2-619 motion to dismiss raises certain defects ordefenses and questions whether a defendant is entitled tojudgment as a matter of law. 735 ILCS 5/2-619 (West 2000). Whenreviewing a motion to dismiss, this court must accept all well-pleaded facts as true (In re Parentage of M.J., 325 Ill. App. 3d826, 829 (2001)) and view them in the light most favorable to theplaintiff (Summers v. Village of Durand, 267 Ill. App. 3d 767,769 (1994)). The court may consider all facts presented in thepleadings, affidavits, and depositions contained in the record.Arriola v. Time Insurance Co., 296 Ill. App. 3d 303, 306 (1998).On appeal, the standard of review for a motion to dismiss is denovo, because the resolution hinges on a question of law. PrimeLeasing, Inc. v. Kendig, 332 Ill. App. 3d 300, 307 (2002).

Sufficiency of the Record on Appeal

Before deciding the merits of the case, we must addressMelchiorre's motion to dismiss this appeal, which was taken withthe case. Melchiorre argues dismissal is appropriate becauseplaintiff has failed to provide transcripts of the trial courthearing on the section 2-619 motion to dismiss. We disagree.This appeal confronts solely a question of law, that beingwhether the pleadings, affidavits, and other documents on recordwarranted a dismissal pursuant to section 2-619. See Arriola,296 Ill. App. 3d at 306. As explained above, when reviewing aquestion of law the standard of review is de novo. In otherwords, this court is in the same position as the trial court,reviewing only the record before it. Because we are not requiredto defer to the trial court's reasoning on de novo review, thetranscripts of the hearings on the motion to dismiss areunnecessary. Nikolic v. Seidenberg, 242 Ill. App. 3d 96, 99(1993).

Melchiorre mistakenly relies on a line of cases that states that, when reviewing a motion to vacate a judgment, thetranscripts of the proceedings must be provided to the reviewingcourt on appeal or the court will presume the trial court'sdecision was correct. Bank & Trust Co. v. Line Pilot Bungee,Inc., 323 Ill. App. 3d 412, 416 (2001), citing Farm Credit Bankof St. Louis v. Schwarm, 251 Ill. App. 3d 205 (1993). Thesecases do not involve a de novo standard of review and aretherefore inapposite. Here, we are taking a fresh look at thepleadings on record. See Board of Education of CommunityConsolidated School District No. 54 v. Spangler, 328 Ill. App. 3d747, 757 (2002). Therefore, because all necessary pleadings andsupporting documents have been filed with this court, we find therecord is adequate to decide this appeal and deny Melchiorre'smotion to dismiss.

Proper Dismissal under Section 2-619(a)(9)

Section 2-619(a)(9) provides grounds to dismiss a case ifthe claim asserted against Melchiorre is barred by otheraffirmative matter avoiding the legal effect of or defeating theclaim. 735 ILCS 5/2-619(a)(9) (West 2000).

The relevant issue is whether Melchiorre's motion to dismisssufficiently established that the claim against her was barred byan affirmative matter. In this case, Melchiorre alleged shecannot be held personally liable for the debt incurred during thecorporation's period of dissolution, because when the corporationwas reinstated, she was absolved of all liability under section12.45(d) of the Illinois Business Corporation Act of 1983. 805ILCS 5/12.45(d) (West 2000).

At the relevant time, section 12.45(d) provided in part:

"Upon the issuance of the certificate ofreinstatement, the corporate existence shallbe deemed to have continued withoutinterruption from the date of the issuance ofthe certificate of dissolution, and thecorporation shall stand revived with suchpowers, duties and obligations as if it hadnot been dissolved; and all acts andproceedings of its officers, directors andshareholders, acting or purporting to act assuch, which would have been legal and validbut for such dissolution, shall standratified and confirmed." 805 ILCS 5/12.45(d)(West 2000).

However, Illinois courts have greatly limited theapplication of section 12.45(d) in cases involving the personalliability of officers acting while corporations are dissolved. In Cardem, Inc. v. Marketron International, Ltd., 322 Ill. App.3d 131, 135-36 (2001), the court held that corporate officers whoconducted purported corporate business during a period ofdissolution are not absolved of personal liability incurredduring that time. E.g., In re Estate of Plepel, 115 Ill. App. 3d803, 806 (1983); Chicago Title & Trust Co. v. Brooklyn BagelBoys, Inc., 222 Ill. App. 3d 413, 420 (1991). "[S]ection12.45(d) does not transform individual liability into corporateliability or create a legal fiction contrary to the true natureof events." Chicago Title & Trust, 222 Ill. App. 3d at 420.

In order to hold an officer personally liable for debtsassumed on behalf of a dissolved corporation, the courts haverequired evidence showing that the defendant knew, or because ofhis position should have known, about the involuntarydissolution. Steve's Equipment Service, Inc. v. Riebrandt, 121Ill. App. 3d 66, 70 (1984); Chicago Title & Trust, 222 Ill. App.3d at 420; H&H Press, Inc. v. Axelrod, 265 Ill. App. 3d 670, 680(1994).

Here, Melchiorre's motion to dismiss, supported by heraffidavit, alleges that she did not know the corporation had beendissolved because her attorney did not inform her of thedissolution, nor did she receive notice from the Secretary ofState. While this allegation, taken as true, may defeat a claimof actual knowledge, it leaves open the question of whetherMelchiorre should have known of the dissolution due to herposition as president and secretary of the corporation. Othercourts have found that corporation presidents are in a positionwhere they should know whether their corporation has beendissolved. See Affiliated Capital Corp. v. Buck, 886 F. Supp.647, 649 (N.D. Ill. 1995). The allegations of the motion todismiss did not entirely defeat plaintiff's claim and thereforefailed to establish that Melchiorre was entitled to judgment as amatter of law. Accordingly, the trial court erred in grantingthe motion to dismiss.

In seeking to uphold the dismissal, Melchiorre reliesheavily upon H&H Press, Inc. v. Axelrod, 265 Ill. App. 3d 670,680 (1994). There, this court reversed a judgment holding thedefendant, Amy Kulek, personally liable for expenses incurred onbehalf of a dissolved corporation. We found that the evidencepresented at trial failed to establish that she either knew, orbecause of her position should have known, of the corporation'sdissolution. As in this case, Kulek stated that she did not knowthe corporation had been dissolved and had not been notified ofthe dissolution by the Secretary of State. However, unlike thecase at bar, Kulek was not the president of the corporation. Infact, the evidence showed that she was not an actual officer, butwas deemed a "de facto" vice-president based on herrepresentations to customers and suppliers. Because of thisfactual dissimilarity, H&H Press, Inc. does not supportMelchiorre's argument that, as a matter of law, she cannot beheld liable for the debt to plaintiff.

Accordingly, the judgment of the circuit court is reversed,and the cause is remanded for further proceedings.

Reversed; cause remanded.

CAHILL and BURKE, JJ., concur.

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