please the court my name is matthew o'hara and i represent the defendant p b s one the issue before the court in this case is a question of statutory construction the statute issue section twelve point eight zero of the business corporation act addresses what rights claims and liabilities survive the dissolution of a corporation and if so for how long the rule of law that we ask the court to adopt in this case is that the survival statute in the business corporation act protects only those claims that have accrued and only those rights that are fixed in ascertainable at the time of a corporation's dissolution the rule of law that we urge the court to adopt here has the virtue of continuing to provide certain to practitioners who are advising corporations and the parties to deal with corporations here if we look at the record in our case we see that the problem is not the statute or our reading of the statute as the plaintiff contends but rather it's the contract that plane of saws been d'arthur pilot negotiated back in one thousand nine hundred six that prevents him from  bringing his claim against p b s one of the if we look at the record you can see a very clear example that tells you if you are bargaining a long term agreement with the corporation you have to take into effect the possibility that it may dissolve it may go bankrupt it may cease to exist and here if we compare our three pilots contract with a contract that  one of his sons robert pilot had with the very same corporation we can see the difference robert pilot like arthur pilot sold his interest in piloting he did so in early one nine hundred eighty eight and he obtained a consulting agreement as well as consideration for the sale of his stock in the company what he had though was a contract with installment payments over a fixed period a fixed term of years and he also required the corporation to post collateral as security for the performance of the corporation's obligation in contrast arthur pilot contracted issue in this case did not have a fixed term of years for his consulting agreement did not have a fixed amount and there was no collateral that was required to secure the performance of the corporation's obligations there was nothing like an annuity and so what we have then is a situation that illustrates that robert pilots rights were protected on the under the survival statute but arthur pilots were not uniformly the cases construing section twelve point eight  agree on two broad principles the first is that the public policy behind the statute is to set a fixed point in time when the corporation ceases to exist and the transaction of business with by and with that corporation terminates secondly the cases uniformly interpret the language issue in this case which is any right or claim existing or any liability incurred referred to tangible fixed and ascertainable interests not contingent ones the statutory language is what animates the public policy behind the statute it creates certainty for the dissolving corporation and its shareholders and it creates certainty for creditors and other counter parties of the corporation that's dissolving it's important to note that the statute works both in favor of a corporation and against a corporation or are you saying it's as simple  and or collateral well i would say that when a counter party with a corporation enters into a contract it is that simple and your honor yes if the party that has the corporate  contract with the corporation has a contract that provides future installment payments with conditions precedence of payment on a periodic basis that claim is not fixed and ascertain and under the law as it stood in illinois for a very long time you would know that that would be a barrier to your claim should the corporation dissolved and therefore it would be in your interest to negotiate a contract that had a fixed term or a fixed amount or to otherwise require security for the performance of the corporation's obligations as i was saying the statute is a very balanced framework so we know for example if you're a creditor of a corporation you understand you have to have an accrued cause of action or possess a fixed and ascertain right or else your claim is barred if the corporation should dissolves by the same token claims by a court and claims by a corporation are also barred if they are not accru before the time of dissolution and we see that in the henderson smith case decided by the appellate court as well as the seven circuit opinions construing our survival statute in the show recent canadian a cases and under your interpretation of crude than would that mean that only of the corporation had failed to pay an annual installment and it was in default that would be in a crude claim well certainly your honor in this case if at the time of p b s one's dissolution there was an amount due to arthur pilot that had not been paid he would have had an accrued claim he would have had accrued cause of action he would have had all of the elements of the contract claim including damages here of course when p b s one dissolved mr pilot did not have an accrued claim the contract had not been breached and mr pilot had not been damaged see the lights already on but i do have a question i know we're talking about section twelve point eight zero but this we need to look at twelve point seven five on the business corporation their own claims against salt corporations as a factor in toronto it says that all but not really your honor and  i think if the court were to consider that it would support our view our construction of twelve point eight zero and that's because twelve point seven five addresses known claims and twelve point eight zero does not simply address claims that  existing claims and so there's a procedure in twelve point seven five of the p c a that says here's what happens with known claims and then in twelve point eight zero the requirement is that the claim be existing and a claim might exist without being known so in a sense twelve point eight zero is a more broader framework for the preservation of claims and we know this in say in the products liability context where a corporation may be dissolving and a person may have already been injured using equipment that was manufactured by that corporation and so that person that tort claimant may already have an accrued claim but it's not known to the corporation because it hasn't been filed yet the right briefly your honour's mentioned four things that tell us that our reading of the statute is consistent with legislators intent we know that the cases have construed the statute this way for many years yet the legislature has not seen fit to change the key language issue here since one thousand nine hundred forty one and really not in any substantive way since eight hundred seventy one we know that the model of business corporation act used to follow our statute pennsylvania and minnesota and we know that our reading of the statute is consistent with the dictionary definition of the word it existing as contract contrasted with the dictionary definition of the word contingent we know that existing the existing rights and contingent rights are very different we know that in other contexts such such as the law concerning who was a creditor tax law and property law  with that your honour's i would ask that you reverse the judgment of the appellate court and answer judgment in favor of p b s one thank you thank you of the contract obligation the purchase of a limited partnership interest is no different than the purchase of a share of stock when you purchase a share of stock you know with certainty that you are gaining just the equity interest in the corporation not the obligations of the corporation certainly not the obligations of the party that owned that stock before you buy the same token a limited partnership interest is not a vehicle of transfer whereby an obligation from one party moves to another by that limited partnership interest a limited partnership interest is a specific and defined right with specific and defined limited liability now in this instance the court went beyond the plain meaning of the document and held that it was reasonable to conclude that a liability of p b s one somehow became an asset attached to an asset of p b s one that it subsequently sold the national cheerio for five point five million dollars can i ask you a couple of questions i want to make sure in my facts right now just one and then if you could just comment before you get into what you're getting into how if at all these facts would  apply to the situation before it was national material just a paper restructuring a previous one that is not not specifically in one instance it was because the the asset that s one owned was was sold to national material but p b s one always remained a viable corporation for another three and a half years until it was administratively dissolved now granted it wasn't doing anything during that period but it was  sentially a holding company that could have been used to any time for similar investments if if the parties who control it would have chosen to do so ok the pilot lp limited consent agreement clearly what was assigned was one hundred percent of a limited partnership interest based upon the pilot lp partnership agreement what was assumed was one hundred percent of a limited partnership interest again based upon the partnership agreement the consent and that document was given by the general partner pursuant to the limited partnership agreement specifically article sixteen dealing with the transfer of a limited partnership interest nothing else was accomplished on that document no other asset was transferred no other obligation is transferred just the limited partnership interest there is some with this what is that something her well the only obligation that attaches to a limited partnership interest is the obligations either set forth by statute or set forth in the limited partnership agreement so yes a limited partnership a limited partner ship in trust does carry with it obligations that's it and that's what was applied dealt with here in this document if anything else was going to be transferred it needed to be specifically  fact you were to take the argument to the plaintiff in this case that that this consulting agreement somehow became part of this word obligation you would have also have to assume that the millions of dollars of other obligations that the pla also argues that he vs one assume during the original transaction somehow transferred that goes way beyond the into the content of this document certainly is not covered by the worth use the word obligation here obligation is specifically the obligation of a limited partner pursuant to statute of pursuant to the limit of partnership agreement there's simply no other way to read this document and based upon this clear not ambiguous language continuation of p b s one doing so all of the court held essentially that per se successor liability of curves when there are common officers and common directors held that the specific purpose was immaterial and the whether or not adequate consideration was paid was not relevant now this court address the issue of success or liability in  and at that time discord determined that there was not the commonality of ownership so that they did not need to address the the exceptions to the rule there are exceptions to all the general rule obviously is that someone who purchases the assets of a corporation is not the corporate legal successor of that entity the exceptions deal with other issues and in this instance the one exception the court dealt with was the mere continuation exception now inferred in this court look to a maryland case baltimore luggage to give the rationale behind the mere a continuation exception and there it was determined that you look to the transaction to see if the specific reason for the transaction was to place assets out of the reach of creditors now in this instance it's clear that national material paid five point five million dollars for the limited partnership interest and the record is clear that that was deemed to be reasonable equivalent compensation it is clear from the record that the transaction took place for specific legitimate business purposes there is no proof in the record that assets were transferred to hide them from creditors the on contradicted evidence in the record meet and shows that adequate consideration was paid it was done for a business purpose if  ruling is allowed to stand on challenge corporate successor liability will tach merely upon the showing of common officers common owners and the specific purpose whether or not consideration is paid or any other relevant factors will no longer be part of the equation and then illinois will stand alone on this issue and we believe that national betrayal national chair holding are entitled to judgment on this matter and if in fact the court has does not reach that conclusion today we would ask that if you reminded the court for trial on those specific issues counsel for the happily meaning of the phrase any right or claim existing or liability incurred i also agree that the statute is largely remain unchanged since eight hundred seventy one and i agree that there's a balance that supposed to be struck that balance is a balance between the rights of creditors to be able to go after corporation for obligations that it did assume but there may not have been a breach until afterwards and the right of corporations to some certainty when they dissolve we have a fundamental very clear on page one hundred twelve one hundred thirteen of that decision that the court sad when was the liability incurred and mind you the phrase right or claim existing was what was added later liability incurred is what's been in the statute from the beginning what the courts say the liability in this case under a surety bond was created prior to the point of the receiver on the execution and delivery of the bond here same thing when p b s one assumes that obligation it incurred the liability when was the breach the cause of action accrued on that liability when there was a breach of the bond and the court says at the beginning that breach didn't occur until after dissolution and what happens there's a period of time there two years here five years or see this is not a situation in which the court needs to adopt any new rule it's a situation which the court should enforce and existing rule where we do with the language interpretation or were not even them to take into account or that interpretation previous one was dissolved in the ninety four correct larry and plaintiff continued to receive payments until nine hundred ninety eight that is  intending to of a doubt liability perhaps they could have brought a suit for declaratory judgment and said well we are receiving existing payments we have a concern that one of the obligate words is going to be gone and we better get a declaration because there's no dispute in this case that if they dissolved a year later we wouldn't have a right to go against them right i mean we sued there's no dispute that we sued within the right period of time so this is not a situation on the on you know mr o'hara certain key point they would have had certainty if they didn't want to go into mental disagreement is that you know you don't agree obviously with the fact that you had no claim until ninety five years after previous one was dissolved no i want to be careful with that you're on i our our view is that we had both a right and there was one incurred liability prior to nine hundred ninety eight prior to dissolution and that's one of the evans decision i think it would be hard pressed to argue given the court cases but there was actually an existing claim but the statute has three different provisions it has a right it has a claim one has a liability incurred who was also paying to give it to me one more time sure what your interpretation of for any writer claim exist any writer claim existing there was a right a contingent right t well that's based there were serious what i'm saying on for a liability incurred it can absolutely be contention because as this court said in evidence and i'm quoting your honor from page one thirteen of the court's opinion we know of no definition of the word liability either given in the dictionary is or is used in the common speech of men which restricts it to such as are absolute or excludes the idea of contingency in fact it's more frequently used in the latter sense than the former and that and that instance they really are making the same argument we i think we have a fundamental difference of opinion it's there in the reply brief they say we're quoting out of context well i don't think the quote is unclear i think that it gives meaning to the word liability incurred it gives meaning to the notion that if you have something that's like a guarantee or a surety that obligation may not come into existence and said in response to justice commerce question yes that is their view their view is is basically happy attempt or if you're a contract and party with a corporation and there's any kind of contingency that's not ever been the law in illinois and that's of creditors and balances those rights against the right of certainty but there's no requirement in the statute to show that the purpose of dissolving was to evade responsibility the point is that the statute provides that if there is a liability that has been incurred there is five years to go after the corporation on that liability and the corporation in this instance he vs one according to the record and it's right there in the in the in the agreement that they had assumed the consulting agreement they knew that this was an obligation and they also knew he we do have a common shareholder and common entity that was providing this mr tang was in charge of midwest metallics and was paying and put that company into bankruptcy i mean this is not a situation where there's a lot of uncertainty of arms length transactions but in any event no you don't as a corporation can dissolve in a reasonable reasoned logical administrative fashion while taking into account the fact that it at that there they have no authority to suggest that that's actually the case and there are many situations where there are claims that may be contingent they may have conditions proceeding to them in this in this instance the what they're doing is they're actually reading in an exception for claims that have conditions proceed and what i would agree with and in response to you know justice thomas comment i mean it's not the case that if there is a accident for example in a product liability case that happens after corporation dissolves you know there's there's land the corporations dissolve and somebody is injured on the land i mean it's pretty clear blankenship case makes it pretty clear that that port claim in the corporation has been dissolved in the last it's ministry of lee reinstated it's done that's not the same thing though the notion that buyouts are protected because you protected yourself is actually begging the question i mean you just need a clear rule that says if a corporation if you if you impose the rule that we're asking for here that the that the second district impose you're not or contingent liabilities under the survival statute have a five year window in which you can sue under them if the cause of action a cruise after the after dissolution absolutely and that's that's what evans says right at pages one hundred twelve two hundred thirteen so you know and they have also not asked to go over i mean you know they've got ten more minutes they haven't asked yet for you to overrule leavens but they've just said that we are misinterpreting it i don't see evans as being at all unclear i don't see this rule as being at all unclear if i can turn to a couple of points that mr bhatia race one thomas to be clear on the various facts and one other fact that i think is important and i think is a modification of the fact that he said it is true that the that p b s one after it sold its limited partnership interest in national material an existing corporation it is not true in the records undisputed the record it was not a viable corporation it immediately paid out all of its assets to it so shareholder mr tang so the idea that it was actually viable you know mr  same shareholder and it was actually a paper restructuring the the it is not material to this court's decision but just in terms of clarification there were several different grounds in the record that we had for why success or liability ought to apply to the pasha said you know there's there was no dispute i believe i heard him say there's no dispute that this was all for a legitimate business purpose that actually was disputed the trial court so there was a fact western on that and so it went off on the other grounds that it was mere continuation and it actually assume the contract so i just don't want to suggest however the court decides to rule that i'm that i'm somehow waiving that the only other thing i'd like to say is given  the how long the whiskers on this litigation and the record of the court has in front of it and i would urge the court to consider exercising its discretion that we've the parties have fully briefed innovation argument i think that i think that  actually fairly straightforward in this instance and i think that it provides an alternative ground that if the court is going to affirm the second district and ruled that this was a liability incurred that it is appropriate would appropriate for the court to reach that ovation argument because that would would actually avoid a trial and potentially many more years of litigation if that question of material is it is it is it is our position that there is no question of material facts certainly just as freemen on the question of consent because there's been no evidence that's been introduced  clear that national material what national to real bought was a national hero bought p b s once partnership interest the idea that mr bhatia is saying well we came in we being mr tang ok signed in all of these different capacities he came in and what he did was he bought last from p b s one then what p b s one owned doesn't make any sense it's not it's not what the record supports what it said was we're buying all of your limited partnership interests and in that instance the limited partnership interest that they bought was one in which they also assumed a consulting agreement that's undisputed in terms of innovation that he undisputed facts are that p b s one assume the contract after now as they've clarified their position in thank you thank you for your argument mr lloyd relied on concerning the survival statute the evans case from one nine hundred twenty one and i think there's really a disconnect here about what happened in that case and it's clearly distinguishable from this case and not at all inconsistent with our reading of the statute and that's because in the add in this case the receiver when he was appointed as receiver for the corporation contended that a part of his appointment business with the corporation had to effectively cease a corporation had not dissolved there it was only a receiver and the court said no these bonds although they were not breached before you were appointed they were breached before the corporation dissolved in the key point in time is the dissolution of the corporation not the appointment of a receiver and therefore there  was a claim existing before the corporation dissolved the appointment of the receiver worked had no effect on whether the claims for breach of those bonds survived or not and moreover the bonds situation of a bond is clearly a fixed in the ascertainable amount unlike the situation that we have here  mtu or i'm not sure i would put it quite that way but what i would say is the legislature has decided in the context of dissolving corporations on a balance between corporations and persons and  cities with which the corporation deals so it's not this is not just a statute that balances the rights of creditors and corporations but as i indicated in my in my main argument the statute also controls what claims can be brought in asserted by a corporation before dissolution and so under our reading of the statute we know that if you're going to be negotiating a long term right  with a corporation that you've got to take into account the fact that it may go away and right now the law provides certainty in terms of understanding what you have to do robert pilots council understood that when he left the company  correct that there has to be a trial on that issue mr lloyd says there was no evidence of arthur pilar's arthur pilots consent to innovation but indeed there was michael's abas who was an attorney representing pilot inc had a meeting with arthur pilot and james pilot and dorothy pilot at which in which he explained the transaction that was about to take place in one nine hundred eighty eight and  according to mr zappa says affidavit arthur pilot agreed to substitute pilot lp the new entity that was coming out of the restructuring for pilot inc and he was receiving a was said between him and arthur pilot and james pilot in the meetings before the night april one thousand nine hundred eight restructuring transaction in mr zappa says deposition he says speaks of what his intention was at a minimum there are clearly disputed facts as to that question and mr lloyd says that the argument that somehow there was an ovation before p b s one assumed the liabilities of pilot inc doesn't make any sense well to me that sounds like a fact argument that sounds like an argument for the jury but certainly not one here were the court would reverse the reasoning of the appellate court on that question if the court has no other questions i will conclude and again ask for judgment on p b s once favor thank you address one of the issues that mr lloyd raised is the question of the viability of p b s one essentially what he's asking you to say is that a corporation in good standing has to have a second assessment of whether or not it is in good standing is it viable to conduct at all times from one thousand nine hundred one through its dissolution in the middle of one thousand nine hundred three and a half years it was a viable corporation in good standing able to conduct any and all business permitted under statute so yes it was viable he also raised the question about this just being a specific paper restructuring well again those are those are fact issues that need to be developed and dealt with at a at a court hearing not in summary judgment as they have  been i would also address briefly the issue of no vision as to the logic of how it was done that ovation occurred before the transaction and then the transaction that took place was that that that was a transaction between p one and pilot corp no other parties if you read the document the the asset purchase agreement carefully section in there provides that the document is not to be relied upon by any third parties it was simply a document by how the two corporations were allocating assets and liabilities for their own purposes not as it related to the rest of the world and certainly not as it related to mr pilot and the question of what national material bought what does one hundred percent of the obligation mean again i would assert that it can only mean what it means by statute and what it means pursuant to the limited partnership agreement and if the court were to make the word obligation mean everything it would throw into doubt hundreds if not thousands of limited partnership transfers that take place every day every year from thousands of them throughout the state parties to these transactions need to know what's with certainty what's at stake and if works of art which i believe these were say that it's one hundred percent of an obligation based upon a partnership agreement that's what it means and nothing more