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2018 IL App (1st) 172281 

No. 1-17-2281 

May 15, 2018 

SECOND DIVISION 

IN THE
 

APPELLATE COURT OF ILLINOIS
 

FIRST DISTRICT
 

ZURICH AMERICAN INSURANCE COMPANY and ) Appeal from the 

AMERICAN ZURICH INSURANCE COMPANY, ) Court Circuit of 

) Cook County. 

Plaintiffs-Appellees, ) 

) 17 L 003729 

v. ) 

)
 

PERSONNEL STAFFING GROUP, LLC; DANIEL ) Honorable
 

S. BARNETT; and DASH MANAGEMENT, ) Thomas R. Mulroy, Jr., 

) Judge Presiding. 

Defendants-Appellants. ) 

PRESIDING JUSTICE NEVILLE delivered the judgment of the court, with opinion. 

Justices Hyman and Mason concurred in the judgment and opinion. 

OPINON 

¶ 1 After Zurich American Insurance Company (Zurich) filed a demand for arbitration of its 

dispute with its insured, Personnel Staffing Group, LLC (PSG), Zurich filed a complaint 

against PSG and two other defendants, alleging that PSG fraudulently transferred funds to the 

other defendants to avoid paying an anticipated arbitration award. PSG filed in court a 

counterclaim that matched claims it raised in the arbitration. The Cook County circuit court 

denied the defendants’ motion to compel arbitration of the fraudulent transfer claim, and it 
 

 

 

 

 

 

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denied the defendants’ motion to stay proceedings on the fraudulent transfer claims pending 

resolution of the arbitration. The court also dismissed the counterclaims to compel arbitration 

of those claims. The defendants now appeal. 

¶ 2 We find that Zurich’s complaint concerns collection of the arbitration award and the 

circuit court correctly held that the parties did not agree to arbitrate issues regarding 

collection of arbitration awards. Staying proceedings on the fraudulent transfer claims 

pending arbitration would conflict with the purposes of the Uniform Fraudulent Transfer Act 

(Act). 740 ILCS 160/1 et seq. (West 2016). The defendants concede that the parties agreed to 

arbitrate the issues raised in their counterclaims. Accordingly, we affirm the circuit court’s 

order. 

¶ 3 BACKGROUND 

¶ 4 In 2011, PSG bought workers’ compensation insurance from Zurich subject to a “Loss 

Retrospective Agreement” (Agreement), which provided that PSG would pay Zurich an 

amount that depended on the workers’ compensation claims eventually filed against PSG for 

the covered period. The Agreement established that Zurich would handle the claims and then 

bill PSG for the paid losses. Because Zurich would initially pay the claims, it effectively 

loaned the payments to PSG. The Agreement referred to this aspect of the Agreement as a 

“risk financing arrangement,” for which Zurich required collateral in the form of a letter of 

credit in “an amount sufficient to secure [PSG’s] financial obligations under this 

Agreement.” The Agreement also provided that “[a]ny dispute arising out of the 

interpretation, performance or alleged breach of this Agreement, shall be settled by binding 

arbitration.” 

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¶ 5 For several years, PSG regularly paid Zurich the amounts Zurich billed, but 

disagreements arose, and PSG stopped reimbursing the full amounts demanded. In June 

2016, the final policy term ended, and PSG bought insurance from another source. On 

December 1, 2016, Zurich filed a demand for arbitration to resolve its disputes with PSG. 

Zurich sought to recover more than $4.6 million for the retrospective premiums already due, 

and it sought a letter of credit in the amount of $39 million as security for future claims. PSG 

replied that Zurich had breached the Agreement by “engag[ing] in a pattern and practice of 

settling claims without regard for whether the settlements were reasonable,” by “fail[ing] to 

properly investigate and manage claims,” and by “failing to consult with PSG about 

settlements and reserve charges that exceed $10,000.” 

¶ 6 Before the arbitration hearing began, Zurich filed the complaint that initiated the lawsuit 

now before this court. Zurich named as defendants PSG, Dash Management, Inc. (Dash), and 

Daniel S. Barnett. Barnett, the “majority member” of PSG, owned Dash, and PSG paid Dash 

management fees. Zurich alleged that the defendants violated the Act in 2015, when PSG 

distributed $4.5 million to Barnett and paid Dash $5.8 million in management fees. 

¶ 7 The defendants filed a “Motion To Dismiss or Stay or in the Alternative for Judgment on 

the Pleadings.” They argued that either the circuit court should dismiss the lawsuit and 

compel arbitration of the fraudulent transfer claims or the court should stay proceedings on 

the fraudulent transfer claims until the arbitrators issue a final award. In the alternative, the 

defendants sought judgment on the pleadings, arguing that PSG’s debt to Zurich did not arise 

until 2017 and, therefore, Zurich could not challenge the transfers PSG made in 2015. The 

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defendants also filed a counterclaim that raised the same issues PSG raised in arbitration. 

Zurich filed a motion to compel arbitration of the counterclaim. 

¶ 8 The circuit court set a date for hearing the “Motion To Dismiss or Stay or in the 

Alternative for Judgment on the Pleadings.” Following the hearing, the court entered an order 

in which it (1) denied the motion to dismiss the lawsuit to compel arbitration of the 

fraudulent transfer claims, (2) denied the motion to stay proceedings on Zurich’s complaint, 

(3) denied the motion for judgment on the pleadings, and (4) granted Zurich’s motion to 

compel arbitration of the counterclaims. The defendants filed a notice of appeal. 

¶ 9 ANALYSIS 

¶ 10 Illinois Supreme Court Rule 307(a)(1) (eff. Nov. 1, 2017) gives this court jurisdiction to 

decide this appeal. MHR Estate Plan, LLC v. K&G Partnership, 2016 IL App (3d) 150744, 

¶ 15; Robert A. Besner & Co. v. Lit America, Inc., 214 Ill. App. 3d 619, 623 (1991) (an order 

compelling arbitration is considered to be an appealable interlocutory order because it is 

injunctive). The circuit court considered only the pleadings and attached documents, deciding 

the issues as a matter of law. Therefore, we review the court’s decision de novo. Board of 

Managers of Chestnut Hills Condominium Ass’n v. Pasquinelli, Inc., 354 Ill. App. 3d 749, 

753-54 (2004). 

¶ 11 Motion to Compel Arbitration 

¶ 12 PSG argues first that the circuit court should have granted its motion to compel Zurich to 

arbitrate its fraudulent transfer claims against PSG because the claims “aris[e] out of the 

interpretation, performance or alleged breach of th[e] Agreement.” We disagree. In its 

complaint, Zurich alleged that PSG transferred funds to Barnett and Dash to avoid paying a 

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possible arbitration award. Zurich’s complaint parallels the complaints filed in Northern 

Tankers (Cyprus) Ltd. v. Backstrom, 967 F. Supp. 1391 (D. Conn. 1997); Ryan Racing, LLC 

v. Gentilozzi, 231 F. Supp. 3d 269 (W.D. Mich. 2017); and Apparel Art International, Inc. v. 

Jacobson, Civ. No. 90-1756 (JAF), 1991 WL 641949 (D.P.R. Aug. 21, 1991), aff’d, 967 F.2d 

720 (1st Cir. 1992). In Apparel Art, the plaintiff claimed that after it initiated arbitration of its 

claims against Amertex, “the principals of Amertex themselves, through family members and 

shell corporations, transferred virtually all assets from Amertex while the arbitration was 

proceeding as a way to frustrate plaintiff’s attempt to collect on any award it might receive.” 

Apparel Art, 1991 WL 641949, at *3. The Apparel Art court observed, “the fraudulent 

transfer claim is merely one aspect of plaintiff’s attempt at collection of the judgment” 

entered on the arbitration award. Apparel Art, 1991 WL 641949, at *3. Ryan Racing and 

Northern Tankers also involved fraudulent transfer claims addressed in court as part of the 

plaintiffs’ efforts to collect arbitration awards. Ryan Racing, 231 F. Supp. 3d at 275-76; 

Northern Tankers, 967 F. Supp. at 1394-95. 

¶ 13	 In Geneva Corporate Finance v. G.B.E. Liquidation Corp., 598 N.W.2d 331 (Iowa Ct. 

App. 1999), the plaintiff won an arbitration award against the defendant and obtained a 

judgment on the award. The plaintiff then filed a fraudulent transfer complaint against the 

defendant in court. The defendant asked the court to dismiss the complaint as res judicata, 

arguing that the plaintiff could have pursued the fraudulent transfer claim in arbitration. The 

Geneva court held that the judgment on the arbitration award did not bar the fraudulent 

transfer claim because “the arbitration award established defendant corporation’s liability 

under the listing contract and this action deals with collecting the judgment.” Geneva, 598 

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N.W.2d at 334. We find that Zurich, like the plaintiffs in Geneva, Apparel Art, Ryan Racing, 

and Northern Tankers, brought the fraudulent transfer claim as part of an effort to collect an 

arbitration award. 

¶ 14 Under the Uniform Arbitration Act (710 ILCS 5/1 et seq. (West 2016)), after a party 

obtains an arbitration award, the party must file a complaint in court for confirmation of the 

award. 710 ILCS 5/14 (West 2016); see Windham v. Doctor’s Associates, Inc., 127 A.3d 

1082, 1086-87 (Conn. App. Ct. 2015). The court then decides issues related to enforcement 

and collection of the judgment entered on the award. 710 ILCS 5/14 (West 2016); see Adam 

Martin Construction Co. v. Brandon Partnership, 135 Ill. App. 3d 324, 326 (1985). 

¶ 15 The defendants cite Miller v. Flume, 139 F.3d 1130 (7th Cir. 1998), as authority holding 

that the arbitrator should decide fraudulent transfer issues. In Miller, the defendant won an 

arbitration award against the plaintiffs, and a court entered a judgment confirming the award. 

The defendant then filed a second arbitration demand, alleging that the plaintiffs had 

fraudulently transferred assets to avoid paying the arbitration award. Miller, 139 F.3d at 

1131. The plaintiffs filed a complaint to enjoin the second arbitration, which concerned only 

enforcement and collection of the original arbitration award. The Miller court found the 

fraudulent transfer claim arbitrable. The court emphasized that “the language of this 

particular agreement to arbitrate is quite broad, sweeping in not only claims that literally 

‘arise out of’ the business of the firm (i.e., its buying and selling activities), but also claims 

that have a ‘connection’ with the firm’s business.” Miller, 139 F.3d at 1136. 

¶ 16 The arbitration clause here, unlike the clause at issue in Miller, limits its scope to issues 

that arise out of the interpretation, performance, or alleged breach of the Agreement. The 

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Agreement manifests an intention to adopt the usual arrangement: the arbitrator decides how 

much each party owes the other under the contract, and the court decides issues related to 

enforcement and collection of the arbitrator’s award. We find that the issues surrounding the 

allegedly fraudulent transfers concern collection of the arbitrator’s award and, therefore, they 

do not arise out of the interpretation or performance of the Agreement. The circuit court 

correctly denied the defendants’ motion to compel Zurich to arbitrate its fraudulent transfer 

claims. 

¶ 17 Motion to Stay 

¶ 18 Next, the defendants argue that the circuit court should have stayed court proceedings 

pending issuance of the arbitral award. “The purpose of the Uniform Fraudulent Transfer Act 

is to prevent fraudulent transfers of property by a debtor who intends to defraud creditors by 

placing assets beyond their reach.” Yokogawa Corp. of America v. Skye International 

Holdings, Inc., 159 S.W.3d 266, 269 (Tex. App. 2005). In accord with the purposes of the 

Act, “[a] ‘claim’ under the Act may be maintained even though ‘contingent’ and not yet 

reduced to judgment.” Cook v. Pompano Shopper, Inc., 582 So. 2d 37, 40 (Fla. Dist. Ct. App. 

1991) (per curiam); see Salisbury v. Majesky, 352 Ill. App. 3d 1188, 1190-91 (2004). “[I]f 

automatically staying discovery and progression of [fraudulent transfer] claims was standard 

and a failure to do so an abuse of discretion, the goal of protecting creditors from wrongful 

asset transfers would likely be nearly entirely frustrated.” Friedman v. Heart Institute of Port 

St. Lucie, Inc., 863 So. 2d 189, 193 (Fla. 2003). We find that, in accord with the purposes of 

the Act, the circuit court correctly denied the motion to stay proceedings under the Act. 

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¶ 19 Motion to Dismiss 

¶ 20 The defendants argue that the circuit court improperly ruled on their motion to dismiss 

under section 2-615 of the Code of Civil Procedure. 735 ILCS 5/2-615 (West 2016). The 

defendants asked the circuit court to dismiss the complaint on grounds that Zurich had no 

claim against PSG in 2015, when PSG made the transfers Zurich seeks to challenge. In this 

appeal, the defendants argue that the circuit court erred when it denied the motion for 

judgment on the pleadings because “[d]efendants did not have any opportunity to file a brief 

or make any argument” in support of their motion. However, defendants do not argue that the 

denial of the motion to dismiss the complaint qualifies as an order granting or denying an 

injunction. See Ill. S. Ct. R. 307(a) (eff. Nov. 1, 2017). In this limited appeal under Rule 307, 

we lack jurisdiction to address the denial of a motion to dismiss the complaint. See Mund v. 

Brown, 393 Ill. App. 3d 994, 996 (2009); Murges v. Bowman, 254 Ill. App. 3d 1071, 1080 

(1993). 

¶ 21 Counterclaims 

¶ 22 Finally, the defendants contend that the circuit court erred when it granted Zurich’s 

motion to compel arbitration of the counterclaims. The defendants admit that all of their 

counterclaims arose out of the Agreement and concern the amount due under the Agreement. 

None of the counterclaims involve collection of a possible arbitral award. Because the 

defendants admit that their counterclaims arose out of the Agreement, the circuit court 

correctly granted Zurich’s motion to compel arbitration of the counterclaims. 

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¶ 23 CONCLUSION 

¶ 24 Zurich and PSG agreed to arbitrate all claims arising out of the interpretation or 

performance of the Agreement, but they did not agree to arbitrate issues concerning 

collection and enforcement of an arbitrator’s award. Because Zurich’s fraudulent transfer 

claims concern collection of a possible award, the claims do not arise out of the interpretation 

or performance of the Agreement. The circuit court correctly denied the motion to compel 

arbitration of Zurich’s fraudulent transfer claims. The court also correctly denied the motion 

to stay proceedings on the complaint pending arbitration. As the defendants conceded that the 

arbitrators have jurisdiction to decide their counterclaims, the circuit court correctly granted 

Zurich’s motion to compel arbitration of the counterclaims. Accordingly, we affirm the 

circuit court’s judgment. 

¶ 25 Affirmed. 

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