Court Opinion

ID: 820694
Source: CourtListenerOpinion
Date Created: 2013-02-15 21:19:55.621884+00
Date Added: 2024-06-11T09:03:07.011299
License: Public Domain

NONPRECEDENTIAL DISPOSITION
                          To be cited only in accordance with
                                   Fed. R. App. P. 32.1

              United States Court of Appeals
                                   For the Seventh Circuit
                                   Chicago, Illinois 60604

                                Submitted February 14, 2013*
                                 Decided February 15, 2013

                                           Before

                             RICHARD A. POSNER, Circuit Judge

                             DIANE P. WOOD, Circuit Judge

                             JOHN DANIEL TINDER, Circuit Judge

No. 12-2764

RANDALL RE,                                         Appeal from the United States District
    Plaintiff-Appellant,                            Court for the Northern District of Illinois,
                                                    Eastern Division.
       v.
                                                    No. 11-cv-3242
REAL ESTATE LAWYERS GROUP, P.C.,
and ILLINOIS STATE BAR ASSOCIATION                  John W. Darrah,
MUTUAL INSURANCE COMPANY,                           Judge.
      Defendants-Appellees.

                                         ORDER

       In this diversity action, see 28 U.S.C. § 1332(a), Randall Re claims that Real Estate
Lawyers Group, P.C., the professional corporation of deceased attorney Terry O’Donnell,
sold a building on his behalf in 2002 but embezzled more than $75,000 from the sale
proceeds. Named as defendants are the professional corporation and its liability insurer,

       *
         After examining the briefs and record, we have concluded that oral argument is
unnecessary. Thus, the appeal is submitted on the briefs and record. See FED. R. APP. P.
34(a)(2)(C).
No. 12-2764                                                                               Page 2

Illinois State Bar Association Mutual Insurance Company. Re is a citizen of Missouri, and
both defendants are citizens of Illinois. The district court dismissed the professional
corporation on the ground that its charter had been revoked in 2005 and thus Re’s suit was
untimely as to that defendant under the Illinois corporate-survival statute, 805 ILCS
5/12.80. And without an actionable claim against the professional corporation, the district
court reasoned, neither could Re benefit from the corporation’s policy with ISBA Mutual.
We affirm the judgment.

       Re had a lawyer when he filed his amended complaint, which controls here. That
complaint alleges that Re hired the professional corporation “to act as counsel in
connection with Re’s post-divorce proceedings with his former wife,” and that “O’Donnell
also represented Re in a related real estate transaction” involving the sale of the building.
We cannot tell from this statement whether O’Donnell was involved in the building sale
only in his capacity as agent for the professional corporation or whether Re also had
retained him individually. But according to the complaint, the professional corporation, not
O’Donnell, is the named insured on the ISBA Mutual policy. The professional corporation
was dissolved by the Illinois secretary of state in February 2005, and in 2006 the Supreme
Court of Illinois disbarred O’Donnell. He committed suicide in 2007.

         Re commenced this action in May 2011, more than six years after the dissolution of
the professional corporation. He attempted to serve the corporation in March 2012 through
its last-known registered agent, who notified Re that the summons could not be forwarded
to the professional corporation due to an “undeliverable address.” Re then moved for entry
of default against the corporation, which the district court denied because § 5/12.80
imposes a five-year limit on suing a dissolved corporation. See 805 ILCS 5/12.80. The court
then granted ISBA Mutual’s motion to dismiss, reasoning that the insurer had no
contractual obligation to indemnify against a claim that the defunct professional
corporation is not “legally obligated to pay.”

        On appeal Re acknowledges the five-year statutory limit on actions against a
dissolved corporation, but he argues that the corporate-survival statute should not bar his
suit because both defendants were on notice of his demand for compensation before the
professional corporation was dissolved. Re also asserts that he was unaware until 2011 that
he must sue the professional corporation rather than O’Donnell, and that afterward his
effort to do so was hindered by his incarceration in federal prison. But § 5/12.80 is a statute
of repose, Sharif v. Int’l Dev. Grp. Co., Ltd., 399 F.3d 857, 860 (7th Cir. 2005), which does not
allow for tolling or equitable estoppel and precludes “even meritorious suits because of
delay for which the plaintiff is not responsible,” McCann v. Hy-Vee, Inc., 663 F.3d 926, 930
(7th Cir. 2011). In any event, apart from the corporate-survival statute, Re’s suit would still
be barred by Illinois’s two-year statute of limitations for malpractice suits against attorneys,
No. 12-2764                                                                            Page 3

which is capped by a six-year statute of repose from the date of the wrongful act. See 735
ILCS 5/13-214.3(b), (c); Ennenga v. Starns, 677 F.3d 766, 775 (7th Cir. 2012).

        That leaves the question whether ISBA Mutual can be liable to indemnify a claim
that the professional corporation is not legally obligated to pay. We review, as did the
district court, the language of the policy itself, which ISBA Mutual attached to its motion to
dismiss. See Brownmark Films, LLC v. Comedy Partners, 682 F.3d 687, 690 (7th Cir. 2012)
(explaining that defendant may supply documents mentioned in complaint without
converting motion to dismiss into one for summary judgment). The language of the
insurance policy is clear—covering only damages that the insured is “legally obligated to
pay”—and thus we agree with the district court’s conclusion that ISBA Mutual cannot be
held liable in the absence of a judgment against the professional corporation. Accordingly,
the judgment of the district court is

                                                                                 AFFIRMED.