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Monday, March 30, 2020

Appeals court says woman can keep suing mobile home park despite naming the wrong company in her lawsuit

State Court

By D.M. Herra | Mar 27, 2020

Third district appellate ottawa illinois
Illinois Third District Appellate Courthouse, Ottawa | IvoShandor [CC BY-SA 3.0 (]

The owner of a mobile home park could be liable for injuries a woman suffered while touring a unit for sale, even though the home in which she was injured was owned by a different company, a divided state appeals panel has ruled.

The ruling prompted a stinging dissent, in which one justice accused his colleagues of not only overlooking deficiencies in the case, but of doing the job of the plaintiff's lawyers for them.

Plaintiff Diana Angell claimed she was injured when she stepped into an uncovered floor vent while touring a mobile home at Tri-Star Estates in Bourbonnais. She sued Santefort Family Holdings LLC, which owns the land on which Tri-Star is built. The circuit court granted Santefort summary judgment when it claimed the mobile home itself was owned by a different but affiliated entity, Midwest Home Rentals LLC.

Illinois Third District Justice Daniel Schmidt |

Santefort Family Holdings is a subsidiary of Santefort Real Estate Group LLC, one of at least 11 companies connected to the Santefort Family 2012 Irrevocable Trust. While Santefort Family Holdings manages the property at Tri-Star Estates, Midwest Home Rentals owns the park's mobile homes. Both companies have the same chief operating officer, Brian Gallagher, who testified that operations, revenues and expenses associated with Tri-Star are recorded on the books of Santefort.

Angell appealed the court’s finding of summary judgment under the doctrine of piercing the corporate veil, which allows those suing to learn and measure the connections among various corporate entities and potentially hold corporate shareholders responsible for the liabilities of a company. 

At the Illinois Third District Appellate Court in Ottawa, Justices Mary W. McDade and Mary K. O’Brien sided with Angell.

“Courts are reluctant to pierce the corporate veil,” McDade wrote. “A party asserting the doctrine has the burden of making a substantial showing that the entities are not separate and distinct.”

Santefort argued the doctrine does not apply because it is not a shareholder of Midwest. The majority disagreed, however, saying both companies are affiliated with the same parent organization. According to Gallagher’s testimony, the court said, “the two entities exist only to facilitate the operations of the irrevocable trust.” The companies co-mingle funds and personnel, the court said, blurring the line between them.

Justice Daniel L. Schmidt dissented. He said Angell did not meet the burden of proof required to pierce the corporate veil.

“Reading the majority’s analysis, one would assume that the financial records, corporate records, accounting records, and other crucial documents related to the legal entities involved are present in the record on appeal,” he wrote. “They are not. Instead, the majority takes plaintiff’s burden upon itself.”

Schmidt accused the majority of speculating as to Gallagher’s role in each company and whether the two entities kept the required “arm’s length” relationship. He pointed out that the majority cited co-mingling of funds between the two companies, even though financial and corporate records were not submitted as evidence.

Angell’s problem, he said, was simply that she had named the wrong company in her lawsuit. Will County Judge Raymond Rossi had correctly construed that mistake as a fatal error, Schmidt said.

“Had plaintiff sued the proper defendant, she presumably would have received any compensation awarded,” he said. “No fraud or injustice exists here.”

The majority disagreed, noting that Santefort could have said in its answer to the complaint that Midwest was the owner of the mobile home, rather than waiting until after Gallagher’s testimony. The majority contended that Santefort’s delay in offering up its arguments created confusion and could be construed as an attempt to shield the company from liability.

The summary judgment was reversed and the case was remanded to Will County Circuit Court.

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