Where a plaintiff seeks an order for an accounting in Illinois from a corporate entity not established in Illinois, the court must respect any exclusive subject-matter jurisdiction imposed by the laws of the corporate entity’s home jurisdiction.
The 1st District Appellate Court affirmed in part and reversed in part a decision from Cook County Circuit Judge Raymond W. Mitchell.
In July 2016, Cameron R. Pearson (Cameron) filed three cases: one in chancery court against Devon Bank, one against Merry Ann Pearson (Merry Ann), individually, as a trustee of the Fred Pearson Revocable Trust (Trust), and as a general partner of Pearson Investments, and the last a verified petition for the dissolution of Pearson Investments against Merry Ann, Julia M. Pearson and Pearson Investments. The three cases were consolidated on March 22, 2017. The only one currently at issue is the petition for dissolution of Pearson Investments and an accounting of assets.
Fred Pearson created Pearson Investments in 1998 as a limited partnership under the laws of Delaware. Merry Ann was the wife of Fred Pearson and stepmother of Cameron. Fred died in 2015. Cameron, the son of Fred Pearson, argued that he is entitled to a detailed accounting of Pearson Investments as a “General and Limited Partner of Pearson Investments.” In addition, Cameron sought an accounting of a corporation called Cameron General created under Delaware law to trade in insurance and which Pearson Investments owns 40%. Devon Bank was appointed successor trustee of a trust set up for Cameron’s benefit as well as another set up for Fred’s daughter, Julia.
Bank moved to dismiss the petition, arguing that the trial court lacked subject-matter jurisdiction, which belonged properly only to the court of chancery in Delaware, and because Cameron failed to identify any authority by which he was entitled to an accounting. Cameron argued that he was not seeking direct dissolution of Pearson Investments, but an order that Merry Ann should seek dissolution as trustee of a trust to which Cameron is the beneficiary. The trial court granted the motion to dismiss for lack of subject matter jurisdiction. Cameron appealed.
On appeal, Cameron only challenged the dismissal of his petition seeking an accounting. Cameron argued that under the Delaware Uniform Partnership Law, Delaware has no exclusive jurisdiction for actions seeking enforcement of the right to an accounting. The appellate court agreed, however it found that this did not extend to Cameron General which was a corporation rather than a limited partnership. The General Corporation Law of the State of Delaware, which governs corporations established there, allows stockholders denied inspection of a corporation’s books or records to apply to the Court of Chancery for an order to compel inspection, and vests the chancery court with exclusive jurisdiction on the issue.
The appellate court therefore affirmed the dismissal of the request for an accounting from Cameron General and reversed the dismissal of the request for an accounting of Pearson Investments.
Cameron R. Pearson v. Merry Ann-Pearson, et al.
2020 IL App (1st) 190717
Writing for the court: Justice Robert E. Gordon
Concurring: Justices Jesse Reyes and EIleen O’Neil Burke
Released: March 5, 2020