South-Western Legal Studies in Business

Out-of-State Trust Created with In-State Interests Subject to State Court Jurisdiction
Description

Appeals court held that Illinois courts had jurisdiction over a Delaware trust that was originally created by Illinois residents to hold business interests in Illinois. Under the long-arm statute, the out-of-state trust was subject to Illinois court jurisdiction.

Topic Court Procedure
Key Words

Jurisdiction; Residency; Long Arm; Partnership; Trust

C A S E   S U M M A R Y
Facts

Sullivan partnered with Kodsi and Gracias, in Illinois, to acquire businesses. They formed MG Capital, LLC, naming themselves as managing members, each with equal interests. Sullivan identified IPC as a company to buy. Kodsi and Gracias formed a separate firm to buy IPC. Sullivan sued them for breach of the partnership agreement. Kodsi and Gracias assigned their interests to a trust in Delaware, which Sullivan also sued. The trial court held that the trust did not do business in Illinois so the court did not have jurisdiction over the trust. Sullivan appealed.

Decision

Reversed and remanded. In determining whether jurisdiction is proper over a foreign defendant, the court evaluates: 1) whether the facts of the case satisfy the requirements of the long-arm stature, and 2) whether jurisdiction is permissible under notions of due process. The trust has a distinct legal existence, so can be a party to litigation. At the time the trust was created, the trustees were Illinois residents, the property assigned to the trust was in Illinois, and the purpose of the trust was related to business interests in Illinois that were connected to other Illinois residents. Hence, the minimum contact requirements have been met, and Illinois courts have jurisdiction over the trust.

Citation

Sullivan v. Kodsi, --- N.W.2d --- (2005 WL 2173662, App. Ct., Ill., 2005)

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