EAST ST. LOUIS – Belleville Crossing developer Jonathan Larmore argues that U.S. District Judge David Dugan lacks jurisdiction over a lawsuit claiming he spent shareholders' money on lavish living while neglecting the property.
Michael Kelly of Chicago answered the claim for Larmore and eight other defendants on Aug. 21 by providing various reasons why Dugan should dismiss it.
Mark Maddox of Indiana filed the complaint in May on behalf of four shareholders in three states.
Maddox sought damages from Larmore, Arciterra Companies, an Arciterra company specific to Belleville, and six individuals including wife Michelle Larmore and mother Marcia Larmore.
Three days earlier, a Louisiana judge had appointed a receiver for First Guaranty Bank, which filed a $35 million demand involving six Larmore properties.
Maddox’s complaint alleged that defendants defrauded more than 2,000 investors.
He claimed they received no dividends since 2019 and some received nothing since 2011.
He also claimed many investors in the initial offering in 2006 are elderly or deceased.
Maddox called it a scheme to wait them out until they are deceased.
He claimed Belleville Crossing was sold in a tax lien sale in November.
Kelly’s answer stated that defendants aren’t Illinois citizens, don’t have their principal places of business here, and don’t own real estate here.
“They have committed no torts here and have not conducted any continuous, systematic business here,” he wrote.
Kelly claimed the court cannot exercise general or specific jurisdiction because defendants haven’t purposely availed themselves of the privilege of conducting business in Illinois.
He claimed jurisdiction over Larmore as owner of Arciterra Companies does not automatically follow from jurisdiction over the corporation which employs him.
He added that even if allegations in the complaint are true, failures are corporate and not actions in Illinois of Jonathan and Michelle Larmore individually.
Kelly claimed plaintiffs impermissibly grouped defendants together, such that it was impossible to tell which allegations were leveled at each defendant.
He argued that plaintiffs alleged that defendants breached a fiduciary duty, but it wasn’t clear who they alleged owed a fiduciary duty.
He added that plaintiffs stated money was diverted into other assets owned by defendants but then implied that it was diverted to assets owned exclusively by the Larmore family.
“It is not clear whether all Defendants own property that allegedly received diverted funds, or just the Larmores,” he wrote.
“Moreover, do Plaintiffs mean Jonathan Larmore, Michelle Larmore, and Marcia Larmore all own the property, or some other combination?” he added.
“Defendants cannot defend Plaintiffs’ conversion claim if it’s not clear whether the allegations apply to them,” he continued.
Kelly claimed plaintiffs failed to plead any connection between actions of Arciterra Companies and their alleged harms.
He also claimed Arciterra Belleville is not a subsidiary of Arciterra Companies and Arciterra Companies has no authority to manage activities of Arciterra Belleville.
“To the extent that Plaintiffs allege that Arciterra Belleville’s contacts with Illinois can be imputed to Arciterra Companies, that argument fails as a matter of law,” he wrote.
“The jurisdictional contacts of affiliate companies cannot be imputed one to another,” he added.
Kelly claimed plaintiffs never took efforts to demand remedial action from Arciterra Belleville’s board of directors.
“Plaintiffs aver that they chose not to make such a demand because doing so would be futile,” he wrote.
“While futility is a cognizable exception to the demand requirement, Plaintiffs fail to meet the lofty particularity pleading requirements necessary to fall within the exception,” he continued.