                           ILLINOIS OFFICIAL REPORTS
                                         Appellate Court




        Howerton v. Prudential Insurance Co. of America, 2012 IL App (1st) 110154




Appellate Court            ANNA HOWERTON, FLOYD R. BURNS, and CATHERINE
Caption                    KUNICKI, a/k/a Bonvich, Individually and on Behalf of All Other
                           Individuals and/or Entities Similarly Situated, Plaintiffs-Appellants, v.
                           PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey
                           Corporation; ARTHUR F. RYAN, Chairman and Chief Executive
                           Officer; FRANKLIN E. AGNEW, FREDERIC K. BECKER, GILBERT
                           F. CASELLAS, JAMES G. CULLEN, CAROLYNE K. DAVIS, ROGER
                           A. ENRICO, ALLAN D. GILMOUR, WILLIAM H. GRAY III, JON F.
                           HANSON, GLEN H. HINER, CONSTANCE J. HORNER, GAYNOR
                           N. KELLEY, BURTON G. MALKIEL, IDA F.S. SCHMERTZ,
                           CHARLES R. SITTER, DONALD L. STAHELI, RICHARD M.
                           THOMSON, JAMES A. UNRUH, P. ROY VAGELOS, STANELY C.
                           VAN NESS, PAUL A. VOLCKER, and JOSEPH H. WILLIAMS,
                           Defendants-Appellees.



District & No.             First District, First Division
                           Docket No. 1-11-0154


Filed                      October 22, 2012


Held                       An Illinois action filed by policyholders of a New Jersey life insurance
(Note: This syllabus       company contesting the consideration plaintiffs received when the
constitutes no part of     company underwent demutualization was properly dismissed on the
the opinion of the court   grounds that the New Jersey Insurance Commissioner was an
but has been prepared      indispensable party to the action challenging his order approving the
by the Reporter of         demutualization and the New Jersey appellate court had exclusive
Decisions for the          jurisdiction over the matter.
convenience of the
reader.)
Decision Under              Appeal from the Circuit Court of Cook County, No. 01-CH-5145; the
Review                      Hon. Peter Flynn, Judge, presiding.



Judgment                    Affirmed.


Counsel on                  Robert A. Holstein and Springer, Casey & Dienstag, P.C., both of
Appeal                      Chicago, for appellants.

                            Novack & Macey, LLP, of Chicago (Stephen Novack, Donald A.
                            Tarkington, and Andrew P. Shelby, of counsel), and Debevoise &
                            Plimpton, LLP, of New York, New York (Edwin G. Schallert and Olga
                            Kaplan, of counsel), for appellees.


Panel                       JUSTICE CUNNINGHAM delivered the judgment of the court, with
                            opinion.
                            Presiding Justice Hoffman and Justice Rochford concurred in the
                            judgment and opinion.



                                              OPINION

¶1          On this direct appeal, plaintiffs claim that the trial court erred when it dismissed
        plaintiffs’ complaint with prejudice on the following grounds: (1) as being filed in an
        improper forum; (2) for failing to join an indispensable party, the New Jersey Insurance
        Commissioner (Commissioner); and (3) for failure to state a cause of action for breach of
        fiduciary duty because proximate cause was not properly alleged. For the following reasons,
        we affirm the ruling of the circuit court of Cook County.

¶2                                          BACKGROUND
¶3          On March 26, 2001, plaintiffs Anna Howerton (Howerton), Floyd Burns, and Catherine
        Kunicki (a/k/a Bonovich) originally filed a class action complaint, individually and on behalf
        of a class, against Prudential Insurance Company of America (Prudential) and its board of
        directors. Plaintiffs are policyholders of life insurance policies issued by Prudential and claim
        to represent similarly situated policyholders as a class. Prudential is a stock life insurance
        company, incorporated with its principal place of business in New Jersey. At the time of the
        claimed damages, Prudential was a mutual life insurance company owned by its
        policyholders, including plaintiffs. Plaintiffs claim in their brief before this court that “each

                                                  -2-
     such policyholder maintained an ownership portion of Prudential proportionate to his or her
     policy and the company’s surplus.” The policyholders elect the board of directors.
¶4        The case at bar stems from a settlement of a prior class action litigation in 1996 (the 1996
     case).
¶5        In the 1996 case, Prudential allegedly sold fraudulent life insurance policies which had
     a “vanishing premium,” as well as other alleged irregularities between January 1, 1982 and
     December 31, 1995. These allegedly fraudulent policies were sold through agents and
     brokers who received commission in compensation for the sales. The agents and brokers
     were under contract to return to Prudential all commissions received from the sale of any
     policy cancelled or otherwise terminated. Prudential entered into a settlement agreement with
     the New Jersey state insurance regulatory authority1 and the members of the class who had
     purchased these policies. Plaintiffs in the case at bar were not part of the class in the
     settlement of the 1996 case because they had purchased their life insurance policies prior to
     1982. The United States District Court for the District of New Jersey approved the settlement
     of the 1996 case, entitled In re Prudential Insurance Co. of America Sales Practices
     Litigation, 962 F. Supp. 450, 468 (D.N.J. 1997), aff’d, 148 F.3d 283 (3d Cir. 1998), cert.
     denied sub nom. Krell v. Prudential Insurance Co. of America, 525 U.S. 1114 (1999). The
     settlement resulted in Prudential paying fines and providing relief to its class members.
     Prudential, 962 F. Supp. at 473, 488-92. The settlement also included an alternative dispute
     resolution (ADR) procedure for policyholders who claim improper sales practices by
     Prudential that the New Jersey court described as a “fair and swift alternative to litigation.”
     Id. at 488. The ADR procedure allowed those claiming injuries a forum to resolve their
     claims outside of court, and Prudential covered the cost of the program, including
     representation fees.2 Id. The settlement also required Prudential to offer “Basic Claim Relief”
     to members of the class who either “[did] not feel misled or [did] not desire to participate in
     the ADR process.” Id. at 541.
¶6        In 1996, around the time of the settlement,3 Prudential considered attempting to recapture
     the “commissions associated with premiums that were returned or reduced in the ADR
     process.” Prudential’s management was concerned that a recapture campaign would hinder
     its agents’ cooperation in the ADR process, which would in turn hinder Prudential’s goal of
     facilitating policyholder remediation. Thus, Prudential chose not to pursue a recapture
     program.
¶7        On September 14, 2000, Howerton wrote a letter to Prudential demanding that Prudential
     recapture the commissions received by its agents for those policies that were returned or
     reduced in the settlement process.



             1
                 And various other states’ insurance regulatory authorities.
             2
                 Policyholders had the option to retain their own counsel. Prudential, 962 F. Supp. at 488.
             3
             The record is unclear regarding whether this happened before or after the settlement was
     agreed upon in October of 1996.

                                                   -3-
¶8         On December 15, 2000, after successfully gaining passage of a New Jersey state law
       allowing demutualization, Prudential’s board unanimously voted to adopt a plan for
       demutualization. Under the terms of the plan, Prudential would distribute common stock,
       cash, or policy credits to eligible policyholders to convert Prudential from a mutual insurance
       company to a stock insurance company which would be owned by its shareholders.
¶9         On January 8, 2001, Prudential responded to Howerton’s demand letter, informing
       Howerton that it planned to form a committee to “investigate” the commissions recapture
       and that the process may take “several months.” Prudential formed a “special committee,”
       and with the help of an outside law firm, conducted a year-long investigation into the matter.
¶ 10       On March 14, 2001, Prudential filed its demutualization plan with the New Jersey
       Department of Insurance. The plan required approval by the Commissioner (N.J. Stat. Ann.
       § 7:17C-4 (West 2000)), as well as a two-thirds approval by Prudential’s qualified
       policyholders (N.J. Stat. Ann. § 17:17C-5 (West 2000)).
¶ 11       On March 26, 2001, plaintiffs filed a class action lawsuit in the circuit court of Cook
       County against Prudential asserting four counts: (1) that the demutualization plan was an
       anticipatory breach of Prudential’s contracts with all of its policyholders; (2) that defendants
       breached their duty of good faith and fair dealing, and breached their fiduciary duty in
       adopting the plan; (3) asking the court to declare that the plan would violate the New Jersey
       Constitution by impairing the policyholders’ contracts; and (4) seeking a declaratory
       judgment that the unearned commissions be deemed an asset of the company and distributed
       as part of any demutualization plan to the class members as surplus.
¶ 12       On May 30, 2001, defendants filed a combined motion to dismiss the class action lawsuit
       under section 2-615 of the Illinois Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West
       2000)), and section 2-619(a)(1) of the Code (735 ILCS 5/2-619(a)(1) (West 2000)).
       Prudential argued that: (1) the complaint should be dismissed under section 2-619 of the
       Code because the issue was not yet ripe and plaintiffs had not exhausted their administrative
       remedies given that no vote by the policyholders had yet taken place; (2) the doctrine of
       forum non conveniens supported New Jersey being the appropriate forum; and (3) the
       Commissioner was a necessary party and was not named in the suit. Prudential also sought
       to dismiss the complaint under section 2-615 of the Code on the grounds that the complaint
       did not state a cause of action.
¶ 13       On July 17 and 18, 2001, the Commissioner held a two-day public hearing regarding
       Prudential’s demutualization plan. During the hearing, plaintiffs’ counsel stated that:
               “This has to do with what I think is a serious undervaluation of the surplus of the
           Company and that undervaluation is derived from what appears to be a failure to–the
           failure of the Company to reimburse itself or collect, honoring commissions with respect
           to vanishing premium policies which were determined to be fraudulently sold.”
¶ 14       On October 15, 2001, the demutualization plan was approved by the Commissioner.
       Within his report, the Commissioner stated that “the Plan allocates 100% of the value of
       [Prudential] to eligible policyholders,” and that eligible policyholders would receive “full and
       proper consideration” for their “aggregate membership interests and corresponding values.”
       He further stated that the plan would not have any adverse effect on any of Prudential’s

                                                 -4-
       “guarantees and obligations to policyholders under their policies.”
¶ 15       On December 5, 2001, the special committee concluded its investigation by issuing a
       unanimous recommendation that “the Board reject *** Howerton’s demand to take
       ‘immediate steps’ ” to “recover certain commissions.” It reasoned that Prudential’s board,
       when it decided not to pursue the recapture of commissions in 1996, “acted with diligence
       and good faith, and in what it reasonably perceived to be in the best interests of [Prudential].”
       The special committee stated that “it would be inappropriate and unwise to attempt to reverse
       [the 1996 decision] many years after the fact.” The special committee also found the costs
       of a recapture program would outweigh its benefits, listing many reasons for its conclusion:
       the length of time between fraudulent sales and the present; its previous announcement that
       it would not pursue recapture; the large number of agents and relatively small amounts of
       money at issue; the high legal costs associated with any recovery; the morale and public
       relations factors; and management costs.
¶ 16       On December 12, 2001, the board of directors adopted the recommendations of the
       special committee and rejected Howerton’s demand to recapture the commissions.
¶ 17       On December 18, 2001, Prudential completed demutualization and became a stock life
       insurance company.
¶ 18       On March 22, 2002, Prudential sent a letter to Howerton explaining that it was declining
       to take action to recover commissions from its agents and brokers over the fraudulent
       insurance policies.
¶ 19       On June 5, 2002, plaintiffs filed an amended class action complaint. Again, Prudential
       filed a combined motion to dismiss under sections 2-615 and 2-619(a)(1) of the Code. On
       October 22, 2002, plaintiffs filed the second amended complaint. In response, Prudential
       filed a combined motion to dismiss under sections 2-615 and 2-619(a)(1) of the Code.
¶ 20       On June 19, 2003, plaintiffs filed a third amended complaint which is the subject of this
       appeal. It did not contain the claim of anticipatory breach of contract or the claim of violation
       of the New Jersey Constitution, which had been raised in the original complaint. The claims
       from the original complaint which are retained in the third amended complaint are: that
       Prudential breached its fiduciary duty to plaintiffs; and that Prudential owes plaintiffs the
       amount of money not recaptured as special damages. The instant complaint asserted that
       special damages were owed by Prudential to plaintiffs and the class because Prudential had
       been “able to maintain itself on the surplus and capital acquired by the sale of its stock, so
       that any recovery from [Prudential]” would rightfully “[belong to plaintiffs] and Class
       Plaintiffs as additional surplus that should have been included in the surplus of Prudential
       had it been accounted for.” The complaint further asserted that plaintiffs did not pursue
       recapturing the money due to them because the board had made the “pre-determination to
       demutualize Prudential for their own personal gain.” It also asserted that the board was
       concerned that pursuing recapture would cause the agents and brokers to blow the whistle
       regarding the board’s part in the fraudulent sales practices. As a result, plaintiffs claim that
       the board breached its fiduciary duty to plaintiffs and the class and, therefore, owes them the
       amount not recaptured.
¶ 21       On July 17, 2003, defendants filed their combined motion to dismiss the third amended

                                                 -5-
       complaint under section 2-619.1 of the Code (735 ILCS 5/2-619.1 (West 2000)), arguing
       that: (1) New Jersey is the proper forum under the doctrine of forum non conveniens; (2) the
       complaint was a direct challenge to the Commissioner’s ruling, which could only be filed in
       New Jersey; (3) the complaint failed to state a cause of action for breach of fiduciary duty;
       (4) the complaint failed to state that the board’s breach of fiduciary duty was the proximate
       cause of plaintiffs’ injuries; (5) the Commissioner’s ruling is protected by the business
       judgment rule; and (6) the claim could only be brought as a derivative action. The motion
       contained a copy of the Commissioner’s approval order and transcripts from the
       Commissioner’s hearing regarding Prudential’s demutualization.
¶ 22       On December 20, 2010, the trial court issued a memorandum opinion and order which
       dismissed the third amend complaint, with prejudice. The court dismissed the complaint
       under section 2-619 of the Code because it found that the complaint was an indirect attack
       on the Commissioner’s decision approving the demutualization, and therefore the complaint
       can only be filed in New Jersey. The court also dismissed the complaint under section 2-615
       of the Code because it found that: (1) the Commissioner was an indispensable party and was
       not joined in the complaint; (2) the complaint was not personal to the shareholders but
       derivative to the company, and thus must be brought as a derivative action; and (3) the
       complaint did not adequately allege that the breach of fiduciary duty was the proximate cause
       of plaintiffs’ injuries. For these reasons, the trial court dismissed the case, with prejudice.
¶ 23       On January 12, 2011, plaintiffs filed a timely notice of appeal.

¶ 24                                         ANALYSIS
¶ 25       Plaintiffs filed a timely notice of appeal pursuant to Illinois Supreme Court Rule 303(a)
       (eff. June 4, 2008). Therefore, we have jurisdiction to consider this appeal. The granting of
       a section 2-615 or section 2-619 motion to dismiss will be reviewed de novo by the
       reviewing court. Kedzie & 103rd Currency Exchange, Inc. v. Hodge, 156 Ill. 2d 112, 116
       (1993). De novo consideration means we perform the same analysis that a trial court would
       perform. Khan v. BDO Seidman, LLP, 408 Ill. App. 3d 564, 578 (2011). When reviewing a
       motion to dismiss, we accept all well-pleaded facts as true. American Health Care Providers,
       Inc. v. County of Cook, 265 Ill. App. 3d 919, 922 (1994). We will view the facts in the light
       most favorable to the plaintiff. Summers v. Village of Durand, 267 Ill. App. 3d 767, 769
       (1994). Further, we may consider all facts presented in the pleadings, affidavits, and
       depositions contained in the record. Arriola v. Time Insurance Co., 296 Ill. App. 3d 303, 306
       (1998).
¶ 26       We first discuss plaintiffs’ arguments that the trial court erred in dismissing their third
       amended complaint for filing the complaint in an improper forum, and for failing to join an
       indispensable party, the Commissioner. Resolution of these issues directly hinges upon
       whether the third amended complaint challenged the Commissioner’s order approving
       Prudential’s demutualization plan, or whether it merely claims damages for an event that
       occurred before the Commissioner approved the demutualization plan.
¶ 27       The trial court ruled that the third amended complaint was actually an attack on the
       Commissioner’s order approving Prudential’s demutualization plan. Accordingly, the trial

                                                 -6-
       court dismissed the third amended complaint finding that New Jersey courts have exclusive
       jurisdiction to consider challenges to a New Jersey administrative agency decision. See N.J.
       Stat. Ann. § 17:17C-4(h) (West 2000); State v. Ferrier, 682 A.2d 1227, 1228 (N.J. Super.
       Ct. App. Div. 1996). Furthermore, the trial court dismissed the complaint because it found
       that the Commissioner was an indispensable party.
¶ 28        Plaintiffs argue that their complaint does not challenge the Commissioner’s order
       approving demutualization. Rather, plaintiffs claim that their complaint alleges a breach of
       fiduciary duty by the board of a currently “nonexistent company.” Plaintiffs claim that the
       Commissioner made no ruling on a cause of action regarding a breach of fiduciary duty and
       never addressed the issue of the collection of commissions. Additionally, plaintiffs assert that
       the Commissioner did not have the authority to adjudicate a dispute involving commissions
       recapture.
¶ 29        Defendants, on the other hand, argue that the Commissioner’s order approving
       demutualization was in effect a ruling on the collection of commissions. Defendants point
       to the record that shows that plaintiffs’ attorney testified regarding the issue of commissions
       recapture at the July 17 and 18, 2001 public hearings concerning demutualization. The
       attorney stated that he thought the plan was “a serious undervaluation of the surplus of the
       Company and that undervaluation is derived from *** the failure of the Company to
       reimburse itself or collect, honoring commissions with respect to vanishing premium policies
       which were determined to be fraudulently sold.” Furthermore, plaintiffs point to the
       Commissioner’s order, which states that eligible policyholders would receive “full and
       proper consideration” for their “aggregate membership interests and corresponding values.”
       The Commissioner’s order concluded that the plan allocated to eligible policyholders “100%
       of the value of [Prudential],” and further found that it was “full and proper consideration.”
¶ 30        Although we accept all well-pleaded facts as true and view those facts in the light most
       favorable to plaintiffs, we conclude that the third amended complaint is a challenge to the
       Commissioner’s approval of the demutualization plan. The Commissioner heard plaintiffs’
       arguments concerning Prudential’s decision to refrain from recapturing commissions related
       to fraudulent policies. The Commissioner then indicated multiple times that the policyholders
       were receiving full and fair value from the demutualization plan. Plaintiffs conclude that this
       action by the Commissioner was a determination that policyholders were not entitled to the
       value of the uncollected commissions. Plaintiffs claim that their damages are based on being
       “deprived of the full value of their ownership interest in [Prudential] at the time of the
       demutualization and the calculation of the resulting distributions to policyholders.” Thus,
       plaintiffs argue that the consideration awarded them by the Commissioner when he approved
       Prudential’s demutualization plan was not adequate. This is, in essence, a challenge to the
       Commissioner’s order.
¶ 31        We agree with Prudential that Wright v. Prudential Insurance Co. of America, 285 F.
       Supp. 2d 515 (D.N.J. 2003), provides insight into this issue. Although Wright is not binding
       authority, we find it persuasive. Wright concerned the same settlement and the same
       demutualization plan as the case at bar. The defendant was also Prudential, and the plaintiffs
       represented Prudential’s policyholders as a class. After the Commissioner had approved the
       demutualization plan, plaintiffs brought a lawsuit in New Jersey claiming Prudential violated

                                                 -7-
       the settlement agreement. Wright, 285 F. Supp. 2d at 518-20. According to plaintiffs in that
       case, Prudential agreed that it would not shift “[c]osts and [e]xpenses” to plaintiffs, either
       by paying legal expenses or otherwise reducing its surplus. Id. at 519-20. Plaintiffs claimed
       that when the cost and consideration of demutualization were calculated, policyholders paid
       the costs of the lawsuit. Id. The District Court in Wright dismissed the claim reasoning that
       although the claim was framed as a breach of contract, it was actually a challenge to the
       Commissioner’s demutualization decision and could only be brought in the New Jersey
       Appellate Court. Id. at 520. The District Court stated “when [p]laintiffs challenge conduct
       that is mandated by a Plan, or omissions permitted by a Plan, they actually challenge that
       Plan itself.” Id. The court stated that it would “treat [the plaintiffs’] claim as what it actually
       is, as opposed to what the [p]laintiffs call it.” (Emphasis in original.) Id. at 521.
¶ 32        The case at bar is very similar to Wright. Both cases involve disputes over conduct by
       Prudential surrounding the same issues. Specifically, both sets of plaintiffs claim that the
       settlement agreement undervalued the consideration upon demutualization of the company.
       Although plaintiffs in the instant case claim their complaint seeks damages for events that
       occurred before Prudential demutualized, we analyze plaintiffs’ claim on the basis of what
       it actually is, as opposed to what plaintiffs have labeled it. Id. The core of plaintiffs’ claim
       is the alleged damages due to undervalued consideration upon demutualization. Thus, the
       third amended complaint is actually a challenge to the Commissioner’s order which held that
       policyholders received full demutualization consideration.
¶ 33        In matters relating to a company’s breach of fiduciary duties, Illinois courts apply the
       substantive law of the state of incorporation of that company. Libco Corp. v. Roland, 99 Ill.
       App. 3d 1140, 1144 (1981). Here, Prudential is incorporated in New Jersey, so we apply New
       Jersey law. New Jersey law gives the Commissioner the power to approve or disapprove of
       a mutual insurance company’s plan of demutualization. N.J. Stat. Ann. § 17:17C-4(e), (f)
       (West 2000). The New Jersey Appellate Court has exclusive jurisdiction for reviewing
       agency decisions. N.J. Stat. Ann. § 17:17C-4(h) (West 2000); State v. Ferrier, 682 A.2d
       1227, 1228 (N.J. Super. Ct. App. Div. 1996). Thus, according to New Jersey law, plaintiffs
       can appeal any challenge to the Commissioner’s order approving demutualization to the New
       Jersey appellate court. Here, plaintiffs’ third amended complaint is actually a challenge to
       the Commissioner’s order approving demutualization. Therefore, a challenge to a decision
       of an administrative agency of the state of New Jersey should be appealed to the New Jersey
       appellate court. Accordingly, the circuit court of Cook County was correct in finding that it
       was an improper forum for the case. Consequently, the circuit court of Cook County properly
       dismissed this action pursuant to section 2-619 of the Code.
¶ 34        We next discuss plaintiffs’ argument that the Commissioner was not an indispensable
       party. Illinois courts have characterized dismissal for failure to join an indispensable party
       as “procedural.” Kostakos v. KSN Joint Venture No. 1, 142 Ill. App. 3d 533, 535 (1986);
       Zurich Insurance Co. v. Baxter International, Inc., 275 Ill. App. 3d 30, 36 (1995) (The
       necessary party issue is a procedural matter defining the scope, not the substance, of the
       litigation.). “In conflict of laws situations, the procedural law of the forum State is applied
       and the substantive law of the other State is applied.” Boersma v. Amoco Oil Co., 276 Ill.
       App. 3d 638, 645 (1995).

                                                  -8-
¶ 35       “A person is a necessary and indispensable party[4] to the litigation when the person has
       an interest in the subject matter of the suit which may be materially affected by a judgment
       entered in the person’s absence.” People ex rel. Sheppard v. Money, 124 Ill. 2d 265, 281
       (1988). “The relevant inquiry is not whether the court’s judgment has in fact materially
       affected the absent individual’s interests in the subject matter in controversy. Instead, it is
       whether the absent person might claim a substantial and present interest which determines
       that the person is a necessary and indispensable party.” Id. When an indispensable party is
       absent, the court should not proceed to a decision on the merits. Feen v. Ray, 109 Ill. 2d 339,
       348 (1985).
¶ 36       Plaintiffs claim in their brief before this court that they “are not disputing the
       Commissioner’s [order], nor are they asking for judicial review of the Commissioner’s
       [order]. Therefore no relief is sought against the Commissioner and [he] is not an
       indispensable party.” Plaintiffs do not address the simple fact that if a complaint challenges
       the Commissioner’s order, then the Commissioner is an indispensable party. As we have
       already determined, the plaintiffs’ complaint does challenge the Commissioner’s order.
¶ 37       Plaintiffs rely on a single citation, Rieff v. Evans, 630 N.W.2d 278 (Iowa 2001), to
       support their argument that the Commissioner is not an indispensable party. In Rieff, the Iowa
       Supreme Court found that a class of policyholders’ cause of action alleged sufficient facts
       to survive dismissal. Rieff, 630 N.W.2d at 296. The policyholders sued the board of directors
       of an insurance company for de facto demutualization and breach of fiduciary duty. Id. at
       282. The court did not discuss the issue of whether the Iowa Insurance Commissioner was
       an indispensable party. Plaintiffs in this case argue that the ruling shows that Iowa does not
       require its insurance commissioner to be joined in actions against insurance companies for
       demutualization. Plaintiffs further argue that there are no Illinois cases on point. Plaintiffs
       then attempt to argue that because Iowa law is similar to Illinois law, Rieff’s reasoning should
       be applied to this case. Plaintiffs cite no authority for this sweeping conclusion.
¶ 38       Furthermore, Rieff is factually distinguishable from this case. In Rieff, the Iowa Insurance
       Commissioner did not issue an order approving demutualization. Rather, the Iowa Insurance
       Commissioner’s office conducted an audit that concluded that no structure changing events
       had occurred. Id. at 290. Plaintiffs seem to be inferring that the Iowa report is equivalent to
       the Commissioner’s order in the case at bar, and therefore we should follow the holding in
       Rieff and conclude that the Commissioner is not an indispensable party. Rieff has no
       applicability to the case before us. We decline plaintiffs’ invitation to apply Rieff to the case
       at bar.
¶ 39       We conclude that the Commissioner has a substantial interest in the subject matter of the
       instant lawsuit which may be materially affected by a judgment entered in his absence. A
       holding for plaintiffs in this case would call into question the Commissioner’s order
       regarding the consideration received by the Prudential policyholders when the company
       underwent demutualization. Such a holding would have a direct impact on the


               4
                Illinois courts frequently use the terms “indispensable party” and “necessary party”
       interchangeably. Allied American Insurance Co. v. Ayala, 247 Ill. App. 3d 538, 543 (1993).

                                                 -9-
       Commissioner’s authority under the laws of New Jersey.
¶ 40       We hold that the trial court did not err in finding that the Commissioner is an
       indispensable party to the case at bar. Furthermore, we hold that the trial court did not err in
       dismissing the third amended complaint pursuant to section 2-619 of the Code because the
       complaint was a challenge to the Commissioner’s order. It is well settled that the New Jersey
       appellate court has exclusive jurisdiction for reviewing the Commissioner’s order.
¶ 41       We note that plaintiffs also argue that the trial court erred in dismissing their third
       amended complaint for failure to state a cause of action for breach of fiduciary duty.
       However, because we have already determined that the trial court properly dismissed the
       third amended complaint on other grounds, we will not address this argument.
¶ 42       For the foregoing reasons, we affirm the ruling of the circuit court of Cook County.

¶ 43      Affirmed.




                                                -10-
