The opinion of the court was delivered by: Elaine E. Bucklo United States District Judge
MEMORANDUM OPINION AND ORDER
On January 19, 2005, John W. Hoffman ("John Hoffman") passed away after suffering from cancer. His death left a dispute between his widow Cristi A. Hoffman ("Cristi Hoffman") and James P. Sumner ("Sumner") and Frank D. Winter ("Winter") over who controlled the company, Designed Alloys, Inc. ("DAI"), that he left behind. Cristi Hoffman contends that she and John Hoffman held all the shares of DAI in joint tenancy, so that following his death these shares passed immediately to her. Winter and Sumner claim that they are also shareholders of DAI and that they had an agreement with John Hoffman that after his death his estate would sell his shares in DAI to them. This basic dispute between the parties has led to both sides filing multiple claims against the other. Now before me are four motions: a motion by Cristi Hoffman, DAI, Designed Alloy Products, Inc. ("DAPI") and Alloy Rod Products, Inc. ("ARPI") to dismiss Counts IV and VI of Sumner's and Winter's second amended counterclaims; a motion by Cristi Hoffman for summary judgment on all of Sumner's and Winter's second amended counterclaims and on Count II of her own complaint; a motion by DAI, DAPI and ARPI for summary judgment on Counts I and II of their complaint and Counts I and II of the second amended counterclaims; and a motion by Winter and Sumner for summary judgment on Count II of plaintiffs' complaint. I grant plaintiffs' motions for summary judgment and enter judgment in their favor.
Summary judgment is appropriate where the record and affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also Steen v. Myers, 486 F.3d 1017, 1021 (7th Cir. 2007) (citing FED. R. CIV. P. 56(c)). If the moving party meets this burden, the non-moving party must go beyond the pleadings and set forth specific facts showing that there is a genuine issue for trial. Ptasznik v. St. Joseph Hosp., 464 F.3d 691, 694 (7th Cir. 2006) (citing FED. R. CIV. P. 56(e); Becker v. Tenenbaum-Hill Assocs., Inc., 914 F.2d 107, 110 (7th Cir. 1990)). The existence of merely a scintilla of evidence in support of the non-moving party's position is insufficient; there must be evidence on which the jury could reasonably find for the non-moving party. Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986)). I must construe all facts in the light most favorable to the non-moving party and draw all reasonable and justifiable inferences in its favor. Anderson, 477 U.S. at 255.
The relevant undisputed facts are as follows:*fn1 Cristi Hoffman is a citizen of Illinois, and DAI, DAPI and ARPI are each Illinois corporations.*fn2 John Hoffman passed away on January 19, 2005. Cristi Hoffman was appointed the executor of his estate.
A. Incorporation and Stock Ownership of DAI
On April 13, 1993, John Hoffman incorporated DAI by filing DAI's articles of incorporation with the Illinois secretary of state; John Hoffman signed the articles of incorporation the day before. DAI's board of directors approved its bylaws on April 20, 1993.*fn3 He recorded the articles of incorporation with the DuPage County recorder of deeds on April 27, 1993. DAI's articles of incorporation show that the board of directors authorized 10,000 shares of common stock, and that DAI issued 250 shares of this stock for consideration of $2,500.00. Cristi Hoffman has presented a DAI stock certificate dated April 13, 1993, issuing 250 shares of DAI stock to John and Cristi Hoffman "as joint tenants with right of survivorship." Winter and Sumner do not dispute that DAI issued this stock certificate on or about April 13, 1993.*fn4 Cristi Hoffman has also presented a DAI "Preorganization Subscription Agreement" dated April 6, 1993 showing that John and Cristi Hoffman are subscribed, as joint tenants with right of survivorship, to 250 shares of common stock of DAI for $2,500.00. Winter and Sumner also do not dispute that according to DAI balance sheets prepared in 1996 and 1998, DAI's "paid-in" capital for common stock remained at $2,500.00 from 1993 until John Hoffman's death in 2005, and that no other stock certificates, shares of common stock, or any other stock were issued by DAI before John Hoffman's death. DAI's corporate records do not show any shares of DAI stock were ever issued to Sumner or Winter, or to someone as trustee for Sumner or Winter. Winter and Sumner admit they have never possessed stock certificates.
B. Sumner's and Winter's Involvement in DAI and the Buy-Sell Agreement
From 1988 through 1994, Sumner was a full-time employee of First Mississippi Steel, Inc. ("First Mississippi Steel"). He did not make any cash or money payment in consideration for DAI stock. Sumner testified that in exchange for 250 shares of stock in DAI he agreed "to make [DAI] a success" and that he performed services "from the very get-go," "from the time the stock gets issued" and "from the time the company started." Sumner never disclosed DAI stock as an asset when he applied for financing or credit.
In his deposition, Sumner testified that prior to the official incorporation of DAI, he had an oral agreement with John Hoffman that they would be equal owners in the new company to help put it together, and that in return for being an equal owner Sumner would help Hoffman by providing services to the company. At some point before August of 1993, Sumner contacted a friend who was a lawyer in Alabama and told him he needed his help drafting a written agreement that would reflect his oral agreement with Hoffman.
In May or June of 1993, Sumner testified he went to Winter, who was then his boss at First Mississippi Steel, to inform him of his agreement with John Hoffman and to see if Winter wanted to be involved. Winter testified that he did. His understanding was that he would provide technical assistance in the business. In his deposition, Winter testified that John Hoffman later asked him to purchase shares in DAI, and he did so by writing a $2,500 check, which he sent to John Hoffman.*fn5 Winter also testified that in discussions John Hoffman promised Winter that if Winter helped him with DAI, he would have shares in DAI issued to Winter. Winter never disclosed any ownership interest in DAI when paying his individual taxes or when applying for personal financing or credit.
Winter and Sumner contend that they had a written agreement with John Hoffman concerning the disposition of their respective shares in DAI. Winter and Sumner have presented a copy of this purported agreement, labeled "Designed Alloys, Inc. Buy-Sell and Trust Agreement" (the "Buy-Sell Agreement"), attached as Exhibit 1 of their exhibits in opposition to plaintiffs' motions for summary judgment. In the recitals of the Buy-Sell Agreement (labeled "Purposes") the Buy-Sell Agreement states:
WHEREAS, the stockholders own all of the issued capital stock of DESIGNED ALLOYS, INC., an Illinois corporation, with principal offices located at Naperville, Illinois (hereinafter called the corporation) as follows: John Hoffman - 250 shares James P. Sumner - 250 shares Frank Winter - 250 shares Section I provides that if any of the shareholders wants to dispose of his stock during his life, he must first give written notice to the other stockholders and allow them 30 days to purchase the stock at a price determined by the Buy-Sell Agreement. Section II provides:
Upon the death of the stockholder first to die, each surviving stockholder shall have the right to purchase, and the executor or administrator (hereinafter called the legal representative) of the deceased stockholder shall offer to sell to each surviving stockholder, that proportionate number of the shares of stock of the corporation owned by the deceased at the time of his death as the number of shares owned by such survivor bears to the total number of shares owned by all the surviving stockholders, for the price and upon the terms and conditions herein stipulated, including the timing, ...