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Dan K. Arnold v. Kjd Real Estate

December 15, 2010

DAN K. ARNOLD, PLAINTIFF,
v.
KJD REAL ESTATE, LLC, GEISSLER ROOFING CO., INC., AND D&D PROPERTY MANAGEMENT, INC., DEFENDANTS.



The opinion of the court was delivered by: Herndon, Chief Judge:

MEMORANDUM & ORDER

I. Introduction

Before the Court is Interpleader Plaintiff's Motion for Writ (Doc. 8), filed pursuant to the All Writs Act, 28 U.S.C. § 1651(a) against interpleader defendants Geissler Roofing Co., Inc. ("Geissler") and D&D Property Management, Inc. ("D&D"), and Plaintiff's Attorney's corresponding Affidavit supporting the Motion for Writ (Doc. 13). Plaintiff seeks a writ from the Court, enjoining and restraining Geissler and D&D from continuing to prosecute a Motion to Enforce Settlement Agreement they have recently filed in the Circuit Court of St. Clair County, Illinois. The Motion is currently set for a hearing in state court on December 16, 2010. Plaintiff contends that a ruling from the state court will severely impact and frustrate the outcome of his Complaint for Interpleader (Doc. 2), filed with this Court, leaving him with no adequate remedy. There is no Response on file from either Geissler or D&D to Plaintiff's Motion for Writ, as it appears from the record that although they have been served, they have not yet entered their appearance, as their answer is not due until December 27, 2010 (see Docs. 6 & 7). There is, however, a Response on file by interpleader defendant KJD Real Estate, LLC (Doc. 12). For the reasons set forth herein, Plaintiff's Motion for Writ shall be granted, temporarily to preserve the status quo in order to allow more facts to come to light.

II. Background

In his Complaint for Interpleader, Plaintiff alleges that he is a former officer and employee of Geissler and also a former officer and/or director of D&D. As such, he is the owner of at least 95 shares of Geissler stock and 50% of the stock of D&D (Doc. 2, ¶ 7). In 1999, Plaintiff filed suit (hereinafter the "1999 lawsuit") in the Circuit Court of St. Clair County, Illinois, against Geissler, D&D and their president, David Owen and Geissler's other shareholder, Brenda Owen (Id. at ¶ 8). The 1999 lawsuit, captioned Arnold v. Owen, et al., No. 99-CH-639, sought a declaratory judgment that Plaintiff owned 50% of the shares of Geissler, damages for being terminated as an officer and employee of Geissler and having his salary withheld, as well as an order to dissolve Geissler and distribute its assets to the shareholders, including Plaintiff, in proportion to their respective ownership interests (Id. at ¶¶ 8-9). In addition, in the 1999 lawsuit, Plaintiff sought an order dissolving D&D and directing the distribution of its assets to the shareholders in proportion to their respective interests, alleging that the shareholders had been deadlocked and could no longer conduct business (Id. at ¶ 10).

The 1999 lawsuit finally drew to what seemed a conclusion in 2006, when Plaintiff alleges that the parties engaged in settlement negotiations (Id. at ¶ 11). However, Plaintiff also alleges that the parties were never able to agree upon or execute a settlement agreement (Id.). Yet, it seems to be the position of both Geissler and D&D that the parties did, in fact, agree to a settlement of the 1999 lawsuit, because in January 2007, Geissler and D&D filed a Motion to Enforce Settlement, requesting that the Court enforce the settlement and in the alternative, dismiss the case (Id. at ¶ 12, Ex. A). The state court thereafter dismissed the 1999 lawsuit, with prejudice, on April 2, 2007, upon the parties' consent motion (Id. at ¶ 13, Ex. B).

Several weeks later, on April 23, 2007, Plaintiff entered into a Stock Purchase Agreement with the third interpleader defendant in this case, KJD Real Estate, LLC ("KJD"), by which Plaintiff sold his stock in Geissler and D&D to KJD (Id. at ¶ 14, Ex. C). KJD then sent a letter to Geissler and D&D, on or about May 17, 2007, to advise them of its acquisition of stock from Plaintiff, as well as to demand to view the companies' books and records (Id. at ¶ 15). In an effort to compel the production of the books and records, KJD thereafter filed suit, on June 5, 2007, against Geissler and D&D in the Circuit Court of St. Clair County, Illinois, in a case entitled KJD Real Estate, LLC v. Geissler Roofing, Co., Inc. and D&D Property Management, Inc., No. 07-MR-143 (Id. at ¶ 16). This suit, coupled with Plaintiff's previous sale of stock to KJD, likely spurred the filing of a separate action by Geissler and D&D against Plaintiff on June 11, 2007 (hereinafter the "2007 lawsuit") in the Circuit Court of St. Clair County, Illinois, which sought to vacate the prior dismissal with prejudice entered in the 1999 lawsuit and to further enforce the settlement Geissler and D&D allege they agreed upon with Plaintiff in the 1999 lawsuit (Id. at ¶ 17).*fn1

While their 2007 lawsuit was pending, Plaintiff states that Geissler and D&D also filed a separate Complaint for Specific Performance against him in the same court, but before a different judge, to enforce the same settlement agreement (hereinafter the "Specific Performance lawsuit"): Geissler Roofing Co., Inc. and D&D Property Management, Inc. v. Arnold, No. 07-CH-1044. Claiming that his counsel was never notified of the Specific Performance lawsuit, Plaintiff states that an ex parte default judgment was entered against him on April 2, 2008 in the Specific Performance lawsuit. This default judgment allegedly requires Plaintiff to execute unspecified settlement documents (Id. at ¶¶ 21-22). The following day, Plaintiff alleges that the parties appeared for a hearing in the 2007 lawsuit on the Motion to Vacate Dismissal and Enforce and although counsel for Geissler and D&D obtained a continuance of the hearing, they never disclosed to the court nor Plaintiff's counsel that they had already obtained a default judgment against Plaintiff the day before in the Specific Performance lawsuit, to enforce the same exact settlement (Id. at ¶ 23). It was not until May 13, 2008, at the continued hearing in the 2007 lawsuit, that counsel disclosed to Plaintiff's counsel that they had obtained a default judgment against Plaintiff in the Specific Performance lawsuit (Id. at ¶ 24). Despite Plaintiff's subsequent efforts to vacate the default judgment, he was unsuccessful (Id. at ¶ 25). Plaintiff also appealed the default judgment, which was recently denied (Id. at ¶ 26).

Plaintiff therefore believes these events give rise to the need for interpleader relief in the instant matter, in that there is a default judgment against him directing him to sell his shares back to Geissler and D&D, however, Plaintiff had previously contractually obligated himself to sell these same stock interests to KJD via the Stock Purchase Agreement, believing he was freely able to do so. Thus, Plaintiff claims he cannot now safely determine his liability as between interpleader defendants Geissler, D&D and KJD (Id. at ¶ 29). As such, Plaintiff claims he is at risk and exposed to double or multiple liability with respect to the proper entity to transfer his stock interest in the Geissler and D&D stock.

Plaintiff now states that the reason for seeking a writ in the instant motion lies behind the fact that a hearing has been set for next Thursday, December 16, 2010, in the 1999 lawsuit on a Motion to Enforce Settlement, recently filed by Geissler and D&D. In fact, Plaintiff makes note of how prior to the Motion to Enforce being filed, counsel for Geissler and D&D appeared to indicate that waiver of service of Plaintiff's Complaint for Interpleader in this case (Docs. 2 & 13) would be acceptable. It was not, however, until the day Plaintiff's counsel was informed of the Motion to Enforce and the upcoming December 16, 2010 hearing in state court that counsel for Geissler and D&D also informed Plaintiff's counsel that he had been instructed not to accept service. Therefore, Plaintiff had to effect service on Geissler and D&D, which occurred on December 6, 2010. However, as previously stated, these interpleader defendants have not yet entered their appearance, answered or otherwise plead in this case, as their answer is not due until December 27, 2010.

III. Discussion

Plaintiff moves for relief pursuant to the All Writs Act ("AWA"), which states:

The Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law.

28 U.S.C. ยง 1651(a). While the AWA enables this Court to issue a writ of and injunctive nature, it must also abide by the parameters set ...


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