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Charles C. Cashner v. Plant Maintenance Services

September 28, 2012


The opinion of the court was delivered by: William D. Stiehl District Judge


Before the Court is Plant Maintenance Services' ("PM"), Harold R. Dugan's ("H. Dugan"), Steven C. Dugan's ("S. Dugan"), Robert Haller's ("Haller"), and Robert M. Harbison's ("Harbison") (referred to collectively as the "defendants")*fn1 motion to dismiss (Doc. 18), to which plaintiff filed a memorandum in opposition (Doc. 23). Defendants seek dismissal of plaintiff's complaint (Doc. 2) pursuant to Federal Rules of Civil Procedure 12(b)(7) and 19.


Plaintiff Charles C. Cashner ("Plaintiff") filed a three-count complaint against defendants seeking one of the following three remedies: (1) to force S. Dugan to pay the money owed to plaintiff in accordance with their contract; or (2) have PM liquidated to distribute its net assets to its members, including Plaintiff; or (3) have this Court declare that Plaintiff retains a 9.5% interest in PM. Plaintiff asserts that this Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332, which provides that "[t]he district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens of different States." 28 U.S.C. §1332(a)(1). Plaintiff alleges, and the defendants do not dispute, the facts which establish diversity. Cashner is a citizen of Missouri and asserts a claim for relief of $740,000. PM is an Illinois limited liability corporation with its principle place of business in Illinois (Doc. 2). "[A] corporation shall be deemed to be a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business. . . ." 28 U.S.C.A. § 1332(c)(1). PM is, therefore, a citizen of Illinois. The remaining defendants are citizens of Illinois. (Doc. 2).

According to PM's Operating Agreement, Plaintiff was a 10% shareholder (Doc. 2-1). The shareholders then granted Haller a 5% portion, sold to him from all of the members' shares, reducing the stake of all shareholders, including Plaintiff (Doc. 2-2). Plaintiff's total stake in the venture became 9.5%. Plaintiff then allegedly sold his 9.5% share in PM to S. Dugan for $520,000 via signed contract. Subsequent to this transaction, S. Dugan failed to pay Plaintiff for purchase of Plaintiff's interest, and the other shareholders refused to recognize Plaintiff's 9.5% interest in PM.

As a result, plaintiff brought the present case. In Count I, Plaintiff alleges breach of contract against S. Dugan for failure to pay plaintiff $520,000 and cancel a 2007 promissory note with a face value of $220,000 in exchange for Plaintiff's 9.5% interest in PM in accordance with an Assignment of his interest which was consented to by PM's members/managers. Plaintiff seeks judgment against S. Dugan in the amount of $740,000, plus prejudgment interest from December 31, 2009. Alternatively, Plaintiff alleges in Count II that the members/managers of PM are aware that S.Dugan never paid Plaintiff for his 9.5% interest, but refuse to recognize Plaintiff's interest and that distributions have been made without recognition of Plaintiff's interest. Plaintiff asks the Court to appoint a Receiver and/or dissolve and liquidate the assets of PM, wind up its affairs, direct the payments of its liabilities, and to distribute its net assets and distributions to its members, including Plaintiff for his fees and expenses to pursue this action. Alternatively, in Count III, Plaintiff asks the Court to declare that the Assignment dated December 31, 2009, is void because S. Dugan has refused to pay in accordance with the assignment, and to declare that Plaintiff retains his 9.5% minority interest and his status as a member/manager of PM under the terms of the original Operating Agreement, as amended. Plaintiff seeks a declaratory judgment stating the same.

I. Missouri State Court Litigation

The complexity of the case increases upon consideration of plaintiff's involvement in two ongoing state lawsuits, as well as this federal action. Prior to Plaintiff's filing a complaint in this Court, Douglas C. Draper ("Draper") and his company, Carlyle Investment Company, LLC ("CIC") sued Plaintiff, S. Dugan, and PM in Missouri state court for collection of debts owed. (Draper and Carlyle Investment Group, LLC v. Cashner, LLC, and Charles C. Cashner, Case No. 10JE-CC00923, 23rd Judicial Circuit, Division 6, Jefferson County, Missouri). It is undisputed that Draper and CIC are both Missouri citizens. Defendants assert that joinder of Draper and CIC is required because, in the Missouri state case, both claim an interest in the subject of this action, particularly, a security interest in Plaintiff's 9.5% membership interest in PM. Without joinder of Draper and CIC, defendants assert, S. Dugan, and the other individual defendants will be subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations. According to defendants, S. Dugan may be liable to Plaintiff as a result of the alleged contract he entered into with Plaintiff for the purchase of his membership interest in PM, even though that interest may be subject to the prior, conflicting security interest claimed by Draper and CIC. Defendants claim that PM may be forced to recognize Plaintiff's interest in PM even after Draper and CIC have acquired that interest through foreclosure, and that the other individual defendants risk dissolution of PM even though Draper's and CIC's conflicting claim to Plaintiff's interest in PM may deprive Plaintiff of any right to compel dissolution.

Defendants also assert that Plaintiff is able to obtain complete relief in the action between Draper and CIC, PM, and Plaintiff in the Missouri court. Notably, as of the date of Plaintiff's response to defendants' motion to dismiss, however, PM, S. Dugan, and Speed Lube, LLC, were dismissed from the Missouri case, and the action now consists only of Draper and CIC as plaintiffs, and Plaintiff and his company, Cashner, LLC, as defendants. Draper and CIC claim Plaintiff owes over $3,500,000.00 and seek, among other things, to foreclose their alleged security interest in the Plaintiff's PM and Speed Lube interest. Plaintiff denies liability to Draper and CIC, claiming that they never acquired a valid security interest in the PM interest or the Speed Lube Interest.

II. Illinois State Court Litigation

Litigation is also ongoing in Bond County, Illinois, in which Plaintiff sued S. Dugan, Draper, Harbison, and Speed Lube, claiming that his agreement to sell the PM interest to S. Dugan was part of an agreement with Draper in which Plaintiff agreed to sell the Speed Lube interest to Draper. (Charles C. Cashner v. Speed Lube, LLC, Douglas Draper, Steven C. Dugan, and Robert M. Harbison, No. 2011-L-13, 3rd Judicial Circuit, Bond County, Illinois).In that case, Plaintiff seeks a declaratory judgment that he is the owner of the Speed Lube interest and is entitled to dissolve Speed Lube. Plaintiff asserts that the only connection between this suit and the Missouri and Illinois state court actions is a common claim by Draper and CIC that plaintiff pledged his 9.5% minority interest in PM and Speed Lube, LLC to secure several loans. (Doc. 19 at 4). Plaintiff further asserts that the outcome of the case before this Court does not directly impact Draper's and CIC's claims in the two state court actions, and confirmation of Plaintiff's interest in PM may in fact strengthen Draper's and CIC's claims to secure the note obligations if each is successful in the Missouri case. Finally, plaintiff claims that because neither Draper nor CIC are members or managers of PM, neither is a necessary or indispensable party to this action.

In their motion to dismiss, defendants advance two arguments: (1) Draper's and CIC's security interests in PM make them indispensable parties, their joinder would defeat diversity jurisdiction, and the suit should, therefore, be dismissed pursuant to Fed. R. Civ. P. 12(b)(7) and 19; and, alternatively, (2) the Court should abstain from adjudicating Plaintiff's claims to avoid duplicative litigation in state court.


Federal Rule of Civil Procedure 12(b)(7) provides for dismissal for failure to join a party under Rule 19. For purposes of this motion, the Court accepts as true the allegations in the complaint. Davis Companies v. ...

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