The opinion of the court was delivered by: Michael P. McCUSKEY U. S. District Judge
2:11-cv-02208-MPM-DGB # 42 Page 1 of 18 Thursday, 28 March, 2013 09:14:30 AM Clerk, U.S. District Court, ILCD
This tortured case, beginning in a state court divorce in October 2006, and spanning over 120 docket entries there, has spilled into Federal court, having accumulated over 40 entries here (and yet accomplishing little of note). Plaintiff, who disputes the proper ownership of certain shares of stock purportedly transferred to her during the three-month pendency of her marriage, attempts to circumvent the Illinois dissolution proceedings by filing a state law action in Federal court. In her complaint, she seeks, ostensibly pursuant to an Illinois statute providing compensation to a shareholder when the board of directors engages in illegal, oppressive, or fraudulent activity, those selfsame shares disputed in the divorce proceedings. Because this case involves, among other factors, parallel state proceedings regarding the same contested property, Colorado River abstention is appropriate.
This case is before the court on Plaintiff's Objection (#41) to Magistrate Judge Bernthal's Order (#39) permitting Intervenor-Defendant William Ayers to intervene for the limited purpose of staying proceedings, and contemporaneously staying the proceedings pending entry of final judgment in a parallel state case. The court has reviewed the briefs, the complaint, and Judge Bernthal's Order (#39), as well as other relevant filings in the docket. Following this careful review, the Order granting the Motion to Intervene and to Stay (#39) is VACATED, and the case is dismissed without prejudice sua sponte.
Plaintiff Helen Ayers ("Helen") is a citizen of Texas, Defendant James Ayers ("Jim") is a citizen of Illinois, and Defendant Central Illinois Manufacturing Company, d/b/a Cim-Tek Filtration ("CIMCO"), is incorporated in Illinois, with a principal place of business in Illinois. Plaintiff alleges, and Defendants do not contest, that the amount in controversy exceeds $75,000. Plaintiff alleges that Jim and CIMCO (collectively, "Defendants") have violated various subsections of 805 ILCS 5/12.56. Accordingly, because there is complete diversity of citizenship and the amount in controversy exceeds the statutory amount, this court has diversity jurisdiction, pursuant to 28 U.S.C. § 1332.
Fed. R. Civ. P. 72(a) states as follows:
(a) Nondispositive Matters. When a pretrial matter not dispositive of a party's claim or defense is referred to a magistrate judge to hear and decide, the magistrate judge must promptly conduct the required proceedings and, when appropriate, issue a written order stating the decision. A party may serve and file objections to the order within 14 days after being served with a copy. A party may not assign as error a defect in the order not timely objected to. The district judge in the case must consider timely objections and modify or set aside any part of the order that is clearly erroneous or is contrary to law. Judge Bernthal's Order is therefore reviewed for clear error or any findings or conclusions that are contrary to law.
Helen and proposed Intervenor-Defendant William Ayers ("Will") were married on July 1, 2006. On October 6, 2006, William filed for dissolution of marriage. That case was docketed in the Circuit Court of the Sixth Judicial District in Piatt County, Illinois, as 06-D-55. CIMCO is a closely-held family corporation that has been operating for over 50 years, manufacturing, among other things, filters for gasoline stations. (#13 ¶ 4). There are 1,000 outstanding shares of CIMCO stock. (#13 ¶ 4). Jim is the current president of CIMCO. (#13 ¶ 5). Jim is Will's brother. (#41 ¶2). Will had a stroke in May 2007, causing him to become, from time to time, mentally disabled. (#1 ¶ 12).
The parties agree that, at one point, Will owned 500 shares. The ownership of 250 of those shares constitutes the controversy in this present case. (#13 ¶ 7; #15 ¶ 3; #32 p. 2). Defendants assert that other family members owned the remaining 500 shares. (#15 ¶ 3). Defendants also assert that at the time of Will's marriage to Helen, Will owned 345 shares, with 155 shares having been at some previous point redistributed to other shareholders. (#15 ¶¶ 5, 6). Helen asserts that during the pendency of the marriage, around August 28, 2006, Will gave 250 of his shares to her. (#1 ¶ 7, #41 exh. 1 ¶ 1). She testified that she is in possession of the physical stock certificates, which are listed on the corporate stock ledger, and their legal transfer occurred in the presence of a notary. (#41 exh. 1 ¶ 1). Defendants deny that Will assigned, gifted, or delivered the 250 shares to Helen, but aver that they have insufficient knowledge as to whether Helen has physical possession of the certificates. (#13 ¶ 7). Will responds that either Helen is "not a CIMCO shareholder" (although he does not explain how this is so) or, in the alternative, that she obtained those shares by exercising undue influence, coercion, and duress (#32 p. 2).
Will asserts that one of the disputed issues in the dissolution case is the allocation of property rights and ownership status of the 250 shares of CIMCO stock at issue in the instant case. (#32 p. 2). In contrast, Helen argues that the issue should be framed instead as a suit solely pursuant to 805 ILCS 5/12.56, which permits a shareholder to demand "[t]he purchase by the corporation or one or more other shareholders of all, but not less than all, of the shares of the petitioning shareholder for their fair value and on the terms determined under subsection," § 5/12.56(b)(11), if "[t]he directors or those in control of the corporation have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent with respect to the petitioning shareholder whether in his or her capacity as a shareholder, director, or officer," § 5/12.56(a)(3). She argues further that her "statutory right to pursue a 'fair value' purchase of her stock by the corporation has nothing to do with her divorce case or the Illinois Marriage and Dissolution of Marriage Act." (#41 ¶ 4).
As of the date of this opinion, the dissolution of marriage case is still ongoing in the Circuit Court of Piatt County, with the most recent docket entries regarding motions for sanctions and motions to strike, suggesting that a final judgment will not be reached seasonably. Among other entries, this court takes special note of the following events in that docket: 6/3/2008, Petitioner (Will) serves a request to produce on Respondent (Helen); 11/6/2008, Petitioner files a motion to compel response to his request to produce; 4/17/2009, Respondent's counsel withdraws; 5/27/2009, Respondent's counsel appears on Respondent's behalf at the dissolution hearing (despite his earlier withdrawal); 7/6/2009, Petitioner files motion for sanctions for failure to comply with order, pursuant to Ill. S. Ct. R. 219(c); 9/8/2009, Respondent ordered to appear in person; 9/30/2009, Respondent fails to appear before the court; 1/15/2010, Petitioner files petition for indirect civil contempt; 4/8/2010, Respondent ordered to comply with discovery requests; 8/30/2010, Respondent's counsel files motion to withdraw (again); 8/31/2010, Respondent found to be in default and barred from presenting further evidence in the case; 4/4/2011, Petitioner files motion for protective order; 5/5/2011, Respondent files motion for substitution of judge and motion for mental health examination; 5/26/2011, motion for substitution of judge denied; 5/27/2011, motion for mental health examination denied; 6/17/2011, protective order entered; 6/24/2011, court reconsiders ruling on mental health examination and allows motion; 11/17/2011, mental health exam ordered; 12/14/2011, Petitioner files motion for sanctions for failing to file mental health exam.
On August 31, 2011, Helen filed the present suit in this court, requesting, among other things, that this court compel Defendants to purchase her stock in CIMCO for fair value, pursuant to the Illinois Business Corporation Act, as amended, 805 ILCS §§5/12.56(b)(11) and 12.56(e). (#1). On November 4, 2011, Defendants filed a motion to dismiss. (#6). On February 22, 2012, Magistrate Judge Bernthal filed his Report and Recommendation, recommending the Motion to Dismiss be denied. (#12). On March 26, 2012, this court accepted the Report and Recommendation (#16). On May 22, 2012, Judge Bernthal set dates for discovery deadlines, ordering, among other things, the exchange of initial disclosures by May 31, 2012. (Minute Entry of May 22, 2012). On June 18, 2012, Defendants filed a Motion to Compel, noting that: a Request to Produce was mailed on March 28, 2012; a follow-up letter sent on May 14, 2012; on May 24, 2012, Defendants received email from Helen's counsel requesting to serve responses on a deferred date of May 31, 2012; no responses were received; on June 4, 2012, Defendants' counsel again sent a request for discovery responses; on June 5, 2012, Helen's counsel indicated he would provide "answers this week"; as of June 18, 2012, 18 days after the discovery deadline, no responses had been served. (#23). On July 9, 2012, Helen filed a Motion for Extension of Time (#24). ...