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Richter v. Prairie Farms Dairy, Inc.

Court of Appeals of Illinois, Fourth District

June 4, 2015

MICHAEL RICHTER and DENISE RICHTER, d/b/a RICH-LANE FARMS, Plaintiffs-Appellants,
v.
PRAIRIE FARMS DAIRY, INC., Defendant-Appellee, and THE BOARD OF DIRECTORS OF PRAIRIE FARMS DAIRY, INC., and EDWARD MULLINS, Defendants

Page 618

As Corrected.

Appeal from Circuit Court of Macoupin County. No. 14L4. Honorable Patrick J. Londrigan, Judge Presiding.

Todd W. Sivia and Paul A. Marks (argued), both of Sivia Law, of Edwardsville, for appellants.

Donald K. Shoemaker (argued) and Andrew J. Tessman, both of Greensfelder, Hemker & Gale, P.C., of Swansea, for appellee.

PRESIDING JUSTICE POPE delivered the judgment of the court, with opinion. Justices Turner and Steigmann concurred in the judgment and opinion.

OPINION

POPE, J.

Page 619

[¶1] In October 2006, plaintiffs, Michael and Denise Richter, doing business as Rich-Lane Farms, filed suit against defendant, Prairie Farms Dairy, Inc., in Madison County case No. 06-L-892 ( Richter I ). Count I of plaintiffs' complaint alleged shareholder remedies under section 12.56 of the Business Corporation Act of 1983 (805 ILCS 5/12.56 (West 2006)), count II alleged violations under section 10a of the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/10a (West 2004)), and count III alleged common-law fraud. In September 2007, the circuit court granted defendant's motion to dismiss counts II and III for failure to state a claim.

[¶2] On September 7, 2012, the circuit court allowed plaintiffs' motion to voluntarily dismiss the suit pursuant to section 2-1009 of the Code of Civil Procedure (Code) (735 ILCS 5/2-1009 (West 2012)). On September 6, 2013, within one year of the voluntary dismissal, plaintiffs refiled their action in Madison County case No. 13-L-1522 ( Richter II ), adding Prairie Farms board of directors and Edward Mullins as named defendants. When we refer to " defendant," we mean Prairie Farms Dairy, Inc., as the record does not reflect service on the board of directors or Mullins. The refiled complaint contained four counts: shareholder remedies, misrepresentation, common-law fraud, and breach of fiduciary duty. In December 2013, the court granted defendant's motion to transfer venue to Macoupin County under Macoupin County case No. 14-L-4. In June 2014, the court granted defendant's motion to dismiss the refiled action on grounds it was barred by res judicata and the statute of limitations.

[¶3] Plaintiffs appeal, arguing their refiled complaint is not barred by res judicata or the statute of limitations. We agree, and we reverse and remand for further proceedings.

[¶4] I. BACKGROUND

[¶5] The following facts are taken from the parties' pleadings, orders of record, and docket entries contained in the record on appeal. Defendant is a cooperative organized under the Agricultural Co-Operative Act (Ill. Rev. Stat. 1971, ch. 32, ¶ ¶ 440 to 473 (now 805 ILCS 315/1 to 33 (West 2012))) and is in the business of producing and supplying dairy products. Plaintiffs are partners engaged in the business of dairy farming. In August 1980, the parties

Page 620

entered into a " Milk Marketing Agreement," whereby plaintiffs agreed to provide defendant with whole milk and defendant agreed to market and sell the milk. Plaintiffs also purchased, in the amount of $15, shares of common stock issued by defendant and became members of its cooperative.

[¶6] In a letter dated October 6, 2005, defendant notified plaintiffs it was terminating the Milk Marketing Agreement as well as plaintiffs' membership in the cooperative. The letter explained plaintiffs " were no longer marketing milk as an active producer of Prairie Farms, as set forth in the By-Laws, at the end of the fiscal year ending 9/30/05." Defendant tendered $15 to plaintiffs to redeem the shares of common stock, but plaintiffs have rejected the payment.

[¶7] A. Plaintiffs' Original Lawsuit--Richter I

[¶8] In October 2006, plaintiffs filed a three-count complaint, seeking recovery for damages they sustained as a result of defendant's decision to terminate the Milk Marketing Agreement and plaintiffs' membership in the cooperative. Count I alleged defendant acted in an illegal or oppressive manner and sought shareholder remedies under the Business Corporation Act of 1983 (805 ILCS 5/12.56 (West 2006)). Counts II and III of the complaint asserted claims for violations of the Consumer Fraud Act and common-law fraud, respectively, based on defendant's concealment, suppression, or omission of its interpretation of section 8 of the Milk Marketing Agreement.

[¶9] Defendant moved to dismiss all three counts pursuant to section 2-615 of the Code (735 ILCS 5/2-615 (West 2006)), asserting plaintiffs failed to state a claim upon which relief may be granted. On September 26, 2007, Madison County circuit judge Daniel Stack ruled on defendant's motion in a written order:

" Defendant's Motion to Dismiss as to Counts I, II, and III are heard and argued.
Defendant's motion as to Count I is denied.
Defendant's Motion to Dismiss as to Counts II and III are granted.
Plaintiff[s] given leave to file amended complaint ...

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