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Steines v. Menrisky

United States District Court, N.D. Illinois, Eastern Division

December 25, 2016



          M. David Weisman, Magistrate Judge

         Before the Court is defendants' motion to modify the temporary standby order. The Court held an evidentiary hearing on December 19, 2016. The motion seeks particularized relief including bonus payments to employees of SimpleSoft, Inc., as well as rent payments. Additionally, the motion seeks relief related to corporate tax issues still lingering from 2015. For the reasons stated herein, the motion is granted in part and denied in part.

         Background Brief summary of litigation and claims

         The parties are in agreement that Judge Feinerman, at a hearing on December 14, 2016, found a deadlock under 805 Ill. Comp. Stat. 5/12.56(a). (ECF #90 at 3.) This finding allows a court to order various relief. The scope of that relief is contested by the parties, and addressed below. When acting under 5/12.56, a court's objective is to “preserve the corporate assets and carry on the business of the corporation until a full hearing can be had.” 805 Ill. Comp. Stat. 5/12.60(d).

         Court's Authority to Act

         Plaintiff Steines filed a motion contesting this Court's jurisdiction to act on the defendants' motion for relief, raising two issues. First, Steines argues that a magistrate judge lacks the authority to definitively act on injunctive relief, citing to 28 U.S.C. § 636. Second, Steines argues that this Court lacks authority under 5/12.56 to “create corporate action” and is limited to enforcing or modifying action that has already been enacted by the corporation. (ECF #90 at 6.)

         As to the limits under 5/12.56, Steines' position is simply wrong as a matter of statutory construction. In various ways, the statute makes clear that a court has the authority to order affirmative acts. As an initial matter, 5/12.56(b) provides inter alia that a court “may order . . . the performance, prohibition, alteration, or setting aside of any action of the corporation.” (emphasis added.) The inclusion of “performance” in this context disproves the limited reading that Steines propounds. The statute also describes a court's power as “including but not limited to” a wide variety of actions, including the performance of corporate act. Id. Finally, 5/12.56(c) provides that the enumerated powers noted in subsection (b) (supra) “shall not be exclusive of other legal and equitable remedies which the court may impose.” In short, Steines' argument is wholly without statutory language support. We therefore reject it, and find that this Court has the authority to order corporate acts based on the deadlock found by Judge Feinerman.

         As to Steines' injunctive authority argument, while not wholly convinced that it is correct, we find the argument more meritorious. We are not convinced that modifying an agreed order (which was not decided by the district court on the merits but merely adopted by the court) is necessarily injunctive relief. Additionally, the parties contest whether the controlling agreed order [ECF #23 & #43] is still applicable. (See ECF #77 n. 1 (defendants assert that the agreed order is no longer controlling because there no longer is a preliminary injunction hearing scheduled). Interpreting the meaning of an injunction is not considered awarding injunctive relief. Compare American River Transportation Co. v. Ryan, 579 F.3d 820, 824 (7th Cir. 2009) (distinguishing between an order interpreting an injunction and one modifying an injunction as defining appellate jurisdiction). Finally, this Court is being asked to direct Simplesoft to take certain action. Simplesoft is not a party to this matter, and under Federal Rule of Civil Procedure 65(d), injunctive relief is limited to the parties of an action and those acting in concert with them. United States v. Kirschenbaum, 156 F.3d 784, 794 (7th Cir. 1998) (“A district court may not enjoin non-parties who are neither acting in concert with the enjoined party nor are in the capacity of agents, employees, officers, etc. of the enjoined party.”). For all of these reasons, we have our doubts as to whether this Court is being asked to award injunctive relief of any kind.

         In any event, because this Court's order (irrespective of which authority under which we act) will be reviewable, see Federal Rule of Civil Procedure 72, we have confined our affirmative relief to the powers vested in this court under 5/12.56, a statutory grant of authority we are completely comfortable exists.

         Relief Sought

         Defendants seek various forms of relief, which we identify below in ascending order of difficulty.

         Bonus to Susan Menrisky

         In their motion, the Menriskys originally sought a $3, 000.00 bonus for Susan Menrisky. (ECF #77 at 9.) At the hearing itself, counsel for the Menriskys withdrew the bonus request. The request is therefore denied as moot.

         Bonuses to Other ...

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