United States District Court, C.D. Illinois, Springfield Division
JAMES R. HAUSMAN, Plaintiff,
TODD GREEN; JOSHUA WAGONER; THE GOLD CENTER, INC., an Illinois corporation; ILLINOIS DEPOSITORY CORPORATION, an Illinois corporation; and ILLINOIS ARMORED TRANSPORT, INC., an Illinois corporation, Defendants.
REPORT AND RECOMMENDATION
SCHANZLE-HASKINS, U.S. MAGISTRATE JUDGE.
matter comes before the Court for a Report and Recommendation
on Defendants' Todd Green and Joshua Wagoner's Motion
to Dismiss and/or Stay Proceedings (d/e 16) and Defendants
The Gold Center, Inc., Illinois Depository Corporation, and
Illinois Armored Transport, Inc., Notice of Joinder in Motion
to Dismiss and/or Stay Proceedings Filed by Defendants Todd
Green and Joshua Wagoner (d/e 17) (collectively the Motions).
Plaintiff James Hausman alleges that he is a minority
shareholder in the corporate defendants The Gold Center, Inc.
(Gold Center), Illinois Depository Corporation (Illinois
Depository), and Illinois Armored Transport, Inc. (Illinois
Armored) (collectively the Corporations). Hausman alleges
that Defendants Todd Green and Joshua Wagoner are also
shareholders in the Corporations. Hausman alleges that Green
and Wagoner committed mismanagement, misappropriation of
assets, and other tortious conduct involving the assets of
the Corporation. He also alleges that Green and Wagoner have
refused to let him inspect the books and records of the
asks this Court to dissolve the Corporations or order the
Defendants to purchase his stock in the Corporations at fair
market value (Count I); and order Green and Wagoner to let
him inspect the books and records of the Corporations and
impose a fine on Green and Wagoner pursuant to 805 ILCS
5/7.75 (Count II). See Verified Complaint (d/e 1)
(Complaint). The Defendants move to dismiss or stay the
Complaint under the Colorado River doctrine, and move to
dismiss Count II for failure to state a claim. For the
reasons set forth below, the Court recommends that the
Motions should be ALLOWED in part and DENIED in part.
Court has diversity jurisdiction over this case. Hausman
alleges that he is a citizen of Wisconsin, Green is a citizen
of Illinois, and the Corporations are all incorporated in
Illinois and have their principal places of business in
Illinois; and that the amount in controversy exceeds $75,
000. Complaint ¶ 2; see 28 U.S.C.
§ 1332. Defendants do not challenge these allegations in
Defendants bring the Motions under Federal Rule of Civil
Procedure 12(b)(1), for lack of jurisdiction, and 12(b)(6),
for failure to state a claim. Defendants' Rule 12(b)(1)
portion of the Motions does not challenge the accuracy of the
allegations in the Complaint. For purposes of both the Rule
12(b)(1) portions of the Motions and the Rule 12(b)(6)
portion of the Motions, the Court assumes the well-pleaded
allegations in the Complaint to be true and draw all
inferences in favor of Plaintiff James Hausman. See
Franzoni v. Hartmax Corp., 300 F.3d 767, 771
(7th Cir. 2002). The parties also rely on matters
of public record in a suit brought by Defendant Todd Green
against Hausman in Sangamon County, Illinois Circuit Court,
No. 2015-CH-170 (State Proceeding). The Court may consider
matters of public record, such as records of state court
proceedings, for purposes of Defendants' Rule 12(b)(6)
request. Henson v. CSC Credit Services, 29 F.3d 280,
284 (7th Cir. 1994). The Court may go beyond the
pleadings and consider “whatever evidence has been
submitted” for purposes of Defendants' 12(b)(1)
request. Capitol Leasing Co. v. F.D.I.C.,
999 F.2d 188, 191 (7th Cir. 1993) (quoting
Grafon Corp. v. Hausermann, 602 F.2d 781, 783
(7th Cir. 1979).
many years, Hausman owned all of the stock of the
Corporations. Through the Corporations, Hausman operated a
business dealing in rare coins, precious metals, and
diamonds. The Gold Center operated the retail aspects of the
business. Illinois Armored operated a secure transport
business for precious metals and diamonds. Illinois
Depository operated a secured storage business for precious
metals and diamonds. Hausman owned the real estate on which
the Corporations operated in Springfield, Illinois
2013, Hausman entered into a transaction to sell 80 percent
of the stock in the Corporations to Green (Transaction). As
part of the Transaction, the Corporations leased the Property
from Hausman on a 5-year lease, with options to renew
(Lease). The Lease also gave Green an option to purchase the
Property. The terms of the Transaction provided that the
Board of Directors of the Corporations consisted of Green,
Hausman, and Wagoner. The Transaction also limited the
ability to sell shares in the Corporations to unrelated third
parties without written permission of the other shareholders,
and provided a mechanism to sell shares at an appraised fair
market value. See Complaint, ¶¶ 25-41.
Transaction was effective January 31, 2014. Green owned 80
percent of the stock in the Corporations, Hausman owned 20
percent. Wagoner became the new manager of the Corporations.
Wagoner also worked as a manager for Green's other
business operation, Green Family Stores, Inc. Hausman and his
wife worked for the Corporations on one-year employment
contracts. Hausman alleges that Green transferred “a 5%
equitable or beneficial interest” in the Corporation to
Wagoner, and a “2% equitable or beneficial
interests” in the Corporations to Mike Quimby. Quimby
was also an employee of Green Family Stores, Inc.
Complaint, ¶¶ 7-18, 37-40.
alleges that Green and Wagoner thereafter mismanaged the
Corporations, misappropriated assets, engaged in transactions
in violation of law, and engaged in other tortious conduct to
the detriment of the Corporation. Complaint
¶¶ 42-88, 114-21.
January 21, 2015, less than one year after the effective date
of the Transaction, Green sent a notice to Hausman purporting
to exercise the option to purchase the Property granted in
the Lease. Hausman alleges that Green could only exercise the
option during the last 120 days of the five-year Lease. On
April 14, 2015, Green commenced the State Proceeding in
Sangamon County, Illinois Circuit Court. Green sought
specific performance on his option to purchase the Property.
Hausman filed a counterclaim in response. On January 25,
2017, Green filed a motion to dismiss the Complaint in the
State Proceeding voluntarily and without prejudice.
Complaint, ¶¶ 90-104.
February 15, 2017, Hausman called a meeting of the Board of
Directors to address resolutions he proposed regarding Green
and Wagoner's improper conduct (Resolutions). In February
2017, Hausman also made a formal demand to inspect the books
and records of the Corporations. Hausman alleges that
Defendants have refused to comply with this demand.
Complaint, ¶¶ 86-89.
March 10, 2017, the Sangamon County, Illinois Circuit Court
ruled on Green's motion to dismiss his complaint in the
State Proceeding without prejudice. Illinois Circuit Judge