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Hausman v. Green

United States District Court, C.D. Illinois, Springfield Division

July 20, 2018

JAMES R. HAUSMAN, Plaintiff,
TODD GREEN; JOSHUA WAGNER; THE GOLD CENTER, INC., an Illinois corporation; ILLINOIS DEPOSITORY CORPORATION, an Illinois corporation; and ILLINOIS ARMORED TRANSPORT, INC., an Illinois corporation, Defendants.



         This cause is before the Court on the objection (d/e 22) to U.S. Magistrate Judge Tom Schanzle-Haskins' Report and Recommendation (d/e 21) filed by Defendants Todd Green and Joshua Wagoner and joined by The Gold Center, Inc., Illinois Depository Corporation, and Illinois Armored Transport, Inc. (the Corporate Defendants) (d/e 23). The Objection is overruled and the Court ACCEPTS the Report and Recommendation. The Motion to Dismiss (d/e 16) filed by Defendants Green and Wagoner and joined by the Corporate Defendants (d/e 17) is GRANTED IN PART and DENIED IN PART. The Court dismisses Plaintiff's prayer for a penalty under 805 ILCS 5/7.75(d) in Count II but otherwise denies the Motion.


         The Court adopts the Statement of Facts set forth in the Judge Schanzle-Haskins' Report and Recommendation. In sum, the Complaint alleges that, in 2013, Plaintiff entered into a transaction to sell 80% of the stock in the Corporation Defendants to Green. As part of the transaction, the Corporate Defendants leased from Plaintiff the real estate on which the corporations operated on a five-year lease, with options to renew. The lease also gave Green an option to purchase the property. Green transferred a 5% equitable or beneficial interest in the Corporate Defendants to Wagoner, who became the new manager of the Corporate Defendants. Plaintiff, Green, and Wagoner are members of each corporation's board of directors. Plaintiff alleges that Green and Wagoner mismanaged the Corporate Defendants, misappropriated assets, engaged in transactions in violations of law, and engaged in other tortious conduct to the detriment of the Corporate Defendants.

         On April 14, 2015, Green filed suit in Sangamon County Circuit Court against Plaintiff seeking specific performance on his option to purchase the property. Plaintiff filed an affirmative defense and counterclaim in response. The counterclaim alleged that Green breached various provisions of the Shareholder's Agreement and Lease, including that Green failed to comply with the Business Corporation Act, 805 ILCS 5/7.75, by denying Plaintiff complete access to the books and records of the Corporate Defendants.

         On January 25, 2017, Green filed a motion to voluntarily dismiss without prejudice the state court case. On March 10, 2017, the state court granted the motion to voluntarily dismiss and made the following docket entry:

03/10/2017 Entry regarding motion to dismiss Signed Judge: MADONIA
Present the Plaintiff by Attorney Myers. Plaintiff's Motion to Voluntarily Dismiss Complaint without prejudice is granted.
Judge: MADONIA Clerk: N
Civil Division Case Closed
Status: Cause Stricken Report: Terminated Mar 10, 2017
Pl. Resp., Ex. 1 State Court Docket (d/e 20-1).[1]

         On January 26, 2018, Plaintiff filed his Complaint in this Court. In Count I, brought pursuant to Section 12.56 of the Illinois Business Corporation Act, Plaintiff asks the Court to either order dissolution of the Corporate Defendants or order Defendants to purchase Plaintiff's stock in the Corporate Defendants at fair market value because Green and Wagoner are acting in a manner that is illegal, oppressive, or fraudulent and are misapplying or wasting corporate assets. In Count II, brought pursuant to Section 7.75 of the Business Corporation Act, Plaintiff asks for a writ of mandamus requiring Defendants to produce the requested records for examination and a penalty of 10% of the value of the shares owned by Plaintiff in the Corporate Defendants.

         In March 2018, Defendants Green and Wagoner filed a Motion to Dismiss and/or Stay Proceedings (d/e 16), which the Corporate Defendants joined (d/e 17). Defendants assert that Plaintiff's state court counterclaim remains pending and, therefore, this Court should abstain from exercising its jurisdiction over Count I pursuant to the Colorado River doctrine. See Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976). Defendants further assert that ...

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