Brizzolara v. Fisher Pen Co.

• Decision Date: 13 September 1993
• Docket Number: Adv. No. 93 A 00737.
• Citation: 158 BR 761
• Parties: Bruce J. BRIZZOLARA, Plaintiff, v. FISHER PEN COMPANY, an Illinois corporation, and Paul C. Fisher, individually and as Trustee of the Paul Fisher Voting Trust, Defendants.
• Court: U.S. Bankruptcy Court — Northern District of Illinois

158 B.R. 761 (1993)

Bruce J. BRIZZOLARA, Plaintiff, v. FISHER PEN COMPANY, an Illinois corporation, and Paul C. Fisher, individually and as Trustee of the Paul Fisher Voting Trust, Defendants.

Adv. No. 93 A 00737.

United States Bankruptcy Court, N.D. Illinois, E.D.

September 13, 1993.

Robert L. Sklodowski, Sklodowski Franklin Puchalski & Reimer, Chicago, IL, Michael E. Lavelle, Lavelle Juneau & McCollom, Oak Park, IL, Jerome DePalma, Las Vegas, NV, for plaintiff Bruce J. Brizzolara.

Steven B. Towbin D'Ancona & Pflaum, Roseann Oliver, Caesar A. Tabet, Pope & John, Chicago, IL, Lenard Schwartzer, Hale Lane Peek Dennison & Howard, Las Vegas, NV, for plaintiff William R. Quinlan, Receiver of Fisher Pen Co.

Alan H. Zenoff, Zenoff & Zenoff, Chicago, IL, for Midwest Bank & Trust Co. Marty J. Schwartz, Chicago, IL, William R. Urga, Stephanie M. Smith, Mark J. Wenker, Jolley Urga Wirth & Woodbury, Las Vegas, NV, for defendant Paul C. Fisher.

FINDINGS OF FACT AND CONCLUSIONS OF LAW ON MOTIONS TO ABSTAIN, REMAND, AND CHANGE VENUE

JACK B. SCHMETTERER, Bankruptcy Judge.

INTRODUCTION

The debtor Paul C. Fisher ("Fisher") recently filed his bankruptcy proceeding under Chapter 11 of the Bankruptcy Code, Title 11 U.S.C. It pends in Nevada. Two years earlier, Fisher had been sued by plaintiff Bruce Brizzolara ("Brizzolara") in the Circuit Court of Cook County, Illinois, along with the Fisher Pen Company. Following several evidentiary hearings, interim orders entered by the Illinois judge favored Brizzolara. Fisher's bankruptcy filing followed. Fisher originally filed removal papers to bring the state action here, then moved here to transfer venue of the removed case to the Nevada bankruptcy judge. Along with the Receiver appointed by the State Court, Brizzolara moved this Court to abstain and also to remand this case back to the Illinois Court.

Following an evidentiary hearing on all these pending motions, the parties rested and final argument was taken. Proposed Findings and Conclusions were considered, along with objections thereto. Pursuant to Findings of Fact and Conclusions of Law entered here under Fed.R.Bankr.P. 7052 and 9014, Brizzolara motions to abstain and remand are allowed, that of Fisher to change venue is denied.

I. FINDINGS OF FACT

1. Brizzolara is a resident of Illinois. He currently is employed as President of the Fisher Pen Company, and is a shareholder of that corporation.

2. The Fisher Pen Company is an Illinois corporation with its principal place of business at 9240 West Belmont Avenue, Franklin Park, Illinois. It manufactures, markets, and sells pens and pen refills. It owns machinery, equipment, tools, and fixtures, all of which are located at its principal place of business in Franklin Park, Illinois. Corporate books and records are maintained at its principal place of business in Franklin Park, Illinois. It employs forty people in Franklin Park, and has eighty salespeople worldwide.

3. Paul C. Fisher is a resident of Nevada and is a shareholder of the Fisher Pen Company. He claims to do business in Nevada under the name and style of "Fisher Space Pen Company".

4. William R. Quinlan is a resident of Illinois and is the Receiver of the Fisher Pen Company pursuant to Order of the Circuit Court of Cook County, Illinois, Chancery Division.

5. On January 24, 1991, Brizzolara, as shareholder of the Fisher Pen Company, filed a lawsuit in the Circuit Court of Cook County, Illinois, Chancery Division, against the Fisher Pen Company and Paul C. Fisher in a case entitled Brizzolara v. Fisher Pen Co., et al., No. 91 CH 747 (Cir.Ct., Cook Cty., Ch.Div.IL) (the "Illinois Action").

6. The Illinois Action was assigned to Judge John N. Hourihane of the Circuit Court of Cook County, Illinois, Chancery Division ("Judge Hourihane" or the "Illinois State Court"). Until the Illinois Action was removed to this Court by Fisher pursuant to 28 U.S.C. § 1452(a) on June 17, 1993, the Illinois Action had been pending before and partially adjudicated by Judge Hourihane and the Illinois Appellate Court, First District.

7. In his Complaint and amendments thereto, Brizzolara has sought various equitable reliefs pleaded under Illinois law, including injunctive and declaratory relief, specific performance, and court-ordered buy-out or dissolution of the Fisher Pen Company. Specifically, Brizzolara has brought nine separate claims in the Illinois Action: Count I (for injunctive relief to restrain Fisher from terminating Brizzolara's employment as President of Fisher Pen Company); Count II (for declaratory relief that the Fisher Voting Trust is irrevocable); Count III (for specific performance of the Brizzolara Employment Agreement, Brizzolara Stock Option Agreement, and Fisher Voting Trust); Count IV (for removal of Fisher as a director of the Fisher Pen Company); Count V (for an accounting); Count VI (for cancellation of a Lease); Count VII (for dissolution of the Brizzolara/Fisher Partnership); Count VIII (for dissolution of the Fisher Pen Company or alternative remedies under the Illinois Business Corporation Act); and Count IX (for a shareholder's derivative action).

8. Fisher submitted to the jurisdiction of the Illinois State Court and at various times has appeared through counsel and pro se. Fisher has filed his Answer and Affirmative Defenses and has brought counterclaims in the Illinois Action. Specifically, Fisher filed four separate counterclaims: Count I (for rescission of Brizzolara's Employment Agreement); Count II (for rescission of Brizzolara's Stock Option Agreement); Count III (for declaratory relief that the Fisher Voting Trust has been canceled); and Count IV (for injunctive relief against, and for an accounting of damages resulting from, Brizzolara's alleged breaches of fiduciary duty).

9. All claims and counterclaims in the Illinois Action are under Illinois law, as presently pleaded.

10. Judge Hourihane expended substantial judicial time and effort on the Illinois Action. He conducted many evidentiary hearings on some of the claims asserted therein, and he entered various interlocutory orders. Among other hearings, Judge Hourihane held evidentiary hearings on July 6, July 7, July 9, and July 10, 1992, September 16, 1992, and March 3, 1993, and he heard testimony from many witnesses, including Brizzolara, Fisher, Deborah Birutis, Leonard Cahill, Beth Colleran, Robert Dagget, David Fall, Christine Mear, Joachim Peter Michaelis, Helmut Mueller, Dale Talbot, Philip Rock, and William Langly. Several of the witnesses who have testified are residents of Illinois.

11. On September 16, 1992, based upon testimony heard, Judge Hourihane made the following interlocutory rulings regarding Count VIII of the Complaint, subject to further evidence to be heard:

• Brizzolara owns 45% and Fisher owns 55% of the outstanding common stock of Fisher Pen Company (Transcript of Trial on September 16, 1992 at 6);

• Brizzolara is President and Chief Executive Officer of Fisher Pen Company (id. at 6);

• Fisher was enjoined from selling pens in competition with the Fisher Pen Company and from disparaging its products (id. at 9);

• Fisher has repeatedly violated the corporate by-laws of Fisher Pen Company (id. at 11);

• In "direct contravention" of the corporate by-laws, Fisher has improperly taken numerous salaries, including $12,000 in 1990, $60,000 in 1991, and $127,000 in 1992 (id. at 11);

• Fisher has repeatedly breached his fiduciary duties to the Fisher Pen Company and has misappropriated various corporate opportunities (id. at 12-14); and

• Fisher has engaged in a continuing course of "oppressive conduct" (id. at 16).

12. In accordance with the rulings on September 16, 1992, Judge Hourihane concluded as a matter of Illinois law that a court-ordered buy-out of the Fisher Pen Company would be an appropriate remedy to resolve the Illinois Action. However, subsequently, he indicated that he might also consider the alternative, corporate dissolution.

13. On March 5, 1993, Judge Hourihane appointed William R. Quinlan as Receiver of the Fisher Pen Company pending final resolution of the Illinois Action, and also enjoined Fisher from soliciting any customers of "Fisher Pen Company".

14. Fisher appealed that part of the March 5, 1993 Order that enjoined him from soliciting any customers of Fisher Pen Company. On April 1, 1993, the Illinois Appellate Court, First District, denied Fisher's appeal.

15. On March 9, 1993, Judge Hourihane issued the "Charge" (instructions) to the Receiver. That Charge set forth the Receiver's duties and responsibilities regarding management of the Fisher Pen Company and administration of the receivership. Under Illinois law, and under the Charge, the Receiver is to report to Judge Hourihane, file interim reports with that Judge, and receive directions and instructions from him.

16. In accordance with the Charge to him, the Receiver has retained Mr. Denis O'Keefe ("O'Keefe"), an independent business consultant, to assist the Receiver in day-to-day business operations of the Fisher Pen Company. O'Keefe is a resident of Illinois.

17. In accordance with the Charge, the Receiver has also retained Mr. William Hass ("Hass"), a partner in the accounting firm of Ernst & Young, to assist the Receiver in review of business operations of the Fisher Pen Company; in an inventory of Fisher Pen Company assets, including assets allegedly misappropriated; and ultimately in an accounting of compensation received by Brizzolara and Fisher from Fisher Pen Company. Hass is a resident of Illinois.

18. The Receiver has undertaken and completed several matters on behalf of Fisher Pen Company in accordance with the Charge. Among other things, he successfully petitioned the Illinois State Court to approve various purchase orders for pens and pen products from the Astro Pen Company, which is a major supplier of the Fisher Pen Company. Astro Pen Company is an Illinois corporation with its principal place of...