Edgeworth v. First Nat. Bank of Chicago
| Decision Date | 20 January 1988 |
| Docket Number | No. IP 85-1642-C.,IP 85-1642-C. |
| Citation | 677 F. Supp. 982 |
| Parties | Myron EDGEWORTH, Jr., Plaintiff, v. The FIRST NATIONAL BANK OF CHICAGO, et al., Defendants. VICTOR OOLITIC STONE COMPANY, a corporation, John R. Edgeworth and Terrence D. Edgeworth, Defendants-Counterclaimants v. Myron EDGEWORTH, Jr., Plaintiff-Counterdefendant. |
| Court | U.S. District Court — Southern District of Indiana |
COPYRIGHT MATERIAL OMITTED
Kenneth R. Gaines, Altheimer & Gray, Chicago, Ill., Philip A. Terry, McHale, Cook & Welch, Indianapolis, Ind., for defendants Victor Buff Stone Co. and Indiana Creek Land Co.
Henry L. Mason, III, Sidley & Austin, Chicago, Ill., James A. McDermott, Barnes & Thornburg, Indianapolis, Ind., for defendants First Nat. Bank of Chicago, Robert Joynt, William Grant.
James L. Simon, Schuyler, Roche & Zwirner, Chicago, Ill., Harry Rider, Rider, Freiherr & Rawley, Indianapolis, Ind., for defendants Victor Oolitic Stone Co., John R. Edgeworth, Terrence D. Edgeworth.
James R. Cotner, Cotner, Andrews, Mann & Chapman, Bloomington, Ind., for defendants Patricia and Richard Letsinger.
Kenneth W. Humphries, Owensboro, Ky., Thomas J. Kimpel, Merrill, Johnson & Kimpel, Evansville, Ind., for plaintiff.
ENTRY
This matter is before the court on the motion for summary judgment of defendants Victor Oolitic Stone Company ("Victor Oolitic"), John R. Edgeworth, and Terrence Edgeworth, filed May 12, 1985 (the first motion for summary judgment). Defendant First National Bank of Chicago, Illinois ("the Bank"), has joined in that motion. Also before the court is the second motion for summary judgment of the same defendants (not including the Bank), filed March 16, 1987. In conjunction with their motions for summary judgment, these defendants also request the imposition of sanctions against the plaintiff Myron Edgeworth, Jr., pursuant to Fed.R.Civ.P. 11. All motions are now fully briefed. For the reasons set forth in the memorandum below, the court now GRANTS the first motion for summary judgment and DENIES the second motion for summary judgment. The request for sanctions is GRANTED to the extent described below. The defendants' request for oral argument is DENIED.
Memorandum"Cast of Characters"
The plaintiff MYRON EDGEWORTH, JR., grandson of Michael J. Edgeworth, is one of the three trustees of the Michael J. Edgeworth Trust ("the Trust"). He is also the president of Victor Buff Stone Company ("Victor Buff"), though not personally a stockholder in the company. The plaintiff, in addition to being a co-trustee, is the beneficiary of one-half of the Trust's income.
* * *
The TRUST, created by Michael J. Edgeworth in 1932, has been and now is the owner of a majority (almost eighty percent) of the issued and outstanding shares of Victor Buff. It also owns about twenty-four percent of the shares of defendant Victor Oolitic Stone Company ("Victor Oolitic"). Finally, the Trust owns a majority of the shares in Indian Creek Land Company ("Indian Creek").
* * *
The defendant FIRST NATIONAL BANK OF CHICAGO, ILLINOIS ("the Bank") is also a Trustee of the Trust, acting through its agents, defendants ROBERT JOYNT and WILLIAM GRANT. The Bank, through agents Joynt and Grant, is also a director of Victor Buff and Indian Creek.
* * *
Defendant PATRICIA EDGEWORTH LETSINGER is also a Trustee of the Trust. Granddaughter of Michael J. Edgeworth and cousin of Myron Edgeworth, Jr., she is the beneficiary of one-sixth of the income of the Trust. She is also a director of Victor Buff and Indian Creek. She personally owns small amounts of stock in Victor Oolitic and Victor Buff.
* * *
Defendant RICHARD LETSINGER is the husband of Patricia Letsinger. He is an officer of Victor Buff, and a director and officer of Indian Creek.
* * *
Defendant JOHN R. EDGEWORTH, grandson of Michael J. Edgeworth and brother of Patricia Letsinger, is the beneficiary of one-sixth of the income of the Trust. He was until 1981 a director of Victor Buff and is now an officer and director of Indian Creek. Together with his brother Terrence he owns about seventy percent of the shares of Victor Oolitic as well as a small amount of stock in Victor Buff.
* * *
Defendant TERRENCE D. EDGEWORTH, grandson of Michael J. Edgeworth and brother of Patricia and John, is the beneficiary of one-sixth of the income of the Trust. He is a director of Victor Buff. With his brother John he owns seventy percent of Victor Oolitic and a small amount of stock in Victor Buff.
* * *
Defendant VICTOR BUFF is a land-holding company near Bloomington, Indiana, that owns land upon which there are limestone deposits. Victor Buff was once owned by Michael J. Edgeworth.
* * *
Defendant VICTOR OOLITIC, also once owned by Michael J. Edgeworth, is an operating company that quarries limestone. Since about 1927, it has quarried limestone from lands owned by Victor Buff.
* * *
Defendant INDIAN CREEK is the owner of land adjacent to Victor Buff property.
On this date, the Illinois court entered a final decree ending ten years of litigation involving the Trust over dealings among the Trust, Victor Buff, and Victor Oolitic. The primary issue in the Illinois litigation was a leasing arrangement by which Victor Oolitic was allowed to quarry limestone from the property of Victor Buff in exchange for payment of rents or royalties to Victor Buff. The Bank had brought the action as a co-trustee of the Trust to resolve any possible conflicts arising from this leasing arrangement. The other parties to this proceeding were Myron Edgeworth, Jr. and his two children, John Edgeworth, Terrence Edgeworth, Patricia Letsinger, Victor Buff, and Victor Oolitic.
The questions presented in that litigation, which had commenced in 1974, were whether Victor Buff should have a leasing arrangement with Victor Oolitic, and, if so, what the terms of the lease should be. In 1981, the Illinois Court of Appeals affirmed the lower court's 1979 order requiring Victor Oolitic and Victor Buff to terminate their then-existing lease and for further requiring Victor Buff to negotiate with Victor Oolitic or others for a new lease. Subsequently, Victor Buff and Victor Oolitic negotiated a new lease which Victor Buff presented to the Illinois court for approval in 1984. The plaintiff and his two children formally appeared and objected to the proposed lease.
On February 11, 1985, the Illinois court commenced a trial of the matter, hearing evidence from Victor Buff, Victor Oolitic, and the plaintiff and his children.
On February 21, 1985, the court entered its decree. The court approved the new lease, and in so doing, made several findings. First, it found that the directors of Victor Buff had negotiated in good faith and at arm's length over the terms of the new lease. Second, the court found that the parties had made some modifications to the lease after presenting it for the court's approval and that the formal objectors (including Myron Edgeworth, Jr.) had approved the lease with full knowledge of the interest other Victor Buff directors had in Victor Oolitic. Third, the court found that the lease had been approved and ratified by all of Victor Buff's directors and shareholders. Finally, the court found that the lease was fair and reasonable, was in accordance with the prior orders of the court and the appellate court, was the result of good faith, arm's length negotiations, and should be approved by the court.
The court therefore entered an order approving the lease and pronounced that it was entering "a final decree resolving all pending matters which were put in issue by the Petition of Victor Buff Stone Company filed on August 16, 1984." The court went on, however, to reserve specifically the issue of alleged underreporting by Victor Oolitic to Victor Buff of limestone quarried between 1978 and the date of the decree.
Since that decree, Victor Oolitic has continued to quarry limestone on Victor Buff property, pursuant to the lease approved on February 21, 1985.
On this date, Myron Edgeworth, Jr. filed a lawsuit against all the defendants listed above. Among his claims against the various defendants, he alleges that:
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