Meek v. Archibald & Meek, Inc.
| Decision Date | 21 May 2021 |
| Docket Number | No. 21-cv-02397,21-cv-02397 |
| Parties | RICHARD MEEK, Plaintiff, v. ARCHIBALD & MEEK, INC. and JOSEPH ARCHIBALD III, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
Plaintiff Richard Meek (Meek) has filed suit against defendants Archibald & Meek, Inc. (A&M) and Joseph Archibald III (Archibald) (collectively, Defendants), asserting several claims resulting from A&M's failure to pay Meek an alleged amount due under an agreement between Meek and A&M. R. 1., Compl.12 Meek now moves the Court to enter a temporary restraining order and preliminary injunction against A&M pursuant to Federal Rule of Civil Procedure 65(a). R. 4, Motion. For the reasons stated below, the Court denies the motion.
A&M supplies electrical wholesale distributors with product inventory and represents lighting manufacturers. Compl. ¶ 20. As part of its role, it also bids on large-scale municipal and roadway lighting contracts and projects. If A&M receivesa successful bid from an electrical wholesale distributor for products, it gets a commission on that sale. Id. From its founding until 2006, it was known as Archibald & Hammel, when it changed its name to Archibald & Meek, Inc. Id. ¶¶ 21, 29.
In 1998, Archibald purchased a 100% stake in A&M from his father. Compl. ¶ 24. Meek began working at A&M in 2003. Id. ¶ 25. On October 1, 2005, Meek and A&M entered into an agreement known as the Archibald and Hamel Stockholders Agreement (the Stockholders Agreement), pursuant to which Meek would pay the company several hundred thousand dollars over a several year period for 50% of the company's shares. Id. ¶ 27. By 2005, Meek had made his payments and owned a 50% stake in the company. Id. ¶ 28.
Meek served in various roles at A&M from 2003 until late 2019, including serving as vice president from 2006 until 2019. Compl. ¶¶ 30, 33, 36. Since 2006, Archibald has served as A&M's president. Id. ¶ 33. In 2018, Meek and Archibald began to have a falling out; in 2018 and 2019, tensions between them increased; and on December 6, 2019, Archibald fired Meek. Id. ¶¶ 34-36. On April 8, 2020, Meek and A&M entered into a Settlement and Stock Repurchase Agreement (the Agreement) to settle the employment dispute between the parties and outline terms of A&M's purchase of Meek's stock in A&M. Id. ¶¶ 39, 41. The Agreement contains a choice of law provision which states that it "shall be governed by the substantive and procedural laws of the State of Delaware, without regard to any provisions thereof relating to conflicts of laws among different jurisdictions." Compl., Exh. 1, ¶ 8.1. Pursuant to the Agreement, Meek and A&M agreed, among other things, that: Meekwould sell all his shares in A&M back to the company, and A&M would buy back those shares; Meek would release A&M from any and all claims he might have against A&M upon the Agreement's execution, Meek would resign as an officer and director of A&M upon closing, Meek would deliver all his paper shares of stock to A&M Meek would not compete with A&M for a one-year period starting on December 6, 2019 and ending on December 5, 2020; and A&M would provide Meek with monthly profit and loss statements until the closing. Compl. ¶¶ 42, 44-45, 64-67, 73.
The value of the company for the purposes of the stock sale price was to be determined by a detailed valuation mechanism. Compl. ¶ 42. According to Meek, once this valuation process was completed in February 2021, A&M was valued at $3,085,000.00. Id. ¶¶ 57, 59. Pursuant to Section 1.3 of the Agreement, once A&M's value has been determined, it "shall pay the Purchase Price for [Meek's] Stock in five (5) consecutive equal annual installments, with each installment including the interest on the unpaid balance at a rate of five percent (5%), payable beginning on April 30 of each year, beginning in 2021." Id. ¶ 60. According to Meek's calculations, because A&M was valued at $3,085,000.00 and he owned half of its shares, he is entitled to a payment of at least $1,542,500.00 spread over five equal annual payments of $308,500.00. Id. ¶ 61. Accounting for interest, A&M's first payment, which was due on April 30, 2021, should have been in the amount of $370,200.00. Id.Meek calculates that A&M was and is to pay him $1,696,750.00 over five years, which includes interest. Id. ¶ 63.
Meek alleges that even though he complied with all of the terms of the Agreement, and A&M has indeed sent him monthly profit and loss statements from May 2020 through March 2021, A&M refused to make its first annual payment due on April 30, 2021, thereby breaching the Agreement. Compl. ¶¶ 69, 71-72, 73. On April 7, 2021, A&M first informed Meek that it did not have money to pay the April 30, 2021 payment and/or that it was in precarious financial straits and was considering whether to "simply closeup shop." Id. ¶¶ 86, 156. The monthly statements, though, showed that for each month except for one, A&M had more than $370,200.00 in its checking and saving accounts. Id. ¶ 84. For several of these months, it had well in excess of this amount in its checking and saving accounts. As of March 31, 2021, A&M had $546,440.62 in these accounts. Id.
In response to A&M's April 7, 2021 statement of its inability to pay Meek, Meek's counsel sent A&M's counsel a letter on April 12, 2021, confirming whether A&M had taken the necessary steps to capitalize itself, and whether it had undertaken other efforts obligated by the Agreement to raise cash to fulfill its contractual obligation to Meek. Compl. ¶¶ 97-99. A&M never responded to this letter. Id. ¶ 101, 103, 105. On April 28, 2021, A&M stated that it faced insolvency and its financial condition was worse that it thought. Id. ¶ 158.
On May 5, 2021, Meek initiated this lawsuit, asserting the following claims against Defendants: Count I for injunctive relief against A&M Count II for breach ofcontract against A&M Count III for tortious interference with contract against Archibald; Count IV for unjust enrichment against Archibald; and Count V for breach of fiduciary duty against Archibald. Compl. Concurrently with filing the Complaint, Meek also filed a motion for temporary restraining order and preliminary injunction seeking the following relief: (i) requiring A&M to deposit the full amount due under the Agreement, $1,696,750.00, into an interest-bearing account with the Court until the Court determines whether A&M breached the Agreement; (ii) as an alternative to (i), requiring A&M to deposit the April payment, $370,200.00 into an interest-bearing account with the Court until the Court determines whether A&M breached the Agreement; (iii) requiring A&M claw back from Archibald any amounts due from the salary A&M paid to him from April 8, 2021 to the present; (iv) requiring A&M to pay salaries to its president, directors, and officers no greater than their salaries on December 6, 2019, and cease payment of bonuses or distributions to them until resolution of this litigation; (v) requiring A&M, if it dissolves, to comply with the Illinois Business Corporations Act and its Delaware counterpart; (vi) preventing A&M from changing its name and corporate structure, or adding share classes, without written consent of all shareholders, including Meek; and (vii) preventing A&M from transferring its assets to another entity, except for its payments due under the Agreement. Motion at 1-2.
Before resolving the motion for temporary restraining order/preliminary injunction, the Court must address several procedural issues. While Meek seeks a temporary restraining order, the motion fails to reveal any emergency. See Motion.Accordingly, the Court construed his motion as a request for a preliminary injunction and had the parties brief the motion. See Hudson City Savings Bank v. Barrow, 782 Fed. Appx. 225, 225 n.1 (3d Cir. 2019). Defendants3 filed their Response (R. 7, Resp.), and Meek filed his Reply (R. 11, Reply).
Meek, in his Reply, attaches various exhibits, namely Exhibits 2 through 5 (R. 11-2, 11-3, 11-4, and 11-5), that were not included with his original motion. It is well-established that a reply brief should not present new arguments or incorporate new evidence for arguments that were not properly supported in an opening brief. See, e.g., Dr. Robert L. Meinders, D.C., Ltd. v. UnitedHealthcare, Inc., 800 F.3d 853, 858 (7th Cir. 2015) (); Black v. TIC Inv. Corp., 900 F.2d 112, 116 (7th Cir. 1990) (); Horvath v. Apria Healthcare, LLC, 2019 WL 5725378, at *2 (N.D. Ill. Nov. 5, 2019) ("'A reply brief is for replying'—not for sandbagging." (quoting Hussein v. Oshkosh Motor Truck Co., 816 F.2d 348, 360 (7th Cir. 1987)); Alston v. Forsyth, 379 Fed. Appx. 126, 129 (3d Cir. 2010) (). Accordingly, the Court strikes Exhibits 2 through 5 and will not consider them or any corresponding statements in the Reply in evaluating Meek's motion.
Before evaluating the merits of Meek's motion, the Court must also briefly address the choice of law issue. Both Meek and Defendants reference the Agreement's choice of law provision, which states that it "shall be governed by the substantive and procedural laws of the State of Delaware." R. 5, Memo. at 5 n.1; Resp. at 5 n.3. The law is clear that where a valid contract has been formed, a court should enforce the choice of law provision contained within that contract unless it violates the forum state's public policy, and the forum state has a materially greater interest in...
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