D'kids Partners L.P. et al v. Kirlin et al

Filing 71

OPINION AND ORDER entered by Sue E. Myerscough, U.S. District Judge. See Written Opinion. Entered on 4/26/2017. (MJC, ilcd)

E-FILED

Wednesday, 26 April, 2017 04:29:01 PM
Clerk, U.S. District Court, ILCD

IN THE UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
D’KIDS PARTNERS, LP,
individually and on behalf of
Kirlins, Inc., and DONALD W.
KIRLIN, individually and on
behalf of Kirlins, Inc.,
Plaintiffs,
v.
DALE T. KIRLIN, GARY F.
KIRLIN, JAMES A. RAPP,
SCHMEIDESKAMP,
ROBERTSON, NEU &
MITCHELL, LLP, and
HUTMACHER & RAPP, P.C.,
Defendants.

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No. 17-3057

OPINION AND ORDER
SUE E. MYERSCOUGH, U.S. District Judge.
This matter is before the Court on Plaintiffs’ Motion for
Temporary Restraining Order and Appointment of Interim Receiver
(d/e 41), which the Court has treated as also requesting a
preliminary injunction. On April 24 and 25, 2017, this Court held a
hearing on Plaintiffs’ requests for a preliminary injunction and
appointment of a receiver. As to the request for a preliminary
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injunction, Plaintiffs have failed to carry their burden to
demonstrate: 1) a probability of success on the merits; 2)
inadequacy of legal remedies; and 3) a risk of irreparable harm.
Plaintiffs’ request for a preliminary injunction is accordingly
DENIED. Plaintiff’s request for appointment of an interim receiver
is similarly lacking support in the record and is DENIED.
I.

BACKGROUND

Plaintiffs are Donald Kirlin, a director of Kirlins, Inc., and his
company, D’Kids Partners, LP, which owns 33,030.75 voting shares
of Kirlins, Inc. Two Defendants are Donald’s two brothers, Dale
Kirlin, Jr. (hereinafter, Dale Kirlin) and Gary Kirlin, each of whom
are directors of Kirlins, Inc. and each of whom owns 33,031.75
voting shares of Kirlins, Inc. (one share more than Plaintiff Donald’s
ownership). Dale Kirlin is also the Chairman and Chief Executive
Officer of Kirlins, Inc. Gary Kirlin is the President of Kirlins, Inc.
James Rapp, former external counsel to Kirlins, Inc. and
former counsel to Plaintiff Donald Kirlin, is also named as a
Defendant, as are his prior law firm, Hutmacher & Rapp, PC, and
his current law firm, Schmeideskamp, Robertson, Neu & Mitchell,
LLP.
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Plaintiffs bring this suit individually and on behalf of Kirlins,
Inc. (hereinafter, the Company). The First Amended Complaint
(hereinafter, Complaint) alleges claims for civil RICO (Count I), civil
RICO conspiracy (Count II), oppression of a minority shareholder
(Count III), breach of fiduciary duty (Count IV), unjust enrichment
(Count V), conversion (Count VI), fraudulent concealment (Count
VII), equitable accounting (Count VIII), constructive trust (Count
IX), interference with prospective economic advantage (Count X),
legal malpractice (Count XI), and employment of manipulative and
deceptive practices (Count XII).
Defendants Dale and Gary have filed a Motion to Dismiss
Plaintiffs’ First Amended Complaint Pursuant to Rules 9(b), 12(b)(6),
and 12(b)(1) (d/e 60). James Rapp and his two law firms also
named as Defendants have also filed a Motion to Dismiss the
Complaint under Rule 12(b)(6) (d/e 67). The Court will address
these motions at a later time.
On March 13, 2017, Plaintiffs filed a Motion for Temporary
Restraining Order and Appointment of Interim Receiver. Plaintiffs
sought a TRO that: 1) barred Defendants from calling a vote on the
proposed resolutions of the Company for 14 days or until further
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Court order; 2) barred Defendants or Kirlins, Inc. from selling any of
its assets for 14 days or until further Court order; and 3) prohibited
Dale and Gary from transacting any business on behalf of Kirlins,
Inc. until further notice of the Court. Plaintiffs also sought
appointment of Rally Management Services, LLC, or another
suitable entity, as interim receiver to manage the daily operations of
Kirlins, Inc. until further order of the Court.
On March 14, 2017, the Court denied Plaintiffs’ request for an
ex parte Temporary Restraining Order. The Court ordered that it
intended to consider Plaintiffs’ motion as additionally requesting a
preliminary injunction and set a hearing on the request for
preliminary injunction and receivership. Plaintiffs did not object to
such treatment of their motion.
On March 21, 2017, Plaintiff Donald Kirlin and Defendants
Dale and Gary Kirlin participated in a settlement conference with
Judge Schanzle-Haskins. On April 19, 2017, Plaintiffs
supplemented their Motion for Temporary Restraining Order and
Appointment of Interim Receiver. The supplement included notices
and materials for an April 26, 2017, special meeting of the
shareholders to approve the sale of selected stores. The supplement
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also included an April 5, 2017, report by Rally Capital Services,
which included an analysis of the validity of the decisions to sell
stores previously sold and an analysis of the financial position of
the Company’s remaining stores earmarked for sale in 2017 (d/e
58-3, Plaintiffs’ ex. 29). In the report, Rally Capital found that all of
management’s decisions to close the stores closed from 2014 to the
date of the report appeared to be valid. The supplement also
included an April 19, 2017, update from Rally Capital encouraging
public notice of the proposed sales and/or an open market bidding
process.
A special meeting of the shareholders and board members is
scheduled to take place on Wednesday, April 26, 2017. In addition
to a proposal to sell several stores to Hallmark Retail LLC, the
proposal includes a sale of three stores to Kirlin’s 1948, Inc., which
is owned by Dale Kirlin’s son, Craig Kirlin. These stores are: Store
# 101 in the Quincy Mall of Quincy, Illinois, Store # 210 in
Columbia, Missouri, and Store # 268 in Kansas City, Missouri.
On April 24 and 25, 2017, the Court held a hearing on
Plaintiffs’ requests for a preliminary injunction and appointment of
a receiver. Because transcripts of that hearing are not yet available,
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this order’s record cites are only to the pleadings and do not include
any testimony given at that hearing.
II.

JURISDICTION

The Court has subject matter jurisdiction over this lawsuit
under federal question and supplemental jurisdiction. See 28
U.S.C. §§ 1331, 1367.
Under the well-pleaded complaint rule, the federal question
forming the basis of the court’s jurisdiction must appear in the
complaint as part of the plaintiff’s claim. Fed. R. Civ. P. 8(a)(1);
Louisville & Nashville Railroad Co. v. Mottley, 211 U.S. 149 (1908).
Counts I and II of the Complaint arise under the civil provisions of
the Racketeer Influenced & Corrupt Organization Act, a federal
statute. 18 U.S.C. § 1962. Additionally, Count XII arises under a
Security and Exchange Commission regulation prohibiting
employment of manipulative and deceptive devices. 17 C.F.R.
240.10b-5. The Complaint therefore establishes the Court’s federal
question subject matter jurisdiction.
Further, the Court has supplemental jurisdiction over the
remaining state law claims under 28 U.S.C. § 1367. The state law
claims form part of the same “case or controversy” as the federal
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law claims. See id. All of the claims in the Complaint concern
Defendants’ alleged mismanagement of the Company, and each of
the claims relies on the set of facts set forth at paragraphs 22 to
220 of the Complaint. Therefore, the Court has subject matter
jurisdiction over all claims in this action.
III.

LEGAL STANDARD

A party seeking to obtain a preliminary injunction must
demonstrate: (1) a reasonable likelihood of success on the merits;
(2) that no adequate remedy at law exists; and (3) that it will suffer
irreparable harm if the injunction is not granted. See Planned
Parenthood of Indiana, Inc., v. Comm’n of Ind. State Dep’t of
Health, 699 F.3d 962, 972 (7th Cir. 2012). If these threshold
conditions are met, the district court then weighs the balance of the
harms to the parties if the injunction is granted or denied. Id. In
making this analysis, the Court must employ a “sliding scale”
approach, weighing the threshold factors against each other,
depending on how strongly each factor points in favor of each party.
Stuller, Inc. v. Steak N Shake Enters., Inc., 695 F.3d 676, 678 (7th
Cir. 2012). The court also must consider the public interest (nonparties) in denying or granting the injunction. Id.
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The likelihood of success on the merits affects the balance of
the harms. That is, the more likely it is that the plaintiff will win on
the merits, the less the balance of irreparable harm needs to favor
the plaintiff’s position in order for the court to issue a preliminary
injunction. Planned Parenthood, 699 F.3d at 972. This balancing
test requires that the court “exercise its discretion to arrive at a
decision based on a subjective evaluation of the import of the
various factors and a personal, intuitive sense about the nature of
the case.” Girl Scouts of Manitou Council, Inc. v. Girl Scouts of the
United States, Inc., 549 F.3d 1079, 1086 (7th Cir. 2008) (internal
quotation marks omitted).
Whether to grant a preliminary injunction is within this
Court’s discretion. Ashcroft v. ACLU, 542 U.S. 656, 664 (2004)
(noting that the Supreme Court and appellate courts review
preliminary injunctions for an abuse of discretion); but see Roland
Machinery Co. v. Dresser Industries, Inc., 749 F.2d 380, 388-91
(7th Cir. 1984) (discussing whether the abuse-of-discretion
standard is appropriate, ultimately concluding the trial court
committed clear factual and legal errors by granting the motion for
a preliminary injunction). However, it is an extreme remedy to be
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granted sparingly. See Girl Scouts of Manitou Council, 549 F.3d at
1085 (a preliminary injunction is “an exercise of a very far-reaching
power, never to be indulged in except in a case clearly demanding
it”). A court that grants a preliminary injunction should limit the
scope to the minimal amount of relief necessary to protect against
the alleged injury. Boucher v. Sch. Bd. of Sch. Dist. of Greenfield,
134 F.3d 821, 826 n.6 (7th Cir. 1998) (“[A] preliminary injunction
that would give the movant substantially all the relief he seeks is
disfavored, and courts have imposed a higher burden on a movant
in such cases.”).
IV.
A.

ANALYSIS

Plaintiffs have not established a likelihood of success on
the merits.
At the preliminary injunction stage, Plaintiff must show some

likelihood of success on the merits of the lawsuit. Girl Scouts of
Manitou Council, 549 F.3d at 1096 (likelihood of success on the
merits means a “better than negligible chance” on at least one of the
claims and is an “admittedly low requirement”).
Regarding the proposed sales to be approved at the April 26,
2017, special meeting, Plaintiffs point out the Defendants’ failure to
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engage an investment bank or broker to market the sales to other
potential buyers or to calculate the market value of the proposed
sale to Kirlin’s 1948, and Defendants’ failure to consider other
alternatives that would allow the Company to remain in business or
return greater profits to the shareholders. Plaintiffs argue that
these omissions are evidence of the fraud and breach of duty
alleged in the Complaint.
However, Plaintiffs set forth no facts to support their allegation
that the proposed sales will be transacted at a price or terms unfair
to the Company. The sales are to be made at virtually identical
terms to almost all of the prior sales of the Company’s stores since
2014 and to the terms under which the Company bought stores in
2013 and 2015. Affidavit of Dale Kirlin, Ex. 1 to Defendants’
Supplemental Memorandum ¶¶ 14, 15 (d/e 66-1).
Under these terms, the purchase price is calculated as a
function of the value of the store’s inventory on the day of the sale.
An external inventory team evaluates the store’s inventory and
calculates the value. A 47.5% multiplier is then applied to the
store’s Hallmark products, and a variety of percentages are applied
to the store’s allied products, based on the product’s brand line,
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condition, and other factors. This formula to calculate purchase
price was established by Hallmark and has been used in Hallmark’s
purchase of stores from the Company and in the Company’s
purchase of stores. Plaintiffs submit no facts suggesting that the
price of the stores to be sold to Kirlins 1948 will be calculated
differently or improperly. Nor have Plaintiffs set forth any evidence
to indicate that the purchase price of the stores sold to Kirlins 1948
will not reflect their fair market values. There is no evidence before
the Court indicating that the sale to Kirlin’s 1948 received
preferential treatment.
Nor does the non-public nature of the sale process support the
allegations of the Complaint. In his April 19, 2017, email to
Plaintiffs’ counsel Alan Farkas, Howard Samuels, Founder of Rally
Capital Services, LLC, advised that the Company distribute notice of
its intent to sell the stores to the public, which may attract another
potential buyer. Rally Capital counseled that the existence of
another potential buyer, or at least notice to a wider audience, is
more likely to achieve a higher selling price of the stores and thus
higher value to the Company.

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However, Howard Samuels testified that he has no expertise in
the sale of greeting card stores. Dale Kirlin, on the other hand,
testified about the standard in the industry and most, if not all, of
the Company’s 151 stores were purchased in the same fashion.
Moreover, the difference in the processes does not support a
finding of fraud or breach of duty. The business judgment rule
presumes that the decisions and actions of a company’s officers and
directors are free from judicial review and are not subject to liability
for honest errors in judgment. Plaintiffs have put forth no facts to
suggest that Defendants acted in bad faith or in disregard of the
best interests of the Company. See Goldberg v. Astor Plaza Condo.
Ass’n, 971 N.E.2d 1, ¶ 63 (Ill. App. Ct. 2012). Further, Plaintiffs
have not established that the proposed sales will prejudice the
Company.
Plaintiffs’ allegations as to the bonuses paid to Dale and Gary
Kirlin also do not indicate a likelihood of success on the merits.
The Company has paid bonuses to Dale and Gary Kirlin since 1975,
when the Board of Directors approved a plan to issue bonuses to
“officer-employees” if the Company’s annual profitability reached a
certain threshold amount. Dale and Gary Kirlin consistently
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reinvested most of the value of their bonuses back into the
Company in exchange for notes of outstanding debt. The Company
currently owes each of them approximately $1 million.
Since 2009, the Company has paid Dale and Gary Kirlin
$9,300 every two weeks in repayment for those notes. To make
those payments, the Company uses funds obtained from one or
more of the loans it has taken from several banks. Plaintiffs
suggest that such a process is indicative of mismanagement.
However, Plaintiffs have offered no facts to show that these
payments are not in the best interests of the Company. Indeed,
each payment reduces the Company’s outstanding debt on those
notes. Any questionability of the wisdom of using bank loan funds
to repay liabilities to employees is a matter of judgment that is
within the purview of the officers and the board of directors and
that is protected by the business judgment rule.
As to the management of the Company’s health insurance
policy, Dale Kirlin’s son-in-law, Jeffrey Kennedy, became the
Company’s agent at Blue Cross Blue Shield in 2004. Mr. Kennedy
is an employee of R.W. Garrett Agency, Inc., which has managed
the Company’s health insurance policy since before Mr. Kennedy
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was hired. Plaintiffs set forth no facts to suggest that Mr.
Kennedy’s role as the agent is harmful to the Company, that he is
incompetent or has mismanaged the Company’s health plan, or that
he has used the Company’s assets or employees for his personal
benefit. The mere familial relationship between Mr. Kennedy and
Dale Kirlin is insufficient to indicate a conflict of interest, fraud, or
a breach of duty.
Brad Kirlin’s position as the Company’s securities broker
similarly does not indicate a conflict of interest sufficient to support
a likelihood of success on Plaintiffs’ claims. The Company’s
employee retirement plan is managed by CPI, Inc. and is overseen
by the trustees of the Kirlin Profit Sharing Plan. The trustees select
the funds into which participating employees can invest. The
broker evaluates the trustees’ selections and may make suggestions
to improve the fund selection.
In 2008, Dale Kirlin’s son, Brad Kirlin, became the Company’s
securities broker. Plaintiffs have established no evidence which
suggests that Brad Kirlin is unqualified to be the Company’s
securities broker, that his position has caused any prejudice the

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Company, or that he has used the Company’s assets or employees
for his personal benefit.
Finally, the circumstances of the sale of the Company’s
aircraft in 2014 also does not indicate wrongdoing by Dale or Gary
Kirlin. The Board of Directors placed the Citation aircraft for sale in
2008 for about $1.4 million, but they did not sell it until 2014 for
about $500,000. Plaintiffs’ disagreement as to the wisdom of the
process by which the aircraft was sold cannot be a basis of liability
because Plaintiffs have not presented evidence that Dale or Gary
Kirlin acted in bad faith or in disregard of the best interests of the
Company. In the absence of such evidence, the business judgment
rule protects management from liability for errors in judgment.
See Goldberg, 971 N.E.2d 1, ¶ 63.
Nor is there any indication that the aircraft was improperly
used for personal benefit. Defendants have submitted evidence to
show that the aircraft was purchased for officer and employee travel
to the Company’s hard-to-access stores. The aircraft’s logs indicate
that 94% of its use was for business. And, the Company
implemented a plan for reimbursement to the Company for the
remaining personal use of the plane.
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Based on the foregoing, Plaintiffs have not demonstrated a
likelihood of success on the merits.
B.

Plaintiffs have not established that no adequate remedy
at law exists.
To obtain a preliminary injunction, the movant must

demonstrate the absence of an adequate remedy at law. Roland
Machinery Co. v. Dresser Industries, Inc., 749 F.2d 380, 386 (7th
Cir. 1984). Plaintiffs have failed to do so. Concededly, money
damages may be insufficient where (1) the plaintiff is so poor he
would be harmed in the interim by the loss of the monetary
benefits, (2) the plaintiff would be unable to finance the lawsuit
without the money he wishes to recover, (3) damages from the
defendant would be unobtainable because the defendant will be
insolvent prior to the final judgment, and (4) the nature of the
plaintiff’s loss may make damages difficult to calculate. Id.
Plaintiffs have failed to establish money damages are insufficient
under any of these prongs.
Given the Company’s outstanding liabilities, monthly
operational losses, and overall financial situation, the Company
may be unable to pay legal damages in the event of a verdict in
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favor of Plaintiffs. See Roland Machinery, 749 F.2d at 386
(inadequate remedy at law if defendant will be insolvent at final
judgment such that plaintiff could not obtain damages from
defendant). However, many stores remain to be sold, so the
financial status of the Company can not be determined on this
record. Further, Dale and Gary Kirlin’s potential liability in their
individual capacities provides Plaintiffs an adequate remedy at law.
Because the Complaint alleges that Dale and Gary engaged in selfdealing, fraudulent activity, and breaches of their fiduciary duties
as directors and officers, these claims, if proven, may pierce the
corporate veil that would otherwise protect them from personal
liability. Song v. Rom, No. 15-1438, 2016 WL 726899 (N.D. Ohio
Feb. 24, 2016) (where a shareholder operates a company as a mere
tool for his benefit and misuses the company, he is not protected by
the limited liability principle and may be personally liable for injury
he caused to third-party creditor by his fraud, siphoning of assets,
or other wrongdoing). Plaintiffs could therefore collect damages
from Dale and Gary in their personal capacities.
Further, Dale Kirlin owns monies that could be subject to a
legal damages order. At the April 25 hearing, Dale Kirlin testified
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that he owned sufficient funds to guarantee the bank loan to Kirlins
1948, Inc. for its approximately $600,000 purchase from the
Company. Because Dale Kirlin owns funds that could be subject to
a legal damages order, Plaintiffs cannot show that damages would
be unobtainable because the defendant would be insolvent prior to
the final judgment. Plaintiffs therefore have not established that
their remedy at law would be inadequate.
Further, Defendants have refuted Plaintiffs’ assertion of the
necessity to enjoin the April 26, 2017, meeting to approve the
proposed sales to Kirlin 1948. Simply, the market for brick-andmortar greeting card stores is meager. A meager market means an
injunction would be unlikely to result in a sale more favorable to
the Company. Card stores nationwide are closing at an alarming
rate. In fact, the Company is regularly approached about buying
out other stores by similar families and Hallmark. Dale Kirlin
explained that few potential buyers exist in the current market, due
to the same conditions that caused the decline in the Company’s
profitability—the explosion of internet shopping, young people’s
preference for e-cards and printed photo books over paper cards
and photo albums, Hallmark’s distribution of its greeting cards to
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“mass channel” stores such as grocery stores and big-box stores,
the rise in postage costs, and other factors. The unlikely existence
of another buyer refutes the necessity of Plaintiffs’ requested
injunction of the meeting to approve the sales to Kirlins 1948.
C.

Plaintiffs have not shown a risk of irreparable harm.
To obtain a preliminary injunction, the movant must

“establish that it will be irreparably harmed if it does not receive
preliminary relief, and that money damages and/or an injunction
ordered at final judgment would not rectify that harm.” Abbott
Labs. v. Mead Johnson & Co, 971 F.2d 6, 16 (7th Cir. 1992);
Roland Machinery, 749 F.2d at 386 (“The requirement of irreparable
harm is needed to take care of the case where although the ultimate
relief that the plaintiff is seeking is equitable, implying that he has
no adequate remedy at law, he can easily wait till the end of trial to
get that relief.”).
Plaintiffs have not established the urgency necessary to justify
the issuance of a preliminary injunction. Donald Kirlin has been
aware of the proposed sale of all or a portion of the Company’s
stores at least since 2006. The Kirlin’s, Inc. Joint Unanimous
Written Consent of Shareholders and Directors, dated March 24,
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2006, and signed by Donald, Dale, and Gary Kirlin, resolves that
Dale and Gary are authorized to negotiate with Hallmark, Inc.
regarding the sale of all or a portion of the Company’s stores.
Defendants’ ex. 14. Additionally, the Company has been selling and
closing its stores since 2014. Plaintiffs have not shown the
existence of the urgency required for a preliminary injunction.
Moreover, Plaintiffs have only alleged a risk of monetary
injury. The non-public process employed for the proposed sales
and the purchase price of those sales affect the monetary value of
the Company and its shares. Plaintiffs’ allegations regarding the
management of the Company’s requirement and health plans, the
bonuses paid to Dale and Gary and the repayment of the loan
notes, and the sale of the aircraft similarly affect strictly the
monetary value of the Company.
Plaintiff Donald Kirlin stated that Store #101 (one of the stores
proposed to be sold to Kirlins 1948) was one of the first stores of the
Company where Plaintiff Donald worked as a child and formed fond
family memories. However, the family history associated with the
store does not remove the proposed sale from the context of a
financial business transaction.
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Plaintiffs also argue that the three stores proposed to be sold
to Kirlins 1948 are among the most profitable of the Company. The
profitability of the stores may affect the wisdom of the ultimate
purchase price of the sale, as well as the effect that the sales will
have on the Company, but such impacts are strictly monetary.
Finally, Plaintiffs argue that sale of the three stores “will put
an end to the Company.” Plaintiffs’ Memorandum of Law at 1 (d/e
42). However, Plaintiffs set forth no facts to substantiate this claim.
Regardless, Dale and Gary were clear that the Company intends to
sell all of its remaining 22 stores, effectively closing the Company
and mitigating losses. Defendants’ Supplemental Memorandum
(d/e 66). Therefore, Plaintiffs have not established a risk of
irreparable harm to justify issuance of a preliminary injunction.
D.

The balance of the harms to the parties weighs in favor
of Defendants.
Even if the Court found that Plaintiffs met their burden to

show probability of success, inadequacy of a legal remedy, and
irreparable harm, the balance of the harms to the parties weighs in
favor of allowing the April 26 meeting to proceed. See Stuller, 695
F.3d at 678. The $370,000 monthly operational losses of the
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Company, the June 2017 maturity date of the Company’s $2.5
million CrownMac loan, and the October 2017 maturity date of the
Company’s $1.78 million Homebank loan support the immediate
selling of the stores. See Affidavit of Gary Kirlin, Ex. 1 to
Defendants’ Memorandum Opposing TRO and Receivership ¶ 29
(d/e 46-1). The speculative nature of any additional value that the
Company may gain from using a different process to sell the
remaining stores is outweighed by the harm the Company
immediately suffers from a delay in the sales.
Because Plaintiffs have not met their burden to demonstrate a
likelihood of success on the merits, the inadequacy of legal
remedies, and a risk of irreparable harm, their request for
preliminary injunction is DENIED.
E.

Plaintiffs have not demonstrated a need for
appointment of a receiver.
Plaintiffs also seek the appointment of an interim receiver to

manage the day-to-day affairs of the Company pending resolution of
this lawsuit. The Court’s considerations as to whether to appoint a
receiver are very similar to the elements required for an injunction.
The factors for the Court to consider include: (1) the defendant’s
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fraudulent conduct; (2) imminent danger that property will be lost
or squandered; (3) inadequacy of available legal remedies; (4) the
probability that the harm to plaintiff from denial of the appointment
will surpass the injury to the opponent; (5) the plaintiff’s likelihood
of success and the possibility of irreparable injury to the plaintiff;
and (6) whether the appointment will serve the plaintiff’s interests.
Consolidated Rail Corp. v. Fore River Railway Co., 861 F.2d 322,
326-27 (1st Cir. 1988).
Like a preliminary injunction, appointment of a receiver is an
“extraordinary and drastic remedy” and is only appropriate in cases
of “urgent necessity.” 805 ILCS Ann. 5/12.56 n.3; see Witters v.
Hicks, 790 N.E.2d 5 (Ill. App. Ct. 2003) (appointment of receiver
justified in shareholder’s individual and derivative action against
majority shareholder and officer who converted rebate funds owed
to company for his own use, retained rent checks rather than
depositing them into corporate accounts, failed to keep accurate
books on interest income generated by employee loan program, and
used employees and corporate assets for personal, separate
business). Given that Plaintiffs have not met their burden to
substantiate their request for a preliminary injunction, they
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similarly have not established the propriety of appointment of a
receiver. Plaintiffs’ request for appointment of a receiver is
accordingly DENIED.
ENTER: April 26, 2017
FOR THE COURT:
s/Sue E Myerscough
SUE E. MYERSCOUGH
UNITED STATES DISTRICT JUDGE

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