3. - LEGAL PROCEEDINGS
Mary Quinn v. Illini Corporation and Illinois Stock
Sangamon County Case No. 98 CH 240
adopted a Shareholder Rights Agreement on June 20, 1997, and named Illinois
Stock Transfer Company (ISTC) as its rights agent thereunder. Illini Corporation was notified in May 1998
of a threatened complaint against ISTC by an Illini Corporation shareholder. The shareholder, Mary K. Quinn (Quinn),
who owns 21 shares of stock in Illini Corporation, filed suit against ISTC on
June 9, 1998 in the Seventh Judicial Circuit Court, Sangamon County,
Illinois. Quinn sought to compel ISTC
to distribute rights certificates to Illini Corporations shareholders and further
sought to certify all Illini Corporation shareholders as a class. Quinn asserted that Ida R. Noll became an
acquiring person under the Rights Agreement on April 16, 1998, and that the
Rights Agreement was triggered. ISTC
has vigorously contested Quinns assertions that Ida R. Noll was an acquiring
person, that the Rights Agreement had been triggered, and that ISTC had a duty
to distribute rights certificates.
On June 9, 1998, Quinn
filed a Motion to Certify the Class, which was granted on December 29,
1998. On January 13, 1999, Quinn filed
an Amended Complaint adding Illini Corporation as a defendant to her
action. Both Illini Corporation and
ISTC answered the Amended Complaint and denied that Ida R. Noll was an
acquiring person. Quinn asserted that
she was entitled to recover her attorneys fees from Illini Corporation and
Quinn filed a Motion for
Summary Judgment that asked the Court to determine as a matter of law that Ida
R. Noll became an acquiring person on April 16, 1998, that the Rights Agreement
was triggered as a result and that Illini Corporation and ISTC had a duty to
distribute rights certificates to all shareholders as of April 16, 1998, except
for Ida R. Noll. Illini Corporation
opposed Quinns Motion for Summary Judgment, which was heard by the Court on
June 18, 1999. On June 29, 1999, the
Court entered an Opinion and Order denying Quinns Motion for Summary Judgment.
On or about May 6, 1999,
counsel for Quinn advised Illini Corporations counsel of her intent to seek an
injunction that would preclude Illini Corporation from completing its
acquisition of the Farmers State Bank of Camp Point (Camp Point), pending
further order of the Court. Quinn
subsequently filed a Motion for Preliminary Injunction and a Memorandum of Law
in Support of her Motion. Quinn argued
that the class (consisting of all Illini Corporations shareholders as of April
16, 1998, except for Ida R. Noll) would be irreparably harmed if the Camp Point
merger closed prior to a determination on the merits of her suit. Illini Corporation filed extensive briefs in
opposition to the Motion for Preliminary Injunction, and the Court heard the
Motion on July 1, 1999. The Court
entered a written Order on July 13, 1999, denying the Motion for Preliminary
Quinns counsel filed a
Motion for Reconsideration of the Orders denying Quinns Motion for Summary
Judgment and Motion for Preliminary Injunction. Illini Corporation and ISTC filed a Motion for Summary Judgment
on August 25, 1999. At a hearing held
on October 18, 1999, the Court granted Illini Corporation and ISTCs Motion for
Summary Judgment and denied Quinns Motion for Reconsideration. An Order was subsequently entered on January
Quinns counsel announced
on October 18, 1999, the intention to petition the Court for an order directing
Illini Corporation and ISTC to pay Quinns attorneys fees pursuant to the
attorney fee provision of the Rights Agreement. Quinns fee petition was heard and denied. Quinn
filed a pending appeal as to all adverse orders. On July 31, 2000, the Appellate Court issued
an order reversing the trial courts order granting summary judgment to Illini
Corporation and remanding the case for trial.
The Appellate Court found that genuine issue of material fact remained
concerning whether the Illini Corporation board of directors acted in good
faith (1) in determining on April 30, 1998 that Ida Nolls acquisition of
shares was inadvertent and (2) in amending the agreement on June 30,
1998. The Appellate Court also reversed
the trial courts order denying Quinns request for costs, expenses and
attorneys fees, finding that the fee provision of the Rights Agreement did not
require one who brought an action to enforce the agreement to prevail in that
action in order to recover fees.
The case has been
remanded to the trial court. Upon Quinns motion the trial court permitted
Quinn to add Mrs. Noll as a party to the action. Quinn subsequently filed a motion to compel an additional
deposition of Burnard K. McHone, President, Illini Corporation, with respect to
a certain Stock Purchase Agreement pursuant to which shares owned by Mrs.
Nolls family were redeemed by Illini Corporation. The trial court denied the motion to compel finding that Quinn
failed to show any basis that the Stock Purchase Agreement was relevant to her
claims in the lawsuit. Defendants filed
a motion to vacate the trial courts order to add Mrs. Noll as a party to the
action. The trial court vacated the prior
order in December 2001. Quinn moved for
recusal of the presiding judge on the grounds that the judge is allegedly
prejudiced or biased against her. The
motion was denied. Illini thereafter
moved for removal of plaintiffs counsel on the basis that counsel had a
conflict of interest arising from his cooperation in the litigation with a
non-class member and her counsel. The
court removed the counsel for the plaintiff class and appointed new counsel to
represent the class. The removed
counsel filed a motion for reconsideration.
The motion was denied.
Thereafter, the remaining class counsel, William Moran, filed a Motion
For Direction. This Motion asserted
that differences had arisen between Moran and the class representative, Mary K.
Quinn, concerning the handling of the case.
Among other assertions, the Motion alleged that the removed class
counsel James Ackerman, continued to advise Ms. Quinn regarding all issues
related to the suit. At a hearing on
the Motion For Direction on January 15, 2003, the trial court removed Mary
Quinn as class representative.
On March 7, 2003, the
trial court appointed Richard G. Austin as successor class representative. Illini Corporation is negotiating for a
settlement of the suit with Mr. Austin and class counsel William Moran. Mary Quinn has filed a motion to opt out of
the class which Illini Corporation opposes.
Mary Quinn v. Ida R. Noll, Burnard McHone, et al.
Sangamon County Case No. 01 CH 377
On August 14, 2001, Mary
Quinn filed a four count complaint against Ida Noll and several present and
former members of Illini Corporations Board of Directors in the Seventh
Judicial Circuit, Sangamon County, Illinois.
The named defendants in the action are Ida Noll, Burnard McHone, William
Etherton, Ronald Thunman, Thomas Black, John Pickrell, Kenneth Deverman, Larry
Curtin, Robert Olson and William McCubbin. Quinn purports to allege derivative
causes of action arising out of Illini entering into a Stock Purchase Agreement
with Ida R. Noll and others. Quinn
asserts that the defendants caused Illini to
breach the Shareholder Rights Agreement, that the directors breached
their fiduciary duty, and usurped a business opportunity of the
Shareholders. Quinn also seeks rescission
of the Stock Purchase Agreement. The
directors named as defendants in the action are represented by the law firm of
Samuels, Miller, Schreoder, Jackson & Sly.
Attorney James Jackson of the Samuels Miller firm moved on behalf of the
defendant directors to dismiss the complaint.
The motion was granted in part and denied in part. Quinn thereafter moved to consolidate this
suit with her previously filed class action suit. Illini intervened for the purposes of opposing
consolidation. The court denied the
motion to consolidate on July 25, 2002, and ordered the derivative suit stayed
pending completion of the trial in the class action suit (98 CH 240) or further
Quinn seeks recovery of
her attorneys fees in the derivative action pursuant to the attorney fee
provision of the Shareholder Rights Agreement.