Control New MLSS, LLC v. Timpone

2023 IL App (1st) 221638-U

• Court: Appellate Court of Illinois
• Decided: March 20, 2023
• Docket: 1-22-1638
• Status: Unpublished

Opinion

2023 IL App (1st) 221638-U FIRST DISTRICT, FIRST DIVISION March 20, 2023

No. 1-22-1638

NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1). _____________________________________________________________________________

IN THE APPELLATE COURT OF ILLINOIS FIRST JUDICIAL DISTRICT _____________________________________________________________________________

CONTROL NEW MLSS, LLC, individually and ) derivatively on behalf of Locality Labs, LLC, and) EDWARD WEINHAUS, ) ) Plaintiffs/Counter-Defendants, ) ) v. ) ) BRIAN TIMPONE, ANDREW MCKENNA, ) DANIEL KAZAN, CHRIS HOCHSCHILD, ) Appeal from the NEWSINATOR, LLC, INTERNET CONTENT ) Circuit Court of SERVICES, TRIBUNE MEDIA COMPANY, ) Cook County, Illinois. TRIBUNE PUBLISHING COMPANY, LLC, and ) LOCALITY LABS, LLC, ) No. 16 CH 07155 ) Defendants/Counter-Plaintiffs ) Honorable ) Thaddeus L. Wilson, (Control New MLSS, LLC, ) Judge Presiding. ) Plaintiff/Counter-Defendant-Appellant, ) ) v. ) ) Brian Timpone, Andrew McKenna, Newsinator, ) LLC, and Locality Labs, LLC, ) ) Defendants/Counter-Plaintiffs-Appellees). ) _____________________________________________________________________________ No. 1-22-1638

JUSTICE COGHLAN delivered the judgment of the court. Presiding Justice Lavin and Justice Pucinski concurred in the judgment.

ORDER

¶1 Held: The trial court acted within its discretion in denying plaintiff’s motion for a stay.

¶2 In 2016, plaintiff Edward Weinhaus, a former manager of the board of directors for

Locality Labs, LLC (Locality), and his company Control New MLSS, LLC (Control) brought

suit against (among other parties) Locality and Brian Timpone, the majority owner of Locality,

alleging breaches of fiduciary duty and breaches of contract.

¶3 In 2022, with the litigation still at the pleadings stage, Control moved to stay the

proceedings and compel settlement negotiations between the parties. The motion was denied, and

Control appeals pursuant to Supreme Court Rule 307(a)(1) (eff. Nov. 1, 2017) (allowing

interlocutory appeals from a denial of injunctive relief). For the reasons that follow, we affirm.

¶4 BACKGROUND

¶5 This appeal arises from a series of lawsuits that Weinhaus is pursuing, on his own behalf

and on behalf of his company Control1, against Locality and Timpone. We summarize the

relevant facts briefly.

¶6 Locality is “a vendor for ‘hyper-local’ news to area newspapers.” In April 2012,

defendant Tribune Media Company and its then-subsidiary, Tribune Publishing Company, LLC

(collectively Tribune) signed a service contract with Locality. In July 2012, Tribune unilaterally

suspended the contract. Weinhaus, as the manager of Locality’s board of directors, “agitat[ed]

for” litigation against Tribune. Over Weinhaus’ objection, Timpone negotiated a new contract

with Tribune. Following further disagreement about the Tribune contract, Timpone and board

1 Weinhaus fully owns Control, which serves as a holding entity for his interest in Locality. -2- No. 1-22-1638

members Daniel Kazan and Chris Hochschild voted to remove Weinhaus from the board of

directors in October 2013. Additionally, Timpone, Kazan, and Hochschild allegedly engaged in

“dilutive financing” which “decimated” the value of Control’s ownership interest in Locality and

gave Timpone “greater control of Locality,” which he used “to divert resources and assets to

Newsinator, LLC (‘Newsinator’) and/or Internet Content Services (‘ICS’), entities he co-owned

and/or managed with Andrew McKenna.”

¶7 On May 25, 2016, Weinhaus and Control filed the instant suit against Locality, Timpone,

McKenna, Kazan, Hochschild, Tribune, Newsinator, and ICS, alleging breaches of fiduciary

duty and breaches of contract. Defendants filed various counterclaims against Weinhaus and

Control. Weinhaus also filed multiple other related actions, including an action in Missouri

federal court against Timpone, McKenna, and Newsinator (Control v. Timpone, No. 4:21-cv-

01522 (E.D. Mo.)), and an action in Missouri state court (Control v. Timpone, No. 20SL-

CC04103 (Cir. Ct. St. Louis Cty., Mo.)).

¶8 On January 11, 2022, with the action still at the pleadings stage, plaintiffs filed a “Motion

for Mediation of Direct Claims Between Plaintiffs and Locality,” arguing that “it is within

Locality’s and Plaintiffs’ interest to seek to resolve their extremely limited issues without undue

expense.” Plaintiffs asserted that prior settlement discussions with Locality were “unfruitful”

because they “centered around” the interests of the other defendants, which were not aligned

with Locality’s interests. Thus, plaintiffs requested the court order mediation between them and

Locality regarding Weinhaus’ direct claims against Locality (counts IX, X, and XI of the second

amended complaint) and Locality’s counterclaims against Weinhaus and Control.

¶9 On February 23, 2022, the court granted plaintiffs’ motion, stating: “Plaintiffs and

Defendant Locality Labs shall agree upon a neutral mediator and mediate all direct claims and

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counterclaims in the Operative Complaint *** and Locality’s First Amended Answer and

Counterclaims.”

¶ 10 On September 27, 2022, Control filed the motion that is the subject of the instant appeal,

requesting that the court order “good faith settlement negotiations for all parties and a stay of

proceedings pending the resolution of the Missouri court’s jurisdiction as it relates to potential

injunction of certain claims in this matter.” It argued that the settlement discussions between

plaintiffs and Locality “could resolve the case,” but “[o]ne issue that is likely to hold up

settlement of all claims is that the non-Locality Defendants are not involved in settlement

discussions or negotiations.” In support, Control cited a joint report submitted by the parties to

the court in the Missouri federal case, stating: “Mediation between the Plaintiffs and [Locality]

in the Underlying Lawsuit which could potentially resolve the claims in that case [] is ongoing

***. The discussions have been meaningful.”

¶ 11 Second, Control argued that a stay was appropriate in the interest of judicial economy

because of developments in the Missouri state action:

“On August 18, 2022, the Missouri [state] court ordered discovery for the issue of

personal jurisdiction so it can finally have the issue joined. The Missouri court is being

called to enjoin counterclaims in this matter. *** [The court’s] potential injunction

against Locality *** and Newsinator would moot several of the most immediate matters

before this Court.”

¶ 12 Third, Control argued that “a temporary stay will give new counsel an opportunity to get

up to speed in this case,” since Locality had new counsel enter in February, and Tribune had a

pending motion to replace their counsel.

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¶ 13 On September 29, 2022, the trial court denied Control’s motion, and Control appealed

pursuant to Supreme Court Rule 307(a)(1) (eff. Nov. 1, 2017) (allowing interlocutory appeals

from a denial of injunctive relief).

¶ 14 ANALYSIS

¶ 15 The trial court “may stay proceedings as part of its inherent authority to control the

disposition of cases before it.” (Internal quotation marks omitted.) Sentry Insurance v.

Continental Casualty Co., 2017 IL App (1st) 161785, ¶ 30. Thus, trial courts are afforded

discretion in issuing stay orders, and we review the court’s denial of a stay for an abuse of

discretion. Id.; Vasa North Atlantic Insurance Co. v. Selcke, 261 Ill. App. 3d 626, 629 (1994).

Control argues that de novo review applies, citing Golden v. Friedman, 2012 IL App (2d)

120513, ¶ 21, for the proposition that where the trial court “does not make any factual findings or

the underlying facts are not in dispute,” and its decision “is based upon a purely legal analysis,”

our review is de novo. See also Hutcherson v. Sears Roebuck & Co., 342 Ill. App. 3d 109, 115

(2003). Golden and Hutcherson involved motions to stay the proceedings and compel arbitration,

under which “the sole question for the court to determine is whether there was an agreement to

arbitrate.” Golden, 2012 IL App (2d) 120513, ¶ 20. Such cases “in no way call[] into question

the general rule that stays are reviewed for an abuse of discretion.” (Internal quotation marks

omitted.) Sentry, 2017 IL App (1st) 161785, ¶ 30.

¶ 16 Settlement Negotiations

¶ 17 Control contends that the trial court should have stayed the proceedings to require all

parties “to conduct good faith settlement negotiations,” citing Haisma v. Edgar, 218 Ill. App. 3d

78, 86 (1991), for the proposition that “Illinois public policy generally favors the peaceful and

voluntary resolution of disputes.” However, the trial court, being acquainted with the parties over

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the course of this protracted litigation, is in the best position to determine whether a stay would

facilitate settlement. Notably, in their January 11, 2022 motion for mediation, plaintiffs asserted

that prior settlement discussions with Locality were “unfruitful” because they “centered around

the other Timpone Defendants’ interests,” which were “completely opposed to Locality’s own

interests.” The trial court could reasonably have concluded that settlement negotiations between

all parties would continue to be “unfruitful” due to defendants’ divergent interests. Moreover, the

trial court’s order does not preclude the parties from choosing to engage in settlement

negotiations while the pretrial process is ongoing. Accordingly, the court acted within its

discretion in denying Control’s motion to stay the proceedings to compel settlement negotiations.

¶ 18 Proceedings in the Missouri State Action

¶ 19 Control next argues that the trial court abused its discretion in not granting a stay because

rulings in the ongoing Missouri state action could “moot actions in the trial court and create

inconsistent rulings.”

¶ 20 “When several actions are pending that involve substantially the same subject matter, a

court may stay the proceedings in one matter to see whether the disposition of one action may

settle the other.” Lisk v. Lisk, 2020 IL App (4th) 190364, ¶ 23. The factors that a court should

consider include “comity; the prevention of multiplicity, vexation, and harassment; the

likelihood of obtaining complete relief in the foreign jurisdiction; and the res judicata effect of a

foreign judgment in the local forum.” Kellerman v. MCI Telecommunications Corp., 112 Ill. 2d

428, 447-48 (1986).

¶ 21 Control has not given this court sufficient background about the Missouri state court

action to assess whether the Kellerman factors apply. Although it references “the Missouri

Contract” and a dispute as to whether Newsinator released certain claims against Weinhaus, it

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does not provide a cohesive explanation of the parties, the underlying facts, or the issues

involved, much less how they might overlap with the case at bar. It is therefore unclear whether

the actions “involve substantially the same subject matter” (Lisk, 2020 IL App (4th) 190364, ¶

23) or whether it is likely the parties will “obtain[] complete relief in the foreign jurisdiction”

(Kellerman, 112 Ill. 2d at 448).

¶ 22 “A reviewing court is entitled to have issues clearly defined with *** cohesive arguments

presented [citation], and it is not a repository into which an appellant may foist the burden of

argument and research.” Obert v. Saville, 253 Ill. App. 3d 677, 682 (1993). Supreme Court Rule

341(h)(6) requires an appellant to state the facts of the case “accurately and fairly without

argument or comment, and with appropriate reference to the pages of the record on appeal.” Ill.

S. Ct. R. 341(h)(6) (eff. Oct. 1, 2020). An appellant’s failure to set forth the facts needed to

understand the issues raised on appeal will justify dismissal of the appeal. In re H.B., 2022 IL

App (2d) 210404, ¶ 43. Even if we choose to overlook Control’s lack of compliance with Rule

341 (see In re Marriage of Souleles, 111 Ill. App. 3d 865, 869 (1982) (the mandates of Rule 341

are admonitions to the parties, not jurisdictional in nature)), we lack a sufficient factual basis

upon which to analyze the Kellerman factors. The trial court was in the best position to evaluate

the risk of inconsistent rulings, and, upon this record, we cannot say it abused its discretion in

denying a stay on that basis.

¶ 23 The cases cited by Control are inapposite. In American Nat’l Trust Co. of Chicago v.

Kentucky Fried Chicken of S. California, Inc., 308 Ill. App. 3d 106 (1999), the trial court stayed

proceedings against defendants who declared bankruptcy in California during the pendency of

the action. Since the trial court’s stay order was not challenged on appeal, Control’s reliance on

Kentucky is misplaced.

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¶ 24 In Lisk, 2020 IL App (4th) 190364, the plaintiffs brought action against their son and

daughter-in-law, who were involved in a pending divorce action, seeking recovery of an alleged

debt. The record clearly reflected that “[b]oth proceedings involved the same property” and “a

determination in the divorce case regarding defendants’ marital property and nonmarital property

would help settle the matter at hand”; thus, the trial court acted within its discretion in entering a

stay. Id. ¶¶ 27-28; see also First Nat’l Bank of Hoffman Estates v. Fabbrini, 255 Ill. App. 3d 99,

101 (1993) (stay was warranted where “[t]here is no question from the record that the Bank’s

counterclaim in the law division action seeks recovery on the same operative set of facts as its

complaint for foreclosure in the instant action”). By contrast, the record is not sufficiently clear

for this court to analyze whether plaintiffs in the Missouri state action seek recovery on the same

operative set of facts as in the instant action, or whether rulings in that case “would help settle

the matter at hand” (Lisk, 2020 IL App (4th) 190364, ¶ 28).

¶ 25 New Counsel

¶ 26 Control argues that a stay “will give new counsel an opportunity to get up to speed in this

case.” The record reflects that Locality had new counsel enter in February 2022 and, as of

September 27, 2002, Tribune had a pending motion to substitute new counsel. However, the trial

court is in the best position to weigh the needs of counsel against the court’s and the parties’

interest in moving the case forward. Control does not cite any cases in which a trial court abused

its discretion in denying a stay for purposes of giving new counsel “an opportunity to get up to

speed.” Moreover, none of the new attorneys in this case represent Control, and if Locality

and/or Tribune believe their attorneys need additional time to acquaint themselves with the case,

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they are free to seek such relief as they deem appropriate. 2 For these reasons, we do not find that

the trial court “acted arbitrarily, exceeded the bounds of reason, or ignored recognized principles

of law” (Fabbrini, 255 Ill. App. 3d at 101) in denying Control’s motion for stay.

¶ 27 Control’s Additional Arguments

¶ 28 Control argues that “even if the court disagrees that the entire case should be stayed, the

court should stay the claims related to the Missouri [state] case,” but it does not set forth what

counts and what parties would be included in such a stay. Accordingly, this argument is

forfeited. Ill. S. Ct. R. 341(h)(7) (eff. Oct. 1, 2020); Gandy v. Kimbrough, 406 Ill. App. 3d 867,

875-76 (2010) (appellant forfeited consideration of issue that was “ill-defined and insufficiently

presented”).

¶ 29 Control additionally argues that we should remand the cause for “the trial court to

conduct a hearing on the motion to stay,” asserting that “the Circuit Court, were it to conduct a

hearing, would not have to look very hard to see that its own time will be wasted” in the absence

of a stay. If Control is referring to an evidentiary hearing, it did not request such a hearing in its

motion and does not articulate what evidence it would present at such a hearing; thus, any such

argument is forfeited. Id. If Control means that the trial court should hear attorney arguments on

the motion to stay, it had full opportunity to make arguments in its written motion. Additionally,

the court’s September 29, 2022 order denying Control’s motion to stay states that it “ha[s] been

advised in the premises.” We therefore do not find it necessary to order the trial court to conduct

a “hearing” on Control’s motion.

¶ 30 CONCLUSION

2 The record reflects that Locality filed a motion for stay in February 2022 that was denied without prejudice. However, since the motion is not included in the record, we can draw no conclusions therefrom. -9- No. 1-22-1638

¶ 31 For the foregoing reasons, the trial court’s order denying Control’s motion for stay is

affirmed.

¶ 32 Affirmed.

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