Madison - St. Clair Record

Wednesday, February 19, 2020

Madison County judge sets trial Sept. 16 in Chinese firm's debt claim, despite defendant motion to remove him

State Court

By Karen Kidd | Sep 10, 2019


EDWARDSVILLE  — A Madison County judge is pushing ahead with trial later this month in a Chinese-based shelving company's lawsuit against a dissolved storage company formerly located in Madison, despite the latter's request that the judge be substituted.

In his handwritten order, Madison County Circuit Judge David Dugan gave defendants U.S. Storage Group LLC and its owner Michael L. Sabados Jr. a deadline to provide a brief on their motion to change the judge in Jracking Storage Solutions' lawsuit. Dugan was first assigned to the case last December and U.S. Storage Group and Sabados filed a motion for change of judge as of right on Aug. 26.

The defendants claim in their single-page motion that Dugan "has made no substantive rulings in this case" but otherwise provided no reasons another judge should be assigned to the case.

The defendants and their counsel also failed to appear for an Aug. 27 hearing on their motion.

"Plaintiff is granted leave to file a motion for sanctions and for attorneys fees for defendants' failure to appear this date," Dugan said in his order, in which he also set the jury trial to begin Sept. 16.

Counsel for Jracking Storage has informed Dugan that the company's representative will be traveling from China for the trial.

Jracking Storage, based in Nanjing, the capital of China's eastern Jiangsu province, and doing business as Nanjing Jiangrui Storage Equipment, filed suit in May of last year in Madison County Circuit Court against U.S. Storage Group LLC and Michael L. Sabados Jr. Sabados, who allegedly purchased the shelving in April 2012, voluntarily dissolved U.S. Storage Group, formerly located in Madison, in February 2017.  

In its six-page "petition to pierce the corporate veil" lawsuit seeking more than $300,000, Jracking Storage alleged that U.S. Storage Group and Sabados didn't meet up to their contractual obligations to pay for warehouse shelving and storage racks.

The following month, Jracking Storage sued U.S. Storage Group in U.S. District Court for the Southern District of Illinois.

Jracking Storage's litigation isn't over whether U.S. Storage Group owes money for the racks. Jracking Storage previously filed suit against U.S. Storage Group in the Third Judicial Circuit Court in April 2016 and received a default judgment in its favor the following December. What Jracking is after now is getting Sabados to pay that debt.

"Defendant U.S. Storage was a mere facade for the operation of defendant Sabados," Jracking Storage's lawsuit before Dugan said, maintaining that a "unity of interest and ownership exists" between U.S. Storage and Sabados.

During an examination the April following the default judgment, Sabados testified he used company funds to pay his personal bills, according to Jracking Storage's lawsuit in Madison County Court.

At the same examination, Sabados testified that he removed company records from their file drawers to "most likely the garbage can," the lawsuit said.

U.S. Storage Group is insolvent, according to the answer and affirmative defenses Sabados filed with the Madison County Court in October. Sabados argued in his answer and affirmative defenses that Jracking Storage's claims against him are barred by res judicata "as this action has already been litigated by plaintiff, who obtained a judgment, and now is engaged in claim splitting."

U.S. Storage Group was founded in January of 1996, according to Sabados' LinkedIn page, which does not mention that the company has been dissolved.

In its motion asking Dugan to strike Sabados affirmative defenses and to grant judgment in its favor, Jracking Storage claims that Sabados' res judicata argument fails because the present litigation was filed to collect a debt owed as a result of the previous judgment.

"Accordingly, Sabados' affirmative defense should be stricken as a matter of law," Jracking Storage's motion said.

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Madison County Circuit CourtU.S. District Court for the Southern District of Illinois

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