Former exec loses appeal to keep his stock in $20M filtration firm

A former filtration-industry executive who wanted to keep his stock in a $20 million corporation has lost his appeal of the dismissal of his case.

The case of Richard Jefferson Deibel v. Larry Hoeg, Aaron Hoeg, and Roger Steffen, 20-3378, dates back to 1986, when Richard Deibel, Larry Hoeg and Roger Steffen founded the Anderson-based filtration business Hy-Pro Corp. Deibel became president, holding 12.5% of the stock and guaranteeing a $100,000 debt to a bank.

But within a year, Deibel began demanding Hoeg’s resignation. When Hoeg refused, Deibel quit but held onto his stock.

Litigation then ensued and, according to Deibel, the parties entered a settlement where Hy-Pro would pay $15,000 to a corporation controlled by Deibel and would arrange for the release of his bank guarantee. The settlement, however, was not reduced to writing, and Hoeg and Steffen alleged there was a third term: Deibel had to surrender his shares. The company eventually canceled Deibel’s stock in 1992.

The settlement’s terms were never resolved in state-court litigation, so Deibel turned to the U.S. District Court for the Southern District of Indiana almost 30 years later. The federal case came after Hy-Pro was sold for $20 million, meaning 12.5% of the shares would be worth more than $2.5 million.

The district court dismissed Deibel’s suit as untimely, noting a two-year statute of limitations. Deibel had argued that he was still an investor when Hy-Pro was sold in 2017, and if not, the firm’s refusal to recognize him as such was a “continuing wrong” giving him leave to sue “until the end of the universe.”

“The district court thought that these contentions have neither factual nor legal support, and we agree with that conclusion,” 7th Circuit Court of Appeals Judge Frank Easterbrook wrote in a Tuesday opinion.

According to the appellate panel, the “potentially important” years in the litigation were 1992 (when the settlement was drafted and when Hy-Pro canceled Deibel’s stock), 1993 and 1995 (when Deibel’s lawyer told him writing that he was no longer a shareholder) and 1997 (when the IRS told him he was not a shareholder). The district court concluded his claim accrued no later than 1998, when he stopped reporting himself as a shareholder to the IRS, and the appellate court agreed.

“Deibel was injured in 1992 when Hy-Pro cancelled his shares,” Easterbrook wrote. “The nature of that injury sank in no later than 1998. Waiting another 20 years to complain is far too long.”

As for Deibel’s continuing wrong argument, the 7th Circuit noted the distinction between a continuing injury and a continuing wrong.

“If A kicks B in the shin, B may ache for days — but the time to sue starts running with the kick, not the last tinge of pain,” Easterbrook wrote. “… Monthly kicks to the shin would be continuing wrongs — one tort per kick, each with its own period of limitations — but a continuing hurt from any given kick does not affect the time to sue.”

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