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LEVY v. PAPPAS

July 1, 2005.

CHARLES D. LEVY, REFUND RESEARCH ASSOCIATES, INC., Plaintiffs,
v.
MARIA PAPPAS, individually and as Treasurer of Cook County; PETER KARAHOLIOS, individually and as former Counsel for the Treasurer of Cook County; WILLIAM KORUKULIS, individually and as Counsel for the Treasurer of Cook County; JAMES P. CRAWLEY, individually and as Counsel for the Treasurer of Cook County; RICHARD A. DEVINE, individually and as State's Attorney of Cook County, JAMES M. HOULIHAN, individually and as Assessor of Cook County; and the COUNTY OF COOK, a corporate body politic, Defendants.



The opinion of the court was delivered by: GEORGE MAROVICH, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff Charles D. Levy ("Levy") filed a complaint on behalf of himself and as an assignee of the rights and claims of Refund Research Associates, Inc. ("Refund Research"), the other plaintiff. Levy also purports to bring claims "as an agent for various present and former Cook County taxpayers who were the clients of" Refund Research. Plaintiffs assert two counts under 42 U.S.C. § 1983 for constitutional violations, three counts for violations of RICO, 18 U.S.C. § 1962 (a), (c) and (d), and state law claims for conspiracy, conversion and tortious interference with business relationship. Defendants Maria Pappas, Martha Mills, William Korukulis, Peter Karaholios, Richard A. Devine and James M. Houlihan move pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure for an order dismissing the complaint.*fn1 For the reasons set forth below, the Court grants in part and denies in part defendants' motion.

I. Background

  For purposes of this motion to dismiss, the Court takes as true the allegations in the complaint. The Court also considers the third amended complaint in the case of Ball v. County of Cook, Case No. 99 CH 1659 (the "state-court case"), which is pending in the Circuit Court of Cook County and which third amended complaint plaintiff attached to his complaint. The Court may consider the state-court case without converting the motion to dismiss into a motion for summary judgment because the document is attached to the complaint, is relevant to plaintiffs' claims and does not require discovery to authenticate or disambiguate. Tierney v. Vahle, 304 F.3d 734, 739 (7th Cir. 2002).

  Plaintiffs have sued the County of Cook and a number of its employees (each employee in his/her official and individual capacities). Defendant Maria Pappas ("Pappas") is the Treasurer of Cook County, and defendant William Korukulis ("Korukulis") is the Deputy Treasurer of Cook County. Defendant Martha Mills ("Mills") is the Chief Counsel for the Treasurer of Cook County. Defendant James Crawley ("Crawley") is Counsel for the Treasurer of Cook County, and defendant Peter Karaholios was (during a period of time which is not clear from the complaint) Counsel for the Treasurer of Cook County. Defendant James M. Houlihan ("Houlihan") is the Assessor of Cook County. Defendant Richard H. Devine ("Devine") is the State's Attorney for Cook County.

  Levy was the president and sole shareholder of Refund Research, which was an Illinois corporation. (It is unclear how long Refund Research was in business or when it was dissolved.) Refund Research was engaged in the business of assisting taxpayers in obtaining real estate tax refunds. To that end, Refund Research/Levy compared tax records to determine which taxpayers were entitled to but had not received real estate tax refunds. Then, Levy attempted to contact such taxpayers in an effort to convince each taxpayer to enter into an agreement with Refund Research whereby Refund Research would agree to file for a refund on behalf of the taxpayer and the taxpayer would agree to pay Refund Research one third of any tax refund.

  In February 1999, Levy filed a lawsuit (the "state-court case") in the Circuit Court of Cook County against Cook County, Pappas and Edward J. Rosewell ("Rosewell"), the former Treasurer of Cook County. In the state-court case, Levy alleged a conspiracy (the details of which are not relevant here) to retain for Cook County millions of dollars in tax overpayments instead of either refunding the amounts to taxpayers or turning over the money to the state of Illinois and asserted claims for conversion, fraud, breach of fiduciary duty, conspiracy, unjust enrichment and constructive trust.

  Plaintiffs allege that after Levy filed the state-court case, the defendants "embarked on a new conspiracy pursuant to and in furtherance of the conspiracy [alleged in the state-court case], designed and intended to conceal the pre-existing scheme and conspiracy" and to "intimidate the plaintiffs and destroy the plaintiffs' business[.]" (Complt. ¶ 35). Specifically, plaintiffs allege that defendants engaged in two types of conduct in retaliation for Levy's having filed the state-court case. First, defendants caused problems for Refund Research and its clients with respect to collecting the clients' tax refunds, and, second, defendants instigated a criminal investigation.

  Problems with the tax refund system after the state-court suit was filed

  Plaintiffs allege that after Levy filed the state-court case, Levy, Refund Research and its clients began experiencing problems with the tax refund system. Before the lawsuit was filed, Refund Research received a refund check approximately 35 days after the date it filed a refund application. After the lawsuit, Refund Research received a refund check approximately 145 days after it filed a refund application.

  Delay was not the only problem plaintiffs faced. Rather, Levy had problems getting refund checks delivered directly to Refund Research. First, in May 1999, Levy had a problem collecting refund checks for clients of Refund Research. An employee of the Treasurer's office called Levy to inform him that some refund checks were ready to be picked up. When Levy arrived to collect the checks, a clerk told Levy that the checks could not be released because the office had lost the forms that authorized the Treasurer's office to release the checks to Levy/Refund Research instead of to the taxpayers themselves. Levy did not have copies of the authorization forms, and the Treasurer's office refused to release the checks to him based on copies of the contracts between the clients and Refund Research as opposed to signed authorization forms. "Many of these checks" remain in the possession of the Treasurer's office. (It is unclear what happened to the remaining checks.) Next, on or about May 25, 1999, Karaholios told Levy that Refund Research did not have the right to conduct its business and that liens filed by Refund Research were invalid. According to the complaint, after this point, refund checks "were no longer delivered to Refund Research." The complaint also alleges (somewhat contradictorily), that by August 2002, Houlihan, the Cook County Assessor, arranged it so that checks issued to Refund Research clients were mailed directly to the client, rather than to Refund Research. Plaintiffs allege that this change "meant that Refund Research was unlikely to be paid anything by the client for Refund Research's services."

  Plaintiffs also complain that employees of the Treasurer's office made it difficult for them to get information. In April 1999, Crawley (then Assistant General Counsel for Treasurer Pappas) informed Levy that incomplete applications for refunds would not be accepted and that the Treasurer's office did not have the personnel to find the "correct CR number" for Levy's applications. Because Levy was being forced to provide complete applications, Levy submitted a FOIA request to inspect the CR book. The Treasurer's office responded that Levy needed to specify a tax year and to pay a copying charge. Levy informed the Treasurer's office (by "telefax") that he did not wish to pay for copying and that he would prefer to inspect the book in person. The Treasurer's office did not respond. In approximately August 1999, Levy was unable to review microfiche records at the Treasurer's office. For the first time, employees at the Treasurer's office informed Levy that in order to obtain a client's microfiche records, Levy would need a notarized power of attorney from his client. Next, in August and September 2001, Levy had difficulty reviewing other records at the Treasurer's office. The Treasurer's office maintains and keeps "CR" books (which contain information about authorized tax refunds) and "JR" books (which contain information about whether the authorized refunds have actually been paid). Levy wanted access to these books both in order to conduct the business of Refund Research and to obtain evidence for his state-court case. When he asked to inspect the CR and JR books in August 2001, he was told he could not. Levy wrote a letter to Mills, who responded that Levy would be given access to the books. Despite follow-up visits and letters, Levy has yet to be given access to the books. Levy alleges that Mills (and the other employees who failed to provide Levy with access to the CR and JR books) were acting at Pappas's direction.

  In addition, at some point after filing the state-court case, Levy wanted to obtain more information to support his state-court case. Accordingly, a third party (the "FOIA requestor"), allegedly on Levy's behalf, requested a copy of annual reports of unclaimed property submitted to the Illinois State Treasurer by the Cook County Treasurer. The FOIA requestor faced the following difficulties: the Treasurer's office required him to pay $.25 per page; the Treasurer's office told him that he could obtain the information online for free, but the information was not, in fact, online; and once the FOIA requestor paid the copying fee, the report was missing a page. The complaint alleges that Pappas and her employees in the Treasurer's office knew Levy was behind the FOIA request.

  Finally, individuals at the Treasurer's office have failed to return telephone calls placed by Levy and at least one of Refund Research's clients. The Treasurer's office has returned phone calls placed ...


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