The opinion of the court was delivered by: Amy J. St. Eve, District Court Judge
MEMORANDUM OPINION AND ORDER
Plaintiffs Eugenie Barsky ("Barsky"), Khalid M. Ali ("Ali"), Tejinder Singh ("Singh"), Alberto Gonzalez ("Gonzalez"), and Meleca Durakovic ("Durakovic"), (collectively, "Plaintiffs"), sued Defendants Steven A. Rutstein ("Rutstein") and Lori Weber Rutstein ("Weber Rutstein" or "Mrs. Rutstein") and two corporations affiliated with one or more of the Rutsteins, alleging violations of the civil Racketeer Influenced Corrupt Organizations Act ("RICO"). The Court held a bench trial on September 8, 2008 and September 9, 2008. (R. 99-1, 100-1.) Following the bench trial, each party filed post-trial submissions in lieu of closing arguments. In addition, Plaintiffs filed their motion for leave to file a third amended complaint. (R. 101-1.) For the reasons discussed below, the Court denies Plaintiffs' motion for leave to file their third amended complaint and enters judgment in favor of Defendants.
Pursuant to Federal Rule of Civil Procedure 52, the Court makes the following findings of fact based on the testimonial and documentary evidence presented at trial on September 8--9, 2008. The Court makes these findings based on its assessment of the witnesses' credibility after considering the evidence presented at the hearing and carefully observing the demeanor of each witness-including the witness' tone of voice and facial expressions-as he or she testified.
Plaintiffs filed their original Complaint on October 19, 2005, alleging three counts of RICO violations pursuant to 18 U.S.C. §§ 1962(a), (c), and (d) and 1964(a) and (c). (R. 1-1.) During almost three years of discovery, the Court admonished Plaintiffs' counsel for failing to appear or otherwise adhere to the Court's deadlines at least six separate times. On May 19, 2008, the Attorney Registration & Disciplinary Commission of the Supreme Court of Illinois (the "ARDC") determined that counsel for Plaintiffs, David M. Levin, had engaged in misconduct and barred him from practicing law in Illinois. Accordingly, the Court granted his motion to withdraw on June 26, 2008. (R. 90-1.)*fn1 Plaintiffs obtained new counsel, and the parties filed their final pretrial order on August 6, 2008. (R. 95-1.) The Pretrial Order characterized this case as "an action for RICO violations," invoking federal question jurisdiction pursuant to 28 U.S.C. § 1331. (R. 95-1 at 1.)
On September 8, 2008, the first day of trial, the Court granted Plaintiffs' oral motion to dismiss Defendant Metropolitan Kitchen & Bath LLC without prejudice, (R. 99-1), and the parties reached a conditional settlement in principle between Plaintiffs and all but one Defendant. As the remaining Defendant was not present, the parties proceeded with trial. On the second day, the parties abandoned the attempted settlement because the condition was not met. Over the course of two days of testimony, each Plaintiff testified, as well as Mr. and Mrs. Rutstein. Following testimony, the parties agreed to submit post-trial briefs in lieu of closing arguments.
Plaintiffs in this case shared the common desire to improve their homes, and in particular, their kitchens. For this purpose, each Plaintiff hired general contractor Avdija Perazic of Poda Construction to perform substantial renovation and/or reconstruction of their homes. In each case, Perazic introduced Plaintiffs to Defendant Steven Rutstein and suggested that the Plaintiffs purchase their custom or semi-custom kitchen cabinets from Mr. Rutstein. Each of the Plaintiffs then submitted orders and deposits to Mr. Rutstein in response to invoices printed on Metro Kitchen & Bath Inc. letterhead. Each of the Plaintiffs then experienced years of delay as the general contractor failed to complete their homes, and further delays when Mr. Rutstein failed to deliver their kitchen cabinets. Ultimately, each of the Plaintiffs obtained kitchen cabinets from other sources. In October 2005, approximately one year after the Plaintiffs first dealt with Mr. Rutstein, Plaintiffs brought this suit alleging that Defendants engaged in a pattern of mail and wire fraud that constituted civil RICO violations. Plaintiffs did not sue contractor Avdija Perazic, and he is not a party to this action.
Plaintiffs Barsky, Ali, and Gonzales each reside in Lincolnwood, Illinois. (R. 95-1 at 5, ¶¶ 1-2, 4.) Plaintiff Singh resides in Morton Grove, Illinois, (Id. at 5, ¶ 3), and Plaintiff Durakovic resides in Skokie, Illinois. (Id. at 5, ¶ 5.)
Defendants Mr. and Mrs. Rutstein reside in Wilmette, Illinois. (Id. at 5, ¶ 6.) Mr. Rutstein performs kitchen and bath consultation and design work, having worked in that industry since 1978 and spent over 18 years with Kitchen Distributors of America ("KDA"). At times relevant to this lawsuit, the Rutsteins involved themselves with at least two Illinois corporations engaged in kitchen and bath design and cabinet sales: 1) Defendant Metro Kitchen & Bath Inc.; and 2) Defendant Metropolitan Kitchen & Bath, LLC. (Id. at 5-8.)*fn2
Mrs. Rutstein incorporated Defendant Metro Kitchen & Bath Inc. ("Metro Inc.") in 2001. (Id. at 6, ¶ 10.) The Rutsteins ran Metro Inc. out of their Wilmette residence. (Id. at 5--6, ¶¶ 16, 27.) Metro Inc. employed Mr. Rutstein as its principal kitchen designer and cabinet salesman. (Id. at 6, ¶ 18.) Mrs. Rutstein owned Metro Inc., served as its president, and processed orders and other paperwork as needed. (Id. at 6--7, ¶¶ 14, 26.) Mrs. Rutstein was not involved in the sale of cabinets for Metro Inc. (Id. at 6, ¶ 32.) Metro Inc. dissolved on October 1, 2004, (Id. at 8, ¶ 38), and Mrs. Rutstein returned to work full-time for Consumers Digest Magazine.
The existence of Metro Inc. overlapped with that of Metro LLC. On April 8, 2004, Alan Erickson, a real estate investor and friend of the Rutsteins, organized Metropolitan Kitchen and Bath, LLC ("Metro LLC"). (Id. at 9, ¶¶ 42, 50.) Metro LLC employed Mr. Rutstein as a designer and salesman. (Id. at 10, ¶ 56.) Despite being owned by Mr. Erickson, Metro LLC had its principal place of business at the Rutsteins' Wilmette residence, (Id. at 9, ¶¶ 47, 50), and Mr. Rutstein was primarily responsible for the kitchen design and cabinet sales aspects of the business. From at least October 1, 2004 through March 1, 2005, Metro LLC maintained an account with Harris Bank (the "Harris Account"), on which Mr. Rutstein was a signatory. (Id. at 9, ¶¶ 52, 54.) Although Mrs. Rutstein never worked for Metro LLC, she was also a signatory on the Harris Account and admitted to writing checks from the Metro LLC Account to pay personal expenses. (Id. at 10, ¶ 57.)
B. The Plaintiffs' cabinet orders
As an initial matter, each of the Plaintiffs ordered cabinets from Metro LLC, although some of the documentation identified Metro Inc. Plaintiffs attempted to put the transition from Metro Inc. to Metro LLC at issue, but none of them could testify convincingly that they contracted with Metro Inc. as opposed to Metro LLC, or vice versa. Mr. Rutstein testified that invoices were prepared by his secretary, and that to the extent Defendants received documents identifying Metro Inc., it resulted from a clerical error and that he did not believe that the error affected his dealings with the respective Plaintiffs. With the exception of Plaintiffs' Exhibit 26, the Gonzales order, these invoices are unsigned. Plaintiffs produced no other written contracts signed by Mr. Rutstein.
On June 1, 2003, Ms. Barsky signed a contract with Avdija Perazic ("Perazic") of Poda construction to remodel her Lincolnwood, Illinois home at a total cost of $275,000. (Pls.' Ex. 1.)
The contract described the scope of the work as "Build addition on first and second floor on existing house," (id. at 1), and provided an estimated time of completion of 120 days. (Id. at 2.) The work included gutting the entire kitchen area on the first floor of her home and adding a bedroom.
In late summer or fall 2004, while her home was still under renovation, Ms. Barsky began meeting with Defendant Steven Rutstein to discuss ordering kitchen cabinets. Perazic recommended Mr. Rutstein as a kitchen designer and provided at least one reference who had purchased kitchen cabinets from Mr. Rutstein in the past, with no problems. At some point that fall, Barsky and Rutstein met at Barsky's home for the purpose of discussing her kitchen design. At that time, the home was still under renovation and drywall had not yet been installed in the Barsky kitchen. Mr. Rutstein measured the kitchen area and made drawings that Ms. Barsky approved. On October 5, 2004, Ms. Barsky completed the order and wrote Mr. Rutstein a check for $4,207.00, representing a 50% down payment on the overall cost of the cabinets. (Pls.' Ex. 17.) The terms of the order were credit on delivery ("C.O.D.")-and Mrs. Barsky understood this to mean that she would pay the remaining balance upon delivery of her cabinets.
In late October, 2004, Mr. Rutstein initiated an order with Medallion cabinetry of Waconia, Minnesota for the construction of Ms. Barsky's cabinets. Mr. Rutstein later cancelled the order, however, and Medallion never built Ms. Barsky's cabinets.
Ms. Barsky could not recall when Poda construction finished the renovations, but she testified that she did not receive an occupancy permit until October 2005, more than two years after the renovations began. Ms. Barsky ultimately ordered cabinets from another source at additional expense. Although Ms. Barsky claimed to have documents detailing the extra costs relating to replacement cabinets, Ms. Barsky never provided those documents to her attorney, despite being requested to do so at her deposition.*fn3 Mrs. Barsky could not recall the exact cost of the replacement cabinets.
Mr. Ali hired Perazic and Poda Construction in Spring 2003 to remodel the first floor of his home and build a second floor addition, at a cost of $140,000. (See, e.g., Pls.' Ex. 9.) While visiting a plumbing supply store with Perazic, Ali met Rutstein, and Perazic recommended Rutstein as someone with whom he had done business in the past. Ali eventually ordered cabinets from Rutstein in October 2004, giving Rutstein a 50% deposit of $4,075.00. (Pls.' Exs. 10, 11, 19.) Like Barsky's order, Ali agreed to pay the remaining 50% balance upon delivery of the cabinets.
In December 2004, Ali began calling Rutstein to inquire when he might expect his cabinets. At that time, Ali was living in his father-in-law's basement, awaiting the completion of his home renovation. Ali planned to store the cabinets in his father's basement until the renovations were complete, but Ali did not communicate his plan to Rutstein. Instead, Rutstein waited to finalize Ali's order until the renovation was complete and the kitchen could accept cabinets. Perazic did not complete the renovations until August 13, 2005.
In response to Rutstein's delay, Ali ordered cabinets from another source. Mr. Ali could not testify with certainty as to the cost of his replacement cabinets.
Mr. Singh also hired Poda construction in December 2003 to renovate his home and kitchen. In October 2004, Singh also ordered cabinets from Rutstein, paying a 50% down payment of $4200. (See Pls.' Exs. 22, 25.) Like Ali's and Barsky's orders, Singh agreed to pay the remaining 50% balance upon delivery of the cabinets.
Even after ordering cabinets, Rutstein met with Singh an additional three to four times to measure for cabinets and make drawings. When asked if Rutstein explained to Singh that additional measurements would be necessary if the contractor built the room in a manner that differed from the plans, Singh admitted that Rutstein had probably said as much.
By the beginning of 2005, Perazic still had not completed work on Singh's home. Singh fired Poda Construction and hired his own contractors to finish the work. Singh completed the renovations and moved back into his house in December 2005. Nonetheless, Singh claims that after relations soured with Mr. Rutstein and he had to go elsewhere for cabinets, his move-in date was delayed an additional 2 and a half months. Singh also has back-up receipts for the extra costs resulting from the delayed cabinets, and he provided his attorney with canceled checks evidencing extra rent paid during the additional 2.5 months he spent waiting for replacement kitchen cabinets. These documents were not provided to Defendants during the litigation, even though the Defendants contend that they requested the documents. Mr. Singh could not confirm the total additional costs be paid.
Ms. Durakovic also hired Perazic and Poda Construction for a full renovation-specifically, to tear her home down to its foundation and rebuild it. According to Ms. Durakovic, the renovation was supposed to last six months but ended up lasting 21 months. Durakovic also testified that Perazic introduced her to Mr. Rutstein, who first measured for cabinets in ...