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Joseph Bachewicz et al v. Preferred Development

June 28, 2011

JOSEPH BACHEWICZ ET AL., PLAINTIFFS,
v.
PREFERRED DEVELOPMENT, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Samuel Der-yeghiayan, District Judge

MEMORANDUM OPINION

This matter is before the court on Defendants' motions to dismiss. For the reasons stated below, the motions to dismiss are granted.

BACKGROUND

Plaintiff Joseph Bachewicz (Bachewicz) is allegedly the President and sole shareholder of Plaintiff Revenue Sharing Corporation (RSC). Plaintiffs allegedly formed a partnership with Defendant Preferred Development, Inc. (Preferred), Defendant Evan Oliff, and Defendant Thomas Morabito (collectively referred to as "Preferred Defendants") to develop Walgreens stores and other retail sites together in a territory presided over by Walgreens' representative Brent Circle (Circle Territory). During discussions, the Plaintiffs and Preferred Defendants allegedly entered into certain oral agreements and later decided to draft written agreements for the partnership. Defendant Grant McCorkhill (McCorkhill), an attorney working for Defendant Holland & Knight, LLP (Knight) (collectively referred to as "Knight Defendants"), was allegedly hired to draft and review the partnership documents. During the drafting process, the parties allegedly entered into further oral agreements. The parties allegedly finally entered into a written Memorandum of Understanding (MOU).

The parties allegedly then proceeded to develop certain Walgreens store sites. While the parties worked under the MOU, the parties allegedly agreed to certain minor modifications of the MOU. According to Plaintiffs, Preferred Defendants then allegedly attempted through fraud to cut Plaintiffs out of the partnership to develop Walgreens sites. Specifically, Preferred Defendants allegedly instructed Bachewicz to work on non-Walgreens related deals so that Preferred Defendants could take over the position of being the main contact with the Walgreens' representative. Preferred Defendants also allegedly failed to work exclusively with Plaintiffs to develop Walgreens sites in the Circle Territory. Preferred Defendants also allegedly shifted expenses from their non-Walgreens projects onto certain Walgreens projects, thereby reducing the net profits on the Walgreens projects. Preferred Defendants also allegedly concealed business information from Plaintiffs, failed to pay Plaintiffs amounts owed for one deal, wrongfully forced Plaintiffs to sell their ownership share in one deal at an unfair price, and unjustly enriched themselves by using Bachewicz to conduct some initial research for a certain deal.

Preferred Defendants also allegedly committed fraud upon Walgreens, which was a customer with whom Bachewicz allegedly spent decades building a business relationship. Preferred Defendants also allegedly committed bank fraud against LaSalle Bank. Preferred Defendants were allegedly able to obtain a mortgage from LaSalle Bank by allegedly making certain misrepresentations regarding certain values.

Knight Defendants, acting as legal counsel for the partnership, allegedly acted in concert with Preferred Defendants and McCorkhill. McCorkhill allegedly made misrepresentations to Plaintiffs. Bachewicz's reliance on statements allegedly made by McCorkhill allegedly enabled Defendants to perpetrate the alleged fraud. McCorkhill also allegedly falsely led Bachewicz to believe that he represented Bachewicz.

Plaintiffs include in the second amended complaint fraud claims brought against Preferred Defendants (Count I), breach of fiduciary duty claims brought against Preferred Defendants (Count II), breach of contract claims brought against Preferred (Count III), unjust enrichment claims brought against Preferred Defendants (Count IV), an accounting claim brought against Preferred Defendants (Count V), a rescission claim (Count VI), fraud claims brought against Knight Defendants (Count VII), aiding and abetting claims brought against Knight Defendants (Count VIII), legal malpractice claims brought against Knight Defendants (Count IX), claims against Preferred Defendants and McCorkhill brought under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq. based on bank and wire fraud (Count X), and RICO claims against Preferred Defendants and McCorkhill based on Knight's alleged involvement in the conspiracy (Count XI). Preferred Defendants and Knight Defendants have filed motions to dismiss.

LEGAL STANDARD

In ruling on a motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6) (Rule 12(b)(6)), a court must "accept as true all of the allegations contained in a complaint" and make reasonable inferences in favor of the plaintiff. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)(stating that the tenet is "inapplicable to legal conclusions"); Thompson v. Ill. Dep't of Prof'l Regulation, 300 F.3d 750, 753 (7th Cir. 2002). To defeat a Rule 12(b)(6) motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Iqbal, 129 S. Ct. at 1949 (internal quotations omitted)(quoting in part Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint that contains factual allegations that are "merely consistent with a defendant's liability . . . stops short of the line between possibility and plausibility of entitlement to relief." Iqbal, 129 S.Ct. at 1949 (internal quotations omitted).

Federal Rule of Civil Procedure 12(b)(1) (Rule 12(b)(1))requires a court to dismiss an action when it lacks subject matter jurisdiction. United Phosphorus, Ltd. v. Angus Chemical Co., 322 F.3d 942, 946 (7th Cir. 2003). If the concern of the court or party challenging subject matter jurisdiction is that "subject matter jurisdiction is not evident on the face of the complaint, the motion to dismiss pursuant to Rule 12(b)(1) would be analyzed as any other motion to dismiss, by assuming for purposes of the motion that the allegations in the complaint are true." Id.; see also Ezekiel v. Michel, 66 F.3d 894, 897 (7th Cir. 1995)(stating that when reviewing a motion to dismiss brought under Rule 12(b)(1), the court "must accept as true all well-pleaded factual allegations, and draw reasonable inferences in favor of the plaintiff"). However, if the complaint appears on its face to indicate that the court has subject matter jurisdiction, "but the contention is that there is in fact no subject matter jurisdiction, the movant may use affidavits and other material to support the motion." United Phosphorus, Ltd., 322 F.3d at 946. For the purpose of determining subject matter jurisdiction, the court "'may properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists.'" Ezekiel, 66 F.3d at 897 (quoting Capitol Leasing Co. v. Federal Deposit Insurance Corp., 999 F.2d 188, 191 (7th Cir. 1993)). The burden of proof in regards to a Rule 12(b)(1)motion is "on the party asserting jurisdiction." United Phosphorus, Ltd., 322 F.3d at 946.

DISCUSSION

I. RICO Claims

Defendants argue that Plaintiffs have failed to state ...


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