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Restoration Services LLC v. R&R Boardwalk, LLC

United States District Court, N.D. Illinois, Eastern Division

November 15, 2017

RESTORATION SERVICES, LLC, MIKE'S TRANSPORTATION, LLC, 27W351, LLC, KEITH MARINO, SUSAN MARINO, and F. MICHAEL MALONE, Plaintiffs,
v.
R&R BOARDWALK, LLC, R&R PARK PLACE, LLC, RICHARD PIETRANEK, and HECTOR SAM CRUZ, Defendants.

          MEMORANDUM OPINION AND ORDER

          Gary Feinerman, Judge

         Keith Marino, Susan Marino, and F. Michael Malone, together with three companies that they own either separately or together-Restoration Services, LLC, Mike's Transportation, LLC, and 27W351, LLC-brought this diversity suit against Richard Pietranek, Hector Cruz, and two companies that Pietranek owns with non-party Robert Zitella-R&R Boardwalk, LLC, and R&R Park Place, LLC-alleging that Pietranek, with Cruz's help, stole records and other property related to a business deal between the Marinos and Malone, on the one hand, and Pietranek and Zitella, on the other. Doc. 3. Three years earlier, it was Pietranek who, together with Zitella, brought suit against the Marinos, Malone, Mike's Transportation, and Restoration Services over that same business deal, though in the Circuit Court of DuPage County, Illinois. Zitella v. Mike's Transportation, LLC, Case 2014 L 507 (Cir. Ct. DuPage Cnty., Ill. filed May 21, 2014) (complaint and amended complaint reproduced at Docs. 19-2 and 15-2, respectively). The Marinos, Malone, Mike's Transportation, and Restoration Services then counterclaimed against Pietranek and Zitella and filed third-party claims against R&R Boardwalk and R&R Park Place in state court, alleging-as they do as plaintiffs against Pietranek here in federal court-that Pietranek and Zitella stole records and other property related to the deal. Docs. 15-9, 15-10.

         Defendants move to dismiss or stay this case pending resolution of the state suit, under either the claim-splitting rule or the doctrine set forth in Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976). Docs. 15, 25. The motion is granted, and the case is stayed under the Colorado River doctrine.

         Background

         Given the nature of the motion, the only relevant background is the procedural history of the state and the federal cases.

         A. The State Court Lawsuit

         In May 2014, Zitella and Pietranek brought the state court suit against Mike's Transportation, Restoration Services, the Marinos, and Malone. Doc. 19-2. The operative state court complaint alleges that in April 2012, the parties entered into an Asset Purchase Agreement under which Pietranek and Zitella purchased from the Marinos and Malone substantially all the assets of Mike's Transportation and Restoration Services. Doc. 15-2 at ¶¶ 9-10. The complaint further alleges that Pietranek, while in a building owned by the Marinos and Malone, saw financial records that were relevant to the transaction but that the Marinos and Malone had improperly failed to disclose. Id. at ¶¶ 22-47. According to the complaint, those records show that Pietranek and Zitella paid far more for the assets than they were worth. Id. at ¶¶ 21, 42-47. The complaint alleges that the failure to disclose those records constitutes breach of contract and fraud. Id. at ¶¶ 48-196.

         Shortly after the suit was filed, the state court enjoined the state court defendants from “destroying any financial records of the two business entities [Mike's Transportation and Restoration Services] or having to do with them and preserving them to maintain the status quo.” Doc. 15-5. About a week later, the court entered an order directing that the financial records be preserved and held by a non-party document storage company. Docs. 15-7, 15-8.

         In November 2014, the state court defendants filed counterclaims alleging that Pietranek and Zitella unlawfully removed certain of the state court defendants' financial records and personal property from the above-referenced building. Doc. 15-9. After the state court dismissed the counterclaims, Doc. 20-1, the Marinos and Restoration Services (but not Mike's Transportation or Malone) amended their counterclaims against Pietranek and Zitella and added third-party claims against R&R Boardwalk and R&R Park Place, which as noted are companies owned by Pietranek and Zitella; the counterclaims and third-party claims sound in conversion, trespass, breach of contract, and identity theft. Doc. 15-10 at pp. 17-26. Like the original counterclaims, the amended counterclaims and third-party claims allege that Pietranek and Zitella-assisted by Cruz, a former employee or contractor of Mike's Transportation and Restoration Services-unlawfully removed documents and other property from the building. Id. at pp. 17-20, ¶¶ 3-21. The stolen items are alleged to include:

A. customer files containing personal information of thousands of the past customers of Restoration Services, including names, social security numbers, dates of birth, employee records and other personal identifying information, including mortgage and property insurance information.
B. personal files and property of Susan Marino and Keith Marino, including their social security numbers, dates of birth, tax records, credit card and bank account and financial information. …
C. sports memorabilia and certifications; six file cabinets; two folding tables; twelve portable room dividers; florescent and flood lights and emergency exit sign batteries; coffee pot; window air conditioning units; three APC units; category five wiring and phone cords; six cell phones; commercial grade storage racks; radiant portable heaters; surge protectors; water moisture monitoring equipment; books and records; printers; computers, disks and drives, and Christmas decorations.

Id. at p. 20, ¶ 21. As relief, the state counterclaims and third-party claims seek damages, attorney fees and costs, and “such other … relief as [the court] deems proper.” Id. at p. 25, ¶ 38.

         In August 2016, the state court denied the state court defendants' motion to dissolve the document preservation order and ordered that all of the documents be copied. Doc. 15-11. The state court defendants filed a notice of interlocutory appeal of that order. Doc. 15-12. The appeal remains pending before the Appellate Court of Illinois. Doc. 15 at 7.

         B. This Lawsuit

         This lawsuit was brought in March 2017 by the state court defendants plus 27W351, LLC-a company owned by the Marinos and Malone that, in turn, owns the building from which Pietranek allegedly took the above-referenced records and other property-against Pietranek, R&R Boardwalk, R&R Park Place, and Cruz. The complaint opens by describing the Asset Purchase Agreement at the center of the state court suit, though the complaint here describes it as an agreement between R&R Boardwalk and R&R Park Place to buy “certain assets” from “some” of the federal plaintiffs. Doc. 3 at ¶¶ 1-10, 13.

         The complaint then alleges that the federal plaintiffs had business and personal property stored in a locked storage area in the building, describing that property as:

a. Customer files containing personal information of thousands of people and companies, the past customers of companies, including names, social security numbers, dates of birth, employee records, credit card numbers of customers, background checks of employees and other personal identifying information, including mortgage and property insurance information.
b. Income tax returns, payroll records, employee records, and other financial information containing personal identifying information;
c. Personal files and property of Plaintiffs Susan Marino and Keith Marino, including their social security numbers, dates of birth, tax records, credit card and bank account and financial information;
d. Sports memorabilia and certifications, six file cabinets, two folding tables, twelve portable room dividers; florescent and flood lights and emergency exit sign batteries; coffee pot; window air conditioning units; three APC units; category five wiring and phone cords; six cell phones; commercial grade storage racks; radiant portable heaters; surge protectors; water moisture monitoring equipment; books ...

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