Eggy

IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOISCOUNTY DEPARTMENT, CRA.NCERY DIVISION

EGGY'S, LLC, an Illinois limited liabilitycompany, BRASSERIE, LLC, an Illinoislimited liability company, PETERDROHOMYRECKY, and SUE KIMDROHOMYRECKY,

Case No. _Plaintiff,

Defendants.

v.

company,

)

MAGELLAN RESTAURANT FUNDING )COMPANY LLC, an Illinois limited liability)

))))))))))))

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Introduction

PLAINTIFF'S VERIFIED COMPLAINT FORINJUNCTIVE AND OTHER RELIEF

alleges as follows:

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/Plaintiff Magellan Restaurant Funding Company LLC ("~agell8dl")~or its

';', . ~)/J ~Verified Complaint for Injunctive and Other Relief against Defe~dant$~'Eb;~,~,... : , --..-;

Brasserie, LLC, Peter Drohomyrecky ("Peter") and Sue Kim-Drohom.yrecl6>("~"),:.~ .: ~ c::;!{j' '!:.: -l:- '~~ 1~.. ~

.::.;- '"-1. Magellan is a lender to Defendants, who own and operate two

restaurants in Chicago. Plaintiff is suing for injunctive relief, an accounting and

other relief because Plaintiff recently discovered that Defendants misappropriated

and diverted funds and collateral supporting the loan.

2. Defendants continue to control and profit from the diversion of the

restaurant receipts and diverted funds Magellan loaned to Defendants. Defendants

also failed properly to pay employment and withholding taxes to the federal and

state government and state sales taxes to the State of Illinois.

3. Given Defendants' diversion and misappropriation of funds and

collateral belonging to Magellan, there is an imminent danger that Magellan will

continue to suffer irreparable injury unless Defendants are restrained from

continued diversion and are required to maintain an accurate accounting and all

financial books and records regarding the restaurant operations and related assets.

4. To prevent continuing irreparable harm arising from this intentional

course of wrongdoing, Magellan seeks injunctive relief to bar Defendants from

continuing to divert the restaurant receipts and funds relating to the restaurant

operations, to timely deposit the daily receipts into the Fifth Third bank accounts so

that payroll, tax and other obligations of the restaurants will be timely and properly

paid, and preserve all financial books and records of the restaurant operations.

5. Magellan further seeks the equitable relief of an Accounting of Eggy's,

LLC's and Brasserie, LLC's assets from their inception, and on all funds loaned or

otherwise provided to Eggy's LLC and Brasserie LLC. Magellan further seeks the

equitable relief of a constructive trust imposed on all of Eggy's LLC's and Brasserie

LLC's assets and the personal assets of Peter and Sue that were obtained from

Magellan or Eggy's LLC or Brasserie LLC.

Parties, Jurisdiction and Venue

6. Magellan is an Illinois limited liability company with its principal

place of business in Chicago, Cook County, Illinois. Magellan entered into written

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Business Loan Agreements, Promissory Notes, Guaranties and Security

Agreements with Defendants.

7. Defendant Eggy's, LLC, is an Illinois limited liability company that

owns and operates Eggy's restaurant in the Lakeshore East community located at

333 E. Benton Place, Chicago, IL.

8. Defendant Brasserie, LLC, is an Illinois limited liability company that

owns and operates the Maison Brasserie restaurant in the Lakeshore East

community located at 333 E. Randolph, Chicago, IL.

9. Defendant Peter Drohomyrecky is a manager of Defendants Eggy's,

LLC, and Brasserie, LLC, and resides in Cook County, Illinois.

10. Defendant Sue Kim-Drohornyrecky is a manager of Defendants Eggy's,

LLC, and Brasserie, LLC, and resides in Cook County, Illinois.

11. Jurisdiction and venue are appropriate in this Court pursuant to 735

ILCS 5/2-101 because Plaintiff resides in this county, the business relationship exists

in this county and Defendants' acts or omissions giving rise to Plaintiff's claims

occurred or had effects in this county and Defendants conduct business in this county.

The Loan Agreements

12. On March 27, 2012. Magellan and Eggy's LLC entered into a Business

Loan Agreement ("Eggy's Loan Agreement") for a principal amount up to $400,000,

secured by all of the assets of Eggy's LLC. Attached as Exhibit A is a true and

correct copy of the Eggy's Loan Agreement.

13. On March 27, 2012, Magellan and Eggvs LLC entered into a

Promissory Note ("Eggy's Note") evidencing the indebtedness in the Eggy's Loan

Agreement. Attached as Exhibit B is a true and correct copy of the Eggy's Note.

14. On March 27, 2012, Magellan and Eggy's LLC entered into a Security

Agreement ("Eggy's Security Agreement") granting Magellan a perfected security

interest in all assets of Eggy's securing the Eggy's Loan Agreement. Attached as

Exhibit C is a true and correct copy of the Eggy's Security Agreement.

15. On March 27, 2012, Magellan and Peter entered into a Recourse

Guaranty Agreement C'Eggy's Guaranty") pursuant to which Peter guaranteed the

obligations in the Eggy's Loan Agreement. Attached as Exhibit D is a true and

correct copy of the Eggy's Guaranty.

16. On May 17, 2012, Magellan and Brasserie LLC entered into an

Amended and Restated Business Loan Agreement ("Brasserie Loan Agreement") for

a principal amount up to $450,000, secured by all of the assets of Brasserie LLC.

Attached as Exhibit E is a true and correct copy of the Brasserie Loan Agreement.

17. On May 17, 2012, Magellan and Brasserie LLC entered into an

Amended and Restated Promissory Note ("Brasserie Note") evidencing the

indebtedness in the Brasserie Loan Agreement. Attached as Exhibit F is a true and

correct copy ofthe Brasserie Note.

18. On May 17, 2012, Magellan and Brasserie LLC entered into a Security

Agreement ("Brasserie Security Agreement") granting Magellan a perfected security

interest in all assets of Brasserie's securing the Brasserie Loan Agreement.

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Attached as Exhibit G IS a true and correct copy of the Brasserie Security

Agreement.

19. On May 17, 2012, Magellan entered into a Recourse Guaranty

Agreement ("Brasserie Guaranty") with Peter pursuant to which Peter guaranteed

the obligations of the Brasserie Loan Agreement. Attached as Exhibit H is a true

and correct copy of the Brasserie Guaranty.

20. Eggy's opened for business on or about April 16, 2012. Maison

Brasserie opened for business in or about May 2012.

21. Defendants are in default of their respective agreements: Eggy's LLC

has breached and is in default on the Eggy's Loan Agreement and Eggy's Security

Agreement and Brasserie LLC has breached and is in default on the Brasserie Loan

Agreement and Brasserie Security Agreement.

22. Recently, within the last two months, Magellan learned that

Defendants had failed to pay any employment taxes or withholding taxes to the

Internal Revenue Service and had failed to pay any state sales taxes.

23. Upon learning of the failure to pay such taxes, Magellan promptly took

steps to correct such violations and make such payments on behalf of Defendants to

mitigate damages. Magellan also began reviewing certain financial books and

records of Eggy's and Brasserie and has recently discovered various discrepancies,

including diversion of approximately $175,000 in funds to Peter that were not

authorized payments.

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24. Magellan also recently learned within the last several weeks that

Defendants had not paid its vendors for various restaurant supplies and that

Defendants were repeatedly bouncing checks and not meeting payroll obligations.

25. Payments to vendors of the two restaurants are critical to the

operations of the restaurants because vendors can refuse to stop supplying the

restaurants if they are not timely paid.

26. Maintaining successful daily operations of the restaurants is vital to

the viability of the restaurants because any disruption in or adverse impact on such

daily service is highly likely to cause the restaurant business to fail.

27. Additionally, the restaurants collect cash on a daily basis from sales.

Defendants promised to deposit the daily cash receipts into bank accounts

maintained at Fifth Third Bank. Defendants began depositing the daily receipts

from the restaurants into the Fifth Third Bank accounts so that vendors and taxing

authorities could be properly paid.

28. On or about February 5, 2013, Magellan learned that Defendants had

secretly opened a separate bank account at North Community Bank and had

diverted business receipts, apparently for their own purposes, and apparently

depositing partial cash receipts into that account and failing to deposit the receipts

into the Fifth Third Bank business accounts.

29. On or about February 6, 2013, Peter admitted to Magellan that he had

used approximately $3,500 of the approximately $14,400 total daily receipts

received over a three-day period. Peter claimed that the $3,500 cash was for "tips."

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.....1

To date, Magellan has learned that Defendants have collected at least $27,000 in

business receipts from the two restaurant businesses but Defendants have failed to

deposit those funds into the Fifth Third business bank accounts.

30. All business receipts are collateral pursuant to the Eggy's and

Brasserie Loan Agreements and Security Agreements.

31. Magellan has demanded that Defendants stop diverting the business

receipts from the restaurants and deposit all diverted funds immediately into the

Fifth Third Bank accounts for the restaurants. Defendants have failed to do so.

Count I (Preliminary and Permanent Injunctive Relief>

32. Magellan realleges and incorporates by reference paragraphs 1

through 31 above, as if set forth herein.

33. As set forth above, Defendants have misappropriated and diverted loan

proceeds and business receipts for their personal use. All business receipts are

security for Magellan's Loan Agreements with Eggy's LLC and Brasserie LLC and

Defendants had no right to divert such funds.

34. Despite Magellan's requests, Defendants have not returned such funds

to the business bank accounts to be used for proper business purposes and have

severely impaired Magellan's collateral and security interests. By violating the

federal and state tax laws and repeatedly bouncing payroll and other checks,

Defendants have exposed the businesses and Magellan to significant penalties, fines

and risk.

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35. Because the restaurant business involves daily cash collections and is

a highly volatile business that is significantly dependent on maintaining daily

supplies from vendors and maintaining a properly functioning staff, Magellan has

no adequate remedy at law sufficient to address its claims or protect its interests.

36. Additionally, Magellan has suffered and will continue to suffer

irreparable harm if Defendants are allowed to continue to divert business receipts

and other collateral and not maintain proper financial records.

37. The irreparable harm suffered by Magellan outweighs any irreparable

harm that Defendants will suffer if injunctive relief is granted, and relief for

Magellan will not harm the public interest.

Count II (Accounting)


through 37 above, as if set forth herein.

39. As detailed more fully above, Defendants wrongfully diverted and

misappropriated loan proceeds and collateral.

40. Defendants profited as a result of their misuse of loan proceeds and

collateral securing Magellan's Loan Agreements.

41. Defendants are now in the possession of financial profits which were

and are (1) obtained through wrongful conduct and; (2) unjustly retained by Peter

and Sue and/or Eggy's LLC and Brasserie LLC.

42. Defendants are in possession and control of the documents and records

concerning such diversion of funds, business receipts, payment of "tips," deposits

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into separate bank accounts, and use of such funds. Therefore discovery is

necessary in order to calculate and verify the actual amount of money damage

caused to Magellan due to Defendants' wrongful acts,

43. Magellan cannot determine the exact amount of actual loss it

sustained by Defendants' wrongful conduct until an Accounting can be made

detailing the restaurant sales, expenses, assets, liabilities and profits from the time

Eggy's LLC and Brasserie LLC were created through the present,

Count III (Conversion)


through 43 above, as if set forth in this paragraph.

45. At all times relevant to the facts of this Complaint, Magellan has had a

valid security interest in the business receipts of Eggy's LLC and Brasserie LLC.

46. At all times relevant to the facts of this Complaint, Magellan has had

the right to ensure that the loan proceeds advanced under the Eggy's Loan

Agreement and the Brasserie Loan Agreement were properly used for proper

business purposes and not diverted or misappropriated.

47. Upon information and belief. Defendants diverted and

misappropriated approximately $175,000 in funds for their personal use and not for

any proper business purpose.

48. Recently, on or about February 5, 2013, Magellan learned that

Defendants had diverted and misappropriated approximately $14,400 in business

receipts from the Fifth Third business bank accounts. Since February 5, 2013, and

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continuing through today, Defendants Peter and Sue continue to divert and

misappropriate daily business receipts from Eggy's LLC and Brasserie LLC.

49. On information and belief, Defendants are depositing at least some of

the diverted funds into an account at North Community Bank. Such conversion of

funds and collateral in which Magellan has a valid security interest continue to

harm Magellan's legitimate business interests.

50. Magellan has a valid right in the collateral securmg the Loan

Agreements. Defendants have deprived Magellan of their rights by wrongfully

taking possession of and misusing the funds for improper personal uses. Magellan

has demanded return of the misappropriated funds but Defendants have failed to do

so.

Count V <Breach of Contract)


through 50 above, as if set forth in this paragraph.

52. As set forth in detail above, the parties entered into valid contracts in

the Eggy's Loan Agreement, Eggy's Note, Eggy's Security Agreement, Eggy's

Guaranty, Brasserie Loan Agreement, Brasserie Note, Brasserie Security

Agreement and Brasserie Guaranty.

53. Magellan has fully performed its obligations under the relevant

contracts.

54. Defendants have breached their contracts by, among other things: (a)

failure to pay interest amounts due under the Eggy's Loan Agreement commencing

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on June 1, 2012, which has accrued to $44,940 at the stated loan rate as of February

6, 2013; and (b) failure to pay interest amounts due under the Brasserie Loan

Agreement commencing on July 1, 2012, which has accrued to $53,459 at the stated

loan rate as of February 6, 2013.

55. As a result of the defaults, Eggy's LLC owes Magellan the original

principal amount of $400,000 plus additional principal fundings of $207,264, as of

February 6, 2013.

56. As a result of the defaults, Brasserie LLC owes Magellan the original

principal amount of $450,000 plus additional principal fundings of $659,352 as of

February 6, 2013.

57. Peter is jointly and severally liable for the contractual amounts owed

by Eggy's LLC and Brasserie LLC pursuant to the Eggy's Guaranty and Brasserie

Guaranty.

58. Magellan has suffered damages as a result of Defendants' breaches of

the contracts as set forth above.

\VHEREFORE, Magellan requests that the Court award Magellan the

following relief:

(a) Enter a preliminary and permanent injunction enjommg

Defendants from diverting any business receipts from Eggy's LLC

and Brasserie LLC into any bank account except for the business

bank accounts maintained at Fifth Third Bank:

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(b) Enter a preliminary and permanent injunction enjornmg

Defendants from diverting or impairing any collateral securing the

Eggy's Loan Agreement or the Brasserie Loan Agreement;

(c) Enter a preliminary and permanent injunction enjoirung

Defendants from destroying, altering 01' otherwise impairmg any

financial book or record, electronic or otherwise, evidencing any

transaction relating in any way to Eggy's LLC or Brasserie LLC, or

any loan proceeds, business receipts or other funds relating in any

way to Eggy's LLC or Brasserie LLC

(d) enter an order which requires Defendants to provide detailed

financial information which depicts the sales, receipts, expenses

and profits of Eggy's LLC and Brasserie LLC, including a complete

accounting of all loan proceeds advanced by Magellan and all

amounts deposited into any bank account other than the Fifth

Third Bank accounts;

(e) enter an order which requires Defendants to place an amount to be

determined by the Court into a constructive trust until a final

resolution has been made in this case;

(f) award Magellan damages against Defendants in an amount

sufficient to compensate Magellan for the damages suffered as a

result of the conduct complained of above;

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(g) award Magellan its costs and attorneys fees pursuant to Magellan's

contractual right to recover collection costs, court costs and

attorneys fees in the respective Loan Agreements;

(h) award punitive damages against Defendants for their willful and

malicious diversion and misappropriation of funds in an amount to

be determined at trial;

(i) order expedited discovery; and

~) award such other relief as this Court deems just and appropriate.

Dated: February 7, 2013

Nancy A. TempleJoshua R. DillerKATTEN & TEMPLE LLP542 S. Dearborn St., 14th FloorChicago, Illinois 60605(312) 663-0800(312) 663-0900 (facsimile)Attorney No. 44583

Counsel for Plaintiff

Respectfully submitted,

~f' #=-

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VERIFI CATION

Uneler penalties as provided by law pursuant to Section 1.-109 of the IllinoisCoele of Civil Procee!ure, the undersigned certifies that the statements set forth inthis instrument are true and correct.~~

Laura Buel

J / f/ / (:3.Executed on:~-------='----+--------

Documents

Eggy