IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS

COUNTY DEPARTMENT, CRA.NCERY DIVISION

EGGY'S, LLC, an Illinois limited liability
company, BRASSERIE, LLC, an Illinois
limited liability company, PETER
DROHOMYRECKY, and SUE KIM-
DROHOMYRECKY,
Case No. _
Plaintiff,
Defendants.
v.
company,
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MAGELLAN RESTAURANT FUNDING )
COMPANY LLC, an Illinois limited liability)
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Introduction
PLAINTIFF'S VERIFIED COMPLAINT FOR
INJUNCTIVE AND OTHER RELIEF
alleges as follows:
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Plaintiff Magellan Restaurant Funding Company LLC its
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Verified Complaint for Injunctive and Other Relief against
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Brasserie, LLC, Peter Drohomyrecky ("Peter") and Sue
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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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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)
38. Magellan realleges and incorporates by reference paragraphs 1
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)
44. Magellan realleges and incorporates by reference paragraphs 1
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)
51. Magellan realleges and incorporates by reference paragraphs 1
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. Temple
Joshua R. Diller
KATTEN & TEMPLE LLP
542 S. Dearborn St., 14
t h
Floor
Chicago, Illinois 60605
(312) 663-0800
(312) 663-0900 (facsimile)
Attorney No. 44583
Counsel for Plaintiff
Respectfully submitted,
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VERIFI CATION
Uneler penalties as provided by law pursuant to Section 1.-109 of the Illinois
Coele of Civil Procee!ure, the undersigned certifies that the statements set forth in
this instrument are true and correct. ~ ~
Laura Buel
J / f/ / (:3
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Executed on:
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