Case 1:12-cv-00862-WTL-DML Document 1 Filed 06/21/12 Page 1 of 23 PageID #: 1

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF INDIANA INDIANAPOLIS DIVISION ) ) ) ) Plaintiff, ) ) v. ) Case No. 1:12-cv-862 ) REALTY GROUP I, LLC, f/d/b/a CENTURY ) ) 21 REALTY GROUP I; REALTY GROUPnd ) McCOUN/82 STREET, LLC, f/d/b/a ) CENTURY 21 REALTY GROUP; KEVIN ) KIRKPATRICK, an Individual; JOHN DICK, ) an Individual; and PHILLIP McCOUN, an ) ) Individual, ) Defendants. CENTURY 21 REAL ESTATE LLC, a Delaware Limited Liability Company, COMPLAINT Plaintiff, Century 21 Real Estate LLC (Century 21), for its Complaint against Realty Group I, LLC., f/d/b/a Century 21 Realty Group I, LLC., a (Realty Group I); Realty Group McCoun/82nd Street, LLC (82nd Street); Kevin Kirkpatrick, individually; John Dick, individually; and Phillip McCoun, individually, states as follows: THE PARTIES 1. Plaintiff Century 21 is a limited liability company organized and existing under

the laws of the State of Delaware with its principal place of business located at One Campus Drive, Parsippany, New Jersey 07054. 2. Upon information and belief, Defendant Realty Group I is a corporation organized

and existing under the laws of the State of Indiana. Upon information and belief, Realty Group I does business or formerly did business in Indiana under the business or fictitious name Realty

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Group I, Inc., f/d/b/a Century 21 Realty Group I. Realty Group Is primary place of business was or is 3801 E. 82nd Street, Indianapolis, IN 46240. 3. Upon information and belief, Defendant 82nd Street is a corporation organized and

existing under the laws of the State of Indiana. Upon information and belief, 82nd Street does business or formerly did business in Indiana under the business or fictitious name Realty Group McCoun/82nd Street, LLC. 82nd Streets primary place of business was or is 8402 E. 116th Street, Fishers, IN 46038. 4. Upon information and belief, Defendant Kevin Kirkpatrick (Kirkpatrick) is an

individual who, at all times relevant herein, was and is a resident of the State of Indiana. Defendant Kirkpatrick was and is, in whole or in part, the moving, active and conscious force behind the misconduct alleged herein and, as an owner of Realty Group I and 82nd Street, authorized and approved the misconduct. 5. Upon information and belief, Defendant John Dick (Dick) is an individual who,

at all times relevant herein, was and is a resident of the State of Indiana. Defendant Dick was and is, in whole or in part, the moving, active and conscious force behind the misconduct alleged herein and, as an owner of Realty Group I and 82nd Street, authorized and approved the misconduct. 6. Upon information and belief, Defendant Phillip McCoun (McCoun) is an

individual who, at all times relevant herein, was and is a resident of the State of Indiana. Defendant McCoun was and is, in whole or in part, the moving, active and conscious force behind the misconduct alleged herein and, as an owner of 82nd Street, authorized and approved the misconduct.

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JURISDICTION AND VENUE 7. This action arises under the trademark laws of the United States, specifically 15

U.S.C. 1051, et seq. 8. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C.

1331 and 1338, 15 U.S.C. 1121 and, with respect to certain claims, 28 U.S.C. 1367. 9. This Court has diversity jurisdiction pursuant to 28 USC 1332 because the

matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between citizens of different states. 10. This Court has personal jurisdiction over Defendants since Defendants reside or

otherwise regularly conduct business in the State of Indiana. 11. Venue is proper in this Court pursuant to 28 USC 1391(a)(2) because a

substantial part of the events or omissions giving rise to the claim occurred within this district. ALLEGATIONS COMMON TO ALL COUNTS The CENTURY 21 Marks 12. Century 21 is one of the largest real estate brokerage franchise systems in the

United States, and is widely known as a provider of real estate brokerage services. 13. Century 21 is the exclusive licensee and/or owner of various trademarks, service

marks, designs, logos, colors, color patterns and business methods for use in the promotion of Century 21 services, products, programs and marketing, which are on the principal register of the United States Patent and Trademark Office (the CENTURY 21 Marks). 14. Century 21 has the exclusive right to sublicense the use of various trade names

and service marks.

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15.

Century 21 or its predecessors have continuously used each of the CENTURY

21 Marks since the date of their registration and these marks are in full force and effect pursuant to 15 U.S.C. 1065. 16. Century 21 has given notice to the public of the registration of the CENTURY

21 Marks as provided in 15 U.S.C. 1111. 17. Century 21 uses or has used the words Century 21, among others, as an

abbreviation of its brand name. 18. Through its franchise system, Century 21 markets, promotes, and provides

services to its real estate franchisees throughout the United States. In order to identify the origin of their real estate services, Century 21 allows its franchisees to utilize the CENTURY 21 Marks and to promote the Century 21 brand name. 19. Century 21 has invested substantial effort over a long period of time, including

substantial financial expenditures, to develop goodwill in its trade names and service marks to cause consumers throughout the United States to recognize the CENTURY 21 Marks as distinctly designating Century 21 real estate services as originating with Century 21. 20. The value of the goodwill developed in the CENTURY 21 Marks is not of

precise monetary calculation, but because Century 21 is one of the largest real estate franchise systems in the United States and is widely known as a provider of real estate services, the value of Century 21s goodwill is substantial. 21. United States. The CENTURY 21 Marks are indisputably among the most famous in the

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The Franchise Agreement Between Century 21 and Realty Group I 22. Effective as of November 10, 1995, Century 21 entered into a franchise

agreement with Realty Group I for the operation of a Century 21 real estate brokerage office located at 3801 East 82nd Street, Indianapolis, Indiana (the Office), Franchise No. 2126720001 (the 0001 Franchise Agreement). (Relevant portions of the 0001 Franchise Agreement are attached hereto as Exhibit A.) Century 21 and Realty Group I agreed to an Amendment of the 0001 Franchise Agreement on June 1, 1998. (The Amendment is included as part of Exhibit A). 23. Pursuant to the 0001 Franchise Agreement and amendments thereto, Realty

Group I was obligated to operate the Century 21 real estate brokerage office through April 1, 2010. 24. During the term of the 0001 Franchise Agreement, Realty Group I was permitted

to use the CENTURY 21 Marks in association with the operation of its Century 21 real estate brokerage business as part of Century 21s franchise system, provided that the terms and conditions of the Franchise Agreement were fully and timely performed by Realty Group I. 25. Pursuant to Section 8 of the Franchise Agreement, Realty Group I agreed to pay

to Century 21, among other things, a franchise royalty fee equal to six percent (6%) of the gross revenues earned during the course of the Franchise Agreement (Royalty Fees). 26. Pursuant to Section 9 of the Franchise Agreement, Realty Group I agreed to pay

to Century 21 a monthly national advertising fee equal to two percent (2%) of its gross revenues, subject to a minimum and maximum amount, which amount could be raised in Century 21s sole discretion (NAF Contributions).

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27.

Pursuant the Franchise Agreement, Realty Group I agreed to pay interest at the

lower rate of either the highest rate allowed by law or a rate that is five (5) percentage points per annum higher than the prime rate then currently established. 28. Pursuant to the Franchise Agreement, Realty Group I agreed to allow Century 21

to review and audit its business records, bookkeeping and accounting records, sales and income tax records and returns, and other records to verify the gross revenues earned and Royalty Fees, NAF Contributions and other fees due to Century 21. 29. Pursuant to the Franchise Agreement, Century 21 could terminate the Franchise

Agreement for various reasons, including Realty Group Is failure to report all transactions and failure to pay royalties on those transactions. 30. Section 18 of the Franchise Agreement specifies Realty Group Is obligations in

the event of a termination of the Franchise Agreement, including its obligation to immediately cease using all of the CENTURY 21 Marks, to pay all amounts then owing to Century 21 and to allow an audit. 31. Pursuant to Section 19 of the Franchise Agreement, Realty Group I acknowledged

that Century 21 has no adequate remedy in the event that Realty Group I engaged in the unauthorized use of the CENTURY 21 Marks and expressly agreed that Century 21 may obtain an injunction and/or temporary restraining order to terminate such use. 32. Pursuant to the Franchise Agreement, Century 21 shall be entitled to lost future

profits, as defined therein, from Realty Group I in the event of an early termination of the agreement. 33. Pursuant to Section 20 of the Franchise Agreement, as well as other provisions,

Realty Group I agreed that, in the event an action was instituted in connection with the Franchise

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Agreements, Century 21 would be entitled to recover its costs and expenses, including attorneys fees from Realty Group I. The Franchise Agreement Between Century 21 and 82nd Street 34. Effective as of June 23, 1995 Century 21 entered into a franchise agreement with

82nd Street for the operation of a Century 21 real estate brokerage office located at 4527 East 82nd Street, Indianapolis, Indiana (the Office), Franchise No. 212672-0002 (the 0002 Franchise Agreement). (Relevant portions of the 0002 Franchise Agreement are attached hereto as Exhibit B.) Century 21 and 82nd Street agreed to an Amendment of the Franchise Agreement on June 1, 1998. (The Amendments are included as part of Exhibit B). 35. 82nd Street was obligated to operate the Century 21 real estate brokerage office

through April 1, 2010. 36. During the term of the Franchise Agreement, 82nd Street was permitted to use the

CENTURY 21 Marks in association with the operation of its Century 21 real estate brokerage business as part of Century 21s franchise system, provided that the terms and conditions of the Franchise Agreement were fully and timely performed by 82nd Street. 37. Pursuant to Section 8 of the Franchise Agreement, 82nd Street agreed to pay to

Century 21, among other things, a franchise royalty fee equal to six percent (6%) of the gross revenues earned during the course of the Franchise Agreement (Royalty Fees). 38. Pursuant to Section 9 of the Franchise Agreement, 82nd Street agreed to pay to

Century 21 a monthly national advertising fee equal to two percent (2%) of its gross revenues, subject to a minimum and maximum amount, which amount could be raised in Century 21s sole discretion (NAF Contributions).

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39.

Pursuant to the Franchise Agreement, 82nd Street agreed to pay interest at the

lower rate of either the highest rate allowed by law or a rate that is five (5) percentage points per annum higher than the prime rate then currently established. 40. Pursuant to the Franchise Agreement, 82nd Street agreed to allow Century 21 to

review and audit its business records, bookkeeping and accounting records, sales and income tax records and returns, and other records to verify the gross revenues earned and Royalty Fees, NAF Contributions and other fees due to Century 21. 41. Pursuant to the Franchise Agreement, Century 21 could terminate the Franchise

Agreement for various reasons, including 82nd Streets failure to report all transactions and failure to pay royalties on those transactions. 42. Section 18 of the Franchise Agreement specified 82nd Streets obligations in the

event of a termination of the Franchise Agreement, including its obligation to immediately cease using all of the CENTURY 21 Marks, to pay all amounts then owing to Century 21 and to allow an audit. 43. Pursuant to the Franchise Agreement, 82nd Street acknowledged that Century 21

has no adequate remedy in the event that 82nd Street engaged in the unauthorized use of the CENTURY 21 Marks and expressly agreed that Century 21 may obtain an injunction and/or temporary restraining order to terminate such use. 44. Pursuant to the Franchise Agreement, Century 21 shall be entitled to lost future

profits, as defined therein, from 82nd Street in the event of an early termination of the agreement. 45. Pursuant to the Franchise Agreement, as well as other provisions, 82nd Street

agreed that, in the event an action was instituted in connection with the Franchise Agreements, Century 21 would be entitled to recover its costs and expenses, including attorneys fees from 82nd Street. Page 8 of 23

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The Personal Guaranties Guaranties for Realty Group I 46. Defendants Kirkpatrick and Dick provided Century 21 with individual personal

guaranties for Realty Group Is obligations under the 0001 Franchise Agreement (0001 Personal Guaranties). (True and correct copy of the Personal Guaranty for the 0001 Franchise

Agreement is attached as Exhibit C). 47. Pursuant to the terms of the 0001 Personal Guaranties, Kirkpatrick and Dick

among other things, guaranteed to Century 21 the prompt payment and performance when due of all obligations of [Realty Group I] under [the] Franchise Agreement. 48. Pursuant to the terms of the 0001 Personal Guaranties, Kirkpatrick and Dick

specifically agreed to pay the costs, including attorneys fees, incurred by Century 21 in enforcing its rights or remedies under the Personal Guaranties or the Franchise Agreements. Guaranties for 82nd Street 49. Defendants Kirkpatrick, Dick and McCoun provided Century 21 with individual

personal guaranties for 82nd Streets obligations under the 0002 Franchise Agreement (0002 Personal Guaranties). (True and correct copy of the Personal Guaranties for the 0002 Franchise Agreement are attached as Exhibits D and E). 50. Pursuant to the terms of the 0002 Personal Guaranties, Kirkpatrick, Dick and

McCoun among other things, guaranteed to Century 21 the prompt payment and performance when due of all obligations of [82nd Street] under [the] Franchise Agreement. 51. Pursuant to the terms of the 0002 Personal Guaranties, Kirkpatrick, Dick and

McCoun specifically agreed to pay the costs, including attorneys fees, incurred by Century 21 in enforcing its rights or remedies under the Personal Guaranties or the Franchise Agreements.

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The Breach of the Franchise Agreements 52. Realty Group I and 82nd Street repeatedly breached the Franchise Agreements by:

(a) failing to pay amounts due thereunder, and (b) failing to report and pay on closed transactions. 53. In April, 2010, Century 21 was notified by Defendants that the defendants

intended to not renew the franchises. Thereafter, Defendants, under separate correspondence dated April 7, 2010, were informed that the Franchise Agreements were terminated. (True and correct copies of this letters are attached hereto as Exhibit F.) At that time, Century 21

demanded that Realty Group I immediately cease the use of all CENTURY 21 Marks, and requested payment of all outstanding amounts due and owing. 54. On April 15, 2010, Century 21 reiterated its demand that Defendants immediately

cease the use of all CENTURY 21 Marks while again requesting payment of $134,134.27, the outstanding amount then due and owing collectively under the Franchise Agreements. (A true and correct copy of this letter is attached hereto as Exhibit G.) Defendants Unauthorized Use of the CENTURY 21 Marks 55. The termination of the Franchise Agreements precluded Defendants from any

further use of the CENTURY 21 Marks including but not limited to in connection with their real estate brokerage offices. 56. Despite the termination of the Franchise Agreements, Defendants continued to

flagrantly use the CENTURY 21 Marks to induce the public to use real estate services provided by their real estate brokerage office under the guise of a continuing association with Century 21, notwithstanding the fact that they had no right to use the CENTURY 21 Marks. 57. Following the termination of the Franchise Agreements, Defendants used the

CENTURY 21 Marks without authorization for real estate services through, among other Page 10 of 23

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things, displaying signage outside their offices containing the CENTURY 21 Marks and using the CENTURY 21 Marks on numerous Internet websites. 58. Defendants former office space continued to reflect unauthorized CENTURY

21 Marks despite Defendants receiving notification from Century 21 and its counsel to cease and desist from this use. Defendants did not cease using the CENTURY 21 Marks. 59. Additionally, Defendants have failed to permit Century 21 to perform an audit to

verify Defendants gross revenues as required by the Franchise Agreements. FIRST CAUSE OF ACTION AGAINST ALL DEFENDANTS (Trademark Infringement,15 U.S.C. 1114) 60. Century 21 repeats and makes a part hereof each and every allegation set forth in

Paragraphs 1 through 59 of the Complaint. 61. This claim is for trademark infringement under the laws of the United States,

Section 32 of the Lanham Act, 15 U.S.C. 1114(1)(a). 62. As of April 1, 2010, the effective date of the termination of the Franchise

Agreements, Defendants no longer had the right to use the CENTURY 21 Marks in connection with its real estate brokerage business or otherwise. However, despite Defendants agreement to discontinue further use of the CENTURY 21 Marks and despite Defendants actual knowledge that their use of the CENTURY 21 Marks following the date of termination was no longer authorized, Defendants continued to use the CENTURY 21 Marks in violation of Century 21s exclusive rights in those marks. 63. Defendants marketed and promoted real estate services for their real estate

brokerage office through the unauthorized use of the registered CENTURY 21 Marks, and such use caused and is likely to continue to cause confusion or mistake among prospective or actual customers, in violation of Section 32 of the Lanham Act. Page 11 of 23

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64.

Such actions constitute infringement of Century 21s trademarks rights to the

CENTURY 21 Marks. The infringing CENTURY 21 mark appears or appeared identically in connection with Defendants real estate brokerage services. Defendants use of the

CENTURY 21 mark is likely to cause confusion as to source among the consumer for these services given the identical look and sound of the mark used in connection with identical services. 65. The prominent display of the CENTURY 21 mark as used by Defendants on

counterfeit and infringing signage is an identical use to Century 21s aforementioned CENTURY 21 Marks. Such misappropriation is a blatant attempt to confuse the consuming public as to the source of the goods and to trade off Century 21s earned goodwill in the real estate industry. 66. Defendants have acted knowingly and willfully, with full knowledge of the

likelihood of confusion as the sponsorship and/or confusion of their infringing use of the CENTURY 21 marks and with the intent to deceive consumers in order to trade off the promotional efforts and earned goodwill and reputation of Century 21 in the real estate industry. Defendants have acted in utter and knowing disregard for Century 21s rights in the CENTURY 21 Marks. 67. By reason of the foregoing acts of trademark infringement, Century 21 has been

monetarily injured in an amount not yet ascertained. 68. In addition, as a result of the acts of trademark infringement, Century 21 has

suffered and will continue to suffer irreparable harm from the Defendants marketing, and sales in connection with the infringing and counterfeit marks. Century 21 has no adequate remedy at law with respect to this injury. Unless the acts of trademark infringement are enjoined by this Court, Century 21 will continue to suffer irreparable harm.

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69.

Defendants acts make this an exceptional case under 15 U.S.C. 1117(a), such

that Century 21 is entitled to an award of attorneys fees and costs. SECOND CAUSE OF ACTION AGAINST ALL DEFENDANTS (False Designation of Origin/False Advertising,15 U.S.C. 1125(a)) 70. Century 21 repeats and makes a part hereof each and every allegation set forth in

Paragraphs 1 through 69 of the Complaint. 71. Defendants actions of using the CENTURY 21 Marks in connection with their

real estate brokerage business, on signage, websites and in other manners, after the termination of the Franchise Agreements and without Century 21s consent, is a false designation of origin and false advertising and has caused and continues to cause a likelihood of confusion, mistake, and deception as to source, sponsorship, affiliation, and/or connection in the minds of the public. This use of the CENTURY 21 Marks by Defendants is a counterfeit mark within the meaning of Section 34(d)(1)(B) of the Lanham Act, 15 U.S.C. 1116(d)(1)(B). 72. Defendants false designation of origin in interstate commerce has infringed

Century 21s trademark rights in violation of Section 43(a) of the Lanham Act, 15 U.S.C. 1125(a)(1). 73. By reason of the foregoing, Century 21 has been injured in an amount not yet In addition, as a result of

fully determined, but believed to be in excess of $100,000.

Defendants acts of infringement, Century 21 has suffered and will continue to suffer irreparable harm, and Century 21 has no adequate remedy at law with respect to this injury. Unless Defendants acts of infringement are further enjoined by this Court, Century 21 will continue to suffer a risk of irreparable harm.

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74.

Defendants actions have been knowing, intentional, wanton, and willful, entitling

Century 21 to damages, treble damages, profits, attorneys fees, and the costs of this action pursuant to 15 U.S.C. 1117 in this Courts discretion. THIRD CAUSE OF ACTION AGAINST ALL DEFENDANTS (Trademark Dilution, 15 U.S.C. 1125(c)) 75. Century 21 repeats and makes a part hereof each and every allegation set forth in

Paragraphs 1 through 74 of the Complaint. 76. This claim is for trademark dilution under the laws of the United States, Section

43 of The Lanham Act, 15 U.S.C. 1125(c). 77. Century 21 is the exclusive licensee of the CENTURY 21 Marks. Century 21

has invested substantial time, effort and millions of dollars in advertising and promoting the goods and services offered in interstate commerce under the CENTURY 21 Marks such that the CENTURY 21 Marks have become distinctive and famous. 78. Despite knowledge of Century 21s legal interests in and to the CENTURY 21

Marks, Defendants have made, and are believed to continue to make, use in interstate commerce of the CENTURY 21 Marks without Century 21s permission. 79. Defendants unauthorized use of the CENTURY 21 Marks has diluted, and is

continuing to dilute, the distinctive quality of the CENTURY 21 Marks. 80. As evidenced by their refusal to cease further use of the CENTURY 21 Marks

following receipt of notice of termination, Defendants use of the CENTURY 21 Marks following the date of termination was intentional and in conscious disregard of Century 21s rights. This constitutes willful and knowing trademark infringement. Therefore, Century 21 is entitled to an award of treble damages and/or enhanced profits from each of the Defendants.

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81.

As a direct and proximate result of the foregoing conduct, Century 21 is entitled

to damages against each of the Defendants, in an amount that is presently unknown, to a preliminary and permanent injunction, and to any and all other relief the Court deems just and proper under the law. 82. Century 21 also is entitled by statute and pursuant to the terms of the Franchise

Agreement to an award of attorneys fees and costs incurred in having to institute this legal action. FOURTH CAUSE OF ACTION AGAINST ALL DEFENDANTS (Common Law Unfair Competition) 83. Century 21 repeats and makes a part hereof each and every allegation set forth in

Paragraphs 1 through 82 of the Complaint. 84. Century 21 is the exclusive licensee of the CENTURY 21 Marks. Despite

knowledge of Century 21s interest in and to the CENTURY 21 Marks, Defendants have made, and are believed to continue to make, use in commerce of the CENTURY 21 Marks without Century 21s permission and/or beyond the permission that Century 21 previously granted. 85. Defendants have engaged in a pattern of unfair, deceptive, and fraudulent acts to

enrich themselves by misappropriating the CENTURY 21 Marks and using them for their own benefit. 86. Defendants unauthorized use of the CENTURY 21 Marks creates a false

association between the Defendants and Century 21 and tends to cause confusion, mistake, and/or deception among consumers as to the source, quality, and nature of their goods and services. 87. Century 21 has been damaged and will continue to be damaged by the

Defendants unlawful, unfair, and/or fraudulent business practices and misleading advertising as Page 15 of 23

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alleged herein. Century 21 therefore is entitled to a preliminary and permanent injunction enjoining each of the Defendants from using the CENTURY 21 Marks in connection with the Defendants real estate business. 88. As a direct and proximate result of the foregoing conduct, Century 21 has been

harmed and is entitled to damages against each of the Defendants in an amount that is presently unknown and to any and all other relief the Court deems just and proper under the law. 89. Century 21 is informed and believes, and thereon alleges, that the Defendants

conduct was willful, wanton, and in conscious disregard of Century 21s rights, thereby justifying an award of punitive and/or exemplary damages in an amount according to proof at trial. FIFTH CAUSE OF ACTION AGAINST REALTY GROUP I LLC (Breach of Contract: Franchise Agreement 0001) 90. Century 21 repeats and makes a part hereof each and every allegation set forth in

Paragraphs 1 through 89 of the Complaint. 91. As set forth above, Century 21 and Realty Group I entered into a Franchise

Agreement whereby Century 21 agreed to provide Realty Group I with a non-exclusive license for its trademarks and marketing system and Realty Group I agreed to certain monetary and nonmonetary obligations as more fully set forth in Exhibit A hereto. 92. Century 21 has performed all conditions, covenants, and promises required on its

part to be performed in accordance with the terms and conditions of the Franchise Agreement. 93. Realty Group I has breached the Franchise Agreement by failing to pay amounts

owed under that agreement, failing to report real estate transactions, continuing to use the CENTURY 21 Marks after the termination of the agreement and by refusing to allow an audit.

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94.

As a result of Realty Group I breaches of the Franchise Agreement, Century 21

has been damaged in the amount of at least $92,670.23, with additional damages in an amount to be proven at trial based on the facts alleged herein, including but not limited to interest and costs. 95. Pursuant to the Franchise Agreements, Century 21 is also entitled to the recovery

of attorneys fees and costs if it prevails in this action. SIXTH CAUSE OF ACTION AGAINST REALTY GROUP-MCCOUN-82ND STREET, LLC (Breach of Contract: Franchise Agreement 0002) 96. Century 21 repeats and makes a part hereof each and every allegation set forth in

Paragraphs 1 through 95 of the Complaint. 97. As set forth above, Century 21 and 82nd Street entered into a Franchise

Agreement whereby Century 21 agreed to provide 82nd Street with a non-exclusive license for its trademarks and marketing system and 82nd Street agreed to certain monetary and nonmonetary obligations as more fully set forth in Exhibit B hereto. 98. Century 21 has performed all conditions, covenants, and promises required on its

part to be performed in accordance with the terms and conditions of the Franchise Agreement. 99. 82nd Street has breached the Franchise Agreement by failing to pay amounts

owed under that agreement, failing to report real estate transactions, continuing to use the CENTURY 21 Marks after the termination of the agreement and by refusing to allow an audit. 100. As a result of 82nd Streets breaches of the Franchise Agreement, Century 21 has

been damaged in the amount of at least $4,353.22, with additional damages in an amount to be proven at trial based on the facts alleged herein, including but not limited to interest and costs. 101. Pursuant to the Franchise Agreements, Century 21 is also entitled to the recovery

of attorneys fees and costs if it prevails in this action.

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SEVENTH CAUSE OF ACTION AGAINST KEVIN KIRKPATRICK AND JOHN DICK (Breach of Contract 0001 Personal Guaranties) 102. Century 21 repeats and makes a part hereof each and every allegation contained in

Paragraphs 1 through 101 of the Complaint. 103. Pursuant to the terms of the Personal Guaranties, Defendant Kirkpatrick and

Defendant Dick agreed, among other things, that upon a default of the 0001 Franchise Agreement, or any other agreements between the parties, they would immediately make each payment and perform all obligations required of Realty Group I under that agreement. 104. Despite their individual obligation to do so, Defendant Kirkpatrick and Defendant

Dick has failed to make any payments or perform or cause Realty Group I to perform its obligations under the 0001 Franchise Agreements. 105. As a result of Defendant Kirkpatricks and Dicks breach of the Personal

Guaranties, Century 21 has been damaged in the amount of at least $92,670.23, with additional damages in an amount to be proven at trial based on the fact alleged herein, including but not limited to interest and costs. 106. Pursuant to the 0001 Personal Guaranties, Century 21 is also entitled to the

recovery of attorneys fees and costs if it prevails in this action. EIGHTH CAUSE OF ACTION AGAINST KEVIN KIRKPATRICK, JOHN DICK, AND PHILLIP McCOUN (Breach of Contract 0002 Personal Guaranties) 107. Century 21 repeats and makes a part hereof each and every allegation contained in

Paragraphs 1 through 106 of the Complaint. 108. Pursuant to the terms of the 0002 Personal Guaranties, Defendants Kirkpatrick,

Dick, and McCoun agreed, among other things, that upon a default of the 0002 Franchise

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Agreement, or any other agreements between the parties, they, individually, would immediately make each payment and perform all obligations required of 82nd Street under that agreement. 109. Despite their individual obligation to do so, Defendants Kirkpatrick, Dick, and

McCoun have failed to make any payments or perform or cause 82nd Street to perform its obligations under the 0002 Franchise Agreement. 110. As a result of Defendants breaches of their Personal Guaranties, Century 21 has

been damaged in the amount of at least $4,353.22 with additional damages in an amount to be proven at trial based on the fact alleged herein, including but not limited to interest and costs. 111. Pursuant to the Personal Guaranties, Century 21 is also entitled to the recovery of

attorneys fees and costs if it prevails in this action. NINTH CAUSE OF ACTION AGAINST REALTY GROUP I, LLC AND REALTY GROUP-McCOUN-82ND STREET, LLC (Audit Demand/Accounting) 112. Century 21 repeats and makes a part hereof each and every allegation contained in

Paragraphs 1 through 111 of the Complaint. 113. Pursuant to the Franchise Agreements, Realty Group I and 82nd Street agreed,

among other things, to pay certain fees to Century 21 including royalties and national advertising fees. At the time of the filing of this Complaint, Century 21 is aware of sums owing from Realty Group I and 82nd Street to Century 21 in the amount of at least $97,023.45, not including interest, costs and attorneys fees. 114. Pursuant to Section 11(c)(iv) of the Franchise Agreements, Realty Group I and

82nd Street also agreed to allow Century 21 to review and audit Realty Group Is and 82nd Streets business records to verify the gross revenues of their officers, upon which its fees are based.

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115.

Century 21 has demanded an accurate accounting of any additional sales

transactions or amounts that may be owed to Century 21, and Realty Group I and 82nd Street have refused to provide this information. 116. Century 21 is informed and believes that Realty Group I and 82nd Street owes

additional sums under the Franchise Agreements beyond the amount set forth above, based on, among other things, sales of real estate not reported but for which franchise fees are due and owing. However, Century 21 is unable to ascertain the full amount owed by Realty Group I and 82nd Street without an accounting or audit of Realty Group Is and/or 82nd Streets books and records. The additional amounts owed are within Realty Group Is and 82nd Streets knowledge as these amounts are based on transactions in which Realty Group I and 82nd Street participated. TENTH CAUSE OF ACTION AGAINST REALTY GROUP I LLC and REALTY GROUP-McCOUN-82ND STREET, LLC (Unjust Enrichment) 117. Century 21 repeats and makes a part hereof each and every allegation contained in

Paragraphs 1 through 116 of the Complaint. 118. During the terms and course of the Franchise Agreements, Century 21 provided

services to Realty Group I and 82nd Street, which services included but were not limited to nonexclusive licenses to use CENTURY 21 Marks, marketing system and other proprietary information and property. Realty Group I and 82nd Street knew that these services were being provided by Century 21 and they accepted them and used them. 119. Despite its obligation to do so, Realty Group I and 82nd Street have failed to pay

certain Royalty Fees, NAF Contributions and other fees to Century 21 due and owing under the Franchise Agreements in the amount of at least $97,023.45.

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120.

Realty Group Is and 82nd Streets failure to compensate Century 21 constitutes

unjust enrichment and has damaged Century 21 in an amount to be proven but of not less than $97,023.45. WHEREFORE, Century 21 respectfully prays for judgment in its favor and against Realty Group I, LLC, Realty Group-McCoun/82nd Street, LLC, Kevin Kirkpatrick, John Dick and Phillip McCoun, jointly and severally, as follows: 1. 2. Judgment in Century 21s favor on all claims herein; For a preliminary and permanent injunction enjoining the Defendants and their agents, servants, employees, and all persons acting in concert with them from: (a) using the CENTURY 21 Marks in marketing, advertising or promotional materials, via the Internet or otherwise, in connection with real estate services or any other business, and otherwise infringing the CENTURY 21 Marks;

(b) 3.

For an Order directing the Defendants to remove all signs and billboards identifying themselves as a Century 21 affiliate or broker, to contact third party websites that contain any reference to Defendants current or former business as having an association or affiliation with Century 21 and to utilize their best efforts to remove any mention of Century 21 in connection with their name or business; Directing the Defendants to issue corrective advertising, including newspaper advertising, to notify customers and potential customers that Defendants are not affiliated with Century 21; An accounting of profits and damages resulting from Defendants trademark infringement, false designation of origin, trademark dilution, counterfeiting, and unfair competition, and trebling such damages under the trademark laws because of the knowing, intentional, willful, and wanton nature of Defendants conduct; On the Lanham Act claims, an award to Century 21 of: (a) (b) an amount equal to the actual damages suffered by Century 21 as a result of the infringement of its trademarks; an amount equal to the profits earned by Defendants as a result of their infringing conduct and the sale of any real estate, or generation of any revenue, using the CENTURY 21 Marks after the termination of the Franchise Agreement; Page 21 of 23

4.

5.

6.

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(c) (d)

an amount equal to three times the monetary award assessed in view of Defendants willful and wanton infringement; in the alternative as may be elected by Century 21, pursuant to Lanham Act Section 35, 15 U.S.C. 1117(c), statutory damages of $1 million for Defendants willful counterfeit of a registered mark, namely CENTURY 21, or, if found not to be willful infringement, $100,000; pre-judgment interest and post-judgment interest; an amount equal to Century 21s reasonable attorneys fees, as an exceptional case under 15 U.S.C. 1117;

(e) (f) 7.

On the breach of contract claim against Realty Group I, damages in the amount of $92,670.23, with additional damages in an amount to be proven at trial based on the facts alleged herein; On the breach of contract claim against 82nd Street, damages in the amount of $4,353.22, with additional damages in an amount to be proven at trial based on the facts alleged herein; On the breach of personal guaranties claim related to the 0001 Franchise Agreement, damages in the amount of $92,670.23; On the breach of personal guaranties claim related to the 0002 Franchise Agreement, damages in the amount of $4,353.22; On the unjust enrichment claim, damages in an amount to be proven but not less than $97,023.45; For interest in the amount of eighteen percent (18%) per annum on the outstanding fees due under the Franchise Agreements, from the due date of those fees until the entry of judgment; For an Order requiring Realty Group I and 82nd Street to submit to an audit within 30 days and to account for any additional sums due based on the Franchise Agreements and information solely within Defendants possession; For an order that each of the Defendants owe and are obligated to pay to Century 21 a service fee of six percent (6%) and a National Advertising Fee of two percent (2%) on all gross revenues Defendants received during the entire period following the date of termination of the Franchise Agreements in which Defendants used the CENTURY 21 Marks, plus interest thereof; An award of punitive damages for intentional and willful acts; An award of interest, attorneys fees, and costs; and

8.

9. 10. 11. 12.

13.

14.

15. 16.

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17.

Such other and further relief as the Court deems proper.

Dated: June 21, 2012 Respectfully submitted, Century 21 Real Estate LLC

By: s/ Patrick F. Moran One of its Attorneys

Ryan T. Brown Patrick F. Moran GORDON & REES LLP One North Franklin Suite 800 Chicago, Illinois 60606 Tel: (312) 565-1400 Fax: (312) 565-6511
RLGY/1067091/9925215v.1

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