A company providing paintless dent removal argues that a competitor’s “frivolous” RICO suit was filed in retaliation to a non-compete lawsuit in which the competitor was sanctioned twice.
Defendants Cosmetic Car Company Holdings Inc., Cosmetic Car Company LLC, Midwest Dent Company, Auto Dentician Inc., Charles Daniel Binkley, Eric Stokes, and Andy Clawson filed a motion to dismiss a lawsuit filed by plaintiffs Wesley Huff and Mirror Finish PDF LLC. The defendants’ motion to dismiss was filed May 12 through attorney Shaun Broeker of Thompson Coburn LLP in St. Louis.
The defendants argue that the plaintiffs filed a “frivolous” lawsuit in retaliation of a lawsuit the defendants filed against Huff in St. Louis County in February 2017 “for Huff’s violation of the non-compete and non-solicitation provisions in the Operating Agreement.”
According to the non-compete lawsuit, the defendants allege Huff attempted to hide his non-compete violations by filing numerous motions and violating multiple court orders. As a result, Huff was sanctioned by the court twice.
The defendants claim St. Louis County Judge Ellen Ribaudo entered a judgment against Huff for more than $700,000 and enjoined him and his company, Mirror Finish, from engaging in paintless dent removal (PDR) services in the St. Louis metropolitan area.
In related documents, the defendant’s argue that Ribaudo was forced to enter default judgment against Huff for failing to comply with discovery obligations and court orders, amounting to a “pattern of contumacious and deliberate disregard for the authority of the court which was caused [Carmed 45] to suffer extreme prejudice and forced it to incur additional and unnecessary attorney’s fees and costs.”
In their motion to dismiss, the defendant’s further claim the complaint is poorly pled, “ignoring the retaliatory nature of this lawsuit.”
The defendants argue that the plaintiffs’ claims fail because the applicable statute of limitations has run its course, and the claims were addressed or should have been addressed in the non-compete lawsuit.
They claim the unjust enrichment claim relies upon the existence of a valid contract, LLC members do not owe fiduciary duties to other LLC members, a party cannot not tortuously interfere with a contract they are a party to, and LLC members cannot conspire amongst each other.
The defendants also argue that the fraudulent inducement claim is “based on a contract that plaintiffs had a duty to read.”
Lastly, the defendants argue that the RICO claim should be dismissed for several reasons, but primarily because “plaintiffs are attempting to turn a private business dispute into a racketeering offence …”
The defendants removed the complaint to the U.S. District Court for the Southern District of Illinois on May 12 based on Huff’s claims that they violated the federal Racketeer and Corrupt Organizations Act (RICO). The complaint was originally filed in April 7 in St. Clair County Circuit Court before the defendants removed it to federal court.
According to the defendants’ notice of removal, Huff, Cosmetic Car Company and Auto Dentician formed the Carmed 45 Partnership in 2010 “for the purposes of providing paintless dent removal services (PDR).” An operating agreement was formed in July 2012.
Huff resigned from Carmed 45 LLC on March 31, 2015 and began providing PDR services through his company Mirror Finish PFR LLC “in direct competition against Carmed 45, LLC in violation of the operating agreement. This was the basis of the non-compete lawsuit.”
The defendants allege in their notice of removal that Huff did not provide any details to his allegation that he was “constructively forced” to resign.
“This general allegation serves as the foundation of his state law claims for unjust enrichment, fraud, breach of fiduciary duty, tortious interference with a contract, fraudulent inducement, and civil conspiracy,” the notice states.
The defendants state in their notice that the plaintiffs’ claims should have been made in the non-compete lawsuit in St. Louis County Circuit Court.
Huff and Mirror Finish filed the complaint April 7 in St. Clair County Circuit Court through attorney Sean K. Cronin of Donovan Rose Nester PC in Belleville.
They explain that paintless dent removal is a “common” “automotive body repair technique that, put simply, involves popping dents out of car bodies in such a way as they do not require paint to repair.”
The plaintiffs argue that the defendants fraudulently conspired against the plaintiffs.
“Defendants have profited off their fraud to plaintiff’s detriment,” the suit states.
The plaintiffs claim the Carmed 45 Partnership was dissolved in 2012 “for reasons unknown to plaintiffs.” They claim Carmed 45 is defunct but is still listed with the Missouri Secretary of State as active and has not conducted operations since 2015.
Huff and Mirror Finish argue that Carmed 45 provided paintless dent removal solely through the plaintiff “in a mobile format, traveling to customers’ locations to perform paintless dent removal services on-site. Carmed 45 did not have a brick and mortar location where it provided services for regular consumers.”
The plaintiffs allege Carmed 45 “conspired to pillage the customers of Carmed 45, LLC” and to “self-deal and deplete all entities in which plaintiff’s had an ownership interest of value to deprive plaintiffs of their interest.”
The defendants are also accused of fraudulently conspiring to misrepresent the plaintiff’s ownership interest and deprive their ownership interest, rightful income and benefits from CCC-related entities.
“Defendants fraudulently induced plaintiffs to enter into the above-referenced business relationship, under knowingly false pretenses, for the purpose of exploiting Wesley Huff for his labor, depriving him of the fruits of said labor and misappropriating his assets,” the suit states.