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Zellner v. Monroe County Municipal Waste Management Authority

July 28, 2008

PAUL ZELLNER. ET AL., PLAINTIFFS,
v.
MONROE COUNTY MUNICIPAL WASTE MANAGEMENT AUTHORITY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge Caputo

MEMORANDUM

Presently before the Court is Defendants Monroe County Municipal Waste Management Authority ("MCMWMA") and Dean D. W. DeLong, Executive Director of the MCMWMA's motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. 31.)

Count I of the Complaint against Defendants MCMWMA and DeLong for violation of Plaintiffs Paul and Twyla Zellner's Fourteenth Amendment procedural due process rights, brought under 28 U.S.C. § 1983, will be dismissed because Plaintiffs fail to allege a protected liberty or property interest and a deprivation of that interest without due process. Count I will also be dismissed as to any substantive due process claim, as Plaintiffs have failed to allege a violation of any right. Count II of the Complaint against Defendants MCMWMA and DeLong for Section 1985 conspiracy will be dismissed because Plaintiffs fail to allege that they are members of a protected class or discrimination based on membership in such a class. Plaintiffs' Count III for violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c) and Count IV for RICO conspiracy pursuant to 18 U.S.C. § 1962(d) will be dismissed, as Plaintiffs have failed to properly allege a RICO cause of action against either Defendant MCMWMA or DeLong. Plaintiffs' state claims will be dismissed, as the Court no longer retains subject matter jurisdiction.

Plaintiffs' Complaint, arising under the Civil Rights Act, 28 U.S.C. § 1983 and § 1988 and under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c) and (d), is before this Court pursuant to 28 U.S.C. § 1331 ("federal question jurisdiction"). Because this Court will dismiss all federal law claims against Defendants MCMWMA and DeLong, federal question jurisdiction no longer exists, and supplemental jurisdiction for Plaintiff's state law claims pursuant to 28 U.S.C. § 1367 is destroyed. Therefore, Plaintiffs' Complaint will be dismissed against Defendants MCMWMA and DeLong.

BACKGROUND

The facts as alleged in Plaintiffs' Complaint are as follows.

I. The Parties

Plaintiffs Paul and Twyla Zellner were the sole members of Plaintiff, Nu-Tech Towing and Automatic Repair, LLC ("Nu-Tech Towing"). (Compl. ¶ 6, Doc. 1.) Nu-Tech Towing is a general partner in Plaintiff, Nu-Tech Associates, L.P. (Id. ¶8.) Plaintiff Zellner Properties, LLC, conducted business under the fictitious name, Mount Cobb RV Sales, a business formerly owned by Plaintiffs Paul and Twyla Zellner. (Id. ¶ 11.) Plaintiff Zellner Properties, a former RV dealer, was a partner in Plaintiff Mount Cobb Associates, L.P., which owned the land on which Plaintiff Zellner Properties LLC conducted business. (Id. ¶¶ 13, 15.)

Defendants are Monroe County Municipal Waste Management Association ("MCMWMA"), Dean D.W. DeLong, Robert L. Monaghan, Jr., Lois Monaghan, Pocono Auto Repair, Nu-Tech Towing and Automotive Repair, Inc. ("Nu-Tech Towing an d Automotive"), Michael Steiert, Anthony Paone, David Warner, Christopher Kleinschmidt, Barry Marshall, and Community Bank and Trust Company. (Id. ¶¶ 16-35.) The moving Defendants are MCMWMA and Dean D. W. DeLong.

II. The Asset Purchase Agreement

On or about September 30, 2005, Plaintiff Nu-Tech Towing entered into an Asset Purchase Agreement as "purchaser" with Defendants Robert and Lois Monaghan, and Defendant Nu-Tech Towing and Automotive as "sellers." (Id. ¶ 36.) Pursuant to the Asset Purchase Agreement, Plaintiff Nu-Tech Towing was to purchase certain assets, equipment, customer lists, and records from the Defendant sellers. (Id. ¶ 37.) Defendants Robert and Lois Monaghan made representations and warranties to Plaintiffs regarding the sale of the business and concerning the operation and value of the business. (Id. ¶¶ 39, 40.) Included in the sale of the business was a non-competition clause, forbidding the Monaghans from operating or affiliating themselves with a towing or auto repair operation within a twenty-five (25) mile radius of the business for five (5) years. (Id. ¶¶ 60-62.)

III. The Agreement for the Sale of Commercial Real Estate

In conjunction with the Asset Purchase Agreement, Plaintiffs, Paul and Twyla Zellner, entered into an Agreement for the Sale of Commercial Real Estate with Defendants Robert and Lois Monaghan and Defendant Nu-Tech Towing and Automotive for the property located at Route 115 North Blakeslee, the location of Defendant Nu-Tech Towing and Automotive. (Id. ¶ 43.) In order to finance the five-hundred and fifty-thousand dollar ($550,000) purchase price, Plaintiff Nu-Tech Associates entered into a mortgage with the Defendant Monaghans for twenty-thousand dollars ($20,000) and into two other mortgages with Defendant Community Bank for three-hundred and sixty-thousand dollars ($360,000) and one-hundred and eighty-thousand dollars ($180,000). (Id. ¶45.) All mortgages have been satisfied except for the one-hundred and eighty-thousand dollar ($180,000) mortgage, which is the subject of litigation between the Zellners and Defendant Community Bank. (Id. ¶ 47.) After purchasing the business, NuTech Associates leased the real estate to Nu-Tech Towing. (Id. ¶ 48.)

IV. The Due Diligence Agreement and Alleged Inflated Value of the Business

Defendants Monaghans and Nu Tech Towing and Automotive represented that the business comprised auto repair work done for Defendant MCMWMA and made other representations about profits and billing. (Id. ¶¶ 49-50.) MCMWMA referred to its recycling program as "the Reach Program" for which Defendant Nu-Tech Towing and Automotive serviced its trucks. (Id. ¶¶ 51-52.) After the Plaintiff Zellners bought the business they learned that these representations were not true; Plaintiffs had previously contracted with Defendant Community Bank to conduct due diligence on their behalf, but Defendant Community Bank failed to discover and/or reveal the true value of the business. (Id. ¶¶ 57-58.)

V. The Lease/Purchase of Equipment and Hiring of Additional Staff

Defendant MCMWMA assured Plaintiffs that it would use Plaintiffs' services and entered into a verbal agreement insisting that Plaintiffs hire more workers and equipment. (Id. ¶¶ 65-67.) Plaintiffs hired four (4) mechanics and purchased thirty-six thousand dollars ($36,000) worth of equipment. (Id. ¶¶ 68-69.) Plaintiffs later leased and purchased other equipment for approximately eighteen-thousand dollars ($18,000). (Id. ¶¶ 70, 73.)

VI. The Alleged Frauds Perpetrated Against Plaintiffs and the Alleged Improper Termination of Nu-Tech Towing as a Service Provider for MCMWMA

In 2005, MCMWMA ordered two (2) trucks for its recycling program, and one of the jobs Plaintiff Nu-Tech Towing was to perform was a refurbishment of one of the trucks. (Id. ¶¶ 74,75.) Defendant Monaghans estimated the refurbishment at fifty-thousand dollars ($50,000), a business deal which Plaintiffs intended to honor upon the purchase of the business. (Id. ¶ 76.) Defendant DeLong drove the truck to Plaintiffs' shop and told them that the Defendant Monaghans would be supervising the work. (Id. ¶¶ 79, 81.) Plaintiffs had difficulty refurbishing the vehicle because, as they later found out, MCMWMA sent them the wrong truck, which Defendants MCMWMA, DeLong, and the Monaghans were aware of since the beginning of their dealings. (Id. ¶¶ 86, 87.) Defendants also sent an incorrect truck to Haul-All, a Canadian Company, for refurbishment, and upon learning of the mistake, Haul-All increased the cost to seventy-three thousand dollars ($73,000) and was paid this amount. (Id. ¶ 88.) Plaintiffs increased their price charged to this amount as well. (Id. ¶ 90.) However, Defendant MCMWMA refused to pay Plaintiffs the extra twenty-three thousand dollars ($23,000) they sought. (Id. ¶ 91.) Plaintiffs, after learning that Defendants MCMWMA and DeLong knowingly supplied them with the wrong truck, called a meeting to discuss the matter, after which Defendants MCMWMA and DeLong improperly terminated Plaintiff Nu-Tech Towing as their service provider. (Id. ¶¶ 96-97.)

VII. The Alleged Improper Luring Away of Plaintiff Nu-Tech Towing's Employees

Defendants David Warner and Barry Marshall, formerly employees of Defendant Nu-Tech Towing and Automotive, became employees of Plaintiff Nu-Tech Towing. (Id. ¶ 99.) While on the clock for Plaintiff Nu-Tech Towing, Defendants Warner and Marshall spent time at the home of the Defendant Monaghans, at the urging and permission of the Monaghans and Defendant DeLong. (Id. ¶ 100.) Defendant Robert Monaghan, acting with permission of Defendants MCMWMA and DeLong, tried to sabotage Plaintiffs' business by knowingly inviting Warner and Marshall to his home while they were on the clock. (Id. ¶¶ 101-02.) Defendant Robert Monaghan, also with the authority of Defendants MCMWMA and DeLong, solicited Defendants Warner and Marshall to leave Plaintiff Nu-Tech Towing. (Id. ¶ 103.)

VIII. The Alleged Improper Formation fo a Competitive Business

Plaintiff Nu-Tech Towing and Defendants Monaghans entered into a non-competition agreement forbidding the Monaghans from operating or being affiliated with a towing and automotive repair company for five (5) years and within a twenty-five (25) mile radius from the business which they sold to Plaintiffs. (Id. ¶¶ 61-62.) The Monaghans could also not interfere with the business relationships and employment relationships of Plaintiff Nu-Tech Towing. (Id. ¶¶ 63-64.) In breach of the non-competition agreement, the Defendant Monaghans formed a new business, Defendant Pocono Auto Repair, in the name of their son, Kyle Monaghan, an active duty military officer. (Id. ¶ 104.) This business was within the restricted geographic area and did work for Defendants MCMWMA and DeLong, and solicited James Booterbough to ...


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