O'Keefe v. Ace Rest. Supply, LLC.

JOSEPH A. O'KEEFE, et al., Plaintiffs, v. ACE RESTAURANT SUPPLY, LLC., et al., Defendants.

CIVIL ACTION No.: 11-cv-1330

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

February 27, 2019

MEMORANDUM

SITARSKI, M. J.

Plaintiff Joseph O'Keefe ("Plaintiff") alleges that Defendants Ace Restaurant Supply, LLC; Korey Blanck; and Nicholas Blanck (collectively, "Defendants") have committed various frauds and knowingly failed to provide contracted-for pieces of kitchen equipment for his new restaurant. Following a bench trial and pursuant to Federal Rule of Civil Procedure 52(a), this Court now issues its findings of fact and conclusions of law. For the following reasons, the Court finds for all Defendants on Counts I and II, respectively asserting violations of the RICO Statute, 18 U.S.C. §§ 1962(c), (d). The Court finds for Defendant Nicholas Blanck on all Counts. The Court finds for Plaintiff against Defendant Korey Blanck and Defendant Ace Restaurant Supply, LLC, on Plaintiff's Counts III, IV, V, and VI, asserting state law claims of fraud, unjust enrichment, and negligent misrepresentation.

I. PROCEDURAL BACKGROUND

On February 28, 2011, Plaintiff filed the instant Complaint in the United States District Court for the Eastern District of Pennsylvania. (Pl.'s Compl., ECF No. 1). Plaintiff alleged a violation of the Federal Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c) (Count I); a RICO conspiracy claim, id. § 1962(d) (Count II); and additional state law counts of fraud (Count III); unjust enrichment (Count IV); intentional misrepresentation (Count V); and negligent misrepresentation (Count VI). (Id. at ¶¶ 12-109). Defendants responded to the Complaint with a Motion to Dismiss filed pursuant to Rule 12(b)(6) (Defs.' Mot. Dismiss, ECF No. 6), which the Honorable R. Barclay Surrick denied. (Mem. & Op., ECF No. 12; Order, ECF No. 13).

On January 31, 2016, Defendants filed their Answers to Plaintiff's Complaint. (Defs.' Answers, ECF Nos. 16, 17). Subsequently, the case was referred to the Court's arbitration program. (Order, ECF No. 22). The arbitration was held on June 8, 2016, before a three-arbitrator panel. (Not. of Hr'g, ECF No. 20; see also ECF No. 23). Following the arbitration, Defendants filed a request for trial de novo (ECF No. 24), and Plaintiff filed a Motion to Strike Defendants' request for trial de novo. (Pl.'s Mot. Strike, ECF No. 25). On September 7, 2016, Judge Surrick denied Plaintiff's Motion to Strike the request. (Order, ECF No. 27).

After various motions and pretrial conferences (ECF Nos. 34-60), and upon consent of all parties, Judge Surrick transferred this matter to me by Order dated May 29, 2018. (Order, ECF No. 62). I held a bench trial on August 8, 2018. (Transcript, ECF No. 71). Plaintiff testified at trial, and called as witnesses Defendant Nicholas Blanck and Defendant Korey Blanck. Defendants called no witnesses. On October 5, 2018, the parties submitted their Proposed Findings of Fact and Conclusions of Law. (ECF Nos. 73, 74). The Court has reviewed the testimony, the parties' proposed findings of fact and conclusions of law, and the exhibits introduced at trial. Upon this record, which includes critical credibility findings, the Court makes its findings of fact and conclusions of law.

II. FINDINGS OF FACT

To briefly summarize, Plaintiff testified that he entered into two contracts with Defendant Ace Restaurant Supply relying upon the fraudulent misrepresentations of Ace's President, Defendant Korey Blanck. Plaintiff testified that he did not receive the contracted-for items, nor did he receive any refund for the money he paid pursuant to those contracts. The Court credits Plaintiff's testimony. Defendants disagree with Plaintiff's version of events, and testified that they delivered the items to Simmeria as required under the contracts. The Court concludes that Defendants' testimony was not credible in many critical respects, as set forth below.

A. The Parties

1. At the time of the events in question, Plaintiff Joseph O'Keefe was the president of Simmeria Café & Bistro ("Simmeria"), a restaurant located in Fleetwood, Pennsylvania, which he formed in the early part of 2010.

2. At the time of the events in question, Defendant Ace Restaurant Supply, LLC, was a business incorporated under the laws of Pennsylvania, with its principal place of business at 2100 North Eleventh Street, Reading, Pennsylvania 19604.

3. Defendant Korey Blanck is an adult individual with last known residential address at 750 Chestnut Street, Reading, Pennsylvania 19602. At the time of the events, Defendant Korey Blanck was the president, owner, and sole shareholder of Defendant Ace Restaurant Supply.

4. Defendant Nicholas Blanck is an adult individual, and Korey Blanck's son. He worked as an employee of Defendant Ace Restaurant Supply as a deliveryman. He was also tasked with cleaning up used restaurant equipment for delivery to customers.

B. Background of the Instant Litigation: The February 12, 2010 Meeting

5. Plaintiff learned of Defendant Ace Restaurant Supply through a former law partner's friend, who informed Plaintiff he should contact Ace Restaurant Supply to equip Simmeria, and that Defendant Korey Blanck was "the guy to talk to." (Tr., 8/8/18, ECF No. 71, at 36:20-23).

6. Plaintiff contacted Defendant Korey Blanck and Ace Restaurant Supply to outfit Simmeria with restaurant equipment. On February 12, 2010, Defendant Korey Blanck went to Simmeria to meet with Plaintiff. (Id. at 10:11-14).

7. Defendant Korey Blanck came to Simmeria and drew a diagram for Plaintiff, detailing the equipment Plaintiff needed. Plaintiff credibly testified that Defendant Korey Blanck "sketched out what he was going to do. He gave me the whole equipment list. I mean, he really gave me a great picture of how he was going to hook me up and set me up." (Id. at 37:25-38:3). Defendant Korey Blanck specified for Plaintiff the pieces of equipment he would provide, and "sketched it out in terms of the line as to how it would fit in the space and what equipment would go where." (Id. at 20:4-6).

8. Plaintiff relied upon Defendant Korey Blanck's representations and diagramming, and purchased the equipment identified on the diagram that Defendant Korey Blanck prepared for Plaintiff. Plaintiff credibly testified that Defendant Korey Blanck's representations regarding the new and used restaurant equipment and sketch was "where we got the list for the equipment." (Id. at 20:12). Thus, Plaintiff entered into two contracts for the sale of those identified items. (Id. at 20:10-19, 37:25-38:3).

9. The representations made by Defendant Korey Blanck to Plaintiff in conjunction with the preparation of that diagram, and during the conversations they had when the diagram was prepared, were false. Plaintiff credibly testified that he "received nothing, anything of the kind that was on the sheet. The most that I got was a bunch of broken, used stuff that was just dumped at [Simmeria]. . . it was nothing new, nothing as represented[.]" (Id. at 11:25:-12:2, 12:22).

C. The February 2010 Contract

10. On February 12, 2010, Plaintiff entered into a contract with Defendant Ace Restaurant Supply through Ace's president, Defendant Korey Blanck. Pursuant to that contract, Plaintiff purchased the following items:

a. One new stainless steel hood with exhaust fan, costing $2,669.00;

b. One used two-box five-tap beer system, costing $2,795.00;

c. One used under-counter dishwasher, costing $2,350.00;

d. One new two-door glass lowboy for beer, costing $3,890.00;

e. One new twenty-four inch Castle flat top gas grill, costing $870.00;

f. One new twenty-four inch Castle rock gas charbroiler, costing $825.00;

g. One new two basket floor fryer, costing $840.00;

h. One new Vollrath eight-bird rotisserie countertop cooker, costing $2,785.00;i. One new three-bay sink, costing $699.00;

j. One new grease trap, costing $465.00;

k. Two new infrared countertop ranges, costing $349.00 each, and $798.00 total;

l. One new forty-eight inch Bain Marie, costing $1,875.00;

m. One new equipment stand, costing $360.00. (Defs.' Ex. 1) (Feb. 12, 2010, Sales Agreement).

11. The total cost of the items was $21,221.00. Plaintiff received a credit of $1,785.00 for trading in other equipment. In total, Plaintiff paid "$20,602.16 which include[d] $1,166.16 in Pennsylvania sales tax" for the items identified in the February 12, 2010 Sales Agreement. (Id. at 11:18-19; see also Pl.'s Prop. Findings of Fact, Ex. 1, at 1-2 (Feb. 12, 2010, Sales Agreement)).

12. As noted above, the February 12, 2010 Sales Agreement specified that many of the items would be "new," and one item would be "used." (Id.; Defs.' Ex. 1).

D. The March 2010 Contract

13. On March 16, 2010, Plaintiff entered into a second contract with Ace Restaurant Supply which "was a supplemental order [] while we were waiting for the new equipment that we thought was on order." (Tr., at 14:11-14). This supplemental order provided for the following items:

a. One new Castle bake oven with wire rack and stone on the bottom shelf, costing $2,960.00;

b. One used hot dog roller grill, costing $779.00;

c. One used acrylic roller cover, costing $170.00;

d. One round up bun steamer, costing $499.00. (Defs.' Ex. 2).

14. Plaintiff paid a total of $4,672.48 for the supplemental order, which included $264.48 in Pennsylvania sales tax. (Pl.'s Ex. 1, at 4; Defs.' Ex. 2). Also on March 16, 2010, Defendants faxed to Plaintiff a "Corrected Invoice" listing this equipment and corresponding prices. (Defs.' Ex. 3).

E. The April 2010 Delivery

15. On April 12, 2010, Defendants mailed and faxed to Plaintiff a letter stating, inter alia, that "[a]ll your equipment has arrived except for the Castle Bake Oven and Custom Back Bar Sliding Door Cooler." (Defs.' Ex. 4).

16. Defendant Nicholas Blanck testified that he worked for Ace Restaurant Supply as a deliveryman. He also cleaned up used equipment for delivery. (Tr., at 51:20-21, 52:24-53:15).

17. Defendant

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