In re Dearborn Process Service, Inc.
| Decision Date | 22 January 1993 |
| Docket Number | Bankruptcy No. 92 B 23549,Adv. No. 92 A 1401. |
| Citation | 149 BR 872 |
| Parties | In re DEARBORN PROCESS SERVICE, INC., Debtor. DEARBORN PROCESS SERVICE, INC., Plaintiff, v. Linda J. STORNER, Individually and doing business as Dearborn Process Servers, Inc., an Illinois corporation a/k/a Dearborn Process Servers, Elizabeth Storner, Subhash Malhotra a/k/a Sam Malhotra, and Unknown Others, Defendants. |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
COPYRIGHT MATERIAL OMITTED
Gregory K. Stern, Chicago, IL, for plaintiff.
Thomas S. More, Chicago, IL, for defendants.
PRELIMINARY INJUNCTION
This cause was heard on Motion of Plaintiff Dearborn Process Service, Inc. for preliminary injunction and other relief. Following an emergency hearing held on notice, this Court entered a Preliminary Injunction on October 27, 1992, nunc pro tunc the date of hearing and ruling October 23, 1992. Final hearing on the application for Preliminary Injunction was then set. Following completion of the full and final hearing thereon, the Court now makes and enters Findings of Fact, Conclusions of Law, and Preliminary Injunction pendente lite:
FINDINGS OF FACT
1. On July 2, 1982, Dearborn Process Services, Inc. was incorporated under the law of the State of Illinois and assigned Illinois corporation number D-5278-584-7. This corporation was involuntarily dissolved on December 27, 1985 by the Illinois Secretary of State for failure to pay franchise taxes.
2. The shareholders of the dissolved corporation were Richard Walsh ("Walsh") and Linda J. Storner ("Storner").
3. From November 1986 through August 22, 1991, Walsh and Storner still operated under the name of "Dearborn Process Service, Inc.", and held the business out as a corporation under federal employer identification number XX-XXXXXXX.
4. On August 22, 1991, Walsh and Storner incorporated Dearborn Process Service, Inc., the Plaintiff ("Debtor") herein, under the laws of the State of Illinois, which was assigned Illinois corporation number D-5650-765-5. The Debtor obtained a new IRS tax number: XX-XXXXXXX.
5. During all the times that Debtor was incorporated, Walsh and Storner were and are the sole shareholders of the Debtor, each holding 50% of the common stock therein.
6. The Debtor was at all times mentioned and is engaged in the business of serving judicial process, making court filings, and obtaining document retrievals, primarily on behalf of many agencies and law firms. During 1991 and 1992, its principal place of business was located at 100 West Monroe Street, Suite 501, Chicago, Illinois. Storner managed the business day-to-day from that location. During those years, the Debtor maintained and still maintains a Post Office Box Number A3693, which it has used in its business operations and published to third parties for such use.
7. Walsh is the duly authorized president and a director of the Debtor.
8. Until Storner's resignation, announced in open court on November 10, 1992, effective November 12, 1992, she was Secretary-Treasurer and a director of the Debtor. Until the latter date, Storner and Walsh were the only directors.
9. At all times when Debtor was incorporated until mid-October of 1992, Storner was the manager of the Debtor's business operations.
10. As directors, officers, and sole shareholders of the Debtor, a closely held corporation, Storner and Walsh each had until November 12, 1992 a confidential and fiduciary relationship with the Debtor.
11. The Debtor owned a corporate checking account, account number XXXXXX, at the Northern Trust Company under federal employer identification number XX-XXXXXXX.
12. Prior to September 20, 1992, the Debtor had two business accounts in its name with Illinois Bell Telephone Company. The business telephone number of the first account was (312) 987-0900. The business telephone numbers of the second account were and are (312) 609-0600 and 609-0059. The latter account was established in August of 1988. Billing statements for the two business telephone accounts were in the name of and mailed to the Debtor prior to September 30, 1992.
13. On or about August 1, 1992, Storner and her daughter, the defendant Elizabeth Storner, developed and engaged in a plan to take away the business of Debtor for their own use and benefit. In furtherance of that plan, they seized records of the Debtor; contacted its customers; engaged in and conducted, under another but deceptively similar name ("Dearborn Process Servers"), the business of serving judicial process, court filings, and documents retrievals; engaged in the deceptive practice of using the name of "Dearborn Process Servers, Inc.", headquartered at 100 West Monroe Street, Suite 501, Chicago, Illinois; and interfered with and diverted the business of Debtor to the defendant Dearborn Process Servers, Inc.
14. On August 20, 1992, Storner, as incorporator, prepared Articles of Incorporation for Dearborn Process Servers, Inc. Those Articles were filed by her with the Illinois Secretary of State on September 15, 1992.
15. Dearborn Process Servers, Inc., also known as Dearborn Process Servers ("Dearborn Process Servers, Inc."), is an Illinois corporation, whose stock is wholly owned and whose business is wholly controlled by Storner and her daughter, defendant Elizabeth Storner. It has its principal place of business at 100 West Monroe Street, Suite 501, Chicago, Illinois, in the office of the Debtor.
16. On or about September 16, 1992, the Storners prepared and submitted a federal Application for Employer Identification Number in the name of Dearborn Process Servers, Inc. The Application admitted that the business started on August 1, 1992.
17. Elizabeth Storner, Linda J. Storner, and Dearborn Process Servers, Inc. a/k/a Dearborn Process Servers (collectively, the "Defendants"), prior to entry of the emergency Preliminary Injunction entered herein on October 27, 1992, were engaged in and conducting business under the name of Dearborn Process Servers, Inc., headquartered at 100 West Monroe Street, Suite 501, Chicago, Illinois, the same office as that of the Debtor.
18. The business in which the Defendants were engaged prior to October 27, 1992 was the serving of judicial process, court filings, and document retrievals, the same business as that of the Debtor; and that business serviced many of the same customers as did the Debtor.
19. On August 31, 1992, acting as Secretary-Treasurer of the Debtor, Storner completed and submitted a federal Application for Employer Identification Number Form SS-4, and was assigned a second federal employer identification number, # XX-XXXXXXX.
20. On September 1, 1992, Storner, on the Debtor's letterhead, faxed a letter to Ms. Ann Kenerson, Northern Trust Company, regarding account number XXXXXX, and directing Northern Trust Company to change its records to reflect Debtor's new tax identification number as XX-XXXXXXX.
21. During September of 1992, Defendants removed some of the Debtor's books and records from the Debtor's principal place of business and had the locks on the doors changed.
22. On September 23, 1992, Storner requested of Illinois Bell a change in service, transferring Dearborn Process' telephone numbers (312) 609-0600 and 609-0059 to the name of Dearborn Process Servers, Inc., directing bills to be sent to Dearborn Process Servers, Inc., attn: Linda Storner, 100 West Monroe Street, Suite 501, Chicago, Illinois 60603, changing 411 information, and adding a third line to the account (XXX-XXX-XXXX).
23. On September 25, 1992, Storner transmitted a copy of Dearborn Process Servers, Inc.'s Articles of Incorporation to Illinois Bell.
24. The Illinois Bell change order requested by Storner on September 23, 1992 went through on September 30, 1992, changing the phone numbers into the name of Dearborn Process Servers, Inc., directing bills to Dearborn Process Servers, Inc., attn: Linda Storner, 100 West Monroe Street, Suite 501, Chicago, Illinois 60603, changing all 411 information, and adding a third line to the account (XXX-XXX-XXXX).
25. On October 19, 1992, Kathy Harper ("Harper"), an Illinois Bell business service representative, conducted a quality check by calling Debtor at (312) 609-0600 to verify the change order. Harper spoke to Linda J. Storner, who represented to Harper that she was a 50% owner of Dearborn Process Service, Inc.
26. Thereafter, on October 19, 1992, responsible people at Illinois Bell decided to transfer service to 20 North Clark Street, Suite 3500, Chicago, Illinois, because an Assumed Outstanding Charge Form ("AOC") had not been executed by Storner or Dearborn Process Servers, Inc. The change order was rescheduled for October 22, 1992.
27. On October 20, 1992, Harper called Storner to advise her that the phone numbers were being transferred to Debtor at 20 North Clark Street, Suite 3500, Chicago, Illinois, at which time Storner contested moving the phone numbers and agreed to sign an AOC. Thereafter Storner signed and mailed an AOC to Illinois Bell.
28. The Defendants, prior to entry of the Preliminary Injunction entered October 27, 1992, had begun business using the Debtor's phone numbers.
29. The Defendants contacted the Debtor's major customers, including but not limited to the State of Illinois Department of Children and Family Services ("DCFS"), in an effort to divert business that would otherwise have inured to the benefit of the Debtor.
30. DCFS is the Debtor's largest customer and, commencing in July 1992, began giving Debtor a substantial amount of business.
31. The Defendants developed and engaged in a scheme to defraud and divert the Debtor business and specifically the Debtor's business with DCFS, beginning in at least August 1992.
32. On August 31, 1992, DCFS confirmed to the Defendants an agreement for the Defendants to provide services to DCFS for the period of September 1, 1992 through September 30, 1992.
33. On September 30,...
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