Ronzio v. Tannariello

• Decision Date: 09 December 2019
• Docket Number: No. 226-2019-CV-00671,226-2019-CV-00671
• Parties: Richard Ronzio, individually and derivatively on behalf of Eco Stoneworks, LLC, CRJ Properties, LLC and Eco Stone South, LLC v. Joshua Tannariello, Christopher Katsoupis, and Eco Stone USA, LLC and Eco Stoneworks, LLC, CRJ Properties, LLC and Eco Stone USA, LLC, Nominal Defendants
• Court: New Hampshire Superior Court

Richard Ronzio, individually and derivatively on behalf of Eco Stoneworks,LLC, CRJ Properties, LLC and Eco Stone South, LLC v. Joshua Tannariello, Christopher Katsoupis, and Eco Stone USA, LLCandEco Stoneworks, LLC, CRJ Properties, LLC and Eco Stone USA, LLC, Nominal Defendants

No. 226-2019-CV-00671

State of New Hampshire MERRIMACK, SS SUPERIOR COURT

December 9, 2019

ORDER

Plaintiff Richard Ronzio ("Ronzio") has brought direct claims against Joshua Tannariello ("Tannariello") and Christopher Katsoupis ("Katsoupis") (collectively, the "Individual Defendants") alleging that he has been frozen out of and lost his interest in Eco Stoneworks, LLC, ("Eco Stoneworks"), CRJ Properties ("CRJ"), and Eco Stone South, LLC ("Eco South"). He and the Individual Defendants are members of Eco Stoneworks, Eco South, and CRJ. Ronzio alleges that the Individual Defendants have breached and violated the operating agreements of the LLCs, their fiduciary duties and obligations of good faith and fair dealing, and have converted corporate opportunities for their own benefit. He alleges that they have prevented him from receiving his due share of business earnings and profits and terminated his employment unlawfully. He seeks preliminary injunctive relief. For the reasons stated in this Order, the request for preliminary injunctive relief is DENIED.¹

I.

While the background facts in this case are not subject to dispute, the facts which relate to the rights and liabilities of the parties are in sharp dispute. The parties have briefed the Motion for Preliminary Injunctive Relief, but no evidentiary hearing has been held. The Court must therefore proceed upon the affidavits and documents filed by the parties in assessing whether or not the Plaintiff has met the standard for injunctive relief.

The parties agree that Tannariello, Katsoupis and Ronzio are the founders and equal members of Eco Stoneworks, CRJ, and Eco South. (Compl. ¶ 5.) Eco Stoneworks and CRJ are New Hampshire limited liability companies that maintain a principal place of business in Milford, New Hampshire. (Compl. ¶¶ 24-25.) Eco Stoneworks is a producer, supplier, and installer of countertops based in Milford, New Hampshire and leases space owned by CRJ to operate its business. (Compl. ¶ 32.) Eco Stoneworks was hired to complete a few jobs in Florida, and the members realized they had the potential to expand the business there. (Compl. ¶ 48.) In order to do so, Eco South was formed jointly by Tannariello, Katsoupis, and Ronzio in 2018, in Florida. (Compl. ¶ 26.) Eco South is a Florida limited liability company with a principal place of business in Miramar Beach, Florida. (Compl. ¶¶ 21, 26.) Eco South is a supplier and installer of countertops manufactured primarily in Asia and shipped directly to customer locations for installation. (Compl. ¶¶ 32-33.)

Ronzio's claims of corporate freeze-out, theft of corporate opportunities, and forcedlowball buyout all have their genesis in his exclusion from the business in 2018. (Compl. ¶¶ 124-190.) There appears to be no dispute that Ronzio left the business in 2018 due to a substance abuse problem. In fact, Ronzio does not dispute that he had a substance abuse problem. (Compl. ¶ 15.) But he asserts that Tannariello and Katsoupis have "always known of" his issues with substance abuse, which have "never interfered with the success of the business and have been under control since he became verifiably clean in December, 2018." (Id.) Ronzio does not dispute that he agreed to take medical leave for drug treatment, which commenced on December 10, 2018.

But here the positions of the parties diverge. Ronzio argues the Individual Defendants insisted that he undergo drug treatment as a pretext for their plan to take over the business. (See e.g., Compl. ¶¶ 63-75.) His allegations are set forth in detail in the Complaint, which has been sworn to by Ronzio. He alleges that Katsoupis sought to eliminate a member of the LLC to increase the profits of the other 2 members and, when he would not go along with an attempt to betray Tannariello so that he could be removed, he "made himself a target." (Compl. ¶¶ 53-62.) According to Ronzio, Katsoupis and Tannariello "hatched a scheme that exploited Ronzio's need to address a long-standing issue with drug use" by "falsely promising to permit Ronzio's expeditious return to work as before once 'clean,' and to be fairly paid during his absence." (Mem. Supp. Pl.'s Mot. Prelim. Inj. Relief at 6.)

According to Ronzio:

- On December 10, 2018, [Ronzio] entered medical leave and checked into a hospital for a drug-related procedure and permanently ceased using drugs.

- On December 17, 2018, [Ronzio] was discharged from the hospital but barred from returning to work by the [Individual Defendants], who demanded that he check into a 30-day treatment program while promising (again) that he would bewelcomed back once he completed the program and would be paid "slightly" reduced compensation in the meantime. In fact, the [Individual Defendants] distributed a total of $57,000 to Ronzio while taking multiples of that amount for themselves.

- On December 19, 2018, the [Individual Defendants] terminated [Ronzio] as co-Manager of the Business without telling him.

- On December 21, 2018, [Ronzio] checked into a 30-day drug treatment program and while in the program, the [Individual Defendants] insisted that [Ronzio] continue rehab for several additional months before returning to work by June 2019.

- On May 30, 2019, the [Individual Defendants] delivered a letter to [Ronzio] apprising him of his termination as a Manager and employee of the Business, and that all benefits (including medical) and compensation would immediately cease. He has since received $0 dollars as the [Individual Defendants] continue to pay themselves.

(Mem. Supp. Pl.'s Mot. Prelim. Inj. Relief at 6-7, citing Compl. ¶¶ 49-97.)

Ronzio alleges that he relied on what he characterizes as the "deliberately deceitful statements and actions" of the Individual Defendants "by extending his stint in the drug treatment program. . . signing certain corporate documentations placed in front of him during his absence, forbearing from taking legal or other measures to force his way back into employment, and otherwise abiding by the requests of the [Individual Defendants] until he received the May 30[, 2019] letter" that "revealed the freeze-out and financial squeeze-out that they had schemed. (Mem. Supp. Pl.'s Mot. Prelim. Inj. Relief at 13.)

The Individual Defendants dispute Ronzio's claims and argue that their decision to remove him was made in order to restore the stability of the business. In support of their Objection to the Motion for Preliminary Injunctive Relief, the Individual Defendants have filed the Affidavit of Stephen Stepanek, a business consultant for Eco Stoneworks. He states:

3. I had done some consulting for the company when it was established. In 2018, I was engaged again. It quickly became apparent the company was experiencingsignificant financial challenges due in large part to Richard Ronzio's addiction to heroin and fentanyl.

4. I personally observed Mr. Ronzio at meetings and while working at Eco in what I believed to be a very drugged state—I believe the term high as a kite would be an appropriate description. On one occasion, while outside the facility in Milford, NH (where Stone is worked on and moved with machinery) I saw Mr. Ronzio incoherent and barely functioning apparently having just taken drugs.

5. I believed as the company's business consultants—and I told the other 2 owners—that Mr. Ronzio posed a threat both to himself and to others at the company given the equipment and heavy slabs of stone that were being moved and worked on. I participated in discussions with Mr. Ronzio where we urged him to go to rehab and he resisted.

6. Ultimately, the company terminated Mr. Ronzio's employment since he was unable to perform his duties satisfactorily and was a real problem for the company, its customers and its vendors. Indeed, I had learned that his addiction was known to employees and vendors. At the time he was terminated as an employee, Mr. Ronzio was told that the company might take him back but there was no commitment in any way.

7. After he was terminated as an employee, it became increasingly apparent that Mr. Ronzio had contributed substantially to problems that the company both on the sales side and the supply side. Without Mr. Ronzio as an employee the company was substantially stronger and profitable.

(Aff. of Stephen Stepanek, in Supp. Def.'s Obj. to Pltf.'s Mot. Prelim. Inj. Relief.)

Apart from his wrongful termination and freeze-out claims, Ronzio alleges that the Individual Defendants have transferred business and opportunities belonging to Eco Stoneworks and Eco South to a new entity controlled by them, Eco Stone USA. (Compl. ¶¶ 80-81, 83.) Ronzio alleges that the Individual Defendants are "cooking the books" by "placing earnings into Eco Stone USA, which [Ronzio] does not own, and related expenses. . . into Eco Stoneworks, which [Ronzio] does partially own." (Mem. Supp. Pl.'s Mot. Prelim. Inj. Relief at 8.) In support of his claims, he has provided the Affidavit of Wendy Renard, who holds a bachelor's degree in accounting, has 25 years of experience as a bookkeeper and as an accounting services provider through companies in a variety ofindustries, and who was employed part-time as a bookkeeper for Eco Stone works from January, 2015 through July, 2019. (Aff. of Wendy Renard, ¶¶ 2-4.) She states in relevant part:

33. During the last months of my employment, I was instructed to book all income generated from fabricated jobs to Eco Stone works and to book all income generated from prefabricated projects to Eco USA.

34. The business included on the books of echo USA all income and associated direct expenses (e.g., payments to subcontractors or for product), but retained all other expenses and overhead (e.g., salaries, accounting, travel) on the

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