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Craig v. Kropp

United States District Court, M.D. Florida, Fort Myers Division

June 9, 2017

KATHRYN T. CRAIG and KOR ISLAND PROVISIONS, LLC, Plaintiffs,
v.
ROMAN KROPP, SHERRI KROPP, and DYLAN KROPP, Defendants.

          OPINION AND ORDER [1]

          SHERI POLSTERCHAPPEL UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court on Defendants' Motions to Dismiss (Docs. 11, 14, 21) filed on April 14, 18, and 28, 2017, to which Plaintiffs responded (Docs. 24, 26, 31). For the reasons set forth below, the motions are denied.

         Background

         On March 1, 2017, Plaintiffs Kathryn T. Craig (Craig) and KOR Island Provisions, LLC (KOR) filed an eight-count Complaint, alleging various state-law tort claims and damages stemming from a business venture gone bad between the parties. The case was removed to this Court on March 31, 2017, based on diversity jurisdiction. (Doc. 2). Defendants Roman and Sherri Kropp (“RKropp” and “SKropp”) are husband and wife, and Defendant Dylan Kropp (“DKropp”) is their son (collectively, “Defendants”). Craig is the sole owner and manager of KOR. (Id. at ¶ 1).

         The Complaint alleges the following which the Court accepts as true at the motion to dismiss stage: In 2010, Craig met and befriended Defendants. In 2011, Craig formed KOR, a high-end retail furniture and furnishings store in Sanibel Island, Florida. (Doc. 2, ¶ 10). In April 2011, KOR, through Craig, hired RKropp to assist with the opening and operation of the store. (Id. at ¶ 11). RKropp became a trusted friend to Craig and RKropp was provided access to the KOR operating account to assist with the store's operation. (Id. at ¶ 12). At some point, the retail store closed.

         As the retail store was closing, RKropp suggested to Craig that they become engaged in a real estate business where RKropp would locate suitable properties for purchase, renovation and re-sale, on Craig's behalf. (Doc. 1, ¶ 13). As suggested by RKropp, KOR was maintained and utilized for the purpose of conducting the real estate business, and Craig provided RKropp with continued access to the KOR account and authority to conduct real estate deals on behalf of KOR. (Id. at ¶ 14). RKropp was provided generous bonuses for his efforts, and as additional compensation, Craig allowed the Kropp family to reside rent fee in one of the properties purportedly purchased for KOR, 661 Cardium Street, Sanibel Island (“661 Cardium”). (Id. at ¶ 15). Over this time, RKropp and SKropp became confidantes and very close friends of Craig, and Craig considered them to be like her own family. (Id. at ¶¶ 16, 17).

         Craig, through KOR, purchased several investment properties in Costa Rica with RKropp's trusted assistance. (Doc. 1, ¶ 18). One such property was called “Villa Santosha.” Craig determined to renovate the “Villa Santosha” property in Costa Rica so that it could be used as a luxury rental, and hired RKropp as the project supervisor, responsible for choosing and hiring the builder, managing and overseeing the work, handling the finances, and maintaining the records and budget for the renovation. (Id. at ¶ 19). As the renovation progressed and large sums of money were transferred out of the KOR account by RKropp, Craig became increasingly frustrated as her requests for information and back-up documentation regarding the cost of the renovation project were ignored by RKropp. (Id. at ¶ 20).

         In late 2016, Craig began looking into the various business and other transactions that she had entrusted to RKropp. At this time, she found that Defendants had grossly abused the trust she had reposed in them, including the following:[2]

a. RKropp falsely represented to Wachovia, n/k/a Wells Fargo that he was an owner of KOR, and was thereby able to have the account statements diverted from Craig and sent to his address at 661 Cardium.
b. RKropp falsely represented to Craig that he had purchased the property at 661 Cardium for KOR. Instead, RKropp had used KOR's funds to purchase the property for $325, 000, but then wrongfully and willfully arranged to have it placed in his name.
c. Several years later, while Craig believed the Kropp family was living rent free in KOR's property at 661 Cardium, RKropp sold the property for $473, 000, without the knowledge or consent of Craig, and kept the funds for himself. When Craig learned of the theft and demanded return of the funds realized by RKropp, he returned only $320, 000, thereby misappropriating $153, 000.
d. Without Craig's knowledge or consent, RKropp and SKropp wrongfully and willfully utilized the debit card on KOR's account to pay for their personal family living expenses, including without limitation: electricity both for 661 Cardium, and for the home they thereafter rented in Colorado, paypal, ebay, gas, family travel, substance abuse rehabilitation for RKropp, cable, telephone, trash service, sewer, Burberry, J Crew, Saks 5th Avenue, jewelry stores, hardware stores, pharmacies, hair salons, restaurants, and itunes. As a result of these unauthorized and unlawful charges, RKropp and SKropp misappropriated in excess of $265, 000.
e. Without Craig's knowledge or consent, SKropp wrongfully and willfully utilized KOR's account to pay the charges on three storage units in her name for a period of approximately four years, thereby misappropriating approximately $36, 000.
f. Without Craig's knowledge or consent, RKropp wrongfully and willfully withdrew or transferred to his personal account(s) from KOR's account, a total amount exceeding $820, 000.
g. Without Craig's knowledge or consent, DKropp wrongfully and willfully withdrew or transferred to his personal account(s), from KOR's account the sums of $9, 000, and $7, 000.
h. RKropp falsely represented to Craig he had purchased the first of the properties in Costa Rica (the “beachfront property”) for KOR. However, RKropp misrepresented to the legal counsel in Costa Rica and all others involved in the transaction that he was the purchaser of the property. KOR's funds were used for the purchase of the beachfront property, but RKropp wrongfully and willfully arranged the transaction so that a corporation owned by RKropp and SKropp took title. Several years later, and before Craig discovered these fraudulent acts, RKropp transferred title of the beachfront property to Craig's son. The nature arid extent of the damages related to these wrongful acts have not yet been determined.
i. RKropp falsely represented to Craig that the purchase price of the beachfront property was $1, 225, 000, when the actual purchase price was $900, 000. After Craig discovered the discrepancy, RKropp falsely advised Craig that the legal counselor in Costa Rica was holding the excess funds. These funds remain missing.
j. RKropp falsely represented to Craig that the purchase price of the third property purchased by him for KOR in Costa Rica was $160, 000, when the actual purchase price was $88, 800. The funds relating to this discrepancy remain missing.
k. RKropp represented to Craig that the renovation to the Villa Santosha property cost $400, 000, but has failed and refused to provide Craig with a shred of documentation to justify any portion of these charges. Craig has received credible information that an entirely new luxury home could have been built in Costa Rica for the amount purportedly paid by RKropp on behalf of KOR Island for the renovation to the Santosha property.
l. RKropp falsely represented to Craig that he had purchased a 2000 Mercedes Benz automobile in Costa Rica (license plate no. 450300) for KOR to be used in conjunction with the properties purchased by KOR. Instead, RKropp used KOR's funds to purchase the automobile for $25, 000, but then ...

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