IN THE CIRCUIT COURT OF THE EIGHTEENTH JUDICIAL CIRCUIT

DUPAGE COUNTY, ILLINOIS

Power Dry of Chicago, Inc., d/b/a

Chicago Water and Fire
Restoration; and Federal Insurance Company

Plaintiffs,

v.

John Montalbano,
CASE NO.: 2022 LA 001026
Defendant.
_____________________________________

John Montalbano,

Counter-plaintiff/Third-party
plaintiff,

v.

Power Dry of Chicago, Inc., d/b/a

Chicago Water and Fire
Restoration;

Counter-defendant

and Ryan Kelly,

Third-party defendant

PLAINTIFFS’ THIRD AMENDED COMPLAINT

Plaintiffs, POWER DRY OF CHICAGO, INC. D/B/A CHICAGO WATER AND

FIRE RESTORATION and FEDERAL INSURANCE COMPANY, by and through their

attorneys, LEWIS BRISBOIS BISGAARD & SMITH, LLP and SCHUELER, DALLAVO

& CASIERI, alleges the following for their Third Amended Complaint against Defendant,

JOHN MONTALBANO:

141196633.1 1
 The Parties

1. Power Dry of Chicago, Inc. d/b/a Chicago Water and Fire Restoration

(“CWFR” or the “Company”) is an Illinois corporation with a principal place of business in

Elmhurst, DuPage County, Illinois.

2. Federal Insurance Company (“Federal”) is an Indiana corporation with a

principal place of business in Indianapolis, Marion County, Indiana.

3. At all times relevant, CWFR was insured under the relevant policy of

insurance issued by Federal, who is therefore subrogated to the extent of the payments it

made.

4. John Montalbano (“Mr. Montalbano”) served as the general manager of

CWFR from July 2018 until his resignation on September 9, 2022. At all times relevant to

this complaint, Mr. Montalbano worked at CWFR’s offices in Elmhurst, Illinois. As

CWFR’s general manager, Mr. Montalbano was one of CWFR’s most trusted employees.

As general manager, Mr. Montalbano had the authority to act on CWFR’s behalf with

respect to all of its operations, had access to all of CWFR’s accounts, and was principally

responsible for auditing the monthly statements on CWFR’s accounts.

5. Mr. Montalbano’s compensation was commensurate with the gravity of his

responsibilities, with the cash component of annual salary (i.e., the components not

including his bonuses, employer 401(k) contributions, and employer provided healthcare)

exceeding $140,000 in 2018, exceeding $190,000 in 2019 and 2020, and exceeding

$218,000 in 2021 and 2022.

6. Among other things, Mr. Montalbano was entrusted to (i) obtain and

disburse petty cash to advance the Company’s interest, and (ii) manage the Company’s

revolving credit accounts. Unfortunately, and as discussed infra, Mr. Montalbano abused his
141196633.1 2
authority as CWFR’s general manager. To date, Defendants’ investigation has revealed

that, while employed by CWFR, Mr. Montalbano (i) diverted $70,670 of petty cash, (ii)

purchased $226,232.25 of goods for himself and his family at Home Depot using CWFR’s

Home Depot credit cards, (iii) purchased $10,439.14 in airfare for himself, his wife, his

children, and his wife’s friend using CWFR’s credit cards, (iv) purchased $4,246.12 of

goods for himself using CWFR’s Amazon account without authorization, (v) purchased

$441.81 of videos on Amazon Prime using CWFR’s account without authorization, (vi)

used CWFR’s American Express cards to make $99,319.46 in unauthorized purchases at

various vendors (excluding Amazon) to benefit himself and his family, (vii) used CWFR’s

credit cards to make an additional $92,629.78 in purchases on Amazon.com without

authorization and to the benefit of himself and his family, and (viii) made $400.02 in

unauthorized purchases from Instacart to the benefit of himself and his family.

7. In addition, since the initial Complaint was filed in this matter, Plaintiff has

discovered additional theft on Mr. Montalbano’s part in which he purchased American

Express gift cards that he told Plaintiff would be given to customers, and instead kept them

for his personal use. To date, Plaintiff has discovered that Mr. Montalbano purchased

$43,995.07 with Plaintiff’s money that he used for himself. As such, as of the preparation of

this Amended Complaint, Mr. Montalbano’s theft from November 2017 to the present, as

memorialized in paragraphs 6 and 7 of this Amended Complaint, has been found to total a

staggering $547,973.63.

8. In addition, while employed by CWFR, Mr. Montalbano secretly directed

CWFR employees and equipment for his personal benefit. He did so to the detriment of

CWFR who depends on its employees and equipment to do work that brings in needed

141196633.1 3
revenue. Mr. Montalbano secretly directed CWFR employees, trucks and other equipment

to do work on his personal home for which he did not compensate CWFR.

9. Two events alerted CWFR to Mr. Montalbano’s malfeasance: (i) Mr.

Montalbano used CWFR’s Home Depot credit cards after he resigned his employment, and

(ii) CWFR noticed that petty cash requests dropped precipitously after Mr. Montalbano

resigned as CWFR’s general manager. Accordingly, CWFR began to investigate the extent

of Mr. Montalbano’s breaches of duty.

Jurisdiction and Venue

10. This Court has jurisdiction over this matter because many of the acts and

omissions giving rise to this complaint occurred in DuPage County Illinois. Accordingly,

venue is proper pursuant to 735 ILCS 5/2–101.

Additional Facts Giving Rise to The Complaint

11. CWFR provides, among other services, mitigation, board–up, and

reconstruction services to customers who have experienced fire loss or who have suffered a

loss due to water infiltration into their property. Given the nature of CWFR’s business,

many of its employees have corporate credit cards, including credit cards issued by Home

Depot, to allow them to purchase goods so that they can serve customers who need CWFR’s

services.

12. At the time a customer is hiring a contractor like CWFR, many of them are

under tremendous stress caused by the destruction caused by fire or the water loss to their

home. Accordingly, CWFR trains its team members to be unfailingly polite, to be

empathetic, and to go the proverbial extra mile on all matters. As an extra incentive to its

customer–facing team members, CWFR pays cash bonuses to employees who are praised

141196633.1 4
by satisfied customers on social media. These bonuses are drawn from the Company’s store

of petty cash and distributed by the general manager.

John Montalbano’s misuse and abuse of CWFR’s Home Depot credit accounts.

13. Mr. Montalbano was in a position to abuse CWFR’s Home Depot credit

cards to purchase materials for his own benefit because he was entrusted with (among other

things) managing CWFR’s revolving credit accounts, including the corporate credit cards

issued to CWFR’s employees. Mr. Montalbano perpetrated his scheme in one of three ways.

In some cases, when an employee quit and returned his Company credit card, Mr.

Montalbano kept that card active and used it to make purchases for his own (and his

family’s own) benefit. In other cases, when Home Depot updated its traditional credit cards

(which worked with a magnetic swipe) to cards with an embedded microchip, Mr.

Montalbano did not give the chip card to the employee but kept it for his own use. And in

still other cases, because Mr. Montalbano had access to all employee credit card numbers,

expiration dates, and security codes, he would simply use that information to make

purchases on–line and then have the goods delivered to his home.

14. Given CWFR’s business, its monthly spend at Home Depot is significant.

Mr. Montalbano also took advantage of this fact—along with the fact that he was one of

CWFR’s most trusted employees with principal responsibility for auditing CWFR’s

recurring invoices—to make purchases that he knew would be difficult to discover. In

addition, to attempt to hide his malfeasance, in some cases, Mr. Montalbano placed fictitious

job descriptions and fictitious job numbers into CWFR’s system. By way of example, on or

about November 28, 2020, Mr. Montalbano used a credit card issued to employee David

Augustyn (a fleet manager whose expenditures were often greater than the typical CWFR

141196633.1 5
employee) to purchase two mattresses from Home Depot in the amount of $6,160.38, which

he had delivered directly to his home in Riverside, Illinois. Mr. Montalbano then attempted

to conceal the malfeasance by imputing “board up” into CWFR’s system so that CWFR’s

accounting department would not question the expenditure.

15. Additional personal purchases by Mr. Montalbano using CWFR’s Home

Depot credit cards (i.e., cards issued to CWFR employees for their use in advancing

CWFR’s business interests) included (i) multiple Dyson vacuum cleaners on or about

December 21, 2021, (ii) a floating pool chair and raft–loungers on or about December 20,

2020, and (iii) candy, holiday decorations, toys, cleaning supplies, and landscaping and

gardening supplies on multiple occasions. Mr. Montalbano’s purchase of the floating pool

chair and raft–loungers is particularly suspect because he does not own a pool; however, his

mother does. Accordingly, the timing and the nature of many of these purchases suggest that

Mr. Montalbano was abusing CWFR’s Home Depot accounts not only to enrich himself but

also his extended family.

16. A chart detailing Mr. Montalbano’s unauthorized purchases using CWFR’s

Home Depot credit cards (going back only as far as November 2017) is attached as Exhibit

A to this complaint.

17. Mr. Montalbano had no authority—express or implied—to use CWFR’s

credit cards for any purpose other than to advance CWFR’s business interests. Under no

circumstances was Mr. Montalbano authorized to use CWFR’s Home Depot credit card

accounts to make purchases for his personal use or for the personal use of his immediate or

extended family. Nor was he authorized to make the purchases identified on the chart

attached as Exhibit A.

141196633.1 6
John Montalbano’s misuse and abuse of CWFR’s lines of credit through American
Express.

18. CWFR maintains lines of credit with American Express and provides

American Express credit cards to certain employees. During his tenure at CWFR, Mr.

Montalbano, was provided an American Express card or cards to purchase goods and

services to advance CWFR’s business. As with his misuse and abuse of CWFR’s Home

Depot credit cards, Mr. Montalbano was able to abuse the line of credit through American

Express in large part because he was trusted to manage CWFR’s revolving credit accounts.

Unfortunately, as discussed infra, Mr. Montalbano used these accounts to advance his own

personal interests and the interests of his family and friends.

JOHN MONTALBANO’S PURCHASE OF AIRFARE USING A

CORPORATE AMERICAN EXPRESS CARD.

19. On or about April 9, 2021, Mr. Montalbano purchased $837.40 in airfare for

himself using a corporate American Express card. There was no legitimate business reason

for Mr. Montalbano to pay for this travel using a CWFR credit card, and Mr. Montalbano

was not authorized to make this purchase.

20. On or about September 11, 2021, Mr. Montalbano purchased $885.94 in

round– trip airfare for his wife (Jessica Montalbano) and his wife’s friend (Jennifer Gallion)

to travel from Chicago, Illinois to Phoenix, Arizona using a corporate American Express

card. There was no legitimate business reason for Mr. Montalbano to pay for this travel

using a CWFR credit card, and Mr. Montalbano was not authorized to make these

purchases.

21. On or about February 3, 2022, Mr. Montalbano purchased $4,426.40 in

round trip airfare for him and his wife to travel from Chicago, Illinois to Charleston, South

141196633.1 7
Carolina using a corporate American Express card. There was no legitimate business reason

for Mr. Montalbano to pay for this travel using a CWFR credit card, and Mr. Montalbano

was not authorized to make these purchases.

22. On or about March 11, 2022, Mr. Montalbano purchased $4,289.40 in round

trip airfare for his wife and his two children to travel from Chicago, Illinois to Houston,

Texas using a corporate American Express card. There was no legitimate business reason

for Mr. Montalbano to pay for this travel using a CWFR credit card, and Mr. Montalbano

was not authorized to make these purchases.

23. Totaled, Mr. Montalbano purchased $10,439.14 in airfare for himself, his

family, and his and his wife’s friend using a CWFR credit card. None of these personal

expenditures were authorized by CWFR.

JOHN MONTALBANO’S PURCHASES OF GOODS ON AMAZON

USING A CORPORATE AMERICAN EXPRESS CARD.

24. Mr. Montalbano purchased $92,629.78 in goods from Amazon using a

CWFR American Express card entrusted to him. A chart detailing Mr. Montalbano’s

unauthorized purchases of these goods is attached as Exhibit B to this complaint. Mr.

Montalbano had no authority—express or implied—to use CWFR’s credit cards for any

purpose other than to advance CWFR’s business interests. Under no circumstances was Mr.

Montalbano authorized to use CWFR’s credit accounts to make purchases for his personal

use or for the personal use of his immediate or extended family. Nor was he authorized to

make the purchases identified on the chart attached as Exhibit B.

John Montalbano’s purchases of videos on Amazon using a corporate

American Express card.

25. Mr. Montalbano purchased $441.81 in videos from Amazon using a CWFR

American Express card entrusted to him. A chart detailing Mr. Montalbano’s unauthorized

141196633.1 8
purchases of videos on Amazon is attached as Exhibit C to this complaint. Mr. Montalbano

had no authority— express or implied—to use CWFR’s credit cards for any purpose other

than to advance CWFR’s business interests. Under no circumstances was Mr. Montalbano

authorized to use CWFR’s credit accounts from American Express to make purchases for

his personal use or for the personal use of his immediate or extended family. Nor was he

authorized to make the purchases identified on the chart attached as Exhibit C.

John Montalbano’s purchases from non–Amazon vendors using a

corporate American Express card.

26. Mr. Montalbano purchased $99,319.46 in goods and services from various

vendors using a CWFR American Express card entrusted to him. These purchases included

groceries from Mariano’s, a subscription to NetFlix, dinners at Gibson’s Steakhouse,

delivery from Door Dash, spa services from Hand and Stone Massage, tickets to the

Chicago Bears, and electronics from Best Buy.

27. A chart detailing Mr. Montalbano’s unauthorized purchases using CWFR’s

American Express credit cards from vendors other than Amazon is attached as Exhibit D to

this complaint.

28. Mr. Montalbano had no authority—express or implied—to use CWFR’s

credit cards for any purpose other than to advance CWFR’s business interests. Under no

circumstances was Mr. Montalbano authorized to use CWFR’s credit accounts from

American Express to make purchases for his personal use or for the personal use of his

immediate or extended family. Nor was he authorized to make the purchases identified on

the chart attached as Exhibit D.

John Montalbano’s misuse and abuse of CWFR’s Amazon account.

141196633.1 9
 29. CWFR maintains a corporate account for Amazon.com that it uses to

purchase supplies to advance its business purposes. During his tenure at CWFR, Mr.

Montalbano had access to this account. Unfortunately, Mr. Montalbano misused and abused

this account, too, purchasing clothing, tools, and electronics without authorization. A chart

detailing Mr. Montalbano’s unauthorized purchases using CWFR’s Amazon account (going

back only as far as November 2017) is attached as Exhibit E to this complaint.

30. Mr. Montalbano’s theft from CWFR’s Amazon account was particularly

devious because, after he made the purchase, Mr. Montalbano attempted to delete the

purchase history. Ultimately, Mr. Montalbano was only successful in archiving the purchase

history meaning CWFR could not have discovered the purchases during a routine audit.

Rather, CWFR was only able to uncover the misappropriation because it was conducting a

thorough audit of its accounts.

John Montalbano’s theft of petty cash.

31. Beginning in 2018 and continuing through his decision to resign from

CWFR, Mr. Montalbano repeatedly requested petty cash from CWFR’s office manager in

excess of what was required to pay cash bonuses to employees who were praised on social

media. On information and belief, Mr. Montalbano would take the extra money and keep it

for himself. CWFR has discovered $70,670 diverted by Mr. Montalbano for which there is

no evidence that (i) a bonus was warranted or paid to an employee, or (ii) the petty cash was

used for a legitimate business purpose.

John Montalbano’s misuse and abuse of an Instacart account

32. CWFR maintains a corporate account with Instacart that it uses to purchase

snacks and additional items to advance its business purposes. On January 19, 2020, Mr.

141196633.1 10
Montalbano made two purchases, totaling $400.02, using the corporate Instacart account for

his own purposes and not for legitimate business purposes. Under no circumstances was Mr.

Montalbano authorized to use CWFR’s Instacart account to make purchases for his personal

use or for the personal use of his immediate or extended family.

Federal Insurance Company’s Subrogation Interests

33. At all times relevant to the Complaint, Plaintiff Federal Insurance Company

insured CWFR for losses, including those as alleged in the Complaint.

34. As a result of the events as alleged in the Complaint, CWFR submitted a

claim to their its insurance carrier, Federal, and requested payment for damages incurred due

to Mr. Montalbano’s malfeasance.

35. Pursuant to Federal’s policy of insurance with CWFR, Federal became

obligated to pay, did pay, and continues to pay CWFR for damage incurred as a result of

Mr. Montalbano’s malfeasance in an amount in excess of $500,000.

36. By virtue of its payments, Federal Insurance is subrogated to the rights of its

insured, CWFR, to the extent of the damages paid on the claim.

37. The Amended Assignment signed by both CWFR and Federal is attached as

Exhibit A. The Amended Assignment states that CWFR assigned to Federal the right to

“pursue recovery…for the amounts paid by Federal to [CWFR].” The Amended

Assignment also states that CWFR assigned to Federal, “to the extent of the $547,973.63

paid by FEDERAL to [CWFR]” the right to “sue, seek collection, collect receipts for,

compromise and settle…for those amounts paid by FEDERAL to [CWFR].” (Exhibit A).

38. Further, the Amended Assignment states that CWFR ”reserves for itself all

of its rights and remedies to pursue any amounts, costs, damages, expenses, losses or other

141196633.1 11
relief which was not or has not been paid by insurance including, but limited to: attorney’s

fees, costs, expenses, lost revenue, monetary losses related to improper use of [CWFR]’s

property and workforce, the applicable $5,000 deductible…and any other amounts, costs,

damages, expenses, losses or other relief sustained greater than the $547,973.63 paid by

FEDERAL to [CWFR.]” id.

COUNT I

CWFR v. John Montalbano

Breach of Fiduciary Duty

39.[37.] Paragraphs 1–36 are re–alleged and incorporated as if fully set forth herein.

40.[38.] At all times while he served as CWFR’s general manager, Mr. Montalbano

had fiduciary duties of loyalty and of care to CWFR.

41.[39.] Mr. Montalbano breached his fiduciary duty to CWFR by, among other

actions, (i) using CWFR’s credit lines with Home Depot to purchase goods for his personal

use, for the use of his immediate and extended family, and for the use of his friends, (ii)

using CWFR’s lines of credit with American Express to purchase airfare, goods, and

services for himself, for family, and for his and his wife’s friends, (iii) using CWFR’s

Amazon and Instacart accounts to purchase goods and services for him- self, his family, and

his and his wife’s friends, (iv) diverting petty cash to his own purposes and (v) diverting

CWFR’s employees, equipment and other assets for his own purposes. In addition, Mr.

Montalbano breached his duty in other ways related to the facts outlined in this Amended

Complaint.

42.[40.] CWFR was harmed by Mr. Montalano’s breaches of duty with respect to

the abuse of its lines of credit and its accounts with Amazon and Instacart because it

ultimately paid those bills, meaning that the money Mr. Montalbano diverted was not

141196633.1 12
available for other business uses or for distribution to ownership as profits. Similarly,

CWFR was harmed by Mr. Montalbano’s breach of duty with respect to his diversion of

petty cash because that money was not available for other business uses or for distribution to

ownership as profits. Further, CWFR was harmed by Mr. Montalbano’s breaches of duty

with respect to his diversion of CWFR employees, equipment and assets for his own use as

CWFR relies on its employees, equipment and assets to obtain revenue and Mr. Montalbano

made them unavailable for that purpose. In addition, CWFR was harmed in other ways

related to the facts outlined in this Amended Complaint.

WHEREFORE, CWFR respectfully prays that this Court:

a. Order Mr. Montalbano to pay damages in the amount of $5,000 for money,

goods and credit taken and/or misappropriated from CWFR separate and

distinct from any remedy sought by Federal;

b. Order Mr. Montalbano to pay damages in the amount equal to the revenue

CWFR lost ($32,739.69) as a result of his breach of fiduciary duty;

c.[b.] Order Mr. Montalbano to pay damages for the amount equal to the value

of the work and the CWFR employees, equipment and other assets that were

used for Mr. Montalbano’s personal benefit ($32,739.69) as a result of his

breach of fiduciary duty;

d.[c.] Order Mr. Montalbano to disgorge his salary ($1,032,712.47) at all times

that he was acting contrary to CWFR’s interests and/or in breach of his

fiduciary duties of loyalty and/or of care;

141196633.1 13
 e.[d.] Order Mr. Montalbano to pay punitive damages of $1,007,957.12, or any

greater amount that a jury may award that will be sufficient to punish him

and to deter others from engaging in similar conduct;

f.[e.] Order Mr. Montalbano to pay interest;

g.[f.] Impose a constructive trust on all items that Mr. Montalbano purchased

using CWFR’s Home Depot credit cards, its American Express cards, and its

Amazon account;

h.[g.] Impose a constructive trust on all items that Mr. Montalbano purchased

with petty cash that he diverted from CWFR;

i.[h.] Order Mr. Montalbano to pay costs of litigation; and

j.[i.] Award any other relief that the Court deems just and/or equitable.

COUNT II
CWFR v. John Montalbano
Conversion

43.[41.] Paragraphs 1–36 are re–alleged and incorporated as if fully set forth herein.

44.[42.] Mr. Montalbano assumed unauthorized and wrongful control, dominion, or

owner- ship over CWFR’s money, including its petty cash, the funds accessible through its

revolving credit accounts with Home Depot and American Express, and the funds accessible

through its Instacart and Amazon accounts.

45.[43.] CWFR has the absolute and unconditional right to its own monies, credit

accounts, and other accounts.

46.[44.] CWFR has the absolute and unconditional right to have its monies—

including petty cash and monies from its revolving credit accounts and other accounts—

returned to it.

141196633.1 14
 47.[45.] CWFR has demanded that Mr. Montalbano return the money he took from

its petty cash and through his misuse and abuse of its revolving credit accounts and other

accounts.

WHEREFORE, CWFR respectfully prays for the following relief:

a. Order Mr. Montalbano to pay damages in the amount of $5,000 for money,

goods and credit taken and/or misappropriated from CWFR separate and

distinct from any remedy sought by Federal;

b. Order Mr. Montalbano to pay punitive damages of $1,007,957.12, or any

greater amount that a jury may award that will be sufficient to punish him

and to deter others from engaging in similar conduct;

c.[b.] Order Mr. Montalbano to pay interest;

d.[c.] Order Mr. Montalbano to pay costs of litigation; and

e.[d.] Award any other relief that the Court deems just and/or equitable.

COUNT III
CWFR v. John Montalbano
Fraud

48.[46.] Paragraphs 1–36 are re–alleged and incorporated as if fully set forth herein.

49.[47.] While employed by CWFR, Mr. Montalbano repeatedly falsely stated to

CWFR that he only used CWFR’s money, accounts, credit cards and other modes of

maintaining and transferring money to advance CWFR’s business interests.

50.[48.] While employed by CWFR, Mr. Montalbano repeatedly falsely stated to

CWFR that he only employed CWFR employees, equipment and other assets to advance

CWFR’s business interests.

141196633.1 15
 51.[49.] While employed by CWFR. Mr. Montalbano repeatedly falsely stated

information on documents and records, destroyed documents and records and hid

documents and records from discovery by CWFR in order to misrepresent to CWFR that he

only used CWFR money and assets to advance CWFR’s business interests.

52.[50.] Mr. Montalbano knew his false statements were untrue when he made them

and he made them with the intent of inducing CWFR to take such actions as pay credit card

bills for his personal purchases, allow him to continue to access CWFR money, credit and

assets for his own benefit and allow him to continue to use CWFR employes, equipment and

assets for his own benefit.

53.[51.] CWFR relied on Mr. Montalbano’s representations regarding his use of

CWFR money, employees, equipment and assets to its detriment.

54.[52.] CWFR’s reliance of Mr. Montalbano’s misrepresentations and fraudulent

statements was reasonable.

55.[53.] As a result of Mr. Montalbano’s actions, representations and fraudulent

conduct has sustained damages and losses of well over $500,000, including in the form of

stolen money, lost revenue and money spent in reliance of misrepresentations.

WHEREFORE, CWFR respectfully prays that this Court:

a. Order Mr. Montalbano to pay damages in the amount of $5,000 for money,

goods and credit taken and/or misappropriated from CWFR separate and

distinct from any remedy sought by Federal;

b. Order Mr. Montalbano to pay damages in the amount equal to the revenue

CWFR lost ($32,739.69) as a result of his misrepresentations;

141196633.1 16
 c.[b.] Order Mr. Montalbano to pay damages for the amount equal to the value

of the work and the CWFR employees, equipment and other assets that were

used for Mr. Montalbano’s personal benefit ($32,739.69) as a result of his

misrepresentation;

d.[c.] Order Mr. Montalbano to disgorge his salary ($1,032,712.47) at all times

that he was acting contrary to CWFR’s interests and/or in breach of his

fiduciary duties of loyalty and/or of care;

e.[d.] Order Mr. Montalbano to pay punitive damages of $1,007,957.12, or any

greater amount that a jury may award that will be sufficient to punish him

and to deter others from engaging in similar conduct;

f.[e.] Order Mr. Montalbano to pay interest;

g.[f.] Impose a constructive trust on all items that Mr. Montalbano purchased

using CWFR’s Home Depot credit cards, its American Express cards, its

Amazon account;

h.[g.] Impose a constructive trust on all items that Mr. Montalbano purchased

with petty cash that he diverted from CWFR;

i.[h.] Order Mr. Montalbano to pay costs of litigation; and

j.[i.] Award any other relief that the Court deems just and/or equitable.

COUNT IV
Federal Insurance Company v. John Montalbano
Breach of Fiduciary Duty

56.[54.] Paragraphs 1–36 are re–alleged and incorporated as if fully set forth herein.

57.[55.] At all times while he served as CWFR’s general manager, Mr. Montalbano

had fiduciary duties of loyalty and of care to CWFR.

141196633.1 17
 58.[56.] Mr. Montalbano breach of his fiduciary duty by (i) using CWFR’s credit

lines with Home Depot to purchase goods for his personal use, for the use of his immediate

and extended family, and for the use of his friends, (ii) using an American Express credit

card to purchase airfare for himself, his wife, his children, and one of his wife’s friends, and

(iii) diverting petty cash to his own purposes.

59.[57.] Federal Insurance Company was harmed by Mr. Montalbano’s breaches of

duty with respect to the abuse of the Home Depot and American Express credit cards

because it ultimately paid those bills, meaning that the money Mr. Montalbano diverted was

not available for other business uses or for distribution to ownership as profits. Similarly,

Federal Insurance Company was harmed by Mr. Montalbano’s breach of duty with respect

to his diversion of petty cash because that money was not available for other business uses

or for distribution to ownership as profits.

WHEREFORE, Federal Insurance Company respectfully prays that this Court:

a. Order Mr. Montalbano to pay damages in the amount of $547,973.63

separate and distinct from any remedy sought by CWFR;

b. Award any other relief that the Court deems just and/or equitable.

COUNT V
Federal Insurance Company v. John Montalbano
Conversion

60.[58.] Paragraphs 1–36 are re–alleged and incorporated as if fully set forth herein.

61.[59.] Mr. Montalbano assumed unauthorized and wrongful control, dominion, or

ownership over CWFR’s money, including its petty cash and the funds accessible through

its revolving credit accounts with Home Depot and American Express.

141196633.1 18
 62.[60.] CWFR has the absolute and unconditional right to its own monies and

credit accounts.

63.[61.] CWFR has the absolute and unconditional right to have its monies—

including petty cash and monies from its revolving credit accounts—returned to it.

64.[62.] Federal Insurance Company has demanded that Mr. Montalbano return the

money he took from CWFR’s petty cash and through his misuse and abuse of CWFR’s

revolving credit accounts.

WHEREFORE, Federal Insurance Company respectfully prays for the following relief:

a. Order Mr. Montalbano to pay damages in the amount of $547,973.63

separate and distinct from any remedy sought by CWFR;

b. Award any other relief that the Court deems just and/or equitable.

Jury Demand

POWER DRY OF CHICAGO, INC. D/B/A CHICAGO WATER AND FIRE

RESTORATION and FEDERAL INSURANCE COMPANY demand a trial by jury on all

issues so triable.

Dated: May 10, 2024 Respectfully submitted,

/s/ Mark W. Guest

Attorney for Plaintiff Power Dry
Mark W. Guest
Lewis Brisbois Bisgaard & Smith llp
550 W. Adams St., Ste. 300
Chicago, Illinois 60661
T: 312.463.3433
mark.guest@lewisbrisbois.com

/s/ Patrick R. Gareis

Attorney for Federal Insurance Company
SCHUELER, DALLAVO & CASIERI
525 W. Monroe Street, Suite 1530

141196633.1 19
 Chicago, IL 60661
Telephone: (312) 831-1090
Facsimile: (312) 831-4144
Patrick.gareis@sdc-atty.com

141196633.1 20