Northbrook Bank & Trust Co. v. Abbas

• Decision Date: 30 March 2018
• Docket Number: No. 1–16–2972,1–16–2972
• Citation: Northbrook Bank & Trust Co. v. Abbas, 2018 IL App (1st) 162972, 102 N.E.3d 861 (Ill. App. 2018)
• Parties: NORTHBROOK BANK & TRUST CO. as successor in interest to First Chicago Bank & Trust, Plaintiff–Appellee, v. Joseph ABBAS, Defendant–Appellant, and Alan L. Freeman, Defendant.
• Court: United States Appellate Court of Illinois

2018 IL App (1st) 162972

102 N.E.3d 861

NORTHBROOK BANK & TRUST CO. as successor in interest to First Chicago Bank & Trust, Plaintiff–Appellee,

v.Joseph ABBAS, Defendant–Appellant,andAlan L. Freeman, Defendant.

No. 1–16–2972

Appellate Court of Illinois, First District, FIFTH DIVISION.

March 30, 2018

Michael W. Tootooian, of Chawla & Ravani, P.C., of Chicago, for appellant.

Adam C. Toosley, of Freeborn & Peters LLP, of Chicago, for appellee.

PRESIDING JUSTICE REYESdelivered the judgment of the court, with opinion.

¶ 1 Following a bench trial, the circuit court of Cook County entered judgment in favor of plaintiff, Northbrook Bank & Trust Company as successor in interest to First Chicago Bank & Trust (plaintiff) on its breach of contract action.¹In so doing, the circuit court found defendantJoseph Abbas(defendant) and his codefendant Alan Freeman(Freeman) in breach of a 1.8 million dollar loan agreement.²On appeal, defendant contends that the trial court erred by 1) allowing plaintiff to present certain documents not previously disclosed, 2) concluding plaintiff had standing, and 3) awarding plaintiff attorney fees.For the reasons that follow, we affirm.

¶ 2 BACKGROUND

¶ 3Plaintiff filed its complaint alleging defendant and Freeman were in breach of a loan they had personally guaranteed and caused plaintiff damages in excess of $1.4 million dollars in unpaid principal, interest, and fees.Plaintiff further sought attorney fees and costs.The operative second amended verified complaint alleged that defendant and Freeman had entered into a term loan agreement with First Chicago Bank & Trust whereby they received $1,880,000.Defendant and Freeman were required to make monthly interest payments and to repay the loan in full by September 16, 2015.Germane to this appeal, four mortgages were pledged as collateral for the loan on certain properties, two of which were located in Illinois, one in Michigan, and one in Florida.In addition, Freeman signed a pledge agreement in which he pledged 44,500 shares of Facebook stock as collateral.The pledge agreement provided that selling these shares without first notifying First Chicago Bank & Trust would result in a breach of the loan agreement.

¶ 4 Regarding its standing, plaintiff alleged that subsequent to the loan agreement the Illinois Department of Financial and Professional Regulation, Division of Banking closed First Chicago Bank & Trust and appointed the Federal Deposit Insurance Corporation(FDIC) as the receiver.Thereafter, on July 8, 2011, the FDIC and plaintiff entered into a purchase and assumption agreement whereby plaintiff became the owner of a substantial portion of the assets of First Chicago Bank & Trust, including the loan agreement at issue in this case.

¶ 5 The operative complaint further alleged the following acts of default occurred.In July 2015, Freeman sold his Facebook shares in violation of the pledge agreement.In addition, defendant and Freeman failed to make interest payments for July and August 2015 in violation of the terms of the loan agreement.Then, when the loan matured, defendant and Freeman did not pay the amounts which were due and owing in full.

¶ 6 The following documents were attached as exhibits to the operative complaint, 1) the first page of the purchase and assumption agreement between the FDIC and plaintiff, 2) the loan agreement, 3) the pledge agreement, and 4) a notice of default.

¶ 7 In response, defendant filed an unverified answer to the complaint denying he breached the loan agreement.Thereafter, plaintiff served defendant with interrogatories and a document production request; however, neither were answered prior to trial.

¶ 8 After it appeared the parties would not settle, the trial court set the matter for a bench trial to commence on June 1, 2016.Subsequently, plaintiff filed a motion for summary judgment.The parties entered into a briefing schedule, but before the hearing on the motion and three weeks prior to trial, defense counsel withdrew.Despite the trial court's best efforts to keep the trial on schedule, it ultimately granted defendant's emergency motion to continue and reset the bench trial for August 15, 2016.

¶ 9 In the meantime, the parties briefed the motion for summary judgment, argument was heard, and the trial court issued a written memorandum opinion denying the motion for summary judgment.The trial court found there was a genuine issue of material fact as to whether the purchase and assumption agreement between the FDIC and plaintiff included the loan at issue.The trial court expressly observed that the singular page of the purchase and assumption agreement provided by plaintiff only mentioned that "certain" assets and deposits were being assumed by plaintiff and plaintiff did not provide any documentation that conclusively demonstrated it had assumed defendant's loan.

¶ 10 Less than a week before trial, defendant filed numerous motions including 1) a motion to dismiss pursuant to section 2–619(a)(9) of the Code of Civil Procedure( 735 ILCS 5/2–619(a)(9)(West 2014) ), 2) a motion to continue the trial, 3) a motion for leave to add an affirmative defense, 4) a motion in limine to bar plaintiff from introducing any evidence it had not already produced, and 5) a motion in limine to bar any evidence related to plaintiff's ownership of the loan.The trial court denied the motion to dismiss and the motion to continue.The trial court, however, granted defendant leave to amend the answer to assert the affirmative defense of lack of standing, but reserved judgment on the motions in limine .The matter then proceeded to trial where the following testimony was elicited.

¶ 11Jeff Galus, senior vice president of Wintrust Financial, testified that plaintiff is a subsidiary of Wintrust Financial and he personally managed the loan at issue in this case.Galus testified to the terms of the loan agreement as set forth in the complaint and further explained that First Chicago Bank & Trust originated the loan but was later shut down and the FDIC became the receiver.Subsequently, plaintiff acquired the loan from the FDIC through a purchase and assumption agreement in July 2011.In December 2013, the loan was modified pursuant to a request from Freeman for plaintiff to release the mortgage on one property that was collateral for the loan agreement in exchange for a $500,000 principal payment.Thereafter, two new pieces of property (one located in Cook County and the other in Lake County) were substituted as collateral for the one property previously identified in the loan agreement.According to Galus, plaintiff was listed as the mortgagee on these mortgages.

¶ 12 In regards to the default on the loan, Galus testified that monthly interest payments were made on the loan to plaintiff from July 2011(when plaintiff acquired the loan) until June 2015.No payments were made for July and August 2015, nor was the full principal balance paid in full when the loan matured on September 16, 2015.

¶ 13 Galus further testified regarding the numerous documents related to the loan at issue which he averred were kept in the ordinary course of business by plaintiff.He further testified that he had access to and was familiar with the documents.These records included the purchase and assumption agreement, the schedule of loans, the loan documents, an allonge, and the history of the transactions involving the loan.

¶ 14 Regarding the purchase and assumption agreement, Galus testified that it was a true and accurate copy, but was not entirely complete because parts of it were redacted to preserve confidentiality.Galus also testified that the schedule of loans (which was referenced in the purchase and assumption agreement) was a true and accurate copy of the document.The schedule of loans identified the loan at issue in this case as being one of the assets acquired by plaintiff through the FDIC's receivership of First Chicago Bank & Trust.In addition, Galus testified that plaintiff was provided a power of attorney which was granted at the time of the acquisition of the loan from the FDIC.Galus further testified that in regards to this loan and pursuant to the power of attorney he executed an allonge on behalf of the FDIC.Galus testified that the allonge which was provided was a true and accurate copy.While the allonge was not dated, it was signed by Galus as attorney in fact for the FDIC.

¶ 15 Galus also testified he personally prepared a payoff statement which indicated the amounts due as of August 15, 2016, included: $1,380,000 in principal; $132,020 in interest (with a per diem of $306.67); $803.47 in late fees, and $3,807 in other fees associated with the loan for a total of $1,516,630.47.

¶ 16 On cross-examination, Galus testified he first became familiar with the loan in December 2013 and admitted he did not participate in the FDIC transaction.Galus further acknowledged that the allonge was a one page document, which was not attached to the note.Regarding the allonge, Galus testified he was authorized to sign the allonge on behalf of the FDIC as its attorney in fact via a power of attorney.Galus, however, did not have a copy of the power of attorney and did not know the date it was executed or when it expired.Galus further testified he signed the assignment and allonge in November or December 2015.Galus also testified that the purchase and assumption agreement does not include the schedule of loans.Galus explained, however, that it is not the FDIC's practice to include a schedule of loans with the purchase and assumption agreement.

¶ 17 On redirect, Galus testified that he personally managed hundreds of loans from other failed banks.In all those transactions a purchase and assumption agreement was utilized and on occasion was a schedule of the assumed assets attached.

¶ 18 Next, Freeman testified for the defense that initially his loan was with First Chicago Bank & Trust.Subsequently it was transferred to plaintiff and ...