O'Malley v. Udo
| Decision Date | 14 January 2022 |
| Docket Number | 1-20-0007 |
| Citation | 2022 IL App (1st) 200007,198 N.E.3d 323,459 Ill.Dec. 533 |
| Parties | Dennis J. O'MALLEY, Plaintiff-Appellant and Cross-Appellee, v. Augustine F. UDO; International Asset Transactions, LLC ; and Iatmarkets, LLC, Defendants, (Augustine F. Udo, Defendant-Appellee and Cross-Appellant.) |
| Court | United States Appellate Court of Illinois |
Edward T. Joyce, Jacob L.V. Armstrong, and Rowena T. Parma, of Law Offices of Edward T. Joyce & Associates, P.C., and Joan M. Mannix, of Law Office of Joan M. Mannix, both of Chicago, for appellant.
Augustine F. Udo, of London, United Kingdom, appellee pro se.
¶ 1 Plaintiff, Dennis J. O'Malley, appeals the trial court's judgment that he was not an employee of defendants Augustine F. Udo, International Asset Transactions, LLC (IAT), and IATMarkets, LLC (IATM), pursuant to section 2 of the Illinois Wage Payment and Collection Act (Wage Act) ( 820 ILCS 115/2 (West 2018) ). On appeal, plaintiff contends (1) the trial court erred in finding that plaintiff met all three conditions required for an independent contractor set forth in section 2, (2) reversal is warranted where the trial court mistakenly recalled the evidence at trial, and (3) he is entitled to a new trial on his claims under the Uniform Fraudulent Transfer Act (UFTA) ( 740 ILCS 160/1 et seq. (West 2018)). Defendant Udo filed a cross-appeal in which he contends that the trial court erred in granting plaintiff's motion for sanctions pursuant to Illinois Supreme Court Rule 137 (eff. Jan. 1, 2018). For the following reasons, we reverse and remand for further proceedings on plaintiff's Wage Act claim but affirm the court's judgment on his UFTA claims. On Udo's cross-appeal, we affirm the court's judgment granting plaintiff's motion for sanctions and imposing against Udo $12,583.33 in attorney fees and $241.08 in costs.
¶ 3 The trial court entered judgment after a bench trial on April 17, 2019, and set briefing on plaintiff's motion for sanctions pursuant to Illinois Supreme Court Rule 137 (eff. Jan. 1, 2018). On June 17, 2019, plaintiff filed a motion to amend his complaint to add two claims under the UFTA, which the trial court allowed. On December 3, 2019, the court entered judgment in favor of defendants on the UFTA claims and entered judgment in favor of plaintiff on his motion for Rule 137 sanctions. Plaintiff filed his notice of appeal on December 31, 2019. Defendant Udo filed his cross-appeal on January 9, 2020. Accordingly, this court has jurisdiction pursuant to Illinois Supreme Court Rule 301 (eff. Feb. 1, 1994) and Rule 303 (eff. July 1, 2017), governing appeals from final judgments entered below.
¶ 5 On April 18, 2018, plaintiff filed a complaint against defendants seeking compensation for his work at IAT from November 2004 to February 2015. IAT was a private company incorporated in 1989, with its principal office located in New York, New York. Defendant Udo, who resides in New York, founded IAT and also served as its president and chief executive officer. IAT sought to provide banks and their clients unique solutions to "the liquidity problems of a wide variety of financial assets." Plaintiff alleged that he was hired to improve IAT's business; to develop its subsidiaries, IATSecuritization, LLC (IATS), and IATM; and "to introduce new asset securitization products to the marketplace."
¶ 6 Defendants were held in default for failing to answer the complaint, and on August 1, 2018, a joint and several default of judgment for $4,438,040.84 was entered against Udo, IAT, and IATM. Udo subsequently moved to vacate the default judgment against him, which the trial court granted. The default judgments against IAT and IATM remain.
¶ 7 One week before the trial on plaintiff's claims against Udo, Udo tendered his trial exhibits to plaintiff. The exhibits included documents Udo initially claimed he did not possess. Plaintiff filed a motion to bar the evidence and for sanctions pursuant to Illinois Supreme Court Rule 219 (eff. July 1, 2002) and Rule 137 (eff. Jan. 1, 2018). The court granted the motion pursuant to Rule 219, finding that "[t]he defendant has just now tendered documents for its pretrial context, ones which had not been tendered before, but are responsive to a request for documents to which he answered none." The court ruled the documents inadmissible at trial. Proceedings on the Rule 137 motion for sanctions were continued until after trial.
¶ 8 At the bench trial, plaintiff testified that he resides in Evanston, Illinois. He has a degree in finance and an MBA from the University of Wisconsin-Madison, and has a law degree from the John Marshall Law School in Chicago. Plaintiff began his career at ABN AMRO and worked his way to head the company's credit business in North America. In 1988, he became the "co-head" of a group that worked on providing financing for leveraged buyouts. The business evolved to include assets securitization, which "was a way to provide financing for credit cards, auto paper, trade receivables, [and] term assets for customers of ABN AMRO in North America." In 2000, the group built a "book of business" worth around $15 to $18 billion. At that time, plaintiff was appointed head of assets securitization for the company's North America operation.
¶ 9 In 2002, plaintiff became global head for asset-backed commercial paper for the company. In that capacity, he spent half his time in the United States and half his time in Europe. He was responsible for 10 conduits that provided financing for auto paper, credit cards, trade receivables, and term assets. When he left ABN AMRO in 2004, the portfolio was "approximately $55 billion of financing on a daily basis," a program whose scale was second only to Citibank. Plaintiff left to look for "other and new endeavors."
¶ 10 In 2004, plaintiff was contacted by an investor who told him he might be interested in IAT. The investor had heard that IAT was developing an independent conduit for asset-backed commercial paper, and plaintiff had been part of a similar project at ABN AMRO. The investor wanted plaintiff to visit IAT and relay information on the company to him.
¶ 11 In November 2004, plaintiff went to New York and met with Udo and Bob Seery at IAT. They discussed a conduit called SuperLumina, which would provide financing for trade payables. Seery had a similar background as plaintiff, and they were "part of the same subculture" in the business. Afterwards, plaintiff met six or seven other IAT employees before meeting again with Udo. Udo told him of the progress they were making on the setup of SuperLumina and that "a number of things" had already been put in place.
¶ 12 Udo and Seery spoke to plaintiff about working with IAT, and he told them to prepare an offer. After plaintiff returned to Chicago, Seery called and offered him compensation of $1000 per day with expenses paid. Once the company was fully funded, plaintiff would have a base salary of $215,000 with benefits. Plaintiff accepted the offer. He would report to Seery and be responsible for running the SuperLumina conduit, which included work "on the structure of the conduit, work with the rating agencies, [and] work with soliciting investors who would buy *** the commercial paper." The conduit work was with IATS, which was the subsidiary set up by IAT for conducting securitization transactions.
¶ 13 After plaintiff accepted, a notice went "out on the wires" announcing his position at IAT. He testified that this type of announcement was common in the business. The notice referred to plaintiff's role as "Senior Managing Director, IATSecuritization." The parties agreed that plaintiff would stay in Chicago and would travel to New York as needed, with his traveling expenses paid by IAT. Plaintiff subsequently set up a home office in Evanston, and IAT reimbursed him for his expenditures.
¶ 14 On November 29, 2004, plaintiff spoke with Seery about the team coming to Chicago to set up a "roadshow" for IAT. A roadshow was essentially a meeting between an entity looking for working capital to fund its business and potential investors. IAT would present a slideshow detailing the company's needs and how IAT would apply money from investors to its business. At the roadshow in Chicago, Udo introduced plaintiff as the person hired from Chicago. He also gave information on plaintiff's education and his business background at ABN AMRO in Chicago.
¶ 15 Plaintiff testified that, in 2005, an average day of work included regular phone calls with Seery, IAT's chief operating officer. Seery often conducted weekly meetings. A "large list of things" had to be done to get a conduit "up and running," and it was common for plaintiff to travel to meet with banks that were "providing information on the deal." At trial, plaintiff was presented with an organization chart for IATS created by Udo. He testified that the chart was used in a slideshow when they talked to investors about putting money in IATS and/or investing in asset-backed commercial paper supported by SuperLumina. The chart accurately portrayed plaintiff's responsibilities in overseeing the administration of the conduit and the funding. IATS operated until 2006, when it "became apparent given what was going on in the bank market that we couldn't find bank liquidity in the program." IATS closed in 2007.
¶ 16 In 2006, Seery left IAT. Before leaving, he agreed to plaintiff's request to put his compensation arrangement with IAT in writing. Although the document was sent to plaintiff on September 5, 2006, the "Engagement letter" was dated November 26, 2004. The agreement, signed by Seery and plaintiff, provided:
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