Vala v. Maton

• Citation: 2013 IL App (4th) 130163
• Decision Date: 24 September 2013
• Docket Number: NO. 4-13-0163,4-13-0163
• Parties: FRANK VALA and TAIMAX OF ILLINOIS, INC., Plaintiffs-Appellees, v. PHILLIP MATON, Defendant-Appellant, and MARINE BANK; MARINE BANCORP, INC.; MARK RICHARDSON; COYN RICHARDSON; and WILLIAM VALA, Defendants.
• Court: United States Appellate Court of Illinois

2013 IL App (4th) 130163

FRANK VALA and TAIMAX OF ILLINOIS, INC., Plaintiffs-Appellees,
v.
PHILLIP MATON, Defendant-Appellant,
and
MARINE BANK; MARINE BANCORP, INC.; MARK RICHARDSON;
COYN RICHARDSON; and WILLIAM VALA, Defendants.

NO. 4-13-0163

APPELLATE COURT OF ILLINOIS FOURTH DISTRICT

Filed: September 24, 2013

NOTICE

This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1).

Appeal from Circuit Court of Sangamon County No. 10L218
Honorable Kenneth R. Deihl, Judge Presiding.

JUSTICE POPE delivered the judgment of the court.
Presiding Justice Steigmann and Justice Appleton concurred in the judgment.

ORDER

¶ 1 Held: The trial court did not abuse its discretion in finding defendant Phillip Maton in willful contempt of the trial court's August 6, 2012, order.

¶ 2 In February 2013, the trial court found defendant Phillip Maton did not have just reasons to refuse to answer deposition questions posed to him and found him to be in willful contempt of the court's order of August 6, 2012. Maton appeals, arguing the court erred in finding him in contempt and sanctioning him because the questions the court ordered him to answer were not relevant to any issues in the case, were not reasonably calculated to lead to the discovery of admissible evidence, and instead "were designed to embarrass, harass and intimidate [Maton], particularly when the information sought was already obtained by Plaintiffs in depositions of other witnesses and in documents produced pursuant to a Protective Order." We

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affirm.

¶ 3 I. BACKGROUND

¶ 4 On September 29, 2010, plaintiffs Frank Vala and Taimax of Illinois, Inc., filed a six-count complaint against defendants Marine Bank, Marine Bankcorp, Inc., Mark Richardson, Coyn Richardson, and Phillip Maton. The complaint alleged the following: common law fraud against all defendants (count I); violation of the Illinois Consumer Fraud and Deceptive Business Practices Act against all defendants (count II); breach of an assumed duty to disclose accurate information against all defendants (count III); breach of fiduciary duty against all defendants (count IV); equitable estoppel against Marine Bank (count V); rescission and restitution against defendant Marine Bank (count VI).

¶ 5 According to the plaintiffs' initial complaint, Frank Vala and George Embrey formed Taimax of Illinois, Inc. (Taimax), for the purpose of owning and operating the Route 66 Motel (motel) in Springfield, Illinois. (Plaintiffs filed a motion for leave to file an amended complaint in this case. The trial court took this under advisement and reserved ruling on the motion.) Embrey later sold his interest in the motel, Taimax, and related matters and assigned all of his rights, interests and claims with respect to the motel transaction to Frank Vala. The motel in question, formerly a Ramada Inn, was previously owned by the Shri-Ohm Corporation and related parties.

¶ 6 At some point prior to 2002, Marine Bank made a loan to the Shri-Ohm Corporation and related parties, secured by a mortgage on the real property located at 625 East St. Joseph Street in Springfield, Illinois. The Small Business Administration (SBA) had also loaned the Shri-Ohm Corporation money secured by a subordinate mortgage on the property.

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¶ 7 In 2002, Marine Bank filed a foreclosure case against the Shri-Ohm Corporation, the SBA, and others with regard to its mortgage on the property. That same year, L. Blair Fein, a loan officer at Marine Bank, had conversations with Vala and Embrey about purchasing the motel with the bank loaning Vala and Embrey both the money to buy and operate the motel. Fein told Vala and Embrey the motel could be purchased for Marine Bank's costs, which he said totaled $1,250,000. Plaintiffs allege defendants Phillip Maton and Coyn Richardson made the same statements to Vala and Embrey with regard to buying the motel at Marine Bank's costs. At all times relevant to this case, Coyn Richardson was one of the principal owners of Marine Bank. Maton was the chief executive officer and chairman of the board of Marine Bank until approximately December 2005.

¶ 8 According to the complaint, during the summer of 2002, Maton and Coyn Richardson told plaintiffs the purchase of the motel was a "good deal" for plaintiffs and the motel was profitable when operated properly. Maton and Richardson said the previous owners mismanaged the motel, the motel had a fair market value in excess of $3 million, and the motel required only a modest amount of repairs and improvements to be operational.

¶ 9 During August and September 2002, Maton and Richardson persuaded plaintiffs to enter into a contract to purchase the motel for $1,750,000, falsely stating they had overlooked additional costs incurred by the bank. Around January 2003, Fein was told by either Howard Neuger or Dan Lanterman of the bank's legal department the extra $500,000 was used by the bank to pay off the SBA's second mortgage so the bank could get the motel loan off its books without waiting for the one-year period of redemption required by SBA loans. Plaintiffs stated they did not learn until September 2009 Fein was told the additional $500,000 of the purchase

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price was allegedly used to pay the SBA's second mortgage on the motel. (Plaintiffs now contend, following discovery, the SBA actually wrote off its loan for $1,000, i.e., $500,000 was never applied by the bank to the SBA loan.) Neither Vala nor Embrey had any experience in purchasing, valuing, or operating a motel or hotel and relied upon the representations of the defendants and their officers and agents the motel was worth substantially more than $1,250,000 and could be operated profitably.

¶ 10 The purchase was to be concluded once Marine Bank obtained the title to the motel. In September 2002, Vala and Embrey borrowed $501,000 from Marine Bank to cover the initial cost of operating the motel and began operating the motel and making the needed repairs and improvements.

¶ 11 In January 2003, Maton and Richardson allegedly persuaded plaintiffs to enter into a loan agreement in the amount of $2,250,000, which provided the funds to purchase the motel from Marine Bank for $1,750,000 and paid off Vala and Embrey's previous loan for the motel's operating expenses. Plaintiffs alleged, from January through March 2003, Maton and Richardson repeated their previous statements the motel was worth more than the purchase price and would generate sufficient profits to pay the loan, Marine Bank would continue the loan until profits from the motel paid the loan balance, and Richardson would make all decisions for Marine Bank regarding the loan for the motel.

¶ 12 In March 2003, Marine Bank obtained an appraisal from Ed Hofferkamp which valued the motel at $5 million. Plaintiffs alleged the true fair market value of the motel was less than $1 million at that time. According to the complaint, plaintiffs had operated the motel at a substantial loss and the costs of repairs and improvements required for profitable operation were

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considerably higher than represented by Maton and Richardson prior to the sale. Maton and Richardson allegedly told plaintiffs the motel only needed minor or modest repairs to make it operational.

¶ 13 Plaintiffs alleged they would not have purchased the motel and would not have entered into the related loans with Marine Bank if they had known they were paying more than the bank's actual legitimate costs in closing out the previous loans on the motel.

¶ 14 Plaintiffs' complaint also included the following allegations:

"20. On information and belief, Phillip Maton was either terminated, or resigned, from Ma[r]ine Bank because he had falsified documents presented to the Bank Examiners and had used funds from unrelated loans to pay amounts due the Bank on an unsecured loan he had issued to Randy McAffee and Darren Shipley who were subsequently convicted of Bank fraud. They had defrauded several banks. The Bank Examiners became suspicious because Marine Bank was reporting that its loan

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