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D.S.A. Finance Corp.

December 09, 2003


Appeal from the Circuit Court of Cook County. Honorable Peter A. Flynn, Judge Presiding.

The opinion of the court was delivered by: Presiding Justice Wolfson


This case involves a fictional invoice and the Provident Hospital chief financial officer who told plaintiff D.S.A. Finance Corporation (DSA) it was real. The question is whether defendant Cook County should be required to pay the invoice. The trial court granted summary judgment in favor of Cook County. We affirm the trial court.


DSA purchases accounts receivable from other companies at a discount, also known as factoring. In November 2000, Shirley DeSadier approached DSA about possibly selling to DSA an account receivable owned by her company, D.P. Staffing. D.P. Staffing allegedly provided hospitals with temporary maintenance personnel. DeSadier told DSA D.P. Staffing had provided services to Provident Hospital (Provident) during October 2000, and, as a result, Provident owed D.P. Staffing $343,696.10. DeSadier gave DSA a copy of the invoice (D.P. invoice) created by D.P. Staffing and issued to Provident indicating the charges.

DeSadier told DSA it could verify the invoice with Earl Bell, Provident's chief financial officer (CFO). Provident is owned and operated by Cook County. At the time of these events, Earl Bell was Provident's Associate Administrator of Finance, a position which is equivalent to that of a CFO.

DSA called Provident's account receivables department to verify the D.P. invoice and the call was directed to Bell. On or around November 28, 2000, Bell confirmed the D.P. invoice was "a true and accurate statement" of the amount the county owed D.P. Staffing. On November 30, 2000, Bell signed a fax transmittal form, which he received from DSA, verifying the invoice for $343,696.10 was correct and would be paid to DSA on February 13, 2000. *fn1 DSA subsequently agreed to purchase the Provident account from D.P. Staffing.

Provident never made a payment to DSA. DSA's attempts to speak with Bell or Provident's chief administrative officer about the delinquent account were unsuccessful. On February 23, 2001, DeSadier paid DSA $59,000 towards the account. A few weeks later, D.P. Staffing issued a check to DSA for $200,000, but the check was not honored.

On July 6, 2001, DSA filed its initial complaint against Provident alleging breach of contract and seeking $292,696.10 in damages. The complaint also included several counts against Bell, DeSadier, Payne, and D.P. Staffing. As exhibits to the complaint, DSA attached the D.P. invoice, DeSadier's factoring application, the factoring contract, the fax transmittal form signed "Earl Bell," a list of Provident's credit references, the bill DSA sent to Provident, and a copy of the $200,000 check from D.P. Staffing. DSA later amended its complaint to name Cook County as a defendant in place of Provident.

Cook County filed a hybrid motion seeking dismissal or summary judgment, contending DSA failed to plead the existence of a contract. Cook County attached three affidavits in support of its motion.

Robert Triplett, Provident's Associate Administrator of Human Resources, stated in an affidavit the county board appointed Earl Bell as Provident's "Associate Administrator of Finance (Chief Financial Officer)" in 1996. Bell resigned in 2001.

Patrick McFadden, Cook County's purchasing agent, stated in an affidavit he kept records of Cook County's contracts and purchase orders. On March 15, 2002, McFadden reviewed his records and found no contract or purchase order concerning Provident and D.P. Staffing or DSA.

Dennis Rice, Provident's Associate Administrator of Professional Affairs, said in his affidavit his job involved overseeing support services. Rice said he was "responsible for verifying and receiving reports for [the materials management, pharmacy, hospital security, plant operations, purchasing and dietary] departments, including county voucher forms relating to material management, plant operations, and purchasing." After reviewing his records, Rice found no invoices or voucher forms for the services reflected in the D.P. invoice. Rice said D.P. Staffing never provided any services to Provident, including the services reflected by the D.P. invoice for October 2000. Rice averred Provident directly employed 36 maintenance workers to meet its maintenance needs and "given the physical plant, its size and maintenance requirements, temporary maintenance personnel for the five-week period at the volume reflected in the D.P. invoice [made] no sense."

The county also attached to its hybrid motion Earl Bell's deposition from another lawsuit. In the other lawsuit, Capital City Financial Group Incorporated (Capital City), another factoring company, filed a complaint against Cook County after Bell, acting as Provident's CFO, verified two fraudulent invoices submitted to Capital City. During a deposition, Bell invoked his Fifth Amendment right against self-incrimination when asked about his position as Provident's CFO and his actions leading up to the lawsuit. Capital City Financial Group, Inc. v. County of Cook, No. 01 C 564 (N.D. Ill. 2002).

DSA subsequently filed a second amended complaint alleging three additional counts against Cook County for account stated, misrepresentation, and negligent hiring.

In response, Cook County filed another motion for summary judgment and incorporated its memorandum in support of the previous motion to dismiss and the corresponding exhibits. In addition, Cook County attached the affidavit of Stephanie Wright-Griggs, the chief operating officer of Provident. Griggs stated Bell worked under her direction and his responsibilities included the day-to-day supervision of Provident's financial operations; however, Bell acted outside the scope of his employment when he told DSA the county would pay the D.P. invoice. Before Capital City filed its lawsuit in March 2001, Griggs received no complaints that Bell was saying the county would pay unauthorized vouchers.

DSA filed a response to Cook County's motion for summary judgment and attached two exhibits: the statement of material facts Cook County filed in the Capital City case and the affidavit of Richard Peck. Peck was an officer and director of DSA and his affidavit described the events leading up to DSA's decision to factor the D.P. invoice, including DSA's communications with Bell.

The trial court found no contract existed and granted summary judgment on Counts I and II. The trial court also found DSA failed to show a genuine issue of material fact on count IV for negligent hiring. Finally, the trial court found, as a matter of law, DSA's reliance on Bell's verification of the invoice was ...

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