The opinion of the court was delivered by: WILLIAM J. HIBBLER, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff Fidelity National Title Insurance Company of New York
(Fidelity) sued nine banks*fn1 under the Illinois Uniform
Fraudulent Transfer Act (UFTA), 740 ILCS § 160/5 et seq.
alleging that an Illinois title insurer, Intercounty Title
Company of Illinois (Old Intercounty) had fraudulently
transferred certificates of deposit in excess of $7 million to the Bank Defendants.*fn2 The parties have filed
cross-motions for summary judgment, as well as numerous other
Laurence Capriotti and Jack Hargrove were principals of
Intercounty Title Company of Illinois ("Old Intercounty"). (Def.
Banks' Joint 56.1(a)(3) Statement of Facts ¶ 3). Old Intercounty
served as the exclusive agent in the Chicago Area for Stewart
Title Guaranty Company, a title insurer. (Def. Joint 56.1(a)(3)
Statement ¶ 3). Old Intercounty also acted as an escrow agent for
real estate transactions. (Def. Joint 56.1(a)(3) Statement ¶ 3).
Unfortunately, for all parties involved, Capriotti and Hargrove
were not the most trustworthy businessmen.
Because of Capriotti's and Hargrove's malfeasance, Old
Intercounty experienced a cash shortage in its accounts that
amounted to $17.7 million in 1990 and grew to $96 million by
1999. (Pl. 56.1(a)(3) Statement ¶ 17; Def. Joint 56.1(a)(3)
Statement ¶ 1999). This is where the parties' agreement as to the
facts end and the parties dispute the remaining course of events.
Principal among these disputes are the nature of the accounts
where the shortfall occurred and the time at which Fidelity
discovered the scheme. According to Fidelity, Capriotti and
Hargrove pillaged Old Intercounty's escrow accounts and used
escrow funds entrusted to Old Intercounty to purchase
certificates of deposit at the Defendant Banks. Fidelity states
that Capriotti and Hargrove then pledged these certificates as collateral for personal loans. According to the
Banks, the accounts from which Fidelity transferred money for the
purchase of certificates of deposit contained more than just
escrow funds. In any event, much of the dispute between the
parties is not material to the resolution of the pending motions,
and the Court finds the following facts to be undisputed.
A. The Transactions at Issue
On December 23, 1991, Old Intercounty wired $175,000 from an
account at LaSalle National Bank to Bank Calumet in order to
purchase a certificate of deposit. (Pl. 56.1(a)(3) Statement ¶
48). Bank Calumet points to no measures it took to ascertain
whether the certificate of deposit was purchased with funds from
Old Intercounty's escrow account. (Pl. 56.1(a)(3) Statement ¶
48). Ten months later, Capriotti and Hargrove received a $175,000
loan from Bank Calumet, the proceeds of which they used to payoff
a loan obtained by James Burke, another Intercounty insider, in
December 1991. (Pl. 56.1(a)(3) Statement ¶ 51, Pl. Ex. Azzarello
DE 12). As collateral for the loan, Capriotti and Hargrove
pledged the certificate of deposit obtained from Bank Calumet in
December 1991. (Pl. 56.1(a)(3) Statement ¶¶ 52-54). On March 24,
1993, Capriotti and Hargrove directed Bank Calumet to liquidate
the certificate of deposit and applied $149,951.50 of the
proceeds to pay off Capriotti's and Hargrove's loan. (Pl.
56.1(a)(3) Statement ¶ 55).*fn3 Bank Calumet issued Capriotti a cashier's check for $25,048.50 (representing
the balance of the pledged certificate of deposit), which
Capriotti endorsed and transferred to Capjac Investments Group,
Inc., a real estate investment company that he and Hargrove
owned. (Pl. 56.1(a)(3) Statement ¶¶ 56-58).
On March 7, 1990, Old Intercounty wired $1,000,000 from an
account in order to purchase a $1,000,000 certificate of deposit.
(Pl. 56.1(a)(3) Statement ¶ 77-78). On March 8, 1990, Hargrove
and Capriotti obtained a loan from Charter Bank in the amount of
$1,000,000, pledging the certificate of deposit as collateral.
(Pl. 56.1(a)(3) Statement 79-80). Old Intercounty renewed the
certificate of deposit in 1991, 1992, 1993, 1994, and 1995 and
after each renewal re-pledged the certificate as collateral for
the original $1,000,000 loan to Capriotti and Hargrove. (Pl.
56.1(a)(3) Statement ¶¶ 87-88).
In 1993, however, Charter Bank requested an opinion from Old
Intercounty's counsel verifying that Hargrove and Capriotti could
pledge the certificate of deposit as collateral for their loan
even though it belonged to Old Intercounty. (Pl. 56.1(a)(3)
Statement ¶ 92). Old Intercounty's counsel sent Charter Bank a
letter stating that Old Intercounty's by-laws allowed it to
hypothecate the certificate of deposit for the benefit of
Capriotti and Hargrove and that Old Intercounty had taken all the
appropriate actions to allow Capriotti and Hargrove to use the
certificate of deposit as collateral for their loan. (Def. Charter Bank's 56.1(b)(3)(B) Statement of Additional Facts
¶ 5). In 1996, Capriotti directed Charter Bank to pay off the
loan using the $1,000,000 certificate of deposit, which Charter
Bank did. (Pl. 56.1(a)(3) Statement Ex. Altenberger DE 17, 19).
Despite the fact that Capriotti and Hargrove had used the
certificate to pay off the loan, Old Intercounty listed the
certificate on its monthly escrow bank reconciliations statements
until January 2000. (Pl. 56.1(a)(3) Statement ¶ 99).
In January 1990, Old Intercounty wired $750,000 from an account
at American National Bank & Trust Company of Chicago to Homewood
Bank. (Pl. 56.1(a)(3) Statement ¶ 101). Later that month,
Homewood Bank issued a certificate of deposit in the amount of
$750,000 to Old Intercounty. (Pl. 56.1(a)(3) Statement ¶ 102).
And Old Intercounty then executed a Power to Hypothecate the
certificate, thus allowing it to be pledged as collateral for a
loan to Capriotti and Hargrove. (Pl. 56.1(a)(3) Statement ¶ 103).
Approximately one month later, Capriotti and Hargrove obtained a
personal loan from Homewood Bank for $750,000 and pledged Old
Intercounty's certificate of deposit as collateral. (Pl.
56.1(a)(3) Statement ¶ 104-105).
Shortly after approving the loan, the Bank of Homewood
requested, among other things, an opinion from Old Intercounty's
counsel "affirming that the pledge of the CD is a valid and
binding obligation of Intercounty." (Def. 56.1(a)(3) Statement
Ex. 24). Counsel for Old Intercounty, Joseph Planera, wrote the
Bank of Homewood in March 1991 and affirmed that "there appears
to be no restrictions . . . relative to the specific certificate
of deposit, issued in the name of Intercounty Title Company of
Illinois . . . as it relates to the hypothecation of the
principal sum of . . . $750,000 for a loan to Jack L. Hargrove
and Laurence W. Capriotti." (Def. 56.1(a)(3) Statement Ex. 24).
Old Intercounty's counsel also supplied the Bank of Homewood with
a corporate resolution authorizing it to hypothecate the
certificate of deposit. (Def. 56.1(a)(3) Statement Ex. 24).
In January 1993, when renewing Capriotti's and Hargrove's loan,
the Bank requested that Old Intercounty verify in writing that
the funds to purchase the certificate of deposit were not
escrowed funds. (Def. 56.1(a)(3) Statement Ex. 24). On March 19,
1993, Susan Peloza, Old Intercounty's Secretary, informed the
Bank of Homewood that "the certificate of deposit is not escrowed
funds, but unrestricted funds of Intercounty Title." (Def.
56.1(a)(3) Statement Ex. 24). In March 1996, Homewood Bank
liquidated the certificate of deposit to pay off the $750,000
loan. (Pl. 56.1(a)(3) Statement ¶ 116). Again, despite the
liquidation of the certificate, Old Intercounty listed the
$750,000 certificate on its escrow bank reconciliations until
December 1992. (Pl. 56.1(a)(3) Statement ¶ 120).
In February 1990, Old Intercounty purchased a certificate of
deposit in the amount of $1,000,000 from Howard Bank. (Pl.
56.1(a)(3) Statement ¶ 122). The check drafted by Old Intercounty
to purchase the certificate identified the account from which the
funds came as an escrow account. (Pl. 56.1(a)(3) Statement ¶ 123,
Ex. Podromos DE 2). At the same time as Old Intercounty purchased
the certificate of deposit, Capriotti and Hargrove obtained a
$1,000,000 loan from Howard Bank, pledging the Old Intercounty
certificate of deposit as collateral. (Pl. 56.1(a)(3) Statement ¶¶ 127-128).
Capriotti and Hargrove signed an affidavit in which they averred
that the loan from Howard Bank was for business purposes only.
(Def. 56.1(b)(3)(B) Statement Ex. 7). Several months after Howard
Bank issued the loan, Old Intercounty executed a Power to
Hypothecate the certificate ...