Name of Assigned Judge Sitting Judge if Other or Magistrate Judge Amy J. St. Eve than Assigned Judge
CASE TITLE DOCKET ENTRY TEXT
The Court denies West Bend's Renewed Motion to Enforce Its Judgment Against Funds Paid to Banco Popular .
O[ For further details see text below.] Notices mailed by Judicial staff.
Before the Court is Plaintiff West Bend Mutual Insurance Company's ("West Bend") Renewed Motion to Enforce Its Judgment Against Funds Paid to Banco Popular. For the following reasons, the Court denies West Bend's motion.
The Court presumes the parties' familiarity with the procedural history of this matter. To briefly summarize, West Bend obtained a default judgment against Defendants Belmont State Corporation ("Belmont") and Mark Gizynski in the amount of $2,150,330.60. West Bend initiated a third party citation proceeding to discover assets against Banco Popular North America ("Banco Popular") on October 29, 2009. Banco Popular responded by providing documents and information regarding, among other things, several checks that were drawn on Belmont's checking account at US Bank, made payable to Banco Popular, and applied to Gizynski's personal mortgage account. The documents revealed that between 2007 and 2008, Gizynski signed and deposited thirteen such checks, totaling $128,957.49. Courtroom Deputy KFInitials:
On January 21, 2010, West Bend filed a motion asking the Court to impose a constructive trust on those funds and to order Banco Popular to turn them over. After careful consideration of the parties' briefs and supporting exhibits, the Court found that West Bend had established that Banco Popular had a duty to exercise due care to ensure that Belmont had intended Gizynski to receive its money. (R. 77, April 21, 2010 Mem. Op. & Order.) Specifically, the Court held that, in accordance with Seventh Circuit law, Banco Popular had a common law duty arising in tort to inquire as to the legitimacy of the checks to ensure that the deposits were authorized. Travelers Cas. & Sur. Co. of Am. v. Wells Fargo Bank N.A., 374 F.3d 521 (7th Cir. 2004); Mutual Serv. Cas. Ins. Co. v. Elizabeth State Bank, 265 F.3d 601 (7th Cir. 2001). The Court denied West Bend's motion without prejudice as to this common law claim, however, because the parties' briefs and documentary evidence revealed factual disputes that prevented a ruling on Banco Popular's liability. The Court identified two factual disputes requiring resolution: (1) the extent to which Banco Popular knew about the relationship between Gizynski and Belmont when it applied the checks to Gizynski's mortgage account; and (2) whether Gizynski was authorized to apply Belmont funds to his personal mortgage with Banco Popular.
Although the Court denied West Bend's motion without prejudice, it held that West Bend had established a right to an evidentiary hearing or trial on the matter, and instructed the parties to file a joint status report indicating whether they would need to conduct any additional discovery in advance of the hearing. The Court continued the third party citation proceeding against Banco Popular through the anticipated hearing. (R. 88.)*fn1 In a joint status report, the parties represented that they would need to conduct additional discovery before an evidentiary hearing could be held. Relying on the parties' joint status report, and on a subsequent request by Banco Popular seeking additional time for discovery, the Court scheduled a November 1, 2010 status hearing to set a date for the anticipated evidentiary hearing. On September 29, 2010, West Bend filed the instant renewed motion to enforce judgment against Banco Popular. (R. 125, Renewed Mot.) In its renewed motion, West Bend asserts that the disputed issues of fact have been resolved, thus obviating the need for an evidentiary hearing. (Id. at 1.) On November 8, 2010, counsel for both parties informed the Court that no hearing was necessary and that the Court should rule on the briefs.
In 2007 and 2008, Gizynski deposited thirteen checks from Belmont's checking account with US Bank to his personal mortgage account at Banco Popular. The checks were made payable to Banco Popular, and were accompanied by a payment stub indicating they should be applied to Gizynski's personal mortgage account. Gizynski signed each of the checks. Belmont did not maintain any bank accounts at Banco Popular, and the parties have submitted no evidence to suggest that Belmont ever had any sort of contractual agreement with Banco Popular. After careful analysis, the Court determined in its April 21, 2010 ruling that given the circumstances of the case, and the nature of the relationships (or, more precisely, lack thereof) between Belmont and Banco Popular, Illinois common law imposed a duty arising in tort which required Banco Popular to inquire as to the legitimacy of the deposited checks. That duty to inquire, a rare but firmly established "good Samaritan" liability that arises when a bank receives a check made out to it by a drawer who owes the bank no money, places the burden on banks to "rescue" the drawer from a possible fraud. Travelers, 374 F.3d at 527.
Banco Popular's liability under that common law tort rests on two questions: did Banco Popular satisfy its duty to inquire, and if not, was Gizynski authorized to deposit Belmont's funds into his personal account? If Gizynski was authorized to deposit those sums, then Belmont cannot obtain the relief it seeks. Id. at 524. West Bend bears the burden of proving that Belmont did not authorize the checks made out to Banco Popular and deposited by Gizynski. Id. ("[E]ven if Travelers proved that Schwab had violated its duty to Allianz, in order to obtain relief Travelers would have to show that Schwab, had it fulfilled its duty, would have discovered that Allianz had not authorized the check to Schwab."); see also id. at 529.
During the supplemental discovery period, West Bend deposed William Bolsen, a Vice President of Commercial Real Estate Lending at Banco Popular, and Michael Randazzo, Senior Vice President and Director of Operations at Banco Popular. The parties also propounded additional written discovery. In its renewed motion, West Bend submits the transcripts from those depositions and ...