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Citibank, N.A., Successor By Merger To Citibank, F.S.B v. Mcgladrey and Pullen

June 14, 2011

CITIBANK, N.A., SUCCESSOR BY MERGER TO CITIBANK, F.S.B.,
PLAINTIFF-APPELLANT,
v.
MCGLADREY AND PULLEN, LLP, AN IOWA LIMITED LIABILITY PARTNERSHIP,
DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County No. 05 L 13222 Honorable Daniel J. Lynch, Judge Presiding.

The opinion of the court was delivered by: Justice Karnezis

JUSTICE KARNEZIS delivered the judgment of the court, with opinion. Presiding Justice Cunningham and Justice Harris concurred in the judgment and opinion.

OPINION

Plaintiff Citibank, N.A., successor by merger to Citibank, F.S.B., appeals the circuit court's judgment in favor of defendant McGladrey & Pullen, LLP, an Iowa limited liability partnership. Citibank contends on appeal that the circuit court's pretrial rulings on two motions in limine were in error and a new trial is required as a result of the error. We affirm the judgment of the circuit court.

Background

In this case, Citibank seeks to recover money it loaned to Dr. Mark S. Weinberger, an ear, nose and throat (ENT) surgeon, who absconded to Europe with the proceeds of a $1.4 million term loan from Citibank.*fn1 Citibank seeks to recover its money by suing McGladrey for its negligent audit of Dr. Weinberger's surgical practice, Subspecialty Centers of America, LLC (SCA). Citibank claims that it relied on McGladrey's audit in making the $1.4 million term loan to SCA.

McGladrey conducted a financial audit of SCA for the year ending December 31, 2003, and issued its audit report in March 2004. The audit report indicated that SCA's "balance sheet presents fairly in all material respects to the financial position of SCA in conformity with generally accepted auditing standards." Citibank received the audit report and in June 2004, made a $1.4 million term loan to SCA. The term loan was a modification of a prior term loan Citibank had made to SCA. Prior to 2004, Citibank had four outstanding loans to SCA; (1) a mortgage loan for its diagnostic surgery center; (2) a mortgage loan for its office condominium; (3) a revolving line of credit; and (4) a term loan. The 2004 term loan was an increase and an extension of the prior term loan.

During discovery, Citibank disclosed three expert witnesses: Edward A. Bartko, an accountant; Dr. Robert Kern, an ENT doctor; and, Dr. Robert Naclerio, an ENT doctor.

Bartko is a senior managing director in the corporate finance department of FTI Consulting, Inc. (FTI), and has an extensive auditing background. His expert credentials are not at issue. Bartko was engaged by Citibank to offer a professional opinion regarding McGladrey's audit of SCA. According to Bartko's "Expert Report and Disclosure," he opined that McGladrey's audit was deficient and "did not comply with the general standards, standards of field work and standards of reporting within the body of generally accepted auditing standards." Specifically, according to Bartko, McGladrey's audit was deficient because McGladrey did not use health care specialists who possessed the expertise to analyze the medical files of SCA's patients, and who would have ultimately uncovered any medical fraud. Bartko's report indicated that FTI's team of health care specialists uncovered numerous red flags in SCA's patient files, which should have been discovered by McGladrey's audit. Bartko's report only refers to FTI's health care specialists as "two registered nurses" (one of which is a "Certified Coding Specialist" and "Certified Professional Coder") and "an individual who leads FTI's Healthcare Compliance Consulting Services practice."

McGladrey filed a motion in limine to "Strike Certain Expert Testimony," which is one of the two motions in limine at issue in this appeal. The motion sought to preclude Bartko from testifying as to the opinions and conclusions of FTI's health care specialists, because the specialists were never disclosed during discovery and because Bartko was not qualified to testify to their findings. McGladrey noted in the motion that Bartko admitted during his deposition that the opinions of the health care specialists were the specialists' opinion and not his opinions and that he was not qualified to read or interpret a patient's medical records. The circuit court granted the motion to the extent that Bartko could testify that he would have engaged the use of health care specialists, but he could not testify as to the specific opinions and conclusions of FTI's health care specialists.

Prior to trial, the circuit court limited Citibank's claims of damages to the 2004 term loan because Citibank had made the other outstanding loans to SCA prior to receiving the McGladrey audit report.

Citibank subsequently filed a motion in limine to exclude any evidence of Citibank's alleged contributory negligence unrelated to its term loan to SCA, which the circuit court denied. This motion is the second of the two motions in limine at issue in this appeal.

The case proceeded to trial, with the jury finding in favor of McGladrey. Citibank appeals the circuit court's pretrial rulings ...


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