Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

APM Restaurant Group, Inc. v. Associated Bank

United States District Court, N.D. Illinois, Eastern Division

July 10, 2019

APM RESTAURANT GROUP, INC., AN ILLINOIS CORPORATION, ANDJOSLINALFAR, PLAINTIFFS,
v.
ASSOCIATED BANK, A WISCONSIN BANKING CORPORATION, DEFENDANT. Check Number Date Payable to Amount

          MEMORANDUM OPINION AND ORDER [1]

          SIDNEY I. SCHENKIER UNITED STATES MAGISTRATE JUDGE.

         Plaintiffs, APM Restaurant Group, Inc. ("APM") and Joslin Alfar ("Ms. Alfar") (collectively "plaintiffs"), have sued defendant Associated Bank ("Associated") in connection with 15 checks drawn on APM's account that Associated negotiated. APM asserts claims against Associated for breach of the Illinois Uniform Commercial Code ("UCC") for unlawfully charging APM's bank account for allegedly forged checks that were not properly payable, conversion in cashing forged and unauthorized checks from APM's bank account, and estoppel (doc. #15: Am. Compl., Counts I-II and IV). Ms. Alfar asserts a separate claim against Associated for negligence (Id., Count III). Defendant has asserted various affirmative defenses to plaintiffs' claims (doc. # 20: Answer at 9-13). Following discovery, defendant filed a motion for summary judgment (doc. #61). The motion is fully briefed. For the reasons set forth below, we grant defendant's motion.

         I.

         In support of its motion for summary judgment, defendant submitted a statement of material facts (doc. # 62: DSOF). Plaintiffs responded to defendant's statement of material facts (doc. # 66: Pl.s' Resp. to DSOF), filed a declaration of Peter Sayegh (doc. # 65: Sayegh Dec), and filed a Rule 56.1(b)(c)(3) statement of additional facts (doc. # 67: PSOF). Defendant moved to strike (doc. # 74) plaintiffs' statement of additional facts (doc. # 67) which we granted (doc. #78) and to strike Mr. Sayegh's declaration (doc. # 76) which we denied (doc. # 78). The following facts are undisputed unless otherwise indicated.

         In early 2014, APM was formed and then acquired and began operating a restaurant known as Niko's Lodge ("Niko's") located in Algonquin, Illinois (DSOF, ¶ 6). Ms. Alfar was the sole owner of APM (DSOF, ¶ 7) but was not involved in the day-to-day operation of Niko's and never reviewed APM's financial records (DSOF, ¶ 30; doc. # 62-4: Alfar Dep. 7:9-15).[2] Ms. Alfar was not employed from 2013 to the present, she did not know if she filed a federal tax return for 2014 or 2015, and she was not sure if she had ever filed a tax return (DSOF, ¶¶ 31, 32). Ms. Alfar did not know what her income was in 2014 or 2015 and she also did not know how much she was paid by APM in 2014 or 2015 (DSOF, ¶¶ 33, 34).

         Ms. Alfar's husband, Peter Sayegh, was the general manager of APM and responsible for the operation of its business (DSOF, ¶ 9). Deanna Marcanti worked as a manager of Niko's (DSOF, ¶ 10).

         On October 31, 2014, APM opened a checking account at Associated and became a customer of the bank (DSOF, ¶ 8). A Deposit Account Agreement governed the banking relationship between APM and Associated (DSOF, ¶ 11). Mr. Sayegh signed the document acknowledging receipt of the Deposit Account Agreement on behalf of APM as its secretary (doc. # 61-3 at 114). APM requested and received online banking services with Associated, and APM (through Mr. Sayegh) reviewed its online statements and checks monthly (DSOF, ¶ 12). Mr. Sayegh was an authorized signer of APM's accounts at Associated (doc. # 61-3 at 114).

         Deanna Marcanti was a manager at Niko's (DSOF, ¶ 10). APM kept its checks in a safe at Niko's to which Ms. Marcanti had access as a manager (DSOF, ¶ 13). APM never took steps to prevent Ms. Marcanti from having access to checks for APM's account with Associated, because part of her job description was to pay vendors (DSOF, ¶¶ 14, 15). APM also gave Ms. Marcanti its Associated online banking username and password so that she could access and use APM's accounts online (DSOF, ¶ 16). At various times, Ms. Marcanti participated with Mr. Sayegh on phone calls with Associated to discuss APM's accounts (DSOF, ¶ 17).

         APM alleges that Ms. Marcanti first forged and cashed a check drawn on the Associated account dated January 20, 2015 (doc. #61-3 at 180). APM allegedly first learned that Ms. Marcanti had forged checks "sometime early in 2015," but Mr. Sayegh could not be more specific as to the date (DSOF, ¶ 20). APM did not report to the police that Ms. Marcanti had stolen, forged and cashed any checks until May 5, 2015, almost five months after Ms. Marcanti allegedly first forged and cashed a check (DSOF, ¶ 19). Furthermore, APM did not submit an Affidavit of Forged Endorsement/Forged Maker ("APM Affidavit") to Associated Bank until May 12, 2015 even though the affidavit attests that 15 of its checks were stolen, forged, and negotiated by its manager between January 20, 2015 and April 27, 2015 (DSOF, ¶¶ 21, 22). APM also did not file a claim with its insurer for the alleged theft of its checks by Ms. Marcanti (DSOF, ¶ 27). APM was informed on June 15, 2015 that its claim of alleged fraud on its account was denied by Associated (doc. #61-3 at 195).

         Plaintiffs allege that on February 11, 2015 Mr. Sayegh placed an alert on APM's bank account on the basis that there was an unaccounted withdrawal and a bank balance discrepancy (doc. #15: Am. Cmplt., ¶ 10; doc. # 20: Answer, ¶ 10). However, there is no evidence that in making that request, Mr. Sayegh identified Ms. Marcanti as a person making "unaccounted" withdrawals or informed Associated it should not cash checks she presented.

         APM's Affidavit submitted in May 2015 attests that the following 15 checks totaling $82, 657.36 were stolen, forged, and negotiated by Ms. Marcanti:

Check Number
Date
Payable to
Amount

1001

1/20/2015

Cash

$6, 792.10

1001

1/23/2015

Cash

$3, 900.00

1001

2/6/2015

Cash

$8, 815.56

1001

2/17/2015

Cash

$10, 000.00

2006

3/10/2015

Cash

$3, 800.00

2009

3/16/2015

Cash

$4, 201.00

2010

3/16/2015

Cash

$4, 000.00

2011

3/17/2015

Cash

$2, 500.00

2014

3/23/2015

Restaurant Depot

$4, 712.89

2016

3/23/2015

Cash

$4, 500.00

2017

3/24/2015

Cash

$1, 500.00

2018

3/27/2015

Restaurant Depot

$5, 435.81

2019

3/30/2015

Cash

$2, 500.00

2007

4/27/2015

Deanna Marcanti

$10, 000.00

2008

4/27/2015

Deanna Marcanti

$10, 000.00

Total:

$82, 657.36

(DSOF, ¶ 22; doc. 61-3 at 180-82).

         Removing the two $ 10, 000.00 checks payable to Ms. Marcanti, which we will discuss later, leaves a potential balance of $62, 657.36 in allegedly forged checks. However, Mr. Sayegh testified that check numbers 2014 and 2018, totaling $10, 148.70 and payable to Restaurant Depot, were used to purchase supplies for Niko's (doc. # 61-3 at 40, 42, 191, 192). Thus, this reduces the balance to $52, 508.66 in alleged forged checks.

         The remaining eleven allegedly forged checks all were made payable to "cash"; however, each check contained a notation on the memo line indicating how the funds were to be used, such as for payment to various vendors, payroll, or "cash for store." Gordon Food Service ("GFS"), Costco, Mickey Linens, and Wirtz Beverage were all vendors of Niko's during the relevant time (doc. # 61-3 at 16, 36) and APM received an invoice from the Kane County Health Department for services (doc. # 61-3 at 35). James McGovern, a forensic accountant and certified public accountant for 31 years retained by Associated for this case, prepared an expert report and testified as to the flow of fluids for these 11 checks made payable to cash (doc. # 62-5). The chart below sets forth Mr. McGovern's analysis (to which plaintiffs have offered no rebuttal) as to how the cash from the allegedly forged checks was used (doc. # 62-5 at 37):

Allegedly Forged Checks


Subsequent distribution of checks payable to Cash

Date

Amount

Number

Drawn by

Payable to

Cashier's Check

Cash

To the Order of


1/20/2015

$6,792.10

1001

APM

Cash


$3,500.00


GFS






$3,292.10


Costco






$6,792.10




1/23/2015

$3,900.00

1001

APM

Cash


$3,206.00


GFS






$694.00


Kane Cty. Health Dept.






$3,900.00




2/6/2015

$8,815.56

1001

APM

Cash


$4,000.00


GFS






$1,815.56


Mickeys Linens







$3,000.00

Payroll






$5,815.56

$3,000.00



2/17/2015

$10,000.00

1001

APM

Cash


$5,000.00


GFS






$3,500.00


Wirtz Beverage







$1,500.00

Cash for Store






$8,500.00

$1,500.00



3/10/2015

$3,800.00

2006

APM

Cash


$2,100.00


Wirtz Beverage







$1,700.00

Cash for Store






$2,100.00

$1,700.00



3/16/2015

$4,201.00

2009

APM

Cash


$4,201.00


GFS


3/16/2015

$4,000.00

2010

APM

Cash



$4,000.00

Cash for Store


3/17/2015

$2,500.00

2011

APM

Cash



$2,500.00

Cash for Store


3/23/2015

$4,500.00

2016

APM

Cash



$4,500.00

Cash for Store


3/24/2015

$1,500.00

2017

APM

Cash



$1,500.00

Cash for Store


3/30/2015

$2,500.00

2019

APM

Cash



$2,500.00

Cash for Store


Total

$52,508.66





$31,308.66

$21,200.00


         The check dated January 23, 2015 for $3, 900.00 and the check dated February 6, 2015 for $8, 815.56 were both signed by Mr. Sayegh (DSOF, ¶¶ 25, 26). Additionally, Mr. Sayegh admitted that the proceeds of these cashed checks were used to purchase the cashier's checks to pay the vendors identified in the chart above (doc. # 61-3 at 35, 36). Mr. Sayegh also testified that the proceeds of the cashed checks dated January 20, 2015 in the amount of $6, 792.10, February 17, 2015 in the amount of $10, 000.00, and March 10, 2015 in the amount of $3, 800.00 were used to purchase the cashier's checks to pay the vendors identified in the chart above (doc. # 61-3 at 35, 36-37, 39). Thus, the balance of alleged forged checks (the proceeds of which were used for corporate purposes) is further reduced by $31, 308.66 to $21, 200.00.

         Mr. Sayegh testified that depending on the day of the week, he kept one thousand to three thousand dollars in cash at Niko's (doc. # 61-3 at 37). Additionally, he did not offer any evidence to refute that the cash obtained by the checks negotiated on March 16, 17, 23, 24 and 30, 2015 was used for anything other than the store as indicated on the checks. Rather, Mr. Sayegh testified that during the pendency of the suit, he had no access to APM's ledgers, as they either were left at Niko's when the restaurant closed or were lost (doc. # 61-3 at 8, doc. # 62-8: APM's Answers to Associated's Request for Production ¶ 6.) Mr. Sayegh nonetheless testified that he knew the checks dated March 10, 16, 17, 23, 24, and 30 were all forged on or about the date of each check, but did not notify Associated of the alleged forgery at the time these checks were cashed (doc. # 61-3 at 43-44). This was so despite the fact that Mr. Sayegh reviewed all of APM's monthly bank statements, which were available to him no later than seven days after the end date on each statement (doc. # 61-3 at 19, 20 (January), 36 (February), 38 (March), 45 (April)).

         The two checks dated April 27, 2015 each made payable to Ms. Marcanti in the amount of $10, 000.00 were signed by Mr. Sayegh (DSOF, ¶ 24; doc. # 65: Sayegh Dec. ¶ 3; doc. # 61-3 at 44, 193, 194). Mr. Sayegh testified that he wrote "repayment for personal loan" on each check after Ms. Marcanti discussed with him that she personally paid bills for Niko's and wanted to be reimbursed for her loan; Mr. Sayegh filled in all the information on the checks, other than Ms. Marcanti's name and the date, and then placed the two signed checks into the safe at Niko's, to which Ms. Marcanti had access (doc. # 61-3 at 44). Plaintiffs testified that Ms. Marcanti thereafter retrieved the checks from the safe, filled in her name and the date and cashed the two $10, 000 checks at Associated (doc. # 61-3 at 32, 44). In exchange for the checks, plaintiffs alleged that Ms. Marcanti received $6, 000 in cash and $14, 000 in a cashier's check that she cashed the following day at Associated (doc. # 61-3 at 32-33). Upon learning that the two $10, 000 checks were cashed, plaintiffs allege Mr. Sayegh contacted Associated and requested a stop payment on the $14, 000 cashier's check to which he was told that could not be done because Ms. Marcanti was the remitter (Id.).

         Associated's expert witness, Mr. McGovern, testified that APM suffered a net loss of $223, 977.00 during its operations in 2014 and 2015, Ms. Alfar only received $9, 000.00 in income from APM in 2014 per APM's tax return, and Ms. Alfar suffered a loss of $214, 977.00 (doc. # 62-5 at 6-7, 35). Mr. McGovern further testified that APM's claim that the value of the business lost was $2, 050, 000.00 did not comply with generally accepted valuation standards, was highly speculative and was unsupported by the documentation plaintiffs produced (doc. # 62-5 at 2, 34-35). Plaintiffs point to no evidence to refute Mr. McGovern's testimony.

         II.

         Summary judgment is appropriate where the moving party establishes that there is no genuine issue as to any material fact and he or she is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A genuine issue exists when "the evidence is such that a reasonable jury could return a ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.