Gambino v. Boulevard Mortgage Corporation ( 2009 )

SIXTH DIVISION
December 11, 2009
Nos. 1-07-3566, 1-08-0702, 1-08-0746, 1-08-1373, 1-08-1982, 1-08-1983, 1-08-2151,
and 1-08-2152 (Cons.)
JOSEPH M. GAMBINO, Independent Administrator ) Appeal from the
of the Estate of Joseph J. Gambino, and NORTH STAR ) Circuit Court of
TRUST COMPANY, as Trustee u/t/a Nos. 13534, 23985, ) Cook County.
23994, )
)
Plaintiffs-Appellees, Cross-Appellants )
and Counter-Defendants, )
)
v. )
)
BOULEVARD MORTGAGE CORPORATION, TITLE )
AMERICA, INC., W.W. FUNDING, L.L.C., )
DENNIS D. KOONCE and STEPHEN WOLF, )
) No. 05 CH 4303
Defendants and )
Counterplaintiffs-Appellants )
)
(Washington Mutual Bank, a Federal Association, and )
Plaza Bank, )
)
Defendants-Appellants and )
Cross-Appellees, )
)
and Salvatore DiBenedetto, and )
Vincenzo DiBenedetto, )
) Honorable
) Nancy J. Arnold,
Defendants-Appellants). ) Judge Presiding.
JUSTICE ROBERT E. GORDON delivered the opinion of the court:
These consolidated appeals arise from an action to quiet title to three parcels of
real estate and to recover damages for slander of title filed in the chancery division of the
circuit court of Cook County. Joseph J. Gambino (Gambino), as beneficiary of three
separate land trusts, and North Star Trust Company (North Star), as trustee under land
trust agreements Nos. 13534, 23985, and 23994, filed this action to quiet title to the three
parcels of real estate and to recover damages for slander of title against certain
defendants. The subject properties are located at 7460 North Milwaukee Avenue in
Niles, Illinois (Niles Property), 2738-40 North Kedzie Avenue in Chicago (Kedzie
Property), and 3619 North Lavergne Avenue in Chicago (Lavergne Property).1 Gambino
suffered a heart attack during his discovery deposition in this matter and died shortly
thereafter. Joseph M. Gambino was substituted as party plaintiff as independent
administrator of his father’s estate.
After a two-week bench trial in late October and early November of 2007, the
trial court found in favor of plaintiffs on all counts of their complaint declaring (1) title to
the subject properties was vested in North Star under trust agreements Nos. 13534,
23985, and 23994, and (2) all purported inconsistent instruments of title and any clouds
on title to the subject properties, including mortgage liens, were void. Further, the trial
court awarded plaintiffs compensatory damages of $595,574 and (2) punitive damages of
$675,000 as follows: $500,000, jointly and severally, against defendants Salvatore
DiBenedetto, Vincenzo DiBenedetto, Dennis Koonce, Boulevard Mortgage Corporation,
and Title America, Inc., and $175,000, jointly and severally, against defendants Stephen
Wolf and W.W. Funding, L.L.C. We affirm.
1
The properties will be referred to collectively as the “subject properties” where
appropriate.
2
BACKGROUND
1. The Pleadings
Plaintiffs’ verified “Corrected Second Amended Complaint” contained six counts,
two counts as to each of the three subject properties. As to each of the properties, one
count sought to quiet title and a second count alleged slander of title. The allegations of
the complaint common to all six counts were as follows.2 Gambino, 73 years old at the
time of his death in 2006, owned and operated the United Transmission Center (United),
an Illinois corporation, a motor vehicle transmission repair business located at the Niles
Property. The Lavergne Property consisted of a four-unit, multifamily apartment
building that Gambino owned for “investment purposes.” In October 2002, Gambino
met with his nephew, defendant Salvatore DiBenedetto (Sal), whom Gambino believed to
be a mortgage broker, to assist him in refinancing one or more of his properties in order
to pay off certain financial obligations. Over the following two months, Gambino and
Sal had several discussions, during which Sal obtained information concerning
Gambino’s business and assets, including information regarding the subject properties.
The complaint alleged that Sal represented to Gambino that he and several real
estate investors were interested in purchasing the Niles and Kedzie Properties and the
transmission business. Sal suggested that the transmission business should be managed
by his brother, defendant Enzo DiBenedetto (Enzo). Gambino refused. Shortly
2
Previous versions of plaintiffs’ complaint were verified by the sworn affidavit of
Gambino, prior to his death and preserved in plaintiffs’ “Corrected Second Amended
Complaint,” which contained binding judicial admissions. Winnetka Bank v. Mandas,
202 Ill. App. 3d 373, 396 (1990).
3
thereafter in 2003, Sal offered to purchase the Lavergne Property in a written purchase
agreement with an offer of $550,000. Gambino never accepted the offer.
The complaint further alleged that Sal personally loaned Gambino $70,000 to be
repaid upon future refinancing or sale of any of the subject properties. The complaint
alleged that Sal requested permission to remove underground liquid storage tanks at the
Niles Property prior to any transfer of the property, and Gambino refused.
The complaint further alleged that Gambino never: (1) signed any agreement
regarding the conveyance of any of the subject properties, or the purchase of United; (2)
authorized Sal or anyone else to place liens or encumbrances upon any of the subject
properties, including any mortgages; (3) authorized anyone to affix his signature to any
document concerning any of the subject properties; or (4) directed his land trustee North
Star to transfer title or his beneficial interest in the subject properties to anyone.
The complaint further alleged that Sal, Enzo, Boulevard, and defendants Dennis
Koonce and Title America, Inc. (Title America), “participated in” forging deeds, and
other documents, to “procure and secure” mortgages on those properties. The complaint
alleged that Koonce, an attorney, participated in each of the transactions that purported to
convey title to the subject properties. Additionally, the complaint alleged that Boulevard
and Title America are both owned and controlled by Koonce, that Boulevard was the
ultimate grantee in a series of forged deeds pertaining to the Lavergne Property, and that
Title America acted as title agent with regard to all but one of the transactions that
purported to convey title to the subject properties.
Count I of plaintiffs’ complaint, pled against Sal, Enzo, Koonce, Boulevard, Title
America, and Washington Mutual Bank, sought to quiet title to the Lavergne Property.
4
Count I of plaintiff’s complaint alleged that in May 2003, a mortgage lien in favor of
LaSalle Bank existed on the Lavergne Property, with a principal balance of
approximately $200,000. On May 5, 2003, LaSalle “informed” Gambino that the
mortgage had been paid in full although Gambino was unaware of this transaction.
Count I further alleged that unbeknownst to plaintiffs, Sal, Enzo, Koonce,
Boulevard, and Title America recorded against the Lavergne Property: a forged trustee’s
deed purportedly executed by North Star, conveying title to the Lavergne Property to
Koonce; a mortgage naming Koonce as the borrower and Equity Plus, Inc., as the lender,
with a principal sum of $400,000; a mortgage naming Koonce as the borrower and
Washington Mutual as the lender with a principal sum of $406,000; and a quitclaim deed,
listing Koonce as the grantor and Boulevard as the grantee. Count I further alleges that
Sal, Enzo, Koonce, Boulevard, Title America and Washington Mutual knew or should
have known that the purported trustee’s deed conveying title to Koonce was forged.
Count II of plaintiffs’ complaint, pled against Sal, Enzo, Koonce, Boulevard, and
Title America, seeking compensatory and punitive damages, alleges slander of title with
regard to the Lavergne Property.
Count III of plaintiffs’ complaint, pled against Sal, Enzo, Koonce, Title America,
W.W. Funding, L.L.C. (WW Funding), Stephen Wolf, and Plaza Bank, sought to quiet
title to the Niles Property. Count III alleged that in the early fall of 2003, Reuben
Zippershtein told Gambino that he was the mortgagee to the Niles Property and that the
mortgage was in default. On January 21, 2004, Zippershtein filed suit to foreclose the
mortgage. On July 9, 2004, Zippershtein voluntarily dismissed the foreclosure suit and
executed a release deed of the recorded mortgage on the Niles Property.
5
Count III alleged that the Zippershtein mortgage was a result of forged and
unauthorized instruments which were recorded by Sal, Enzo, Koonce, Boulevard, Title
America, Wolf and WW Funding. Count III further alleged that the following illegal
instruments were recorded against the Niles Property: a forged trustee’s deed,
purportedly executed by North Star, conveying title to the Niles Property to “Joseph J.
Gambino”; a mortgage naming “Joseph J. Gambino” as the borrower and Zippershtein as
the lender, with a principal sum of $200,000; a warrantee deed, listing “Joseph J.
Gambino” as the grantor and WW Funding as the grantee; a mortgage, naming WW
Funding as the borrower and defendant Plaza Bank as the lender, with a principal sum of
$445,000; and an assignment, purporting to assign rents from WW Funding to Plaza
Bank. Count III further alleged that Sal, Enzo, Koonce, Boulevard, Title America, WW
Funding, Wolf, and Plaza Bank knew or should have known that the purported trustee’s
deed conveying title to “Joseph J. Gambino” was forged.
Count IV of plaintiffs’ complaint, pled against Sal, Enzo, Koonce, Boulevard,
Title America, WW Funding, and Wolf, seeking compensatory and punitive damages,
alleged slander of title with regard to the Niles Property.
Count V of plaintiffs’ complaint, pled against Sal, Enzo, Koonce, Boulevard,
Title America, WW Funding, Wolf, and Plaza Bank, sought to quiet title to the Kedzie
Property. Count V alleged that the following illegal instruments were recorded against
the Kedzie Property: a forged trustee’s deed, purportedly executed by North Star,
conveying title to the Kedzie Property to “Joseph J. Gambino”; a forged warrantee deed,
listing “Joseph J. Gambino” as the grantor and 21st Century Financial Planners, Inc.
6
(Century), as the grantee3; a special warranty deed, listing Century as grantor and WW
Funding as grantee; a mortgage naming WW Funding as the borrower and Plaza Bank as
the lender, with a principal sum of $350,000; and an assignment, purporting to assign
rents from WW Funding to Plaza Bank. Count V further alleged that Sal, Enzo, Koonce,
Boulevard, Title America, WW Funding, Wolf, and Plaza Bank knew or should have
known that the purported trustee’s deed conveying title to “Joseph J. Gambino” was
forged.
Count VI of plaintiffs’ complaint, pled against Sal, Enzo, Koonce, Boulevard,
Title America, WW Funding, and Wolf, seeking compensatory and punitive damages,
alleged slander of title with regard to the Kedzie Property.
As noted, defendants Koonce, Boulevard, Title America, and WW Funding filed
counterclaims which included claims to quiet title to the subject properties. The Koonce
defendants’ (Koonce, Boulevard, and Title America) verified amended counterclaim
contained five counts. Count I of the Koonce-related defendants’ counterclaim sought a
judgment to quiet title to the Lavergne Property in favor of Boulevard. Counts II, III, IV,
and V of the Koonce defendants’ counterclaim alleged unjust enrichment, fraud,
intentional interference with a business relationship, and slander of title, respectively.
Further, the Koonce defendants raised affirmative defenses to plaintiffs’
complaint consisting of waiver, estoppel, ratification, and laches.
3
This warranty deed bears an execution date of January 17, 2003; the complaint
alleges that on that same date, Gambino’s signature was forged to a commercial lease
where Gambino purportedly leased the Kedzie Property from Century. This lease was
signed by Wolf on behalf of Century.
7
WW Funding’s counterclaim was filed in two counts. One count concerned the
Kedzie Property and the other count concerned the Niles Property. In each count WW
Funding sought to quiet title or, in the alternative, to obtain reimbursement from
Gambino’s estate for various sums.4
2. Overview of the Events Leading to Trial
As noted, this case was tried as a bench trial over a two-week period in late
October and early November of 2007. In order to provide context for the testimony
presented in this case, we will provide an overview of the events leading to trial,
including a description of the real estate closings, the disbursement of funds, and the
parties’ involvement in those closings.
It is undisputed by the parties that Gambino was in serious financial debt in the
summer of 2002, owing overdue payroll and real estate taxes. United, Gambino’s motor
vehicle transmission repair business, had failed to pay payroll taxes since 1999 and owed
the Internal Revenue Service (IRS) approximately $125,000 to $150,000 for back taxes,
penalties, and interest. Gambino was in danger of losing properties, which had been sold
to tax buyers for unpaid real estate taxes that were past due.
By June 2002, the payroll taxes had gone unpaid for years, and the IRS threatened
to levy on United and close them down, seize its assets, and/or personally assess
4
At oral argument before this court on November 12, 2009, counsel for Wolf
and WW Funding stated that both Wolf and WW Funding seek only to vacate the trial
court’s findings against them with respect to slander of title, and that WW Funding no
longer seeks a finding of quiet title with respect to either the Kedzie or Niles Property
or reimbursement from Gambino’s estate.
8
Gambino for the outstanding moneys due. In June 2002, Gambino hired Jeffrey Pritikin,
who testified in plaintiffs’ case-in-chief. Pritikin testified he was an accountant and an
“enrolled agent” licensed to represent taxpayers before the IRS. He testified that one can
become an “enrolled agent” by working for the IRS for five years, and he had worked for
the IRS for seven years. He is not an attorney and not a certified public accountant.
Pritikin testified that Gambino told him that he intended to borrow money by
using the subject properties as security; in September 2002, Gambino approached his
nephew Sal, who “had contacts” in the mortgage industry. Pritikin spoke with Sal, who
claimed he was able to arrange a loan for Gambino and provided Pritikin with a
commitment letter to present to the IRS to “stall” any seizure of Gambino’s or United’s
assets. Pritikin submitted a form to the IRS which contained a description of the subject
properties and their corresponding values, which were less than the values of what the
subject properties were appraised for.
Six transactions, two as to each of the subject properties, form the basis of
plaintiffs’ complaint to quiet title and for damages for slander of title. The testimony at
trial concerning the transactions, and the circumstances surrounding them, indicate the
following. The witnesses whose testimony provides the basis for the following synopsis
were called as witnesses in plaintiffs’ case-in-chief, and they testified without objection
under the Dead-Man’s Act (735 ILCS 5/8-201 (West 2006)), as did Pritikin.
Sal sought a collateral-based lender for the Niles Property in the summer of 2002.
He met with Wolf and explained what he was looking for. Wolf spoke with his associate,
Reuben Zippershtein (since deceased), a “hard money” lender, who made a loan on the
property. Sal testified that Zippershtein agreed to loan Gambino $200,000 to be repaid in
9
one year, and that Zippershtein advised Gambino to direct North Star to convey legal title
to Gambino because a loan could not be procured if legal title was held in trust.
Maritza Castillo, a senior trust officer for North Star, testified that Gambino
executed three written directions to convey legal title to Gambino from the land trusts.
He told her that he was going to refinance the properties and required legal title conveyed
to him personally.
Koonce testified that in October 2002, at Sal’s request, he began to give money to
Sal and Enzo for what he believed were loans to Gambino. Koonce testified that he
signed numerous checks payable to Sal and Enzo and gave them to Sal frequently over a
period of about three years totaling of $157,300.
Sal testified that he arranged for an appraisal of the Niles Property, for which he
and Enzo both testified Enzo paid the appraiser $5,000. Gambino accompanied the
appraiser through the property during the appraisal. The property was appraised at
$550,000, and the appraisal report was delivered to Zippershtein’s office. Sal testified
that he obtained an estimate of redemption for the past-due real estate taxes owed on the
Niles Property and forwarded copies to Zippershtein, Gambino, and Koonce. Real estate
taxes had not been paid since 1999 and the property had been sold to a tax buyer.
Stephen Fritzshall, Zippershtein’s attorney, testified that Zippershtein telephoned
him to drop everything to prepare the legal documents to “save Gambino’s business and
property.” Koonce faxed Fritzshall wire instructions and provided a copy of the title
commitment issued by Title America.
The first closing related to the Niles Property occurred on December 20, 2002.
Sal testified that he obtained the closing documents from Koonce and Fritzshall, the
10
trustee’s deed conveying title to Gambino and other documents from Gambino, “got the
transfer tax exemption stamp in Niles, and went to Zippershtein’s office for the checks
and a conference call with Koonce.” Fritzshall, Zippershtein, Sal, and Wolf were
present, with Koonce representing the title company and assisting by telephone. Koonce
transmitted to Fritzshall an insurance binder and a signed Housing and Urban
Development (HUD) settlement statement signed by Koonce and purportedly signed by
Gambino.
Koonce testified that he made disbursements on behalf of Title America pursuant
to Gambino’s purported letter of direction, which was delivered by Sal. Disbursements
were made to the following:
Stephen Wolf $5,250 (commitment fees)
Adam Wolf $4,000 (commitment fees)
Zippershtein $15,750 (commitment fees)
December Interest $3,000 (on Zippershtein mortgage)
Fritzshall $1,500 (attorney fees)
Mortgage Escrow $33,000 (11 months of payments on mortgage)
Sal $53,141.91 (for back taxes)
Enzo $5,000 (appraisal fee)
Lawyers Title $282 (title policy, etc.)
Koonce, Title America $1490 (closing fees)
Gambino $52,586.09
Sal $25,000 (Sal testified that the moneys went to
Gambino)
----------------------------------------------------------
$200,000 Total
Sal testified that he obtained a cashier’s check at Harris Bank for the property
taxes and cashed the check payable to him, paid the outstanding real estate taxes, drove
to Gambino’s office in Niles and gave him copies of the tax paid receipts and of the title
company checks, and $25,000 in cash and cashier’s checks (Sal could not recall what
portion of the $25,000 was in currency or cashier’s checks). Sal obtained the deed at
11
Koonce’s office on December 26, 2002, and had it recorded at the Cook County recorder
of deed’s office in Markham, Illinois.
Within a month of the first transaction concerning the Niles Property, Sal
contacted investors, including Wolf, as funding sources for a loan on the Kedzie
Property. Wolf testified that he was not interested in lending money on the Kedzie
Property but that he telephoned an investor David Azran and asked Azran if he wanted to
make a loan. Azran agreed to do so through his company, 21st Century Financial
(Century). Sal testified that he was introduced to Stephen Richek, Azran’s attorney.
Century purportedly loaned Gambino $200,000, through a sale and lease back of
the Kedzie Property, which was to include a purchase option to Gambino. Century was
to hold title for a year, receive $3,000 per month pursuant to the purported lease,
maintain a reserve for interest, taxes, and insurance and funds to cover all the costs of the
loan and the fees involved, and, if Gambino did not pay off the loan in a year, keep title.
Richek prepared the legal documentation for the transaction. Marc Smith was
also involved as attorney for the Wolfs in the transaction, and prepared some of the
documentation. Estimates of redemption for the outstanding Kedzie Property real estate
taxes were obtained by Sal.
The closing took place on January 17, 2003. Sal delivered what purported to be a
trustee’s deed for the Kedzie Property conveying title to Gambino. Sal testified that he
picked up closing documents from Koonce and the deed and other documents from
Gambino, and delivered them to Richek at Zippershtein’s office. He testified that he
obtained a $200,000 check from Century at Zippershtien’s office and delivered it to
12
Koonce. Azran was not at the closing. The lease purporting to have Gambino’s
signature was signed by Richek on behalf of the lessor.
The following disbursements were made at the January 17, 2003, closing relating
to the Kedzie Property:
Century $9,250 (January rent ($3,000) & loan fee)
Steven Wolf $6,250 (commitment fee)
Adam Wolf $6,250 (loan fee)
Harris Bank $30,274.83 (back taxes)
Marc Smith $2,500 (attorney fees)
Zippershtein $6,250 (commitment fee)
Richek $500 (attorney fees)
Chesterfield Insurance $3,368 (insurance)
Lawyers Title $2,134
Title America $1,190 (title insurance)
Lease Payment $3,000 (February lease payment)
Norman Trust Account $25,000 (the disbursement sheet notes that this
amount was to “pay off investor.” At trial,
Sal admitted that this amount was used to
fund a settlement of a lawsuit against him
for fraud)
Casale, Woodward & Bulls $5,372.72 (attorney fees)
Lease Escrow $30,000 (10 months of lease payments)
Water Certificate Escrow $8,000
James Halle $16,000 (cash purportedly given to Gambino)
Mark Guillermo $9,660.45 (cash purportedly given to Gambino)
Papiese $25,000 (cash purportedly given to Gambino)
Gambino $10,000 (cash Gambino acknowledged he received)
----------------------------------------------------------
$200,000 Total
The deed was recorded on January 23, 2003.
In January 2003, after the two aforementioned closings had already occurred,
Gambino returned the three North Star trustee’s deeds he had obtained in December 2002
to North Star, which cancelled the deeds.
13
The first closing related to the Lavernge Property occurred on April 30, 2003, at
Lawyers Title. A mortgage lien in favor of LaSalle Bank existed on the Lavergne
Property.
Prior to closing, Koonce applied for and obtained a $400,000 loan from Equity
Plus. Equity Plus later assigned its mortgage to Countrywide Mortgage. Sal delivered a
trustee’s deed to Lawyers Title dated April 28, 2003, purporting to convey legal title on
the Lavergne Property from North Star as trustee to Koonce. Koonce transferred the
assignment of rents from the leases on the four Lavergne Property apartments on May 1,
2003, to Countrywide.
The following disbursements were made on the refinancing:
LaSalle Bank $219,551.03 (mortgage loan payoff)
Equity Plus $1,093.11 (loan fees)
Boulevard $850 (loan application and processing fees)
Lawyers Title $930 (closing and underwriting fees)
Recording Fees $114
Chesterfield Insurance $3,628 (insurance premium)
Koonce $32,926.71 (payment escrow for mortgage payments for
one year)
SBC Ameritech $4,470 (for Gambino’s past due account)
Equity Plus $3,337.15 (loan fees)
Countrywide Funding $3,100 (loan fees)
Harris Bank $10,000 (cash purportedly given to Gambino)
Enzo $10,000 (cash purportedly given to Gambino)
Enzo $110,000 (wired funds purportedly given to Gambino)
--------------------------------------------------------
$400,000 Total
A second closing concerning the Lavergne Property occurred on December 17,
2003, when Koonce refinanced the property for just over $400,000 from Washington
Mutual. Koonce applied for the loan as borrower and quitclaimed title to the Lavergne
Property to his mortgage company, Boulevard, on the day of closing.
14
At closing, the balance of the Countrywide loan, $399,896.60, was paid. Overdue
real estate taxes, in the amount of $2,487.83, were also paid. Settlement charges,
including loan fees, interest, title charges, and recording fees, were paid in the amount of
$3,222.05.
A second closing also occurred when the Kedzie Property was refinanced in
December 2003. Century had not been paid on its mortgage for the loan it made on the
Kedzie Property. In December 2003, Sal met with Wolf and told him that Century was
going to take title to the Kedzie Property, and asked if Wolf would provide a loan to
prevent its loss. Wolf testified that he met with Sal and Gambino, and that during that
meeting Gambino told him that Sal was authorized to act on his behalf with regard to any
loan secured by the Kedzie Property. Wolf made the loan through his company, WW
Funding.
The transaction was structured so that the Century loan would be repaid and the
property would be conveyed to WW Funding as collateral for the loan. WW Funding
borrowed $350,000 from Plaza Bank, took title to the property, paid the Century
mortgage, and granted an option to purchase the property to Koonce. The option
provided that if the loan from Plaza was paid within a year, WW Funding would convey
title to Koonce. Sal testified that he received a document prepared by Richek or Marc
Smith assigning the purchase option, under the lease of the Kedzie Property from
Century to Gambino (as noted, the first transaction involving the Kedzie Property was
structured as a “sale/leaseback”), to WW Funding. Sal testified that he obtained
Gambino’s signature on that document and returned the executed assignment to either
Richek or Smith.
15
The following disbursements were made on this refinancing:
Tax Escrow $1,988.14 (for payment of future real estate taxes)
Plaza Bank $5,250 (loan fees)
Plaza Bank $200 (loan document preparation fees)
Flood Certificate $15
Tax Service Fee $50
Century $218,008.49 (mortgage loan payoff)
Marc Smith $42,000 (escrow for monthly rent payments under
agreement granting Koonce purchase
option)
WW Funding $33,738.74 (“cash to borrower”)
WW Funding $25,800 (commitment fee & $800 insurance
payment)
Lawyers Title $2,380 (recording fees, tax transfer stamps)
Title America $2,511.50 (settlement & title insurance)
Cook County Collector $17,808.13 (back real estate taxes)
Water Certificate $250
---------------------------------------------------------------
$350,000 Total
A second closing related to the Niles Property for refinancing occurred in June
2004. The December 2002 Zippershtein loan had not been paid. Fritzshall sent a letter to
Gambino in December 2003, demanding payment. On January 16, 2004, Gambino sent a
letter to Fritzshall, denying the existence of the loan. Zippershtein filed a mortgage
foreclosure action and later voluntarily dismissed the case. Link testified that in 2004,
Gambino told him that the foreclosure action filed by Zippershtein was being dismissed
because “somebody had paid off the loan.” An agreed order of dismissal entered in that
action stated that the “debt at issue was paid in full.”
Koonce testified that Enzo, who had planned on acquiring Gambino’s business
and the buildings housing the business, desired an option to purchase the business and
property. The transaction was structured as a refinance, with WW Funding borrowing
$445,000, to pay off the Zippershtein mortgage, and providing Koonce with an option to
16
purchase the property for $230,000. Koonce testified that the option was actually for
Gambino’s benefit, because Gambino had financial issues and did not have enough credit
to structure a deal. Koonce was creditworthy and would be able to secure financing to
“save” the property.
An agreement purportedly signed by Gambino allowed WW Funding to acquire
title to the Niles Property and grant an option to Koonce to purchase the property for
$230,000, the amount necessary to pay off the Zippershtein loan. Sal testified that he
obtained Gambino’s signature on the agreement, and also had him sign a warranty deed
to WW Funding that he had notarized. Sal further testified that Gambino signed a power
of attorney authorizing Sal to sign any documents necessary to complete the transaction.
The closing occurred at Attorneys Title. Sal signed documents on behalf of
Gambino, including the HUD statement. WW Funding borrowed $445,000 from Plaza
Bank, took title to the property, and paid off the Zippershtein mortgage.
The following disbursements were made at closing:
Zippershtein $231,680.08 (mortgage loan payoff)
Pullman Bank $6,675 (commitment fee)
Plaza Bank $830 (closing fees)
Plaza Bank $45,000 (underground tank removal escrow)
Real Estate Capital Corp. $6,675 (commitment fee (Adam Wolf’s brokerage
firm))
County Taxes $7,535.88 (real estate taxes)
Attorney Title $2,636.50 (state & county stamps, title insurance, etc.)
Recording Fees $82
Courier $30
Marc Smith $7,500 (attorney fees)
Water Certificate $1,184.16
Balance to WW Funding $135,171.38
------------------------------------------------------------
$445,000 Total
Gambino received nothing.
17
In July 2004, after the claimed refinancing of the Niles Property, Gambino
refused to allow workers to remove the underground tanks. In the fall of 2004, Enzo, Sal,
and Gambino met with Gambino’s first cousin Thomas Gambino (Thomas), who also is
Sal and Enzo’s uncle, in an attempt to resolve some of the problems they were having.
Thomas testified that at the meeting, Gambino confirmed that he had discussed selling
the subject properties with Sal and Enzo, and had agreed to let Sal sell one of his
properties, and if that worked out to proceed with the others, and talked with Enzo about
purchasing United.
At the meeting, Thomas testified that Gambino said that he wanted his properties
back. Sal said he could not make that happen at that time; the deal had to be completed
or Gambino would lose everything.
In December 2004, Gambino executed a letter to Enzo and Sal “to stop all activity
relating to the pending business transaction involving the businesses and properties.”
When Enzo was cleaning up the Kedzie Property in February 2005, Gambino called the
police and Enzo was charged with criminal trespass. Enzo was found not guilty after a
bench trial. In March 2005, Gambino and North Star filed this action.
3. Trial
The following testimony was presented at trial.
a. Plaintiffs’ Witnesses
Gambino’s widow, Catherine, was called as a witness at trial. She testified that
she was married to Gambino on November 15, 1952, and that the two remained married
until Gambino’s death in 2006. After serving in the military for approximately 10 years,
18
Gambino started a transmission repair business (United) in the 1960s at the Kedzie
Property.
Catherine testified that she was familiar with Gambino’s signature. She identified
plaintiff’s exhibit No. 44, which contained a series of handwriting samples, marked K1
through K36, which she identified as her husband’s signature. She then reviewed
plaintiff’s exhibits Nos. 5 through 43, which consisted of legal documents purportedly
signed by Gambino concerning the subject properties. She testified that the signatures
contained on the documents were not Gambino’s signatures.
On cross-examination, Catherine testified without objection that she was aware
that Gambino spoke to Sal and Enzo regarding business matters, but did not know the
details of those conversations. She identified her signature as well as Gambino’s
signature on a mortgage loan commitment dated November 29, 2002, signed by Sal on
behalf of Boulevard relating to the procurement of a mortgage on her residence.
Catherine testified that Gambino was attempting to obtain loans due to financial
difficulties he was experiencing, including back taxes owed to the IRS.
Maritza Castillo testified at trial. She testified that she was employed by North
Star as trust officer for six years prior to the trial in this matter. She testified that
Gambino was the sole beneficiary of the land trusts held by North Star under trust
agreement Nos. 13534, 23985, and 23994, until the time of his death. Castillo identifed
three trustee’s deeds purportedly executed by her and Phyllis Robinson, vice president of
North Star. She testified that the signatures bearing her name and Robinson’s were not
genuine, and that the trustee’s deeds were not authentic. She also identified a trust
agreement purportedly signed by her as trust officer, dated April 9, 1962, pertaining to
19
the Lavergne Property, which showed Koonce as the sole beneficiary of the land trust.
She testified that the land trust agreement was not authentic and that the signature on the
trust agreement bearing her name was not genuine.
On cross-examination, Castillo identified three canceled trustee’s deeds executed
at Gambino’s direction in December 2002 regarding the subject properties. Prior to their
cancellation, the trustee’s deeds conveyed legal title from North Star to Gambino.
Castillo testified without objection that Gambino directed North Star to convey him legal
title because he planned to refinance the subject properties, but he returned the
documents to North Star a few weeks later and directed North Star to cancel them. On
further cross-examination, Castillo testified that there was no way that one could
determine that the trustee’s deeds from North Star were forged by simply viewing the
deeds.
Phyllis Robinson also testified at trial. She was retired at the time of trial, but
previously was vice president of North Star. Her testimony echoed that of Castillo; she
identifed three trustee’s deeds purportedly executed by her and Castillo. She testified
that the signatures bearing her name and Castillo’s name were not genuine.
Pritikin was then called as a witness and testified that he was an accountant
licensed to practice before the IRS in representing the interests of taxpayers as an
“enrolled agent.” Pritikin testified that Gambino retained him in June 2002 to represent
him with regard to “payroll tax problems.” He testified that Gambino and United owed
the IRS between $125,000 and $150,000. Pritikin told Gambino that the IRS could shut
United down if the tax liability was not settled. Pritikin testified that Gambino told him
20
that he was going to borrow money against some of his properties with the assistance of
Sal so that he could settle United’s liability with the IRS.
Pritikin testified that Gambino directed him to speak with Sal in November 2002,
and Sal told him he was employed by Boulevard and could obtain loans on Gambino’s
properties. Sal sent Pritikin via facsimile a loan commitment from Boulevard showing
Gambino approved for a loan signed by Sal.
On August 7, 2003, Pritikin spoke with Sal requesting documentation regarding a
refinance or sale of Gambino’s properties because the IRS was threatening to seize
United. Pritikin testified that he never received any documentation from Sal regarding a
refinance or sale of the subject properties.
Stephen Link, an attorney since 1995, was called as a witness. He testified that he
was Gambino’s counsel from 2002 until shortly after the instant case was filed, when he
withdrew. Link testified that he was never made aware that any loans were procured on
the subject properties. Link filed an appearance in the Zippershtein foreclosure suit, and
when the suit was dismissed, Gambino was “surprised” and told Link that “someone had
paid off the mortgage.”
Sal was then called by plaintiffs as an adverse witness. Sal testified that at the
time of trial, he was unemployed. He testified that he never held employment where he
earned a salary or wage, and had never received unemployment benefits. He testified
that he had been living on moneys borrowed or gifted from family members. Sal
testified that he had not held a bank account for approximately 12 to 15 years, and that he
conducted all his financial transactions in cash and on rare occasions by cashier’s check.
Sal identified the loan commitment sent to Pritikin by facsimile transmission, on
21
Boulevard letterhead, and identified his signature on the document above the signature
line as the “authorized signature.”
Sal testified that had known Koonce since the fall of 2001 and that Koonce was
an attorney and owned both Boulevard and Title America. Sal testified that he never
represented to anyone that he worked for Boulevard. Sal testified that he and Enzo “had
a couple of business transactions going on” with Koonce regarding Gambino. He
testified that Koonce lent money to both him and Enzo and they gave the funds totalling
$180,000 to Gambino.
Sal testified that his role in the transactions described in the plaintiffs’ complaint
was limited, but admitted he attended at least five of the closings at issue. He was shown
all the documents that plaintiffs claimed had forgeries of Gambino’s signatures; of the
documents he recognized, he claimed that all of them were signed by Gambino in his
presence. Sal identified the notary of Gambino’s signature on all of the contested
documents as that of Regina Brophy, who worked as a legal secretary for the Cook
County public defender’s office in Markham, Illinois, where Sal’s uncle, Thomas
Gambino, was employed as a supervisor of criminal investigations. Sal testified that it
was his practice to have Gambino sign the documents at United’s Niles location, drive
the documents to Brophy in Markham, together with a copy of Gambino’s driver’s
license, and present it to her to be notarized.
Sal testified that he never kept any money for his participation in the various
transactions involving the subject properties. When Sal was first approached by
Gambino in the fall of 2002 about refinancing his properties, Gambino signed various
authorizations allowing Sal to obtain Gambino’s credit report. He also received a list of
22
Gambino’s properties, showing their value and mortgage indebtedness. The listing
showed that the Niles Property had an estimated value of $550,000 with no mortgage
debt, the Kedzie property had an estimated value of $1.2 million with no mortgage debt,
and the Lavergne Property had an estimated value of $450,000 with a mortgage debt of
$223,000.
Sal testified that he and Wolf were present at the December 20, 2002, closing.
Sal testified that Gambino had signed all the relevant legal documents prior to the
closing. Sal testified that he prepared the accounting of the funds distributed at the
December 20, 2002, closing. He testified that the accounting showed that Koonce earned
an attorney’s fee of $750, Enzo received a check for $5,000 for the appraisal, and that he
received a check for $25,000 which he converted to cash and gave to Gambino.
Sal testified that he made loans to Gambino, totaling $770,000, but could not
provide an accounting. Sal testified that Gambino owed him a balance between $150,000
and $200,000.
In early 2005, Sal worked with WW Funding, which held title the Kedzie
Property and had the locks changed. Sal also testified that he made repairs to the
Lavergne Property after Boulevard had acquired title to the property.
Sal deposited a cashier’s check payable to Gambino for $42,586.09 into one of
Gambino’s accounts concerning the Niles Property. Sal identified a check that Gambino
paid to either Sal or Enzo for unpaid property taxes in the amount of $24,067.48, which
showed up in a deposit into Enzo’s account of $24,067.48 on December 30, 2002, and
showed no withdrawals on that date.
23
Sal testified that Gambino was not at the Kedzie closing but had signed all the
closing documents in Sal’s presence, and Sal then delivered the documents to the closing.
Sal was shown an entry on the disbursement sheet of a $25,000 payment made to
the “Norman Trust Account” to “payoff investor.” At first, Sal testified that the Norman
Trust payment constituted repayment of an investor on behalf of Gambino, but then
admitted this payment was made to fund a settlement of a suit against him for fraud.
The parties stipulated that a $25,000 cashier’s check drawn on Title America’s
account at Harris Bank payable to Enzo’s girlfriend Kathleen Papiese was funds
deposited into Papiese’s bank account and that Enzo was a signatory to that account.
Sal testified that a payment of fees to a law firm Casale, Woodward & Bulls for
$5,372.72 was not for Gambino’s benefit, although it originated from a mortgage placed
on the Kedzie Property.
Sal testified that he prepared the April 30, 2003, disbursements on the Lavergne
Property, claiming that $130,000 in cash was given to Gambino.
Sal admitted that no funds were given to Gambino from the Kedzie Property
closing. Checks were written to Marc Smith, which were ultimately disbursed to WW
Funding. Plaza Bank provided the financing for this transaction. Sal testified that he
also procured Gambino’s signature on an assignment of an option that allowed WW
Funding to acquire the Kedzie Property by paying off the Century loan.
Sal claimed Gambino had given him a power of attorney for the Niles Property.
Sal signed the HUD statement, in which $135,171.38 was disbursed to WW Funding. No
funds were written to Gambino. In this transaction, WW Funding purportedly purchased
24
the Niles Property from Gambino for $230,000 based on a contract on which Sal claimed
he had procured Gambino’s signature.
Regina Brophy, a 25-year legal secretary for the office of the Cook County public
defender in Markham, testified at trial. She is a notary public who worked with Thomas
Gambino. She testified she notarized signatures for Sal without ever seeing the people
who signed the documents or knowing whether they were genuine. She testified, “I just
trusted him.”
Thomas Gambino testified that he was a supervisor of criminal investigations in
the public defender’s Markham office. Sal and Enzo are his nephews. He testified that
he attended a meeting in late 2004 with Gambino, Enzo and Sal, at Enzo’s request, to
help Enzo “straighten out” some problems he and Sal were having with Gambino. He
testified that his role at this meeting was as a mediator, because whatever business deals
Sal and Enzo had with Gambino were nearing a “complete breakdown.”
Thomas testified that Gambino explained he had engaged in conversations with
Sal and Enzo about selling his properties and possibly retiring when Gambino received
notification from his bank that one of his properties had been sold without his
knowledge, and he ordered them to stop doing anything further. Gambino said that he
gave Sal and Enzo permission to sell one of his properties, but Thomas did not identify
which property Gambino was referring to.
Sal said Gambino “was confused and did not quite understand how the deal was
put together.” When asked how it was that Gambino had lost control of his properties,
Sal said “that it had to be part of the deal because [the investors had] to have more
assurance and *** more property,” in order for the deal to proceed. Sal said that he had
25
given Gambino $60,000 in “good faith” money and that more moneys would be paid
Gambino at “the close of the deal.”
Gambino requested his properties back and Sal told Gambino the deals were
“nonreversible.” Sal said the investors “were people that you don’t fool around with
once [you] make a deal.”
Steven Fritzshall, a licensed attorney since 1981, was then called as a witness. He
represented Zippershtein in connection with the mortgage on the Niles Property. In
connection with this transaction he testified that Koonce claimed that he was Gambino’s
attorney.
In December 2003, Fritzshall wrote to Gambino regarding a default on the
Zippershtein mortgage. Gambino responded, “In response to your letter, I have told Mr.
Zippershtein several times the loan you are referring to was not made by me. I did not
receive any loan from Mr. Zippershtein. The loans you are referring to are not valid.”
Barry Mullin testified that in 2003, he was employed as a personal banker for
LaSalle Bank/ABN Amro, which had held a mortgage on the Lavergne Property.
Gambino asked him to find out how his loan had been paid. Mullin called Koonce, who
“informed [Mullin] he had paid off the mortgage because [the property] had been deeded
to him.”
David Azran testified that he was the sole shareholder of Century, which was the
lender involved in the first transaction related to the Kedzie Property. He made the loan
as a result of a call he received from Zippershtein and Wolf. They told him the
transaction was a “sale/leaseback” of $200,000, with interest at 18% per year. The
transaction was structured so that if the borrower did not pay the loan within a year,
26
Century would have the right to retain title to the property given to it as security for the
debt. He testified that, Azran, Wolf, and Zippershtein agreed to share in ownership if the
purchase option was never exercised.
Phillip Cali testified that he was an independent agent for Service Insurance
Agents and was Gambino’s insurance agent. Cali testified that the certificate of
insurance concerning the Niles Property was not authentic and did not bear his signature.
Rogelio Llamedo testified that he owned, developed and managed property in
Chicago. He met Gambino in early 2006. Llamedo testified, over an objection under the
Dead-Man’s Act (735 ILCS 5/8-201 (West 2006)), that on January 12, 2006, he entered
into a contract to purchase the Kedzie Property from Gambino for $1.4 million. On that
date, Llamedo also entered into a contract to purchase the house adjacent to the Kedzie
Property. It was his intent to develop the properties. He testified that he had the
financial ability to close on the contract to purchase the Kedzie Property in January 2006
and retained that ability at the time of trial.
Diane Marsh, a forensic document examiner, was qualified as an expert
handwriting witness. She compared Gambino’s known handwriting samples with the
questioned documents at issue. Marsh testified that experts in her field utilize a hierarchy
of conclusions, ranging from the most certain to the least certain. The highest degree of
confidence is called an identification, which means that the forensic document examiner
has no reservations concerning the authenticity of the signature. In expressing her
opinion regarding the authenticity of the suspect signatures, Marsh utilized the highest
level of certainty.
27
Marsh described at length the procedures she followed in reaching her conclusion
and the basis for the three separate reports she issued in the case. Marsh’s examination
involved the detection of possible autoforgery, which are instances “where somebody
tries to disguise their own signature so they can deny it later.” Simulations, on the other
hand, are signatures of a third party meant to appear authentic. She testified that it is
extremely difficult to create a series of autoforgeries that could escape detection. Her
conclusion was, “Mr. Gambino did not disguise his own signatures,” and the 39
signatures contained on plaintiffs’ exhibits Nos. 5 through 43 were not Gambino’s. It
was also her opinion that all but one of the questioned documents were signed by the
same person, and that the one questioned document was also not signed by Gambino.
On cross-examination Marsh testified that the handwriting samples that she
considered in reaching her opinion were all tendered by Gambino, and that she did not
use the retainer check for her services as one of the samples in reaching her opinion.
Dennis Koonce, a licensed attorney since 1986, was called as an adverse witness.
Koonce is the sole shareholder of Title America and Boulevard. Title America acted as
the “policy issuing agent” for five of the six transactions. The one exception was the
second transaction related to the Niles Property.
Koonce was shown the loan application in connection with the first Lavergne
closing, dated April 30, 2003. Koonce signed it and certified the accuracy of the
information; in it, he listed the Lavergne Property as one of his own properties, claiming
he had acquired it in 1995. The application for the loan was submitted as a refinance. He
was then shown a purported trust agreement between Koonce and North Star as trust No.
13534, dated April 9, 1962, signed by Koonce. Koonce was shown copies of leases
28
pertaining to the Lavergne Property when he was the lessor, although the dates of the
leases preceded the first transaction concerning the Lavergne Property. Koonce
identified his signature on the leases.
Koonce identified the Real Estate Settlement Procedures Act (RESPA) form from
the closing concerning the refinancing transaction of the Lavergne Property on December
17, 2003, which he signed. He identified a similar set of leases that had been submitted
to Washington Mutual regarding the Lavergne Property, and a mortgage loan application
signed by him for $800,000 regarding the Niles and Kedzie Properties. He testified that,
in the schedule listing real estate owned, he had listed the Niles, Kedzie and Lavergne
Properties as his own.
Koonce identified his agreement with WW Funding to acquire the Niles and
Kedzie Properties granting him an option to acquire the properties after WW Funding
had paid off Century and Zippershtein. Koonce testified that he had entered into this
series of agreements for the benefit of Gambino. He claimed “the money that I advanced
to [Gambino] was going to be lost and these properties were not saved so in an effort to
save them yes I did and [Gambino] did nothing to preserve that.”
Enzo was then called as an adverse witness. Enzo was asked about the funds
shown as being disbursed to him and to his girlfriend from various transactions, and he
admitted receiving them.
Stephen Wolf was then called as an adverse witness. He had been a real estate
investor for 40 years. Wolf said he never paid Gambino anything when he acquired the
Kedzie Property from Century or when he acquired the Niles Property by paying off the
Zippershtein loan. Wolf estimated the value of the Niles Property as between $550,000
29
and $700,000. He testified that Gambino’s name appeared nowhere in connection with
the various option agreements granted to Koonce.
Wolf testified he met with Gambino prior to the refinancing transaction on the
Kedzie Property, prior to granting Koonce an option. He said that during this meeting,
no terms were discussed, but he had requested that, if a problem arose, Gambino should
contact him. Wolf testified that Gambino was not accompanied by an attorney. Wolf
identified an outline of the agreement WW Funding was to have with Koonce regarding
the Kedzie Property. Wolf did not have Gambino sign it to indicate his assent. Wolf
admitted that he never attempted to communicate with Gambino when problems arose
concerning the Koonce option.
Joseph M. Gambino was the independent administrator of his father’s estate. He
had worked at the transmission shop his father operated at the Kedzie Property and was
familiar with the manner in which Gambino carried on his business. He was familiar
with Gambino’s signature and had observed him sign documents many times. He was
shown the signatures on plaintiffs’ exhibits Nos. 5 through 43, and he testified that the
signatures were not his father’s.
b. Defense Witnesses
Enzo testified that he met with Gambino in 2002. He testified, over an objection
under the Dead-Man’s Act, that Gambino agreed to the purchase price of $2.8 million for
the subject properties and the house adjacent to the Kedzie Property, which Gambino also
owned. To raise the money, Sal introduced Enzo to Koonce, to help him obtain
financing. Gambino told Enzo he did not have books that would substantiate his business
profit and loss.
30
Plaintiffs’ exhibit No. 151 was a listing of checks Enzo received, which he
claimed he had cashed and the proceeds of which he had given to Gambino, either in the
form of currency or cashier’s checks. Enzo never obtained a receipt.
Enzo thought he was going to be taking over Gambino’s business in January of
2003. However, he testified that Gambino decided not to allow him to assume control.
Inspections were performed on the Kedzie Property and Gambino allowed the inspection.
Enzo testified that the $25,000 received by Enzo’s girlfriend was later converted to cash,
cashier’s checks or money orders and delivered to Gambino.
Regarding the wire transfer of $110,000 to his account from the first closing
concerning the Lavergne Property, Enzo testified he delivered these funds to Gambino in
cash.
After Enzo met with Gambino and Thomas Gambino in late 2004, he went to the
Kedzie Property to “clean-up.” At the same time, he also applied for a business license
and had several meetings with Gambino. In February 2005, Gambino “had [him]
arrested for trespassing.” Enzo made arrangements to move underground storage tanks at
the Niles Property in July 2004. Enzo identified various permits he obtained from
governmental agencies regarding work to be performed at the Niles and Kedzie
Properties.
On cross-examination, Enzo was unable to recall any document signed by
Gambino memorializing any agreement between Gambino and Enzo or Sal with regard to
the subject properties. Enzo admitted receiving a letter from Gambino dated December
16, 2004, to cease any activity with regard to the subject properties. In February 2005,
31
Enzo had the locks changed at the Kedzie Property at the instruction of WW Funding.
Enzo did not believe that Gambino had any further interest in the building at the time.
Sal also testified in defendants’ case-in-chief and identified a credit report that he
had obtained concerning Gambino. Based upon that credit report, Sal made inquiries to
Adam Wolf to find a collateral-based lender, and Adam recommended his father. Sal
met with Wolf, who told him that Zippershtein would be interested in making such a
loan. Sal testified that he was present in December 2003 when Wolf met with Gambino
and when Gambino authorized Sal to act on his behalf.
Koonce also testified in defendants’ case-in-chief and testified that he never told
anyone he represented Gambino. He testified that he had no knowledge that the trustee’s
deeds may have been forged. Koonce identified the back real estate taxes owed on
several of the subject properties, insurance certificates regarding the properties and
various payments he made regarding the Lavergne Property.
The trial court ruled that although Gambino had died during the course of his
discovery deposition and had not signed the transcript of his deposition or been afforded
an opportunity to examine the transcript to make corrections, sections of his deposition
would be admitted into evidence, not as binding judicial admissions, but as evidentiary
admissions by a party opponent. These admissions were then read into the record.
At his discovery deposition, Gambino admitted to having North Star execute
trustee’s deeds conveying legal title to him, but that he later had those deeds cancelled.
Gambino admitted receiving two checks for $10,000 each on January 8, 2003, and
January 28, 2003, from Sal. He also admitted receiving a check for $42,586.09, but
claimed that Sal requested a check from him for $24,067.48 in return. He also admitted
32
receiving cash from Sal or Enzo on two occasions; one for $5,000, and another for
$2,000. Further, he admitted to accompanying the appraiser through the Niles Property
during the late 2002 appraisal.
Stephen Wolf testified in defendants’ case-in-chief that he became involved in the
transactions at issue through his son, Adam. At that time, he shared an office with
Zippershtein. He testified that he had a meeting with Gambino and Zippershtein
immediately before the first transaction concerning the Niles Property and received a fee,
and then another fee concerning the Kedzie Property. He never became aware of any
claim that Gambino’s signature was forged.
In December 2003, Sal approached Wolf requesting a loan secured by the Kedzie
Property. Wolf made arrangements with Plaza for funding that transaction, and prior to
closing, met with Gambino. As part of that transaction, an option was given to Koonce
to acquire the property by repaying the interest, fees and principal balance of WW
Funding’s loan. The option was given to Koonce, not Gambino, because Koonce was
creditworthy. Sal told him that Gambino had no problem with the arrangement.
4. The Trial Court’s Findings
The trial court rendered its “Findings of Fact and Judgment after Trial” in a 21-
page written memorandum opinion and order. The trial court found in favor of plaintiffs
on all counts of plaintiffs’ complaint to quiet title and for slander of title.
The trial court found that plaintiffs’ evidence was overwhelming that the
purported trustee’s deeds conveying title to the subject properties were forged, which
evidence included the testimony of Castillo and Robinson that they had not signed the
trustee’s deeds used to effectuate the disputed conveyances, and the testimony of Brophy,
33
who admitted to notarizing the trustee’s deeds, as well as approximately 40 other
documents used to accomplish the disputed conveyances, at the request of Sal without
seeing the signatories or recognizing the signatories’ signatures. The trial court also
found the expert testimony of Marsh “extremely credible, thoroughly articulated, and
well-supported.” The trial court found that defendants offered no evidence to refute this
testimony. Further, the trial court discounted Sal’s testimony, including the portions
related to Gambino signing the disputed documents, finding it to “be zero in all respects.”
Further, the trial court found that by their acts Sal, Enzo, Koonce, Boulevard,
Title America, Wolf, and WW Funding had slandered plaintiffs’ title to the Kedzie and
Niles Properties. With respect to the Lavergne Property, the trial court found that by
their acts Sal, Enzo, Koonce, Boulevard, and Title America had slandered plaintiffs’ title.
In its order, the trial court deferred its findings as to compensatory damages until a later
date and ordered plaintiffs’ attorneys to submit a fee petition. The trial court did assess
punitive damages in the following amounts on November 30, 2007: the trial court
imposed punitive damages against Enzo, Sal, and the Koonce defendants, jointly and
severally, in the amount of $500,000, and against Wolf and WW Funding, jointly and
severally, in the amount of $175,000.
On May 2, 2008, the trial court issued a seven-page memorandum opinion and
order where it awarded compensatory damages to plaintiffs.5 In its memorandum opinion
and order, the trial court described plaintiffs’ petition for attorney fees. The trial court
indicated that the suit was brought when Gambino was still alive. Link was the attorney
5
The trial court’s May 2, 2008, order also denied two Illinois Supreme Court Rule
137 petitions for sanctions. 155 Ill. 2d R. 137.
34
engaged for the lawsuit. He drafted the originally filed complaint and a motion for
temporary restraining order. The fee arrangement between Link and Gambino was set at
an hourly rate of $185. Link submitted a copy of his billings for the period of March 1,
2005, to March 15, 2005, totaling $7,085.
Shortly after the filing of the lawsuit, Gambino engaged additional counsel, Sam
Amirante. On March 22, 2005, Gambino agreed to a $10,000 retainer and a contingency
fee of one-third of any recovery. Link and Amirante withdrew their appearances on
March 31, 2006. Arimante accepted the $10,000 and made no further claim for fees.
On March 31, 2006, Gambino engaged new counsel. New counsel were attorneys
Michael Braun, Sherwin Winer, and Kevin O’Rouke. Initially, all three attorneys billed
monthly at an hourly rate. Within a short time, however, Gambino was unable to keep
current in paying his attorney fees. Counsel were unwilling to continue working on an
hourly basis when their bills were not being paid and would not agree to deferring
payment until the conclusion of the case. It was agreed that while billing would continue
on an hourly basis, all amounts unpaid would be treated under a contingency fee
agreement. Specifically, all unpaid hourly fees would be paid at three times the amount
billed if and when the case reached successful conclusion. Costs were to be treated in the
same manner. The attorneys’ billings were attached to the fee petition. Braun billed at
$205 per hour; Winer at $250 per hour; and O’Rouke at $150 per hour for out-of-court
time and $200 per hour for in-court time. A total of $187,196 in bills was unpaid and
thus subject to the contingency enhancement.
The Koonce defendants and the Wolf defendants both objected to plaintiffs’
petition for attorney fees. Both sets of defendants argued that no Illinois authority
35
allowed the multiplier of three to be applied to the lodestar amount. Further, the Wolf
defendants argued that the petition failed to properly segregate the attorneys’ billings for
plaintiff’s claims to quiet title and plaintiffs’ claims for slander of title. They argued that
only plaintiffs’ attorney fees incurred in quieting title were recoverable.
The trial court first rejected the Wolf defendants’ argument that only plaintiffs’
attorney fees incurred for plaintiffs’ quiet title claims were compensable, finding that
plaintiffs’ claims to quiet title and for slander of title were inextricably linked. The trial
court then addressed the reasonableness of the attorney fees exclusive of the multiplier,
and found that the attorneys’ hourly rates were reasonable. The trial court found all
itemizations sufficiently detailed, noting its own familiarity with the entire context of the
trial court proceedings. The trial court found the time billed for each item appropriate,
recognizing the difficulties presented by the multidefendant, multiproperty case and the
expertise of plaintiffs’ counsel.
Finally, the trial court rejected defendants’ objections to the use of a multiplier of
three times the lodestar, finding that the measure was “imminently reasonable.” The trial
court found that the hourly rates were modest and that the attorneys’ itemized time
appropriate. Further, the trial court found that the fee was proportionate to the value of
the properties at issue, roughly $2.5 million.
Noting that the Wolf defendants had no involvement with respect to the contested
transactions related to the Lavergne Property, the trial court segregated the attorney fees
incurred with respect to the Lavergne Property from the remainder of the petition and
awarded the following accordingly: attorney fees in the form of compensatory damages
in the amount of $595,574 on counts IV and VI of plaintiffs’ complaint, such damages
36
imposed jointly and severally against Sal, Enzo, and the Koonce defendants; attorney
fees in the form of compensatory damages in the amount of $556,485 on counts IV and
VI on plaintiffs’ complaint, such damages imposed jointly and severally against Wolf
and WW Funding; and attorney fees in the form of compensatory damages in the amount
of $595,574 on count II of plaintiffs’ complaint, imposed jointly and severally against
Sal, Enzo, and the Koonce defendants. The court found that plaintiffs were to have only
one recovery of compensatory damages, and the judgments entered were not cumulative.
5. Notices of Appeal
As noted, multiple appeals were taken from the trial court’s November 30, 2007,
and May 2, 2008, orders. The appeals were consolidated on this court’s own motion.
Sal and Enzo filed a timely notice of appeal, but have failed to file a brief with
this court. The Koonce defendants have appealed from both the November 30, 2007, and
May 2, 2008, orders and the judgments entered against them. The Koonce defendants
raise no arguments with regard to the trial court’s finding against them on their
counterclaims, and as a result all arguments concerning their counterclaims are waived.
210 Ill. 2d R. 341(h)(7). Wolf and WW Funding have appealed from both the November
30, 2007, and May 2, 2008, orders and the judgments entered against them. Although
WW Funding filed a notice of appeal from the trial court’s November 30, 2007, order,
where the trial court found against its counterclaim to quiet title to the Kedzie and Niles
properties, WW Funding raises no argument with respect to those findings. Further, as
noted, at oral argument before this court, WW Funding explicitly waived any claims to
quiet title to the Kedzie and Niles Properties. As such, any argument concerning its
counterclaim is waived. 210 Ill. 2d R. 341(h)(7). Plaza Bank has appealed the trial
37
court’s judgment with respect to its finding to quiet title to the Niles Property.
Washington Mutual (Washington Mutual did not file a notice of appeal from the trial
court’s quiet title findings) and Plaza Bank filed a notice of appeal from the trial court’s
denial of their Rule 137 motion for sanctions. Plaintiffs filed a notice of appeal from the
trial court’s denial of their Rule 137 motion for sanctions.
ANALYSIS
On appeal, the defendants, collectively, raise a myriad of arguments with respect
to the trial court’s findings. The Koonce defendants (Koonce, Boulevard, and Title
America) attack the trial court’s findings with respect to plaintiffs’ claims for quiet title
and slander of title, and the trial court’s assessment of damages against them, including
its assessment of compensatory damages for plaintiffs’ attorney fees and its assessment
of punitive damages. The Wolf defendants (Wolf and WW Funding) only raise
arguments with respect to the trial court’s slander of title findings and its assessment of
damages against them, including its assessment of compensatory damages for plaintiffs’
attorney fees and its assessment of punitive damages. Plaza Bank’s arguments on appeal
concern only the trial court’s findings with respect to plaintiffs’ claim to quiet title to the
Niles Property.
1. Standards of Review
A trial court’s decision following a bench trial is reviewed to determine if the
judgment is against the manifest weight of the evidence. Smith, Allen, Mendenhall,
Emons & Selby v. Thomson Corp., 371 Ill. App. 3d 556, 558 (2006). A judgment is not
against the manifest weight of the of the evidence unless the opposite conclusion is
38
clearly evident. Ikari v. Mason Properties, 314 Ill. App. 3d 222, 228 (2000), citing
Jordan v. National Steel Corp., 183 Ill. 2d 448, 456 (1998).
A trial court’s decision awarding attorney fees is reviewed under the abuse of
discretion standard. Mirar Development, Inc. v. Kroner, 308 Ill. App. 3d 483, 485
(1999). “A trial court does not abuse its discretion unless, in view of all the
circumstances, its decision so exceeded the bounds of reason that no person would take
the view adopted by the trial court.” In re Marriage of Demar, 385 Ill. App. 3d 837, 852
(2008).
On appeal from a bench trial, the question of whether punitive damages are
available as a matter of law for a cause of action is reviewed de novo. Franz v. Calaco
Development Corp., 352 Ill. App. 3d 1129, 1138 (2004). The question of whether the
facts prove willfulness or other aggravating factors justifying the imposition of punitive
damages is a factual determination that is reviewed using the manifest-weight standard.
Franz, 352 Ill. App. 3d at 1137-38. The trial court’s decision to award punitive damages
is reviewed for an abuse of discretion. Franz, 352 Ill. App. 3d at 1138.
2. Quiet Title
We begin with the trial court’s findings with respect to plaintiffs’ quiet title
claims. As noted, counts I, III, and V, of plaintiffs’ complaint sought to quiet title to the
subject properties. On November 30, 2007, the trial court found in favor of the plaintiffs
on those counts based on its finding that the evidence at trial showed “overwhelming[ly]”
that the written instruments used to convey title to the subject properties from plaintiffs
were forgeries.
39
An action to quiet title in property is an equitable proceeding in which a party
seeks to remove a cloud on his title to the property. Stahelin v. Forest Preserve District
of Du Page County, 376 Ill. App. 3d 765 (2007). A cloud on title is the semblance of
title, either legal or equitable, appearing in some legal form but which is, in fact,
unfounded or which it would be inequitable to enforce. Lakeview Trust & Savings Bank
v. Estrada, 134 Ill. App. 3d 792, 812 (1985). “Various forms of documents which
appeared valid on their face have been held to constitute clouds on title.” Lakeview Trust
& Savings Bank, 134 Ill. App. 3d at 812, citing Johnston v. Masterson, 397 Ill. 168, 172
(1947) (subsequent deed to second grantee), Johnson v. Riedler, 395 Ill. 412, 417 (1946)
(recorded mortgage), and Oswald v. Newbanks, 336 Ill. 490, 496 (1929) (forged deed).
“ ‘It is a fundamental requirement in an action to quiet title or in an action to
remove a cloud from a title that the plaintiff must recover on the strength of his own title,
although it is not required that a perfect title be established.’ ” Lakeview Trust & Savings
Bank, 134 Ill. App. 3d at 812, quoting Reynolds v. Burns, 20 Ill. 2d 179, 193 (1960).
Thus, a plaintiff cannot claim that there is a cloud on his title, unless he actually has title.
Lakeview Trust & Savings Bank, 134 Ill. App. 3d at 812, citing Ford v. Witwer, 383 Ill.
511, 514 (1943); Klingel v. Kehrer, 81 Ill. App. 3d 431, 439 (1980); Aebischer v. Zobrist,
56 Ill. App. 3d 151, 154 (1977).
“The essential elements of a forgery are (1) a false writing or alteration of some
instrument in writing; (2) the instrument must be apparently capable of defrauding; and
(3) there must be an intent to defraud.” In re Estate of Bontkowski, 337 Ill. App. 3d 72,
76 (2003), citing Haffa v. Haffa, 115 Ill. App. 2d 467 (1969). The validity of signatures
on a deed of conveyance can be overcome only by clear and convincing evidence from
40
disinterested witnesses. Estate of Bontkowski, 337 Ill. App. 3d at 76, citing Witt v.
Panek, 408 Ill. 328 (1951); Resolution Trust Corp. v. Hardisty, 269 Ill. App. 3d 613(1995).
A trial court’s determination as to these matters will not be disturbed unless it is
against the manifest weight of the evidence. Estate of Bontkowski, 337 Ill. App. 3d at 76,
citing Resolution Trust Corp., 269 Ill. App. 3d at 617. A trial court’s finding is against
the manifest weight of the evidence only if the opposite conclusion is clearly evident.
Ikari v. Mason Properties, 314 Ill. App. 3d 222, 228 (2000), citing Jordan v. National
Steel Corp., 183 Ill. 2d 448, 456 (1998).
With regard to the trial court’s findings as to plaintiffs’ claims to quiet title, the
Koonce defendants first argue that the validity of North Star’s title to the subject
properties was never established. They argue that no evidence was presented as to the
title of the subject properties “at any time, before or after the transfers,” and that the trial
court’s quiet title findings should be reversed on this basis alone. This argument is not
persuasive.
First, the Koonce defendants’ counterclaim verified by the sworn affidavit of
Koonce alleged that “North Star *** held title to the [subject] properties in trust, with
Gambino as the beneficiary.” This binding judicial admission removed the question of
the validity of North Star’s title to the subject properties from contention. Winnetka Bank
v. Mandas, 202 Ill. App. 3d 373, 396 (1990). Second, the evidence at trial establishing
the validity of North Star’s title to the subject properties was uncontroverted. Castillo,
North Star’s trust officer, testified that Gambino was the sole beneficiary of three land
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trusts holding legal title to the subject properties under trust agreements Nos. 13534,
23985, and 23994, until the time of his death.
The Koonce defendants then argue that the alleged clouds on title to the subject
properties and the alleged forgery of the trustee’s deeds to the subject properties were
never proven.
A cloud on title is the semblance of title, either legal or equitable, appearing in
some legal form but which is, in fact, unfounded or which it would be inequitable to
enforce. Lakeview Trust & Savings Bank v. Estrada, 134 Ill. App. 3d 792, 812 (1985). It
is undisputed that the questioned trustee’s deeds conveying legal title out of trust were
recorded against the subject properties, along with other legal documents used to convey
title to the subject properties and procure loans using the subject properties as security.
Further, mortgage liens were recorded against all three of the subject properties. The
Koonce defendants argue that the trustee’s deeds conveying title to the subject properties
out of trust were improperly admitted into evidence. However, a review of the record
demonstrates that the trustee’s deeds were admitted into evidence without objection. See
In re Stephen K., 373 Ill. App. 3d 7, 22 (2007) (waiver).
The Koonce defendants then argue that the trial court’s finding that the evidence
that the purported trustee’s deeds conveying legal title to the subject properties, and other
legal documents used in the contested transactions, were forged, was against the manifest
weight of the evidence. Estate of Bontkowski, 337 Ill. App. 3d at 76 (a trial court’s
finding of forgery is reviewed under the manifest-weight standard).
The bank officers whose signatures purportedly appear on the trustee’s deeds
testified that they did not sign the deeds and that the signatures purporting to be theirs
42
were not. The notary whose seal and signature appears on the trustee’s deeds also
testified to notarizing the trustee’s deeds, as well as approximately 40 other legal
documents, each at the request of Sal, without seeing the signatories, knowing the
signatories, or having any familiarity with the signatories’ signatures. The notary further
admitted to notarizing the purported signature of Gambino contained on the deeds to the
Niles and Kedzie Properties conveying title to WW Funding and Century, respectively, at
Sal’s request, without seeing Gambino, knowing his signature, or having any familiarity
with his signature.
Further, Marsh, plaintiffs’ handwriting expert and a disinterested witness, opined
that the signatures contained on a series of contested documents purporting to be that of
Gambino, including the deeds conveying title to the Niles and Kedzie Properties to WW
Funding and Century, were not Gambino’s.
Despite the foregoing, the Koonce defendants argue that the trial court’s finding
as to forgery was against the manifest weight of the evidence because the trial court
failed to make a specific finding of an intent to defraud. Estate of Bontkowski, 337 Ill.
App. 3d at 76. A reviewing court may affirm the trial court’s judgment on any basis
which appears in the record, regardless of the basis relied upon by the circuit court.
Estate of Bontkowski, 337 Ill. App. 3d at 78. “ ‘The real issue on appeal is not the
reasoning of the [trial] court nor the basis for its decree, but whether its decree was
correct.’ ” Estate of Bontkowski, 337 Il. App. 3d at 78, quoting La Salle National Bank v.
International Ltd., 129 Ill. App. 2d 381, 390-91 (1970). Again, a trial court’s findings as
to the elements of forgery, including the determination of an intent to defraud, are
43
reviewed under the manifest-weight standard. Estate of Bontkowski, 337 Ill. App. 3d at
78.
In the present case, there was ample evidence of the Koonce defendants’ intent to
defraud by the use of the forged documents. The Koonce defendants, relying on the
testimony of Sal, argue that Gambino signed the contested documents in Sal’s presence.
First, we note that the trial court found Sal’s credibility to be “zero” in all respects. The
determination of witnesses’ credibility is a matter for the trier of fact and will not be
second-guessed on appeal. Franz, 352 Ill. App. 3d at 1144. Plaintiffs’ expert, who was
not contradicted at trial, opined that Gambino did not sign the contested documents. The
trial court found the contested documents were signed by someone other than Gambino
for the advantage of several defendants in the case at bar, including Sal, which illustrates
an intent to defraud. “Intent to defraud is a question of fact, which may be proved by
circumstantial evidence and inferred from the facts and circumstances surrounding the
transaction.” People v. Aguilar, 366 Ill. App. 3d 341, 344 (2006).
Here, the settlement documents on the subject properties provide direct and
circumstantial evidence of fraud. The Niles Property alone had $25,000 in commitment
fees distributed to the Wolfs and Zippershtien, a mortgage escrow of $33,000 which is
unusual, a $5,000 appraisal fee, and a payment to Sal of $25,000 that is questionable on
its face. The Kedzie settlement disbursements reveal commitment or loan fees of
$18,750, a $25,000 payment to “Norman Trust Account,” and $5,372.72 to a law firm not
involved in the process, and over $50,000 to unknown people (Halle, Guillermo, and
Papiese) and only $10,000 to Gambino, which should have indicated to the Koonce
defendants that an explanation was in order. The disbursements on the Lavergne
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Property were just as bizarre with no funds going to Gambino and $120,000 to Enzo,
with loan fees over $7,000, and an unexplained disbursement to Harris Bank for $10,000.
The case of In re Estate of Bontkowski, 337 Ill. App. 3d 72 (2003), is instructive
here. In that case, the proof of an alleged forged deed was found sufficiently established
by testimony of a handwriting expert that the signatures on a deed were not those of the
decedent and by testimony of a notary who affixed her signature and notary seal to the
deed. Like this case, in In re Estate of Bontkowski, the notary admitted that someone
other than the signatory had given her the deed to notarize, that the signatory was not
present when she notarized the deeds, that she had never met the signatory, and that she
did not know the purported signatory’s signature. Based on that evidence, the appellate
court affirmed the trial court’s findings that the elements of forgery had been met,
including intent to defraud. In re Estate of Bontkowski, 337 Ill. App. 3d at 77.
Like In re Estate of Bontkowski, the trial court’s finding in the case at bar that the
signatures, the trustee’s deeds, the deeds conveying the Kedzie and Niles Properties from
Gambino to WW Funding and Century, and other documents used in the contested
transactions were forged was not against the manifest weight of the evidence.
The Koonce defendants then argue that Gambino authorized and/or ratified the
transactions.
An agent’s authority may be actual or apparent and, if actual, may be express or
implied. Granite Properties Limited Partnership v. Granite Investment Co., 220 Ill. App.
3d 711, 713-14 (1991). Apparent authority is cognizable when a principal, through
words or conduct, creates the reasonable impression in a third party that his agent is
authorized to perform a certain act on his behalf. To prove the existence of apparent
45
authority, a party must establish that: (1) the principal consented to or knowingly
acquiesced in the agent’s exercise of authority; (2) the third party, based upon his
knowledge of the facts, possessed a good-faith belief that the agent possessed such
authority; and (3) the third party relied to his detriment on the agent’s apparent authority.
Weil, Freiburg & Thomas, P.C. v. Sara Lee Corp., 218 Ill. App. 3d 383, 390 (1991). The
party alleging an agency relationship must prove it by a preponderance of the evidence.
Granite Properties Limited Partnership, 220 Ill. App. 3d at 714.
“Ratification occurs when the principal learns of an unauthorized transaction,
then retains the benefits of the transaction or takes a position inconsistent with
nonaffirmation.” Stathis v. Geldermann, Inc., 295 Ill. App. 3d 844, 858 (1998), citing
Progress Printing Corp. v. Jane Byrne Political Committee, 235 Ill. App. 3d 292, 310
(1992). “For ratification to occur, the principal must, with full knowledge of the act,
manifest an intent to abide and be bound by the transaction.” Stathis, 295 Ill. App. 3d at
858, citing Peskin v. Deutsch, 134 Ill. App. 3d 48, 55 (1985). “Ratification may be
inferred from surrounding circumstances, including long-term acquiescence, after notice,
to the benefits of an allegedly unauthorized transaction.” Stathis, 295 Ill. App. 3d at 858,
citing Progress Printing Corp., 235 Ill. App. 3d at 310.
The Koonce defendants argue that the fact that Gambino executed three written
directions to convey and requested trustee’s deeds from North Star “gave Gambino the
opportunity to create fraudulent deeds himself, which he ultimately delivered to Sal to be
recorded.” The Koonce defendants argue that Gambino had possession of the trustee’s
deeds for approximately a month before returning them to North Star giving Gambino, or
Sal with Gambino’s “encouragement and authorization,” an opportunity to prepare the
46
fraudulent deeds. The Koonce defendants also point out that the trustee’s deeds that
Gambino did indeed request from North Star and the contested trustee’s deeds are mirror
images. They reason that this fact proves that Gambino provided and encouraged Sal
with the opportunity to forge the questioned trustee’s deeds. Again, when we analyze the
settlement documents on the subject properties, the disbursements appear to be tainted
with fraud. The Niles Property alone had $25,000 in commitment fees distributed to the
Wolfs and Zippershtein, a mortgage escrow of $33,000, which is unusual, a $5,000
appraisal fee, and a payment to Sal of $25,000 that is questionable on its face. The
Kedzie settlement disbursements reveal commitment or loan fees of $18,750, a $25,000
payment to “Norman Trust Account,” and $5,372.72 to a law firm not involved in the
process, and over $50,000 to unknown people (Halle, Guillermo, and Papiese) and only
$10,000 to Gambino, which should have indicated to the Koonce defendants that an
explanation was in order. The disbursements on the Lavergne Property, again, were just
as bizarre with no funds going to Gambino and $120,000 to Enzo, with loan fees over
$7,000, and an unexplained disbursement to Harris Bank for $10,000.
The Koonce defendant’s argument to the trial court was that Gambino was the
one who committed the fraud based on the fact that he may have shown the trustee’s
deeds from North Star to Sal. The trial court found that this “prove[d] nothing except
that by having in his possession such a deed *** Gambino provided [Sal, Enzo] and
Koonce with the tools of their fraud.”
There was no credible evidence at trial to prove that Gambino authorized and/or
ratified the contested transactions. The Koonce defendants argue that Gambino received
hundreds of thousands of dollars from the disputed transactions in cash, checks, and the
47
payment of bills and loans. They point out that Gambino told Thomas Gambino that he
had authorized Sal and Enzo to procure a loan on one of his properties. Further, they
point out that overdue real estate taxes were paid on the subject properties from the
closings. Further, they argue that Gambino’s response to the Zippershtein foreclosure
action showed that Gambino ratified the transactions. They argue that Gambino, after
being served with the foreclosure complaint, never filed a motion to dismiss or strike the
foreclosure action, but simply allowed the mortgage to be paid.
First, the only testimony that Gambino actually received hundreds of thousands of
dollars from the disputed transactions was the testimony of Sal and Enzo, which the trial
court found to be not credible. Koonce testified that he signed numerous checks payable
to Sal and Enzo for what he believed were loans to Gambino. Yet, Koonce, a lawyer and
sophisticated real estate investor, never discussed the matter with Gambino or obtained
any receipts of the moneys he paid to Sal or Enzo for Gambino. Multiple payments were
made to third parties from the closings, including creditors of Sal. Deposits of large
amounts of moneys were made into Enzo’s bank accounts and the bank account of his
girlfriend, which Enzo testified was converted to cash and given to Gambino, but no
documentary evidence showed that Gambino actually received these moneys.
Second, the fact that Gambino approached Sal about procuring a loan on one of
the subject properties was admitted by plaintiffs in their complaint at the outset; what
was contested was the transactions that conveyed the subject properties from Gambino to
several defendants for pennies on the dollar. Further, the fact that overdue real estate
taxes were paid from the closings does not prove that Gambino ratified the transactions
or that the taxes were paid for his benefit. Rather, the evidence at trial shows that the
48
overdue real estate taxes were paid for the benefit of several of the defendants in the case
to clear title to the properties. Finally, the events surrounding the Zippershtein
foreclosure action does not undercut the trial court’s finding that Gambino did not ratify
the contested transactions. Upon receiving a letter demanding payment of the
Zippershtien mortgage, Gambino denied any knowledge with regard to the loan. When
suit was filed, he appeared to defend until that suit was voluntarily dismissed by
Zippershtein. These arguments cannot serve as a basis for reversing the trial court’s
findings.
We now address the arguments of Plaza Bank. Plaza Bank’s arguments on appeal
solely concern the trial court’s order voiding its mortgage lien on the Niles Property.
Plaza Bank argues that the trial court’s findings with regard to plaintiffs’ claim to quiet
title to the Niles Property were against the manifest weight of the evidence. Smith, Allen,
Mendenhall, Emons & Selby v. Thomson Corp., 371 Ill. App. 3d 556, 558 (2006) (trial
court’s decision following a bench trial is reviewed to determine if the judgment is
against the manifest weight of the evidence). Plaza Bank argues that the evidence
presented coupled with plaintiffs’ judicial admissions establishes that Gambino was
aware of and participated in the Niles mortgage.
Plaza Bank first argues that Sal and Enzo were Gambino’s agents. In this regard,
Plaza Bank argues that Gambino engaged Sal and Enzo to procure a loan on one of his
properties, authorized Sal to obtain his credit report, and authorized Pritikin to speak with
Sal regarding the procurement of a loan to settle his liability with the IRS. The trial court
found in its November 30, 2007, order that “there was no proof of any statement or
conduct by Gambino that encouraged or led these defendants or anyone else to produce
49
these forged and falsely notarized documents purportedly transferring title, to [his]
detriment.” The judgment of the trial court cannot be reversed on this basis.
Plaza Bank then argues that Gambino ratified the Niles transaction. As noted,
ratification occurs when the principal learns of an unauthorized transaction, then retains
the benefits of the transaction or takes a position inconsistent with nonaffirmation.
Stathis, 295 Ill. App. 3d at 858, citing Progress Printing Corp. v. Jane Byrne Political
Committee, 235 Ill. App. 3d 292, 310 (1992).
Plaza Bank points to the fact that Gambino directed North Star to convey legal
title to the Niles Property to him 10 days before the Zippershtein mortgage was procured
on the property. Plaza Bank argues that Gambino received moneys from the first closing
related to the Niles Property and also points out that Gambino told Thomas Gambino that
he had authorized Sal and Enzo to procure a loan on one of his properties. Further, Plaza
Bank points out that overdue real estate taxes were paid on the subject properties from
the closings. Further, Plaza Bank argues that Gambino’s response to the Zippershtein
foreclosure action showed that Gambino ratified the transactions. Plaza Bank argues that
Gambino, after being served with the foreclosure complaint, never filed a motion to
dismiss or strike the foreclosure action, but simply allowed the mortgage to be paid.
Again, the fact that Gambino approached Sal about the possibility of procuring a
loan on one of the subject properties was admitted by plaintiffs in their complaint at the
outset; what was contested was the transactions that conveyed the subject properties from
Gambino to several defendants by the use of fraudulent, forged legal documents
including forged deeds. Further, the fact that overdue real estate taxes were paid from
the closings does not prove that Gambino ratified the transactions or that the taxes were
50
paid for his benefit. Rather, the evidence at trial shows that the overdue real estate taxes
were paid for the benefit of several of the defendants who needed to have clear title.
Finally, the events surrounding the Zippershtein foreclosure action does not undercut the
trial court’s finding that Gambino did not ratify the contested transactions. Upon
receiving a letter demanding payment of the Zippershtien mortgage, Gambino denied any
knowledge of the loan. When suit was filed, he hired a lawyer to defend until that suit
was voluntarily dismissed. Like the Koonce defendants’ arguments, Plaza Bank’s
arguments are not persuasive.
Plaza Bank also argues that Gambino is judicially estopped from denying the
Niles transaction, because of his involvement in the Zippershtein foreclosure suit. The
doctrine of judicial estoppel postulates that “ ‘a party who assumes a particular position
in a legal proceeding is estopped from assuming a contrary position in a subsequent legal
proceeding.’ ” Barack Ferrazzano Kirschbaum Perlman & Nagelberg v. Loffredi, 342
Ill. App. 3d 453, 460 (2003), quoting Bidani v. Lewis, 285 Ill. App. 3d 545, 550 (1996).
The purpose of the doctrine is “ ‘to promote the truth and to protect the integrity of the
court system by preventing litigants from deliberately shifting positions to suit the
exigencies of the moment.’ ” Loffredi, 342 Ill. App. 3d at 460, quoting Bidani, 285 Ill.
App. 3d at 550. The five elements necessary for the application of judicial estoppel
include the following: “ ‘the party to be estopped must have (1) taken two positions, (2)
that are factually inconsistent, (3) in separate judicial or quasi-judicial proceedings, (4)
intended for the trier of fact to accept the truth of the facts alleged, and (5) have
succeeded in the first proceeding and received some benefit from it.’ ” Loffredi, 342 Ill.
App. 3d at 460, quoting People v. Caballero, 206 Ill. 2d 65, 80 (2002).
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In the case at bar, the elements of judicial estoppel have not been met. Gambino
did not take a position in the case at bar factually inconsistent with his position in the
Zippershtein foreclosure action. In both actions, he contested the validity of the
Zippershtein mortage. When the foreclosure action was filed, Gambino retained a lawyer
to defend the case. It was Zippershtein who voluntarily dismissed that suit.
Plaza Bank then argues that Gambino had unclean hands. It is a basic maxim of
equity that he who seeks equity must do equity. Long v. Kemper Life Insurance Co., 196
Ill. App. 3d 216, 218 (1990). The doctrine of “unclean hands” precludes a party from
taking advantage of his own wrong. Long, 196 Ill. App. 3d at 219, citing State Bank of
Geneva v. Sorenson, 167 Ill. App. 3d 674, 680 (1988). It is an equitable doctrine that
bars relief when the party seeking that relief is guilty of misconduct in connection with
the subject matter of the litigation. Thomson Learning, Inc. v. Olympia Properties, LLC,
365 Ill. App. 3d 621, 634 (2006), citing Wolfram Partnership, Ltd. v. LaSalle National
Bank, 328 Ill. App. 3d 207, 221-22 (2001). For the doctrine to apply, the party’s
misconduct must rise to the level of fraud or bad faith. Thomson Learning, Inc., 365 Ill.
App. 3d at 634, citing Beitner v. Marzahl, 354 Ill. App. 3d 142, 150 (2004). To
determine whether a party acted with unclean hands, the court must look to the intent of
that party. Thomson Learning, Inc., 365 Ill. App. 3d at 634, citing Schivarelli v. Chicago
Transit Authority, 355 Ill. App. 3d 93, 103 (2005). The doctrine is unavailable where the
act giving rise to the defense does not directly involve the transaction which is the subject
of the litigation. Cole v. Guy, 183 Ill. App. 3d 768, 776 (1989). The application of the
doctrine is a matter for the trial court’s discretion, which this court will not disturb on
52
appeal absent an abuse of that discretion. Long, 196 Ill. App. 3d at 219, citing Fair
Automotive Repair, Inc. v. Car-X Service Systems, Inc., 128 Ill. App. 3d 763, 768 (1984).
Plaza Bank argues that Gambino lied in plaintiffs’ verified complaint when he
verified the allegation that he never directed North Star to convey legal title to the subject
properties to anyone including himself. Further, Plaza Bank argues that Gambino made
misrepresentations to the IRS on the values of the subject properties. Plaza Bank’s
argument cannot be used to reverse the trial court’s judgment as the actions giving rise to
its “unclean hands” argument did not involve the Niles transaction. Further, since
Gambino returned the title documents to North Star, the trial court may have found that
allegation drawn by his attorney did not rise to the level of “unclean hands,” and we
cannot say that the trial court abused its discretion in its findings on that matter or on
Gambino’s representation to the IRS. The trial court did not abuse its discretion by not
applying the “unclean hands” doctrine.
Finally, Plaza Bank argues that the trial court awarded Gambino a “windfall”
when it ordered Plaza Bank’s mortgage lien on the Niles Property void. They claim they
are entitled to a lien on the Niles Property in the amount of $335,000, for its payoff of the
Zippershtein mortgage, $54,000 for their payment of back real estate taxes paid on the
Niles Property, and $69,000 which Plaza Bank claim Gambino received from the Niles
transactions.
Compensatory damages are those which are awarded to a person as
compensation, indemnity or restitution for a wrong or injury sustained by him. Harris v.
Peters, 274 Ill. App. 3d 206, 207 (1995). The purpose of awarding compensatory
damages is to make the injured party whole and restore him to the position he was in
53
before the loss, but not to enable him to make a profit or windfall on the transaction.
Harris, 274 Ill. App. 3d at 207, citing Rittenhouse v. Tabor Grain Co., 203 Ill. App. 3d
639, 650 (1990).
Plaza Bank’s argument is not persuasive because it never raised the issue of
restitution or its entitlement to a lien on the Niles Property in any pleading. The issues in
controversy and the theories upon which recovery is sought are fixed by the pleadings.
IMC Global v. Continental Insurance Co., 378 Ill. App. 3d 797, 804 (2007), citing
Kincaid v. Ames Department Stores, Inc., 283 Ill. App. 3d 555, 568 (1996). Accordingly,
the trial court lacked jurisdiction to adjudicate an issue not presented through proper
pleadings. William J. Templeman Co. v. Liberty Mutual Insurance Co., 316 Ill. App. 3d
379, 388 (2000). Since Plaza Bank never raised the issue of restitution or its entitlement
to a lien on the Niles Property in a pleading, we cannot say that the trial court abused its
discretion in denying the relief requested.
Based on the foregoing, we affirm the trial court’s findings with respect to
plaintiffs’ claims to quiet title to the subject properties.
2. Slander of Title
We now consider the trial court’s findings concerning plaintiffs’ slander of title
counts. As noted, plaintiffs alleged slander of title in counts II, IV, and VI of their
complaint. Count II was pled against Sal, Enzo, and the Koonce defendants with regard
to the Lavergne Property. Counts IV and VI were pled against Sal, Enzo, the Koonce
defendants, and the Wolf defendants with regard to the Niles and Kedzie Properties,
respectively. On November 30, 2007, the trial court found in favor of plaintiffs on those
counts.
54
The Koonce defendants and the Wolf defendants (Wolf and WW Funding) argue
that the trial court’s findings as to plaintiffs’ slander of title counts are against the
manifest weight of the evidence. A plaintiff asserting slander of title bears the burden of
proving the following: (1) the defendants made a false and malicious publication, either
oral or written; (2) that such publication disparaged the plaintiff’s title to property; and
(3) damages due to such publication. Chicago Title & Trust Co. v. Levine, 333 Ill. App.
3d 420, 424 (2002), citing American National Bank & Trust Co. v. Bentley Builders, Inc.,
308 Ill. App. 3d 246, 251 (1999). A plaintiff must also prove that the defendants acted
with malice. Levine, 333 Ill. App. 3d at 424, citing Bentley Builders, 308 Ill. App. 3d at
252. To prove malice, the plaintiff must show that the defendants knew that the
disparaging statements were false or that the statements were made with reckless
disregard of their truth or falsity. Levine, 333 Ill. App. 3d at 424, citing Bentley Builders,
308 Ill. App. 3d at 251-52. A defendant acts with reckless disregard if he publishes the
allegedly damaging matter despite a high degree of awareness of its probable falsity or if
he has serious doubts as to its truth. Levine, 333 Ill. App. 3d at 424, citing Bentley
Builders, 308 Ill. App. 3d at 252.
The act of maliciously recording a document that clouds another’s title to real
estate is actionable as slander of title. Bentley Builders, 308 Ill. App. 3d at 252, citing
Whildin v. Kovacs, 82 Ill. App. 3d 1015, 1016 (1980). However, if the party who records
the document has reasonable grounds to believe that he has title or a claim to the
property, he has not acted with malice. Bentley Builders, 308 Ill. App. 3d at 252, citing
Whildin, 82 Ill. App. 3d at 1016. Malice is a question of fact. Bentley Builders, 308 Ill.
App. 3d at 252, Whildin, 82 Ill. App. 3d at 1016. In a bench trial, it is the function of the
55
trial judge to weigh the evidence and make findings of fact. Kalata v. Anheuser-Busch
Cos., 144 Ill. 2d 425, 433 (1991). A trial court’s findings of fact are entitled to great
deference and should not be overturned on review merely because the reviewing court
may have reached a different result. Lake County Grading Co. Of Libertyville, Inc. v.
Advance Mechanical Contractors, Inc., 275 Ill. App. 3d 452, 463-64 (1995). A trial
court's findings of fact will only be set aside when they are against the manifest weight of
the evidence. In re Application of the County Treasurer, 131 Ill. 2d 541, 549 (1989). A
finding is against the manifest weight of the evidence when the opposite conclusion is
clearly evident. Case v. Forloine, 266 Ill. App. 3d 120, 125 (1993).
The Koonce defendants first argue that plaintiffs failed to prove the element of
publication. Emery v. Northeast Illinois Regional Commuter R.R. Corp., 377 Ill. app. 3d
1013, 1022 (2007) (in order to prove publication, a plaintiff must show that allegedly
slanderous remarks were communicated to someone other than plaintiff). The Koonce
defendants’ argument ignores the trial court’s finding that the Koonce defendants
participated in the acts leading to the recording of all the legal documents which
slandered plaintiffs’ title to the subject properties. Plaintiffs were not required to prove
that the Koonce defendants actually recorded the documents. All persons who cause or
participate in the publication of slanderous matters are responsible for such publication.
Van Horne v. Muller, 185 Ill. 2d 299, 308 (1998). At trial, Sal admitted that he
personally recorded all the deeds, including the forged trustee’s deed conveying title to
the Lavergne Property from North Star directly to Koonce. Further, mortgage liens were
recorded against the Lavergne Property due to loans applied for by Koonce as borrower.
Further, Koonce submitted his application for a loan on the Lavergne Property in April
56
2003 through Boulevard, which received an $850 fee for “loan application and
processing fees.” Further, Title America was the title company used for five of the six
closings which led to the recording of the legal documents slandering plaintiffs’ title to
all three of the subject properties. The element of publication against the Koonce
defendants was proven.
The Koonce defendants and the Wolf defendants both argue that there was no
evidence that they acted with malice. We will address the trial court’s findings with
regard to the Koonce defendants first.
The trial court found that Koonce was personally involved with Sal in defrauding
Gambino from the outset of the events leading to this trial. At trial, Sal admitted that he
recorded all the deeds as to the subject properties. As to the Lavergne Property, he
admitted that he recorded the forged trustee’s deed conveying title from North Star
directly to Koonce. As to the Niles Property, the trial court believed the testimony of
Fritzshall, Zippershtein’s attorney, that Koonce claimed he was Gambino’s attorney. At
trial, Koonce denied that he ever represented to anyone that he was Gambino’s attorney
but the trial court found his testimony not credible.
The trial court noted that Koonce “refinanced” the Lavergne Property, although
he did not own it. He submitted a loan application as a “refinance” and signed it as the
“borrower.” Further, the court noted Koonce’s agreement with WW Funding to take an
option to purchase the Kedzie Property, an option for which Koonce admitted he paid
nothing.
Further, the trial court found that both Boulevard and Title America acted with
malice. With respect to Boulevard, the court found that Koonce and Sal used Boulevard
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in various ways for these transactions. Koonce used a Boulevard form to submit an
application for a $800,000 loan to Washington Mutual on the Niles and Kedzie
Properties. Koonce and Sal used Boulevard to obtain a credit report for Gambino, and
issued a mortgage loan commitment for Gambino from it. Koonce quitclaimed his
interest in the Lavergne Property to Boulevard.
The trial court noted that Title America, of which Koonce is the sole shareholder,
was used as the title company for five of the six contested transactions. The trial court
found that the reason for this was so scrutiny of the forged documents would remain low.
Title America accepted the forged deeds and other forged documents. Moneys were paid
from the closings to third parties unrelated to the transactions. Large checks and wire
transfers were issued by Title America to Enzo and Sal, and to creditors of Sal.
Based on the foregoing, we cannot say that the trial court’s findings that the
Koonce defendants acted with malice was against the manifest weight of the evidence.
We now address the Wolf defendants argument that the trial court’s findings that
they acted with malice was against the manifest weight of the evidence.
The Wolf defendants argue that they did not know nor should they have known
that the warranty deed WW Funding received from “Joseph J. Gambino” to the Niles
Property was forged or that the warrantee deed from “Joseph J. Gambino” to Century for
the Kedzie Property, title to which WW Funding later obtained, was forged. The Wolf
defendants argue that they, in good faith, believed that they were purchasing the Niles
and Kedzie Properties by paying off the Zippershtein mortgage and the Century loan.
The trial court found that Wolf was involved with Sal’s defrauding of Gambino
from the beginning of the events leading to trial. Sal first approached Wolf with regard
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to the Niles Property. Wolf referred the loan to Zippershtein, who made a $200,000 loan
on the Niles Property. Wolf earned a $5,250 commitment fee from that loan. His son
Adam earned a $4,000 commitment fee. Both Fritzshall and Sal testified that Wolf was
present for the first closing related to the Niles Property. Wolf denied being present.
With regard to the Kedzie Property, Wolf referred the loan to Azran who made a
loan through his company Century. Century loaned $200,000, taking title to the property
as security for the loan, and purportedly leased the property back to Gambino; a purchase
option which lapsed in a year’s time was also purportedly given to Gambino. Azran
testified that it was agreed in advance that in the event Gambino did not exercise his
option to purchase, Wolf, Zippershtein, and Azran would each take a one-third ownership
interest in the property. Wolf was paid a $6,250 commitment fee for this loan. His son
Adam was also paid a $6,250 loan fee for this loan. When Gambino failed to exercise
the option to purchase the Kedzie Property, it was Wolf who purchased the property
through his company WW Funding. From this closing, WW Funding was paid a $25,000
commitment fee. As to the Niles Property, after Zippershtein filed the foreclosure suit,
WW Funding purchased the property, obtaining $445,000 in financing from Plaza Bank.
WW Funding held $135,171.38 from closing. Upon WW Funding’s taking title to both
the Niles and Kedzie Properties, options to purchase were granted to Koonce.
The trial court “flatly disbelieve[d]” Wolf’s testimony that he personally met with
Gambino and that Gambino approved the aforementioned transactions.
As to WW Funding, the trial court found that Wolf used WW Funding to
complete the transactions in which he would finally hold title to the Niles and Kedzie
Properties.
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Based upon the foregoing, we cannot say that the trial court’s finding as to the
Wolf defendants’ malice was against the manifest weight of the evidence. We recognize
the fact that large commitment fees are sometimes earned in “hard-money” transactions
like the ones in the case at bar and that large commitment fees are not necessarily
indicative of illegal transactions. However, it was the trial court’s duty to determine
whether the Wolf defendants had acted with malice in the case at bar, which it did, and
based upon the record before us we cannot determine that the opposite conclusion, that
the Wolf defendants did not act with malice in slandering plaintiffs’ title to the Kedzie
and Niles Properties, was clearly evident.
Accordingly, the trial court’s findings with respect to plaintiffs’ slander of title
claims are affirmed.
3. Damages
The Koonce defendants and the Wolf defendants raise several arguments with
regard to the trial court’s award of compensatory and punitive damages. They argue that
the trial court abused its discretion in awarding attorney fees in the amount of three times
the lodestar. They further argue that the trial court’s award of punitive damages was
error as a matter of law, against the manifest weight of the evidence, an abuse of
discretion, and in violation of their constitutional right to due process.
We begin with the arguments with regard to the trial court’s award of attorney
fees. As noted, the trial court awarded attorney fees to plaintiffs in the form of
compensatory damages: $595,574 on counts IV and VI of plaintiffs’ complaint, such
damages imposed jointly and severally against Sal, Enzo, and the Koonce defendants;
$556,485 on counts IV and VI of plaintiffs’ complaint, such damages imposed jointly
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and severally against Wolf and WW Funding, and $595,574 on count II of plaintiffs’
complaint, imposed jointly and severally against Sal, Enzo, and the Koonce defendants.
The court found that plaintiffs were to have only one recovery of compensatory damages,
and the judgments entered were not cumulative.
A trial court has broad discretionary powers in awarding attorney fees and its
discretion will not be reversed on review unless the court abused its discretion. Mirar
Development, Inc. v. Kroner, 308 Ill. App. 3d 483, 485 (1999), citing In re Estate of
Callahan, 144 Ill. 2d 32, 43-44 (1991). The party seeking fees bears the burden of
presenting sufficient evidence from which the trial court can render a decision as to their
reasonableness. Kaiser v. MEPC American Properties, Inc., 164 Ill. App. 3d 978, 983
(1987), citing Fiorito v. Jones, 72 Ill. 2d 73 (1978); Heckman v. Hospital Service Corp.,
104 Ill. App. 3d 728 (1982); Ealy v. Peddy, 138 Ill. App. 3d 397 (1985). An appropriate
fee consists of reasonable charges for reasonable services; however, to justify a fee, more
must be presented than a mere compilation of hours multiplied by a fixed hourly rate or
bills issued to the client (In re Marriage of Angiuli, 134 Ill. App. 3d 417 (1985)), since
this type of data, without more, does not provide the court with sufficient information as
to their reasonableness -- a matter which cannot be determined on the basis of conjecture
or on the opinion or conclusions of the attorney seeking the fees. Flynn v. Kucharski, 59
Ill. 2d 61 (1974); In re Marriage of Angiuli, 134 Ill. App. 3d 417 (1985). Rather, the
petition for fees must specify the services performed, by whom they were performed, the
time expended thereon and the hourly rate charged therefor. Fiorito, 72 Ill. 2d 73; Ealy v.
Peddy, 138 Ill. App. 3d 397 (1985). Because of the importance of these factors, it is
incumbent upon the petitioner to present detailed records maintained during the course of
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the litigation containing facts and computations upon which the charges are predicated.
Flynn v. Kucharski, 59 Ill. 2d 61 (1974); Board of Education of the Aptakisic-Tripp
School District No. 102 v. County of Lake, 156 Ill. App. 3d 1064 (1987).
Once presented with these facts, the trial court should consider a variety of
additional factors such as the skill and standing of the attorneys, the nature of the case,
the novelty and/or difficulty of the issues and work involved, the importance of the
matter, the degree of responsibility required, the usual and customary charges for
comparable services, the benefit to the client (Ashby v. Price, 112 Ill. App. 3d 114(1983)), and whether there is a reasonable connection between the fees and the amount
involved in the litigation. In re Estate of Healy, 137 Ill. App. 3d 406 (1985); In re
Marriage of Ransom, 102 Ill. App. 3d 38 (1981).
As noted, on March 31, 2006, Gambino engaged attorneys Michael Braun,
Sherwin Winer, and Kevin O’Rouke, after his original attorneys had withdrawn.
Initially, all three attorneys billed monthly on an hourly rate. Within a short time,
Gambino was unable to keep current in paying the attorneys’ fees. Counsels were
unwilling to continue working on an hourly basis when their bills were not being pay and
they would not agree to deferring payment until conclusion of the case. It was agreed
that while billing would continue on an hourly basis, all amounts unpaid would be treated
by a contingency fee agreement. Specifically, all unpaid hourly fees would be paid at
three times the amount billed if and when the case reached successful outcome. Costs
were to be treated in the same manner. The attorneys’ billings were attached to the fees
petition submitted to the trial court after trial. A total of $187,196 in bills was unpaid,
and thus subject to the contingency enhancement.
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The trial court found that the attorneys’ hourly rates were reasonable and all
itemizations sufficiently detailed, noting its own familiarity with the entire context of the
trial court proceedings. The trial court found the time billed for each item appropriate,
recognizing the difficulties presented by the multidefendant, multiproperty case and the
expertise of plaintiffs’ counsel.
The Wolf defendants argue that the trial court abused its discretion by awarding
attorney fees for plaintiffs’ slander of title claims. They argue that only the attorney fees
incurred on plaintiffs’ quieting title claims were recoverable, not fees incurred for
plaintiffs’ claims for slander of title. This argument is not persuasive.
Contrary to the Wolf defendants’ argument, there is authority in Illinois providing
that recovery for slander of title actions permit recovery of those costs and attorney fees
which directly flow from the wrongful disparagement. Home Investments Fund v.
Robertson, 10 Ill. App. 3d 840, 844 (1973). Further, plaintiffs were entitled to recover
those costs and attorney fees directly related to the quieting of title and to those damages
directly related to a slander of title, i.e., loss of vendibility, etc. Robertson, 10 Ill. App.
3d at 844.
Both the Koonce defendants and the Wolf defendants argue that the trial court
abused its discretion by awarding attorney fees enhanced by a multiplier of three. They
argue that no Illinois authority supported the use of a multiplier.
The trial court rejected defendants’ objections to the use of a multiplier of three
times the lodestar, finding that the measure was imminently reasonable. The trial court
found the hourly rates were modest and the attorneys’ itemized time appropriate.
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Further, the trial court found that the fee was proportionate to the value of the properties
at issue, roughly $2.5 million.
As noted, plaintiffs were entitled to recover those costs and attorney fees directly
related to the quieting of title and to those damages directly related to a slander of title,
i.e., loss of vendibility, etc. Robertson, 10 Ill. App. 3d at 844. Plaintiffs costs and
attorney fees directly related to the quieting of title and to those damages directly related
to a slander of title were those costs which Gambino agreed to in his contingency
agreement with counsel who tried this litigation to successful outcome.
The Koonce defendants and the Wolf defendants do not cite, and our independent
research does not reveal any Illinois authority that forbids the award of plaintiffs’ actual
costs and attorney fees directly related to this action. No law of this state, including any
statute, compels us to find the contingency agreement against public policy.
We cannot find that the trial court abused its discretion by awarding plaintiffs
attorney fees actually incurred in this action.
We now turn to the arguments regarding the imposition of punitive damages. As
noted, the trial court awarded $675,000 in punitive damages: $500,000, jointly and
severally, against Sal, Enzo, and the Koonce defendants, and $175,000 against Wolf and
WW Funding.
The purpose of punitive damages is: “ ‘(1) to act as retribution against the
defendant; (2) to deter the defendant from committing similar wrongs in the future; and
(3) to deter others from similar conduct.’ ” Gomez v. The Finishing Co., 369 Ill. App. 3d
711, 721 (2006), quoting Hazelwood v. Illinois Central Gulf R.R., 114 Ill. App. 3d 703,
712 (1983). Such damages will be awarded only where the defendant’s conduct is willful
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or outrageous due to evil motive or a reckless indifference to the rights of others. Franz
v. Calaco Development Corp., 352 Ill. App. 3d 1129, 1137 (2004), citing Proctor v.
Davis, 291 Ill. App. 3d 265, 285 (1997). Because punitive damages are not favored in
the law they are only available in cases where the wrongful act complained of is
characterized by wantonness, malice, oppression, willfulness, or other circumstances of
aggravation. Franz, 352 Ill. App. 3d at 1138.
On appeal from a bench trial, the question of whether punitive damages are
available as a matter of law for the cause of action is reviewed de novo. Franz, 352 Ill.
App. 3d at 1137. The question of whether the facts prove willfulness or other
aggravating factors is a factual determination that is reviewed using the manifest-weight
standard. Franz, 352 Ill. App. 3d at 1137-38. Whether punitive damages should be
awarded is reviewed for an abuse of discretion. Franz, 352 Ill. App. 3d at 1138. We
review the computation of the punitive damages award to determine whether the amount
was excessive or the result of passion, partiality, or corruption. Franz, 352 Ill. App. 3d at
1138.
“In reviewing [the] determination of the amount of punitive damages, if any, we
will reverse only if the award was ‘so excessive [as] to indicate passion, partiality, or
corruption.’ ” Gomez, 369 Ill. App. 3d at 722, quoting Franz, 352 Ill. App. 3d at 1138.
The assessment of punitive damages is a highly factual decision, which is appropriately
made at the trial court level. Franz, 352 Ill. App. 3d at 1144. The amount of an award
should be a reflection of the fact finder’s determination as to the degree of maliciousness
evidenced by a defendant’s actions. Franz, 352 Ill. App. 3d at 1144. In reviewing the
maliciousness of conduct for purposes of punitive damages awards, a reviewing court is
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not in a position to reassess the credibility of the witnesses who testified at trial. Franz,
352 Ill. App. 3d at 1144. A trial court must evaluate available evidence of a defendant’s
financial worth in calculating punitive damages, but an award will not be overturned just
because the defendant did not present evidence of financial worth at trial. Gomez, 369
Ill. App. 3d at 722, citing Franz, 352 Ill. App. 3d at 1144, and Kochan v. Owens-Corning
Fiberglass Corp., 242 Ill. App. 3d 781, 798 (1993).
Here, as a matter of law, punitive damages are available. See Chicago Title &
Trust Co. v. Levine, 333 Ill. App. 3d 420, 426 (2002) (affirming award of punitive
damages in slander of title case).
However, the Koonce defendants and the Wolf defendants argue that the trial
court erred by imposing punitive damages, as a matter of law, because there was no
evidence to support a finding of malice beyond that necessary for a finding of liability on
the tort of slander of title itself. They argue that, “to the extent that plaintiff[s]
established nothing more than the elements of the tort itself, punitive damages are not
appropriate.” Further, they argue that the trial court’s finding that punitive damages were
warranted in this case was against the manifest weight of the evidence. These arguments
are unpersuasive.
In Illinois, although malice is an element of the tort of slander, punitive damages
may be awarded in slander cases where actual malice exists. Levine, 333 Ill. App. 3d at
426; Mullen v. Solber, 271 Ill. App. 3d 442, 445 (1995). Further, as is apparent from a
reading of the trial court’s memorandum opinions and orders, it found actual malice
warranting the imposition of punitive damages in this case. The trial court found that the
malice exhibited by these defendants was beyond that necessary to establish the elements
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of plaintiffs’ slander of title claims. The trial court found that the Koonce defendants and
the Wolf defendants participated in a number of transactions by which the subject
properties were taken from plaintiffs by means of fraudulent, forged legal documents.
Again, we note that the settlement documents are direct evidence of fraud. The Niles
Property alone had $25,000 in commitment fees distributed to the Wolfs and
Zippershtein; a mortgage escrow of $33,000, which is unusual; a $5,000 appraisal fee;
and a payment to Sal of $25,000 that is questionable on its face. The Kedzie settlement
disbursements reveal commitment or loan fees of $18,750, a $25,000 payment to
“Norman Trust Account,” and $5,372.72 to a law firm not involved in the process, and
over $50,000 to unknown people and only $10,000 to Gambino. The disbursements on
the Lavergne Property were just as bizarre with no funds going to Gambino and $120,000
to Enzo with loan fees over $7,000 and an unexplained disbursement to Harris Bank for
$10,000. Further, Wolf, Zippershtein, and Azran, had in place an agreement to share in
the ownership of the Kedzie Property in the event Gambino should fail to exercise his
option to purchase the property. The trial court’s decision to impose punitive damages in
this case was neither error as a matter of law, against the manifest weight of the evidence,
or an abuse of its discretion. Again, the assessment of punitive damages is highly factual
decision that should be a reflection of the fact finder’s determination of maliciousness.
Gomez, 369 Ill. App. 3d at 722. We cannot disturb the trial court’s assessment of
punitive damages here.
We note that no defendant has provided us with any authority of whether the trial
court’s assessment of punitive damages before its calculation of compensatory damages
was error. As a result any contention in this regard is waived. 210 Ill. 2d R. 341(h)(7).
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We also were unable to find any authority dictating the reversal of the trial court’s order
under these circumstances. We also note that the fact that no evidence of defendants’
financial status does not require reversal. Kochan, 242 Ill. App. 3d at 798. This court in
a decision authored by Justice Cahill recently upheld an award of punitive damages
despite the absence of evidence of the defendant’s financial status in Gomez v. The
Finishing Co., 369 Ill. App. 3d 711 (2006).
Next, both the Koonce defendants and the Wolf defendants argue that the trial
court’s award of punitive damages violated their constitutional right to due process.
The standard of review for the constitutional question of whether a punitive
damages award is excessive in violation of due process is reviewed de novo. Franz, 352
Ill. App. 3d at 1147. A constitutional challenge to an award of punitive damages is
separate from the common-law challenge addressed above. Franz, 352 Ill. App. 3d at
1147. The constitutional question requires a court to consider three factors: (1) the
degree of reprehensibility of the defendant’s misconduct; (2) the disparity between the
harm suffered by the plaintiff and the punitive damages award; and (3) the difference
between the punitive damages awarded and the civil penalties authorized or imposed in
comparable cases. Franz, 352 Ill. App. 3d at 1147, citing Cooper Industries, Inc. v.
Leatherman Tool Group, Inc., 532 U.S. 424, 440, 149 L. Ed. 2d 674, 689, 121 S. Ct.
1678, 1687 (2001).
“Perhaps the most important indicium of the reasonableness of a punitive
damages award is the degree of reprehensibility of the defendant's conduct.” BMW of
North Amerca, Inc. v. Gore, 517 U.S. 559, 575, 134 L. Ed. 2d 809, 826, 116 S. Ct. 1589,
1599 (1996). Courts are instructed to consider the following factors when determining
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reprehensibility: (1) whether the harm caused was physical as opposed to economic; (2)
whether the tortious conduct evinced an indifference to or a reckless disregard for the
health and safety of others; (3) whether the target of the conduct was financially
vulnerable; (4) whether the conduct involved repeated actions or was an isolated
incident; and (5) whether the harm was the result of intentional malice, trickery, or
deceit, or mere accident. Gore, 517 U.S. at 575, 134 L. Ed. 2d at 826, 116 S. Ct. at 1599.
“The existence of any one of these factors weighing in favor of a plaintiff may not be
sufficient to sustain a punitive damages award; and the absence of all of them renders any
award suspect. It should be presumed a plaintiff has been made whole for his injuries by
compensatory damages, so punitive damages should only be awarded if the defendant's
culpability, after having paid compensatory damages, is so reprehensible as to warrant
the imposition of further sanctions to achieve punishment or deterrence.” State Farm
Mutual Automobile Insurance Co. v. Campbell, 538 U.S. at 408, 419, 155 L. Ed. 2d 585,
602, 123 S. Ct. 1513, 1521 (2003).
In the case at bar, the evidence presented and highlighted by the trial court’s
findings, demonstrated the reprehensible nature of the defendants’ conduct. As noted,
the factors to be considered in determining reprehensibility include whether the target of
the conduct was financially vulnerable, whether the conduct involved repeated actions
and whether the harm was the result of intentional malice, trickery, or deceit. Here, it is
undisputed that Gambino was in serious financial debt in the summer of 2002. He owed
back taxes to the IRS and overdue real estate taxes. Further, the conduct involved
repeated actions. Over 40 legal documents were used in order to take title to the subject
properties over the course of six real estate closings. The trial court also found that the
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harm here was the result of intentional malice, trickery, and deceit. The trial court
determined that the Koonce defendants and the Wolf defendants participated in a scheme
to take plaintiffs’ properties through the use of fraudulent, forged legal documents
including forged deeds.
Furthermore, the punitive damages awarded in this case were only a fraction of
the damages plaintiffs’ suffered as a result of the defendants’ conduct. The trial court’s
imposition of punitive damages in this case did not violate due process.
4. Sanctions
We finally come to the final issues on appeal; whether the trial court abused its
discretion by denying two Illinois Supreme Court Rule 137 motions for sanctions (155
Ill. 2d R. 137) in its May 2, 2008, order. Plaintiffs filed a cross-appeal from the denial of
their motion for sanctions against defendants Plaza Bank and Washington Mutual for
failing to amend their answer to plaintiffs’ complaint to conform to the proofs of this
case. Plaza Bank and Washington Mutual filed their own Rule 137 motion in response to
plaintiffs’ motion, which was also denied. Plaza Bank and Washington Mutual appeal
the denial of their motion for sanctions.
As noted, plaintiffs’ complaint alleged that Plaza Bank and Washington Mutual
knew or should have known that the trustee’s deeds recorded against the subject
properties were forged. In response to this allegation both Plaza Bank and Washington
Mutual answered that they “lacked knowledge or information sufficient” to form a belief
as to the truth of the allegation.
Plaintiffs filed a motion for sanctions against Plaza Bank and Washington Mutual
on December 12, 2007, after the trial court’s November 30, 2007, order, arguing that
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Plaza Bank and Washington Mutual had a continuing duty to monitor the accuracy of
their answer and that their continued disavowal of the forgeries warranted sanctions.
Plaza Bank and Washington Mutual responded and filed a cross-motion for
sanctions, contending that the motion for sanctions filed by plaintiffs themselves was not
well-grounded in fact or law.
Illinois Supreme Court Rule 137 allows the trial court to award sanctions against
parties who filed frivolous pleadings when a pleading has no basis in fact or law. 134 Ill.
2d R. 137. An attorney’s signature on a pleading, motion or other paper indicates:
“That to the best of his knowledge, information, and belief formed after
reasonable inquiry it is well grounded in fact and is warranted by existing
law or a good-faith argument for the extension, modification, or reversal
of existing law, and that it is not interposed for any improper purpose.”
134 Ill. 2d R. 137.
“Rule 137 is intended to prevent counsel from making assertions of fact or law without
support.” Lewy v. Koeckritz International, Inc., 211 Ill. App. 3d 330, 334 (1991).
Specifically, with respect to a question of law, Rule 137 is intended to provide a sanction
when a party asserts a proposition of law which is contrary to established precedent.
Shea, Rogal & Associates, Ltd. v. Leslie Volkswagen, Inc., 250 Ill. App. 3d 149 (1993).
In order to avoid sanctions, parties must present objectively reasonable arguments
for their view, regardless of whether they are found to be correct. Shea, 250 Ill. App. 3d
at 154. In determining whether sanctions are warranted in a particular case, the court
must ascertain what was reasonable at the time, and should not engage in hindsight.
Lewy, 211 Ill. App. 3d at 334. The determination of whether to impose sanctions under
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Rule 137 rests with the sound discretion of the trial court; the decision to impose or deny
sanctions is entitled to great weight on appeal and will not be disturbed on review absent
an abuse of discretion. In re Estate of Wernick, 127 Ill. 2d 61, 77-78 (1989).
The trial court did not abuse its discretion by denying plaintiffs’ motion for
sanctions. It is quite settled that a pleading is judged at the time that it is filed. Ambrose
v. Thornton Township School Trustees, 274 Ill. App. 3d 676, 685 (1995) (“[i]n
determining whether sanctions are warranted in a particular case, the court must ascertain
what was reasonable at the time, and should not engage in hindsight”). Further, there
was evidence in the record that if believed would have validated Plaza Bank and
Washington Mutual’s answer. Evidence was presented to the trial court that Gambino
ratified and/or authorized the transactions; of course, this evidence was rejected by the
trial court, but it cannot be used as a basis to sanction a party on the basis of a pleading
filed long before the trial court’s judgment.
Further, the trial court did not abuse its discretion by denying Plaza Bank and
Washington Mutual’s motion for sanctions. Although the trial court made no specific
findings as to the denial of this motion for sanctions, the trial court could have found that
plaintiffs’ motion for sanctions was not made for an improper purpose and was a good-
faith argument for the extension, modification, or reversal of existing law to impose a
duty on litigants a continuing duty to amend their pleadings as facts come to light that
would prove their pleadings mistaken.
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CONCLUSION
For the foregoing reasons, we affirm the judgment of the circuit court of Cook
County in its entirety.
Affirmed.
CAHILL, P.J., and McBRIDE, J., concur.
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