Chicago Bankcorp, Inc. v. Chao Chen

2020 IL App (1st) 190979-U
CourtAppellate Court of Illinois
DecidedJune 2, 2020
Docket1-19-0979
StatusUnpublished

This text of 2020 IL App (1st) 190979-U (Chicago Bankcorp, Inc. v. Chao Chen) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Chicago Bankcorp, Inc. v. Chao Chen, 2020 IL App (1st) 190979-U (Ill. Ct. App. 2020).

Opinion

2020 IL App (1st) 190979-U No. 1-19-0979

SECOND DIVISION June 2, 2020 Modified upon denial of rehearing on July 14, 2020

NOTICE: This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1).

______________________________________________________________________________

IN THE APPELLATE COURT OF ILLINOIS FIRST JUDICIAL DISTRICT ______________________________________________________________________________

CHICAGO BANCORP, INC., ) Appeal from the Circuit Court ) of Cook County. Plaintiff-Appellant, ) ) v. ) No. 15 L 5043 ) CHAO CHEN, SOUTHEASTERN SECURITY ) PROFESSIONALS, LLC, and IVAN BASTOS, ) The Honorable ) Jerry A. Esrig, Defendants ) Judge Presiding. ) (Chao Chen and Southeastern Security ) Professionals, LLC, Defendants, Cross-plaintiffs- ) Appellees; Ivan Bastos, Defendant and Cross- ) defendant). ) ______________________________________________________________________________

JUSTICE PUCINSKI delivered the judgment of the court. Presiding Justice Smith and Justice Coghlan concurred in the judgment.

ORDER

¶1 Held: Where the plaintiff did not suffer any damages as a result of the defendant’s alleged fraud, the application of the collateral source rule was rendered moot, and the trial court did not err in granting summary judgment in favor of the plaintiff. 1-19-0979

¶2 Plaintiff, Chicago Bancorp, Inc., appeals from the trial court’s grant of summary

judgment in favor of defendants Chao Chen and Southeastern Security Professionals, LLC

(collectively, “Southeastern defendants”), on plaintiff’s claims of fraud and conspiracy to

defraud. For the reasons that follow, we affirm.

¶3 BACKGROUND

¶4 Plaintiff included three counts in its Second Amended Complaint: conspiracy to commit

fraud by all defendants (Count I), fraud by defendant Ivan Bastos (Count II), and fraud by the

Southeastern defendants (Count III). In support of these claims, plaintiff alleged that in 2007,

Bastos applied for a home mortgage loan with plaintiff. In doing so, Bastos falsely represented

that he was employed with Southeastern Security making $264,000 per year. Bastos was not,

and never had been, employed by Southeastern Security. Plaintiff further alleged that Bastos

arranged to have Chen support his false claim of employment. Chen, on behalf of Southeastern

Security, completed, signed, and returned to plaintiff a written verification form that falsely

confirmed that Bastos was employed with Southeastern Security at $264,000 per year. Chen also

falsely verified Bastos’ claimed employment and salary during a verification phone call from

plaintiff. These misrepresentations were made by Bastos and Chen for the purpose of inducing

plaintiff to make the loan to Bastos. On September 14, 2007, relying on those

misrepresentations, plaintiff loaned $510,320 to Bastos. Plaintiff alleges that Bastos defaulted

on that loan in that he was not employed by Southeastern Security, did not earn $264,000 per

year, and did not have sufficient income to make the payments on the loan. Bastos did not repay

any portion of the loan, and plaintiffs claim they have been damaged in the amount of the loan--

$510,320.

-2- 1-19-0979

¶5 The Southeastern defendants moved for summary judgment, arguing that plaintiff was

unable to prove its claim of fraud against them, because there was no evidence that anyone

associated with plaintiff prepared, signed, or sent the written employment verification form to

the Southeastern defendants; there was no evidence that Chen signed or otherwise wrote on the

written employment verification form; and the telephone verification occurred after the loan

closed, thus negating any reliance by plaintiff. The Southeastern defendants also argued that

plaintiff had not sustained any damages as a result of the alleged fraud, because plaintiff sold the

loan for more than the amount it lent to Bastos and was never required to repay any of that

amount.

¶6 The Southeastern defendants submitted a number of documents in support of their motion

for summary judgment. Included were documents related to the closing of the Bastos loan and

its subsequent sale to CitiMortgage, Inc. (“CMI”). These documents reveal that plaintiff and

CMI entered into a “Correspondent Agreement” in 2004, which governed the terms of loan sales

from plaintiff to CMI, including the Bastos loan. The Bastos loan, made in the amount of

$510,320, closed on September 14, 2007. At closing, Bastos signed an acknowledgement that,

effective November 1, 2007, the date on which his first installment payment was due, the

servicing of his loan would be assigned, sold, or transferred to CMI. Less than two weeks after

the close of the loan, on September 26, 2007, plaintiff sold the Bastos loan to CMI. CMI paid

plaintiff a total of $513,755.28 on the sale.

¶7 The Southeastern defendants also submitted excerpts of several transcripts, including the

deposition transcript of John Phillips, the loan officer on the Bastos loan. Phillips testified that

he does not recall being involved in the verification process for the Bastos loan, and he would

not have been involved in verifying Bastos’ employment, as that would have been the duty of the

-3- 1-19-0979

processing department. He also testified that all of the loans issued by plaintiff in 2007 were

sold on the secondary market, and most of the time, he would have known to whom a particular

loan was being sold so that the buyer’s particular underwriting requirements could be followed.

¶8 The deposition of Joshua Elges, who processed the Bastos loan for plaintiff, was also

submitted. Elges testified that he did not recall the specifics of processing the Bastos loan. After

being shown exhibits, Elges testified that he was not involved in obtaining the written

employment verification of Bastos from the Southeastern defendants. This conclusion was based

on the fact that his signature did not appear on the written employment verification form. He

testified that if he had obtained the written verification, he would have signed the form. He did,

however, sign the form memorializing the verbal telephone verification of Bastos’ employment.

Accordingly, he assumes that he must have talked to someone at Southeastern Security, even

though he does not specifically recall speaking with Chen or anyone else at Southeastern

Security.

¶9 The deposition of Chen, along with a written declaration by him, was also submitted in

support of the motion for summary judgment. According to his deposition testimony and

declaration, in 2007, he was the CFO and CEO of Southeastern Security and was responsible for

payroll and responding to requests for employment verification. At no point was Bastos ever

employed with Southeastern Security. No one at Southeastern Security ever received or signed

the written employment verification form from plaintiff. Chen denied that it was his signature on

the form or that he had any contact with plaintiff regarding Bastos. Chen also denied ever

speaking with Elges. Chen testified that Bastos was the father of one of his high school

classmates, Fred Bastos, but that Chen had limited contact with Bastos and believed he currently

lived in Brazil.

-4- 1-19-0979

¶ 10 The Southeastern defendants also submitted the transcript of an evidentiary hearing on a

motion to dismiss they filed earlier in the proceedings.

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2020 IL App (1st) 190979-U, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chicago-bankcorp-inc-v-chao-chen-illappct-2020.