MOUNT VERNON – St. Clair County Associate Judge Andrew Gleeson lacked jurisdiction when he ordered owners of a Maryland bank to pay Amiel Cueto $7.4 million, a lawyer for the owners told Fifth District appellate justices on March 1.
Constantine Trela of Chicago, on behalf of American Bank Holdings Inc., asked three justices to reverse a default judgment that Gleeson entered in 2008.
"We do not dispute that service was not handled properly," Trela said.
"That relates to due diligence and not to jurisdiction or whether he can state a claim," he said.
He called Cueto's claim of loss "implausible and unsupported by facts."
Cueto answered that the holding company could have challenged his facts if they had responded to the complaint.
"They had a duty to pay attention and they did nothing," Cueto said.
Cueto sued the holding company, lender United Mortgage, and eight other defendants, over the collapse of a plan to develop 32 acres he owned on the East St. Louis riverfront.
He claimed he had to sell to a different buyer, for about $7.4 million less.
All defendants answered except American Bank Holdings Inc., and Cueto moved for default judgment against it.
Gleeson granted the motion, finding the holding company committed fraud under common law and Illinois consumer law.
He awarded the damages Cueto claimed, plus nine times as much in punitive damages.
In the order, Gleeson also ordered creation of a trust in Cueto's name, to build schools and roads.
He awarded a fee of about $24 million to local lawyer Grey Chatham, bringing the total to about $98 million.
American Bank Holdings responded at last, with a petition to set aside judgment.
Gleeson didn't set it aside, but he reduced punitive damages from nine times to three, dropped the plan for a Cueto trust, and cut out Chatham's fee.
Later he eliminated punitive damages, granting judgment only on the original claim.
Finally he asked the Fifth District to rule on his jurisdiction.
When Cueto sought to enroll the judgment in Maryland state court, a judge ruled that Gleeson lacked jurisdiction.
That didn't relieve the concerns of the holding company's insurer, St. Paul Mercury, which sued in Maryland federal court to escape liability for the judgment.
Gleeson stayed his judgment pending resolution of the insurance dispute, and the federal court stayed its proceedings pending a decision at the Fifth District.
About a year ago, the Fifth District delayed action after Cueto reported he would undergo surgery for cancer.
Cueto's appeal brief alleged perjury four times and left prosecution to the state's attorney.
Trela led off, saying the real estate deal involved an unsecured loan for $600 million.
He said it would have been one of the biggest real estate transactions ever in Illinois.
"There was no allegation that we played any role in the transaction," he said.
Trela said the complaint alleges the holding company is an alter ego of American Bank.
He said Cueto connected the holding company to United Mortgage as a subsidiary of the bank, by finding the same telephone number and address for both.
He said the holding company and United Mortgage aren't the same entity.
Justice Bruce Stewart asked if the holding company showed they weren't the same.
Trela said it wasn't in a position to establish that.
Stewart said, "You attack him for having no proof but you offer no proof?"
Trela said yes.
He said Cueto connected United Mortgage to American Bank by a printout from a separate website.
"There is no evidence that they merged," Trela said. "It was a simple purchase of assets."
He said the third link in Cueto's chain was that the holding company and the bank were the same.
"Parents are not responsible for the liabilities of subsidiaries, and jurisdiction over a subsidiary is not jurisdiction over a parent," Trela said.
He said Cueto initiated action in Maryland, and the court vacated the judgment.
He said Cueto moved to set aside the order of vacation, claiming the holding company lied and falsified records.
The court denied Cueto's motion and Cueto didn't appeal, Trela said.
"Those are the same parties and the same issue as here," he said.
Stewart asked if it was Trela's position that there was no final appealable order because Gleeson didn't dismiss all other defendants.
"The record is not a model of clarity," Trela said.
Presiding Judge Melissa Chapman said, "Is it like a de facto dismissal?"
Trela said, "Yes, if I didn't do it before, I do now.
"We challenged it properly. It was really the only way."
Stewart asked if the difference between orders was one minute, and Trela said yes.
Stewart asked if the clerk wrote the time, and Trela said yes.
A clerk cracked a gavel and Cueto rose, representing himself.
He has litigated "pro se" in various suits since leaving federal prison, where he served time on a conviction for obstruction of justice.
Through other cases he has tried to prove his innocence so the Illinois Supreme Court will restore his license to practice.
Cueto began by telling the justices that Chatham would assist him.
Chatham once accompanied Cueto to Gleeson's court, with Cueto asking defense counsel if some law said he couldn't be both represented and pro se.
At the Fifth District, Chatham silently set exhibits on easels.
Cueto told the justices that Trela barely mentioned the default.
He said the complaint was served on registered agent CT Corporation on June 18, 2008.
CT delivered it to the main office on June 19, 2008, he said, and the holding company used American Bank to handle protocol for the lawsuit.
Stewart asked if he assumed that the same address and overlap of officers and directors didn't prevent them from being separate.
Cueto said, "No, but Blaszczak said they are the same."
Stewart said, "Your testimony is based on a phone conversation? If you said it on the witness stand, could you prove it?"
Cueto said, "Yes, if it isn't contradicted."
Cueto leaned on the podium and grew quieter.
He said the holding company waived jurisdiction by moving to set aside judgment.
He said the motion made it a new case separate from the underlying case.
The gavel cracked and Cueto stopped.
Trela rose and said, "Much of that has nothing to do with the case."
He said the theory that the petition started a new case was new.
"That doesn't make any sense," Trela said.
He said Blaczszak was an employee of the bank, not the holding company.
The justices took it under advisement.