Determining that the St. Clair County Circuit Court did not have jurisdiction over a Maryland bank, the Fifth District Appellate Court has reversed a multi-million judgment awarded to the late Amiel Cueto.
Cueto, who died in May 2012, sued American Bank Holdings Inc. and several other defendants, some of whom were later dismissed from the suit, in June 2008 in connection with the collapse of a plan to develop 32 acres of land he owned on the East St. Louis riverfront.
His wife, Elaine Cueto, was substituted as the plaintiff in the case in April 2013.
In the unpublished order it handed down last week, a panel of the Fifth District Appellate Court reversed the default judgments St. Clair County Circuit Court Judge Andrew Gleeson had entered against the bank on the basis of jurisdiction.
The judgments at issue in the case originally totaled slightly more than $98 million, but were later reduced to about $28.4 million and then $7.4 million.
In his suit, Cueto accused the American Bank Holdings and several other defendants of violating the Illinois Consumer Fraud and Deceptive Business Practices Act, as well as committing common law fraud by falsely promising to finance the purchase of his land.
Cueto claimed that he ended up having to sell his land to a different buyer, for about $7.4 million less than the contract price. In addition to the amount of alleged actual damages, Cueto sought punitive damages and attorney fees.
Following Cueto’s July 2008 request for a default judgment, Gleeson entered three separate judgment orders. They awarded him about $7.4 million in compensatory damages, slightly more than $66.5 million in punitive damages and nearly $24.7 million in attorney fees under the Consumer Fraud Act.
After Cueto tried to enforce the judgments by filing them in a Maryland court, the bank sought to vacate and void them, asserting that the St. Clair County Circuit Court lacked personal jurisdiction over it.
To bolster support for its jurisdictional argument, the bank filed an affidavit of its president who swore that American Bank Holdings never conducted business, owned property, had an office or was licensed in Illinois.
The bank president also stated in his affidavit, according to the appellate court order, that none of the defendants in the suit were its employees or subsidiaries and that American Bank Holdings never committed funds toward the purchase of Cueto’s land.
Gleeson denied the bank’s motion to vacate and void the judgments in a June 2009 order, which preserved the $7.4 million award for compensatory damages, reduced the award for punitive damages to $21 million and vacated the attorney’s fee award.
He later, sua sponte, vacated the $21 million award for punitive damages.
In July 2009, the circuit court in Maryland issued an order that temporarily stayed enforcement of the judgments and Gleeson, that same month, entered another sua sponte order that stated he remained “troubled by the jurisdictional issue.”
Gleeson then certified two questions for interlocutory review: 1) whether the trial court had personal jurisdiction over the bank and 2) if American Bank Holdings had waived its right to contest jurisdiction.
The Maryland court in August 2009 determined that the St. Clair County Circuit Court lacked personal jurisdiction over the bank and as such, vacated the judgments.
While Cueto unsuccessfully asked the Maryland Court to set aside its order, American Bank Holdings was successful in seeking a stay of enforcement of the St. Clair County judgment pending its appeal.
The bank filed two appeals, which the Fifth District consolidated and resolved in its recently issued unpublished order that was delivered by Justice Melissa Chapman. Justices Stephen Spomer and Bruce Stewart concurred.
“There was no evidence that American Bank Holdings had a relationship between the parties to the failed contract nor any evidence that American Bank Holdings committed a tortious act,” Chapman wrote for the court.
She added, “However, even if there was some remote connection to the entities involved in this case, there is no evidence that St. Clair County circuit court could exercise personal jurisdiction over American Bank Holdings–specifically or generally.”
Chapman explained that “with no evidence of any connection to the failed transactions at issue, there is no single action within Illinois giving rise to the cause of action, by which American Bank Holdings purposefully availed itself of the benefits of Illinois laws.”
Saying that Cueto failed to prove the bank had sufficient minimum contacts with Illinois in order to provide jurisdiction, Chapman wrote the appeals panel found “the court's exercise of personal jurisdiction was in violation of federal and state due process.”
“Because the court never had personal jurisdiction over American Bank Holdings, judgments entered against the company were void,” she wrote.
The appeals panel also determined that the bank did not waive its jurisdictional argument when it filed a petition to void the judgment as its first pleading.
Chapman explained, “The combination motion filed by American Bank Holdings satisfied the requirement of section 2-301 of the Code of Civil Procedure that a petition contesting personal jurisdiction must be filed before any other pleading.”
Based on its finding over jurisdiction, the appellate court also rejected Cueto’s cross-appeal that asked it to reinstate the punitive damages award.
“Without personal jurisdiction, there is no basis by which this court could reinstate this judgment,” Chapman wrote.
According to the appellate court clerk’s office, Belleville attorney Michael Nester and Chicago attorney Constantine Trela represented American Bank Holdings.
Belleville attorney Christopher Cueto represented Cueto, a one-time attorney who had represented himself in arguments before the appellate court. Although Amiel Cueto lost his law license in 2004, he was allowed to represent himself and file pro se lawsuits.