Arrowwood Indemnity Co. v. Thompson , 2024 IL App (5th) 230876-U ( 2024 )

2024 IL App (5th) 230876-UNOTICE
NOTICE
Decision filed 05/08/24. The
This order was filed under
text of this decision may be NO. 5-23-0876
Supreme Court Rule 23 and is
changed or corrected prior to
not precedent except in the
the filing of a Petition for IN THE limited circumstances allowed
Rehearing or the disposition of
under Rule 23(e)(1).
the same.
APPELLATE COURT OF ILLINOIS
FIFTH DISTRICT
______________________________________________________________________________
ARROWWOOD INDEMNITY COMPANY, ) Appeal from the
) Circuit Court of
Plaintiff-Appellee, ) St. Clair County.
)
v. ) No. 22-SC-671
)
SALEEM THOMPSON, ) Honorable
) Julia R. Gomric,
Defendant-Appellant. ) Judge, presiding.
______________________________________________________________________________
JUSTICE MOORE delivered the judgment of the court.
Justices Boie and Sholar concurred in the judgment.
ORDER
¶1 Held: The order and judgment of the trial court is affirmed. The trial court did not abuse
its discretion in admitting exhibits pursuant to the business records exception to the
hearsay rule. The judgment in favor of the plaintiff was not against the manifest
weight of the evidence.
¶2 The defendant, Saleem Thompson, appeals the September 19, 2023, order of the circuit
court of St. Clair County, following a bench trial, that entered judgment against Thompson in the
amount of $15,387.81 and in favor of the plaintiff, Arrowwood Indemnity Company
(Arrowwood). For the reasons that follow, we affirm the trial court’s order.
1
¶3 I. BACKGROUND
¶4 On April 20, 2022, the plaintiff, Arrowwood, filed a two count verified small claims
complaint against the defendant, Thompson. The complaint alleged that Thompson defaulted on
two student loans.
¶5 On July 11, 2022, counsel for Thompson entered a special and limited appearance and filed
a motion to quash service of summons and the complaint. On August 8, 2022, the trial court entered
an order granting, in part, and denying, in part, the motion to quash. The order required the plaintiff
to send a complete copy of the complaint to the defendant’s attorney by September 1, 2022. The
defendant was granted until October 1, 2022, to file a responsive pleading. On October 17, 2022,
the trial court entered an order granting the defendant’s motion to dismiss, 1 granting the plaintiff
21 days to file an amended complaint, and granting the defendant 21 days thereafter to respond to
any amended complaint.
¶6 On November 9, 2022, the plaintiff filed an amended verified two count complaint. The
amended complaint alleged, inter alia, that the plaintiff, Arrowwood, was a successor in interest
to Guaranty National Insurance Company (Guaranty) and that Guaranty provided default insurance
polices to various lenders, including those that provided student loans. Guaranty provided default
insurance policies on the two student loans identified in the complaint that were obtained by
Thompson. The following documents were attached as exhibits to the amended complaint: Group
Exhibit A—affidavit of Linda Pettigrew and September 30, 2011, Bill of Sale, Assignment and
Assumption Agreement between Citibank, N.A., and Discover Bank; Group Exhibit B—
TuitionGard, Ltd. Insurance Certificate, two Arrowwood Indemnity Company Request for Claim
Reimbursement Forms, and two Transfer of Ownership between Discover Student Loans-SLC and
1
The defendant’s motion to dismiss the original complaint is not contained within the common law
record on appeal.
2
Arrowwood Indemnity Company; Exhibit C—CitiAssist Loans for medical students application
for Saleem Thompson and promissory note; Exhibit D—Arrowwood Lost or Missing Original
Loan Document Affidavit regarding Truth in Lending document with attached illegible document;
and Exhibit E—Affidavit of Indebtedness.
¶7 On November 14, 2022, the defendant filed a motion to dismiss the amended complaint
pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 2022)). No
additional pleadings were filed for approximately four months. On March 9, 2023, the plaintiff
filed a motion for default judgment. This resulted in responses and a motion for sanctions to be
filed by the defendant. The motion for default judgment was later withdrawn. On June 20, 2023,
the plaintiff filed a response to the motion to dismiss.
¶8 On June 26, 2023, the trial court entered an order that denied the defendant’s motion to
dismiss the amended complaint and denied the motion for sanctions. The defendant was granted
20 days to answer the amended complaint. Further, the trial court set the matter for a bench trial
on September 19, 2023.
¶9 On July 18, 2023, the defendant filed a motion for leave to submit discovery requests. The
plaintiff filed an objection to the motion. The trial court denied the motion on August 14, 2023.
¶ 10 On September 18, 2023, the day before the bench trial was scheduled, Thompson filed his
verified answer to the first amended complaint that denied each and every allegation of the
amended complaint.
¶ 11 The trial court conducted the bench trial on September 19, 2023. Thompson was not present
for the bench trial; however, his counsel was present. Each side gave a brief opening statement
and then plaintiff called the only witness to testify, Robert Baer.
3
¶ 12 Baer testified that he was employed by Arrowwood and had been for 32 years. Baer’s title
is claim executive. He testified that he is responsible nationally for workers’ compensation, some
construction defect cases, and the tuition guard program.
¶ 13 Baer testified that the tuition guard program sold insurance coverage to lenders for
coverage should a borrower default on a covered loan. If a borrower defaulted, a claim would be
filed with Arrowwood, the claim would be reviewed, and if it was a valid claim, Arrowwood would
pay the amount that was claimed to be owed. In exchange, Arrowwood then received ownership
of the loan.
¶ 14 Next, the following colloquy relevant to this appeal occurred:
“Q. [PLAINTIFF’S COUNSEL]: Okay. Is it the ordinary course of business to get
documents for such review?
A. [BAER]: Yes.
Q. And are those records kept in the ordinary course of business?
A. Yes.
[DEFENSE COUNSEL]: Let me interpose an objection, Your Honor. He can not
[sic]—he can not [sic] make a business record of some other organization into a business
record of Arrowwood. He can not [sic] testify that those other documents by other
companies were made in the ordinary course of business and are a business record of
Arrowwood.
THE COURT: I don’t know that I disagree Mr. Duree. But I don’t know that’s what
he’s testifying to or that counsel is intending to assert. So overruled for now. You can re-
raise your objection at the end of testimony.
4
[PLAINTIFF’S COUNSEL]: Your Honor, I have a case right out of the Fifth
District that says everything I’m doing is proper. Do you want me to argue that now or just
wait?
THE COURT: Do you have a copy of the case you want me to review? I’ll take it
now if you want.
***
THE COURT: Well, why don’t we go forward with Mr. Baer’s testimony and I’ll
allow you to re-raise an objection after I hear the totality of his testimony Mr. Duree.”
Counsel for each side then agreed to stipulate that defense counsel was making a standing objection
to this line of questioning, and the trial court accepted the stipulation.
¶ 15 Baer testified that Arrowwood would receive the following documents for student loans in
default: the original claim documents, a record of the payments that were made, and a claim form.
Baer testified that the aforementioned documents were kept in the ordinary course of business, it
was the ordinary course of the business to keep those records, and Arrowwood relied on those
documents.
¶ 16 Next, Baer testified regarding several exhibits. Baer testified that he was familiar with a
loan provided to Thompson. Baer testified that exhibit 1 is a loan application to Citibank for a
student loan. Arrowwood received this document as part of the documents “presented to
[Arrowwood] as part of the claim package when the subsequent lender, Discovery [sic] filed their
claim.” Exhibit 1 contained four pages including the loan application and the terms and conditions
of the loan. Page 4 of exhibit 1 was the disclosure statement that indicated the amount financed,
the interest rate, and the total number of payments. Baer testified that exhibit 1 would be part of
the claim package and it was kept with those records on this loan.
5
¶ 17 Baer identified exhibit 1-A as a request for claim reimbursement for the Thompson
disbursement made on September 7, 2000. Baer testified that it would be in the regular course of
business to receive this document from the lender, and that Arrowwood received exhibit 1-A in
the ordinary course of Arrowwood’s business, and it is part of Arrowwood’s business records.
¶ 18 Baer testified that exhibit 1-C was the sale of the loan from Citibank to Discover. He
testified that exhibit 1-B was a transfer of ownership from Discover Student Loans-SLC to
Arrowwood. Baer testified that the loan went from Citibank to Discover and then Discover sent it
to Arrowwood. He testified that the documents contained in exhibits 1-B and 1-C were received
in the ordinary course of business and then became part of the business records of Arrowwood.
¶ 19 Baer testified that exhibit 1-D was an insurance certificate that would have been provided
to the lender and it showed the premium paid and policy number. He testified that this would have
been created in the ordinary course of business by Arrowwood or its broker or agent. He also
testified that it would have been received in the ordinary course of business and made part of the
business record.
¶ 20 Baer testified that the loan was disbursed in two installments, both in the amount of $8009.
Next, Baer testified regarding exhibit 1-E, which he identified as the payment record of payments
made on the first disbursement. Arrowwood received this document as part of the claim process.
Exhibit 1-E showed the first payment being received in 2005 and the last payment recorded on
November 9, 2012. He testified that it was in the ordinary course of business for Arrowwood to
keep these records as part of its own records. This would have been documentation that supported
the claim and the payment of the claim by Arrowwood.
¶ 21 Next, Baer testified regarding the documentation related to the second disbursement.
Exhibit 2 contained the exact same loan application as for the first disbursement. Exhibit 2-A was
6
a request for claim reimbursement for the second disbursement. Exhibits 2-B and 2-C, like exhibits
1-B and 1-C, referenced the sale and transfer of the loan. Exhibit 2-D is the insurance certificate.
Exhibit 2-E was the payment history for the second disbursement. The last payment made on the
second disbursement was made on November 10, 2012. Baer testified that exhibits 2 and 2-A
through 2-E were all received in the ordinary course of business for Arrowwood, it is the ordinary
course of Arrowwood to have these records, and Arrowwood had then to document the claim being
made by the lender for the default of the borrower.
¶ 22 Baer testified that Arrowwood paid $4594.81 for the first disbursement and $4852.72 for
the second disbursement. This was paid based on the principal owed on the loan. He also testified
that interest was accruing at the rate of 3.5%. Baer also testified that the contract provided that
court costs and attorney fees would also be collected.
¶ 23 Baer testified that Arrowwood relied upon all of the documents that he had been shown as
exhibits to pay out the insurance claims.
¶ 24 Next, defense counsel cross-examined Baer. First, Baer was cross-examined regarding the
payment histories. Baer testified that the payment histories were not prepared by Arrowwood; they
were documents received by Arrowwood. Baer testified that the believed the payment histories
showed a combination of payments made to Citibank and Discover because the history predates
the transfer of ownership but contains all of the payments. There was nothing on the documents to
indicate which entries were made by Citibank and which were made by Discover.
¶ 25 Baer testified that he did not have a canceled check or similar document that would show
a payment from Arrowwood to anybody. Baer testified that the transfer of ownership documents,
exhibits 1-B and 2-B, would indicate payments from Arrowwood. Baer testified that these
documents evidenced that Arrowwood made payments to Discover Student Loans-SLC.
7
¶ 26 Baer was then cross-examined regarding the date the payments were made; he testified that
he did not know the exact date. He also did not know the exact date the documents were received
by Arrowwood.
¶ 27 Baer agreed on cross-examination that no payments were ever made to Arrowwood by
Thompson. He also agreed that he did not have personal knowledge that Thompson signed either
of the original loan agreements. Cross-examination continued regarding the exhibits that Baer had
previously reviewed and testified about in direct examination.
¶ 28 On redirect examination, Baer testified that Arrowwood had a record of making the
payments on the two claims for the two disbursements. Baer testified that based on the loan
application documents, exhibits 1 and 2, that Thompson received the funds specified in the loan
application. The application included a school certification that was signed off on by a director of
the program indicating that Thompson was attending the school and should receive the money.
This concluded the presentation of testimony.
¶ 29 Plaintiff’s counsel then moved for the admission of the exhibits. At which point, arguments
were presented. Defense counsel first argued that the documents were not business records of
Arrowwood and just because they were received by Arrowwood does not make them admissible
as business records. Next, he argued that the documents do not show an assignment of the “oral
obligations from, if you assume for purposes of debate, the loan agreements were allegedly signed
by Saleem Thompson. *** [T]hey don’t show that there was an assignment from Citibank, a State
Bank to Citibank, a National Bank.” Or an assignment from Citibank, a national bank, to Discover.
For these reasons, defense counsel objected to the admission of the exhibits.
¶ 30 In response, plaintiff’s counsel argued that the cases he tendered to the trial court support
his position that it is not necessary that the person that has knowledge of the documents is the
8
person who created the documents. He cited Northbrook Bank & Trust Co. v. 2120 Division, LLC,
2015 IL App (1st) 133426-U (Sept. 24, 2015); however, the Rule 23 unpublished decision was
withdrawn and replaced with a published opinion on December 3, 2015. Additionally, plaintiff’s
counsel cited Bank of America, N.A. v. Land, 2013 IL App (5th) 120283. Regarding the assignment
argument, plaintiff’s counsel argued that Arrowwood is not a collection agency and that the
assignments have been testified to and documents presented. After considering the arguments of
counsel and the cases cited by plaintiff, the trial court admitted all of the exhibits over the
defendant’s objection.
¶ 31 Plaintiff’s counsel then requested that the interest, court costs, and attorney fees also be
considered by the trial court. Defense counsel then argued again that the assignment documents
presented did not state the consideration for the assignment and that the case should be dismissed,
as had been previously argued in the motion to dismiss.
¶ 32 The trial court then made an oral pronouncement in favor of the plaintiff that was followed
with a written judgment on September 19, 2023. The defendant filed a timely notice of appeal on
October 6, 2023.
¶ 33 II. ANALYSIS
¶ 34 On appeal, the defendant alleges that the judgment entered against him should be reversed.
More specifically, the defendant identifies the following issues in his opening brief:
I. The trial court erred by entering judgment for Arrowwood Indemnity
Company because the judgment was against the manifest weight of the evidence in that
there was no evidence that the two student loan agreements were assigned from Citibank,
a New York State Bank, to Discover Bank, a Delaware Banking Corporation, and from
Discover Bank, a Delaware Banking Corporation, to Arrowwood Indemnity Company;
9
there was no evidence from which the trial court could find that Arrowwood Indemnity
Company acquired the rights of the original lender by assignment (Issue I).
II. The trial court erred by entering judgment for Arrowwood Indemnity
Company because the judgment is against the manifest weight of the evidence in that there
was no evidence from which the trial court could have found that Arrowwood Indemnity
Company or Guaranty National Insurance Company was required, under the insurance
contract, to repay the loans or that either of them repaid the loans and thereby became the
owners of the promissory notes that are part of the loan agreements (Issue II).
III. The trial court erred and abused its discretion by admitting into evidence
Arrowwood Indemnity Company’s exhibits, consisting of alleged records of Discover
Bank, a Delaware Banking Corporation, Citibank, N.A., a National Banking Association,
Citibank, a New York State Bank, and Discover Student Loans-SLC, over objection,
because there was no evidence establishing that the alleged records of those entities were
made in the regular course of business of those entities and at or near the time of the events
or occurrences; the mere fact that the documents of other companies wound up in the files
of Arrowwood Indemnity Company does not establish a foundation for their admission
into evidence as business records; Arrowwood Indemnity Company failed to establish a
submissible case without, and even with, these exhibits (Issue III).
¶ 35 We find it prudent to begin our review of this case with the last issue presented by the
defendant, Issue III—whether the trial court erred in admitting Arrowwood’s exhibits as business
records. “A reviewing court will not disturb a trial court’s decision regarding the admissibility of
business records absent an abuse of discretion.” Southern Wine & Spirits of Illinois, Inc. v. Steiner,
2014 IL App (1st) 123435, ¶ 25. “An abuse of discretion occurs only when the trial court’s decision
10
is arbitrary, fanciful, or unreasonable or where no reasonable person would take the view adopted
by the trial court.” Seymour v. Collins, 2015 IL 118432, ¶ 41.
¶ 36 The defendant contends that Baer’s testimony was insufficient to support the admission of
the plaintiff’s exhibits as business records. The business records exception to the hearsay rule is
codified in Illinois Supreme Court Rule 236, which provides as follows:
“Any writing or record, whether in the form of any entry in a book or otherwise, made as
a memorandum or record of any act, transaction, occurrence, or event, shall be admissible
as evidence of the act, transaction, occurrence, or event, if made in the regular course of
any business, and if it was the regular course of the business to make such a memorandum
or record at the time of such an act, transaction, occurrence, or event or within a reasonable
time thereafter. All other circumstances of the making of the writing or record, including
lack of personal knowledge by the entrant or maker, may be shown to affect its weight, but
shall not affect its admissibility. The term ‘business,’ as used in this rule, includes business,
profession, occupation, and calling of every kind.” Ill. S. Ct. R. 236(a) (eff. Aug. 1, 1992).
¶ 37 During the bench trial and on appeal, the plaintiff relies on our opinion in Bank of America,
N.A. v. Land, 2013 IL App (5th) 120283, to support the admission of its exhibits under the business
records exception to the hearsay rule. Land provides, inter alia, as follows: “Notably, ‘Rule 236
expressly provides that lack of personal knowledge by the maker may affect the weight of the
evidence but not its admissibility.’ ” Id. ¶ 12 (quoting In re Estate of Weiland, 338 Ill. App. 3d
585, 601 (2003)). Land also noted the reasoning behind the business records exception as set forth
in Kimble v. Earle M. Jorgenson Co.:
“The theory upon which entries made in the regular course of business are admissible as
an exception to the hearsay rule is that ‘since their purpose is to aid in the proper transaction
11
of the business and they are useless for that purpose unless accurate, the motive for
following a routine of accuracy is great and the motive to falsify nonexistent.’ ” Kimble v.
Earle M. Jorgenson Co., 358 Ill. App. 3d 400, 414 (2005) (quoting Michael H. Graham,
Cleary and Graham’s Handbook of Illinois Evidence § 803.10, at 817 (7th ed. 1999)).
¶ 38 In the present case, the trial court heard direct testimony and cross-examination testimony
of Baer. Baer testified that he had worked for Arrowwood for more than 30 years and was familiar
with the claim surrounding Thompson’s loans. Baer testified regarding the documents that
Arrowwood received after a claim was made for payment under the insurance policy and that
Arrowwood relied upon the documents to process and ultimately pay the claims. “A trial court’s
decisions on the admissibility of evidence are entitled to deference ***.” Jefferson v. Mercy
Hospital & Medical Center, 2018 IL App (1st) 162219, ¶ 39. Upon a thorough review of the
record, we cannot find that the trial court’s decision to admit the plaintiff’s exhibits was arbitrary,
fanciful, or unreasonable. Accordingly, we affirm the trial court’s admission of plaintiff’s exhibits.
¶ 39 Next, turning to Issue I asserted by the defendant—whether there was evidence presented
regarding the assignment of the original loans. In the defendant’s opening brief, approximately
two pages are used to articulate his position. However, other than citing legal authority for the
applicable standard of review on this issue, the defendant fails to cite to any additional legal
authority in support of his argument on this issue.
¶ 40 “A reviewing court is entitled to have the issues on appeal clearly defined with pertinent
authority cited and a cohesive legal argument presented.” Thrall Car Manufacturing Co. v.
Lindquist, 145 Ill. App. 3d 712, 719 (1986). “The appellate court is not a depository in which the
appellant may dump the burden of argument and research.” Id. On appeal, “[p]oints not argued are
forfeited and shall not be raised in the reply brief, in oral argument, or on petition for rehearing.”
12
Ill. S. Ct. R. 341(h)(7) (eff. Oct. 1, 2020). The mere allegation that the trial court’s order was in
error without any citation to authority to support that contention falls short of what is required
under Rule 341(h)(7), “which our supreme court has stated is not a mere suggestion, but has the
force of law.” In re Marriage of James, 2018 IL App (2d) 170627, ¶ 37 (citing Rodriquez v.
Sheriff’s Merit Comm’n, 218 Ill. 2d 342, 353 (2006)). Accordingly, we find the defendant forfeited
any arguments regarding Issue I pursuant to Illinois Supreme Court Rule 341(h)(7).
¶ 41 As to Issue II, the defendant did not raise this issue in the trial court during, or after, the
bench trial. “It is well settled that issues not raised in the trial court are deemed waived and may
not be raised for the first time on appeal.” Haudrich v. Howmedia, Inc., 169 Ill. 2d 525, 536 (1996).
Therefore, we will not consider this argument on appeal due to the defendant’s failure to raise this
before the trial court.
¶ 42 Now turning to the ultimate issue, should the trial court’s order and judgment of September
19, 2023, following a bench trial, be reversed? “The standard of review in a bench trial is whether
the judgment is against the manifest weight of the evidence.” Camelot, Inc. v. Burke Burns &
Pinelli, Ltd., 2021 IL App (2d) 200208, ¶ 50. When sitting as the trier of fact in a bench trial, the
trial court makes findings of fact and weighs all of the evidence in reaching a conclusion. Nokomis
Quarry Co. v. Dietl, 333 Ill. App. 3d 480, 483-84 (2002). “When a party challenges a trial court’s
bench-trial ruling, we defer to the trial court’s factual findings unless they are contrary to the
manifest weight of the evidence.” Id. at 484. When applying this standard of review, we give great
deference to the trial court’s credibility determinations, and we will not substitute our judgment
for that of the circuit court “ ‘because the fact finder is in the best position to evaluate the conduct
and demeanor of the witnesses.’ ” Staes & Scallan, P.C. v. Orlich, 2012 IL App (1st) 112974, ¶ 35
(quoting Samour, Inc. v. Board of Election Commissioners, 224 Ill. 2d 530, 548 (2007)). “A factual
13
finding is against the manifest weight of the evidence when the opposite conclusion is clearly
evident or the finding is arbitrary, unreasonable, or not based on evidence.” Samour, 224 Ill. 2d at
544. The trial court’s findings and judgment will not be disturbed “if there is any evidence in the
record to support such findings.” Brown v. Zimmerman, 18 Ill. 2d 94, 102 (1959).
¶ 43 After determining that the evidence submitted by the plaintiff and admitted by the trial
court was not an abuse of discretion, we cannot find that the trial court’s reliance on that evidence
resulted in an order and judgment that was against the manifest weight of the evidence. We affirm
the trial court’s order and judgment of September 19, 2023, in favor of the plaintiff.
¶ 44 On appeal, the plaintiff seeks attorney fees due to the additional costs of defending the
appeal. The trial court’s order of September 19, 2023, ordered that defendant was to pay attorney
fees for the underlying litigation. We remand this matter to the trial court for a hearing on any
additional attorney fees to be awarded as a result of the appeal.
¶ 45 III. CONCLUSION
¶ 46 For the foregoing reasons, we affirm the trial court’s order and judgment of September 19,
2023. Further, we remand this matter to the trial court for a hearing on any additional attorney fees.
¶ 47 Affirmed and remanded.
14