FirstMerit Bank, NA successor to Midwest Bank and Trust Company v. Balin et al
Filing
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MEMORANDUM Opinion entered by the Honorable Samuel Der-Yeghiayan on 9/11/2012. Mailed notice (tlm)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
FIRSTMERIT BANK, N.A.,
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Plaintiff,
v.
TIMOTHY T. BALIN, et al.,
Defendants.
No. 11 C 8809
MEMORANDUM OPINION
SAMUEL DER-YEGHIAYAN, District Judge
This matter is before the court on Plaintiff FirstMerit Bank, N.A.’s
(FirstMerit) motion for summary judgment. For the reasons stated below, the motion
for summary judgment is granted.
BACKGROUND
FirstMerit alleges that in December 2009, in accordance with a loan agreement
(Loan Agreement), Midwest Bank and Trust Company (Midwest) agreed to loan
Home Acquisitions, Inc. (HAI) $742,399.67 (Loan). In exchange for the Loan, HAI
allegedly executed and delivered to Midwest a Promissory Note (Note). To secure
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the Note, Defendant Timothy T. Balin (T. Balin), Defendant Gilbert Balin (G. Balin),
and Defendant Jonathan Smith (Smith) allegedly each executed a guaranty, agreeing
“absolutely and unconditionally” to guarantee full payment on the Note (collectively
referred to as “Guaranties”). (Compl. Par. 12). Defendants also allegedly consented
to two subsequent amendments of the Note. In May 2010, pursuant to an agreement
with the Federal Deposit Insurance Corporation (FDIC), as receiver of Midwest,
FirstMerit became the successor to Midwest and the lawful owner and holder of the
Note, Loan Agreement, and Guaranties. HAI allegedly failed to make the necessary
payment due under the Loan in October 2011, and HAI has allegedly refused to
make any further payment on the Loan. As of June 12, 2012, HAI allegedly still
owes $425,016.33 on the Note. FirstMerit contends that Defendants have failed to
pay the outstanding debt owed under the Note and that Defendants have failed to
honor their obligations under the Guaranties. FirstMerit includes in its complaint a
breach of guaranty claim brought against T. Balin (Count I), a breach of guaranty
claim brought against G. Balin (Count II), and a breach of guaranty claim brought
against Smith (Count III). FirstMerit now moves for summary judgment on all
claims.
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LEGAL STANDARD
Summary judgment is appropriate when the record, viewed in the light most
favorable to the non-moving party, reveals that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as a matter of law.
Fed. R. Civ. P. 56(c); Smith v. Hope School, 560 F.3d 694, 699 (7th Cir. 2009). A
“genuine issue” of material fact in the context of a motion for summary judgment is
not simply a “metaphysical doubt as to the material facts.” Matsushita Elec. Indus.
Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, a genuine issue
of material fact exists when “the evidence is such that a reasonable jury could return
a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986); Insolia v. Philip Morris, Inc., 216 F.3d 596, 599 (7th Cir. 2000). In
ruling on a motion for summary judgment, the court must consider the record as a
whole, in the light most favorable to the non-moving party, and draw all reasonable
inferences in favor of the non-moving party. Anderson, 477 U.S. at 255; Bay v.
Cassens Transport Co., 212 F.3d 969, 972 (7th Cir. 2000).
DISCUSSION
FirstMerit argues that there are no genuinely disputed material facts relating to
the liability of Defendants or the amount of damages owed by Defendants.
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I. Local Rule 56.1
FirstMerit filed a statement of material facts pursuant to Local Rule 56.1, and
Smith has filed a statement of additional facts pursuant to Local Rule 56.1.
A. FirstMerit’s Statement of Material Facts
None of Defendants have filed any response to FirstMerit’s statement of
material facts. Therefore, pursuant to Local Rule 56.1, all facts in FirstMerit’s
statement of material facts are deemed to be undisputed. LR 56.1; see also Sojka v.
Bovis Lend Lease, Inc., 686 F.3d 394, 398 (7th Cir. 2012)(stating that “[t]he
obligation set forth in Local Rule 56.1 is not a mere formality,” and that “[i]t follows
from the obligation imposed by Fed.R.Civ.P. 56(e) on the party opposing summary
judgment to identify specific facts that establish a genuine issue for trial”)(internal
quotations omitted)(quoting Waldridge v. American Hoechst Corp., 24 F.3d 918, 924
(7th Cir. 1994)); Judson Atkinson Candies, Inc. v. Latini-Hohberger Dhimantec, 529
F.3d 371, 382 n.2 (7th Cir. 2008)(stating that a “district court has broad discretion to
require strict compliance with Local Rule 56.1”). Therefore, it is undisputed in this
case that: (1) HAI executed the Note in which HAI promised to pay Midwest the
principal amount of $742,399.67 (SF Par. 12), (2) that Defendants executed the
Guaranties, promising absolutely and unconditionally to honor HAI’s obligations on
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the Note and that Defendants consented to amendments of the Note (SF Par. 16-24),
(3) that HAI has not honored its obligations under the Note and that as of June 12,
2012, HAI owed $425,016.33 (SF Par. 27, 37), and (4) that after a demand for
payment from Defendants, Defendants have failed to pay the outstanding debt owed
on the Note. (SF Par. 33-36). Defendants also do not dispute that they agreed to
reimburse FirstMerit for all attorneys’ fees and costs related to collecting monies
owed by Defendants. (SF Par. 25).
B. Smith’s Statement of Additional Facts
Smith filed a statement of additional facts, and although FirstMerit did not file
a response, several of the paragraphs listed in Smith’s statement of additional facts
fail to comply with Local Rule 56.1 and are thus not deemed to be undisputed. For
example, in paragraph 3 of Smith’s statement of additional facts (Paragraph 3), Smith
contends that “[t]he amount disputed totals $64,825.61.” (S SAF Par. 3). However,
Smith’s conclusory statement as to the amount he believes is in dispute is not
appropriately included in a statement of material facts. Pursuant to Local Rule 56.1,
a statement of material facts must be supported by admissible evidence. LR 56.1.
Smith merely cites in Paragraph 3 to paragraph 4 of his attached declaration (Smith
Declaration). In the Smith Declaration, Smith offers nothing more than conclusory
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statements that certain fees were “not a correct charge nor charged by First Midwest
Bank.” (Smith Decl. Par. 4). Smith does not reference any supporting facts or other
evidence in paragraph 4 of his declaration to support his conclusory statements.
FirstMerit has pointed to ample evidence to justify its damages calculations, and a
reasonable jury could not discount such evidence based solely on Smith’s
unsubstantiated personal opinion as to the proper amount of damages. Paragraph 3
thus fails to comply with Local Rule 56.1.
Smith argues in paragraph 4 of his statement of additional facts (Paragraph 4),
that the declaration by Thomas Maxwell (Maxwell Declaration) is not sufficient to
authenticate certain business records presented by FirstMerit and that such evidence
is inadmissible. A statement of material facts filed pursuant to Local Rule 56.1
provides a litigant with an opportunity to present the court with the facts in a case.
Smith, however, presents the court with a legal argument as to the admissibility of
evidence in Paragraph 4, which is improper under Local Rule 56.1. See Judson, 529
F.3d at 382 n.2 (stating that “[i]t is inappropriate to make legal arguments in a Rule
56.1 statement of facts”). Thus, Paragraph 4 fails to comply with Local Rule 56.1.
II. Maxwell Declaration
Defendants argue that the Maxwell Declaration is not sufficient to authenticate
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certain business records and documents of Midwest. As indicated above, Defendants
had the opportunity, pursuant to Local Rule 56.1, to dispute the amounts set forth in
FirstMerit’s statement of material facts and to cite to admissible evidence that
Defendants could present at trial to support their position. As indicated above,
however, Defendants failed to properly dispute the amounts set forth by FirstMerit in
its statement of material facts. Thus, Defendants have admitted, pursuant to Local
Rule 56.1, that the amounts set forth by FirstMerit are accurate.
The court notes that even if Defendants had not made such an admission, the
Maxwell Declaration is sufficient to authenticate the business records and documents
in question. Defendants argue that the business records and documents belonged to
Midwest and that Thomas Maxwell, who works for FirstMerit, cannot authenticate
the records of Midwest, a third party. Federal Rule of Evidence 803(6) (Rule 803(6))
provides the following:
The following are not excluded by the rule against hearsay, regardless of
whether the declarant is available as a witness: . . . (6) Records of a Regularly
Conducted Activity. A record of an act, event, condition, opinion, or diagnosis
if: (A) the record was made at or near the time by--or from information
transmitted by--someone with knowledge; (B) the record was kept in the
course of a regularly conducted activity of a business, organization,
occupation, or calling, whether or not for profit; (C) making the record was a
regular practice of that activity; (D) all these conditions are shown by the
testimony of the custodian or another qualified witness, or by a certification
that complies with Rule 902(11) or (12) or with a statute permitting
certification; and (E) neither the source of information nor the method or
circumstances of preparation indicate a lack of trustworthiness.
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Fed. R. Evid. 803(6); see also United States v. Reese, 666 F.3d 1007, 1017 (7th Cir.
2012)(stating that “[a] qualified witness need not be the author of the document but
must have personal knowledge of the procedure used to create and maintain the
document”). The record reflects that although Maxwell did not work for Midwest
and was not a custodian of Midwest’s records, Maxwell would constitute a qualified
witness since the records of Midwest became FirstMerit’s records as the successor
bank. See United States v. Jakobetz, 955 F.2d 786, 801 (2nd Cir. 1992)(stating that
“[e]ven if the document is originally created by another entity, its creator need not
testify when the document has been incorporated into the business records of the
testifying entity”). In addition, other courts have held that a successor bank that has
acquired a failed bank through the FDIC can satisfy Rule 803(6) with the declaration
of an employee of the successor bank. See, e.g., U.S. Bank Nat. Ass’n v. American
Screw & Rivet Corp., 2010 WL 3172772, at *3 (N.D. Ill. 2010)(holding that witness
from successor bank could authenticate records of bank that went into receivership);
Krawczyk v. Centurion Capital Corp., 2009 WL 395458, at *5 (N.D. Ill.
2009)(indicating that a bank can rely on its predecessor’s business records and that
“[u]ltimately, the primary emphasis of Rule 803(6) is on the reliability or
trustworthiness of the records sought to be introduced”). As Defendants
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acknowledge themselves, a district court has discretion in assessing the ultimate
trustworthiness of a document that contains hearsay. (Ans. Mem. 2). In this case,
there is sufficient evidence to show that the business records and documents of
Midwest relied upon by FirstMerit to calculate the amounts owed are trustworthy and
reliable documents. Defendants have failed to present any evidence other than their
unsupported personal opinions to call into doubt the accuracy or trustworthiness of
the business records and documents.
Also, as FirstMerit correctly points out, under the standard advocated by
Defendants, it would be extremely difficult for a successor bank to recover debt
owed to a failed bank, as in the instant action, since the custodian of the failed bank’s
records may no longer be able or willing to participate in efforts to recover debts
owed to the bank that went into receivership. Such a standard would inhibit the
FDIC in its receivership role when it must find solvent banks to take over insolvent
banks. Based on the above, the Maxwell Declaration is sufficient to authenticate the
Midwest business records and documents relied upon by FirstMerit.
III. Fees
Defendants also argue that certain fees included in the amount owed, as
calculated by FirstMerit, are improper. However, again, as indicated above,
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Defendants admit, pursuant to Local Rule 56.1, that the amounts set forth by
FirstMerit in its statement of material facts are accurate. In addition, even if
Defendants had not made such an admission, Defendants fail to point to sufficient
evidence to create a genuinely disputed issue of material fact as to the fees in
question. In their response to the instant motion, Defendants rely solely upon the
Smith Declaration. (Ans. 2). FirstMerit correctly points out that the conclusory
statements provided by Smith in the Smith Declaration concerning certain fees are
not supported by any references to admissible evidence. Smith merely states that
“[i]f called as a witness,” he “would competently testify” that certain fees “are not a
correct charge nor charged by” FirstMerit. (Smith Decl. 1). Were Defendants to
offer nothing more than those conclusory statements at trial, a reasonable jury could
not find for Defendants. Smith does not even explain in his declaration why he
believes each fee was improper. The Seventh Circuit has made clear that
“conclusory statements, not grounded in specific facts, are not sufficient to avoid
summary judgment,” and that Federal Rule of Civil Procedure 56 “demands
something more specific than the bald assertion of the general truth of a particular
matter, rather it requires affidavits that cite specific concrete facts establishing the
existence of truth of the matter asserted.” Lucas v. Chicago Transit Authority, 367
F.3d 714, 726 (7th Cir. 2004)(internal quotation omitted)(quoting in part Drake v.
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Minnesota Min. & Mfg. Co., 134 F.3d 878, 887 (7th Cir. 1998)); see also Trinity
Homes LLC v. Ohio Cas. Ins. Co., 629 F.3d 653, 659-60 (7th Cir. 2010)(indicating
that a personal opinion could suffice, but only if based on the declarant’s personal
knowledge and if provided with “sufficient detail to” support the opinion); Abioye v.
Sundstrand Corp., 164 F.3d 364, 368 (7th Cir. 1998)(stating that “none of the
conclusory statements made by the affiants demonstrated, with sufficient
particularity,” the facts put forth by the affiants); Miranda v. Wisconsin Power &
Light Co., 91 F.3d 1011, 1018 (7th Cir. 1996)(stating that “[c]onclusory and
generalized assertions are not sufficient to survive a motion for summary judgment”).
Thus, the conclusory statements by Smith in his declaration are not sufficient to
create a genuinely disputed issue of fact and defeat FirstMerit’s motion for summary
judgment.
There is ample documentary evidence that contradicts the statements included
in the Smith Declaration. FirstMerit also correctly points out that it served
interrogatories on Smith during discovery, which would have required him to present
such facts relating to the fees at that juncture, and that Smith failed to present such
facts during discovery. It is improper for Smith to present such facts for the first
time after the conclusion of discovery in this case. Therefore, based on the above,
FirstMerit’s motion for summary judgment is granted in its entirety.
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CONCLUSION
Based on the foregoing analysis, FirstMerit’s motion for summary judgment is
granted. Judgment is entered in favor of FirstMerit and against Timothy T. Balin,
Gilbert Balin, and Jonathan Smith in the amount of $425,016.33, plus attorneys’ fees,
costs, and $116.51 in interest per day from June 12, 2012, to the date of judgment.
As to attorneys’ fees and costs, FirstMerit is given until September 18, 2012, to
provide the court FirstMerit’s requested amounts. Defendants are given until
September 25, 2012 to respond. The status hearing set for October 18, 2012 stands.
___________________________________
Samuel Der-Yeghiayan
United States District Court Judge
Dated: September 11, 2012
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