FirstMerit Bank, N.A. v. Frasca
Filing
49
Third Party Defendant Robert Wolkoff's motion to dismiss the third party complaint 26 is granted in part and denied in part. MEMORANDUM Opinion and Order Signed by the Honorable George M. Marovich on 7/23/2013:Mailed notice(clw, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
FIRST MERIT BANK, NA,
Plaintiff,
v.
DANIEL N. FRASCA,
Defendant/Third-Party Plaintiff,
v.
ROBERT WOLKOFF,
Third-Party Defendant.
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Judge George M. Marovich
MEMORANDUM OPINION AND ORDER
After plaintiff First Merit Bank N.A. (“First Merit”) filed against defendant Daniel N.
Frasca (“Frasca”) a lawsuit in which it alleged Frasca had breached a guaranty, Frasca filed a
third-party claim against Robert Wolkoff (“Wolkoff”). Wolkoff has filed a motion to dismiss the
third-party claim against him on the grounds that the claim is not ripe. For the reasons set forth
below, the Court grants in part and denies in part the motion to dismiss.
I.
Background
In First Merit’s complaint against Frasca, First Merit alleges that in May 2008, Isabella
Northfield LLC executed a note (the “Isabella Northfield note”) to evidence a loan in the amount
of $3,974,000. At the same time, defendant Frasca executed a guaranty, pursuant to which
Frasca guaranteed payment on the Isabella Northfield note. First Merit alleges that Frasca
breached the guaranty by failing to pay after Isabella Northfield LLC defaulted.
Frasca then filed a third-party complaint against Wolkoff. In his third-party complaint,
Frasca alleges that several people, including Frasca and Wolkoff, executed an Operating
Agreement of Isabella Northfield LLC (the “Operating Agreement”). The Operating Agreement
states, in relevant part:
12.4
Indemnification Obligation of Wolkoff, Frasca. If any lender
requires Wolkoff and/or Frasca to personally (i) guaranty all or any portion of any
amounts borrowed by the Company pursuant to any Loan Documents; . . . then
each of Wolkoff and Frasca shall indemnify, and hereby agree to pay, discharge,
defend and hold harmless, the other for fifty percent (50%) of any and all
payments, losses, costs and expenses incurred as a result of any such guaranties or
indemnification . . .
(Operating Agreement at p. 18). Among other things, Frasca alleges in his third-party complaint
that he “is now incurring damages, including the costs of defending this action and will incur
additional damages so long as this action continues, including the possibility of a judgment and
costs.” (Third-party Complt. ¶ 11).
II.
Discussion
Wolkoff argues that the third-party complaint should be dismissed as unripe, because
there is not yet a judgment for Frasca to pay and, therefore, nothing to indemnify. The Court
agrees with the premise that the duty to indemnify should generally not be considered until after
the underlying liability has been determined. Lear Corp. v. Johnson Electric Holdings, Ltd., 353
F.3d 580, 583 (7th Cir. 2003) (“We regularly say that decisions about indemnity should be
postponed until the underlying liability has been established.”).
Still, it does not follow that all of Frasca’s third-party claim against Wolkoff should be
dismissed. As Frasca points out, the indemnification clause Frasca seeks to enforce also states
that Wolkoff will defend Frasca. (Operating Agreement at 18) (“each of Wolkoff and Frasca
shall indemnify, and hereby agree to pay, discharge, defend and hold harmless, the other for fifty
percent (50%) of any and all payments, losses, costs and expenses incurred as a result of any
such guaranties or indemnification”) (emphasis added). The duty to defend ripens as soon as the
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underlying suit is filed. Medline Industries, Inc. v. Ram Medical, Inc., 892 F. Supp.2d 957, 965
(N.D. Ill. 2012) (“a claim for breach of duty to defend is ripe during the pendency of the
underlying suit”) (citing Lear, 353 F.3d at 583).
Thus, the Court will dismiss only that portion of Frasca’s third-party claim that seeks
indemnification. That portion is dismissed without prejudice. The portion of Frasca’s thirdparty claim that seeks to enforce the duty to defend may proceed now.
III.
Conclusion
For the reasons set forth above, the Court grants in part and denies in part the motion to
dismiss Frasca’s third-party complaint.
ENTER:
George M. Marovich
United States District Judge
DATED: July 23, 2013
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