U.S. Bank N.A. v. Hauger et al
Filing
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Memorandum Opinion and Order signed by the Honorable Robert W. Gettleman on 2/18/2015: Plaintiff's motion for summary judgment is granted. Plaintiff's motion for appointment of special commissioner is granted. Status hearing is set for 3/4/2015, at 9:15 a.m. Mailed notice (gds)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
U.S. BANK N.A.,
Plaintiff,
v.
KENNETH E. HAUGER, MARIE E.
HAUGER, and NICOR GAS COMPANY1
Defendant.
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No. 13 C 6690
Judge Robert W. Gettleman
MEMORANDUM OPINION AND ORDER
Plaintiff U.S. Bank N.A. brought this foreclosure action against defendants Kenneth E.
Hauger and Marie E. Hauger, the mortgagors of certain residential property. On July 11, 2014,
defendants answered plaintiff’s complaint, asserting as affirmative defenses that plaintiff: (1)
lacked standing to foreclose the property; (2) violated the Illinois Collection Agency Act
(“ICAA”); and (3) violated the Illinois Consumer Fraud and Deceptive Business Practices Act
(“ICFA”) by refusing to review defendants for loss mitigation available under the Home
Affordable Modification Program (“HAMP”). Plaintiff has filed the instant motion for summary
judgment pursuant to Fed. R. Civ. P. 56 (along with an accompanying motion for appointment of
a special commissioner), contending that no genuine issue of material fact exists and that
plaintiff is entitled to judgment as a matter of law. Plaintiff also seeks damages, interest, and
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Nicor Gas Company (“Nicor”) was named as a defendant because of a January 18,
2006, judgment entered against defendant Kenneth Hauger in an unrelated case. Nicor was
served with process on September 24, 2013, but according to this court’s docket Nicor has never
answered plaintiff’s complaint and no further proceedings have been initiated against Nicor.
Consequently, the court dismisses Nicor for want of prosecution.
attorney’s fees and costs. For the reasons discussed below, plaintiff’s motion for summary
judgment is granted.
BACKGROUND2
On or about January 15, 2003, Hartland Mortgage Centers (“Hartland”) loaned
defendants Kenneth Hauger and Marie Hauger $143,000. The loan was secured by property
located at 489 North Chatham Avenue, Villa Park, Illinois, 60181. Defendants agreed to make
monthly payments towards the loan on the first of every month, beginning on February 21, 2003.
On January 15, 2003, Hartland executed an assignment of mortgage to The Provident Bank. The
note was endorsed by Hartland to The Provident Bank. National City Bank s/b/m The Provident
Bank, subsequently executed an assignment of mortgage to plaintiff on July 29, 2009. The note
was endorsed to plaintiff by National City Bank. Beginning in August 2012, defendants failed to
pay the monthly installments due on the note. On September 27, 2012, plaintiff mailed a Notice
of Default to defendants. As of September 23, 2014, there remained an outstanding balance on
the loan of $129,038.16, with interest accruing. As such, plaintiff seeks to foreclose on the
property.
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The following facts are, unless otherwise specified, undisputed and come from
plaintiff’s Local Rule 56.1 statements. L.R. 56.1(b)(3) requires that “[e]ach party opposing a
motion filed pursuant to Fed. R. Civ. P. 56 shall serve and file . . . a concise response to the
movant’s [L.R. 56.1] statement.” Defendants, however, have failed to comply with this district’s
local rule by not responding to plaintiff’s L.R. 56.1 statements, despite plaintiff alerting
defendants to this shortcoming in its reply brief. Accordingly, the court deems all of plaintiff’s
56.1 statements admitted. See, e.g., Stevo v. Frasor, 662 F.3d 880, 886-87 (7th Cir. 2011)
(“Because of the high volume of summary judgment motions and the benefits of clear
presentation of relevant evidence and law, we have repeatedly held that district judges are
entitled to insist on strict compliance with local rules designed to promote the clarity of summary
judgment filings.”); McGuire v. United Parcel Serv., 152 F.3d 673, 675 (7th Cir. 1998) (“An
answer that does not deny the allegations in the numbered paragraph with citations to supporting
evidence in the record constitutes an admission.”).
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DISCUSSION
I.
Legal Standard
A movant is entitled to summary judgment pursuant to Fed. R. Civ. P. 56 when the
moving papers and affidavits show that there is no genuine issue of material fact and the movant
is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986). Once a moving party has met its burden, the nonmoving party must go
beyond the pleadings and set forth specific facts showing there is a genuine issue for trial. See
Fed. R. Civ. P. 56(c); Becker v. Tenenbaum–Hill Assoc., Inc., 914 F.2d 107, 110 (7th Cir. 1990).
The court considers the record as a whole and draws all reasonable inferences in the light most
favorable to the party opposing the motion. See Green v. Carlson, 826 F.2d 647, 651 (7th Cir.
1987); Fisher v. Transco Services–Milwaukee, Inc., 979 F.2d 1239, 1242 (7th Cir. 1992).
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); Stewart v. McGinnis, 5 F.3d 1031, 1033 (7th Cir. 1993). The nonmoving party
must, however, “do more than simply show that there is some metaphysical doubt as to the
material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
“The mere existence of a scintilla of evidence in support of the [nonmoving party's] position will
be insufficient; there must be evidence on which the jury could reasonably find for the
[nonmoving party].” Anderson, 477 U.S. at 252.
II.
Analysis
This matter is before the court pursuant to the court’s diversity jurisdiction. See 28
U.S.C. § 1332. In diversity cases, the court applies federal procedural law and state substantive
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law, e.g., Santa’s Best Craft, LLC v. St. Paul Fire & Marine Ins. Co., 611 F.3d 339, 345 (7th Cir.
2010), employing the choice-of-law principles utilized by the forum state, see United States
Textiles, Inc. v. Anheuser-Busch Cos., I, 911 F.2d 1261, 1269 (7th Cir. 1990). Here, paragraph
16 of the mortgage states that “this Security Instrument shall be governed by . . . the law of the
jurisdiction in which the Property is located.” Because this provision governs and the property
at issue is located in Illinois, the court will apply Illinois law.
Defendants do not dispute that they were required to make monthly payments under the
terms of the note, that they failed to make any payments since August 2012, or that there remains
an outstanding balance on their loan that continues to accrue interest. Nor do they dispute that
plaintiff has possession of the note or that the note is authentic. Thus, the factual record before
the court demonstrates that there are no genuine issues of material fact with respect to any
elements of plaintiff’s foreclosure claim; namely, that: (1) defendants had a mortgage; (2) they
failed to pay; and (3) they defaulted. Defendants have offered no evidence to contradict these
facts.
Defendants argue only that a genuine issue of material fact exists as to whether plaintiff
has standing to foreclose the mortgage and as to whether plaintiff violated the ICFA by engaging
in “unfair” conduct.3 Defendants contend that plaintiff lacks the legal capacity to bring the
present foreclosure action because the assignment of the note to plaintiff was improper under the
terms of the trust instrument, rendering the assignment void. Specifically, defendants argue that
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Defendants initially alleged as an affirmative defense that plaintiff violated the ICAA.
However, in their response brief, defendants seem to have withdrawn the defense in light of the
Assignment of Mortgage dated July 29, 2009, submitted by plaintiff as a part of its motion for
summary judgment.
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the assignment was improper because the note was assigned after the trust was authorized to
accept assigned property and because the trust was permitted to accept assignments of property
only from a structured asset securities corporation. Because neither of these conditions were
met, defendants argue that “no transfer was properly created and the assignment is void,”
providing defendants with “the right to challenge Plaintiff’s standing.”
In response, plaintiff argues that under Illinois law, “mortgagors do not have standing to
raise alleged breaches of these trust agreements because they were not a party to the trust
agreement” unless “the transfer into the trust renders the transfer void, rather than merely
voidable.” Plaintiff contends that while Illinois law controls the parties mortgage, “for purposes
of determining whether the transfer of the trust renders the transfer void, courts should look to
the contract entered into by the plaintiff trust.” Section 9.06 of the Transfer and Servicing
Agreement of the Trust, attached as exhibit 1 to plaintiff’s reply brief, provides that the
agreement shall be construed by the laws of New York. Defendants, however, argue that
Delaware law, not New York law, controls whether the alleged flaws in the present assignment
are void or voidable because the trust is a “Delaware statutory trust.” Defendants assert that
under Del. Code Tit. 12 § 3536, assignments that are unassignable by the terms of the trust
instrument are void. The court disagrees.
In Bank of Am. Nat’l Ass’n v. Bassman FBT, LLC, 981 N.E.2d 1, 5-6 (Ill. App. Ct.
2012), the court found that when determining the validity of the transfer of the mortgage into a
trust administered by the plaintiff, the trust agreement’s choice-of-law provision governs.
Accordingly, because the trust agreement specifies New York law as controlling, the court will
apply New York law in determining whether the assignment was void. As the state appellate
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court in Bassman decided after an in-depth review of New York case law, “a trustee’s ultra vires
acts are not void,” but merely voidable. Id. at 9 (emphasis included). Consequently, because the
assignment here is only voidable, not void, defendants do not have standing to challenge the
assignment.
Defendants also argue that summary judgment is not proper because there is a genuine
issue of material fact as to whether plaintiff violated the ICFA. Defendants allege that plaintiff
engaged in unfair conduct that violated the ICFA when it failed to send defendants two written
notices of default in contravention of the standards of conduct outlined in the Making Home
Affordable Handbook. Defendants also argue that plaintiff’s conduct was unfair because it did
not review defendants for loss mitigation or conduct a pre-foreclosure evaluation as required by
the Home Affordable Modification Program.
Contrary to defendants’ assertions, a potential ICFA claim is not grounds to deny
plaintiff’s motion for summary judgment. As plaintiff points out, the ICFA is not an affirmative
defense to a mortgage foreclosure action, but instead provides a mortgagor with a discrete cause
of action where the act has been violated. See, e.g., Bobbit v. Victorian House, Inc., 532 F.
Supp. 734, 736 (N.D. Ill. 1982) (suggesting two definitions of what constitutes an affirmative
defense: (1) “something that generally admits the matters in a complaint but suggests some other
reason why there is no right to recovery;” and (2) “something that raises a matter outside of the
scope of plaintiff’s prima facie case”). Moreover, even if an ICFA claim was a proper
affirmative defense, Fed. R. Civ. P. 56(e) makes clear that “a party opposing summary judgment
may not rely on the allegations of her pleadings.” Waldridge v. Am. Hoechst Corp., 24 F.3d
918, 920 (7th Cir. 1994). “[I]f the non-movant does not come forward with evidence that would
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reasonably permit the finder of fact to find in her favor on a material question, then the court
must enter summary judgment against [the nonmovant].” Id. (emphasis included). Defendants
have not submitted any evidence, such as affidavits, establishing the alleged ICFA violation.
The fact that plaintiff may not have responded to defendants’ Request for Mortgage Assistance
that was sent a month after plaintiff filed the present motion for summary judgment does not
create a question of material fact.
Because plaintiff has submitted uncontroverted evidence supporting all elements of its
mortgage foreclosure claim, the court grants summary judgment on the claim.
CONCLUSION
For the reasons stated above, the court grants plaintiff's motion for summary judgment
(Doc. 34) and enters judgment in favor of plaintiff U.S. Bank N.A. and against defendants
Kenneth E. Hauger and Marie E. Hauger, and grants plaintiff’s motion for appointment of a
special commissioner (Doc. 37). Plaintiff is directed to submit a final judgment order of
foreclosure for presentation on March 4, 2015, at 9:15 a.m.
ENTER:
February 18, 2015
__________________________________________
Robert W. Gettleman
United States District Judge
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