FirstMerit Bank, N.A. v. McElree et al

Filing 45

MEMORANDUM Opinion and Order Signed by the Honorable Sharon Johnson Coleman on 10/27/2016:Mailed notice(rth, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
FirstMerit Bank, N.A.
Plaintiff,
v.
Mark Ruane, et. al
Defendants.

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Case No. 15-cv-06824
Judge Sharon Johnson Coleman

MEMORANDUM OPINION AND ORDER
This matter is before the Court on Plaintiff’s motion for summary judgment [24]. Plaintiff
FirstMerit Bank, N.A., (“FirstMerit”) is the successor in interest to the Federal Deposit Insurance
Corporation as receiver for George Washington Savings Bank (“GWSB”). Defendants Mark Ruane
(“Ruane”) and Arturo Chavez’s (“Chavez”) failed to respond to FirstMerit’s motion. For the
following reasons, FirstMerit’s motion for summary judgment is granted.
Background
Ruane and Chavez failed to respond to FirstMerit’s Rule 56.1 statement of facts. Therefore,
the following facts taken from FirstMerit's Rule 56.1 statement of facts are deemed to be admitted.
LR 56.1(b)(3)(C).
On February 6, 2009, Harbor Country Cottages III, LLC (“Harbor”), executed a
$2,097,000.00 promissory note (“Harbor Note”) in favor of GWSB. Harbor promised to pay the
principal and interest in its entirety to GWSB on August 1, 2010. Ruane and Chavez each executed
a commercial guaranty in connection with the Harbor Note (respectively, the “Ruane Guaranty” and
the “Chavez Guaranty;” collectively, the “Guaranties”). The Guaranties provide that:

Guarantor absolutely and unconditionally guarantees full and punctual payment and
satisfaction for the Indebtedness of [Harbor] to [GWSB], and the performance and
discharge of all [Harbor’s] obligations under the [Harbor Note] and Related
Documents. This is a guarantee of payment and performance and not of collection,
so [GWSB] can enforce this Guaranty against Guarantor even when [GWSB] has not
exhausted [GWSB’s] remedies against anyone else obligated to pay the Indebtedness
or against any collateral securing the Indebtedness, this Guaranty or any other
guaranty of the indebtedness. 1
Ruane and Chavez, through the Guaranties, assumed liability for any Harbor default on the
Harbor Note.
On February 19, 2010, the Illinois Department of Financial Professional Regulation Division
of Banking closed GWSB and named the Federal Deposit Insurance Corporation (“FDIC”) the
receiver pursuant to 12 U.S.C. § 1821(c)-(d). On May 14, 2010, FirstMerit and the FDIC entered
into a purchase and assumption agreement under which FirstMerit took assignment and possession
of substantially all of GWSB’s assets including the Harbor Note and the Guaranties. FirstMerit has
owned the Harbor Note and the Guaranties since then. Harbor defaulted on the Harbor Note in
August 2010 and FirstMerit subsequently instituted foreclosure proceedings against the collateral.
The proceeds from the foreclosure sale were applied to the Harbor Note balance.

Per the

Guaranties, Ruane and Chavez became liable for the Harbor Note. As of April 7, 2016, the amount
due and owing on the Harbor Note – and the Guaranties – was in excess of $1,800,000.00. 2
Legal Standard
Summary judgment is appropriate where “the pleadings, the discovery and disclosure materials
on file, and any affidavits show that there is no genuine issue as to any material fact and that the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). Where the non-moving
Defendant Michael McElree (“McElree”) also executed a guaranty (the “McElree Guaranty”) in connection with the
Harbor Note. The McElree Guaranty contains the same language as the Ruane Guaranty and Chavez Guaranty. This
Court entered an order of default and default judgment in favor of FirstMerit and against McElree on February 10, 2016.
The Court does not address the McElree Guaranty for this reason.

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The Court provides this estimation due to discrepancies in FirstMerit’s own papers. For this reason, the Court is
ordering FirstMerit to file a report detailing the amount due and owing on the Harbor Note and the Guaranties. See
the Court’s conclusion below.

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party fails to respond to a motion for summary judgment, the Court accepts as true all material facts
contained in the moving party’s statement of undisputed material facts. Johnson v. Gudmundsson, 35
F.3d 1104, 1108 (7th Cir. 1994). Even if the non-moving party fails to respond to the motion for
summary judgment, the Court must still determine that judgment is proper as a matter of governing
law. Id. at 1112.
Discussion
The clear and unambiguous terms of the Guaranties indicate that Ruane and Chavez were to
assume responsibility for the obligations under the Harbor Note in the event of a Harbor default.
The obligations under the Harbor Note and the Guaranties were originally due to GWSB. After
GWSB failed, those obligations became due to the FDIC, and later to FirstMerit.
Harbor defaulted after FirstMerit took assignment and possession of the Harbor Note and
the Guaranties. Subsequently, FirstMerit applied the proceeds from a foreclosure sale on a Harbor
mortgage to the Harbor Note balance. Since then, FirstMerit has sought to enforce the Guaranties
to satisfy the original obligation under the Harbor Note. FirstMerit asserts that Ruane and Chavez
have not made or refuse to make payments on the Guaranties. In their respective answers, Ruane
and Chavez admit that they have not made any payments on the Guaranties. The amount due and
owing on the Harbor Note – and the Guaranties – remains in excess of $1,800,000.00.
FirstMerit has exercised its right to require payment on the Harbor Note and on the
Guaranties.

There is no dispute that Ruane and Chavez failed to make payments on their

obligations as required by the Guaranties. The Court therefore finds that Ruane and Chavez have

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breached the Guaranties. There is no dispute as to the evidence or legal conclusions that can be
drawn from the facts and evidence as presented by FirstMerit. 3
Conclusion
FirstMerit’s motion for summary judgment [24] is granted as to Counts II (breach of
guaranty against Mark Ruane) and III (breach of guaranty against Arturo Chavez). FirstMerit is
ordered to submit a report detailing the amount due and owing on the Harbor Note and the
Guaranties by November 11, 2016, and defendants Ruane and Chavez are to file any objections to
the report, and only to the report, by November 18, 2016. No extensions will be permitted. Upon
receiving the report and any objections, the Court will either schedule a hearing on the amount due
and owing on the Harbor Note and the Guaranties or issue an order indicating the amount owed to
FirstMerit as a result of the breaches.

IT IS SO ORDERED.
_____________________________
SHARON JOHNSON COLEMAN
United States District Judge
DATED: October 27, 2016

In its motion for summary judgment, FirstMerit addresses the affirmative defense that Chavez asserts in his answer.
The Court declines to address the defense because Chavez, as a result of his failure to respond to FirstMerit’s motion,
has provided no factual support for it. See, e.g. PNC Bank, Nat. Ass’n v. Dubin, No. 11 C 2126, 2012 WL 28766 at *3
(N.D. Ill. Jan. 5, 2012) (J. Kocoras) (granting summary judgment when defendants failed to respond to a motion for
summary judgment and provide any evidentiary support for defenses asserted in their answers).

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