VFC Partners 39 LLC v. Huntley Building Development Corporation et al
Filing
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MEMORANDUM OPINION AND ORDER Signed by the Honorable Robert M. Dow, Jr. on 5/30/2017. Civil case terminated. Mailed notice(cdh, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
VFC PARTNERS 39 LLC,
)
)
Plaintiff,
)
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v.
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HUNTLEY BUILDING DEVELOPMENT
)
CORPORATION, PETER J. KONOPKA,
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HUNTLEY BUSINESS PARK ASSOCIATION, )
HUNTLEY GATEWAY COMMONS
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ASSOCIATION, NON-RECORD CLAIMANTS, )
UNKNOWN OWNERS,
)
)
Defendants.
)
Case No. 15-cv-9646
Judge Robert M. Dow, Jr.
MEMORANDUM OPINION AND ORDER
Plaintiff VFC Partners 30 LLC filed a mortgage foreclosure complaint against
Defendants Huntley Building Development Corporation, Peter J. Konopka, Huntley Business
Park Association, Huntley Gateway Commons Association, Non-Record Claimants, and
Unknown Others. [1.] Defendants Huntley Building Development Corporation and Peter J.
Konopka subsequently filed an answer admitting all material allegations. [29.] Plaintiff now
moves for judgment on the pleadings. [49.] For the reasons that follow, the Court grants
Plaintiff’s motion for judgment on the pleadings [49]. The Court directs Plaintiff to file by June
30, 2017 a supplemental memorandum supporting its claim for the full amount due and owing
under the terms of the L&M, U, and V Loans. Specifically, Plaintiff is instructed to detail for
each loan: the principal balance, the interest rate, the unpaid interest due at the time of filing of
the supplemental memorandum, and Plaintiff’s expenses for protection of the property and
collateral, including sums for real estate taxes, attorney’s fees, and other costs to which Plaintiff
claims it is entitled. Plaintiff should provide citations to the pleadings—namely, the exhibits
attached to its complaint [1]—that support the amounts it submits.
The Court will enter a
separate Judgment of Foreclosure and Sale.
I.
Background
Defendant Huntley Building Development Corporation (“Huntley”) is an Illinois
corporation and the fee title of the real property at the center of the lawsuit, located at 11922 Oak
Creek Parkway, Huntley, Illinois 60142 (“the subject property”). Defendant Huntley is also the
owner of certain fixtures and personal property located on the subject property. Defendant Peter
J. Konopka is an individual and citizen of Illinois.
Defendants Huntley and Konopka
(collectively, “Borrower”) are both named as the borrower on the loan documents at issue in this
case.
On or about December 20, 2010, Borrower entered into three separate commercial
mortgage loans with First National Bank of Omaha to acquire Unit L&M in the original principal
amount of $326,496.72 (“L&M Loan”), Unit U in the original principal amount of $131,586.54
(“U Loan”), and Unit V in the original principal amount of $176,040.00 (“V Loan”),
(collectively, “the Loans”). [1 (Complaint), at ¶ 10; 29 (Answer), at ¶ 10.] The Loans are
evidenced by Promissory Notes dated December 20, 2010, (collectively, “the Note”). The Notes
were subsequently modified by certain Change in Term Agreements (collectively, “the
Modifications”), which modified the contract interest rate and extended the maturity date of the
Notes to June 15, 2015. [1, at ¶¶ 14–15; 28, at ¶¶ 14–15.]
In order to secure the Loans, Borrower executed and delivered certain loan documents,
which included, among other documents: (1) a mortgage dated July 13, 2001 and recorded on
August 17, 2001 as Instrument No. 2001K085085, Kane County Records, as modified by
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Modification of Mortgage dated December 20, 2010 and recorded January 6, 2011 as Instrument
No. 2011K001674, Kane County Records (“L&M Mortgage”); (ii) a mortgage dated July 13,
2001 and recorded on August 17, 2001 as Instrument No. 2001K085086, Kane County Records,
as modified by Modification of Mortgage dated December 20, 2010 and recorded January 6,
2011 as Instrument No. 2011K001678, Kane County Records (“U Mortgage”); (iii) a mortgage
dated July 13, 2001 and recorded on August 17, 2001 as Instrument No. 2001K085087, Kane
County Records, as modified by Modification of Mortgage dated December 20, 2010 and
recorded January 6, 2011 as Instrument No. 2011K001679, Kane County Records (“V
Mortgage”); (iv) an Assignment of Rents dated December 20, 2010, and recorded on January 6,
2011 as Instrument No. 2011K001675, Kane County Records (“L&M Assignment of Rents”);
(v) an Assignment of Rents dated July 13, 2001 and recorded August 17, 2001 as Instrument No.
2001K085089, Kane County Records, as modified by Modification of Mortgage dated December
20, 2010 and recorded January 6, 2011 as Instrument No. 2011K001678, Kane County Records
(“U Assignment of Rents”); (vi) an Assignment of Rents dated July 13, 2001 and recorded
August 17, 2001 as Instrument No. 2001K085090, Kane County Records, as modified by
Modification of Mortgage dated December 20, 2010 and recorded January 6, 2011 as Instrument
No. 2011K001679, Kane County Records (“V Assignment of Rents”); and (vii) a Business Loan
Agreement dated December 20, 2010 (collectively with the Notes, Modifications, Mortgages,
Assignments of Rent, the “Loan Documents”). [1, at ¶ 11; 29 at ¶ 11.]
On or about September 30, 2011, First National Bank of Omaha assigned the Loans and
Loan Documents to Summitbridge Credit Investments LLC. [1, at ¶ 14; 29, at ¶ 14.] On or
about February 23, 2015, Summitbridge Credit Investments LLC assigned the Loans and Loan
Documents to Plaintiff. [1, Exhibits 4, 8, 11, 27–29.] Plaintiff subsequently perfected its
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security interest in Borrower’s personal property, fixtures on the subject property, and other
collateral. [1, at ¶ 18–19.]
On October 29, 2015, Plaintiff filed a complaint seeking a judgment of foreclosure and
other relief. [1.] Defendants Huntley and Konopka admitted that they were in default of the
terms of the Loans and Loan Documents on October 29, 2015, the date Plaintiff filed its
complaint. [1, at ¶ 20; 29, at ¶ 20.] On September 8, 2016, Plaintiff moved for judgment on the
pleadings [49]. The Court set a briefing schedule, and Defendants failed to file a response.
II.
Legal Standard
Pursuant to Federal Rule of Civil Procedure 12(c), a party may move for judgment on the
pleadings after the parties have filed the complaint and answer. Fed. R. Civ. P.; see also Brunt v.
Serv. Emps. Intern. Union, 284 F.3d 715, 718–19 (7th Cir. 2002). When a Rule 12(c) motion is
used in an attempt to dispose of the case on the merits, the Court applies the summary judgment
standard, except that the Court may consider only the contents of the pleadings. Alexander v.
City of Chicago, 994 F.2d 333, 336 (7th Cir. 1993). Thus, the Court takes the well-pleaded
allegations in the nonmoving party’s pleadings as true and draws all reasonable inferences in
favor of the nonmoving party—in this case, Defendants. See id. Judgment on the pleadings is
appropriate if there are no genuine issues of material fact and the moving party is entitled to
judgment as a matter of law. See id. The pleadings that the Court may consider “include the
complaint, the answer, and any written instruments attached as exhibits.” N. Indiana Gun &
Outdoor Shows, Inc. v. City of S. Bend, 163 F.3d 449, 452 (7th Cir. 1998). Additionally, the
Court “may take judicial notice of documents that are part of the public record, including
pleadings, orders, and transcripts from prior proceedings in the case.” Scherr v. Marriott Int’l,
Inc., 703 F.3d 1069, 1073 (7th Cir. 2013).
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III.
Analysis
Plaintiff moves for judgment on the pleadings against Defendants, arguing that it is
entitled to judgment as a matter of law on its claims seeking a judgment of foreclosure of the
L&M, U, and V Mortgages, recovery under the L&M, U, and V Notes, and claim and delivery of
the collateral. 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 law. Santa’s Best Craft, LLC v. St. Paul Fire & Marine Ins. Co., 611 F.3d 339, 345
(7th Cir. 2010). Here, Illinois substantive law applies because the case involves the foreclosure
of a mortgage on real property that is located in Illinois.
Under Illinois Mortgage Foreclosure Law, 735 ILCS 5/15-1101 et seq., a mortgage is
“any consensual lien created by a written instrument which grants or retains an interest in real
estate to secure a debt or other obligation.” 735 ILCS 5/15-1207. “[F]rom the time a mortgage
is recorded it shall be a lien upon the real estate that is the subject of the mortgage for all monies
advanced or applied or other obligations secured in accordance with the terms of the mortgage or
as authorized by law * * *.” 735 ILCS 5/15-1301. Generally speaking, a lien that is properly
recorded has priority over and is entitled to satisfaction before liens that are subsequently
recorded on the same property. See, e.g., Union Planters Bank, N.A. v. FT Mortgage Cos., 794
N.E.2d 360, 363–64 (Ill. App. Ct. 2003). The holder of a mortgage may face a foreclosure action
if he does not timely comply with his obligations under the mortgage. “To foreclose” means “to
terminate legal and equitable interests in real estate pursuant to a foreclosure.” 735 ILCS 5/151203. In Illinois, a party bringing a mortgage foreclosure action must attach a copy of the note
and mortgage to its complaint. 735 ILCS 5/15-1504.
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By admitting to the material allegations in Plaintiff’s complaint and failing to respond to
Plaintiff’s motion for judgment on the pleadings, Defendants Huntley and Konopka have not
made any attempt to establish that a genuine issue of material fact exists concerning Plaintiff’s
entitlement to judgment against them. Copies of the Mortgages and Notes were attached to
Plaintiff’s complaint [1]. Additionally, Defendants Huntley and Konopka admitted that they
failed to make payment in full on the Loans when due on maturity on June 15, 2015 and that they
are in default of the Loans and the Loan Documents. [1, at ¶ 20; 29, at ¶ 20.] 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 on the subject property; (2) they failed to pay; and (3) they defaulted. See Deutsche
Bank Nat’l Trust, Co. v. Ortiz, 2014 WL 117347, at *4 (N.D. Ill. Jan. 13, 2014). Furthermore,
Plaintiff has shown that it suffered damages as a result of Defendants’ actions.
Additionally, pursuant to § 9-609(a) of the Illinois Uniform Commercial Code, Plaintiff
is entitled to immediate possession of the collateral described in the mortgages. 810 ILCS 5/9609(a); see also Gen. Motors Acceptance Corp. v. Stoval, 872 N.E.2d 91, 99 (Ill. App. Ct. 2007).
The UCC is applicable because the mortgages define themselves as security agreements under
the UCC, thereby granting Plaintiff the right to claim a security interest in the collateral. [1, at
Exhibits 5, 9, 12 (Mortgages).] Since Defendants defaulted on the Notes when they reached
maturity on June 15, 2015, Plaintiff’s rights as a secured creditor under the UCC entitled it to
immediate possession of the collateral. Accordingly, Defendants are ordered to refrain from
damaging, destroying, concealing, disposing of by sale or other transfer, or using so as to
substantially impair its value, the collateral under the security agreement in the L&M Mortgage,
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the U Mortgage, and the V Mortgage, and the receiver is vested with possession of the collateral
until the indebtedness to Plaintiff is fully satisfied.
IV.
Conclusion
For the reasons explained above, the Court grants Plaintiff’s motion for judgment on the
pleadings [49]. Judgment of foreclosure is entered against Defendants. The Court directs
Plaintiff to file by June 30, 2017 a supplemental memorandum supporting its claim for the full
amount due and owing under the terms of the L&M, U, and V Loans. Specifically, Plaintiff is
instructed to detail for each loan: the principal balance, the interest rate, the unpaid interest due at
the time of filing of the supplemental memorandum, and Plaintiff’s expenses for protection of
the property and collateral, including sums for real estate taxes, attorney’s fees, and other costs to
which Plaintiff claims it is entitled. Plaintiff should provide citations to its pleadings—namely,
the exhibits attached to its complaint [1]—that support the amounts it submits. The Court will
enter a separate Judgment of Foreclosure and Sale.
Date: May 30, 2017
Robert M. Dow, Jr.
United States District Judge
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