Fannie Mae v. Runte et al

Filing 26

MEMORANDUM AND ORDER sustaining 21 Motion for Summary Judgment. See order for further information. Signed by District Judge Kathryn H. Vratil on 8/22/14. (hw)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
)
)
)
Plaintiff,
)
v.
)
)
MATT RUNTE, et al.,
)
)
Defendants.
)
____________________________________)
FANNIE MAE,

CIVIL ACTION
No. 13-2479-KHV

MEMORANDUM AND ORDER
Fannie Mae1 brings this diversity action against Matt Runte and Matt’s Apartments, LLC.
Fannie Mae asserts that Matt’s Apartments defaulted on its obligations under a promissory note and
that Runte defaulted on a guaranty of that note. This matter comes before the Court on plaintiff’s
Motion For Summary Judgment (Doc. #21) filed June 25, 2014. Defendants have not filed a
response. For reasons set forth below, the Court finds that plaintiff’s motion should be sustained.
Legal Standards
Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories,
and admissions on file, together with the affidavits, if any, show no genuine issue as to any material
fact and that the moving party is entitled to a judgment as a matter of law. See Fed. R. Civ. P. 56(c);
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Vitkus v. Beatrice Co., 11 F.3d 1535,
1538-39 (10th Cir. 1993). A “genuine” factual dispute is one on which the jury could reasonably
find for the nonmoving party, and requires more than a mere scintilla of evidence. Liberty Lobby,
477 U.S. at 252. A factual dispute is “material” only if it “might affect the outcome of the suit under
the governing law.” Id. at 248.

1

Fannie Mae was formerly known as the Federal National Mortgage Association.

The moving party bears the initial burden of showing that there are no genuine issues of
material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Justice v. Crown Cork & Seal
Co., 527 F.3d 1080, 1085 (10th Cir. 2008). Once the moving party meets its burden, the burden
shifts to the nonmoving party to show that a genuine issue remains for trial. Nat’l Am. Ins. Co. v.
Am. Re-Ins. Co., 358 F.3d 736, 739 (10th Cir. 2004); see Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 586-87 (1986). As to these matters, the nonmoving party may not rest
on the pleadings but must set forth specific facts. Fed. R. Civ. P. 56(e)(2); Matsushita, 475 U.S. at
586-87; Justice, 527 F.3d at 1085. Conclusory allegations not supported by evidence are insufficient
to establish a genuine issue of material fact. Jarvis v. Potter, 500 F.3d 1113, 1120 (10th Cir. 2007);
see Kidd v. Taos Ski Valley, Inc., 88 F.3d 848, 853 (10th Cir.1996).
When applying this standard, the Court must view the factual record in the light most
favorable to the party opposing the motion for summary judgment. Duvall v. Ga.-Pac. Consumer
Prods., L.P., 607 F.3d 1255, 1260 (10th Cir. 2010); see Ricci v. DeStefano, 557 U.S. 557, 586
(2009). Summary judgment may be granted if the nonmoving party’s evidence is merely colorable
or is not significantly probative. Liberty Lobby, 477 U.S. at 250–51. Essentially, the inquiry is
“whether the evidence presents a sufficient disagreement to require submission to the jury or
whether it is so one-sided that one party must prevail as a matter of law.” Id. at 251-52.
Here, defendants have not filed a timely response and plaintiff’s motion is therefore
unopposed. Under D. Kan. Rule 7.4(b), a party who fails to file a responsive brief or memorandum
within the time specified waives the right to later do so, and the Court will consider and decide the
motion as uncontested. Ordinarily, the Court will grant the motion without further notice. Id. A
party’s failure to respond to a summary judgment motion, however, is not a sufficient basis on which

-2-

to enter judgment. Reed v. Bennett, 312 F.3d 1190, 1195 (10th Cir. 2002). Rather, the Court must
determine whether judgment for the moving party is appropriate under Fed. R. Civ. P. 56. The Court
therefore accepts as true all material facts asserted and properly supported in the summary judgment
motion. Id.
Uncontroverted Facts
On July 13, 2007, Matt’s Apartments entered into a commercial loan transaction with
LaSalle Bank National Association. Doc. #22-1. Matt’s Apartments executed a Multifamily Note
in favor of LaSalle, in the original principal amount of $1,540,000.00. Doc. #22-2. Matt’s
Apartments also executed a Multifamily Deed of Trust, Assignment of Rents, and Security
Agreement and Fixture Filing. Doc #22-3. Matt’s Apartments agreed to pay attorney’s fees and
collection costs incurred to collect under the Loan Agreement.
To secure repayment of amounts owing under the Note, Runte executed a Guaranty of
Payment which personally and unconditionally guaranteed the obligations of Matt’s Apartments
under the Note. Doc. #22-4. Runte also agreed to pay attorney’s fees which LaSalle incurred in
enforcing its rights under the Note and Guaranty. Id. The Note and Guaranty state that they are
governed by Illinois state law.
On May 30, 2008, LaSalle assigned to Fannie Mae the Deed of Trust and the related loan
documents. Doc. #22-5.
On February 6, 2013, Fannie Mae notified Matt’s Apartments and Runte that Matt’s
Apartments had failed to make payments due under the Note and that all amounts were immediately
due. Doc. #22-6. Matt’s Apartments and Runte failed to pay the amounts due. Matt’s Apartments
and Runte admit that they are in default.

-3-

On April 23, 2013, the substitute trustee under the Deed of Trust conducted a foreclosure sale
of the land and personal property secured by the Deed of Trust. At the foreclosure sale, Fannie Mae
purchased the collateral for $450,000.00.
As of June 16, 2014, Matt’s Apartment and Runte are indebted to Fannie Mae in the
following amounts: $1,108,220.79 in principal and $143,860.60 in interest to June 16, 2014, plus
interest from June 16, 2014 at a per diem rate of $344.16. As of May 31, 2014, Fannie Mae had
incurred $21,309.50 in attorney’s fees for enforcement of the Note and Guaranty. Doc. #22-7.
Analysis
Plaintiff asserts that it is entitled to summary judgment on its claims for breach of contract.
As noted, the loan documents provide that Illinois law governs; the Court therefore applies Illinois
law in interpreting the loan documents. Pepsi-Cola Bottling Co. v. PepsiCo., Inc., 431 F.3d 1241,
1255 (10th Cir. 2005) (court sitting in diversity applies choice-of-law rules of forum state; federa1
courts in Kansas routinely enforce parties’ contractual choice-of-law provisions under Kansas
choice-of-law rules).
A.

Breach Of Contract Claim Against Matt’s Apartments

To establish a breach of contract claim under Illinois law, plaintiff must show the following
elements: (1) a valid and enforceable contract; (2) plaintiff’s substantial performance; (3)
defendant’s breach; and (4) damages. Reger Dev., LLC v. Nat’l City Bank, 592 F.3d 759, 764 (7th
Cir. 2010). Here, plaintiff has satisfied all four elements. First, plaintiff has put forth uncontroverted
evidence that Matt’s Apartments entered a valid contract to borrow $1,540,000.00 Second, plaintiff
has produced evidence that LaSalle performed its obligations by tendering Matt’s Apartments
$1,540,000.00, and that LaSalle validly assigned the loan to plaintiff. Third, Matt’s Apartments

-4-

does not dispute that it defaulted on the Note. Fourth, plaintiff points to damages as a result of the
breach, including $1,108,220.79 in unpaid principal, $143,860.60 in accrued default interest, plus
interest from June 16, 2014, at a per diem rate of $344.16. The Court therefore finds that plaintiff
is entitled to judgment against Matt’s Apartments in the amount of $1,252,081.39, plus interest of
$344.16. per diem from June 16, 2014 to the date of judgment.
B.

Breach Of Guaranty Against Matt Runte

Plaintiff asserts that it is entitled to summary judgment on its claim for breach of the
Guaranty against Runte.
To establish a prima facie case for breach of a guaranty under Illinois law, plaintiff must
prove (1) the original indebtedness, (2) the borrower’s default and (3) execution of the guaranty by
the guarantor. Gen. Elec. Bus. Fin. Servs., Inc. v. Silverman, 693 F.Supp.2d 796, 799 (N.D. Ill.
2010). Here, plaintiff has set forth a prima facie case: (1) Matt’s Apartments is indebted to plaintiff
in the principal amount of $1,540,000.00, as set forth in the Note and Guaranty; (2) Matt’s
Apartments failed to pay the Note when it came due, and the Note remains unpaid; and (3) Runte
executed a Guaranty in favor of plaintiff.
As noted, plaintiff has established that as of June 16, 2014, the balance owing is
$1,252,081.39 plus interest which continues to accrue. Because Runte has not controverted that the
Guaranty is valid and enforceable and that amounts due and owing remain unpaid, plaintiff is
entitled to judgment as a matter of law against Runte for the total amount due under the Note and
Guaranty – $1,252,081.39, plus interest from June 16, 2014 to the date of judgment at a per diem
rate of $344.16.

-5-

C.

Attorney’s Fees Under The Note And Guaranty

The Note and Guaranty expressly state that defendants must pay attorney’s fees and expenses
which Fannie Mae incurred in enforcing its rights under the Note and Guaranty. Under Illinois law,
a contract provision which specifically authorizes the recovery of attorney’s fees is enforceable.
Myers v. Popp Enters., Inc., 576 N.E.2d 452, 457 (Ill. Ct. App. 1991).
Plainitff requests an award of attorney’s fees in the amount of $21,309.50 and asks the Court
to supplement its request for attorney’s fees to include those fees incurred after the date of the
summary judgment motion. The Court has reviewed the request for fees and finds that the billed
hours and fees are reasonable. See Wilkinson v. I.C. Sys., Inc., No. 09-2456-JAR, 2011 WL
5304150, at *2 (D. Kan. Nov. 1, 2011) (lack of response does not foreclose review and analysis of
fee request).
IT IS THEREFORE ORDERED that plaintiff’s Motion For Summary Judgment
(Doc. #21) filed June 25, 2014 be and hereby is SUSTAINED.
IT IS FURTHER ORDERED that plaintiff is entitled to joint and several damages in the
amount of $1,252,081.39, plus interest from June 16, 2014 to the date of judgment at a per diem rate
of $344.16, plus attorney’s fees of $21,309.50, plus supplemental fees to be determined.
IT IS FURTHER ORDERED that on or before September 4, 2014, plaintiff shall file a
supplemental request for attorney’s fees with supporting documents.
Dated this 22nd day of August, 2014 at Kansas City, Kansas.
s/Kathryn H. Vratil
KATHRYN H. VRATIL
United States District Judge

-6-