Fannie Mae v. CSL Oshkosh LLC, et al

Filing 21

FINDINGS OF FACT AND CONCLUSIONS OF LAW signed by Judge William C Griesbach on 4/27/2021. (cc: all counsel)(Griesbach, William)

THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF WISCONSIN
FANNIE MAE,
Plaintiff,

Case No. 1:21-cv-25

v.
CSL OSHKOSH, LLC and
CSL OSHKOSH MANAGEMENT, LLC,
Defendants.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
The Motion for Default Judgment having been filed by the Plaintiff, Fannie Mae, and the
Court having considered the pleadings, declarations, and other documents now on file, the Court
hereby makes the following findings of fact and conclusions of law.
FINDINGS OF FACT
1.

The Plaintiff, Fannie Mae, is a corporation organized and existing under the laws

of the United States. Fannie Mae is a citizen of the District of Columbia for purposes of
jurisdiction. 12 U.S.C. § 1717(a)(2)(B).
2.

The Defendants, CSL Oshkosh, LLC (which may also be referred to herein as the

“Borrower”) and CSL Oshkosh Management, LLC (which may also be referred to herein as the
“Manager”) are both Delaware limited liability companies with principal places of business in
Texas. The sole member of each of the Defendant LLCs is Capital Senior Living Properties 4,
Inc., a Delaware corporation with its principal place of business in Texas.
3.

This foreclosure action arises out of and seeks to enforce rights with respect to a

senior housing community in Oshkosh, Winnebago County, Wisconsin known as The Waterford

at Oshkosh (the “Facility”). Its address is 1816 Vinland Street and 1010 & 1110 West Murdock
Avenue, Oshkosh, Wisconsin 54901.
4.

CSL Oshkosh, LLC borrowed funds (the “Loan”) that are evidenced by a

“Multifamily Note” originally payable to Berkadia Commercial Mortgage LLC dated April 5,
2011 in the original principal amount of $13,229,063.00 (“Note”). A copy of the Note is
attached to the Complaint as Exhibit A. (Dkt. 1-1.)
5.

The Loan and other obligations are also evidenced, documented, and secured by a

Multifamily Loan and Security Agreement (the “Loan Agreement”).
6.

All rights of the lender under the Loan Agreement were assigned to Fannie Mae

pursuant to the Assignment of Collateral Agreements and Other Loan Documents, which is
attached to the Complaint as Exhibit B. (Dkt. 1-2.)
7.

The obligations owed to Fannie Mae are also evidenced and secured by a

Multifamily Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing
(the “Mortgage”).

A copy of the Mortgage is attached to the Complaint as Exhibit C.

(Dkt. 1-3.)
8.

The Note was endorsed and assigned to Fannie Mae as shown by the endorsement

on the last page of it, and the Mortgage was assigned to Fannie Mae as shown by the
Assignment of Mortgage, a copy of which is attached to the Complaint as Exhibit D.
(Dkt. 1-4.)
9.

Exhibits A – D to the Complaint comprise the “Loan Documents” for purposes

of these Findings of Fact and Conclusions of Law.
10.

The Loan evidenced by the Note and the other obligations owed under the Loan

Documents are secured (without limitation) by the Mortgage.

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11.

The Mortgage was recorded with the Register of Deeds for Winnebago County on

August 6, 2014, as Document Number 1669173.
12.

The Mortgage covers and grants to Fannie Mae a lien in the “Mortgaged

Property” as that term is defined in the Mortgage, which includes, without limitation: (a) the
“Land” located in Winnebago County, Wisconsin with a legal description shown on Exhibit A to
the Mortgage; (b) the “Improvements” as that term is defined in the Mortgage; (c) the
“Personalty” as that term is defined in the Mortgage; (d) all leases and rents; and (e) all other
items and assets within the definition of “Mortgaged Property” in the Mortgage.
13.

The mortgaged premises are described as follows:
PARCEL A:
THE SOUTH ONE-HUNDRED TWENTY (120) FEET OF THAT PART OF THE
SOUTHWEST ONE-QUARTER (1/4) OF THE SOUTHEAST ONE-QUARTER
(1/4) OF SECTION ELEVEN (11), IN TOWNSHIP EIGHTEEN (18) NORTH,
RANGE SIXTEEN (16) EAST, IN THE TWELFTH (12TH) WARD, CITY OF
OSHKOSH, WINNEBAGO COUNTY, WISCONSIN, LYING NORTH OF THE
NORTH LINE OF MURDOCK AVENUE, EAST OF THE EAST LINE OF
VINLAND STREET AND WEST OF THE EXTENDED WEST LINE OF
WALNUT STREET.
AND
THE NORTH ONE-HUNDRED SEVENTY (170) FEET OF THE SOUTH TWOHUNDRED NINETY (290) FEET OF THAT PART OF THE SOUTHWEST ONEQUARTER (1/4) OF THE SOUTHEAST ONE-QUARTER (1/4) OF SECTION
ELEVEN (11), IN TOWNSHIP EIGHTEEN (18) NORTH, RANGE SIXTEEN (16)
EAST, IN THE TWELFTH (12TH) WARD, CITY OF OSHKOSH, WINNEBAGO
COUNTY, WISCONSIN, LYING NORTH OF THE NORTH LINE OF MURDOCK
AVENUE, EAST OF THE EAST LINE OF VINLAND STREET AND WEST OF
THE EXTENDED WEST LINE OF WALNUT STREET (THE NORTH LINE OF
THE SUBJECT PREMISES BEING THE SOUTH LINE OF PROPERTY
CONVEYED BY DEEDS RECORDED IN DOCUMENT NUMBERS 688937 AND
715961).
PARCEL B:
LOTS THREE (3), FOUR (4), FIVE (5), SIX (6), SEVEN (7), EIGHT (8), NINE (9),
TWELVE (12), THIRTEEN (13) AND FOURTEEN (14) OF BLOCK SIX (6) IN
PLAT OF EICHSTADT SUBDIVISION, IN THE CITY OF OSHKOSH,
WINNEBAGO COUNTY, WISCONSIN, LESS AND EXCEPTING PREMISES

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CONVEYED IN WARRANTY DEED RECORDED AS DOCUMENT NO.
1130144 MORE PARTICULARLY DESCRIBED AS THE NORTH FIFTY-FIVE
(55) FEET OF LOTS THREE (3) AND TWELVE (12) OF BLOCK SIX (6) AND
THAT PORTION OF THE WEST ONE-HALF (1/2) OF VACATED CEDAR
STREET LYING EAST OF AND WITHIN THE EXTENDED NORTHERLY AND
SOUTHERLY BOUNDARY LINES OF SAID NORTH FIFTY-FIVE (55) FEET
OF LOT TWELVE (12) OF BLOCK SIX (6), ALL IN EICHSTADT
SUBDIVISION, IN THE TWELFTH (12TH) WARD, CITY OF OSHKOSH,
WINNEBAGO COUNTY, WISCONSIN.
AND
LOTS THREE (3), FOUR (4), SEVEN (7) AND EIGHT (8) OF BLOCK SEVEN (7)
IN PLAT OF EICHSTADT SUBDIVISION, IN THE CITY OF OSHKOSH,
WINNEBAGO COUNTY, WISCONSIN, LESS AND EXCEPTING PREMISES IN
WARRANTY DEED RECORDED AS DOCUMENT NO. 1130145 MORE
PARTICULARLY DESCRIBED AS THE NORTH FIFTY-FIVE (55) FEET OF
LOTS THREE (3) AND SEVEN (7) OF BLOCK SEVEN (7) AND THAT
PORTION OF THE EAST ONE-HALF (1/2) OF VACATED CEDAR STREET
LYING WEST OF AND WITHIN THE EXTENDED NORTHERLY AND
SOUTHERLY BOUNDARY LINES OF SAID NORTH FIFTY-FIVE (55) FEET
OF LOT THREE (3) OF BLOCK SEVEN (7), ALL IN EICHSTADT
SUBDIVISION IN THE TWELFTH (12TH) WARD, CITY OF OSHKOSH,
WINNEBAGO COUNTY, WISCONSIN.
AND
A PIECE OF LAND LYING IN THE SOUTHEAST ONE-QUARTER (1/4) OF
SECTION ELEVEN (11), IN TOWNSHIP EIGHTEEN (18) NORTH, RANGE
SIXTEEN (16) EAST, CITY OF OSHKOSH, WINNEBAGO COUNTY,
WISCONSIN, DESCRIBED AS FOLLOWS:
STARTING AT AN IRON PIN IN THE CENTER OF THE CONCRETE
HIGHWAY ON MURDOCK STREET AT THE INTERSECTION WITH
ELMWOOD AVENUE, SPRUCE STREET AND VINLAND STREET ROAD;
THENCE EASTERLY ON CENTERLINE OF MURDOCK STREET, 617.52 FEET
TO A POINT 0.5 FEET EAST OF THE EAST LINE OF CEDAR STREET
EXTENDED; THENCE NORTH AT RIGHT ANGLES 30 FEET TO THE NORTH
LINE OF MURDOCK STREET, WHICH IS THE POINT OF BEGINNING;
THENCE 237.62 FEET ALONG THE NORTH LINE OF MURDOCK STREET TO
A POINT 5 FEET WEST OF THE WEST LINE OF BEECH STREET EXTENDED;
THENCE NORTH AT RIGHT ANGLES, 190 FEET; THENCE WEST AT RIGHT
ANGLES, 237.62 FEET; THENCE SOUTH AT RIGHT ANGLES, 190 FEET TO
THE POINT OF BEGINNING.
AND
TOGETHER WITH THAT LAND COMPRISING THE VACATED PORTION OF
CEDAR STREET EXTENDING TWO-HUNDRED SIXTY-FIVE (265) FEET
NORTH FROM THE NORTH LINE OF MURDOCK STREET AS SHOWN IN
THE PLAT OF EICHSTADT SUBDIVISION.

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AND
TOGETHER WITH THAT PORTION OF VACATED CEDAR STREET LYING
ADJACENT TO AND BETWEEN LOT TWELVE (12) OF BLOCK SIX (6) AND
LOT THREE (3) OF BLOCK SEVEN (7) IN PLAT OF EICHSTADT
SUBDIVISION, LESS AND EXCEPTING PREMISES CONVEYED IN
WARRANTY DEEDS RECORDED AS DOCUMENT NO. 1130144 AND
DOCUMENT NO. 1130145.
FOR INFORMATIONAL PURPOSES ONLY:
Property addresses:
Parcel A - 1816 Vinland Street, Oshkosh, Wisconsin 54901
Parcel B - 1010 & 1110 West Murdock Avenue, Oshkosh, Wisconsin 54901

14.

Any interest of the Manager in the Mortgaged Property (both the real property

and the personal property constituting Mortgaged Property) is junior and subordinate to the right,
lien, security interest and other rights of Fannie Mae under the Mortgage and its other security
agreements.
15.

Pursuant to a separate Subordination, Assignment and Security Agreement dated

as of August 4, 2014 signed by the Manager and the Borrower, Fannie Mae also holds a security
interest in all UCC Collateral and in all leases and rents arising out of or associated with the
Facility, to the extent of any interest which Manager may have therein.
16.

The Mortgage also grants to Fannie Mae a security interest in the Mortgaged

Property that is “UCC Collateral” as that term is defined in the Mortgage.
17.

On May 6, 2020, Borrower executed a Forbearance Agreement as to which, by

Extension Agreements, the Forbearance Termination Date was extended through July 31, 2020.
Without limitation, the Borrower acknowledged in the Forbearance Agreement, as extended, that
it was in default under the Loan Documents with Fannie Mae, including because it was
delinquent in the payments due for the months of April, May, June, July and August 2020.
18.

A receiver of the Facility was appointed in a proceeding, Civil No.

3:20-cv-2395 K, United States District Court, Northern District of Texas, Dallas Division. The
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Agreed Order Appointing Receiver issued in that case, covering multiple facilities similar to and
including The Waterford at Oshkosh Facility, provides, without limitation, that “Without further
order of this Court, Fannie Mae with advanced notice to the Defendants as required by the
existing loan documents and applicable law may foreclose by judicial or non-judicial means its
interests in the Receivership Estate” (which includes all real and personal property the Receiver
is managing). Borrower is a party to that Agreed Order. This underlying complaint and the
Agreed Order Appointing Receiver from the Texas federal court case have been filed in the
United States District Court for the Eastern District of Wisconsin.
19.

The Loan Documents also provide that Fannie Mae is entitled to collect and

Borrower agreed to pay “Enforcement Costs” as that term is defined in the Mortgage, and all
costs and expenses incurred by Fannie Mae in pursuing its remedies and collecting the amounts
owed to it by the Borrower, both before and after judgment.
20.

The amounts owed to Fannie Mae under the Loan Documents as of the dates

shown below are as follows:
a)

Principal as of 03/31/21:

$11,996,548.99

b)

Interest to 03/31/21:

$605,706.00

c)

Prepayment premium:

$1,825,299.00

d)

Custodial & Administrative fees:

$300.00

e)

Environmental Report fees:

$2,500.00

f)

Property Condition Assessment fee:

$2,700.00

g)

Appraisal fee:

$6,637.50

h)

Acct & Deferred Unpaid Billings:

$160.78

i)

Default Interest 4/01/20 – 03/31/21:

$487,111.00

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j)

Late Charges:

$63,738.00

k)

Receiver Advances

$173,768.20

l)

Escrow Advances:

$231,218.00

m)

Less Replacement Reserve Escrow

($24,438.65)

n)

Less unapplied funds

($86,543.81)

o)

Subtotal as of dates shown:

$15,311,705.01

Additional attorneys’ fees as permitted under the loan documents are:
p) Attorneys’ fees and costs: $171,729.87;
p) Receiver’s fees and costs: $20,000.00;
Total as of March 31, 2021: $15,503,434.88.
21.

Borrower has failed to pay the foregoing amounts due to Fannie Mae.

22.

Fannie Mae filed this civil action to enforce its rights under the Loan documents

on January 6, 2021. (Dkt. 1.)
23.

CSL Oshkosh, LLC was served with an authenticated copy of the Summons and

Complaint on January 13, 2021, as reflected by the proof of service filed on January 21, 2021.
(Dkt. 6.)
24.

CSL Oshkosh, LLC’s answer to the Complaint was due February 3, 2021.

25.

CSL Oshkosh, LLC, being a Delaware limited liability company, is not a minor,

an incompetent person, or serving in the armed forces.
26.

CSL Oshkosh Management, LLC was served with an authenticated copy of the

Summons and Complaint on January 13, 2021, as reflected by the proof of service filed on
January 21, 2021. (Dkt. 5.)

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27.

CSL Oshkosh Management, LLC’s answer to the Complaint was due February 3,

28.

CSL Oshkosh Management, LLC, being a Delaware limited liability company, is

2021.

not a minor, an incompetent person, or serving in the armed forces.
29.

Each Defendant has failed to appear, plead, or otherwise defend within the time

allowed pursuant to Fed. R. Civ. P. 12(a) and, therefore, each Defendant is now in default.
30.

The Clerk entered default against Defendants. See March 2, 2021 Docket Text

Entry (“Clerk's ENTRY OF DEFAULT as to CSL Oshkosh LLC, CSL Oshkosh Management
LLC.”).
31.

A lis pendens was filed with the Winnebago County Register of Deeds and

recorded on March 1, 2021 as Document No. 1844314. A copy was filed with this Court on
March 18, 2021. (Dkt. 12.)
32.

The Winnebago County Sheriff has significant experience and is well qualified to

carry out foreclosure sales in Winnebago County, where the Mortgaged Property is located.
33.
sales

The Winnebago County Sheriff maintains on its website a page advertising all

(available

at:

https://www.co.winnebago.wi.us/sheriff/sales),

oversees

numerous

foreclosure sales each month and has assigned personnel managing all aspects of the foreclosure
sale process. The sales are easily accessible to the public. Given the regularity of foreclosure
sales by Winnebago County Sheriff, a foreclosure sale it conducts will likely maximize the sale
price at auction.
34.

In another mortgage foreclosure case, federal courts in Wisconsin have entered an

Order for Judgment and Judgment of Foreclosure and Sale on neighboring properties authorizing
a county sheriff instead of the U.S. Marshal to carry out the foreclosure sale. See, e.g., Bank of

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Am., N.A. v. Martinson, 828 F.3d 532, 533 (7th Cir. 2016) (“The [United States District Court for
the Western District of Wisconsin] entered a judgment of foreclosure and ordered sale of the
property at a sheriff's auction after the time for redemption by the owners had expired.”); Wells
Fargo Bank, N.A. v. Moore, 717 F. App’x 635 (7th Cir. 2018) (“After the [United States District
Court for the Eastern District of Wisconsin] entered judgment permitting Wells Fargo to
foreclose on the two properties that Moore had used to secure a $7.1 million dollar mortgage, the
properties sold for $100,000 at a sheriff’s sale.”); United Cent. Bank v. Wells Street Apartments,
LLC et al., Case No. 11-CV-693, Docket No. 165, p. 11, ¶¶ 10, 11, 21 (E.D. Wis. January 30,
2014) (ordering foreclosure sale by the Sheriff of Outagamie County).
35.

By appointing the Winnebago County Sheriff as special master to carry out the

foreclosure sale, the cost of the sale will be significantly reduced. The commission on the sale
by a marshal would be 3% on the first $1,000 and 1.5% on the remaining purchase price. See 28
U.S.C. § 1921(c)(1). The commission applies also to any amounts taken as setoff, which would
apply to the plaintiff’s credit bid at the sale. See Hill v. Whitlock Oil Servs., Inc., 450 F.2d 170,
174 (10th Cir. 1971), see also United States of America v. Petty Motor Company et al. 767 F.2d
712 (10th Cir. 1985), see also Prudential Ins. Co. v. Von Bergen, 84 C 8568, 1986 WL 4736
(N.D. Ill. Apr. 16, 1986). For illustration purposes, based on a sale price of $1,000,000, the
commission would be $15,015. In comparison, the Winnebago County Sheriff charges a flat fee
of $150 per sale.
36.

Appointment of the Winnebago County Sheriff as a special master to conduct the

foreclosure sale will therefore maximize the recovery of the plaintiff and reduce the deficiency.

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CONCLUSIONS OF LAW
1.

This Court has subject matter jurisdiction over this case pursuant to 28 U.S.C.

§ 1332 because the amount in controversy (over $10 million) exceeds the minimum
jurisdictional limits of this Court and Plaintiff and Defendants are citizens of different states.
2.

This Court has personal jurisdiction and venue is proper in this district pursuant to

28 U.S.C. § 1391(b)(2) because the mortgaged property is located in this district.
3.

The Court finds that Plaintiff is entitled to default judgment.

4.

The Court recognizes that, as a result of default judgment, all of the factual

allegations in the complaint are “take[n] as true.” Wehrs v. Wells, 688 F.3d 886, 888 (7th Cir.
2012). Further, a “default judgment establishes, as a matter of law, that defendants are liable to
plaintiff on each cause of action alleged in the complaint.” e360 Insight v. Spamhaus Proj., 500
F.3d 594, 602 (7th Cir. 2007).
5.

The Court thus finds that Fannie Mae is the owner and holder of the Note, the

assignee of the Loan Agreement and Mortgage, and is entitled to enforce all of the Loan
Documents.
6.

The Court finds that the Mortgaged Property includes and covers both personal

property and real property; therefore, pursuant to Wis. Stat. § 409.604(1) Fannie Mae may
proceed under part 6 of Wis. Stats. Chapter 409 (UCC Article 9) as to the personal property
without prejudicing its rights as to the real property, or it may, at its option, proceed both as to
the personal property and the real property in accordance with its rights with respect to the real
property and have the personal property collateral sold with the real property collateral.

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7.

The Court finds that the Mortgaged Property, including without limitation, the

real property and any leases, should be sold together in one sale, as to do otherwise would injure
the interest of Fannie Mae.
8.

The Court finds that, due to the defaults under the Loan Documents, the Loan was

properly accelerated, all amounts owed to Fannie Mae under the Loan Documents are due, and
Fannie Mae is entitled to foreclose under the Mortgage and recover against all of its real estate
and personal property collateral. No further notice is required under any Loan Documents or
otherwise for Fannie Mae to exercise its remedies including to foreclose and recover against its
collateral.
9.

The Court finds that, as a result of the defaults described above, Fannie Mae is

entitled to judgment of foreclosure on the Mortgaged Property pursuant to the Mortgage and
applicable law.
10.

The Court finds that all interests, whatever they may be, of any Defendant in the

Mortgaged Property including, without limitation, any interest of the Manager in any UCC
Collateral or in the leases or rents, are junior and subordinate to the interest of Fannie Mae.
11.

The Court finds that, unless Fannie Mae determines to include the UCC Collateral

that is personal property in and with the real property in a sheriff’s sale, Fannie Mae is entitled to
take possession and control of, and to dispose of, the UCC Collateral under part 6 of Wis. Stat.
ch. 409 and apply the proceeds of any such disposition against the obligations owed to Fannie
Mae as alleged above.
12.

The Court finds that all sums advanced by plaintiff for taxes, special assessments,

insurance, or necessary repairs shall become additional indebtedness secured by the mortgages,

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with interest thereon from the date of payment at the legal post-judgment rate, and may be added
to the judgment by order at any time after the entry thereof.
13.

The Court finds that the Plaintiff is entitled to a lien on the premises for the

amount of any payments made for reasonable expenses incurred in pursuing the remedy of
foreclosure and may obtain an order directing that the amounts so paid, with interest thereon
from the date of payment at the legal post-judgment rate, be paid out of the proceeds of a
foreclosure sale.
14.

The Court finds that the Defendants and all persons claiming under them

subsequent to the filing of the notice of the pendency of this action hereby are forever barred and
foreclosed of all right, title, interest, claim and equity of redemption in and to the lands and
premises or any part, parcel, or portion thereof.
15.

The Court finds that if necessary to secure possession of said premises, the Clerk

of Court, upon application by Plaintiff, shall issue a writ of assistance.
16.

Pursuant to Fed. R. Civ. P. 53(a)(1)(c), the Court may appoint a special master in

post-trial matters that cannot be timely addressed by an available district judge or magistrate
judge. Federal courts have utilized special masters to conduct foreclosure sales under this
subsection:
Plaintiff seeks appointment of a special master to conduct the foreclosure sale,
which is authorized by Rule 53(a)(1)(C), Federal Rules of Civil Procedure. Absent
a basis for disqualification, federal courts routinely appoint special masters to
conduct foreclosure sales.
Stearns Bank, N.A. v. Farrell Homes, Inc., 2012 WL 360205, *3 (M.D. Fla. 2012). Other
Federal Courts, such as the Southern District of Ohio, have promulgated rules anticipating
the need for special masters to carry out foreclosure sales, under Fed. R. Civ. P. 53: “to

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carry out foreclosure sales, the Court shall appoint special masters under Fed. R. Civ. P.
53.” OH R USDCTSD Order 07-03.
17.

The Court finds that the subject premises shall be sold at public sale by or under

the direction of the Winnebago County Sheriff in accordance with the requirements applicable to
foreclosure sales in Wisconsin.
18.

Plaintiff may require, as a condition and term of the sale, that the purchaser at a

foreclosure sale agree to continue to operate the subject premises in accordance with the terms of
any program under mortgage insurance or assistance that was provided, or any applicable
regulatory or other agreement in effect with respect to such property immediately prior to the
time of the foreclosure sale. 12 U.S.C. § 3706(b)(1).
19.

The Court adopts Plaintiff’s Proposed Judgment.

Dated at Green Bay, Wisconsin this 27th day of April, 2021.
s/ William C. Griesbach
William C. Griesbach
United States District Judge

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