United States of America v. Bourdo et al

Filing 25

ORDER Granting Plaintiff's Motion for Summary Judgment 18 . (cc: all counsel) ((cef), C. N. Clevert, Jr.)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
UNITED STATES OF AMERICA,
Plaintiff,
v.

Case No. 14-C-1156

BENJAMIN E. BOURDO, NICOLE BOURDO,
PROHEALTH CARE MEDICAL ASSOCIATES,
WAUKESHA MEMORIAL HOSPITAL INC.
DISCOVERY BANK, BANCO SERVICES INC.,
Defendants.
ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT (DOC. 18)
On June 1, 2015, the United States of America moved for summary judgment in this
foreclosure action against the non-defaulting defendants, debtors Benjamin and Nicole
Bourdo (“the Bourdos”), and two junior lienholders, ProHealth Care Medical Services and
Waukesha Memorial Hospital.1 To date, no defendant has filed a response. Because the
undisputed facts establish that the United States is entitled to judgment as a matter of law,
the court will grant the motion.
FINDINGS OF FACT
The Bourdos executed three promissory notes in favor of the Farm Service Agency
(“FSA”) on September 15, 2009, August 27, 2010, and May 23, 2011, respectively, with a
total principal of $308,000. (Compl. ¶ 2; Am. Answer ¶ 1; Lund Decl. ¶ 2,Exs. A - C.) To
secure these loans, the Bourdos provided the FSA with a security interest in all farm
products, crops, livestock, and farm equipment (collectively, the “chattel”) owned or

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On April 1, 2015, the Clerk of Courts entered default with respect to Banco Services Inc. and
Discovery Bank. (Doc. 14.)

thereafter acquired by the Bourdos. (Compl. ¶ 4, Ex. D; Am. Answer ¶ 1; Lund Decl. ¶ 3,
Ex. D.) The Bourdos also executed three mortgages for specified parcels at their farm in
East Troy, Wisconsin, in favor of the FSA. (Compl. ¶ 8, Exs. G - I; Am. Answer ¶ 1; Lund
Decl. ¶ 4, Exs. E - G.) The Bourdos have not made payments on any of the three loans
since December 2013 and, therefore, have defaulted under the terms of the instruments
governing the loans at issue. (Comp. ¶ 9; Am. Answer ¶ 1; Lund Decl. ¶ 5.)
Upon default, the security agreement and mortgages executed by the Bourdos
provide that the government may (1) declare the entire unpaid amount immediately due and
payable and (2) foreclose on the instruments and sell the real property as well as the
chattel securing the loans. (Lund Decl. ¶ 6, Ex. D ¶ 4(b); Ex. E ¶ 27; Ex. F ¶ 27; Ex. G
¶ 27.) When the Bourdos became more than 90 days delinquent on their loans, the FSA
provided them with information about potentially available loan servicing options that could
allow them to modify or defer their loan payment under the Agency’s loan deferment
program. (Lund Decl. ¶ 7, Ex. H.) To be eligible for participation in the loan deferment
program, a borrower must satisfy stringent financial criteria, including the submission of a
feasible farm operating plan demonstrating that the borrower will have a positive cash flow
during and after the deferral period. (Lund Decl. ¶ 8; 7 C.F.R. § 766.109(a).) However, the
Bourdos did not submit any application for a deferment to the FSA. (Lund Decl. ¶ 8.)
Consequently, the FSA served the Bourdos with a Notice of Acceleration and Demand for
Payment of their entire outstanding debt on April 14, 2014. (Lund Decl. ¶ 9, Ex. I.)
Separate from its loan deferment program, FSA policy permits a borrower to make
payments following the acceleration of a loan, and if the borrower pays the outstanding
delinquent balance, the FSA may reinstate the loan. (Lund Decl. ¶ 10.) Consistent with
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this policy, an FSA employee provided the Bourdos with additional time (until June 24,
2014) to become current and to avoid foreclosure proceedings. (Lund Decl. ¶ 11.) The
Bourdos failed to make any additional payments on their loans prior to the June 24, 2014.
deadline. (Lund Dec. ¶ 12.)
Thus, the United States proceeded to initiate foreclosure proceedings against the
Bourdos and filed this action on September 9, 2014. (Compl.) Due notice of the pendency
of this action was filed with the Register of Deeds for Walworth County on October 6, 2014.
(Carter Decl. ¶ 2, Ex. A.) Defendants ProHealth Care Medical Associates and Waukesha
Memorial Hospital filed Claims for Surplus on December 17, 2014. (Docs. 5 and 6.) These
Claims for Surplus concede that the United States has priority over the claims of ProHealth
Care Medical Associates and Waukesha Memorial Hospital. Id.
The current outstanding balance owed to the United States by the Bourdos on the
loans is $317,340.50 in principal, interest, and other fees as of May 19, 2015. (Lund Decl.
¶¶ 13-14, Ex. K; Carter Decl. ¶ 3.) Additional interest continues to accrue at the rate of
$35.0635 per day. (Id.)
CONCLUSIONS OF LAW
Under the Federal Rules of Civil Procedure, summary judgment is proper if the
pleadings, depositions, answers to interrogatories, and admissions on file, together with any
affidavits, show that there is no genuine issue of material fact and the moving party is
entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). “[T]he plain language of Rule
56(c) mandates the entry of summary judgment, after adequate time for discovery and upon
motion, against a party who fails to make a showing sufficient to establish the existence of

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an element essential to that party's case, and on which that party will bear the burden of
proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317 (1986).
The United States has shown that it is entitled to a judgment of foreclosure. In
addition to filing copies of the three promissory notes executed by the Bourdos in favor of
the FSA, the United States filed the security agreement and three mortgages for specified
parcels at their farm in East Troy. (Lund Decl., Exs. A-G.) The Declaration of Douglas
Lund, a Farm Loan Specialist for the United States Department of Agriculture, states that
the Bourdos have failed to make payments on the three loans at issue since December
2013. The terms of the security agreement and mortgages provide that the FSA may
declare the entire unpaid amount immediately due and payable and foreclose on the
instruments and sell the real property and the chattel securing the loans. Additionally, the
United States has provided evidence that the Bourdos were provided with options to allow
them to modify the payment on the terms of their loans (Lund Decl. Ex. H) and that the
Bourdos failed to submit any application for loan servicing and/or a loan deferment. (Lund
Decl. ¶ 8, Ex. H.) Served with the Notice of Acceleration and Demand for Payment of their
entire debt on April 14, 2014, the Bourdos have failed to make any payments prior to their
June 24, 2014, deadline. Accordingly, the court finds that the Bourdos owe a total
outstanding balance of $317,340.50 ($278,977.66 in principal, $375 in fees, and
$37,987.84 in interest with interest accruing at a rate of $35.0635 per day).
Although the Bourdos raised affirmative defenses in their amended answer, they
have not come forward with any facts suggesting they can prevail on their defenses.
Specifically, they assert that the United States promised that the loan in question would be
placed in deferment, and that the United States is barred under the doctrines of unclean
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hands, estoppel, and waiver. However, there is no evidence in this record supporting any
of these defenses. The undisputed facts establish that the Bourdos never submitted the
requisite application for a loan deferment or other repayment assistance, see 7 C.F.R.
§ 766.101(d)(3) and 766.103(b), and the Bourdos have not even alleged facts to support
the defenses of unclean hands, waiver, and estoppel. To survive summary judgment,
defendants were required to provide specific evidence that a triable issue of fact remains.
Because they have not met their burden, summary judgment will be granted.
As a final matter, ProHealth Care Medical Associates and Waukesha memorial
Hospital have filed Claims for Surplus in response to the complaint conceding their interests
are junior to the those of the United States. Accordingly,
IT IS ORDERED that the United States of America’s motion for summary judgment
is granted. The United States may proceed with the immediate foreclosure and sale of the
collateral covered by the notes and mortgages held by the FSA.
IT IS FURTHER ORDERED that judgment shall be entered in favor of the United
States as to all defendants.
Dated at Milwaukee, Wisconsin, this 26th day of August, 2015.
BY THE COURT

/s/ C.N. Clevert, Jr.
C.N. CLEVERT, JR.
U.S. DISTRICT JUDGE

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