BMO Harris Bank N.A. v. Rivers Transportation, Inc. et al
Filing
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OPINION and ORDER granting 7 Motion for Summary Judgment. Plaintiff must file its petition for attorney fees, along with supporting documentation, by October 26, 2018. Signed by District Judge James D. Peterson on 10/12/18. (jat)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN
BMO HARRIS N.A.,
Plaintiff,
v.
OPINION and ORDER
RIVERS TRANSPORTATION, INC.,
KENNETH SIKORA, and PATRICIA
SIKORA,
17-cv-777-jdp
Defendants.
Plaintiff BMO Harris N.A. filed this suit to collect debt owed by defendants Rivers
Transportation Inc., Kenneth Sikora, and Patricia Sikora. Dkt. 1. BMO Harris is the assignee
of a loan that Rivers Transportation took out to purchase commercial trucks, and a party to a
second agreement with Rivers Transportation to lease additional trucks. BMO Harris alleges
that Rivers Transportation defaulted on its payments under both agreements, and that the
Sikoras are personally liable because they guaranteed Rivers Transportation’s performance in
all obligations to BMO Harris.
BMO Harris brings breach of contract claims against all defendants. It also claims that
under the terms of the contracts, the Sikoras are obligated to pay BMO Harris’s attorney fees
and expenses. It moves for summary judgment on all claims and asks the court to award
damages of $205,748.13 plus attorney fees and expenses. Dkt. 7 and Dkt. 12-2. Defendants
did not respond to the motion, so the court accepts all facts as represented by BMO Harris.
Because the facts show that BMO Harris is entitled to relief, the court will grant the
motion and award damages. BMO Harris is also entitled to recover its attorney fees, but BMO
Harris will need to file a separate petition with documentation of its counsel’s hourly rate and
number of hours worked.
UNDISPUTED FACTS
The court draws the following facts from BMO Harris’s summary judgment materials.
Defendants did not respond to BMO Harris’s proposed findings of fact, and as the court
explained in its pretrial conference order, it will conclude that a proposed fact is undisputed
unless the responding party explicitly disputes it. Dkt. 5, at 4.
On October 18, 2013, Rivers Transportation entered into a loan and security agreement
with GE Capital Commercial Inc. under which GE Capital loaned money for the purchase of
three commercial trucks. Dkt. 11-4. Rivers Transportation agreed to make 66 monthly
payments of $4,284.39, for a total of $282,769.74. In 2015, GE Capital transferred its interests
in the agreement to BMO Harris. Dkt. 11-1.
On December 3, 2015, Rivers Transportation entered into a second agreement to lease
two trucks from BMO Harris. Dkt. 11-2. This agreement was modified on November 30, 2016,
and the parties set a new pay schedule for Rivers Transportation to pay the remaining balance.
Under the modified agreement, Rivers Transportation agreed to make 60 monthly payments
of $4,880.55, for a total of $292,833.
Both the 2013 agreement and the modified 2016 modified agreement stated that Rivers
Transportation would be in default if it failed to make timely payment. Dkt. 9, ¶ 12. Upon
default, BMO Harris had the right to declare all debt immediately due and payable. Id., ¶ 13.
As part of the 2016 modification, the Sikoras agreed to personally guarantee Rivers
Transportation’s performance of all “present and future liabilities, obligations and
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indebtedness.” Id., ¶ 14. If Rivers Transportation went into default, the Sikoras would be jointly
and severally liable for all of Rivers Transportation’s debt, along with any attorney fees and
expenses incurred by BMO Harris as a result of the default. Id., ¶ 15; Dkt. 11-5.
In 2017, Rivers Transportation defaulted under the terms of both agreements and BMO
Harris accelerated the entire amount due. Id. ¶ 16; Dkt. 11-6; Dkt. 11-7. Defendants did not
pay the accelerated balance, and BMO Harris repossessed and sold the trucks. After deducting
the proceeds from the truck sales, BMO Harris calculates that defendants still owe $39,141.83
under the 2013 agreement and $166,606.30 under the 2016 modified agreement. Dkt. 11-8;
Dkt. 12-1. The total debt includes the remaining principal balance of each agreement plus
interest, repossession expenses, and outstanding late payment charges.
ANALYSIS
A. Jurisdiction
Even if the parties do not contest jurisdiction, the court must determine that it has
jurisdiction before it can determine the merits of the case. See Avila v. Pappas, 591 F.3d 552,
553 (7th Cir. 2010) (“The first question in every case is whether the court has jurisdiction”).
Here, BMO Harris invokes the court’s diversity jurisdiction under 28 U.S.C. § 1332, which
requires an amount in controversy that exceeds $75,000 and diversity of citizenship between
the plaintiff and defendants. Dkt. 9, ¶¶ 2–7. BMO Harris’s proposed findings of fact are
sufficient to determine that Rivers Transportation and the Sikoras are citizens of Wisconsin,
but they are not sufficient for the court to determine BMO Harris’s citizenship.
The complaint and the proposed findings of fact both state that BMO Harris is “a
corporation and national bank association with its principal place of business in Chicago.” Dkt.
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1, ¶ 1; Dkt. 9, ¶ 2. Although a state corporation is a citizen of its state of incorporation and its
principal place of business, 28 U.S.C. § 1332(c)(1), a national bank association is a citizen of
the state in which it is “located.” 28 U.S.C. § 1348. A national bank is located in, and therefore
a citizen of, the state in which its “main office” is located, as set forth in its articles of
association. Wachovia Bank v. Schmidt, 546 U.S. 303, 307 (2006). The location of a national
bank’s main office and the location of its principal place of business will almost always coincide,
but they are not the same thing. See id. at 317 n.9.
In a previous case before this court, BMO Harris indicated that, according to its articles
of association, its main office is in Chicago. See General Electric Capital Corp. v. Malaszuk
Specialized Logistics, LLC, No. 15-cv-191, Dkt. 55-1 (W.D. Wis. Apr. 8, 2016). Another federal
court also found that BMO Harris is a citizen of Illinois because its main office is in Chicago.
Sarvis v. BMO Harris Bank, No. 14-c-9143, 2015 WL 2415244, at *1 n.1 (N.D. Ill. May 19,
2015) (finding that BMO Harris’s main office and principal place of business are both in
Chicago), aff'd sub nom. Sarvis v. BMO Harris Bank N.A., 619 F. App'x 520 (7th Cir. 2015).
Based on BMO Harris’s prior representations, the court is satisfied that BMO Harris is a citizen
of Illinois and that the court has diversity jurisdiction.
B. Merits
BMO Harris does not discuss which state’s law should apply, but it cites Wisconsin law
throughout its brief. The court will therefore apply Wisconsin law. See FutureSource LLC v.
Reuters Ltd., 312 F,3d 281, 283 (“[T]here’s no discussion of choice of law issues, and so we
apply the law of the forum state”).
BMO Harris’s first claim is against Rivers Transportation for breach of contract. Under
Wisconsin law, a claim for breach of contract has three elements: (1) a contract between the
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parties that creates obligations flowing from the defendant to the plaintiff; (2) failure of the
defendant to do what it undertook to do; and (3) damages. Brew City Redevelopment Grp., LLC
v. The Ferchill Grp., 2006 WI App 39, ¶ 11, 289 Wis. 2d 795, 714 N.W.2d 582. Here, Rivers
Transportation failed in its obligations to make monthly payments and to pay its remaining
balance upon default. BMO Harris suffered damages in the form of economic loss. So Rivers
Transportation breached its contracts with BMO Harris.
BMO Harris’s second and third claims are against the Sikoras for breach of their
obligations under the continuing guaranties. A guaranty of payment binds the guarantor to pay
the debt of another party according to the terms and conditions of the guaranty. Park Bank v.
Westburg, 2013 WI 57, ¶¶ 58–60, 348 Wis. 2d 409, 832 N.W.2d 539. The guaranty is a
contract that is separate from the agreement of the principal debtor, and the guarantor’s
liability is based upon the terms of the guaranty. Id. ¶ 63 n.14. Here, the Sikoras agreed to pay
the full debt of Rivers Transportation for all agreements it had with BMO Harris if Rivers
Transportation went into default. As consideration, BMO Harris modified the terms of Rivers
Transportation’s lease agreement in exchange for the guaranties. See Electric Storage Battery Co.
v. Black, 27 Wis. 2d 366, 134 N.W.2d 481, 483 (1965) (agreement to sell goods to third party,
on condition of guaranty, is adequate consideration to hold guarantor liable). When Rivers
Transportation defaulted, the Sikoras were obligated to pay its debts and they breached their
obligations to do so.
Finally, BMO Harris claims attorney fees and expenses pursuant to the guaranties
signed by the Sikoras. Under Wisconsin law, parties may agree to an obligation to pay attorney
fees only if the contract provision “clearly and unambiguously so provides.” Hunzinger Const.
Co. v. Granite Res. Corp., 196 Wis. 2d 327, 340, 538 N.W.2d 804, 809 (Ct. App. 1995). Here,
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the continuing guaranty clearly states that the guarantor agrees to pay “all attorneys’ fees and
expenses which may be suffered by Bank by reason of the Company’s default.” Dkt. 11–5, at
2. So BMO Harris is entitled to recover attorney fees and expenses incurred in this action.
BMO Harris should file a separate petition for attorney fees and support its motion with
documentation of its counsel’s hourly rate and number of hours worked, as explained in the
court’s pretrial conference order. Dkt. 5, at 45.
ORDER
IT IS ORDERED that:
1. Plaintiff BMO Harris Bank N.A.’s motion for summary judgment, Dkt. 7, is
GRANTED.
2. The clerk of court is directed to enter judgment in favor of plaintiff BMO Harris
Bank N.A. and against defendants Rivers Transportation Inc., Kenneth Sikora,
and Patricia Sikora in the amount of $205,748.13.
3. Plaintiff must file its petition for attorney fees, along with supporting
documentation, by October 26, 2018.
Entered October 12, 2018.
BY THE COURT:
/s/
________________________________________
JAMES D. PETERSON
District Judge
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