Bank of Commerce v. Fyre Lake Ventures, LLC
| Decision Date | 13 March 2015 |
| Docket Number | Case No. 4:13–cv–04001–SLD–JEH |
| Citation | 84 F.Supp.3d 807 |
| Parties | Bank of Commerce as Successor in Interest to the Federal Deposit Insurance Corporation as Receiver of Country Bank, Plaintiff, v. Fyre Lake Ventures, LLC, Blair Minton, Gregory Yates, Kenneth Hoffman, Jr. Paul Van Henkelum, Gerald Lee, Jerome Epping, Jeffrey Frye, James Gaugert, U.S. Department of the Treasury–Internal Revenue Service, Director of Employment Security of the State of Illinois, 3–D Concrete, Inc., d/b/a Golf Creations, QC Silt Fence, Inc., Rock River Electric, Inc, Van Henkelum, Lynch, & Associates, LLC, V2G Surveying LLC, and Unknown Owners and Nonrecord Claimants, Defendants. |
| Court | U.S. District Court — Central District of Illinois |
Paul J. Richards, Kavanagh Grumley & Gorbold LLC, Joliet, IL, for Plaintiff.
Daniel Lynch, Amy J. Hansen, Lynch & Stern LLP, Bruce L. Wald, David A. Kallick, Tishler & Wald Ltd, Micah Jon Hughes, Thomas Gene Gardiner, Gardiner Koch Weisberg & Wrona, Chicago, IL, Kenneth A. Carlson, Tracy Johnson & Wilson, Joliet, IL, Jennifer L. Kincaid, Mcgehee Olson Pepping & Balk Ltd., Silvis, IL, Douglas R. Lindstrom, Jr., Lane & Waterman LLP, Davenport, IA, Jeffrey C. McDaniel, Brooks Law Firm PC, William R. Stengel, Coyle Gilman & Stengel, Rock Island, IL, John H. Campbell, U.S. Atty., Peoria, IL, for Defendants.
The Bank of Commerce (the “Bank”), as Successor in Interest to the Federal Deposit Insurance Corporation (the “FDIC”) in its capacity as receiver for the failed Country Bank, is suing Fyre Lake Ventures, LLC (“Fyre Lake”) for breach of a note, for foreclosure on property mortgaged as security for the note, and for judgment against some of Fyre Lake's guarantors on the note.1 Before the court are several motions: the Bank's motion for summary judgment on its foreclosure claim, ECF No. 85; the Bank's motion for summary judgment against certain of the guarantors, ECF No. 86; Defendant Kenneth Hoffman's motion for summary judgment as to the claim against him as a guarantor, ECF No. 89; Defendant Gerald Lee's Motion for Extension of Time to File Answer, ECF No. 105; the Bank's motion to expedite a ruling on its motion for summary judgment on the foreclosure claim, ECF No. 106; the Bank's Motion for Default Judgment against Defendant Paul Van Henkelum, ECF No. 112; the Bank's Motion for Hearing Status and Case Management, ECF No. 115; and the Bank's Motion for Summary Judgment against Kenneth Hoffman, ECF No. 116. For the following reasons, the Bank's motion for summary judgment on its foreclosure claim is GRANTED. The Bank's motion for summary judgment against certain of the guarantors is GRANTED IN PART and DENIED IN PART. Hoffman's motion for summary judgment is DENIED. The Bank's Motion for Default Judgment against Van Henkelum is GRANTED. Lee's motion for extension of time is MOOT. The Bank's motions to expedite and its motion for a status conference are MOOT. The Court declines to rule at this time on the Bank's Motion for Summary Judgment against Hoffman, as the motion is not yet fully briefed.
On January 2, 2013, the FDIC filed a complaint against Fyre Lake, Blair Minton, Gregory Yates, Kenneth Hoffman, Jr., Paul Van Henkelum, Gerald Lee, Jerome Epping, Jeffrey Frye, James Gaugert, and unknown owners and non-record claimants, alleging that Fyre Lake had failed to make quarterly payments on a $9,000,000 loan (the “Fyre Lake loan”), and seeking to foreclose on the property that had been mortgaged to secure the loan. Compl. 9–16, ECF No. 1. The FDIC also sought judgment against all other named defendants as guarantors of the note, in the amounts by which the parties had allegedly agreed to guarantee the note—$900,000 for most of the guarantors, but $650,000 for Epping, and $325,000 for Frye and Guagert. Id. at 16–27.
Fyre Lake and Minton jointly filed an unverified Answer, ECF No. 35, asserting as affirmative defenses that Country Bank, which made the initial loan before being taken over by the FDIC, had not provided valuable consideration in exchange for Minton's guaranty (the “Minton Guaranty”), and had assured Minton that it would never collect on the Minton Guaranty. Minton/Fyre Lake Answer 32. Fyre Lake admitted that it had failed to make “certain payments” on the note, and claimed no affirmative defenses.Id. at 14. Lee and Yates filed verified answers, ECF Nos. 32, 42, respectively. Lee asserted as a defense that his guaranty (the “Lee Guaranty”) was obtained by a course of fraud and self-dealing, and without valuable consideration, and that the FDIC failed to state a claim upon which relief could be granted. Lee Answer 39. Yates asserted as a defense that his guaranty (the “Yates guaranty”) was obtained for no valuable consideration, and via a course of self-dealing. Yates Answer 17. Epping and Gaugert filed unverified answers, ECF Nos. 33, 34, respectively, asserting defenses of self-dealing. Epping Answer 14; Gaugert Answer 14. Frye filed an unverified answer, ECF No. 19, 50, asserting that his guaranty was acquired without valuable consideration and through a course of self-dealing. Frye Answer 15–16, ECF No. 50. Hoffman filed a motion to dismiss, ECF No. 23, and an amended motion to dismiss, ECF No. 53, which this Court denied, ECF No. 74. Van Henkelum, although properly served, ECF No. 28, has to date filed no responsive pleading in this matter.
On May 24, 2013, the FDIC filed an Amended Complaint, ECF No. 45, joining as defendants various other parties (Department of the Treasury—Internal Revenue Service; Director of Employment Security of the State of Illinois; 3–D Concrete, Inc.; Midwest Golf Development, Inc.; QC Silt Fence, Inc.; Rock River Electric, Inc.; Van Henkelum, Lynch & Associates, LLC; and V2G Surveying, LLC) who held liens against the mortgaged property, and requested that all these parties' interests in the mortgaged property be declared junior to its own. Am. Compl. 14. Yates and Lee filed answers to the amended complaint, again verified, ECF Nos. 46, 47, respectively, as did the parties who had originally filed unverified answers, all of which were, again, unverified. ECF Nos. 49, 50, 51, 52. Hoffman filed a verified answer, ECF No. 77, asserting as defenses lack of consideration, self-dealing, failure to state a claim, and the fact that Hoffman had previously executed a release with the FDIC from a separate debt obligation. Hoffman Answer 23–24.
As for the alleged junior lienholders, 3–D Concrete, Inc. (“3–D Concrete”) filed an answer and counterclaim, ECF No. 66. 3–D Concrete eventually dismissed the counterclaim. ECF No. 76. Of the remaining defendants, only the Internal Revenue Service (“IRS”) filed a responsive pleading, an answer, ECF No. 69, which alleged the existence of a federal tax lien against Fyre Lake in the amount of $23,228 and did not otherwise dispute the Amended Complaint. IRS Answer 2.
On September 27, 2013, the FDIC filed a “Motion for Entry of Judgment of Foreclosure and Sale.” ECF No. 75. After some responses and an FDIC motion to expedite, ECF No. 82, the Court denied the FDIC's motion, noting procedural defects in the FDIC's proposed form of notice for the foreclosure sale, and explaining that the proper vehicle for such a motion in federal court, as opposed to Illinois state court, was a motion for summary judgment. Feb. 20, 2014 Text Order. The FDIC returned on April 10, 2014 with a motion for summary judgment on Count I of the Amended Complaint, the foreclosure claim, ECF No. 85. On April 28, the FDIC filed a motion for summary judgment as to its claims in subsequent Counts against Defendants Minton, Yates, Lee, Epping, Frye, and Gaugert. ECF No. 86. Several defendants pointed out, via motion, that there were defects in the FDIC's affidavits in support of its motion for summary judgment, and that the FDIC had failed to include a proposed order of foreclosure, both of which defects the FDIC eventually remedied by the expedient of filing these documents piecemeal. ECF Nos. 95, 96, 97. Meanwhile, Defendant Hoffman moved for summary judgment against the FDIC, ECF No. 89.
On August 5, 2014, the FDIC filed another motion to expedite, ECF No. 106. On October 22, 2014, Lee was dropped from the case pursuant to a stipulated dismissal, ECF No. 110. Epping and Gaugert were also dropped due to stipulated dismissals on November 25, 2014, ECF No. 113. On November 11, 2014, Minton filed a Suggestion of Bankruptcy, ECF No. 111, which prompted the Court to stay the case as to Minton, Dec. 2, 2014 Minute Entry. On November 24, 2014, the FDIC moved for default judgment as to Van Henkelum, ECF No. 112, and the Court subsequently issued an order granting default, Dec. 4, 2014 Text Order.
On December 29, the FDIC assigned its interest in this matter to the Bank of Commerce, ECF No. 114. On January 5, 2015, the Bank moved for a status conference, and on February 16, 2015, moved for summary judgment as to Hoffman, ECF No. 116.
There has been a jumbled concatenation of filings in this case. In an attempt at clarity, the Court treats each pending motion below in the order it was filed.
Summary judgment is the “put up or shut up moment in a lawsuit, when a party must show what evidence it has that would convince a trier of fact to accept its version of events.” Johnson v. Cambridge Indus., Inc., 325 F.3d 892, 901 (7th Cir.2003) (internal quotation marks omitted). “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
At the summary judgment stage the court's function is not to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial—that is, whether there is evidence favoring the...
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