The opinion of the court was delivered by: Richard Mills, District Judge:
The Government sues to collect a debt.
This is a cause of action to collect on a promissory note
held by the Small Business Administration (SBA). On August 14,
1980, Golden Elevator, Inc., through its President, Robert H.
Leenerts, executed a promissory note and security agreement
with Farmers State Bank. On that same day, Robert H. Leenerts
and Debra J. Leenerts agreed to personally guarantee the loan.
Over five years later, on October 11, 1985, Farmers State Bank
executed an assignment with the SBA.
Sometime prior to the assignment, Golden Elevator began
having difficulty making payments on the loan. As a result, in
July of 1992, the Government filed suit to collect on the
guaranties and to foreclose on the mortgage. Case No. 92-3172.
The Government, however, failed to timely prosecute the case
and it was dismissed with prejudice. See United States v.
Golden Elevator, Inc., 27 F.3d 301 (7th Cir. 1994).
Thereafter, on August 3, 1993, the SBA, pursuant to the terms
of the note, sent notice to Robert Leenerts that it was
accelerating the loan. Fifteen days later, on August 17, 1993,
the Government filed a second suit to foreclose on the
mortgage. Defendants Golden Elevator and Robert and Debra
Leenerts then filed a motion to dismiss. In response, the
Government filed a motion to amend the Complaint. The motion
and the Complaint was amended to assert a cause of action
against only Golden Elevator to collect on the promissory note
with all other claims and defendants being dropped. After the
Complaint was amended, Golden Elevator filed a new motion to
dismiss asserting that the Government had failed to plead a
cause of action upon which relief could be granted.
Golden Elevator's motion to dismiss was denied. This Court
held that under Illinois law the contract action on the note
was separate and distinct from the claims that were dismissed
for failure to prosecute and that the dismissal for failure to
prosecute did not preclude bringing the contract action. After
the motion to dismiss was denied, Golden Elevator answered the
Amended Complaint raising six affirmative defenses.
On October 20, 1994, the Government moved for summary
judgment contending that Defendant had admitted most of the
allegations in the Amended Complaint and that no genuine issues
of material fact remain. Additionally, the Government asserts
that Golden Elevator's affirmative defenses are deficient as a
matter of law.
In response, Golden Elevator contends that three asserted
affirmative defenses preclude summary judgment. Specifically,
Defendant contends that because the Government failed to
provide notice and grant administrative rights, failed to plead
the Federal Debt Collection Procedures Act, and failed to plead
a cause of action upon which relief can be granted, summary
judgment should be denied.
Summary judgment shall be granted if the record shows that
"there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law."
Black v. Henry Pratt Co., 778 F.2d 1278, 1281 (7th Cir. 1985).
The moving party has the burden of showing the absence of a
genuine issue of material fact. Celotex Corp. v. Catrett,
477 U.S. 317, 325, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). A
genuine issue of material fact exists when "there is sufficient
evidence favoring the nonmoving party for a jury to return a
verdict for that party." Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 249, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). In
determining whether a genuine issue of a material fact exists,
the evidence is to be taken in the light most favorable to the
non-moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144,
157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). Once the
moving party has met its burden, the opposing party must come
forward with specific evidence, not mere allegations or denials
of the pleadings, which demonstrates that there is a genuine
issue for trial. Posey v. Skyline Corp., 702 F.2d 102, 105 (7th
The Government has put forth uncontroverted evidence that the
Defendant made, executed and delivered a written promissory
note on August 14, 1980, for $315,000.00, to Farmers State Bank
of Camp Point. It is also not in dispute that the SBA is the
present owner and holder of said note with assignment occurring
on October 11, 1985. Additionally, Defendant's agents have
admitted that Defendant defaulted on payments due under the
note and that the note matured with a balance due and owing.
Finally, the evidence shows that the Government made a written
demand for payment on the note on August 3, 1993. Thus, the
Government has demonstrated the elements necessary for relief.
See Fed.R.Civ.P. Official Form 3.
A. Administrative Remedies
Defendant claims Plaintiff is not entitled to summary
judgment because three affirmative defenses preclude relief.
First, Defendant argues that summary judgment is not warranted
because the Government failed to provide "notice of, or the
opportunity to apply for administrative remedies prior to the
initiation of the foreclosure." (Def.'s ...