Summary judgment is a means for avoiding a trial when the best evidence
the party opposing the motion can bring would not win the claims even if
believed. It is appropriate where "`there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as a
matter of law.'" Bridgman v. New Trier High School Dist. No. 203,
128 F.3d 1146, 1148 (7th Cir. 1997) (quoting Fed. R. Civ. P. 56(c)). I
construe the evidence in the light most favorable to the nonmoving party
and draw all justifiable inferences in favor of that party. Id. A genuine
issue of material fact does not exist unless there is "sufficient
evidence favoring the non-moving party for a jury to return a verdict for
that party." Liu v. T&H Machine Co., 191 F.3d 790, 796 (7th Cir. 1999).
The non-moving party "may not rest only upon the allegations set forth in
the pleadings, but must come forward with specific facts sufficient to
raise a genuine issue for trial." Id. at 794-95 (internal citations
Although he is not a party, Mr. Pound responds to the summary judgment
on his own behalf and as president of RAM. If he represents himself, I
would have to give Mr. Pound a lot of latitude because he is not
represented by counsel. Mallett v. Wisconsin Div. of Vocational
Rehabilitation, 130 F.3d 1245, 1248 (7th Cir. 1997) (legal filings
drafted by pro se plaintiffs are to be construed liberally). However,
Mr. Pound cannot represent RAM because he is not an attorney.*fn1
"Corporations . . . [can] appear in federal courts only through licensed
counsel." Rowland v. California Men's Colony, 506 U.S. 194, 195 (1993)
(citing Osborn v. Bank of the United States, 22 U.S. 738, 828 (1824)
(opinion of Marshall, C.J.) (A "corporation can only appear by
attorney.")); see also 28 U.S.C. § 1654 (governing appearances in
federal court). Accordingly, I cannot accept his response on behalf of
RAM, and must treat RAM as having waived any response. That alone is
enough to warrant summary judgment with respect to the plaintiffs' claims
Even if RAM's pleadings could be considered, it would lose. In the
first place, RAM failed to file its Local Rule 56.1 (formerly Rule 12)
statement of material facts, and "a failure to properly contest in the
12(N) statement material facts set out in the movant's 12(M) statement
constitutes a binding admission of those facts." Brasic v. Heinemann's
Inc., 121 F.3d 281, 284 (7th Cir. 1997). In such a case, I "depart from
[the] usual posture of construing all facts in favor of the nonmoving
party; rather [I] accept as true all material facts contained in [the
moving party's] 12(M) statement." Id. Accordingly, I accept the facts as
set forth by the Commissioner and Midwest. Obviously accepting the
plaintiffs' version of the facts prejudices the defendants' case.
Second, apart from the formalities of filing, RAM's arguments against
the Commissioner fail to meet the burden imposed on a party opposing a
summary judgment motion. RAM does not have an onerous burden: "he need
not tender evidence in a form that would be admissible at trial; he may
rely on affidavits or any other materials of the kind identified in Rule
56(c); . . . [h]e need not match the movant witness for witness, nor
persuade the court that his case is convincing; he need only come forward
with appropriate evidence demonstrating that there is a pending dispute
of material fact." Liu, 191 F.3d at 796-97. But "he must do that much."
Id. at 797. Here, it did not.
The Commissioner argues, first, that RAM breached the December 23,
1994, Agreement between Midwest and RAM, causing harm to National
Heritage, the intended third party beneficiary of the Agreement. In
Illinois, whose law governs here, a third party can have rights under a
contract if contracting parties "have manifested an intent to confer a
benefit on [it]." Ocasek v. City of Chicago, 656 N.E.2d 44, 49 (Ill.
App. Ct. 1995). Illinois courts "look to the contract to determine the
intent of the parties. `The test is whether the benefit to the third
person is direct to [it] or is but an incidental benefit to [it] arising
from the contract.'" Id. (internal citation omitted). A third-party
beneficiary may sue for breach of a contract made for [its] benefit.
Santucci Constr. Co. v. Baxter & Woodman, Inc., 502 N.E.2d 1134, 1141
(Ill. App. Ct. 1986). The Commissioner, acting for National Heritage, may
sue on the contract if National Heritage was a third party beneficiary.
RAM does not dispute that it was, and the Agreement specified on its face
that its beneficiary was the "debentureholder," here, National Heritage.
So the Commissioner may sue on the contract. It is therefore irrelevant
that RAM had no contractual obligation to National Heritage.
The Commissioner argues that RAM breached the § 6(a) of the
December 23, 1994 Agreement and §§ 6.05 and 6.16 of the Indenture.
Section 6(a) of the December 23, 1994, Agreement required RAM to "carry
out all of its obligations hereunder at its own expense, except as
otherwise specifically provided." Section 6.16 of the Indenture is to the
same effect, and § 6.05 allows RAM to use proceeds of the mortgage
loans only for certain limited purposes, such as paying real estate taxes
and insurance premiums on the mortgaged properties. The expenses listed
above were in violation of both agreements. RAM claims that § 6.05
allows for attorneys' fees for foreclosure work to be paid from the
bond's proceeds, but it does not. RAM also asserts that several thousand
dollars paid from those accounts to C.T. Corp. were expended for
permitted collections activities, but a mere assertion will not suffice to
show this. It argues that the Commissioner approved travel expenses and
other operating expenses, but presents no evidence of this fact. Its
other arguments concerning "customary practices in the industry" or
knowledge by the Commissioner of the money paid to National Workout do
not go to whether the contract was breached. It has not produced evidence
on which a rational jury could decide in its favor on this count if that
evidence was believed. I grant summary judgment to the Commissioner on
her claim of breach of contract.
RAM fails to respond to the claims for unjust enrichment, breach of
fiduciary duty, or civil conspiracy, and so has waived any arguments on
the count, effectively conceding them. I grant summary judgment on these
For its part, Midwest asks for summary judgment on RAM's first and
second counterclaims and its own affirmative defenses. Midwest argues
that RAM fraudulently induced Midwest into entering the December 23, 1994
Agreement, and so is not liable on that Agreement for the 1% "pull fee"
or indemnification, and anyway should not be allowed to profit from its
dirty hands or relitigate matters decided in the criminal case.
Midwest's pleadings are sloppy, and if RAM were represented by a
competent attorney, Midwest would lose this motion. The fraudulent
inducement defense on which it puts all its bets in the summary judgment
motion was not pled with the degree of specificity required by Fed. R.
Civ. P. 9(b): "[T]he circumstances constituting fraud . . . shall be
stated with particularity."*fn2 A sufficient level of factual
may be found "where the circumstances are pled "`in detail.'" In re
Healthcare Compare Corp. Securities Litigation, 75 F.3d 276, 281 (7th
Cir. 1996). "This means the who, what, when, where, and how: the first
paragraph of any newspaper story." DiLeo v. Ernst & Young, 901 F.2d 624,
627 (7th Cir. 1990). On this motion, despite several lengthy statements
of facts, Midwest fails to provide a coherent account of the alleged
Midwest argues that RAM is barred from relitigating the matters decided
in the criminal case where Mr. Pound was found guilty of "similar if not
identical facts at issue in this case," and specifically the facts,
whatever they might be, underlying the fraudulent inducement claim. But
Midwest fails to match up the counts in the indictment of which Mr. Pound
was found guilty with any particular descriptions of matters supposedly
being relitigated here, leaving me with the argument, in effect, that I
should hold that RAM is barred from litigating its counterclaims against
Midwest because Mr. Pound is a convicted fraudster and, generally
speaking, a bad guy. Needless to say, this won't do.
Midwest's "unclean hands" argument is vitiated by similar flaws. Mr.
Pound may be a crook, but even convicted fraudsters and generally bad
guys have the right to enforce a contract. Midwest is lucky that RAM's
counsel withdrew after answering, leaving RAM without the ability to
defend itself on this motion, which I must therefore grant as unopposed.
I therefore GRANT as unopposed the Commissioner's motion for summary
judgment against RAM on counts XIII-XVI and award it $2,258,601.50, plus
pre-judgment interest, reasonable attorneys' fees and costs. I also GRANT
as unopposed summary judgment for Midwest on RAM's first and second
counterclaims and Midwest's affirmative defenses.