Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.


September 18, 2003


The opinion of the court was delivered by: Ronald Guzman, District Judge


Pending is plaintiff Mountain Funding, Inc.'s Motion for Summary Judgment pursuant to Federal Rule of Civil Procedure ("Rule") 56(c) as to all claims. For the following reasons, the Court denies plaintiff's motion for summary judgment.


In September 1997, Mountain Funding, Inc. ("Mountain Funding") provided $3.8 million in subordinated financing to United Round Lake Land Development LLC ("Round Lake") for the development of the Brooks Farm subdivision in Lake County, Illinois. Round Lake purchased the land upon which the homes were to be developed, was to divide the land into individual lots, and sell the lots to United Homes, Inc. ("United Homes"). In February 1999, Round Lake was in default of its obligation to Mountain Funding.

In lieu of foreclosure, Mountain Funding and Round Lake agreed to a `workout' [ Page 2]

and restructuring of the loan agreement. In order to facilitate the workout, Round Lake and United Homes agreed to a purchase schedule for the lots in question with fixed prices and a set timetable. This fixed schedule better ensured United Homes' timely purchase of the lots owned by Round Lake and the subsequent ability of Round Lake to fulfill its obligations to Mountain Funding.

An additional condition of the workout was that United Homes was required to procure a land acquisition bond in order to bond its obligations to purchase the parcels of land in the subdivision. The land acquisition bond ("bond") was procured on May 4, 1999 through Frontier Insurance Company ("Frontier"). The principal obligation under the bond was the February 1999 Lot Purchase Agreement between United Homes and Round Lake. United Homes was the principal of the bond, with Frontier as surety-securing United Homes' obligation. Round Lake and Mountain Funding were both named as obligees of the bond.

When the bond was issued, Frontier was aware that there was an outstanding loan between Mountain Funding and Round Lake with an outstanding balance of $5,000,000, but did not request the loan agreement. Frontier was unaware that Round Lake was in default to Mountain Funding on the existing loan when it issued the bond in question. This information was never requested by Frontier in the process of evaluating the bond in question. Additionally, Frontier was aware that David Feltman, an attorney, held positions at both Round Lake and United Homes during the time the bond was issued. Frontier was aware that Round Lake and United Homes were related entities. The parties disagree as to whether the information concerning the default and relatedness of the entities would have made a difference in Frontier's decision to issue the bond in question. [ Page 3]

In September 1999, United Homes defaulted under the Lot Purchase Agreement that had been secured by the bond issued by Frontier. In September 1999, February 2000, March 2000, and July 2000 Mountain Funding notified Frontier of the default and sent Frontier its claim under the bond. In August 2000, Frontier acknowledged the receipt of Mountain Funding's previous demands, but Frontier stated that no evidentiary material had been received, and it could not make a claim decision. Frontier has never paid Mountain Funding any amount of money under the bond.

As a result of the default by United Homes and inaction by Frontier, Round Lake sold the remaining parcels of land (some lots covered by the 1999 Lot Purchase Agreement and other additional lots not covered by that agreement) to Remington Homes and Cambridge Homes. An affiliate of Mountain Funding, Round Mountain LLC, was formed and became a member of Round Lake to oversee the winding down of the entity, including the sale of lots in the Brooks Farm subdivision. The total purchase price for the lots is in dispute; as is the amount of damages sustained by Mountain Funding as a result of United Homes' default under the Lot Purchase Agreement.


Pursuant to Federal Rule of Civil Procedure 56(c), the court shall grant summary judgment if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show 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." FED. R. Civ. P. 56(c). When considering the evidence submitted by the parties, the court does not weigh it or determine the truth of the matters asserted. Anderson v. Liberty Lobby, [ Page 4]

Inc., 477 U.S. 242, 249 (1986). In deciding a motion for summary judgment, all facts must be viewed and all reasonable inferences drawn in the light most favorable to the non-moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 158 (1970); Shank v. William R. Hague, Inc., 192 F.3d 675, 683 (7th Cir. 1999). On a motion for summary judgment, "[t]he evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255. In response to "a properly supported motion for summary judgment," the nonmovant "must set forth specific facts showing that there is a genuine issue for trial." Id. at 250 (internal quotations omitted). If a reasonable jury could find for the party opposing the motion, summary judgment may not be granted. Hedberg v. Ind. Bell Tel. Co., Inc., 47 F.3d 928, 931 (7th Cir. 1995),

Although the moving party has the initial burden to show that the record presents no genuine issue of material fact, if the nonmovant bears the ultimate burden of proof, "he must then go beyond the pleadings and affirmatively demonstrate a genuine issue of material fact for trial." Essex v. United Parcel Serv., Inc., Ill F.3d 1304, 1308 (7th Cir. 1997) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)). The moving party need not negate the opponent's claim with affidavits or similar materials, as Rule 56 makes such supporting documentation optional. Celotex, 477 U.S. at 323; see Fed.R.Civ.P. 56(a), (b), (c) (2003) ("the affidavits, if any," and "with or without supporting affidavits"). The moving ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.