The opinion of the court was delivered by: JOHN W. DARRAH, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff, LaSalle Bank National Association, as Trustee for the
registered holders of Commercial Mortgage Asset Trust, Commercial
Mortgage Pass-Through Certificates, Series 1999-CI ("LaSalle"), filed
suit against Defendant, Thomas O. Mudd, III ("Mudd"), alleging Mudd
defaulted on a fraud guaranty. Presently before the Court is Mudd's
Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).
In reviewing a motion to dismiss, the court reviews all facts alleged
in the complaint and any reasonable inferences drawn therefrom in the
light most favorable to the plaintiff. See Marshall-Mosby v. Corporate
Receivables, Inc., 205 F.3d 323, 326 (7th Cir. 2000). A plaintiff is not
required to plead the facts or the elements of a claim, with the
exceptions found in Federal Rule of Civil Procedure 9. See Swierkiewicz
v. Sorema, 534 U.S. 506, 511 (2002); Walker v. Thompson, 288 F.3d 1005,
1007 (7th Cir. 2002) (Walker). Dismissal is warranted only if "it appears
beyond a doubt that the plaintiff can prove no set of facts in support of
his claim which would entitle him to relief."
Conley v. Gibson, 355 U.S. 41, 45-46 (1957). The "suit should not be
dismissed if it is possible to hypothesize facts, consistent with the
complaint, that would make out a claim." Graehling v. Vill. of Lombard,
Ill., 58 F.3d 295, 297 (7th Cir. 1995). Furthermore, on a motion to
dismiss, the Court may consider exhibits attached to the complaint as
part of the pleadings. Beam v. IPCO Corp., 838 F.2d 242 (7th Cir. 1988).
A reading of the Amended Complaint supports the following summary of
the alleged operative conduct of the parties.
In August 1998, Container Corporation executed and delivered to the
Capital Company of America, LLC ("CCA") a mortgage note in the original
principal amount of $3,250,000 for a loan in that amount. As security
for the Note and the loan, Container executed and delivered to CCA a
Mortgage, Assignment of Leases and Rents and Security Agreement of the
premises located at and commonly known as 1524 Walnut Street, Streator,
Illinois (the "Premises"). At the same time, Mudd executed and delivered
to CCA a fraud guaranty in which Mudd guaranteed and agreed that he would
be liable to CCA for fraud by himself or Container in connection with the
In the Mortgage, Container assigned to CCA as mortgagee all of
Container's rights in and to the leases of and rents from the Premises
and agreed to hold the rents in an amount sufficient to discharge all
current sums due to the mortgagee "in trust for the benefit of
Mortgagee." Mudd executed the Mortgage on Container's behalf;
accordingly, he had knowledge of its terms and provisions.
In early December 1998, CCA assigned the Mortgage and the Note to
LaSalle, pursuant to an Assignment of Mortgage, Assignment of Leases and
Rents and Security Agreement.
Container defaulted on the Note and the Mortgage by failing to make the
monthly payment due under the Note on November 1, 2001. As a result of
the default, the Note became immediately due and payable. Since that
time, Container has not made any payments on the Note.
Mudd knew that, by reason of Container's default under the Note and
Mortgage, LaSalle was entitled to foreclose the Mortgage and obtain the
appointment of a receiver and that, upon the appointment of a receiver,
the rents from the Premises would be paid to the receiver. In order to
deprive the receiver and, concomitantly, LaSalle of the rents to which it
would be entitled upon the commencement of a foreclosure and appointment
of a receiver, in November 2001, without LaSalle's knowledge or consent
and contrary to the express terms of the Mortgage, Mudd induced two
tenants of the Premises to pay their rents to Container in advance. The
rent paid in advance totaled $1,280,116.55.
Container has failed to make any payments on the Note and the Mortgage
since its receipt of the above rents. Instead, Container or Mudd used the
prepaid rents to purchase speculative stock investments and for payment
of other obligations contrary to the requirement of the Mortgage to hold
the rents "in trust for the benefit of Mortgagee."
LaSalle commenced an action to foreclose the Mortgage and obtained the
appointment of a receiver. Container has failed and refused to turn over
to the receiver ...