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WACHOVIA BANK, N.A. v. FOSTER BANCSHARES

August 9, 2005.

WACHOVIA BANK, N.A. Plaintiff,
v.
FOSTER BANCSHARES, INC d/b/a, FOSTER BANK Defendant/Third Party Plaintiff, SUNJIN CHOI, Third Party Defendant.



The opinion of the court was delivered by: JAMES HOLDERMAN, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff Wachovia Bank, N.A. ("Wachovia"), a North Carolina corporation with its principle place of business in North Carolina, filed suit on June 9, 2004 invoking this court's diversity jurisdiction pursuant to 28 U.S.C. § 1332, against defendant Foster Bankshares, Inc., a Delaware corporation doing business in Illinois as Foster Bank ("Foster"), seek a declaratory judgment that Foster breached it warranty to Wachovia. (Dkt. No. 1). Foster filed a third-party complaint on July 12, 2004 against third-party defendant, Sunjin Choi Choi, ("Choi"), an Illinois resident. (Dkt. No. 3). Wachovia and Foster have filed the present cross motions for summary judgment on April 29, 2005 and May 2, 2005. (Dkt. Nos. 21, 24). For the reasons set forth below, this court grants Wachovia's motion for summary judgment and denies Foster's motion for summary judgment. BACKGROUND

This litigation is between the two primary banks involved in the processing and payment of a fraudulent check. The issue presented by the case is the responsibility to be borne between them.

  A company called MediaEdge, which is not a party to this case, issued check number 400-413142 on November 13, 2002 in the amount of $133,026.00. (Dkt. No. 23 at ¶ 9). MediaEdge's check was drawn on its account with Wachovia and was made payable to CMP Media Inc. (Id.) That check was intercepted and the check, or a copy of the check, was altered. The check's payee was changed from CMP Media Inc to Sunjin Choi Choi. (Id.) The altered check, or a copy of the check, was deposited into Choi's account at Foster and then presented to Wachovia for payment. (Id. at ¶ 12-13). Wachovia paid Foster from MediaEdge's account. (Id.) Wachovia and Foster later learned of the alleged theft of the check when CMP Media Inc., the intended payee of the check, failed to receive the payment and notified MediaEdge in January 2003. (Id. at 15).

  MediaEdge has sued Wachovia in New York seeking reimbursement. Wachovia, in turn, is suing Foster for reimbursement in light of MediaEdge's suit. Wachovia seeks from this court a declaration that Foster is liable for the original amount of the check of $133,036.00 plus interest, costs and fees including the attorney's fees incurred by Wachovia in defending in the New York suit against MediaEdge. Foster argues that Wachovia must bear the loss and filed a cross-motion for summary judgment on May 2, 2005. (Dkt. No. 24).

  STANDARD OF REVIEW

  Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper "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). In ruling on a motion for summary judgment, the evidence of the nonmovant must be believed and all justifiable inferences must be drawn in the nonmovant's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). This 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. A party who bears the burden of proof on a particular issue, however, may not rest on its pleadings, but must affirmatively demonstrate, by specific factual allegations, that there is a genuine issue of material fact that requires trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).

  In considering a motion for summary judgment, this court is not required to scour the record in search of evidence to defeat the motion; the nonmoving party must identify with reasonable particularity the evidence upon which the party relies. Johnson v. Cambridge Indus., Inc., 325 F.3d 892, 898 (7th Cir. 2003). Finally, the evidence relied upon must be competent evidence of a type otherwise admissible at trial. Stinnett v. Iron Work Gym/Exercise Health Spa, Inc., 301 F.3d 610, 613 (7th Cir. 2002).

  ANALYSIS

  A. Foster's Failure to Comply with Local Rule 56.1 and Case Management Procedures

  Before proceeding to the substance of the motions, the court must discuss Foster's failure to follow the requirements of Local Rule 56.1 and this court's case management procedures. Both the local rules and the court's case management procedures are located on the court's website. See also Malec v. Sanford, 191 F.R.D. 581 (N.D. Ill. 2000) (discussing the requirements of Local Rule 56.1).

  The court's case management procedure requires a motion for summary judgment, memorandum, Rule 56.1 statement and exhibits to be provided in separate documents filed separately from one another. Foster's submissions are combined together and do not comply with the court's requirements.

  Foster's failure to follow Local Rule 56.1 is more significant. "A district court is entitled to expect strict compliance with [Local] Rule 56.1." Ammons v. Aramark Uniform Servs., Inc., 368 F.3d 809, 817 (7th Cir. 2004). The result of a failure to follow Local Rule 56.1 when responding to the opposing party's statement of facts can be dramatic. The failure to properly respond results in admission of other party's facts for the purposes of evaluating summary judgment. Smith v. Lamz, 321 F.3d 680, 683 (7th Cir. 2003). "[I]mproper denials . . . and a mere disagreement with the movant's asserted facts is inadequate if made without reference to specific supporting material." Id. (citations omitted). "A general denial is insufficient to rebut a movant's factual allegations; the nonmovant must cite specific evidentiary material justifying the denial." Malec, 191 F.R.D. at 584.

  Foster's response to Wachovia's statement of facts of May 20, 2005 (Dkt. No. 29), does not comply with the requirements of Local Rule 56.1. The statement contains general denials and does not contain specific citations to documents in the record that demonstrate a genuine issue of material fact. Foster does provide a better effort of citing to evidence in the record when it provides its own statement of undisputed facts in support of its motion for summary judgment. (Dkt. No. 24). However, Foster's statement of undisputed facts in support of its own ...


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