The opinion of the court was delivered by: Judge Sharon Johnson Coleman
MEMORANDUM OPINION AND ORDER
Plaintiff, RBS Citizens, N.A. ("RBS"), filed a complaint alleging that defendants failed to perform their obligations under two loan and security agreements, one for $400,000 and the second for $3,649,000, and claiming that defendants owe an outstanding balance of over $4.4 million. Plaintiff filed a motion for summary judgment asserting that it is entitled to judgment as a matter of law. Defendants responded by challenging the foundation of plaintiff's proffered affidavit in support of summary judgment. Plaintiff filed a reply brief with additional affidavits appended to it and a supplemental statement of material facts. Defendants moved to strike plaintiff's reply brief and additional affidavits. Both motions are now under consideration. Motion to Strike
Defendants move to strike: (1) the declaration of Thomas F. Thompson, upon which RBS relies in support of its motion for summary judgment, on the basis that it fails to comply with Federal Rule of Civil Procedure 56(e)(1) because it improperly relies on conclusory allegations of default and fails to establish a foundation for the amounts that RBS claims defendants owe by not stating that it is based on personal knowledge; and (2) RBS' reply brief in support of its motion for summary judgment with its supplemental statement of material facts and three additional declarations because these documents constitute new material that RBS should have presented with its initial filing. For the reasons that follow, defendants' motion is denied.
In support of their motion, defendants refer to Federal Rule of Civil Procedure 56 that was effective until December 1, 2010, absent contrary congressional action. Plaintiff's filed its motion for summary judgment on December 13, 2010. Defendants' motion to strike was filed on April 21, 2011. Accordingly, the language of Rule 56 applicable in this instance is the text effective after December 1, 2010. The current rule nevertheless requires that an affidavit used to support or oppose a motion must be made on personal knowledge. Fed. R. Civ. P. 56(c)(4). However, even under the version of Rule 56 cited by defendants, the text clearly states that "[t]he court may permit an affidavit to be supplemented or opposed by depositions, answers to interrogatories, or additional affidavits." Prior Fed. R. Civ. P. 56(e)(1). The new version of Rule 56 likewise allows for supplemental affidavits if a party fails to properly support an assertion of fact. See Fed. R. Civ. P. 56(e) (eff. Dec. 1, 2010). "While the burden is on the proponent of the evidence to make a sufficient showing that any particular piece of evidence is admissible, evidentiary objections must first be raised by the opposing side. There is no rule preventing a party moving for summary judgment from responding to evidentiary objections in its reply or even from providing additional foundation materials with the reply." (Internal citations omitted.)
Fenje v. Feld, 301 F. Supp. 2d 781, 810-11 (N.D. Ill. 2003). Indeed, as the Seventh Circuit has pointed out, there is no "blanket prohibition on filing additional affidavits when a movant for summary judgment files a reply brief following a non-movant's response." Balderston v. Fairbanks Morse Engine Division of Coltec Indus., 328 F.3d 309, 318 (7th Cir. 2003).
Here, plaintiff's reply brief and supplemental statement of facts do not raise new issues or arguments as defendants claim. Rather, the reply brief addresses the evidentiary objections to Thomas F. Thompson's declaration and the additional affidavits rectify the evidentiary deficiency of the Thompson declaration, which did not state that it was based on personal knowledge. The affidavits also provide further foundational support to plaintiff's statement of material facts. The supplemental statement of material facts also does not raise new issues, but instead provides additional citations to the supplemented record for facts already asserted. With respect to defendants' argument that the Thompson declaration improperly contained the legal conclusion that defendants are in default on the loans, this Court is able to disregard those conclusions without striking the entire affidavit. See Pfeil v. Rogers, 757 F.2d 850, 862 (7th Cir. 1985). Accordingly, defendants' motion to strike is denied and this Court will proceed to consider plaintiff's motion for summary judgment.
Motion for Summary Judgment
A party is entitled to summary judgment if all of "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). When deciding a motion for the Court construes all reasonable inferences in the light most favorable to the non-moving party. Abdullahi v. City of Madison, 423 F. 3d 763, 773 (7th Cir. 2005) . The party who bears the burden of proof on an issue may not rest on the pleadings or mere speculation, but must affirmatively demonstrate that there is a genuine issue of material fact that requires a trial to resolve. Celotex v. Catrett, 477 U.S. 317, 324 (1986).
The following facts are undisputed. RBS is a national bank, with its main office located in Providence Rhode Island. Defendant, Akhtar Ramzanali is an Illinois citizen. The corporate defendants, Chicago Donuts, Inc., Clock Tower Donuts, Inc., Dundee Donuts, Inc., Huntley Donuts, Inc., McLean Donuts, Inc., and Tyler Creek Donuts, Inc. are Illinois corporations. On August 29, 2007, all defendants and RBS entered into a $400,000 Loan and Security Agreement for an amount up to $400,000.*fn1 (Dkt. 23-2, Exhibit 1.) In connection with the $400,000 Loan and Security Agreement, Ramzanali executed a $400,000 Line of Credit Note (Dkt. 23-2, Exhibit 2.) On August 29, 2007, the corporate defendants and RBS entered into a Loan and Security Agreement for an amount up to $3,649,000. (Dkt. 23-2, Exhibit 3.) In connection with the $3,649,000 Loan and Security Agreement, the defendants also executed the $3,649,000 Term Note. (Dkt. 23-2, Exhibit 4.)
Sections 2.1 and 2.2 (c) of the $400,000 loan and security agreement and the $3,649,000 loan and security agreement, give RBS a continuing security interest in and to "any and all of the personal property" of borrowers, including, without limitation, its: (i) accounts; (ii) chattel paper; (iii) goods; (iv) inventory; (v) equipment; (vi) fixtures; (vii) farm products; (viii) instruments; (ix) investment property; (x) documents; (xi) commercial tort claims; (xii) deposit accounts; (xiii) letter-of-credit rights; (xiv) general intangibles; (xv) supporting obligations; and (xvi) proceeds and products of the foregoing. RBS has perfected its security interests in the $400,000 loan collateral and the $3,649,000 loan collateral by the filing of UCC-1 financing statements. Pursuant to the $400,000 loan, RBS extended secured loans in the amount of $400,000. RBS distributed those funds on August 29, 2007. RBS distributed funds pursuant to the $3,469,000 loan on August 29, 2007.
The corporate defendants each executed separate unlimited guaranties dated August 29, 2007, that unconditionally guarantee payment of the obligations of Ramzanali under the $400,000 loan. (Dkt. 23-4, Exhibits 14, 17, 20, 23, 26, 29.) Each of the loan guaranties provide that each guarantor will make full and punctual payment to RBS of all sums due and owing and all that may become due and owing in the future by the borrower. Ramzanali executed an unlimited guaranty on August 29, 2007, that guarantees payment of the obligations of the borrower under the $3,649,000 loan and the Interest Rate Swap Agreement. The $3,649,000 loan guaranty provides that Ramzanali will guarantee full and punctual payment to RBS of all sums due and owing and all that may become due and owing under the loan. The $3,649,000 loan guaranty further provides that Ramzanali guarantees the due performance by the borrowers of all their obligations under all other present and future contracts and agreements with RBS. (Dkt. 23-4, Exhibit 11.) For the purpose of hedging interest rate risk arising out of their obligations under the loans, the defendants on the $3,649,000 loan and RBS executed the Interest Rate Swap Agreement (Dkt. 23-4, Exhibit 32.) Section 3(b) of the Interest Rate Swap Agreement provides that a default on the $3,649,000 loan constitutes an event of default under the Interest Rate Swap Agreement.
Section 6.1 of each of the loan and security agreements provides a list of thirteen events constituting default, the following are most relevant to the case at bar: (a) failure to pay in full and when due any installment of principal or interest or default of borrower or any guarantor of the obligations under any other loan document or any other agreement with the bank; (c) default of any material liability, obligation or undertaking of borrower or any guarantor of the obligations to any other party; and (d) if the bank determines that borrower or guarantor of the obligations in connection with the agreement made false or misleading statements in their financial statements in any material respect when made
Section 6.2 of each loan and security agreement provides that in the event of default, at RBS' election, "all obligations shall become immediately due and payable without notice or demand." Section 7.3 of each loan and security agreement provides that each borrower is jointly and severally liable for the payment and performance of all other borrowers. Pursuant to the terms of each of the loans, upon an event of default, and without any further demand or ...