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Firstmerit Bank, Na, As Successor In Interest To Midwest Bank and v. Albert L. Grasso

October 22, 2012


The opinion of the court was delivered by: Judge Virginia M. Kendall


FirstMerit Bank, NA, successor to Midwest Bank and Trust Company (in such capacity, "Plaintiff") sued Albert Grasso, Dennis Ahrens and Mohammed Mirza (together "Defendants") for breach of personal guarantees of a commercial loan. On May 21, 2012, following close of discovery, Plaintiff moved for summary judgment. In lieu of response to Plaintiff's motion for summary judgment, Defendants sought leave of this Court to add an affirmative defense of the application of the Illinois Credit Agreements Act, 815 ILCS 160/0.01 et seq. This Court denied leave via written opinion dated August 10, 2012. Defendants have now failed to respond to Plaintiff's motion for summary judgment despite twice requesting and receiving this Court's leave to extend the time allotted for filing. For the reasons set forth below, Plaintiff's motion is granted and judgment is entered against Defendants, jointly and severally.

Undisputed Material Facts

Pursuant to Local Rule of Civil Procedure 56.1, "All material facts set forth in the statement required of the moving party will be deemed to be admitted unless controverted by the statement of the opposing party." None of Defendants have filed any response to FirstMerit's statement of material facts. Therefore, all facts in FirstMerit's statement of material facts are deemed to be undisputed. L.R. 56.1; see also Sojka v. Bovis Lend Lease, Inc., 686 F.3d 394, 398 (7th Cir.2012) (stating that "[t]he obligation set forth in Local Rule 56.1 is not a mere formality," and that "[i]t follows from the obligation imposed by Fed.R.Civ.P. 56(e) on the party opposing summary judgment to identify specific facts that establish a genuine issue for trial") (internal quotations omitted). As Defendants also have not filed a statement of additional facts, this Court has before it only FirstMerit's undisputed facts and supporting record.

On or about August 24, 2007, Midwest Bank and Trust Company ("Midwest Bank") agreed to loan Samir 1031 Woodfield, LLC ("Borrower") $3,967,000 (the "Loan"). (Def. SOF at ¶ 1). In exchange for the Loan, Borrower executed and delivered to Midwest Bank two fixed rate notes (together, the "Notes"), one in the principal amount of $2,784,000 (the "Primary Note") and one in the principal amount of $1,183,000 (the "Secondary Note"). (Id. at ¶¶ 2,3). Each Note, by its terms, requires payment of principal and interest in the manner provided in the Notes and the other Loan Documents (defined below). (Id.)

In connection with the Loan, Borrower and Midwest Bank entered into a Business Loan Agreement dated August 24, 2007 (the "Loan Agreement"). (Def. SOF at ¶ 12). As security for the Notes, Borrower granted a Mortgage and Security Agreement (the "Security Agreement"), also dated August 24, 2007, to Midwest Bank. The Security Agreement was recorded on September 7, 2007. (Complaint at Ex. 7; Answer at ¶ 13). Each of the Defendants also entered into a Guaranty agreement, each dated August 24, 2007 (each a "Guaranty" and together the "Guaranties"). (Def. SOF at ¶¶ 1-3). The Guaranties were executed by Defendants as security for the performance of the Notes and all covenants, conditions, and agreements in the Notes and the other Loan Documents.

(Id. at ¶ 14). The Loan Agreement, the Security Agreement, the Notes and the Guaranties together will be referred to as the "Loan Documents." The copies of the Loan Documents attached to the Complaint have been admitted by the Defendants to be true and correct copies of the documents. (Answer at ¶¶ 1, 10, 11, 12, 13).

Pursuant to each Guaranty, each Guarantor: absolutely, irrevocably, and unconditionally guarantees to [Midwest Bank] (and its successors and assigns), jointly and severally, the payment and performance of the Guaranteed Obligations [as defined in the Guaranties] as and when the same shall be due and payable, whether by lapse of time, by acceleration of maturity or otherwise. [Each] Guarantor hereby absolutely, irrevocably and unconditionally covenants and agrees that it is liable, jointly and severally, for the Guaranteed Obligations as a primary obligor, and that each Guarantor shall fully perform, jointly and severally, each and every provision hereof. (Compl. at Exs. 1-3, each at Section 1.1; see also Answer at ¶ 1).

"Guaranteed Obligations" are defined in each Guaranty as: all the obligations of Borrower under (i) the Notes; (ii) the Security Instrument; (iii) the Environmental Indemnity (as defined in the Security Instrument), including without limitation the indemnification provisions contained therein, and (iv) all of the other Loan Documents (as defined in the Security Instrument). (Compl. at Exs. 1-3, each at Section 1.2; see also Answer at ¶ 16).

Also pursuant to each Guaranty, each Defendant agreed that:

[i]n the event that Guarantor should breach or fail to perform any provisions of [the] Guaranty, Guarantor shall, immediately upon demand by [Midwest Bank], pay [Midwest Bank] all costs and expenses (including court costs and reasonable attorneys' fees) incurred by [Midwest Bank] in the enforcement hereof for the preservation of [Midwest Bank's] rights hereunder. (Compl. At Exs. 1-3, each at Section 1.8; see also Answer at ¶ 17).

On May 14, 2010, the Federal Deposit Insurance Corporation, as Receiver of Midwest Bank, entered into a Purchase and Assumption Agreement with FirstMerit, whereby FirstMerit purchased all of the assets of Midwest Bank. (Def. SOF at ¶ 18). FirstMerit recorded an Assignment of Mortgage with the Cook County Recorder of Deeds on March 18, 2011. (Id. at ¶ 20).

On August 14, 2009, Borrower and Midwest Bank executed a Change in Terms Agreement, set to mature on September 1, 2010, whereby the interest rate agreed to in the Primary Note was reduced. (Id. at ¶ 21). Borrower and Defendants executed an Amendment to Loan Agreement and Related Loan Documents, effective September 1, 2010, which extended the maturity date to September 1, 2012. (Id. at ¶ 22).

Under Paragraph 6 of the Loan Agreement and Section 5 of the Notes, upon an Event of Default (as defined in the Loan Agreement) FirstMerit may, at any time and without notice, declare the Notes to be fully due and payable and proceed to enforce its rights under the Loan Documents. (Def. SOF at ¶ 24). Defendants admit receipt of a letter from FirstMerit dated July 1, 2011 (the "Demand Letter") in which FirstMerit made demand upon Borrower for full and immediate payment of all outstanding amounts owed under the Notes and Loan Documents based on an Event of Default in the form of a cross-default by Defendant Ahrens under another agreement. (Def. SOF at ¶ 25; Cmplt. Ex. 12; Answer at ¶ 28). Since receipt of the Demand Letter, additional Events of Default have occurred as a result of Borrower having failed to pay interest due and owing under the terms ...

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