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Osk Ii, LLC v. Peggy L. Creek

November 1, 2012

OSK II, LLC, PLAINTIFF,
v.
PEGGY L. CREEK, CHRISTOPHER E. CREEK, FIRST BANK & TRUST, S.B., A/K/A FIRST BANK OF SAVOY, NEWTON'S CLEANING SPECIALIST, INC., AND CTC ILLINOIS PROPERTIES, LLC, DEFENDANTS.



The opinion of the court was delivered by: David G. Bernthal United States Magistrate Judge

E-FILED

Thursday, 01 November, 2012 04:51:35 PM

Clerk, U.S. District Court, ILCD

ORDER

Plaintiff OSK II, LLC, brings suit for mortgage foreclosure and other relief against Defendants CTC Illinois Properties, LLC ("CTC"), Christopher E. Creek, Peggy L. Creek, First Bank & Trust, S.B. a/k/a First Bank of Savoy, and Newton's Cleaning Specialist, Inc. Jurisdiction is based on diversity of citizenship, pursuant to 28 U.S.C. § 1332. In September 2012, Defendants CTC, Christopher Creek, and Peggy Creek filed a Motion to Dismiss (#15) and Memorandum in Support (#16), arguing that Plaintiff's complaint fails to establish that Plaintiff has standing to foreclose. Shortly thereafter, Plaintiff filed its Response in opposition (#17). After reviewing the parties' pleadings and memoranda, the Court ORDERS Plaintiff to produce the Asset Sale Agreement discussed below. The Court defers ruling on the Motion to Dismiss (#15) until after the Asset Sale Agreement is produced.

I. Background

The following relevant background comes from Plaintiff's First Amended Complaint (#14) and is undisputed unless otherwise indicated. Plaintiff seeks to foreclose on property in Urbana, Illinois, owned by Defendant CTC. In March 2007, Main Street Bank & Trust loaned CTC $5,620,000 ("the Senior Loan"), evidenced by a promissory note ("the Senior Note"), which was secured by a mortgage on CTC's property ("the Senior Mortgage"). In September 2007, Main Street Bank & Trust loaned CTC $10,080,000 ("the Junior Loan"), evidenced by a promissory note ("the Junior Note"), which was secured by a mortgage on the same property ("the Junior Mortgage").

Plaintiff alleges that, in March 2012, Busey Bank, Main Street Bank & Trust's successor-in-interest, "sold its rights in the Senior Loan and Junior Loan, and all accompanying documents" to Plaintiff. (#14, ¶ 22.) Plaintiff attaches to its complaint, among other documents, the Senior and Junior Notes and the Senior and Junior Mortgages (#14-1). Attached to both the Senior and Junior Notes is a document titled "Allonge."*fn1 The Allonge attached to the Senior Note provides:

Reference is made to the $5,620,000.000 original principal amount promissory note dated March 1, 2007 made by CTC Illinois Properties, L.L.C, an Illinois limited liability company, and payable to the order of Busey Bank, an Illinois banking corporation (successor-in-interest to Main Street Bank & Trust) ("Assignor"), as such evidence of indebtedness has been amended, modified, supplemented, renewed, endorsed, negotiated, sold, assigned, conveyed or otherwise transferred to date (the "Note"). It is intended that this Allonge be attached to and made a permanent part of the Note.

Pay to the order of OSK II, LLC, a Minnesota limited liability company ("Assignee"), without recourse, representations or warranties or any kind, except as provided in that Asset Sale Agreement dated as of March 13, 2012, by and between Assignor and OSK, Inc., as purchaser thereunder (predecessor-in-interest to Assignee).

Executed as of March 26, 2012.

(#14-1, p. 18 (emphasis added).) The Allonge is signed by the Vice President of Busey Bank. The Allonge attached to the Junior Note is identical, except that it refers to the "$10,080,000 original principal amount promissory note dated September 24, 2007." (#14-1, p. 42.)

Defendants move to dismiss Plaintiff's complaint "pursuant to Federal Rule of Civil Procedure 12" (#15, p. 1), though they do not specify under which provision of the rule they seek dismissal, "for failure to establish . . . standing to pursue a foreclosure of the notes and mortgages referred to therein." (#15, p. 2.) Defendants argue that Plaintiff has provided insufficient documentation to establish its standing to foreclose because it has not attached to its complaint the "Asset Sale Agreement" referred to in the Allonges attached to the Senior and Junior Notes. Defendants assert, "Without attaching the Asset Sales Agreement, there is no way to determine whether this is a valid assignment, giving the Plaintiff standing to pursue the foreclosure, and moreover, although the document states that it pays to the order of OSK II, L.L.C., there is a limitation in the document based upon an Asset Sales Agreement between Busey and OSK, II." (#16, p. 3.) Defendants, therefore, move to dismiss Plaintiff's complaint or, in the alternative, request that the Court order Plaintiff to produce documentation to establish its standing.

Plaintiff responds that, to establish standing under the Illinois Mortgage Foreclosure Law, it need only allege the capacity in which it brings the foreclosure action and attach to its complaint copies of the promissory note and mortgage at issue. Plaintiff asserts that it has done so, as it has alleged "the capacity in which it brings its claims-as owner and holder of the underlying indebtedness," and attached to its complaint both the Senior and Junior Notes, which are "specifically ...


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