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U.S. Bank Nat'l Ass'n v. Rose

Court of Appeals of Illinois, Third District

February 5, 2014

U.S. BANK NATIONAL ASSOCIATION, a National Banking Association, as Successor-in-Interest to the Federal Deposit Insurance Corporation in its Capacity as Receiver for Park National Bank, Plaintiff-Appellant,
v.
MICHAEL H. ROSE; MHR ESTATE PLAN LLC, a Delaware Limited Liability Company; PLAINFIELD RETAIL LAND LLC, an Illinois Limited Liability Company; UNKNOWN OWNERS; and NONRECORD CLAIMANTS, Defendants-Appellees

Appeal from the Circuit Court of the 12th Judicial Circuit, Will County, Illinois, Circuit No. 13-CH-212. Honorable Richard J. Siegel, Judge, Presiding.

SYLLABUS

In an attachment action, the trial court has no discretion and " shall" enter an order for attachment if the factual findings establish both cause and a probability of success, and where plaintiff bank established all of the requisite elements of fraud, including that defendant transferred assets to an offshore account, defendant made misrepresentations and false statements about his dealings, and there was a probability that plaintiff would succeed on its claims for foreclosure, monetary and injunctive relief under the Uniform Fraudulent Transfer Act, and a monetary judgment on defendant's guaranty of another loan, the trial court's denial of plaintiff's motion for prejudgment attachment of defendant's assets was reversed and the cause was remanded for further proceedings.

William J. Dorsey, BeLinda I. Mathie, and Paul T. Musser, all of Katten, Muchin, Rosenman LLP, of Chicago, for appellant.

Michael A. Weinberg, John B. Haarlow, Jr., and Alexander L. Berg, all of Novack & Macey LLP, of Chicago, and Stephen D. White, of Rathbun, Cservenyak & Kozol, LLC, of Joliet, for appellees.

JUSTICE O'BRIEN delivered the judgment of the court, with opinion. Justices Carter and Holdridge concurred in the judgment and opinion.

OPINION

O'BRIEN, JUSTICE

Page 602

This appeal arises out of a foreclosure and fraud action filed by plaintiff, U.S. Bank National Association (U.S. Bank), against defendants, Michael H. Rose (Rose) and MHR Estate Plan LLC (MHR Estate Plan). After filing its complaint in the foreclosure case, plaintiff filed a motion for prejudgment attachment against defendants' assets. The trial court denied the motion. Plaintiff appeals. We reverse and remand for further proceedings.

Page 603

FACTS

On January 15, 2013, plaintiff filed a complaint naming Rose and MHR Estate Plan as defendants. The complaint sought (1) to foreclose a mortgage based on Rose's breach of the related note; (2) a monetary judgment, attachment, and injunction against MHR Estate Plan because Rose had fraudulently transferred property to MHR Estate Plan in an effort to hide assets; and (3) a judgment on Rose's guarantee of a separate loan. The monetary claims sought more than $13 million in relief.

Shortly after filing the complaint, U.S. Bank filed a motion for prejudgment attachment under the attachment article of the Code of Civil Procedure (hereinafter, Attachment Act) (735 ILCS 5/4-101 et seq . (West 2012)) against all assets of Rose and MHR Estate Plan. The motion argued that attachment was justified by four " causes" under the Attachment Act: (1) Rose was not a resident of Illinois; (2) Rose had concealed himself from service of process of the underlying complaint; (3) Rose and MHR Estate Plan were about to fraudulently conceal, assign, or otherwise dispose of property as to hinder U.S. Bank as a creditor; and (4) Rose had fraudulently contracted for the underlying debt. See 735 ILCS 5/4-101(1), (2), (8), (9) (West 2010).

The pleadings established the following facts relevant to our decision. On September 18, 2002, U.S. Bank's predecessor-in-interest and Rose executed a $500,000 loan (Loan). The associated promissory note (Note) included a negative covenant (Antiassignment Covenant), under which Rose agreed not to " sell, transfer, mortgage, assign, pledge, lease, grant a security interest ...


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