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Firstmerit Bank, National Association v. Emerald Properties, L.L.C.

United States District Court, N.D. Illinois, Eastern Division

March 28, 2014

FIRSTMERIT BANK, NATIONAL ASSOCIATION, a national banking institution, AS SUCCESSOR IN INTEREST TO THE FEDERAL DEPOSIT INSURANCE CORP., RECEIVER FOR MIDWEST BANK AND TRUST COMPANY, SUCCESSOR TO MIDWEST BANK OF HINSDALE, Plaintiff,
v.
EMERALD PROPERTIES, L.L.C., an Illinois limited liability company, DOMINIC J. NASO, GREGORY J. NASO, and EAST IOWA DECKS, INC., an Illinois corporation, Defendants.

MEMORANDUM OPINION AND ORDER

MARVIN E. ASPEN, District Judge.

Plaintiff FirstMerit Bank, N.A. ("FirstMerit") filed this action on August 21, 2013, for foreclosure, breach of contract, and breach of guaranty. Following the appointment of a receiver, FirstMerit filed its motion for summary judgment on November 1, 2013, which it amended on December 3, 2013. Defendants filed the present motion on December 13, 2013, asking that we stay briefing and ruling on FirstMerit's motion for summary judgment to allow for discovery. (Dkt. No. 62.) Defendants contend that they need time to conduct discovery to properly contest summary judgment and to prove their affirmative defenses. As set forth below, we grant the motion in part and deny it in part.[1]

BACKGROUND

For present purposes, we accept as true the facts asserted in the complaint. On or about March 1, 2010, Defendant Emerald Properties, L.L.C. borrowed $293, 886.44 from Midwest Bank of Hinsdale, predecessor in interest to Midwest Bank and Trust Company ("Midwest Bank"). (Am. Compl. ¶ 8.) Emerald Properties-through its two members and managers, defendants Dominic and Gregory Naso-executed several documents evidencing and securing the debt, including a loan agreement, a promissory note, and a modification of mortgage for property located in Lockport, Illinois. ( Id. ¶¶ 5, 8-10.) As consideration for the loan, Dominic and Gregory Naso also each executed a commercial guaranty on March 1, 2010, guaranteeing all amounts due Midwest Bank under the loan and note. ( Id. ¶¶ 24-27, 29-32.)

On May 10, 2010, the Federal Deposit Insurance Corporation ("FDIC") was appointed receiver of Midwest Bank and assigned the loan and all related documents to FirstMerit. ( Id. ¶ 4; see also MSJ Ex. 3 (FDIC and FirstMerit 5/10/2010 Purchase and Assumption Agmt., Dkt. No. 34-10).)

Pursuant to the note executed by Emerald Properties, all outstanding amounts related to the loan became immediately payable and due on March 5, 2013. (Am. Compl. ¶ 12.) According to the complaint, neither Emerald Properties, nor the other defendants, have paid FirstMerit the amounts due. ( Id. ¶ 13.) In light of this default, FirstMerit demanded payment in full on July 31, 2013. ( Id. ¶ 15.) As of August 14, 2013, Emerald Properties, Dominic Naso, and Gregory Naso allegedly owed $290, 127, plus interest, late charges, attorney's fees and additional costs accrued. ( Id. ¶¶ 16, 20J, 22, 27, 32.) FirstMerit's summary judgment motion claims damages totaling $317, 156.09, as of November 7, 2013. (MSJ Ex. 2 (Shachter Aff. ¶ 20, Dkt. No. 34-2).)

STANDARD OF REVIEW

Pursuant to Rule 56(d), we may defer consideration of a summary judgment motion, allow for additional discovery, or provide other appropriate relief, where a nonmovant demonstrates "that, for specified reasons, it cannot present facts essential to justify its opposition" to the motion. Fed.R.Civ.P. 56(d). The rule, however, "does not allow a party to block summary judgment simply by offering generalities about the need for further discovery." Pickenpack v. Third Act Pictures, Inc., 13 C 354, 2014 WL 287515, at *2 (N.D. Ill. Jan. 27, 2014) (quoting Staten v. Nissan N. Am., Inc., 134 F.Appx. 963, 965 (7th Cir. June 14, 2005)); see Xie v. Hospira, Inc., 10 C 6777, 2011 WL 1575530, at *2 (N.D. Ill. Apr. 27, 2011). Rather, the nonmoving party must make a good faith showing that it cannot respond to the pending motion without discovery and must identify specific evidence that it reasonably expects to obtain through discovery that would enable it to rebut the movant's position. Kalis v. Colgate-Palmolive Co., 231 F.3d 1049, 1058 n.5 (7th Cir. 2000); Pickenpack, 2014 WL 287515, at *2; Xie, 2011 WL 1575530, at *2. "The Seventh Circuit has instructed that [we] should construe Rule 56(d) liberally to prevent a premature grant of summary judgment." Pickenpack, 2014 WL 287515, at *2 (citing King v. Cooke, 26 F.3d 720, 726 (7th Cir. 1994)); see also Central Contracting, Inc. v. Kenny Constr. Co., 11 C 9175, 2012 WL 832842, at *2 (N.D. Ill. Mar. 12, 2012).

ANALYSIS

Here, Defendants argue that they need discovery-which the parties have not yet undertaken-to oppose the summary judgment motion and to support their affirmative defenses.

A. LOAN DOCUMENTATION

Defendants contend that they cannot formulate their opposition to FirstMerit's motion without having an opportunity to review the original underlying loan documentation and payment records. (Mem. at 6.) Defendants claim that they cannot rely on the summary materials attached to the affidavit of Jason Schachter, a FirstMerit Vice President, because the materials are confusing and because his testimony fails to establish his personal knowledge of the relationship between FirstMerit and its predecessors in interest. ( Id. at 6-7.) Accordingly, Defendants seek discovery to review the original records upon which FirstMerit's damages are based and to depose Mr. Schachter. ( Id. at 6.)

In response, FirstMerit claims that the records submitted by Mr. Schachter are not a summary, but represent the entire loan history. (Resp. at 7-8.) FirstMerit further argues that the loan history materials fall under the business records exception to the hearsay rule, as set forth in Federal Rule of Evidence 803(6), and thus do not require additional authentication. FirstMerit also discredits Defendants' concerns about the transaction history, arguing that the loan history materials provide all of the information about payments, advances, and late charges. ( Id. at 6-7.) In short, FirstMerit contends that Defendants already have all the information they need about the loan transactions and resulting damages to oppose summary judgment.

Having reviewed the documents, along with Mr. Schachter's two affidavits, we agree with Defendants that the loan history materials are not as clear as FirstMerit claims. Defendants have not had any opportunity to inquire about the notations on the records, how certain payments were applied, how damages have been calculated, etc. Such basic information would help them understand the allegations and raise any damages arguments. Given the early stages of this litigation, and our mandate to liberally construe Rule 56(d), we grant Defendants' motion in part. We hereby grant the parties approximately forty-five days to conduct discovery into the loan history materials and ...


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