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PNC Bank v. Ohcmc-Oswego, LLC

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

July 17, 2014

PNC BANK, National Association, successor in interest by merger to National City Bank, successor in interest by merger to MidAmerica Bank, fsb, Plaintiff,
OHCMC-Oswego, LLC, an Illinois limited liability company, and CAMILLE O. HOFFMANN, Defendants.


ROBERT M. DOW, Jr., District Judge.

This is a diversity foreclosure action brought by Plaintiff PNC Bank against an allegedly defaulting mortgagor, Defendant OHCMC-Oswego, LLC ("Oswego"), and the guarantor of the mortgage, Defendant Camille O. Hoffmann ("Hoffmann").[1] The action is stayed as to Oswego, which filed for Chapter 11 bankruptcy on February 19, 2014. See [23]; [24]. The action remains live as to Hoffmann, however, and her motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(3) and 12(b)(6) [15] is pending before the Court. For the reasons stated below, the Court grants the motion on Rule 12(b)(6) grounds. The dismissal is without prejudice; Plaintiff is given 21 days to replead its allegations against Hoffmann if it believes that it can cure the deficiencies identified below consistent with its obligations under Federal Rule of Civil Procedure 11. The case remains stayed as to Oswego.

I. Background

The following facts are drawn from Plaintiff's complaint and attached exhibits. See [1]. For the purposes of Hoffmann's motion to dismiss, the Court takes as true all well-pleaded allegations set forth in the complaint. See Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618 (7th Cir. 2007). The facts do not appear to be in dispute in any event.

A. Facts

Plaintiff, successor in interest by merger to both National City Bank and MidAmerica Bank, fsb, is a national banking association that is incorporated in Delaware and is headquartered in Pennsylvania. Oswego is an Illinois limited liability company that is domiciled in Illinois. Oswego's sole member and manager, Oliver-Hoffmann Corporation, is an Illinois corporation that is domiciled in Illinois. Hoffmann is a citizen of Illinois and was at all relevant times domiciled in Illinois.

On or about September 30, 2005, Plaintiff (technically, its predecessor-in-interest MidAmerica Bank) extended credit to Oswego in the form of a $12, 350, 000.00 loan. An authorized representative of Oswego executed a promissory note in the original principal amount of $12, 350, 000.00 in favor of MidAmerica Bank. As security for the indebtedness, Oliver-Hoffmann Corporation, as manager of Oswego, executed a mortgage on a parcel of land in Kendall County. Hoffmann signed the mortgage in her capacity as President of Oliver-Hoffmann. See [1] Ex. C Part II. The mortgage was recorded on October 26, 2005.

Over the course of the next several years, the loan documents were modified several times to extend the maturity date of the note. In connection with the fourth such modification, Hoffmann became a guarantor of the loan. Later, on or about February 10, 2010, Hoffmann, Plaintiff, and a representative of Oswego executed a fifth and final modification of the loan documents. Pursuant to that final modification, the maturity date of the note was extended from June 30, 2009 to November 1, 2010, and the note's interest rate and certain payment terms were amended.

Pursuant to the terms of the note, all amounts due became due immediately at maturity. The terms of the note further provided that Oswego waived all notices of default, demand for payment, and presentment, and, moreover, agreed to pay any and all attorneys' fees and costs that Plaintiff may incur in connection with enforcing its rights under the note.

Plaintiff alleges that it complied with all of its obligations under the terms of the note and guaranty, as modified by all of the Modifications. Plaintiff further alleges that Oswego defaulted under the note by failing to pay off the note when it matured on November 1, 2010, or anytime thereafter.

Notwithstanding the provisions in the note, Plaintiff notified Oswego and Hoffmann of the default and demanded payment of all amounts due and owing on or about November 1, 2010. Neither Oswego nor Hoffmann (or anyone else acting on behalf of Oswego) has made payments to satisfy the amounts due to Plaintiff under the note.

B. Procedural History[2]

On January 11, 2011, Plaintiff filed a complaint against Oswego and Hoffmann in this Court. Plaintiff's complaint alleged that Oswego breached the note and that Hoffmann breached the guaranty. Plaintiff sought recovery of $11, 637, 303.49 in principal allegedly due under the note, plus default interest, late charges, attorneys' fees, and additional costs. The case, No. 11-cv-301, was assigned to Judge Kennelly.

In that case, Hoffmann moved to dismiss the count against her under Rule 12(b)(3) because a forum selection clause in the guaranty provided that "all actions arising directly or indirectly as a result or in consequence of this guaranty shall be instituted and litigated only in courts having situs in the County of DuPage, State of Illinois." See Case No. 11-cv-301 Dkt. [16]; see also [16-1]; [20-1]. After taking briefing from both sides, Judge Kennelly granted the motion and dismissed the count against Hoffmann. See Case No. 11-cv-301 Dkt. [26], [27]. Plaintiff later prevailed on its claim against Oswego. See Case No. 11-cv-301 Dkt. [53], [62]. ...

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