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First Merit Bank, N.A. v. Dziedzic

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

September 17, 2014

FIRST MERIT BANK, N.A., Plaintiff,
v.
DAVID DZIEDZIC, et al., Defendants.

MEMORANDUM OPINION AND ORDER

ANDREA R. WOOD, District Judge.

Plaintiff First Merit Bank, N.A. ("First Merit") filed this lawsuit seeking to foreclose mortgages and obtain other relief after Defendant David Dziedzic, and other individuals and entities associated with him, defaulted on their loan obligations. The eleven-count complaint names the following defendants: David Dziedzic, both personally and as Trustee of the David A. Dziedzic Trust No. One Dated Jan. 14, 2002 ("Trust"); Deanna Dziedzic; Robert P. Whitesell; RPW Holdings, Inc. ("RPW"); I.F.D., Inc. ("IFD"); and Associated Environmental, LLC. Currently before the Court is First Merit's motion for summary judgment ("Motion") (Dkt. No. 60). As filed, the Motion sought summary judgment in First Merit's favor on Counts I, II, III, V, VII, VIII, and IX of the Complaint. After the Motion was filed, however, David Dziedzic filed for Chapter 7 bankruptcy protection. As a result, the claim against him in Count VII is stayed. In addition, First Merit has now settled with Whitesell and RPW, and voluntarily dismissed Counts VIII and IX with prejudice. Finally, based on the parties' representation that Counts I and II were no longer contested, the Court entered judgment in First Merit's favor on those counts on August 29, 2014. As a result of these developments, the only claims that remain to be decided by the Motion are Counts III and V. As explained below, the Motion is granted with respect to both of those counts.

BACKGROUND

The following facts are undisputed.[1] On or around August 29, 2006, David Dziedzic, both personally and as trustee of the Trust, executed and delivered to First Merit's predecessor-in-interest a Promissory Note in the original principal amount of $532, 000 ("Dziedzic Note"). (PSF ¶ 13.) The Dziedzic Note is secured by a mortgage on a property located in Elk Grove, Illinois ("Dziedzic Mortgage"), which was amended after its original execution by the First Amendment of Mortgage and Assignment of Rents ("First Amendment of Dziedzic Mortgage"). ( Id. ¶ 14.) IFD guaranteed in writing the full payment of the Dziedzic Note. ( Id. ¶ 15.) The Dziedzic Note matured on April 30, 2011, but was not paid upon maturity and still remains unpaid. For its part, First Merit has fulfilled all of its obligations under the Dziedzic Note. ( Id. ¶¶ 16-18.)

Subsequently, on or around May 15, 2009, Associated Environmental and IFD executed and delivered to First Merit's predecessor-in-interest a second Promissory Note, as later modified, in the principal amount of $900, 000 ("Second Renewal Associated Note"). ( Id. ¶ 20.) The Second Renewal Associated Note is secured by the Dziedzic Mortgage (as amended by the First Amendment of Dziedzic Mortgage), as well as a mortgage on a property located in Park Ridge, Illinois. ( Id. ¶ 21.) David Dziedzic holds title to the Park Ridge property along with his ex-wife Deanna Dziedzic. ( Id. ¶¶ 5-6.) Payment of the Second Renewal Associated Note was guaranteed in writing, jointly and severally, by Dziedzic, Whitesell, and RPW. ( Id. ¶ 22.) The Second Renewal Associated Note matured on April 30, 2011 and was not paid upon maturity. ( Id. ¶¶ 24-25.) As with the Dziedzic Note, First Merit has performed all obligations required of it under Second Renewal Associated Note. ( Id. ¶ 26.)

As noted above, although the instant Motion originally addressed nine of the eleven counts in the Complaint, only two remain to be decided. With Count III, First Merit seeks to foreclose the mortgage on the Park Ridge property. Only Deanna Dziedzic contests this claim. Count V of the Complaint, which is uncontested, seeks judgment against IFD for breach of its agreement to guaranty the Dziedzic Note, and seeks to recover $542, 159.44 plus costs, contractual attorneys' fees, and additional prejudgment interest through the date of the judgment.

DISCUSSION

Federal Rule of Civil Procedure 56(a) provides that "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). When faced with a motion for summary judgment, "[t]he court has one task and one task only: to decide, based on the evidence of record, whether there is any material dispute of fact that requires a trial." Payne v. Pauley, 337 F.3d 767, 770 (7th Cir. 2003) (quoting Walbridge v. Am. Hoechst Corp., 24 F.3d 918, 920 (7th Cir. 1994)). "In evaluating whether a genuine issue of material fact exists, all evidence and inferences must be viewed in the light most favorable to the nonmoving party." Scott v. Edinburg, 346 F.3d 752, 755 (7th Cir. 2003) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986), and Balderston v. Fairbanks Morse Engine Div. of Coltec Indus., 328 F.3d 309, 320 (7th Cir. 2003)). "[I]f the non-movant does not come forward with evidence that would reasonably permit the finder of fact to find in her favor on a material question, then the court must enter summary judgment against [the non-movant]." Deutsche Bank Nat'l Trust, Co. v. Ortiz, No. 12-cv-3651, 2014 WL 117347, at *4 (N.D. Ill. Jan. 13, 2014) (quoting Waldridge, 24 F.3d at 920).

I. First Merit's Claim to Foreclose the Mortgage on the Park Ridge Property

With Count III of the Complaint, First Merit seeks to foreclose the mortgage on the Park Ridge property that secures the Second Renewal Associated Note. The claim is asserted against Deanna Dziedzic as a title holder of the Park Ridge property (along with David Dziedzic) and co-signatory on the mortgage agreement. In response to the summary judgment motion, Deanna Dziedzic raises two arguments, neither of which presents a disputed issue of fact or otherwise defeats First Merit's Motion.

A. The Sufficiency of First Merit's Supporting Affidavit

Deanna Dziedzic first argues that First Merit's summary judgment motion should be denied because it is procedurally deficient. Specifically, she challenges the sufficiency of the affidavit submitted by First Merit in support of its motion, claiming that (i) the affidavit does not state that it is based on personal knowledge, (ii) First Merit failed to attach certified copies of the underlying loan documents as required by Illinois Supreme Court Rule 191(a), and (iii) First Merit failed to submit a loss mitigation affidavit as required by Illinois Supreme Court Rule 114.

As an initial matter, this Court's jurisdiction in this case is premised on the diversity of the citizenship of the parties and an amount in controversy in excess of $75, 000. 28 U.S.C. § 1332(a)(1). "Under the Erie Doctrine, when a federal court sits in diversity, it applies state substantive law and federal procedural law." HSBC Bank USA, N.A. v. Garcia, No. 12 CV 6561, 2014 WL 3865365, at *5 (N.D. Ill. Aug. 6, 2014) (citing Hanna v. Plumer, 380 U.S. 460, 465 (1965)). Courts in this District have consistently held that the rules of the Illinois Supreme Court are considered procedural, not substantive, and as such they do not apply in cases such as this one. See id. ("Other judges in this district have uniformly held that Rule 114 is a procedural rule rather than a substantive one."); Ortiz, 2014 WL 117347, at *3 ("Defendants primarily argue that Plaintiff must comply with Illinois Supreme Court Rules that govern foreclosure in Illinois state courts. Defendants are incorrect."); Bank of New York Mellon v. Ontiveros, No. 12-cv-3896, 2014 WL 114129, at *3 (N.D. Ill. Jan. 13, 2014) ("Judicial rules constraining Illinois state courts, even those derived from the Illinois Constitution, do not impact federal procedures in mortgage foreclosure cases."). This Court agrees. First Merit's purported failure to comply with Illinois Supreme Court Rules 191(a) and 114, even if true, provides no basis to deny the Motion.

Instead, the Motion is governed by the procedures set forth in the Federal Rules of Civil Procedure and the Local Rules of this Court. While the Federal Rules provide that a party responding to a summary judgment motion can object to a fact that is not supported by admissible evidence, they also provide that "[t]he court need consider only the cited materials, but it may consider other materials in the record." Fed.R.Civ.P. 56(c)(2)-(3). Furthermore, "[a]n affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts ...


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