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Koppenhoefer v. Federal Deposit Insurance Corporation

United States District Court, C.D. Illinois, Rock Island Division

September 24, 2014



SARA DARROW, District Judge.

Plaintiff Joel M. Koppenhoefer filed an eleven-count complaint against the FDIC in its capacity as receiver for Citizens First National Bank ("Citizens Bank"), seeking various legal and equitable relief from debt obligations that arose from a commercial loan guaranty made by Koppenhoefer. Plaintiff alleges that Citizens Bank fraudulently induced him to guarantee the debt obligations of TWK Properties ("TWK"), an Illinois limited liability company ("LLC"). The FDIC moved to dismiss all counts of Koppenhoefer's complaint for lack of subject matter jurisdiction and failure to state a claim upon which relief can be granted. Koppenhoefer dismissed one count (XI) voluntarily. For the following reasons, Defendant FDIC's Motion to Dismiss, ECF No. 11, is GRANTED as to all remaining counts. The FDIC's Motion for Leave to File a Reply to the Response, ECF No. 18, is GRANTED.


TWK Properties was formed in November 2006 by Vincent Tessitore, Michael Wall, Diane Wall, Ralph Wutscher, and JMK Holdings, LLC. The latter was managed by Koppenhoefer. TWK's purpose was to acquire, lease, operate, hold for investment, and sell real estate located at 172, 174, and 178 South Lake Street in Aurora, Illinois ("the Lake Street Properties"). Tessitore was TWK's manager. TWK's operating agreement limited Tessitore's authority in various ways, including by authorizing him to "secure financing not to exceed $400, 000" to acquire the Lake Street Properties, and by requiring that a majority in interest of TWK members consent to any arrangement under which TWK would act as guarantor for any debt obligation other than what might be necessary for the financing or operation of the Lake Street Properties. Shortly thereafter, Tessitore obtained loans from First Choice Bank totaling $356, 000, for the purchase of the Lake Street Properties.

On December 7, 2007, Tessitore executed a guaranty on behalf of TWK ("the TWK Guaranty"). This guaranty was for a loan of $315, 000 by Citizens Bank to River Street Lofts, LLC. River Street Lofts was organized and managed by The Vanstrand Group, Inc., for which Tessitore served as vice president and general counsel.

In January 2009, Tessitore told Koppenhoefer that TWK needed to refinance its loans from First Choice bank to avoid defaulting on the loans. Tessitore decided to refinance TWK's loans with Citizens Bank, with whom Tessitore and Vanstrand had a "preferential and special relationship." Compl. ΒΆ 42. Citizens Bank required, as a condition of refinancing the loans, that the individual members of TWK sign personal guaranties to Citizens Bank. Koppenhoefer did so ("the Koppenhoefer Guaranty"). See Compl., Ex. E, ECF No. 1-3.

The Koppenhoefer Guaranty provides that the guarantor, Koppenhoefer, will guarantee all loans and "liabilities of every kind and description, whether now owing or hereafter arising out of credit previously, contemporaneously, granted by Lender to Borrower." The guaranty designates Citizens Bank as the lender and the other individual members of TWK, as well as TWK itself, as the borrowers. Id. at 1. The guaranty provides, in a paragraph titled "REPRESENTATIONS":

Guarantor acknowledges and agrees that Lender (a) has not made any representations or warranties with respect to, (b) does not assume any responsibility to Guarantor for, and (c) has no duty to provide information to the undersigned regarding the enforceability of any of the indebtedness or the financial condition of any Borrower or any other guarantor. Guarantor has independently determined the creditworthiness of Borrower and the enforceability of the obligations of Borrower to Lender and until such obligations are paid in full in accordance with this Guaranty, Guarantor will independently and without reliance on Lender continue to make such determinations.

Id . Koppenhoefer did not know about the TWK Guaranty when he signed the Koppenhoefer Guaranty. Upon receipt of guaranties from all individual members of TWK, including Koppenhoefer, Citizens Bank loaned TWK $356, 000.

On November 16, 2010, Citizens Bank filed a complaint in Illinois state court, Citizens First National Bank v. River Street Lofts, LLC, at al. , No. 2010 CH 5273, which sought to recover on the loan to River Street Lofts, and sought judgment from TWK, under the terms of the TWK Guaranty, for $276, 334.31. On May 1, 2012, Citizens Bank entered into a settlement agreement with TWK and all the members of TWK besides Koppenhoefer, who was not informed about the settlement. Under the terms of this settlement, the settling members of TWK paid Citizens Bank $275, 000 and agreed not to defend against a forthcoming foreclosure action against the Lake Street Properties. In return, Citizens Bank dismissed its claim against TWK and released TWK from the TWK guaranty, and released the non-Koppenhoefer members of TWK from their individual guarantees. This secret agreement excluded Koppenhoefer.

Six days later, Citizens Bank filed a complaint, again in Illinois state court, Citizens First National Bank v. TWK Properties, LLC, et al. , No. 2012 CH 1600. The complaint sought foreclosure of the Lake Street Properties and a judgment against Koppenhoefer, as the only remaining guarantor for TWK, for the amount claimed then to be due under the loan, $344, 515.19. Citizens Bank later foreclosed on the property and dismissed TWK as a defendant. In January 2013, Citizens Bank sold the property for $250, 000, allegedly well below fair market value.

On February 1, 2013, Koppenhoefer submitted these claims for administrative review to the FDIC. The FDIC disallowed these claims on March 27, 2013.


In his Response to the FDIC's Motion to Dismiss, Koppenhoefer voluntarily dismissed the eleventh count of his original complaint.[2] Pl.'s Resp. to Mot. Dismiss 23, ECF No. 15. The ten remaining counts in Koppenhoefer's Complaint are demands for, or allegations that Citizens Bank committed:

(1): Declaratory judgment that the Koppenhoefer Guaranty is void and unenforceable.
(2): Declaratory judgment that the TWK Guaranty is void ab initio for lack of authority.
(3): Declaratory judgment that the TWK Guaranty is void for lack of consideration.
(4): Declaratory judgment of accord and satisfaction.
(5): Declaratory judgment of no right to allocation under the ...

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