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UMB Bank, National Association v. Leafs Hockey Club, Inc.

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

March 2, 2015

UMB BANK, NATIONAL ASSOCIATION, as Indenture Trustee under Trust Indenture dated February 1, 2007, Plaintiff/Counter-Defendant,
v.
LEAFS HOCKEY CLUB, INC., Defendant/Counter-Plaintiff.

MEMORANDUM OPINION AND ORDER

AMY J. ST. EVE, District Judge.

On May 31, 2013, Plaintiff Wells Fargo Bank, [1] as Indenture Trustee under the Trust Indenture dated February 1, 2007, filed a two-count First Amended Complaint against Defendant Leafs Hockey Club, Inc. (the "Club") alleging a breach of contract claim (Count I) and a contractual indemnity claim (Count II). On December 17, 2013, the Club filed a three-count Counterclaim against the Trustee alleging a breach of contract claim (Counterclaim I), an equitable accounting claim (Counterclaim II), and a conspiracy to defraud claim (Counterclaim III). After the Court ruled on the Trustee's motions to dismiss under Federal Rule of Civil Procedure 12(b)(6), the remaining Counterclaims include the Club's breach of contract and equitable accounting claims.

Before the Court is the Trustee's motion for summary judgment under Rule 56(a) as to Count I of the First Amended Complaint and Counterclaims I and II. For the following reasons, the Court grants the Trustee's summary judgment motion. Further, because the Court addressed the Club's arguments regarding the Trustee's Rule 56.1 Statements of Fact in the context of each factual dispute, the Court denies the Club's motion to strike as moot.[2] The Trustee's motion to prove up its damages, including the principal, interest, fees, and other amounts owed by the Club due to its breach of the Guaranty Agreement, along with the supporting documentation and citations to relevant sections of the Trust Indenture, Guaranty Agreement, and/or Loan Agreement, is due on or before March 16, 2015. The Club's response is due on or before March 30, 2015. The Trustee's reply, if any, is due on April 6, 2015. After reviewing the parties' submissions, the Court will decide whether an evidentiary hearing on damages is necessary.

BACKGROUND

I. Northern District of Illinois Local Rule 56.1

Local Rule 56.1 "is designed, in part, to aid the district court, which does not have the advantage of the parties' familiarity with the record and often cannot afford to spend the time combing the record to locate the relevant information, ' in determining whether a trial is necessary." Delapaz v. Richardson, 634 F.3d 895, 899 (7th Cir. 2011) (citation omitted). Specifically, Local Rule 56.1(a)(3) requires the moving party to provide "a statement of material facts as to which the moving party contends there is no genuine issue." Cracco v. Vitran Exp., Inc., 559 F.3d 625, 632 (7th Cir. 2009). "The opposing party is required to file a response to each numbered paragraph in the moving party's statement, including, in the case of any disagreement, specific references to the affidavits, parts of the record, and other supporting materials relied upon." Id. (citing N.D.Ill. R. 56.1(b)(3)(B)). Local Rule 56.1(b)(3)(C) requires the nonmoving party to present a separate statement of additional facts. See Ciomber v. Cooperative Plus, Inc., 527 F.3d 635, 643-44 (7th Cir. 2008).

In general, the purpose of Local Rule 56.1 statements and responses is to identify the relevant admissible evidence supporting the material facts, not to make factual or legal arguments. See Cady v. Sheahan, 467 F.3d 1057, 1060 (7th Cir. 2006) ("statement of material facts did [] not comply with Rule 56.1 as it failed to adequately cite the record and was filled with irrelevant information, legal arguments, and conjecture"). "When a responding party's statement fails to dispute the facts set forth in the moving party's statement in the manner dictated by the rule, those facts are deemed admitted for purposes of the motion." Cracco, 559 F.3d at 632. With these standards in mind, the Court turns to the relevant facts underlying this lawsuit.

II. Relevant Facts

Plaintiff UMB Bank, N.A. is the successor trustee ("Trustee" or "UMB") under the Trust Indenture between the Illinois Finance Authority and the Prior Trustee dated February 1, 2007 ("Trust Indenture"). (R. 113, Pl.'s Rule 56.1 Stmt. Facts ¶ 1.) In accordance with Sections 8.8 and 8.9 of the Trust Indenture and pursuant to an Instrument of Removal of Trustee and Appointment of Successor Trustee effective September 1, 2009, Amalgamated Bank of Chicago was removed as original Trustee and Wells Fargo Bank, N.A. was appointed as successor Trustee. ( Id. ¶ 2.) On December 5, 2013, Wells Fargo was removed as Trustee and UMB was contemporaneously appointed as successor Trustee pursuant to the Trust Indenture. ( Id. ¶ 3.)

On November 8, 2006, the Club established LHC, LLC ("LHC") to build, own, and operate a hockey rink in West Dundee, Illinois (the "Rink"). ( Id. ¶ 4; R. 123, Def.'s Rule 56.1 Stmt. Add'l Facts ¶ 2.) The Club is an Illinois not-for-profit organization that is a youth hockey club run out of West Dundee. (Pl.'s Stmt. Facts ¶ 5.) The Club is the sole member of LHC. ( Id. ) To secure funds to build the Rink, LHC entered into the Loan Agreement with the Illinois Finance Authority on February 1, 2007. ( Id. ¶ 8.) The Illinois Finance Authority issued $20, 000, 000 in bonds under the Trust Indenture, the proceeds of which were loaned to LHC for the construction and operation of the Rink. ( Id. ¶ 9.) The bonds consisted of four different series maturing in different years with different rates of interest. (Def.'s Stmt. Facts ¶ 4.) Pursuant to the Loan Agreement and the February 1, 2007, Guaranty Agreement ("Guaranty Agreement"), LHC was the borrower and the Club was the guarantor. (Pl.'s Stmt. Facts ¶ 8, Pl.'s Ex. E., Loan Agmt.) Michael Durkin, the Club President, signed the Guaranty Agreement on behalf of the Club. ( Id. ¶ 14.)

Under the Loan Agreement, LHC was required to make payments semi-annually, specifically, on March 1 and September 1 of each year. (Def.'s Stmt. Facts ¶ 7.) LHC failed to make payments as required by the Loan Agreement in March 2010, September 2010, and September 2012. (Pl.'s Stmt. Facts ¶¶ 20, 24.) On September 19, 2012, and December 27, 2012, the Trustee sent letters of default to both LHC and the Club. ( Id. ¶ 22.) On February 25, 2013, LHC filed for Chapter 11 bankruptcy protection. ( Id. ¶ 23.) The bankruptcy proof of claim states that the amount due and owing of principal, interest, and Trustee fees as of April 3, 2013, was $21, 052, 713.25. ( Id. ¶ 35.) It is undisputed that the Trustee has demanded that the Club fulfill its obligations under the Guaranty Agreement. ( Id. ¶ 25.) Further, it is undisputed that the Club has not made any payments pursuant to the Guaranty Agreement. ( Id. ¶¶ 26, 27, 30.)

SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate "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). A genuine dispute as to any material fact exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). In determining summary judgment motions, "facts must be viewed in the light most favorable to the nonmoving party only if there is a genuine' dispute as to those facts." Scott v. Harris, 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007). The party seeking summary judgment has the burden of establishing that there is no genuine dispute as to any material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). After "a properly supported motion for summary judgment is made, the adverse party must set forth specific facts showing that there is a genuine issue for trial.'" Anderson, 477 U.S. at 255 (quotation omitted).

ANALYSIS

I. Breach of the Guaranty ...


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