United States District Court, N.D. Illinois, Eastern Division
W.M. CAPITAL PARTNERS, INC., Plaintiff,
JPMORGAN CHASE BANK, N.A., Defendant. JPMORGAN CHASE BANK, N.A., Third-Party Plaintiff,
PRO VEST REALTY SERVICES, INC., JAMES W. REED, individually and as Trustee of PRO VEST REALTY SERVICES GRANTOR IRREVOCABLE TRUST, and CLAUDIA CASCONE, Third-Party Defendants.
MEMORANDUM OPINION AND ORDER
I. Schenkier, Magistrate Judge
Bank ("Edgebrook") filed this action against
defendant JPMorgan Chase Bank, N.A. ("Chase") on
July 17, 2014, alleging that Chase was liable for negligence
and conversion for improperly accepting and depositing a
check which Edgebrook, a joint payee, did not endorse (doc. #
148: Order on Summ. J. at 1). The negligence claim was
previously dismissed from the case, leaving only the
conversion claim (Id. at 1 n.l). The remaining
conversion claim is set for a jury trial to commence on
February 13, 2017.
December 22, 2014, Chase filed a third-party complaint
against Provest Realty Services, Inc. ("Provest"),
James W. Reed, individually and as trustee of Provest
Services Grantor Irrevocable Trust ("Provest
Trust"), and Claudia Cascone (collectively,
"third-party defendants") asserting that Chase was
entitled to contribution from all third-party defendants
under the Joint Tortfeaser Contribution Act, 740 ILCS 100/1
et seq. ("the Act"), In its third-party
complaint, Chase also seeks recovery under theories of
contractual indemnification and breach of warranty of
transfer from Mr. Reed and the Provest Trust (doc. # 30:
Answer and Third-Party Complaint at 14-20). On January 20,
2017, Chase filed a motion for default pursuant to Federal
Rule of Civil Procedure 55(a) against third-party defendants
(doc. # 203). Plaintiff has filed a response brief asking the
Court to deny Chase's motion, but only insofar as Chase
seeks entry of default on the contribution claim (doc. #
sets out the "two stages in a default proceeding: the
establishment of the default, and the actual entry of a
default judgment." VLMFood Trading Int'l, Inc.
v. Illinois Trading Co., 811 F.3d 247, 255 (7th Cir.
2016). This first step is set out in Rule 55(a): "[w]hen
a party against whom a judgment for affirmative relief is
sought has failed to plead or otherwise defend, and that
failure is shown by affidavit or otherwise, the clerk must
enter the party's default." Fed.R.Civ.P. 55(a).
"The basic effect of an entry of default (step one) is
that upon default, the well-pleaded allegations of a
complaint relating to liability [of the defaulting party] are
taken as true, " and the defaulting party has no right
to dispute the issue of liability. VLM Food, 811
F.3d at 255 (internal quotations and citations omitted).
However, "the entry of default does not of itself
determine rights;" the plaintiff still must establish
his entitlement to the relief he seeks in order to obtain
entry of a default judgment under Rule 55(b). Id.
(internal quotations and citations omitted).
stage, Chase contends that it has established a default by
third-party defendants. Third-party defendants' attorney
filed answers to Chase's third-party complaint on behalf
of Provest and Mr. Reed, individually and as trustee of
Provest Trust, on March 26, 2015 (doc. # 54) and on behalf of
Ms. Cascone on March 9, 2016 (doc. # 138), after her motion
to dismiss was denied (doc. # 136). However, on July 16,
2016, the attorney for all third-party defendants filed a
motion to withdraw (doc. # 149), which was granted
on July 28, 2016 (doc. # 154). More than six months has
elapsed since their counsel withdrew, but third-party
defendants have not retained new counsel and they have not
appeared at any court hearing in this matter, despite orders
requiring them to be present (docs. ## 154, 156, 161).
Third-party defendants also did not appear at the pretrial
conference in this matter or participate in the filing of the
pretrial order. Chase contends that third-party defendants
have thereby failed to participate in or defend this case,
mandating an entry of default under Rule 55(a) (Chase's
Mot. at 2).
argues that this Court should deny Chase's motion for
entry of default against third-party defendants on the
contribution claim because, assuming that the jury finds in
plaintiffs favor, plaintiff may not be able to recover all of
its damages from Chase (PL's Resp. at 1-3). While the
right to contribution does not affect a plaintiffs right to
recover the full amount of his judgment from any individual
tortfeasor who is jointly and severally liable for that
plaintiffs injury, see 740 1LCS 100/4, another
Illinois statute, 735 ILCS 5/2-1117, modifies the rule of
joint and several liability for minimally culpable
defendants. Section 1117 provides that "[a]ny defendant
whose fault, as determined by the trier of fact, is less than
25% of the total fault attributable to the plaintiff, the
defendants sued by the plaintiff, and any third party
defendant except the plaintiffs employer, shall be severally
liable for all other damages." 735 ILCS 5/2-1117;
see also Unzicker v. Kraft Food Ingredients Corp.,
783 N.E.2d 1024, 1033-34 (111. 2002) (upholding Section 1117
and determining that it does not conflict with the Act).
Plaintiff argues that if the jury returns a verdict in its
favor, and if this Court then finds that Chase is less than
25 percent liable for the total fault (adjudication of the
third-party claims would be for the Court, as no party
demanded a jury trial on those claims), plaintiff may have
difficulty collecting the remaining judgment directly from
third-party defendants (PL's Resp. at 3).
a lot of "ifs, " and we decline plaintiffs
invitation to venture into the hypothetical on this matter.
At this stage, we are ruling on Chase's motion for entry
of default, which requires only a showing that third-party
defendants have failed to plead or otherwise defend.
Fed.R.Civ.P. 55(a). Although third-party defendants answered
the complaint, Chase has shown that they have failed to
"otherwise defend" against Chase's complaint
because they: (1) failed to appear after their counsel
withdrew, see, e.g., Consumer Fin. Prot. Bureau v.
Corinthian Colleges, Inc., No. 14-7194, 2015 WL
10854380, at *1 (N.D. 111. Oct. 27, 2015) (noting that entry
of default was entered on these grounds); (2) showed a
"cavalier disregard for a court order" to appear,
see, e.g., City of N.Y. v. Mickalis Pawn Shop, LLC,
645 F.3d 114, 130 (2d Cir. 2011) (holding that entry of
default under Rule 55(a) was proper in such circumstances),
and Flowers v. U.S. Postal Serv., No. 08 C 552, 2009
WL 691291, at *2 (N.D. 111. Mar. 16, 2009) (holding that the
court had the authority to hold the defendant in default for
its failure to abide by the court's orders); and (3)
failed to appear at a scheduled pretrial conference or file a
pretrial order, see, e.g., Hoxworth v. Blinder, Robinson
& Co., 980 F.2d 912, 918-19 (3d Cir. 1992) (holding
that default was properly entered in part on these grounds).
Moreover, entry of default is warranted against Provest
because corporations may only appear through counsel, and
Provest has not appeared or retained counsel for the last six
months. See Fid. Nat'l Title Ins. Co. of N. Y, v.
Intercounty Nat'l Title Ins. Co., 310 F.3d 537, 541
(7th Cir. 2002).
therefore enter a default against third-party defendants
pursuant to Rule 55(a). After the jury trial, if the jury
finds in plaintiffs favor and against Chase, Chase still must
establish that it is entitled to obtain entry of a default
judgment against third-party defendants under Rule
55(b). The issues plaintiff raises about the Act
and Section 1117 will not arise unless the jury were to find
for plaintiff, and this Court were to find that
Chase was less than 25 percent at fault. And, the issues
plaintiff has raised concerning the contribution claim would
not affect Chase's claim for contract indemnity and
breach of warranty of transfer against Mr, Reed and Provest
foregoing reasons, we grant Chase's motion for default
against third-party defendants under Federal Rule of Civil
Procedure 55(a) (doc. # 203), and enter an order of default
against all third-party defendants.
On October 21, 2016, by consent of the
parties and pursuant to 28 U.S.C. § 636(c) and Local
Rule 73.1, this case was assigned to this Court for all
proceedings, including entry of final judgment (doc. #
On May 13, 2015, the Federal Deposit
Insurance Corporation ("FDIC") was appointed as
receiver for Edgebrook, the original plaintiff in this case
(doc. # 63). Subsequently, the FDIC sold Edgebrook's
loans to WM Capital Partners, Inc., and WM Capital Partners,
Inc. was granted leave to substitute as the plaintiff in this
action (doc. # 100). WM Capital Partners has filed a separate
motion to substitute WM Capital Management, Inc. for WM
Capital Partners (doc. # 213). Chase has disputed the motion
to substitute on the grounds that the transaction documents
do not show that the FDIC transferred its interest in the
loan at issue in this case. The resolution of the ...