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Southport Bank v. Miles

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

February 1, 2017

CHARLES V. MILES, et al., Defendants.


          JOHN W. DARRAH United States District Court Judge

         Citation Respondent and Claimant First National Bank of Omaha (“FNBO”) filed a Motion to Reconsider and Vacate the November 17, 2015 Order on Perfection [453]. For the reasons discussed below, FNBO's Motion [453] is granted.


         Southport began this action to recover payment under two “Commercial Guaranty” contracts executed by Randolph and Charles Miles. A jury trial was held, and the Court entered judgment on the jury's verdict in favor of Southport against Randolph and Charles Miles, as follows: on October 25, 2013, a judgment was entered against Randolph in the amount of $7, 061, 784.84 and against Charles in the amount of $5, 429, 916.71. On November 27, 2013, Southport issued Citations to Discover Assets to the Miles Defendants and a Citation to Discover Assets to Third Party Goeken Group Corp. (“Goeken”).

         On March 27, 2014, Southport's Motion for Judgment as a Matter of Law was granted against Goeken. On October 14, 2014, a judgment was entered against Goeken in the amount of $5, 498, 081.60.

         On June 19, 2015, FNBO loaned Goeken $6, 960, 571.91. The loan was guaranteed by The John D. Goeken Revocable Trust (the “Trust”) and by Mona Lisa Goeken. Ms. Goeken and the Trust collateralized their guaranties, and each assigned a deposit account to FNBO. FNBO filed UCC Financing Statements in June 2015 with the Delaware Department of State and the Illinois Secretary of State.

         On November 15, 2015, Southport and Goeken filed an Agreed Motion for Entry of Order Establishing the Date Upon Which Southport Perfected Its Judgment Lien Against Goeken Group Corp. [358] which was granted in a November 17, 2015 Order [362]. The agreed motion requested the “entry of an Order establishing that Southport Bank's lien against the Goeken Group Corp. regarding Southport's outstanding judgments was perfected on November 27, 2013.” The FNBO transaction of June 19, 2015, mentioned above, was not disclosed in the November 15, 2015 Agreed Motion.

         A Citation to Discover Assets was issued by Southport to FNBO on February 10, 2016. Under an agreed stipulation, entered March 8, 2016, FNBO froze $7, 051, 111.59 in the deposit-account collateral pledged by Ms. Goeken and the Trust. Southport claims an interest superior to FNBO in these accounts.


         “Motions for reconsideration serve a limited function: to correct manifest errors of law or fact or to present newly discovered evidence.” Caisse Nationale de Credit Agricole v. CBI Indus., Inc., 90 F.3d 1264, 1269 (7th Cir. 1996). A manifest error “is not demonstrated by the disappointment of the losing party”; it is the “wholesale disregard, misapplication, or failure to recognize controlling precedent.” Oto v. Metropolitan Life Ins., 224 F.3d 601, 606 (7th Cir. 2000) (internal quotation marks omitted).


         FNBO argues that the perfection order was improperly entered on two grounds: (1) that Illinois law does not provide for the perfection order, and (2) that the perfection order violated due process.

         At the outset, Southport argues that there is no basis for consideration under the law of the case doctrine: “. . . the law of the case doctrine embodies the notion that a court ought not to re-visit an earlier ruling in a case absent a compelling reason, such as manifest error or a change in the law, that warrants re-examination.” Minch v. City of Chicago, 486 F.3d 294, 301 (7th Cir. 2007). However, the doctrine is meant to be a presumption; and the strength of that presumption varies with the circumstances. Avitia v. Metro. Club of Chicago, Inc., 49 F.3d 1219, 1227 (7th Cir. 1995). There is reason to overlook that presumption where the court was not fully informed of the circumstances by the parties, who knew that third-party rights would be affected. As mentioned above, the Agreed Motion did not disclose any other judgment creditors or liens against any Goeken assets. The Court, based on what was presented, erroneously concluded that the Agreed Motion was to correct a procedural formality, not to directly alter the substantive rights of third parties.[1]

         Southport also argues that the November 17, 2015 Order was a final decision under Federal Rule of Civil Procedure 54 that adjudicated all of the rights and all of the claims of all of the parties and cannot be reviewed. The November 17, 2015 Order was a postjudgment order. For purposes of a final judgment, a postjudgment proceeding is treated as a freestanding lawsuit. Solis v. Current Dev. Corp., 557 F.3d 772, 775 (7th Cir. 2009). The full rights and claims of the parties to any ...

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