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Momo Enterprises, LLC v. Banco Popular of North America

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

March 30, 2017

MOMO ENTERPRISES, LLC, a dissolved Limited Liability Company, ANASTACIO GONZALEZ, PLAZA LOUNGE, LLC, a dissolved Limited Liability Company, Plaintiffs,



         Momo Enterprises, LLC, a dissolved LLC (“Momo”), Anastacio Gonzalez (“Gonzalez”), and Plaza Lounge, LLC, a dissolved LLC (“Plaza Lounge”) (collectively, “Plaintiffs”) brought their 179 page, 34-count second amended complaint (the “complaint”), (Dkt. 20), against a plethora of parties. The defendants filed individual motions to dismiss, in addition to a joint memorandum in support of dismissal (Dkt. 48). After reviewing the complaint and the various motions and memoranda, and hearing oral argument, this Court grants the following motions:

• North American Title's[1] motion to dismiss [34]
• Popular, Inc.'s (“Popular, Inc.”) motion to dismiss [38]
• 1700 W. Division LLC's motion to dismiss [40]
• John Leydon's (“John Leydon”) motion to dismiss [42]
• Banco Popular of North America (“Banco Popular”), Popular Community Bank (“PCB”), Thomas H. Horn (“Horn”), Chuhak & Tecson, P.C. (“Chuhak & Tecson”), Terrence G. Tiu (“Tiu”), Daniel J. Fumagalli (“Fumagalli”), Joshua S. Hyman (“Hyman”), and Kara Allen's (“Allen”) (collectively, the “Bank Group”) motion to dismiss [43]
• Kate Leydon's (“Kate Leydon”) motion to dismiss [45]
• Robert Stone (“Stone”), David Ball (“Ball”), Jennifer Cirar (“Cirar”), DPT Condo Association (“DPT Condo Association”), DPT Condo President (“DPT President”), and DPT Condo Secretary's (“DPT Secretary”) (collectively, the “DPT Defendants”) motion to dismiss [49]
• Michael Zucker (“Zucker”) and Peak Properties, LLC (“Peak Properties”) (collectively, “Peak Defendants”) motion to dismiss [33]
• Kovitz Shifrin & Nesbit, P.C.'s (“KSN”) motion to dismiss [37]
• David J. Axelrod and Associates (“Axelrod and Associates”) and David J. Axelrod's (“Mr. Axelrod”) (collectively, the “Axelrod Defendants”) motion to dismiss [39]
• Chicago Title Trust & Co. (“Chicago Title”) motion to dismiss [101][2]

         This Court outlines the grounds for this ruling and the resulting relief in the discussion section below.


         Gonzalez is the former owner of a commercial condominium and a residential condominium in a building located at 1700 W. Division Street in Chicago, IL. (Dkt. 20 ¶ 20). Plaintiffs brought this suit, in large part, to challenge the sales and foreclosures of the residential and commercial condominiums and the Plaintiffs' subsequent evictions from those properties. They allege, as described below, that the sales and foreclosures were the product of a large conspiracy made up of neighbors, banks, attorneys, and other parties, which was perpetrated through multiple lawsuits, purported fraudulent transfers, and a wide variety of torts. This Court was called upon to decipher the lengthy, complicated, convoluted, and often inconsistent complaint, in addition to the multiple motions and briefs filed in response.

         1. The subject properties

         The building located at 1700 W. Division is comprised of three residential condominiums, a commercial condominium, and a rooftop parcel. By the end of 2005, Ball, Cirar, and Stone owned the residential condominiums on the second and third floors of the building. (Dkt. 20 ¶¶ 60-62). On September 28, 2006, Gonzalez purchased the residential condominium on the fourth floor and became the owner of the rooftop parcel. (Id. ¶ 64). Stone, Ball, and Cirar, as part of their purchase contracts, agreed that the rooftop parcel and the commercial condominium would exist separate and apart from the residential condominium properties and the DPT Condo Association, and that they would not directly or indirectly contest the application for or possession of a liquor license by the occupants of the commercial condominium. (Id. ¶ 62).

         Starting in April, 2006, Stone, Ball, and Cirar induced Gonzalez to pay for common bills related to the building located at 1700 W. Division Street. These bills included maintenance, repair and improvement, electric, and water bills. (Id. ¶ 106).

         On March 22, 2010, Ball and Stone formed the DPT Condo Association. (Id. ¶ 108). The DPT Condo Association allegedly refused to service or provide maintenance for common element areas on the fourth floor of the building, change hallway lights, paint, or clean the front and rear stairways. (Id. ¶ 142).

         On January 25, 2007, Gonzalez, through Momo, purchased the commercial condominium space located on the first floor of the 1700 W. Division building. (Id. ¶¶ 20, 21, 65). In April, 2007, Gonzalez, through Plaza Lounge, applied for the required licenses to open his restaurant in the commercial condominium. (Id. ¶ 68). Gonzalez launched his restaurant[3] in the commercial condominium in December, 2008. (Id. ¶ 73). Thereafter, a series of lawsuits were filed and actions were taken against the Plaintiffs.

         2. The first state lawsuit - Stone, Ball, and Cirar v. Gonzalez and Plaza Lounge

         On March 10, 2009, Stone filed a state court complaint against Gonzalez and Plaza Lounge alleging a noise nuisance (the “first suit”). Stone requested an order preventing Plaza Lounge from playing music in the restaurant after 9:00 PM. (Id. ¶¶ 77, 78). On July 22, 2009, Ball and Cirar joined the suit as plaintiffs. (Id. ¶ 88). Gonzalez alleges that Ball and Cirar joined the suit in an effort to remove Plaza Lounge from the commercial condominium. (Id. ¶ 90). Removing Plaza Lounge would have helped Ball and Cirar sell their residential condominium more quickly. (Id. ¶ 90). On September 11, 2009, Gonzalez, Stone, Ball, and Cirar participated in mediation. (Id. ¶ 93).

         3. The second state lawsuit - DPT Condo Association v. Gonzalez

         On June 3, 2010, the DPT Condo Association filed a complaint in state court against Gonzalez alleging that Gonzalez owed the DPT Condo Association $6, 401.04 (the “second suit”). (Id. ¶ 110). On June 4, 2010, the DPT Condo Association created a “30 Day Notice and Demand Letter” which claimed that Gonzalez owed the DPT Condo Association $6, 401.04 as of April 2, 2010. (Id. ¶¶ 111, 112). On January 6, 2011, Ball filed an amended complaint which added a count demanding possession of the residential condominium pursuant to the Forcible Entry and Detainer Act and alleged that Gonzalez owed the DPT Condo Association $9, 491.54. (Id. ¶ 114). On February 1, 2011, KSN filed an appearance on behalf of the DPT Condo Association. (Id. ¶ 116). The case was transferred to the “forcible call” on March 9, 2011. (Id. ¶ 118). On June 28, 2011, KSN filed a second amended complaint on behalf of the DPT Condo Association which alleged that Gonzalez owed it $11, 735. (Id. ¶ 119). Trial began on September 21, 2011. (Id. ¶ 123). A judgment of $5, 650 was entered in favor of the DPT Condo Association and against Gonzalez. (Id. ¶ 125). The DPT Condo Association also obtained an order for possession of Gonzalez's residential unit. (Id. ¶ 125). On December 8, 2011, Gonzalez was forced to leave the residential condominium. (Id. ¶ 213).

         4. The third state lawsuit - The DPT Condo Association v. Gonzalez and Momo

         On June 1, 2010, the DPT Condo Association filed a state court complaint against Gonzalez and Momo[4] alleging that they owed the DPT Condo Association $2, 750 in insurance costs for the commercial condominium spanning from September 2006 to April 2010 (the “third suit”). (Id. ¶ 128). The DPT Condo Association filed a motion for default against Gonzalez and Momo and scheduled the motion for presentment on September 14, 2010. (Id. ¶ 130). Gonzalez did not attend the hearing on behalf of Plaza Lounge as he was scheduled to be in two other courtrooms at the same date and time. (Id. ¶ 131). The state court entered a default judgment against Gonzalez and Momo for $2, 750. (Id. ¶ 132)). On November 12, 2010, the default judgment was vacated and the suit was dismissed. (Id. ¶ 133).

         5. The fourth state lawsuit - Irizarry v. Gonzalez

         On September 3, 2009, Axelrod filed a breach of contract and account stated suit on behalf of his client, Irizarry, and against Gonzalez (the “Axelrod suit”). (Id. ¶ 290). The Axelrod suit appears to pertain to furniture Irizarry and his company, R&M Booth, provided to Gonzalez and Plaza Lounge for use in the commercial condominium. (Id. ¶ 292). Plaintiffs now allege that Axelrod misrepresented, concealed, and suppressed material information at various hearings, although Plaintiffs do not identify what this information was. (Id. ¶¶ 293a-g).

         Over the course of this contested litigation, Axelrod, on behalf of Irizarry, made several representations concerning Banco Popular, including the following: that Irizarry “removed certain business property at directions of the attorney for Banco Popular, ” (Id. ¶ 271), and that “[i]n late March 2012, [Irizarry] was called by someone who said he was connected with Banco Popular, a bank foreclosing on 1700 W. Division . . .” and that the Banco Popular agent told Irizarry he had one hour to remove his furniture from the commercial condominium. (Id. ¶ 272).

         After meeting with Gonzalez on September 11, 2013, Irizarry signed two affidavits. The first indicated that he voluntarily agreed to vacate all judgments and judgment orders entered against Gonzalez in the Axelrod suit, (Id. ¶ 276), and the second indicated that in October, 2011, Stone and Tiu, a Chuhak & Tecson attorney, had reached out to him about the proceedings to remove Plaza Lounge from the commercial condominium. (Id. ¶¶ 277d, e). The second affidavit also discussed communications between John Leydon and Irizarry in February and March of 2012 about collecting property from the commercial condominium. (Id. ¶¶ 277f, g). On September 23, 2013, Irizarry appeared in court and dismissed the Axelrod suit and vacated all judgments and judgment orders against Gonzalez. (Id. ¶ 278).

         6. Purchase and sale of the commercial condominium and the alleged bid-rigging scheme

         Throughout the proceedings in the first suit, Stone allegedly told Gonzalez that he was working with Horn, an Assistant Vice President and Loan Workout Officer at Banco Popular, to buy the commercial condominium. (Id. ¶ 99a). On January 20, 2010, Chuhak & Tecson filed a foreclosure action on behalf of Banco Popular against the commercial condominium, naming Gonzalez and Momo as the defendants, after Gonzalez and Momo fell behind on the mortgage payments (the “mortgage foreclosure action”).[5], [6] (Id. ¶ 145). In its complaint, Banco Popular used the wrong PIN number to identify the commercial condominium, [7] used the incorrect legal description of the commercial condominium, failed to provide a unit number for the commercial condominium, and excluded the commercial parking lot from the legal description of the commercial condominium. (Id. ¶ 146). Gonzalez filed an appearance in the foreclosure action and filed a “tentative Answer” on May 11, 2010. (Id. ¶ 150). On July 9, 2010, Banco Popular filed a motion for default and entry of judgment of foreclosure and sale, which it scheduled for presentment on July 21, 2010; the motion represented that Gonzalez and Momo had been served but that they had not filed a responsive pleading. (Id. ¶ 152). In support of the July 9 motion for default, Horn submitted an affidavit that alleged that Banco Popular had in its possession a promissory note from Momo dated August 1, 2006, for $13, 287, 000 and a promissory note from Momo dated January 27, 2007, for $680, 000. (Id. ¶ 154). On July 21, 2010, the Cook County Circuit Court entered an order of default and a default judgment of foreclosure and sale in the amount of $680, 000 against Gonzalez and Momo. (Id. ¶ 155). A judicial sale of the commercial condominium was scheduled for August 30, 2010. (Id. ¶ 156).

         In its certificate of publication and notice of sale at public auction for the commercial condominium, Banco Popular used the 044 PIN instead of the 071 PIN, used the incorrect legal description, failed to use the unit number, and failed to list substantial improvements to the commercial condominium. (Id. ¶¶ 158a-e). Banco Popular also refused to allow inspection of the commercial condominium prior to the judicial sale. (Id. ¶ 158f). Plaintiffs allege that these omissions were meant to suppress competitive bidding on the commercial condominium. (Id. ¶¶ 158, 162).

         On August 30, 2010, Banco Popular successfully bid on the commercial condominium and was granted a certificate of sale. (Id. ¶ 163). Banco Popular purchased the commercial condominium for $441, 600, where the estimated fair market value of the property was $2, 000, 000. (Id. ¶ 163). Banco Popular filed a motion to appoint Zucker as the receiver for the commercial condominium, which was rescheduled for presentment on September 14, 2010, (Id. ¶ 165a), which date coincided with a motion in the first suit and a motion for default in the third suit. (Id. ¶¶ 165b, c). During the receivership hearing, Banco Popular represented to the court that Gonzalez and Momo owed the City of Chicago $17, 000 for water bills, which Plaintiffs claim was a fraudulent representation.[8] (Id. ¶ 166). Zucker was appointed as receiver for the commercial condominium. (Id. ¶ 169).

         On December 9, 2010, Banco Popular presented a motion for order approving report of sale and distribution and for an entry of deficiency judgment. (Id. ¶ 173) Banco Popular obtained an order approving the report of sale and distribution. (Id. ¶ 174). On December 10, 2010, Banco Popular was granted the judicial sale deed for the commercial condominium. (Id. ¶ 175). The sale deed, however, was executed for the 044 PIN. (Id. ¶ 176). Banco Popular allegedly crossed out the 044 PIN and added the 071 PIN on the judicial sale deed sometime between December 10 and December 15, 2010. (Id. ¶ 177).

         On January 6, 2011, Zucker, on behalf of Banco Popular, served Plaza Lounge with a landlord's five-day notice pursuant to the terms of the commercial condominium lease. (Id. ¶¶ 180, 181). On January 10, 2011, Plaza Lounge tendered, and Banco Popular accepted, outstanding rent it owed. (Id. ¶ 183). On January 31, 2011, Banco Popular filed a petition for an order of possession of the commercial condominium against Plaza Lounge. (Id. ¶ 186). On April 6, 2011, Gonzalez filed an opposition to this motion, which detailed the alleged “unlawful acts” being committed in furtherance of the conspiracy to defraud Gonzalez of the commercial condominium. (Id. ¶ 234). On June 24, 2011, Banco Popular pursued and obtained a deficiency judgment against Gonzalez and Momo for the full amount of the mortgage debt and a citation to discover assets was issued. (Id. ¶ 236). Despite making monthly lease payments, Plaza Lounge was evicted from the commercial condominium on September 29, 2011. (Id. ¶ 187). Plaintiffs allege that the eviction violated several terms of the commercial condominium lease agreement. (Id. ¶ 188).

         On October 20, 2011, Banco Popular sold the commercial condominium to John Leydon via a special warranty deed, despite the Plaintiffs' lien on the property and the various petitions to vacate the foreclosure which this Court describes in the next section. (Id. ¶¶ 196, 196a). Chuhak & Tecson prepared and Horn signed the special warranty deed which included the correct 071 PIN and the commercial parking parcel in the legal description. (Id. ¶ 243). On October 25, 2011, John Leydon obtained a mortgage to purchase the commercial condominium; this transaction was completed at the Chicago Title offices. (Id. ¶ 208). Plaintiffs allege that John Leydon made several false representations in his pursuit of acquiring the mortgage. (Id. ¶¶ 209a-c).

         On November 21, 2011, Gonzalez filed an emergency motion for temporary restraining order (“TRO”), presumably in the mortgage foreclosure action, requesting that John Leydon be prohibited from removing certain property from and leasing the commercial condominium. (Id. ¶ 210). The TRO also set a date for a hearing on damages for alleged conversion, theft, and assault and battery, allegations which this Court details below. (Id. ¶ 210). Plaintiffs do not identify the judge that heard the motion. Chuhak & Tecson represented John Leydon in this action. (Id. ¶ 211).

         On December 13, 2011, Judge Alexander White approved a citation to discover assets against John Leydon. (Id. ¶ 218). The citation prohibited John Leydon from transferring any of his assets. (Id. ¶ 219). One day later, [9] John Leydon obtained a second mortgage for the commercial condominium from North American Title. (Id. ¶ 225). This mortgage was obtained while Plaintiffs were challenging the judgment in favor of Banco Popular, and while the $1, 500, 000 lien against the commercial condominium was still active. (Id. ¶ 226). On the same day, John Leydon filed a quitclaim deed and corrected the previously incorrect legal description of the commercial condominium. (Id. ¶ 228). On December 20, 2011, John Leydon transferred the commercial condominium to defendant 1700 W. Division LLC. (Id. ¶ 220).

         7. Challenge of the commercial condominium foreclosure

         On October 14, 2011, Gonzalez, Momo, and Plaza Lounge filed a lien against the commercial condominium for the $1, 500, 000 liquidated damages pursuant to the eviction terms in the commercial condominium lease, (Id. ¶ 192), and a petition pursuant to 735 ILCS 5/2-1401(f) in the mortgage foreclosure action. (Id. ¶ 193). The petition requested that the circuit court vacate and void all of the judgments and orders in the mortgage foreclosure action. (Id. ¶ 193). On October 19, 2011, the trial court ordered Banco Popular to allow Gonzalez to access the commercial condominium in order to conduct an inventory of the remaining personal property and to schedule time for Gonzalez to remove such property. (Id. ¶ 195). On November 4, 2011, Banco Popular filed a sanctions motion against Gonzalez, who was pro se at the time, which alleged that Gonzalez had filed false verified pleadings. (Id. ¶ 244). The motion for sanctions requested that Gonzalez, Plaza Lounge, and Momo be held in civil contempt, and that they be restricted from filing any motions for 180 days without leave of court. (Id. ¶ 244a, b).

         Banco Popular began to include Axelrod on the service list for all motions starting in April, 2012. (Id. ΒΆ 262e). It should be noted that, based on this Court's review of the record, it does not appear that Axelrod represented any of the parties involved in the mortgage foreclosure action. If in fact he did not represent any of the parties, there would be no reason for him to be ...

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