Federal Deposit Insurance Corp. v. Coyle

          ORDER

          SARA DARROW, UNITED STATES DISTRICT JUDGE.

         Before the Court are a Motion for Summary Judgment, ECF No. 10, and a Motion to Supplement the Motion for Summary Judgment, ECF No. 25, filed by Plaintiff Federal Deposit Insurance Corporation as Receiver (“FDIC-R”) against Defendants Francis J. Coyle Jr. and Dawn D. Coyle (“the Coyles”) to recover for non-payment of loan obligations on two mortgages originally executed by Valley Bank. For the following reasons, the motion is GRANTED in part and DENIED in part.

         BACKGROUND^[1]

         In 1999 and 2007, the Coyles took out mortgages from Valley Bank on their property in Rock Island, IL. Each of the Coyles signed a promissory note, executed jointly and severally in the amount of $773, 857.18. The 2007 Mortgage executed by the Coyles is dated January 10, 2007 and was recorded with the Recorder of Rock Island County, IL on January 19, 2007 as Document No. 2007-01366. The Notes were modified on January 26, 2009, January 16, 2011, and February 11, 2013 (collectively, “the obligations”). Final payment of the obligations was due February 11, 2016. The obligations are secured by mortgages. The mortgages signed by the Coyles are a first lien on real estate owned by Dawn D. Coyle, which real estate is described in both mortgages as:

Lot No. 3 in French Oaks Subdivision, an Addition to the City of Rock Island, Illinois, situated in County of Rock Island, State of Illinois. (Commonly known as 4302 42nd Ave. Ct., Rock Island, IL 61201)

         The current owner of the real estate is Dawn D. Coyle, and the Coyles were, when the mortgages were executed, married to each other, and remain married. It is undisputed that the Coyles defaulted on the mortgage and promissory note because they each:

a. Failed to pay the payments due on the promissory note from March 11, 2013 and each of the subsequent installments that were due on the Note and Mortgage thereafter from and after August 11, 2013 and in 2014, 2015 and 2016;

b. Failed to pay the interest and principal on the Note and Mortgages when due;

c. Failed to pay the final balloon payment when it was due on February 11, 2016. FDIC also alleges that the Coyles “[f]ailed to pay late fees that are due on the Note and Mortgages, ” Pl.'s Statement of Undisputed Facts ¶ 10, in the amount of $10, 044.79, but the Coyles dispute that they owe these late fees. Def.'s Resistance to Mot. Summ. J ¶ 1, ECF No. 22.

         Valley Bank, the mortgagee, brought a state court foreclosure action against the Coyles in August 2013. Not. Removal Ex. A-1 2-3, ECF No. 1-1. FDIC-R was subsequently appointed receiver for Valley Bank, and removed the suit to federal court. Not. Removal ¶ 2, ECF No. 1. FDIC-R owns and holds the mortgages. Pursuant to the terms of the Note and Mortgage, the FDIC-R is entitled to collect its attorney fees and costs of collection that have been incurred on this matter and that are continuing to be incurred and which as of June 1, 2016 are in the amount of $23, 472.97, which sum is secured by the Mortgages. The Coyles do not suggest that they are not responsible for the attorney fees, but only that the sum has not been itemized and has not been shown to be reasonable. Def.'s Resistance ¶ 3.

         The FDIC provided notice of the receivership to the Coyles by publication and by mail; the mailed notice, dated July 17, 2014, stated that any claims against Valley Bank assets must have been filed with the FDIC before September 24, 2014. Mot. Dismiss Ex. A, ECF No. 3-1. According to an affidavit from an FDIC employee, the Coyles did not file an administrative claim with the FDIC before that deadline. Mot. Dismiss Ex. B ¶ 5, ECF No. 3-2.

         The unpaid principal balance owed on the obligations, the Notes and Mortgages at the time the motion for summary judgment was filed was $752, 360.92. The accrued unpaid interest as of July 1, 2016 was $129, 245.60, secured by mortgages. The interest continues to accrue on the unpaid principal balance at 6% per annum. The disputed late fees had accrued to $10, 044.79 by August 19, 2013. The total unpaid principal, interest, and late fees due jointly and severally by the Coyles on the mortgage and note, as of July 1, 2016 (excluding attorney fees, expenses, and court costs) is $891, 651.31, secured by the mortgages.

         FDIC has moved for summary judgment against the Coyles and for entry of an order that the amounts owing be paid to the FDIC and that a decree be entered regarding the terms ...