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Hughes v. Inland Bank

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

August 1, 2017

LLOYD M. HUGHES and LLOYD M. HUGHES ENTERPRISES, INC., Plaintiffs,
v.
INLAND BANK AND TRUST, Defendant.

          MEMORANDUM OPINION AND ORDER

          MATTHEW F. KENNELLY, District Judge.

         Lloyd Hughes and his company, Lloyd M. Hughes Enterprises, Inc.-referred to collectively here as Hughes-have filed suit against Inland Bank and Trust, the owner of Hughes' loan. Hughes alleges that the bank discriminated against him based on his race when it denied his request to modify the terms of his loan and initiated foreclosure proceedings, in violation of 42 U.S.C. § 1981, 42 U.S.C. § 1982, the Fair Housing Act (FHA), and the Equal Credit Opportunity Act (ECOA). The Court previously dismissed Hughes' claim for tortious interference with business expectancy.

         In March 2017, Inland filed this motion for summary judgment on all four claims of race discrimination. After the Court set a schedule for briefing the motion, it granted Hughes' counsel leave to withdraw. The Court extended the deadline for Hughes to respond to the motion. He did not file a response by the extended deadline and has not sought an extension of time. The Court therefore proceeds to rule on the motion. For the reasons discussed below, the Court grants summary judgment in favor of Inland.

         Background

         By failing to respond to Inland's Local Rule 56.1 submission accompanying its motion for summary judgment, Hughes is deemed to have admitted the facts set forth in that submission which are properly supported by admissible evidence. See N.D. Ill. R. 56.1(b)(3); Cracco v. Bitran Express, Inc., 559 F.3d 625, 632 (7th Cir. 2009). Inland has therefore established the following as true.

         Hughes is an African-American business owner and a lifelong resident of Chicago. He is the sole owner of Lloyd M. Hughes Enterprises, Inc., an Illinois corporation. Hughes owns and operates Laundryworld, a laundromat located at 6331 S. Martin Luther King Drive in Chicago. In June 2010, Hughes borrowed $625, 000 from First Choice Bank under the Small Business Administration's loan program. The loan was secured by a mortgage in favor of First Choice against the laundromat. Hughes also signed a guarantee in favor of First Choice secured by a mortgage on two other pieces of real property.

         In August 2011, Inland purchased out of receivership all of First Choice's loans, deposits, and facilities. As a result, Inland acquired ownership of Hughes' loan and the accompanying guarantee. Inland assigned Robert O'Brien as the loan officer for Hughes' loan. Sometime in 2011, Hughes submitted a request to adjust the payment schedule of the loan to allow twelve months of interest-only payments. In December 2011, O'Brien denied the request, stating, "Your business is unable to support the loan payments for the amount of debt outstanding." Def.'s Statement of Undisputed Material Facts (SUMF), Ex. J. He further indicated that the bank believed Hughes needed "to reduce this debt down to a more manageable amount" and that "[t]he way to do that is to sell at least one of the homes that are securing this loan as collateral." Id.

         O'Brien then left Inland. As a result, Inland had to assign Hughes' loan to another loan officer. O'Brien met with other Inland employees to determine to whom the loan should be assigned. Inland decided to transfer the loan to Mark Reid, an employee in its special assets division. The special assets division manages troubled loans, and officers in this division try to rehabilitate the loans by helping the borrowers improve business operations. Inland assigned Hughes' loan to this division based on his earlier statements to O'Brien that he was having difficulty making payments.

         In early 2012, Hughes asked Reid to adjust the loan payment schedule to permit interest-only payments for twelve months. On February 16, 2012, Reid informed Hughes that Inland had approved the request and needed certain documentation from Hughes to finalize the modification. Hughes did not provide this paperwork until April 2012. Once finalized, the modification permitted interest-only payments for twelve months beginning February 24, 2012. Hughes made all of these payments.

         During this interest-only period, Hughes also approached Reid about extending the term of the loan from twelve years to twenty-two or twenty-five years, because he anticipated not being able to return to full payments at the end of the twelve-month period. Once the interest-only period ended, Hughes stopped making full payments on the loan. Reid informed Hughes that, in order for Inland to consider the request for the extension, he would need to provide Inland with financial statements and try to bring the loan current by paying as much as he could towards the overdue payments. By September 2013, Reid had received all of Hughes' financial statements, but Hughes still had not caught up on his loan payments. After a review of these statements, Reid determined that Hughes had not shown a sufficient increase in net income to justify a modification of the loan terms. Reid also determined that Hughes would not be able to make payments on the loan as currently written.

         Hughes' loan was then assigned to Inland's SBA resources division, which was managed by Colleen Ryan. On September 26, 2013, Inland sent Hughes a notice of default. Hughes called Ryan on her cell phone number, which he obtained from an Inland employee. Hughes later testified that Ryan was unfriendly during this phone call and that this was because she could tell from his voice that he is African-American. Ryan testified that she was frightened because she had never met Hughes and yet he brought up personal details about her background and her children.

         By April 2014, Inland had initiated foreclosure proceedings in the Circuit Court of Cook County.

         Discussion

         Inland has moved for summary judgment on the four remaining counts, each of which involves a claim of racial discrimination. It argues that it is entitled to summary judgment because Hughes cannot show that ...


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