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Capital One Equipment Finance Corp. v. Adela Inc.

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

November 2, 2017

CAPITAL ONE EQUIPMENT FINANCE CORP. f/k/a ALL POINTS CAPITAL CORP, d/b/a CAPITAL ONE TAXI MEDALLION FINANCE, Plaintiff,
v.
ADELA INC., ADRIAN TUDOR, FLORINA TUDOR, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          AMY J. ST. EVE, DISTRICT COURT JUDGE.

         Plaintiff Capital One Equipment Finance has moved for a summary judgment finding that the Defendants Adela Inc., Adrian Tudor, Florina Tudor, and the additional Defendant entities described below, collectively, “Defendants, ” are in default and are jointly and severally liable to Plaintiff. (R. 62, Mot. for Summ. J.) For the following reasons, the Court grants Plaintiff's motion for summary judgment.

         BACKGROUND

         I. The Parties

         Plaintiff Capital One Equipment Finance Corp. (“Plaintiff” or “Capital One”) is incorporated in the State of New York with its principal place of business in New York. (R. 65, Pl.'s Statement of Facts ¶ 1.) Defendants Adela Inc., New Pisces Inc., P.T. Cab Co., Sagittarius 1 Inc., Terra Taxi Three Corp., Rex 1 Inc., Rex 2 Inc., Rex 3 Inc., Rex 6 Inc., Rex 10 Inc., Nect 3 Inc., Nect 5 Inc., Nect 10 LLC, Nect 11 LLC, Nect 12 LLC, Nect 13 LLC, Nect 14 LLC, Nect 15 LLC, Nect 16 LLC, Nect 17 LLC, Nect 18 LLC, Nect 19 LLC, Nect 20 LLC, Nect 21 LLC, Nect 22 LLC, Nect 23 LLC, Nect 24 LLC, Nect 25 LLC, Nect 26 LLC, Nect 27 LLC, Nect 28 LLC, and Nect 29 LLC (collectively, “Borrower Defendants”) are Illinois limited liability companies and corporations with their principal place of business in Illinois. (Id. ¶¶ 2-3.) Adriana and Florina Tudor, both of whom are Illinois citizens, are the sole members of each of the Nect LLCs. (Id. ¶¶ 4, 6-7.) Defendant Medallion Leasing (“Medallion”) is an Illinois corporation with its principal place of business in Illinois. (Id. ¶ 5.) Adrian Tudor, Florina Tudor, and Medallion, as well as Nect 10 LLC, Nect 11 LLC, Nect 12 LLC, Nect 13 LLC, Nect 14 LLC, Nect 15 LLC, Nect 16 LLC, Nect 17 LLC, Nect 18 LLC, Nect 19 LLC, Nect 20 LLC, Nect 21 LLC, Nect 22 LLC, Nect 23 LLC, Nect 24 LLC, Nect 25 LLC, Nect 26 LLC, Nect 27 LLC, Nect 28 LLC, and Nect 29 LLC, are collectively the “Guarantor Defendants.”

         II. The Loans, Master Joint Participation Agreements, and the Assignment of the Loans

         Plaintiff seeks to recover the aggregate principal, as well as costs, attorneys' fees, and interest, with respect to 32 mature and unpaid loans the Borrower Defendants received from Transit Funding Associates 4, LLC (“Transit Funding”) and Tri-Global Financial Services, Inc. (“Tri-Global”) (collectively, the “Original Lenders”). (Id. ¶¶ 11-12, 15.) Borrower Defendants executed and delivered a single Promissory Note (“Note”) for each of the loans. (Id. ¶ 13.) With respect to each loan, one or more of the Guarantor Defendants, and with regard to certain loans, one or more of the Borrower Defendants, executed and delivered a payment Guaranty (“Guaranty, ” collectively, the “Guaranties”). (Id. ¶ 14.)

         Plaintiff and the Tri-Global are parties to a Master Joint Participation Agreement (“Tri-Global MJPA”) dated August 2, 2010, and Plaintiff and Transit Funding are parties to a Master Joint Participation Agreement (“Transit Funding MJPA”) dated March 29, 2012. (Id. ¶¶ 16-17.)[1]The MJPAs give Plaintiff the right to revoke servicing from the Original Lenders and to enforce the loans directly against the respective borrowers, guarantors, and obligors. (Id. ¶ 18.) Pursuant to the MJPAs, the Original Lenders also were required to deliver to Plaintiff, among other documents, the original note executed in connection with the loan, an allonge[2] indorsing the note to Plaintiff, and a present assignment of the loan, guarantees, and other documents the borrowers and guarantors executed in connection with each loan. (Id. ¶ 19.) The Original Lenders also authorized Plaintiff to take certain actions in connection with each loan, including the right to indorse any notes or instruments given in connection with the loans on behalf of the Original Lender. (Id. ¶ 20.) Through two letters, dated November 30, 2016 and April 7, 2016, Plaintiff exercised its rights pursuant to the MJPAs to terminate the Original Lenders' rights to enforce the loans and to succeed to their rights to enforce the loans. (Id. ¶¶ 21-22.) Additionally, at the closing of each loan, the Original Lenders executed an assignment and transfer agreement (“Assignment and Transfer Agreements”), which assigned and transferred all their rights in the loan to Plaintiff.[3] (Id. ¶ 23.) Plaintiff also took possession of the Notes in connection with each loan at or shortly after closing and the Original Lenders authorized Plaintiff to indorse the Notes, but all payments Defendants made on the loans were to the Original Lenders. (Id. 24; R. 84, Defs. Resp. to Pl.'s Statement of Facts ¶ 24.)

         III. The Tri-Global Loans, Notes, and Guarantees

         On or about September 6, 2013, Tri-Global made loans (the “Tri-Global Loans”) in varying amounts to Adela, New Pisces, P.T. Cab, Rex 1, Rex 2, Rex 3, Rex 6, Rex 10, Saggitarius 1, Terra Taxi Three, Nect 3, and Nect 5 (collectively, the “Tri-Global Borrower Defendants”). (Pl.'s Statement of Facts ¶ 26.) Each of the Tri-Global Loans was evidenced by a Promissory Note (the “Tri-Global Notes”) Adrian Tudor executed as president of each Tri-Global Borrower Defendant. (Id. ¶ 27.)

         Defendant Adrian Tudor had principal responsibility for the execution of the loans at issue in this lawsuit and was continuously involved in the operation of the taxi medallions that secure the loans. (R. 85, Defs.' Statement of Additional Facts ¶¶ 1-2.) Tudor was directly involved in the payment of the loans, and he negotiated the loans personally with Tri-Global's employee, Roman Sapino. (Id. ¶¶ 3, 5.) Tudor spoke to Sapino in the fall of 2016 and told him he was having trouble making the loan payments due to market conditions, and Sapino told him to do his best to make payments when possible. (Id. ¶¶ 6-7.) Tudor, however, continued to make payments in the fall of 2016. (Id. ¶ 8.)

         Each of the Tri-Global Loans has a “Maturity Date” of November 1, 2016 and each of the Loans states that on the Maturity Date “there shall be a balloon payment of the unpaid principal balance of the note, plus any accrued interested thereon.” (Pl.'s Statement of Facts ¶¶ 29-30.) Prior to initiating this action, Plaintiff indorsed the Tri-Global Notes to Plaintiff by executing an allonge (“Tri-Global Allonge”) in accordance with the Assignment and Transfer Agreements executed and delivered by Tri-Global in connection with the Tri-Global Loans. (Id. ¶ 31.) The Tri-Global Allonges have been firmly affixed to the Tri-Global Notes, and Plaintiff is in possession and is the holder of the Tri-Global Notes. (Id. ¶¶ 32-33.)

         The Tri-Global Notes provide “all persons liable . . . on this Note, agree, jointly and severally, to pay all costs of collection, including reasonable attorneys' fees and disbursements, in case the unpaid principal balance of this Note, or any payment of principal and/or interest thereon, is not paid when due.” (Id. ¶ 34.) Illinois law govern the Tri-Global Notes. (Id. ¶ 35) Contemporaneously with the execution of the Tri-Global Notes, Adrian Tudor and Florina Tudor, each individually, executed a Loan Guaranty (the “Tri-Global Guaranties”) for the Tri-Global Loans to the Tri-Global Borrower Defendants. (Id. ¶ 36.) In addition, contemporaneously with the execution of the Tri-Global Notes, Adrian Tudor executed an additional Loan Guaranty (“Medallion Guaranties”) on behalf of Medallion Leasing for the Tri-Global Loans to the Tri-Global Borrower Defendants. (Id. ¶ 37.) The Tri-Global and Medallion Guaranties all provide that Medallion and the Tudors as primary obligors and not merely as a surety “unconditionally guarantee[] to the Lender payment when due, . . . of any and all liabilities of the Borrower to the Lender, together with all interest thereon and all attorneys' fees, costs and expenses of collection incurred by the Lender in enforcing any of such liabilities.” (Id. ¶¶ 38-39.)

         The Guaranties also further provide the following:

• “[n]o invalidity, irregularity, or unenforceability of all or any part of the liabilities hereby guaranteed or of any security therefor [sic] or any other circumstance that might otherwise constitute a legal or equitable defense of a guarantor shall affect, impair, or be a defense to this guaranty . . .”
• they are given “in consideration of financial accommodations given or to be given or continued” to the Tri-Global Borrower Defendants.”
• “[n]o delay on the part of the Lender in exercising any of its options . . . shall constitute a waiver thereof. No waiver of any rights . . . shall be deemed to be made by the Lender unless the same shall be in writing, duly signed on behalf of the Lender.”
• Illinois law governs them.
• “the Lender shall have the right, at any time . . . and without notice, to sell, assign, transfer, or otherwise dispose of all or any part of its rights under this guaranty. In such event, each and every immediate and successive purchaser, assignee, transferee, or holder . . . shall have the right to enforce this guaranty by legal action or otherwise, for its own benefit as fully ...

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