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United States v. Bursch

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

March 28, 2018

UNITED STATES OF AMERICA, Plaintiff,
v.
JAMES BURSCH, MARK WRASMAN, AND LAURA WRASMAN, Defendants.

          MEMORANDUM OPINION AND ORDER

          VIRGINIA M. KENDALL, UNITED STATES DISTRICT JUDGE

         The United States of America (“Government”), on behalf of the Small Business Administration (“SBA”), filed this lawsuit against James Bursch, Mark Wrasman, and Laura Wrasman (collectively “Defendants”) as guarantors of a loan made pursuant to the Small Business Act, 15 U.S.C. § 631 et seq., to Silent W. Properties, LLC (“Silent W. Properties”). The Government alleges that the loan was defaulted and seeks the principal sum of $376, 993.86 plus interest. The Government now moves for summary judgment against the three Defendants jointly and severally. (Dkt. 34). For the reasons discussed below, the motion is granted.

         BACKGROUND

         For the purposes of this motion, the following facts are viewed in the light most favorable to Defendants-the non-movants here-and all reasonable inferences are drawn in their favor. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The Court takes the relevant facts primarily from the Government's and Bursch's Local Rule 56.1 Statement of Uncontested Facts and supporting exhibits: (Dkt. 36), (Dkt. 38), (Dkt. 39), (Dkt. 42).[1] Mark Wrasman and Laura Wrasman failed to respond to the Government's Local Rule 56.1 Statement of Uncontested Facts, and therefore they admit all facts set forth therein. See Local Rule 56.1(b)(3)(C) (“All material facts set forth in the statement required of the moving party will be deemed to be admitted unless controverted by the statement of the opposing party.”); Friend v. Valley View Cmty. Unit Sch. Dist. 365U, 789 F.3d 707, 710 (7th Cir. 2015) (district court properly deemed admitted facts asserted by defendants as penalty for non-movant's noncompliance with Local Rule 56.1); Mintjal v. Prof'l Benefit Trust, 146 F.Supp.3d 981, 985 (N.D. Ill. 2015) (“the penalty for failing to properly respond to a movant's 56.1(a) statement is usually summary judgment for the movant (at least if the movant has done his or her job correctly) because the movant's factual allegations are deemed admitted”) (internal quotation marks and citation omitted). The facts set forth are undisputed, unless otherwise noted.

         Mark Wrasman owns Keystroke Graphics, a graphic design, printing, and promotional products business. (Dkt. 39) at ¶ 1. Laura Wrasman is the sole owner of Silent W Communications, Inc., a business that publishes a wedding magazine and website for the Chicagoland market. Id. at ¶ 2. The Wrasmans sought to purchase property located at 762 Shoreline Drive in Aurora, Illinois, in which to operate both businesses. Id. at ¶ 5. The Wrasmans approached Bursch, a business client of Mark Wrasman, to become a passive investor in the purchase. Id. at ¶¶ 3-4. The Defendants formed Silent W. Properties, LLC to hold the property and in which the Wrasmans were managers and Bursch was a silent investor.[2] In order to purchase the building, Silent W. Properties secured two loans. The first, not at issue in this case, was from a private banking institution, Pullman Bank (though sometimes referred to as Regency Bank by Defendant Bursch (see, e.g., (Dkt. 39) at Ex. H (J. Bursch Dep.) at 13:8, 31:22)) for approximately $500, 000. (Dkt. 39) at ¶¶ 6, 8. There is no dispute that Bursch agreed to guarantee the Pullman loan. Id. The second loan, at issue here, was made on February 11, 2005 by the Small Business Growth Corporation (“Growth”)-a certified Illinois development company licensed by the SBA to work with borrowers and their banks to package, process, and services SBA loans-pursuant to the Small Business Act (“SBA loan”).[3] (Dkt. 36) at ¶ 7. Silent W. Properties executed a written 20-year term promissory note (“Note”) dated February 11, 2005, in the principal sum of $475, 000. Id. at ¶ 7; see (Dkt. 36-1) at 8-12 (U.S. SBA Note dated Feb. 11, 2005). All three Defendants signed the Note for Silent W. Properties, although Bursch does not recall signing it or, as discussed below, any SBA forms. See (Dkt. 36-1) at 12. Mark Wrasman and Laura Wrasman personally unconditionally guaranteed payment of the Note by separate written guarantees dated February 11, 2005. (Dkt. 36) at ¶¶ 11, 13; see (Dkt. 36-1) at 19-22 (U.S. SBA Unconditional Guarantee signed by Mark Wrasman), 24-27 (U.S. SBA Unconditional Guarantee signed by Laura Wrasman). The execution of Mark Wrasman's and Laura Wrasman's guarantees were witnessed and notarized by R. Bruce Patterson, an Illinois-licensed notary public and attorney who was employed by Growth and who worked out of Springfield, Illinois. (Dkt. 36) at ¶¶ 12, 14.

         As for Bursch, the Government contends that he also provided an unconditional guarantee on the note and that his guarantee was notarized by Patterson. Id. at ¶¶ 8-9; see (Dkt. 36-1) at 14-17 (U.S. SBA Unconditional Guarantee). Busch, however, only recalls completing the loan application for Pullman Bank, but not for the SBA. (Dkt. 39) at ¶ 8. Accordingly, he denies any memory of guaranteeing the SBA Note, but he has stated in his deposition that the signature on the guarantee “looks like [his] signature.” Id. at ¶ 10; (Dkt. 36-1) at 33 (J. Bursch Dep.) at 22:17-23:12.

         As relevant, the guarantees signed by the Wrasmans and allegedly signed by Bursch waived certain defenses to enforcement of the Note:

C. Guarantor waives defenses based upon any claim that:
1) Lender failed to obtain any guarantee;
2) Lender failed to obtain, perfect, or maintain a security interest in any property offered or taken as Collateral;
3) Lender or others improperly valued or inspected the Collateral;
4) The Collateral changed in value, or was neglected, lost, destroyed, or underinsured;
5) Lender impaired the Collateral;
6) Lender did not dispose of any of the Collateral;
7) Lender did not conduct a commercial reasonable sale;
8) Lender did not obtain the fair market value of the Collateral;
9) Lender did not make or perfect a claim upon the death or disability of Borrower or any guarantor of the Note;
10) The financial condition of Borrower or any guarantor was overstated or has adversely changed;
11) Lender made errors or omissions in Loan Documents or administration of the Loan;
12) Lender did not seek payment from the Borrower, any other guarantors, or any Collateral before demanding payment from Guarantor;
13) Lender impaired Guarantor's suretyship rights;
14) Lender modified the Note terms, other than to increase the amounts due under the Note. If Lender modifies the Note to increase the amounts due under the Note without Guarantor's consent, Guarantor will not be liable for the increased amounts and related ...

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