Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Signature Financial LLC v. Auto Trans Group Inc.

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

April 23, 2018

SIGNATURE FINANCIAL LLC, Plaintiff,
v.
AUTO TRANS GROUP INC. and VIOLET MIHAYLOVA, Defendants.

          MEMORANDUM OPINION AND ORDER

          HONORABLE MARVIN E. ASPEN UNITED STATES DISTRICT JUDGE

         Plaintiff Signature Financial LLC filed this breach of contract and replevin lawsuit against Defendants Auto Trans Group Inc. (“ATG”) and Violet Mihaylova for damages resulting from Defendants' alleged default on three loan agreements and related guarantees. Presently before us is Plaintiff's motion for default judgment and entry of an order of replevin. (Dkt. No. 9.) Also before us is Plaintiff's oral motion for Defendants to provide a status report regarding the Collateral[1] subject to the above-captioned action. (Dkt. No. 17.) For the reasons set forth below, we deny Plaintiff's motion for default judgment, continue Plaintiff's motion for an order of replevin, and grant Plaintiff's motion for a status report regarding the Collateral.

         BACKGROUND

         Plaintiff's claims center on three lending agreements to ATG to purchase vehicles. (Compl. (Dkt. No. 1) ¶ 6.) First, Plaintiff and ATG entered into an Equipment Financing Agreement on May 9, 2014 (“Loan No. 1”), under which ATG agreed to pay Plaintiff the principal sum of $152, 000.00, plus interest, over a period of sixty months, with consecutive monthly installments in the amount of $3, 009.07. (Id. ¶ 7.) To secure ATG's obligations under the terms of the loan agreement, ATG granted to Plaintiff a security interest in two 2012 Freightliner Cascadia vehicles. (Id. ¶ 8.) Plaintiff alleges it perfected its security interest in the collateral by retaining possession of the Certificates of Title, copies of which were also filed with the Illinois Department of Motor Vehicles, and by filing a UCC-1 Financing Statement with the Illinois Secretary of State. (Id. ¶ 10.) Plaintiff alleges Mihaylova then executed a Continuing Guaranty pursuant to which she unconditionally guaranteed to Plaintiff the prompt payment and performance of the Loan No. 1 obligations. (Id. ¶ 12.)

         Plaintiff alleges ATG then entered into two additional loan agreements on February 18, 2015 (“Loan No. 2”) and November 13, 2015 (“Loan No. 3”) with third-party River Valley Capital Corporation (“River Valley”). Under Loan No. 2, ATG agreed to pay River Valley $141, 680.00, plus interest, over a period of sixty months, with consecutive monthly installments in the amount of $2, 822.18. (Id. ¶¶ 13-14.) Loan No. 3 provided ATG would pay River Valley $143, 000.00, plus interest, over a period of sixty months, with consecutive monthly installments of $2, 799.25. (Id. ¶¶ 22-23.) In order to secure ATG's obligations under the terms of Loan No. 2, ATG granted to River Valley a security interest in two 2015 Great Dane/Reefer vehicles, and under Loan No. 3, ATG granted to River Valley a security interest in a 2016 Freightliner Cascadia vehicle. (Id. ¶¶ 15, 24.) In addition, Mihaylova executed guaranties as to both loans, agreeing to unconditionally guarantee prompt payment and performance of the loan obligations. (Id. ¶¶ 16, 25.) River Valley subsequently assigned to Plaintiff all of its right, title, and interest in Loan No. 2 and Loan No. 3 and in the associated collateral and guaranties, and Plaintiff became the successor-in-interest as a result of the assignment. (Id. ¶¶ 17-18.) Plaintiff alleges it perfected its security interest in both loans' collateral by retaining possession of the Certificates of Title, filing copies with the Illinois Department of Motor Vehicles, and filing a UCC-1 Financing Statement. (Id. ¶¶ 20-21, 29-30.)

         Plaintiff alleges ATG defaulted on each of the three loan agreements when it failed to make the required monthly payments due to Plaintiff under the terms of each respective agreement. (Id. ¶ 34 (alleging ATG failed to make monthly payments due under Loan No. 1 on August 15, 2017, September 15, 2017, October 15, 2017, and November 15, 2017), ¶ 42 (alleging ATG failed to make monthly payments due under Loan No. 2 on August 25, 2017, September 25, 2017, and October 15, 2017), ¶ 50 (alleging ATG failed to make monthly payments due under Loan No. 3 on August 20, 2017, September 0, 2017, and October 20, 2017).) Plaintiff asserts that as a result of ATG's defaults, pursuant to each loan agreement, “the entire balance of all unpaid monies due under the terms of [the agreements] was declared to be immediately due and payable.” (Id. ¶¶ 35, 43, 51.) Plaintiff alleges it has performed all terms and conditions precedent, but ATG has failed to pay any of the loan agreement obligations. (Id. ¶¶ 37-38, 45-46, 53-54.) By reason of ATG's defaults and failure to pay, Plaintiff further contends it made demand on Mihaylova for payment of ATG's loan obligations. (Id. ¶¶ 58-59.) Plaintiff alleges Mihaylova has failed to pay Plaintiff any of the loan obligations. (Id. ¶ 60.)

         On December 15, 2017, Plaintiff filed its complaint for money damages against Defendants and for replevin of the Collateral. Plaintiff asserts three counts of breach of contract against ATG in connection with its alleged defaults under each of the three loan agreements, and one count of breach of contract against Mihaylova for defaulting under the terms of the guarantees. (Id. ¶¶ 33-63.) Plaintiff also asserts a claim for replevin against ATG, seeking to take immediate possession of the Collateral as a result of ATG's defaults. (Id. ¶¶ 64-75.) Finally, Plaintiff seeks attorneys' fees against both ATG and Mihaylova under the terms of the loan agreements. (Id. ¶¶ 76-79.) Plaintiff served the summons and complaint on Defendants on January 12, 2018. (Dkt. Nos. 6-7.) On February 13, 2018, after Defendants failed to timely file an answer or otherwise plead, Plaintiff filed a motion for default judgment pursuant to Federal Rule of Civil Procedure 55 and an order of replevin pursuant to 735 ILCS 5/19-104. (Default and Replevin Motion (“Mot.”) (Dkt. No. 9).)

         We held a status hearing on February 22, 2018, during which counsel for Plaintiff and Defendants appeared. (Dkt. No. 13.) At the hearing, we entered and continued Plaintiff's motion for default judgment and replevin, and ordered Defendants to answer or otherwise plead to the complaint by March 1, 2018. (Id.) We also granted Defendants leave to file a response to Plaintiff's motion for replevin. (Id.) Defendants filed an answer to the complaint and a response to the motion for replevin on February 28, 2018. (Dkt. No. 15-16.) We held a second status hearing on March 1, 2018 at which counsel for all parties appeared. (Dkt. No. 17.)

         ANALYSIS

         I. MOTION FOR DEFAULT JUDGMENT

         Plaintiff moved for entry of a default judgment against Defendants pursuant to Federal Rule of Civil Procedure 55(a) and 55(b)(2). Plaintiff noticed the motion for a hearing on February 22, 2018. (Dkt. No. 10.) At the February 22, 2018 hearing, counsel for Defendants appeared and requested an extension of time to answer or otherwise plead to the complaint by March 1, 2018. (Dkt. No. 13.) We granted Defendants' request, and they timely filed an answer on February 28, 2018. (Dkt. No. 15.)

         No entry of default was entered by the clerk under Rule 55(a), but in any event, a default may be “liberally” set aside for good cause under Rule 55(c), where, as here, no default judgment was entered. Cracco v. Vitran Exp., Inc., 559 F.3d 625, 631 (7th Cir. 2009) (“Our cases articulate a policy of favoring trial on the merits over default judgment.”). Entry of default judgment is generally justified only “if the defaulting party has exhibited a willful refusal to litigate the case properly.” Davis v. Hutchins, 321 F.3d 641, 646 (7th Cir. 2003) (citing Hal Commodity Cycles Mgmt. Co. v. Kirsh, 825 F.2d 1136, 1138 (7th Cir. 1987)). Although there is no question Defendants failed to timely file their answer to the complaint, they quickly corrected the error by appearing at the February 22, 2018 status hearing and promptly filing their answer, which denied the material allegations of the complaint. Furthermore, service was not completed on Defendants until January 12, 2018, and Defendants' answers were due February 2, 2018; therefore, Defendants' neglect caused a delay of less than a month, and it has not prejudiced Plaintiff or caused significant impact on the proceedings at this point. (See Mot. ¶¶ 2-3.) See also Comerica Bank v. Esposito, 215 Fed.Appx. 506, 508 (7th Cir. 2007). Moreover, we granted Defendants' oral motion to file their answer late before a default judgment was entered. Conn. Nat. Mortg. Co. v. Brandstatter, 897 F.2d 883, 885 (7th Cir. 1990). Accordingly, we deny Plaintiff's motion for default judgment pursuant to Rule 55(b)(2).

         II. MOTION FOR REPLEVIN

         Plaintiff has also moved for an order of replevin. Plaintiff seeks the return of the Collateral from Defendants “based on its first priority, perfected lien in and to the Collateral and its immediate right to possession due to ATG's default under the Loan Agreements.” (Mot. ¶ 12.) Under Illinois law, an action for replevin may be brought to recover wrongfully detained goods or chattels. 735 ILCS 5/19-101; Carroll v. Curry, 392 Ill.App.3d 511, 514, 912 N.E.2d 272, 275 (2d Dist. 2009) (“The primary purpose of the replevin statute is to test the right of possession of personal property and place the successful party in possession of the property.”). “In Illinois, replevin is strictly a statutory proceeding and the requirements of the statute must be followed precisely.” Harrisburg Cmty. Unit Sch. Dist. No. 3 v. Steapleton, 195 Ill.App.3d 1020, 1023, 553 N.E.2d 76, 79 (5th Dist. 1990). To be entitled to replevin, the plaintiff must show (1) it is the owner of the property or lawfully entitled to possession of the property; (2) the property is wrongfully detained by the defendant; and (3) the property has not been taken for any tax, assessment, or fine levied by virtue of any Illinois law, against the property of such plaintiff, or against ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.