United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
Honorable Thomas M. Durkin, United States District Judge.
Phoenix REO brings this action to recover on a loan made to
Shashtriji Inc. and guaranteed by individual defendants
Ghanshyam Patel, Pradyuman Shah, Pramod Patel, Sunita Patel,
Hiralkumar Patel, and Priyanka Patel. Phoenix REO filed a
motion for summary judgment against the individual defendants
for breach of their guaranties. For the following reasons,
Phoenix REO's motion is granted.
judgment is appropriate “if the movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a); see also Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23 (1986). The Court
considers the entire evidentiary record and must view all of
the evidence and draw all reasonable inferences from that
evidence in the light most favorable to the nonmovant.
Horton v. Pobjecky, 883 F.3d 941, 948 (7th Cir.
2018). To defeat summary judgment, a nonmovant must produce
more than a “mere scintilla of evidence” and come
forward with “specific facts showing that there is a
genuine issue for trial.” Johnson v. Advocate
Health and Hosps. Corp., 892 F.3d 887, 894, 896 (7th
Cir. 2018). Ultimately, summary judgment is warranted only if
a reasonable jury could not return a verdict for the
nonmovant. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986).
suit arises from guaranties executed by the individual
defendants to secure a commercial loan for a hotel. The facts
are largely undisputed. In March 1998, Shashtriji Inc. issued
a promissory note to The National Republic Bank of Chicago
(NRBC) for $1, 200, 000. R. 129 ¶ 11. The note was
secured by a mortgage on the hotel property and a loan
agreement. Id. ¶ 14; R. 124
¶¶ 7-8. The note and loan were modified
and ratified several times between 1998 and 2012. R. 129
¶¶ 12-13. In connection with the note, the
individual defendants each entered into guaranty agreements
with NRBC for the debt owed by Shashtriji. Id.
is in default under the promissory note for, among other
reasons, failing to make timely and complete mortgage
payments, failing to pay property taxes, further encumbering
the property, and failing to send regular financial
statements. Id. ¶ 19. As of February 5, 2019,
the principal due and owed under the promissory note was
$751, 104.17, with accrued interest of $35, 171.72, real
estate taxes of $43, 021.95, receiver property expenses of
$66, 000, default interest of $114, 927.18, appraisal and
environmental fees of $7, 200, and late fees of $6, 747.55.
Id. ¶ 20. Interest continues to accrue at a
rate of $271.22 per day. Id. Further, Phoenix REO
has paid or become obligated to pay attorneys' fees and
costs of $204, 351.37. Id. ¶ 23.
demands from Phoenix REO, the defendants have failed to make
the payments specified in the promissory note and guaranties.
Id. ¶ 21. Phoenix REO now moves for summary
judgment on Count II of its complaint for the individual
defendants' breach of their guaranties. The defendants
raised six affirmative defenses that they contend excuse
their non-performance including: (1) fraudulent inducement;
(2) impairment of collateral against NRBC; (3) impairment of
collateral against Phoenix; (4) breach of contract against
NRBC; (5) breach of contract against Phoenix; and (6) release
and discharge of guarantors.
elements of a breach of contract claim are “(1) the
existence of a valid and enforceable contract; (2)
substantial performance by plaintiff; (3) breach of contract
by the defendant; and (4) resultant injury to the
plaintiff.” Avila v. Citi Mortgage, Inc., 801
F.3d 777, 786 (7th Cir. 2015).
defendants do not dispute in their response to Phoenix
REO's motion or in the declaration of Ghanshyam Patel
that they executed valid guaranties, that Shishtriji
defaulted on the promissory note, that they have failed to
make payments as required by the guaranties, or that Phoenix
REO has suffered damages. See R. 129
¶¶ 15-21; Ex. 6. It is thus clear
defendants breached their contracts as a matter of law.
defendants contend they are discharged from paying the debt
because of the additional facts alleged in their six
affirmative defenses. See Myers v. Harold, 279
F.Supp.3d 778, 798 (N.D. Ill. 2017) (“[T]he basic
concept of an affirmative defense is an admission of the
facts alleged in the complaint, coupled with the assertion of
some other reason defendant is not liable.”)
(alteration in original) (quoting Instituto Nacional De
Comercializacion Agricola (Indeca) v. Cont'l Illinois
Nat. Bank & Trust Co., 576 F.Supp. 985, 988 (N.D.
Ill. 1983)). To survive summary judgment, the defendants bear
the burden of putting forth evidence to create a genuine
issue of material fact on their affirmative defenses.
Bethine W. Alberding Estate Admin. Tr. ex rel. Moore v.
Vinoy Park Hotel Co., 2005 WL 730960, at *3 (N.D. Ill.
Mar. 24, 2005); Dunkin' Donuts Inc. v. N.A.S.T.,
Inc., 428 F.Supp.2d 761, 773 (N.D. Ill. 2005). They fail
to meet that burden here.
Impairment of Collateral (Defendants' Affirmative