Searching over 5,500,000 cases.

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.

A.H. Employee Company, Ltd v. Fifth Third Bank and Michael Kozak

June 26, 2012


The opinion of the court was delivered by: James F. Holderman, Chief Judge:


This lawsuit arises out of a broken relationship between Vijay and Vinod Goyal (collectively, "the Goyals"), who are both physicians and owners of various businesses, and their lender Fifth Third Bank ("Fifth Third"). On March 1, 2012, the court granted in part and denied in part a motion to dismiss the plaintiffs' 10-count Amended Complaint, and granted the plaintiffs leave to file a Second Amended Complaint. (Dkt. No. 37.) On March 20, 2012, the plaintiffs filed a Second Amended Complaint listing only a handful of the Goyals' business entities as plaintiffs. (Dkt. No. 42 ("Second Am. Compl.").) The Second Amended Complaint raises three claims against both Fifth Third and Michael Kozak, the loan officer assigned to the plaintiffs' accounts: (1) discrimination and retaliation under 42 U.S.C. § 1981 (Count I); (2) discrimination and retaliation under the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. § 1691(a)(1-3) (Count II); and (3) a failure to provide a statement explaining the revocation of credit, as required by the ECOA, 15 U.S.C. § 1691(d) (Count III). Plaintiff A.H. Employee Company, Ltd. ("AHE") also raises a claim that Fifth Third breached a revolving note establishing the terms of Fifth Third's loan to AHE (Count IV). Finally, all the plaintiffs except AHE, each of whom was a guarantor of AHE's loan, claim that Fifth Third breached their loan contracts by enforcing the defaults that were triggered by AHE's default (Count V). Before the court is the defendants' "Rule 12(b)(6) Motion to Dismiss" (Dkt. No. 52.) For the reasons stated herein, the motion is granted as to Counts III, IV, and V.


The following facts are taken from the plaintiffs' Second Amended Complaint and are accepted as true for the purposes of this motion. Plaintiff AHE is an Illinois corporation owned and managed by the Goyals. (Second Am. Compl. ¶ 3.) Vijay Goyal was born in India; Vinod Goyal in Nepal. (Id. ¶ 4.) Both are of the Hindu religion and are United States citizens. (Id.) The Goyals also own several limited partnerships, including plaintiffs Southwest Pacific LP, Forestview River LP, Alabama-Illinois LP, Atlanta-Illinois LP, Arizona-Illinois LP, Lake Jefferson LP, Southwest Cermak LP, and 1640 North Partnership LP. (Id. ¶ 5.) For purposes of this opinion, the Goyal-owned businesses will be referred to collectively as the "Goyal entities," where appropriate.

Fifth Third Bank is incorporated in Ohio and headquartered in Tennessee. (Id. ¶ 6.) It operates throughout the Chicago area. (Id.) Michael Kozak is a vice president at Fifth Third. (Id. ¶ 7.) The Goyals and their businesses had a long-standing relationship with Fifth Third. (Id. ¶ 8.) Beginning in 2003, the Goyal entities borrowed an aggregate of more than $9 million from Fifth Third, and never made a late payment on those loans. (Id.) The Goyal entities had several loans with Fifth Third, including loans to: (1) Southwest Pacific LP with a principal of $557,949.13; (2) Forestview River LP with a principal of $977,701.28; (3) Alabama-Illinois LP with a principal of $800,000; (4) Atlanta-Illinois LP with a principal of $800,000; (5) Arizona-Illinois LP with a principal of $800,000; (6) Lake Jefferson LP with a principal of $2,046,535; (7) Southwest Cermak LP with a principal of $560,000; and (8) 1640 North Partnership LP with a principal of $953,608. (Id. ¶ 9.) In addition, AHE had a loan from Fifth Third with a principal of $750,000. (Id. ¶ 10.)

The revolving note for the AHE loan (the "A.H. Note") is at the center of this dispute. It was issued on March 17, 2008, and was secured by guaranties of the other Goyal entities. (Id. ¶¶ 10-11.) By its terms, the A.H. Note was to renew automatically for a period of one year on the anniversary date of the note "unless [Fifth Third] delivers to [AHE] a written notice stating that the Maturity Date will not be extended, with such written notice to be delivered to [AHE] by [Fifth Third] at least 30 days prior to any such anniversary date of this Note." (Dkt. No. 42, Ex. A ¶ 1.) On both March 17, 2009, and March 17, 2010, the A.H. Note was automatically renewed. (Id. ¶ 14.) In early 2008, the A.H. Note, and the rest of the Goyal entities' loan portfolio, was transferred to a new loan officer, Kozak. (Id. ¶ 15.)

On January 26, 2011, Vijay Goyal received an email from Kozak stating that: Per our meeting a couple months ago, I had let you know that we would be sending the attached notification letter for the auto renewing line of credit in the name of [AHE]. This letter will serve as the notice that is required per the loan agreement (copy also attached) prior to the anniversary date of the note (March 17, 2011). This letter is also being sent to you and Vinod's attention via certified mail. In order to extend the line of credit past the said anniversary date we need the following information below to review. (Dkt. No. 42, Ex. B.) The email then proceeded to list various records. It next stated that:

In addition we had discussed in our meeting that going forward if the line of credit is approved for an extension after formal credit review, beginning with fiscal year 2011 (ending 12/31), the bank will require reviewed consolidating financial statements for all Goyal owned related entities prepared by an accounting firm acceptable to the bank. (Id.) Attached to the email was a letter from Kozak to the Goyals regarding the A.H. Note, dated January 25, 2011, and stating:

Fifth Third has conducted an evaluation of the above referenced Note. As prescribed under the current terms of the agreement, the undersigned hereby notifies you of the Bank's intent to not renew the Note under its current terms. Based on the Bank's recent evaluation, the Note will be due and payable on March 17, 2011. (Id.) Following the email of January 26, Fifth Third and AHE engaged in ongoing communications about the renewal of the A.H. Note. (Second Am. Compl. ¶ 25.) On February 28, 2011, Kozak sent an email to the Goyals indicating certain discrepancies in the Goyal entities' financial statements and stating that:

In order to consider renewing the line of credit for a 12 month period, we will require reviewed consolidated financial statements by a firm acceptable to the bank for all Goyal owned entities for the 12 month period ending 12/31/10. . . . If we can receive a commitment letter from the 3rd party CPA confirming that they are preparing the financials as requested and the date that they will be completed we would consider a 60 day extension to allow the CPA time to complete. Until we have that commitment letter, the line of credit facility in the name of [AHE] . . . will expire on 03/17/11. (Dkt. No. 42, Ex. C.) On March 16, 2011, the Goyals sent to Fifth Third a commitment letter from a CPA as requested. (Second Am. Compl. ¶ 30.)

Nonetheless, on March 21, 2011, Fifth Third sent a notice of default to AHE informing it that it would be in default if the note was not paid off by March 31, 2011, which represented the end of the 10-day cure period. (Id. ¶ 32). On April 7, 2011, Fifth Third sent notices to the Goyal entities identified as guarantors of the A.H. Note, demanding that they pay off the outstanding balance of the A.H. Note. (Id. ¶ 33.) Then, on April 22, 2011, Fifth Third sent default and acceleration notices to the Goyal entities informing them that their loans were in default because of the default of the A.H. Note. (Id. ¶ 34.) The Goyal entities' loans had been in good standing until the April 22, 2011, default notice was issued. (Id. ¶ 35.) On April 27, 2011, AHE paid off the A.H. Note in full, including legal fees. (Id. ¶ 36.) Nonetheless, Fifth Third maintains that all of the Goyal entities' loans are in default due to the alleged default on the A.H. Note. (Id. ¶ 37.)


Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a complaint need only contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). The complaint must "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). While "detailed factual allegations" are not required, "labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555. The complaint must "include sufficient facts 'to state a claim for relief that is plausible on its face.'" Cole v. Milwaukee Area Tech. College Dist., 634 F.3d 901, 903 (7th Cir. 2011) (quoting Justice v. Town of Cicero, 577 F.3d 768, 771 (7th Cir. 2009)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). In ruling on a Rule 12(b)(6) motion, the court "construe[s] the . . .

[c]omplaint in the light most favorable to Plaintiff, accepting as true all well-pleaded facts and drawing all possible inferences in ...

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.