1

 Unless otherwise noted, the facts in this section are undisputed. Because the parties

did not strictly comply with Local Rule 56.1, the facts are pieced together from the parties’

summary judgment briefs and the exhibits attached thereto. 

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

AMERICAN GENERAL FINANCIAL )

SERVICES OF ILLINOIS, INC., an )

Illinois corporation, )

)

Plaintiff, )

) No. 02 C 3518

v. )

) Mag. Judge Michael T. Mason

RIVERSIDE MORTGAGE COMPANY, )

INC., an Arkansas corporation, )

)

Defendant. )

MEMORANDUM OPINION AND ORDER

Michael T. Mason, United States Magistrate Judge:

Plaintiff, American General Financial Services of Illinois, Inc. (“plaintiff” or “American

General Illinois”) filed an action for declaratory relief and breach of contract against

defendant Riverside Mortgage Company, Inc. (“Riverside”). American General Illinois

moved for summary judgment. For the following reasons, we deny plaintiff’s motion for

summary judgment.

Background1

On February 16, 2001, Riverside entered into a Purchase and Sale Agreement with

American General Finance, Inc., a Delaware corporation (“American General Delaware”).

Pursuant to the contract, American General Delaware purchased several mortgage secured

loans from Riverside, two of which are the subject of this litigation. In particular, American

General Delaware purchased a note and mortgage purportedly executed by Kurt Bulawa
2

 Exhibit D to the February 21, 2001 contract purportedly lists the mortgage secured

loans that Riverside sold to American General Delaware. However, neither the contract

attached to the complaint nor the contract attached to Riverside’s response brief include Exhibit

D. Nevertheless, the parties appear to agree that the Bulawa and Spendel notes and

mortgages were sold to American General Delaware pursuant to the contract.

2

and a note and mortgage purportedly executed by Amanda Spendel.2 Riverside assigned

all of its rights, title and interest in the Bulawa and Spendel notes and mortgages to

American General Delaware on February 16, 2001. The Bulawa note and mortgage are

secured by residential property located at 23006 East Drive, Richton Park, Illinois. The

Spendel note and mortgage are secured by residential property located at 586 Saratoga,

Chicago Heights, Illinois.

Both the Bulawa and Spendel notes have been delinquent since May 2001. The

Bulawa and Spendel notes and mortgages are the subject of this litigation because they

were allegedly procured by fraud. The parties dispute whether these mortgages and notes

are enforceable. 

On July 11, 2001, Amanda Spendel signed an Affidavit of Forgery swearing that she

did not sign the promissory note associated with the Chicago Heights property and she did

not know who forged her signature. On July 20, 2001, American General Delaware sent

a formal demand letter to Riverside in which it asked Riverside to repurchase the Spendel

note and mortgage pursuant to the terms of the contract between the parties. Riverside

refused. Subsequently, on August 6, 2001, American General Delaware sent another

formal demand letter asking Riverside to repurchase the Bulawa note and mortgage

pursuant to the terms of the contract. Again, Riverside refused.

Both demand letters asked Riverside to repurchase the Bulawa and Spendel notes
3

 It is unclear whether the reference to 598 Saratoga in the plea agreement is a typo and

should read 586 Saratoga, the property associated with the Spendel note and mortgage.

3

and mortgages pursuant to ¶ 11 of the contract. The relevant portion of ¶ 11 provides:

11. SELLER’S WARRANTIES REGARDING THE RECEIVABLES

a. .... Seller represents and warrants to Buyer, which representations and

warranties shall survive the execution and closing of this Agreement, that as

of the Contract Date and the Closing Date:

(x) All of the Receivables, together with any instruments securing the

same are genuine, valid and complete, were made for valuable

considerations and are legally enforceable obligations of the

respective persons shown as indebted thereon, in accordance with

their terms.

c. In the event of any breach or breaches of any of the foregoing warranties,

Seller will, within 30 days after written demand, pay Buyer [sic] purchase

price listed on Exhibit D of the then Net Outstanding Balance of the affected

Receivable(s).

In a separate criminal action brought by the United States against defendant Valerie

Fortner in the Northern District of Illinois, Ms. Fortner admitted in a plea agreement that she

fraudulently obtained mortgage loans secured by several residential properties, including

23006 East Drive, Richton Park, Illinois and 598 Saratoga, Chicago Heights, Illinois.3

 The

plea agreement was filed on April 1, 2004. Fortner also admitted that she fraudulently

caused Riverside, among other mortgage companies, to issue mortgage loans based upon

documents that often contained forged signatures from alleged borrowers and false and

fraudulent information related to the alleged borrowers’ finances, employment and familial

situation.

Plaintiff, American General Illinois, filed its complaint in the district court on May 16,

2002, alleging that Riverside breached its contractual obligation to repurchase the subject
4

 Michael Walsh states that he is the Director of Operations for American General

Financial Services Corp. However, neither Mr. Walsh nor the plaintiff identifies this entity or

explains how it is related to either American General Illinois or American General Delaware. 

Moreover, plaintiff fails to explain the corporate relationship, if any, between American General

Illinois and American General Delaware. 

4

loans upon demand. American General Illinois also asked the Court to declare the rights

and responsibilities of the parties to this action as they relate to performance of the

contract. Riverside filed an affirmative defense alleging that American General Illinois has

no standing to seek remedies for breach of contract or request a declaration of its rights

under the February 16, 2001 contract because American General Illinois is not a party to

the contract. Riverside further alleged that no contract exists between Riverside and

American General Illinois. 

The parties also dispute whether American General Illinois is the holder of the

Bulawa and Spendel notes and mortgages. Riverside contends that American General

Illinois has not established that it is the holder of these notes and mortgages. American

General Illinois argues that the affidavits of Michael Walsh, an authorized agent of

American General Illinois, show that the subject notes and mortgages were assigned by

American General Delaware to American General Illinois.4

 In the affidavits submitted in

support of plaintiff’s motion, Mr. Walsh states that American General Illinois controls the

right, title and interest of the Bulawa and Spendel notes and mortgages, as it is the

servicing arm of American General Delaware. Mr. Walsh further states that the servicing

rights for these notes and mortgages were internally transferred between the related

corporate entities to American General Illinois in 2002. 

However, under Federal Rule of Civil Procedure 56(e), supporting and opposing
5

affidavits must “set forth such facts as would be admissible in evidence . . . .” Fed. R. Civ.

P. 56(e). To be admissible in evidence, the affidavits must be “accompanied by a

certificate of acknowledgment executed in the manner provided by law by a notary public

. . . .” Fed. R. Evid. 902(8). The Walsh affidavits are unsigned and they are not notarized.

Thus, the affidavits are not admissible as evidence under Rule 56(e) and we will not

consider them. Howard-Ahmad v. Chicago Sch. Reform Bd. of Trustees, 161 F. Supp. 2d

857, 861 (N.D. Ill. 2001). We will also disregard any factual contentions plaintiff supports

by reference to these affidavits. See Mingo v. Roadway Express, Inc., 135 F. Supp. 2d

884, 893-94 (N.D. Ill. 2001); Bell Enters. Venture v. Santanna Natural Gas Corp., 2002 U.S.

Dist. LEXIS 19460 (N.D. Ill. 2002) (recognizing that the Court must disregard factual

contentions which are conclusory or unsupported by the record or admissible evidence).

Legal Analysis

Summary judgment is proper when “the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, show that there

is no genuine issue as to any material fact and that the moving party is entitled to a

judgment as a matter of law.” Fed. R. Civ. P. 56(c); see also, Celotex Corp. v. Catrett, 477

U.S. 317, 322-23 (1986). The moving party has the burden of demonstrating the absence

of genuine issues of material fact. Celotex, 477 U.S. at 323. “A genuine issue of material

fact exists only if there is sufficient evidence favoring the nonmoving party for a jury to

return a verdict for that party.” Alexander v. Dept. of Health and Family Services, 263 F.3d

673, 680 (7th Cir. 2001). When making this determination, we review the record in the light

most favorable to the nonmovant, and draw all reasonable inferences in favor of the

nonmovant. Id.
5

 Pursuant to ¶ 23 of the February 16, 2001 contract, Indiana law governs.

6

Here, American General Illinois moved for summary judgment on its breach of

contract and declaratory relief counts. The breach of contract counts arise out of

Riverside’s alleged breach of the February 16, 2001 contract Riverside entered into with

American General Delaware. Plaintiff’s request for declaratory relief asks the Court to

declare the rights and responsibilities of the parties to this action as they relate to

performance of the February 16, 2001 contract. However, American General Illinois is not

a party to that contract.

“Generally, only parties to a contract or those in privity with the parties have rights

under the contract.” OEC-Diasonics v. Major, 674 N.E.2d 1312, 1315 (Ind. 1996).5

 Those

not party to a contract may enforce the contract only if they demonstrate that they are

third-party beneficiaries. Luhnow v. Horn, 760 N.E.2d 621, 628 (Ind. Ct. App. 2001).

American General Illinois does not claim that it is a party to the February 16, 2001 contact,

nor does it argue that it was in privity with the parties to that contract. Furthermore,

American General Illinois makes no attempt to demonstrate that it is a third-party

beneficiary of the contract.

Instead, American General Illinois contends that it is the true and lawful owner of the

Bulawa and Spendel notes and mortgages and that American General Delaware assigned

those notes and mortgages to it. Even if these facts were supported by an admissible

affidavit, which they are not, American General Illinois still has not demonstrated that it has

standing to seek remedies for breach of contract or request a declaration of its rights under

the February 16, 2001 contract. Indeed, American General Illinois has failed to show that
7

it has any rights under the February 16, 2001 contract because it is not a party to the

contract, it is not in privity with the parties, nor is it a third-party beneficiary. See Kaplan

v. Shure Bros., 266 F.3d 598 (7th Cir. 2001).

Nevertheless, there are two contractual provisions under which American General

Illinois potentially could demonstrate a right to seek the relief requested in its complaint.

In particular, pursuant to ¶ 19 of the contract, as a subsidiary or affiliate of American

General Delaware, American General Illinois could obtain all the benefits and obligations

of the contract if it purchased one of the receivables (i.e., the notes and mortgages).

Paragraph 19 of the February 16, 2001 contract provides: 

If a subsidiary or affiliate of Buyer purchases a Receivable, the subsidiary or affiliate

shall have all the benefits and obligations of this Agreement including but not limited

to the benefits of the covenants, representations and warranties made by Seller, and

shall have the authorizations, rights and powers granted by the Seller, with respect

to the Receivable.

American General Illinois has not submitted any evidence demonstrating that it

purchased either the Bulawa note and mortgage or the Spendel note and mortgage.

Accordingly, plaintiff has not demonstrated a right to seek contractual or declaratory relief

pursuant to ¶ 19 of the contract.

Under ¶ 26 of the contract, American General Illinois could demonstrate a right to

seek contractual or declaratory relief if it established that it is a transferee, successor or

assignee. Paragraph 26 of the contract provides:

All terms and provisions of this Agreement shall be binding upon and shall inure to

the benefit of the parties to the Agreement and their respective transferees,

successors, and assigns.

American General Illinois offers no evidence nor does it even argue that American
6

 At best, plaintiff claims that American General Delaware assigned the Bulawa and

Spendel notes and mortgages to it and transferred the servicing rights for the subject notes and

mortgages to it. However, we must disregard these contentions because American General

Illinois relies on inadmissible affidavits and we found no other evidence in the record to support

these contentions. See Mingo, 135 F. Supp. 2d at 893-94; Bell, 2002 U.S. Dist. LEXIS 19460.

8

General Delaware assigned or transferred the February 16, 2001 contract to it.6

Furthermore, there is no evidence that American General Illinois is a successor of

American General Delaware. See Markham v. Prutsman Mirror Co., 565 N.E.2d 385,

386-387 (Ind. Ct. App. 1991) (recognizing that a successor, with reference to corporations,

generally means another corporation which, through amalgamation, consolidation, or other

legal succession, becomes invested with rights and assumes burdens of first corporation).

Accordingly, plaintiff has not demonstrated a right to seek relief pursuant to ¶ 26 of the

contract. Id. at 387 (recognizing that the cross-claimant had no standing to enforce rights

under an asset purchase agreement because cross-claimant was not a successor or

assignee under the agreement); see also, Kaplan v. Shure Bros., 266 F.3d 598, 2001 U.S.

App. LEXIS 19610, *20-25 (7th Cir. 2001) (holding that the plaintiff lacked standing to

enforce rights under a real estate contract because plaintiff was not a party to that contract

and he failed to produce evidence demonstrating that the contract was assigned to him).

It is well settled that to recover for breach of contract, a plaintiff must prove that a

valid contract existed between the parties. Black Agents & Brokers Agency, Inc. v. Near

North Ins. Brokerage, Inc., 2004 U.S. Dist. LEXIS 17945, *12 (N.D. Ind. 2004) (relying on

Indiana law). American General Illinois has failed to establish this most fundamental
7

 Plaintiff’s failure to establish that it is a party to the contract or that it otherwise has

standing to enforce any rights under the February 16, 2001 contract obviates the need to

discuss breach or damages issues.

9

element of its breach of contract claims. Indeed, plaintiff has not shown that it is a party

to the contract, that it is in privity with the parties or that it is a third-party beneficiary.

Furthermore, American General Illinois failed to demonstrate that it has standing to enforce

any rights under the February 16, 2001 contract as an assignee, transferee or successor.

Markham, 565 N.E.2d at 387. Simply put, American General Illinois has not established

all of the essential elements of its breach of contract claims or the right to seek declaratory

relief under the contract. Accordingly, American General Illinois is not entitled to summary

judgment.7

Conclusion

For the reasons set forth above, plaintiff’s motion for summary judgment is denied.

It is so ordered. 

ENTER:

______________________________

MICHAEL T. MASON

United Stated Magistrate Judge

Dated: May 19, 2005