Court Opinion

ID: 4204318
Source: CourtListenerOpinion
Date Created: 2017-09-18 22:01:01.79728+00
Date Added: 2024-06-11T14:41:11.558178
License: Public Domain

NONPRECEDENTIAL DISPOSITION
                        To be cited only in accordance with Fed. R. App. P. 32.1

                    United States Court of Appeals
                                   For the Seventh Circuit
                                   Chicago, Illinois 60604
                                  Argued September 12, 2017
                                  Decided September 18, 2017

                                             Before

                                FRANK H. EASTERBROOK, Circuit Judge

                                MICHAEL S. KANNE, Circuit Judge

                                ANN CLAIRE WILLIAMS, Circuit Judge

No. 14-3636                                                     Appeal from the United
                                                                States District Court for the
CHARLES B. RICE, SR., et al.,                                   Northern District of Illinois,
     Plaintiffs-Appellees,
                                                                Eastern Division.
               v.
                                                                No. 14 C 8675
LSREF3 SAPPHIRE TRUST 2014, et al.,                             Edmond E. Chang, Judge.
     Defendants-Appellants.

                                              Order

    Charles Rice, Sr., and Catherine Rice guaranteed a loan from Harris Bank to Bark-
ston Properties, LLC. The loan went into default, and two forbearance agreements were
reached. Under the second of these agreements only a new default supports accelera-
tion of the principal and immediate collection. In June 2014 the Bank assigned the loan
and guarantee to LSREF3 Sapphire Trust 2014 (the Trust), which promptly asserted that
a new default had occurred. The Rices filed this suit in an effort to exercise control over
collateral pending a decision about the Trust’s assertion. The Trust brought its own suit.
See LSREF3 Sapphire Trust 2014 v. Barkston Properties, LLC, 2016 U.S. Dist. LEXIS 7931
(N.D. Ill. Jan. 25, 2016). These suits have been consolidated.
No. 14-3636                                                                          Page 2

    The district court issued a preliminary injunction requiring two things: first that the
Trust release its security interest in a property at 46 Surfsong Road, Kiawah Island,
South Carolina (the Kiawah parcel), as part of its sale, and second that the Trust not sell
properties at 9090 and 9110 Barkston Drive, Alpharetta, Georgia. The parties refer to the
second part of the order as enjoining a “nonjudicial foreclosure,” which is how they de-
scribe a private sale authorized under Georgia law by a deed to secure debt.

   The district judge concluded that there is a legitimate debate among the litigants
whether any default post-dates the second forbearance agreement, though he thought
the Rices likely to prevail on that issue. The injunction was accordingly provisional, and
the judge called on the parties to settle—and, if not, to supply other evidence so that the
preliminary injunction could be lifted or made permanent.

    The injunction was entered in November 2014. Almost three years have passed. The
parties tried to settle but could not do so, and the Trust’s appeal was finally briefed and
argued. Long before that, however, the sale of the Kiawah parcel closed. The Trust,
which received $220,000 as its share of the proceeds, allows that a sale to a bona fide
purchaser cannot be undone or a lien reinstated, but it resists the conclusion that this
aspect of the dispute is moot. It invokes the doctrine of “capable of repetition but evad-
ing review.” See Weinstein v. Bradford, 423 U.S. 147 (1975). It is not at all clear that the
dispute about the Kiawah parcel is capable of repetition. That dispute centered on a
contention that the parcel was being sold for too little. Even if disputes about other par-
cels concern their selling prices, they won’t be the same as the dispute about the Kiawah
parcel’s price. At all events, future disputes will not evade review if the Trust posts a
bond to prevent the sale while protecting the Rices against loss from delay. So this as-
pect of the proceedings is indeed moot.

    As for the dispute about the two Barkston Drive parcels: we do not perceive any
abuse of discretion by the district court. It is far better to provide the judge with more
evidence about compliance with the second forbearance agreement, and get this dispute
finally resolved, than to engage in additional proceedings concerning preliminary relief.

    The appeal is dismissed as moot to the extent it concerns the Kiawah property. (This
is the proper remedy when a preliminary injunction becomes moot while on appeal.
Orion Sales, Inc. v. Emerson Radio Corp., 148 F.3d 840, 843 (7th Cir. 1998).) Otherwise the
decision is affirmed.