Court Opinion

ID: 5134457
Source: CourtListenerOpinion
Date Created: 2021-12-13 21:00:42.164119+00
Date Added: 2024-06-11T08:23:44.060114
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________
No. 20-3017
ROMSPEN MORTGAGE LIMITED
PARTNERSHIP,
                                                   Plaintiff-Appellee,

                                 v.

BGC HOLDINGS LLC – ARLINGTON PLACE
ONE, et al.,
                                 Defendants-Appellants.
                     ____________________

         Appeal from the United States District Court for the
           Northern District of Illinois, Eastern Division.
           No. 1:18-cv-01696 — Elaine E. Bucklo, Judge.
                     ____________________

 ARGUED SEPTEMBER 13, 2021 — DECIDED DECEMBER 13, 2021
                ____________________

   Before RIPPLE, ROVNER, and SCUDDER, Circuit Judges.
   RIPPLE, Circuit Judge. This case brings to us a contract dis-
pute over a piece of commercial real property in Arlington
Heights, Illinois. After BGC Holdings, LLC, et al., (“BGC”) de-
faulted on a loan secured by Romspen Mortgage Limited
Partnership (“Romspen”), the parties negotiated an agree-
ment to avoid foreclosure of the property (the “Arlington
2                                                  No. 20-3017

Property”) and to salvage the loan. As a result of these nego-
tiations, they entered into a Forbearance and Loan Extension
Agreement (the “Forbearance Agreement” or the “Agree-
ment”). By the terms of this document, Romspen agreed to
hold off on the judicial sale of the property; for its part, BGC
agreed to make a $1.6 million payment on the loan. While the
parties were negotiating the Forbearance Agreement, BGC
learned that Romspen had filed a lien against another prop-
erty (the “1907 Property”) in which one or more of the defend-
ants had an ownership interest. This news created a problem
for BGC because it had planned to refinance the 1907 Property
so that it could make the payment on the Arlington property
as required by the Forbearance Agreement. When BGC failed
to provide proof of a refinancing plan for the Arlington Prop-
erty, Romspen refused to remove the lien on the 1907 Prop-
erty, and eventually BGC foreclosed on the Arlington Prop-
erty.
    After the foreclosure sale of the Arlington Property, BGC
filed a motion for leave to file a counterclaim alleging that
Romspen had breached the Forbearance Agreement. In re-
sponse, Romspen filed a motion for an order confirming the
judicial sale of the property. The district court denied BGC’s
motion to file a counterclaim. It ruled that Romspen had not
breached the Forbearance Agreement because it made “com-
mercially reasonable efforts” to remove the lien on the 1907
Property. The district court also granted Romspen’s motion
for confirmation and issued a separate order confirming the
sale of the Arlington property and ordering the eviction of
BGC.
   BGC now appeals. For the reasons set forth in this opinion,
we conclude that Romspen did not breach the Forbearance
No. 20-3017                                                                3

Agreement and that the district court’s decision to confirm the
sale of the Arlington property was proper. We therefore af-
firm the district court’s judgment.
                                     I
                           BACKGROUND
   In 2015, BGC secured a $3.1 million mortgage loan from
Romspen for a piece of commercial real property located in
Arlington Heights, Illinois. As part of this transaction, de-
fendants Samuel K. Bobby and Puthenveetil Bobby executed
                                                                            1
personal guarantees of BGC’s indebtedness to Romspen.
BGC defaulted on the loan. When Romspen filed this foreclo-
sure action, BGC admitted default. On May 28, 2019, the dis-
trict court entered a Judgment of Foreclosure and Sale (the
“Foreclosure Judgment”), which, under Illinois law, does not
                                             2
finalize the foreclosure of property.
    Following the foreclosure judgment but prior to the sale
of the property, the parties entered into a Forbearance and
Loan Extension Agreement. Under the terms of the Forbear-
ance Agreement, Romspen agreed that it would: 1) forbear
from exercising remedies (including the judicial sale of the
Arlington Property) for sixty days; and 2) reinstate the Ar-
lington Property loan and extend the maturity date for two
years.

1 The district court’s jurisdiction is based on diversity of citizenship. See
28 U.S.C. § 1332(a).
2 In the Foreclosure Judgment, the court ordered the sale of the Arlington
Property by public auction, found that the Bobbys had breached their
guaranty agreements, and awarded Romspen a money judgment in excess
of $4 million. R.57.
4                                                      No. 20-3017

    These undertakings were not unconditional. In return,
BGC had to make a partial paydown of the loan in the amount
of $1.6 million.
  During the parties’ negotiations over the Forbearance
Agreement, BGC learned that Romspen had filed a lien
                                                              3
against a second property it owned—the 1907 Property. This
filing presented a problem for BGC because it had planned
to refinance the mortgage on the 1907 Property (and another
property in Itasca, Illinois), so that BGC could make the pay-
down payment on the Arlington Property required by the
Forbearance Agreement. To recognize BGC’s reliance on the
1907 Property for the paydown funds, the parties agreed to
include language in the Forbearance Agreement about the
lien. Section 4(g) of the Agreement addresses the lien on the
1907 Property:
       (g) Liens Upon the 1907-29 Property. Upon the
       request of Loan Parties, Lender shall use all
       commercially reasonable efforts to promptly re-
       move or release any liens or encumbrances it
       may have against the real property located at
       1907-29 South Arlington Heights Road, Arling-
       ton Heights, Illinois … and irrespective of such
       request shall do so sufficiently before the Clos-
       ing Date so that the Loan Parties can use such
       property as collateral to obtain funds to support

3 On June 19, 2019, Romspen recorded the Judgment of Foreclosure and
Sale of the Arlington Property against the 1907 Property, as document
1917016062, with the Recorder of Deeds of Cook County.
No. 20-3017                                                  5

        the transactions contemplated by this Agree-
                  4
        ment.
    On April 20, 2020, after the parties executed the Forbear-
ance Agreement, BGC sent a request via email to Romspen
referencing Section 4(g) of the Agreement and asking that the
                                       5
lien on the 1907 Property be removed. Romspen emailed the
following response:
        [W]e need some proof that y’all are likely going
        to close on a deal—otherwise, we lose our lien
        priority if you are not going to be successful.
        Are you planning on completing a refinancing
        in the near term with respect to that property,
        and how much of that money will be coming to
                      6
        Romspen?
The parties dispute what transpired following this email ex-
change. Romspen asserts that BGC did not provide the neces-
sary proof it requested. BGC points to term sheets that it sent
to Romspen as proof that it was working to obtain refinancing
on the Arlington Property. Notably though, the term sheets
were from February 2020 and stated that they were “not a
                          7
commitment to lend.”
   Ultimately, Romspen did not remove the lien on the 1907
Property, and BGC did not make the paydown payment by

4 R.116-1 at 9.

5 See R.123-6.

6 Id.

7 R.140-1 at 34–39.
6                                                 No. 20-3017

the May 2020 closing date required by the Forbearance Agree-
ment. Several months later, and two days before the sched-
uled sale of the Arlington Property, BGC filed an emergency
petition to stay the judicial sale. Romspen objected, noting
that although it had negotiated and executed the Forbearance
Agreement with BGC to afford it more time to obtain financ-
ing, BGC was unable to secure additional funding. The dis-
trict court denied the emergency motion.
    On July 28, 2020, the Arlington Property was sold at auc-
tion. Romspen, the only bidder, won the bid. A week later,
BGC filed a motion for leave to file a counterclaim for breach
of contract, alleging that Romspen had breached the Forbear-
ance Agreement. In response, Romspen filed a motion seek-
ing confirmation of the public sale and immediate possession
of and title to the Arlington Property.
   The district court disposed of both motions in the same or-
der. The court first denied BGC’s motion for leave to file a
counterclaim, specifically stating that the evidence did not
suggest that Romspen breached the Forbearance Agreement.
The court believed BGC’s argument was at odds with the ex-
press terms of the Forbearance Agreement, which only re-
quired Romspen to use “commercially reasonable efforts” to
remove the lien. The district court explained that nothing in
BGC’s motion for leave hinted at any basis for concluding that
Romspen’s efforts were not commercially reasonable or ex-
plained how resolution of the disputed facts in BGC’s favor
would entitle it to judgment on any theory consistent with the
terms of the Forbearance Agreement.
    The court then turned to Romspen’s motion for confirma-
tion of the sale. In response to the motion, BGC had requested
that the court take the motion under advisement and enter a
No. 20-3017                                                                 7

ninety-day schedule for discovery limited to the breach of the
Forbearance Agreement. It also requested that the court
schedule an evidentiary hearing to determine whether spe-
cific performance should be ordered or if the sale should be
confirmed. Instead, applying Illinois law, the district court
granted Romspen’s motion for an order confirming the judi-
cial sale of the Arlington Property. The district court ruled
that BGC could not establish any of the grounds recognized
by the Illinois Mortgage Foreclosure Law (“IMFL”) as a rea-
                                                        8
son for declining to confirm the judicial sale.
    Finally, on September 25, 2020, the district court entered
an order approving the Report of Sale and Distribution, con-
firming the sale of the Arlington Property, and ordering the
eviction of BGC. Following the order approving the sale, BGC
did not move to stay the enforcement of the district court’s
order and judgment under Federal Rule of Civil Procedure 62.
On September 29, Romspen transferred the deed of the Ar-
lington Property to RIC (Arlington), LLC. BGC timely ap-
                                 9
pealed the final judgment.

8 Pursuant to the IMFL, a court will ordinarily confirm a judicial sale un-
less it finds that “(i) a notice required in accordance with subsection (c) of
Section 15-1507 was not given, (ii) the terms of the sale were unconscion-
able, (iii) the sale was conducted fraudulently, or (iv) justice was otherwise
not done ... .” 735 ILCS 5/15-1508(b).
9 In Illinois, “it is the order confirming the sale, rather than the judgment
of foreclosure, that operates as the final and appealable order in a foreclo-
sure case.” EMC Mortg. Corp. v. Kemp, 982 N.E.2d 152, 154 (Ill. 2012); see
also In re Marriage of Verdung, 535 N.E.2d 818, 824 (Ill. 1989).
8                                                   No. 20-3017

                               II
                        DISCUSSION
                               A.
    Romspen submits that BGC’s appeal is moot. It points out
that, after the district court entered judgment, it transferred
its right to the Arlington Property to a nonparty. In its view,
this transfer renders the present appeal moot and therefore
deprives us of appellate jurisdiction. Because this issue di-
rectly implicates our jurisdiction under Article III of the Con-
stitution, we address it before any discussion of the merits.
United States v. Sanchez-Gomez, 138 S. Ct. 1532, 1537 (2018).
    In support of its argument, Romspen invites our attention
to Federal Rule of Civil Procedure 62. It submits that this rule
required BGC to obtain a stay of the district court’s judgment
in order to preserve its right to assert on appeal its claim to
the Arlington Property. It reasons that because BGC failed to
obtain such a stay and Romspen then transferred the Arling-
ton Property to a nonparty, RIC (Arlington), LLC, we cannot
reverse the transfer of the property or provide BGC any other
relief. BGC counters that the case is not moot because
Romspen transferred the property to a nominee or affiliated
party, not to a good faith, third-party purchaser.
                               1.
    In evaluating these arguments, we turn first to an exami-
nation of the legal landscape. The general rule followed in the
United States is that absent a stay, sale of the property to a
good faith purchaser during the pendency of the appeal,
“moots the appeal of the judgment ordering the sale.” F.D.I.C.
v. Meyer, 781 F.2d 1260, 1263 (7th Cir. 1986). This rule “applies
to all judgments ordering the sale of property and is not
No. 20-3017                                                        9

limited to bankruptcy cases.” Id. at 1264. We have identified,
however, an exception to this general rule: “[I]f the court still
has jurisdiction over the parties who control the property and
thus can still reach the subject matter of the suit, it can compel
restoration of the status quo.” Paris v. U.S. Dep’t of Hous. & Urb.
Dev., 713 F.2d 1341, 1344 (7th Cir. 1983) (citing Ramsburg v.
Am. Inv. Co. of Ill., 231 F.2d 333, 336 (7th Cir. 1956)); see also
Bastian v. Lakefront Realty Corp., 581 F.2d 685, 691 (7th Cir.
1978) (holding that if the parties are still within the reach of
the court’s equitable powers, then the appeal is not moot).
    In this line of cases, Paris, 713 F.2d 1341, is particularly rel-
evant to the situation now before us. In Paris, the Department
of Housing and Urban Development (“HUD”) sold a housing
project to co-defendant Paul Toller. Several months after the
sale, Toller transferred ownership of the apartment complex
to a partnership—Tee Harbor Associates. The plaintiffs ap-
pealed the sale; the defendants argued that the transfer of the
property rendered the case moot. Paris, 713 F.2d at 1344. We
did not find the defendants’ argument persuasive because
Toller was the sole general partner of the Tee Harbor Associ-
ates partnership, the new owner of the property. Under Indi-
ana partnership law, Toller still had the authority to bind the
partnership in response to a court order. We also held that
because both HUD and Toller were defendants in the district
court proceedings and had completed the sale with the
knowledge that it was under legal challenge, we could still
reach the property. Id. If the parties who control the property
are still within the court’s jurisdictional reach, then the court
can reach the subject matter of the suit and, if necessary, re-
store the status quo. See id. (citing Ramsburg, 231 F.2d at 336).
In short, we concluded that the case was not moot merely be-
cause title was now held by the partnership. Id. at 1345 n.3.
10                                                               No. 20-3017

We still had jurisdiction over the parties, and thus they were
within reach of the court’s equitable powers. Id. at 1345.
    Our approach to this issue is well within the heartland of
cases in the United States. Most circuits recognize explicitly
this general rule that, absent a stay, the sale of foreclosure is
                                                      10
final, and any appeal of the sale is moot. Many circuits, in-
cluding this one, also have had occasion to recognize several
exceptions to the rule.
   For instance, in the bankruptcy context, an appeal will not
be considered moot if the third-party’s status as a good faith
                                11
purchaser is challenged. Additionally, several of our sister
circuits have held that an appeal is not moot if the real prop-
erty has been sold to a creditor who is a party to the appeal,
                                                                               12
and the sale is subject to state statutory rights of redemption.
Finally, a number of courts have recognized that an appeal is

10 See In re Egbert Dev., LLC, 219 B.R. 903, 905 (B.A.P. 10th Cir. 1998); Oak-
ville Dev. Corp. v. F.D.I.C., 986 F.2d 611, 613 (1st Cir. 1993); In re Sullivan
Cent. Plaza, I, Ltd., 914 F.2d 731, 733 (5th Cir. 1990); In re Onouli–Kona Land
Co., 846 F.2d 1170, 1171 (9th Cir. 1988); In re Lashley, 825 F.2d 362, 364 (11th
Cir. 1987).
11 Petroleum & Franchise Funding LLC v. Bulk Petroleum Corp., 435 B.R. 589,
591–92 (E.D. Wis. 2010) (citing In re Andy Frain Servs., Inc., 798 F.2d 1113,
1125 (7th Cir. 1986) and Hower v. Molding Sys. Eng’g Corp., 445 F.3d 935,
938 (7th Cir. 2006)); see also In re 255 Park Plaza Assocs. Ltd. P’ship, 100 F.3d
1214, 1218 (6th Cir. 1996) (citing In re Onouli-Kona Land Co., 846 F.2d at
1173); Miami Ctr. Ltd. P’ship v. Bank of N.Y., 838 F.2d 1547, 1554 (11th Cir.
1988).
12 In re 255 Park Plaza, 100 F.3d at 1218; In re Sullivan Cent. Plaza, 914 F.2d
at 734; In re Sun Valley Ranches, Inc., 823 F.2d 1373, 1375 (9th Cir. 1987); In
re Onouli-Kona Land Co., 846 F.2d at 1172–73.
No. 20-3017                                                                11

not moot where state law would otherwise permit the trans-
                           13
action to be set aside.
    Under the well-established rule and its recognized excep-
tions, it is clear that the case is not moot. There is no dispute
between the parties that RIC is a “special purpose entity cre-
ated by Romspen for the purpose of holding and maintaining
             14
property.” Romspen created RIC less than sixty days before
the execution of the Special Commissioner’s Deed conveying
                                        15
title to the Arlington Property. RIC has the same principal
office and the same manager as Romspen. Romspen assigned
its interest in the Arlington Property to RIC and then, follow-
ing the district court’s confirmation of the sale, Romspen
transferred, rather than sold, its rights in the property to
       16
RIC.
                                     2.
     There is, however, an additional reason why the case is not
moot. Illinois law recognizes the general rule that where no
stay has been obtained and the property has been sold, the
case is moot. Like most jurisdictions, Illinois also recognizes
an exception to this general rule: the conveyance of the prop-
erty to a party or a nominee of a party will not prevent a court
from exercising its equitable authority over the property. But
Illinois then goes a step further. In Illinois, in order to work a

13 In re 255 Park Plaza, 100 F.3d at 1218; In re Egbert Dev., LLC, 219 B.R. at
907; In re Mann, 907 F.2d 923, 926 (9th Cir. 1990).
14 Appellee Br. at 4.

15 S. Bobby Reply Br. at 7.

16 Appellee Br. at 13.
12                                                               No. 20-3017

divestment of the court’s equitable authority, the record must
unequivocally disclose that the third-party purchaser was not a
                                     17
party or nominee of a party. In the absence of such proof of
such non-party or non-nominee status, an appeal cannot be
                                           18
dismissed on mootness grounds.
    The ultimate question of mootness and of our jurisdiction
under Article III of the Constitution is, of course, a question
of federal law. If, however, this rule incorporates an allocation
of proof and embodies the substantive policy of Illinois law to
require a particularly significant showing before property
transfer is deemed to be to an entity other than a nominee or
a party, our responsibilities under the doctrine of Erie Railroad

17 Illinois Supreme Court Rule 305(k) protects third-party purchasers of a
property from reversal or modification of the judgment regarding that
property if: “(1) the property passed pursuant to a final judgment; (2) the
right, title and interest of the property passed to a person or entity who is
not part of the proceeding; and (3) the litigating party failed to perfect stay
of judgment within the time allowed for filing a notice of appeal.”
Steinbrecher v. Steinbrecher, 759 N.E.2d 509, 515 (Ill. 2001) (interpreting Rule
305(j), which is now Rule 305(k)); see also Town of Libertyville v. Moran, 535
N.E.2d 82, 84 (Ill. App. Ct. 1989) (interpreting Rule 305(i), which is now
Rule 305(k)); People ex rel. First Nat’l Bank v. City of N. Chi., 510 N.E.2d 577,
583 (Ill. App. Ct. 1987); Illinois Hous. Dev. Auth. v. LaSalle Nat’l Bank, 487
N.E.2d 772, 774 (Ill. App. Ct. 1985) (“The record must unequivocally dis-
close, however, that the third party purchaser was not a party or a nomi-
nee of a party to the litigation.”).
18 Pinnacle Corp. v. Vill. of Lake in the Hills, 630 N.E.2d 502, 505 (Ill. App.
Ct. 1994); Glen Ellyn Sav. & Loan Ass’n v. State Bank of Geneva, 382 N.E.2d
1267, 1272 (Ill. App. Ct. 1978); Arnold v. Leahy Home Bldg. Co., 420 N.E.2d
699, 709 (Ill. App. Ct. 1981) (“Absent some showing in the record that the
third parties were not acting solely as nominees, however, this court can-
not say the present appeal is moot.”) (superseded on other grounds by
rule as stated in Chand v. Schlimme, 563 N.E.2d 441, 445 (Ill. 1990)).
No. 20-3017                                                     13

Co. v. Tompkins, 304 U.S. 64 (1938), require that we follow the
Illinois rule as our rule of decision.
    In assessing whether state law must govern our inquiry,
we have recognized that it may be difficult to classify a par-
ticular rule as substantive or procedural. See Houben v. Telular
Corp., 309 F.3d 1028, 1033 (7th Cir. 2002). In these gray areas,
the Supreme Court has directed us to decide whether “the
scope of any federal rule or statute is broad enough either to
cause a ‘direct collision’ with the state law or otherwise ‘con-
trol[s] the issue’ before the court.” Id. at 1039 (quoting Burling-
ton N. R.R. Co. v. Woods, 480 U.S. 1, 4–5 (1987)); see also Hanna
v. Plumer, 380 U.S. 460, 469–74 (1965).
    Both Federal Rule 62 and Illinois Rule 305(k) address the
stay of judgment prior to appeal. But Illinois places an addi-
tional requirement upon the parties when the transfer of real
property is involved. The Supreme Court has recognized that
there are instances where “the scope of the Federal Rule [is]
not as broad as the losing party urge[s], and therefore, there
being no Federal Rule which cover[s] the point in dispute, Erie
command[s] the enforcement of state law.” Walker v. Armco
Steel Corp., 446 U.S. 740, 750 (1980) (quoting Hanna, 380 U.S. at
470). Here, the federal rule does not address the transfer of
property to a party’s nominee. The Illinois rule, on the other
hand, requires a particularly significant showing before a
transfer of property will be deemed to be to someone other
than a party or a nominee. Thus, Illinois Rule 305(k) and Rule
62 “can exist side by side, therefore, each controlling its own
intended sphere of coverage without conflict.” Walker, 446
U.S. at 752.
   We previously have recognized that “the burden of proof
on a particular issue of a diversity case is a matter of
14                                                             No. 20-3017

substantive law, and, hence, a variable of local law which fed-
eral courts must observe under Erie.” Sundstrand Corp. v.
Standard Kollsman Indus., Inc., 488 F.2d 807, 813 (7th Cir. 1973);
see also Cities Serv. Oil Co. v. Dunlap, 308 U.S. 208, 212 (1939).
Here, the Illinois rule requires the party seeking to protect the
transfer of property to supply substantial proof that it was
transferred to a non-party or a non-nominee of a party. In-
deed, we previously have determined that “this rule, con-
cerned as it is with settling title to property, is binding on fed-
eral courts in a diversity suit governed by Illinois substantive
law.” Aurora Loan Servs., Inc. v. Craddieth, 442 F.3d 1018, 1026
                   19
(7th Cir. 2006).
   These considerations require us to consider the Illinois
rule with respect to the burden of proof to be substantive for
purposes of the Erie doctrine. Under Illinois law, Romspen
must establish by substantial evidence that RIC was not act-
                         20
ing as its nominee. The facts before this court certainly do
not suffice to carry Romspen’s Illinois-imposed burden. In-
deed, they tend to indicate that there is a connection between
the two entities such that RIC is within reach of this court’s
equitable powers. BGC, although not maintaining that a

19 We have also identified a line of cases where the state rule, “though
undeniably procedural,” is limited to a particular substantive area and
thus may be considered substantive under Erie. See S.A. Healy Co. v. Mil-
waukee Metro. Sewerage Dist., 60 F.3d 305, 310 (7th Cir. 1995) (collecting
cases). Here, Illinois Rule 305(k) is limited to the area of property law.
20 Proof of non-party status usually comes in the form of affidavits de-
scribing the entities and their relationship to each other. See Illinois Hous.,
487 N.E.2d at 774; Horvath v. Loesch, 410 N.E.2d 154, 157–58 (Ill. App. Ct.
1980); Fed. Nat’l Mortg. Ass’n v. Kimbrell, No. 3-14-0062, 2016 WL 5904803,
at *5 (Ill. App. Ct. Oct. 11, 2016).
No. 20-3017                                                                  15

formal partnership relationship exists between Romspen and
RIC, submits that RIC is an insider or affiliated party of
Romspen. An “affiliate” is “a corporation that is related to an-
other corporation by shareholdings or other means of control;
a subsidiary, parent or sibling corporation.” Affiliate, Black’s
Law Dictionary (11th ed. 2019). Related areas of law also con-
tribute helpful analogies. In the bankruptcy context, an “in-
sider” is “[a]n entity or person who is so closely related to a
debtor that any deal between them will not be considered an
arm’s-length transaction and will be subject to close scrutiny.”
Insider, Black’s Law Dictionary (11th ed. 2019). Under bank-
ruptcy law, “the concept of ‘insider’ includes affiliates of the
debtor or insider of affiliates of the debtor.” 11 U.S.C.
§ 101(31)(E).
   Our cases addressing forum selection clauses are also in-
formative here. This line of cases focuses on whether parties
                             21
are “closely related.”            Although recognizing that “closely

21 Our approach is well within the heartland of cases throughout the Na-
tion. “‘Closely related’ appears to be an umbrella term that refers to a va-
riety of common law doctrines courts use to bind non-signatories to con-
tracts, including third-party beneficiaries, successors-in-interest, princi-
pals of signatory agents, and alter egos.” Fitness Together Franchise, L.L.C.
v. EM Fitness, L.L.C., No.1:20-cv-02757-DDD-STV, 2020 WL 6119470, at *5
(D. Colo. Oct. 16, 2020). Moreover, in determining whether forum selec-
tion clauses should be applied to non-parties, we and other circuits have
asked if the party is “closely related” to the dispute such that it becomes
“foreseeable” that it will be bound. Hugel v. Corp. of Lloyd’s, 999 F.2d 206,
209 (7th Cir. 1993); see also Carlyle Inv. Mgmt. LLC v. Moonmouth Co. SA, 779
F.3d 214, 219 (3d Cir. 2015); Magi XXI, Inc. v. Stato della Citta del Vaticano,
714 F.3d 714, 723 (2d Cir. 2013); Marano Enters. of Kansas v. Z-Teca Rest.,
L.P., 254 F.3d 753, 757 (8th Cir. 2001); Manetti-Farrow, Inc. v. Gucci Am., Inc.,
858 F.2d 509, 514 n.5 (9th Cir. 1988).
16                                                   No. 20-3017

related” is a vague standard, we also have noted that “it can
be decomposed into two reasonably precise principles … ‘af-
filiation’ and ‘mutuality[.]’” Adams v. Raintree Vacation Exch.,
LLC, 702 F.3d 436, 439 (7th Cir. 2012). “Affiliation” applies
when a forum selection clause is enforced “by or against a
company that is under common ownership (for example as a
parent or subsidiary) with ... a party to a contract containing
the clause.” Id. at 439–40. In Adams, we explained the risk of
not recognizing affiliates in certain circumstances: a signatory
of a contract containing a forum selection clause could “shift
the business to which the contract pertained to a corporate af-
filiate—perhaps one created for the very purpose of provid-
ing a new home for the business—thereby nullifying the
clause.” Id. at 441. Although a forum selection clause is not at
issue here, the concept of a “closely related” affiliate from this
line of cases assists us in appreciating the implications of the
relationship between RIC and Romspen for the situation be-
fore us. As Romspen admits, RIC is a special purpose entity
that it created specifically for the purpose of holding prop-
erty.
    This case is not moot. Romspen has not shown that the en-
tity it created to hold title to the property is anything other
than a nominee under its control. This arrangement does not
divest the court of its equitable authority over the property.
We therefore have appellate jurisdiction.
                               B.
                                1.
   BGC contends that the district court erred in concluding
that Romspen made commercially reasonable efforts to re-
move or release any liens or encumbrances that it might have
No. 20-3017                                                    17

on a parcel of land that BGC needed to refinance to meet its
indebtedness. In essence, BGC submits that the district court
misinterpreted Section 4(g) of the Forbearance Agreement,
which states:
        (g) Liens Upon the 1907-29 Property. Upon the
        request of Loan Parties, Lender shall use all
        commercially reasonable efforts to promptly re-
        move or release any liens or encumbrances it
        may have against the real property located at
        1907-29 South Arlington Heights Road, Arling-
        ton Heights, Illinois … and irrespective of such
        request shall do so sufficiently before the Clos-
        ing Date so that the Loan Parties can use such
        property as collateral to obtain funds to support
        the transactions contemplated by this Agree-
                   22
        ment.
BGC first focuses on the district court’s interpretation of the
phrase “commercially reasonable efforts” found in the first
clause of Section 4(g). BGC submits that Romspen did not
make “commercially reasonable efforts” to remove the lien on
the 1907 Property as required by the Forbearance Agreement.
“A court will not interpret a contract in a manner that would
nullify or render provisions meaningless, or in a way that is
contrary to the plain and obvious meaning of the language
used.” Thompson v. Gordon, 948 N.E.2d 39, 47 (Ill. 2011). The
district court did not err in interpreting the contract language
of the Forbearance Agreement. Roboserve, Inc. v. Kato Kagaku
Co., 78 F.3d 266, 278 (7th Cir. 1996) (“The question of what is
‘reasonable’ under a contract is an issue of fact for the trier of

22 R.116-1 at 9.
18                                                           No. 20-3017

fact[.]”); see also Int’l Prod. Specialists, Inc. v. Schwing Am., Inc.,
580 F.3d 587, 594–95 (7th Cir. 2009) (determining that the ma-
terial breach of a contract is reviewed for clear error). When
considering Section 4(g) of the Forbearance Agreement, the
district court properly considered the circumstances sur-
rounding the parties’ actions and interpreted the Agreement
in a manner that was in alignment with its plain meaning.
   The record demonstrates that after BGC contacted
Romspen about the removal of the lien on the 1907 Property,
Romspen indicated that it was willing to remove the lien so
long as BGC provided some form of proof that it was working
on financing for their paydown on the Arlington Property.
Romspen specifically asked BGC: “Are you planning on com-
pleting a refinancing in the near term with respect to that
property, and how much of that money will be coming from
              23
Romspen?” As the district court recognized, BGC offered no
evidence that it responded to Romspen’s email or offered suf-
ficient proof that it was working on the necessary refinanc-
     24
ing. Romspen requested evidence that its interest in BGC’s
debt was secure absent the lien. To the district court, these
facts showed that Romspen’s actions were commercially rea-
sonable. As the original mortgage holder for the Arlington
Property, upon which BGC had defaulted, it was reasonable
for Romspen to request assurances of refinancing before re-
moving the lien. These findings are not clearly erroneous. See

23 R.123-6.

24 See R.149 at 2–3. We recognize that BGC sent several term sheets to
Romspen as proof of its efforts, but the sheets specifically state that they
are not commitments to lend. BGC also offered its own unsupported per-
sonal assurances that it would obtain financing for the Paydown.
No. 20-3017                                                     19

Metavante Corp. v. Emigrant Sav. Bank, 619 F.3d 748, 765 (7th
Cir. 2010) (determining that the district court’s consideration
of the parties’ actions, commitments, and diligent efforts sup-
ported its conclusion that the plaintiff performed in a com-
mercially reasonable manner).
    Notably, it is not clear that BGC had the capability to re-
finance the loan on the Arlington Property. BGC stated in its
brief, “While it cannot be said based on the record that the
Paydown absolutely would have been made had Plaintiff re-
leased the 1907-29 Lien, it can be said that the failure to release
the lien prevented [BGC] from having the chance to make the
             25
Paydown.” This statement implies that even if Romspen had
removed the lien, BGC would not automatically have made
the Paydown payment. Thus, Romspen was on solid ground
in requesting some form of concrete proof from BGC before
agreeing to remove the lien on the 1907 Property.
    Under Illinois law, our “primary objective in construing a
contract is to give effect to the intent of the parties.” Gallagher
v. Lenart, 874 N.E.2d 43, 58 (Ill. 2007). Our starting point is, of
course, the agreement’s language. We should endeavor to
give that language “its plain and ordinary meaning.” Id. We
also have emphasized that “context, in the broadest sense, is
the key to understanding language” used in an agreement.
All. to End Repression v. City of Chi., 742 F.2d 1007, 1013 (7th
Cir. 1984). Here, the plain language of Section 4(g) required
Romspen to act in a commercially reasonable manner regard-
ing the lien on the 1907 Property. Romspen’s actions demon-
strated its willingness to work with BGC to remove the lien as
long as its own financial interest was protected. BGC did not

25 S. Bobby Appellant Br. at 26.
20                                                 No. 20-3017

give the assurance that Romspen necessarily and reasonably
required. It was BGC’s inability to give the requisite assurance
that led to the failure of the Forbearance Agreement.
    BGC also asserts that regardless of the phrase “commer-
cially reasonable efforts,” the second clause of Section 4(g)
mandated the removal of the lien. The second clause states the
following: “and irrespective of such request shall do so suffi-
ciently before the Closing Date so that the Loan Parties can
use such property as collateral to obtain funds to support the
                                                   26
transactions contemplated by this Agreement.” In BGC’s
view, Section 4(g) imposes two distinct obligations on
Romspen: 1) to remove the lien upon BGC’s request using
commercially reasonable efforts (first clause); and 2) to re-
move the lien, whether or not requested by BGC, sufficiently
before the Closing Date as determined by the Forbearance
Agreement (second clause).
    The district court correctly determined that this second
clause cannot be read reasonably to impose on Romspen an
unqualified obligation to remove the lien. Although this
clause includes the word “shall,” it would make little sense to
read it as imposing an independent obligation on Romspen to
release the lien outside of the bounds of “commercially rea-
sonable efforts.” The phrase “irrespective of such request”
clearly refers to BGC’s request to Romspen to remove the lien.
The “shall do so” phrase refers back to the first “shall” state-
ment in the clause: “shall use all commercially reasonable ef-
forts to promptly remove or release any liens … .” Any other
reading would render superfluous the “commercially reason-
able efforts” requirement. See Platinum Supplemental Ins., Inc.

26 R.116-1 at 9.
No. 20-3017                                                                 21

v. Guar. Tr. Life Ins. Co., 989 F.3d 556, 565 (7th Cir. 2021) (We
do “not interpret a contract in a manner that would nullify or
render provisions meaningless, or in a way that is contrary to
the plain and obvious meaning of the language used.” (quot-
ing Thompson v. Gordon, 948 N.E.2d 39, 47 (Ill. 2011))).
   Under the plain wording of Section 4(g), Romspen was re-
quired to make “commercially reasonable efforts” to remove
the lien either by request or by the Closing Date. The district
                                                                       27
court properly found that it fulfilled this requirement. The
district court was under no legal misapprehension and com-
mitted no misstep in its consideration of the Forbearance
Agreement or of Romspen’s obligations under it. Therefore,
the district court did not err by denying BGC’s motion for
leave to file a counterclaim against Romspen.
                                      2.
   BGC also contends that the district court erred in confirm-
ing the judicial sale of the Arlington Property. The IMFL

27 BGC also contends that the “commercially reasonable efforts” clause
must be considered with the covenant of good faith and fair dealing that
is inherent in commercial contracts under Illinois law. See Martindell v.
Lake Shore Nat’l Bank, 154 N.E.2d 683, 690 (Ill. 1958) (stating that every con-
tract implies good faith and fair dealing between the parties to it). BGC
asserts that Romspen knew its imposition of the lien on the 1907 Property
would be an impediment to the cash-out financing it needed to make the
Paydown payment. BGC takes the view that because Romspen violated
the covenant of good faith and fair dealing in refusing to remove the lien,
it breached the Forbearance Agreement. This argument is waived. BGC
did not present it to the district court. “Failing to bring an argument to the
district court means that you waive that argument on appeal.” Wheeler v.
Hronopoulos, 891 F.3d 1072, 1073 (7th Cir. 2018); Fednav Int’l Ltd. v. Cont’l
Ins. Co., 624 F.3d 834, 841 (7th Cir. 2010).
22                                                   No. 20-3017

provides several grounds that justify a court’s declining to
confirm a judicial sale of real property: “(i) a notice required
in accordance with subsection (c) of Section 15-1507 was not
given, (ii) the terms of the sale were unconscionable, (iii) the
sale was conducted fraudulently, or (iv) justice was otherwise
not done ... .” 735 ILCS 5/15-1508(b). BGC maintains that the
district court should not have confirmed the sale based on the
fourth ground: that justice was not done. It claims that
Romspen failed to fulfill its obligations under the Forbearance
Agreement. BGC also submits that the district court should
have held an evidentiary hearing on the matter before con-
firming the sale of the property.
    First, BGC relies on Deutsche Bank National Trust Company
v. Cortez, No. 1-19-2234, 2020 WL 5423100, at *5 (Ill. App. Ct.
Sept. 10, 2020), to support its contention that the district court
should have held an evidentiary hearing to determine
whether Romspen contributed to the failure of the Forbear-
ance Agreement. In Cortez, the Illinois Appellate Court held
that an evidentiary hearing was necessary to determine
whether the parties had entered into a loan modification
agreement and whether the plaintiff had contributed to the
failure of the agreement, thereby impairing the borrower’s
ability to complete a financial workout. Id. BGC attempts to
draw parallels from the factual situation in Cortez to the one
before us now.
    In Cortez, the court determined that because there was a
question as to whether the parties had entered into a loan
modification agreement, an evidentiary hearing on that issue
was necessary. Id. Here, by contrast, there is no question that
the parties entered into the Forbearance Agreement. The par-
ties agree the Forbearance Agreement applies but disagree as
No. 20-3017                                                              23

to which party breached it. The district court adequately re-
viewed the Agreement, the parties’ actions, and any relevant
evidence before concluding that Romspen did not breach it.
The district court explained that there was no evidence that
BGC could have presented in an evidentiary hearing that
                                  28
would change the outcome. Thus, the district court did not
err in declining to hold an evidentiary hearing.
    Second, BGC also submits that the district court erred by
confirming the judicial sale of the Arlington Property because
“justice was otherwise not done” under section 1508(b)(iv) of
the IMFL. Under Illinois law, a borrower seeking relief under
the IMFL must demonstrate “either the lender, through fraud
or misrepresentation, prevented the borrower from raising
his meritorious defenses to the complaint at an earlier time in
the proceedings, or the borrower has equitable defenses that
reveal he was otherwise prevented from protecting his prop-
erty interests.” Wells Fargo Bank, N.A. v. McCluskey, 999 N.E.2d
321, 329 (Ill. 2013).
   BGC relies on two Illinois appellate cases where the courts
invoked section 1508(b)(iv) because the lender’s conduct pre-
vented the borrowers from protecting their interest in the
property. In Fleet Mortgage Corporation v. Deale, 678 N.E.2d 35,
38–39 (Ill. App. Ct. 1997), the Illinois Appellate Court upheld
the vacatur of a judicial sale where a lender proceeded with a

28 R.149 at 5. The district court stated, “And while it is true that in some
circumstances, a hearing is required to determine whether confirmation is
appropriate, I am not persuaded that it would be helpful here, since the
factual disputes [BGC] identify, even if resolved in their favor, would not
establish [Romspen’s] breach of the forbearance agreement—the corner-
stone of [BGC’s] objection to confirmation.”
24                                                             No. 20-3017

foreclosure sale despite the borrowers’ having exercised their
right of redemption. They also rely on Commercial Credit
Loans, Inc. v. Espinoza, 689 N.E.2d 282, 286 (Ill. App. Ct. 1997).
There, the Illinois Appellate Court similarly affirmed the de-
nial of a sale under section 1508(b)(iv) where the lender im-
peded the borrower’s right of redemption by refusing to re-
spond to the borrower’s requests concerning the redemption
process.
    BGC believes this case is similar to these cases. It argues
that Romspen’s conduct served as a serious impediment to its
ability to satisfy its obligations under the Forbearance Agree-
ment. We cannot accept this argument. Both Illinois cases in-
volved the borrower’s right of redemption and borrowers
who were working actively to make payments on the de-
                29
faulted loan. BGC’s right of redemption had long passed,
and it was not actively working with Romspen to provide
proof of its ability to make payments on the defaulted loan.
    Here, the evidence establishes that the parties negotiated
the Forbearance Agreement regarding the Arlington Property
loan, but ultimately its terms were not met. BGC failed to
make the required Paydown payment. BGC contends it was
Romspen’s conduct that prevented it from protecting its in-
terest in the Arlington Property. The district court properly
found that Romspen’s conduct did not unjustly prevent BGC
from protecting its interest in the Arlington Property. The

29 Under Illinois law, the mortgagor, or other co-owner of the mortgaged
real estate, may redeem from the foreclosure during the redemption pe-
riod. See React Fin. v. Long, 852 N.E.2d 277, 279–80 (Ill. App. Ct. 2006) (cit-
ing 735 ILCS 15-1603(a)). Here, the Order Confirming the Sale of the prop-
erty noted that the period of redemption had expired. R.151 at 2.
No. 20-3017                                                  25

district court was right to confirm the judicial sale of the Ar-
lington Property. This case does not present one of the “rare
cases” where the “justice clause” under Illinois law should be
used as a safety valve. See McCluskey, 999 N.E.2d at 329. For
these reasons, the district court’s refusal to deny confirmation
under section 1508(b), does not constitute reversible error.
                         CONCLUSION
   The judgment of the district court is affirmed.
                                                     AFFIRMED