Court Opinion

ID: 2832005
Source: CourtListenerOpinion
Date Created: 2015-08-28 18:01:01.497012+00
Date Added: 2024-06-11T12:21:42.084337
License: Public Domain

In the

     United States Court of Appeals
                 For the Seventh Circuit
No. 14-1491

UNITED CENTRAL BANK, a Texas
banking association, as successor of
Mutual Bank,
                                                  Plaintiff-Appellant,

                                  v.

KMWC 845, LLC, a Wisconsin
limited liability company, et al.,
                                               Defendants-Appellees.

         Appeal from the United States District Court for the
                   Eastern District of Wisconsin.
          No. 2:11-cv-00693-LA — Lynn Adelman, Judge.

   ARGUED JANUARY 21, 2015 — DECIDED AUGUST 28, 2015

   Before BAUER, FLAUM, and WILLIAMS, Circuit Judges.
   BAUER, Circuit Judge. Plaintiff-appellant, United Central
Bank (“UCB”), commenced this diversity action asserting three
counts of mortgage foreclosure, one count for each of the three
mortgages it sought to foreclose on. UCB named a number of
entities as defendants in its complaint, but only the following
2                                                     No. 14-1491

defendants, appellees on appeal, actively defended suit:
KMWC 845, LLC; CS MWC, LLC; BV Evergreen, LLC; BV
Wells, LLC; and 523 West Wall Street, LLC (collectively,
“appellees”). The parties filed competing motions for summary
judgment. The district court granted UCB’s motion for sum-
mary judgment and denied appellees’ motion with respect to
Counts II and III. As for Count I, the court granted appellees’
motion for summary judgment and denied UCB’s motion. UCB
then filed a motion for reconsideration on Count I, which the
district court denied.
    UCB appeals the district court’s grant of summary judg-
ment for the appellees on Count I. It also appeals the district
court’s denial of its motion for reconsideration on Count I.
Since the appellees have not filed a cross-appeal, only Count I
is at issue in this appeal. For the reasons that follow, we affirm.
                      I. BACKGROUND
    The facts are not in dispute. In 2005, Mutual Bank of
Harvey, located in Harvey, Illinois, made loans to the appel-
lees. These loans were evidenced by promissory notes. As
security for the loans, the appellees executed and delivered
three different mortgages to Mutual Bank, which we refer to as
Mortgages I, II, and III. Mortgage I applies to four properties,
which are located in Appleton, Menasha, and Milwaukee,
Wisconsin. Mortgage II applies to a property located in Grand
Chute, Wisconsin. And Mortgage III applies to seven proper-
ties located in Milwaukee. In 2008, the appellees stopped
making payments on the promissory notes and the notes went
into default, where they remain today.
No. 14-1491                                                     3

    On July 31, 2009, regulators closed Mutual Bank, and the
Federal Insurance Deposit Corporation (“FDIC”) was ap-
pointed receiver. The FDIC, as receiver for Mutual Bank,
entered into a Purchase and Assumption Agreement with UCB
on that same day. By virtue of this agreement, UCB became the
owner and holder of the notes and mortgages on the Wisconsin
properties.
    On July 20, 2011, UCB commenced this action, asserting
three counts of mortgage foreclosure. UCB moved for sum-
mary judgment on each of these three counts. The appellees
filed a competing motion for summary judgment, contending
that UCB was barred from foreclosing on the mortgages
because it was barred from enforcing the promissory notes that
the mortgages secured. More specifically, the appellees argued
that pursuant to the Illinois “single refiling” rule, see 735 ILCS
5/13-217, UCB was barred from enforcing the promissory notes
underlying the mortgages since UCB had twice formerly filed
an action against the appellees to recover on the notes and
voluntarily dismissed each of these prior actions. For this
reason—since UCB cannot maintain an action to enforce the
underlying notes—the appellees contended that Illinois law
barred UCB from foreclosing on the mortgages at issue.
     The district court granted the appellees’ motion for sum-
mary judgment and denied UCB’s motion with respect to
Count I. The court determined that the mortgage underlying
Count I, Mortgage I, was governed by Illinois law and that
UCB was precluded from foreclosing on Mortgage I because
Illinois’ single refiling rule barred UCB from enforcing the
promissory notes that Mortgage I secured. The court granted
UCB’s motion for summary judgment and denied the appel-
4                                                  No. 14-1491

lees’ motion with respect to Counts II and III. The court found
that Wisconsin law applied to Mortgages II and III and
determined that, unlike Illinois law, Wisconsin law permitted
UCB to foreclose on the mortgages.
   UCB then filed a motion for reconsideration, arguing that
the district court erred in applying Illinois law to Count I and
Mortgage I. The district court denied UCB’s motion, holding
that UCB waived the argument that Wisconsin law applied to
Mortgage I by failing to raise it prior to the court’s summary
judgment decision and order. This appeal followed.
                      II. DISCUSSION
   On appeal, UCB challenges the district court’s grant of
summary judgment in favor of appellees on Count I. It also
challenges the district court’s decision denying its motion for
reconsideration on Count I. We begin by discussing the latter.
    A. UCB’s Motion for Reconsideration
    After the district court issued its summary judgment order,
UCB filed a motion for reconsideration challenging the court’s
grant of summary judgment to appellees on Count I. UCB
claimed that Mortgage I (the mortgage underlying Count I)
was governed by Wisconsin law, not Illinois law, and thus
summary judgment should have been entered in its favor on
Count I, as it was on Counts II and III. In support of its
argument, UCB pointed out to the district court that, although
an “amendment” to Mortgage I contains a choice-of-law
provision selecting Illinois law, the original mortgage contains
a choice-of-law provision selecting Wisconsin law. UCB
contended that the court should have applied the original
No. 14-1491                                                         5

mortgage’s choice-of-law provision, not the mortgage amend-
ment’s choice-of-law provision. The district court denied
UCB’s motion, holding that UCB waived the choice-of-law
argument. In so holding, the court noted that the appellees, in
moving for summary judgment, argued that Illinois law
applied to Mortgage I and that “UCB did not dispute that
Illinois law applied to Mortgage I” at any stage in the summary
judgment proceedings.
    We review a district court’s ruling on a motion for reconsid-
eration only for abuse of discretion. Caisse Nationale de Credit
Agricole v. CBI Indus., Inc., 90 F.3d 1264, 1269 (7th Cir. 1996). We
will not upset the district court’s ruling absent a showing that
“no reasonable person could agree with the decision of the
district court.” Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939, 953
(7th Cir. 2013) (internal quotations and citation omitted). As
explained below, we find no abuse of discretion in the district
court’s disposition of UCB’s motion for reconsideration.
     On appeal, UCB contends that no waiver occurred because
it cited to Wisconsin law in both its second amended complaint
and motion for summary judgment. In its second amended
complaint, UCB cites to two Wisconsin statutes: Wis. Stat. Ann.
§§ 846.103 and 846.162 (West 2015). These statutes pertain to
procedural aspects concomitant to foreclosure proceedings on
Wisconsin properties; they do not speak to what state law
governs Mortgage I. In its summary judgment motion, UCB
cited to a single Wisconsin case for a general proposition of
law. At no point, however, did UCB argue or assert that
Mortgage I was governed by Wisconsin law. In fact, UCB’s
summary judgment motion is devoid of any choice-of-law
discussion; UCB never claimed that it was the original mort-
6                                                     No. 14-1491

gage’s choice-of-law provision, not the mortgage amendment’s
choice-of-law provision, which determined the law applicable
to its foreclosure claim on Mortgage I. The sole statement that
UCB appears to have made regarding choice-of-law came in its
response to the appellees’ motion for summary judgment. In its
response, UCB explicitly acknowledged that “[t]wo of the three
mortgages”—Mortgages II and III—“contain provisions that
provide Wisconsin law shall govern,” thus implying that the
third mortgage—Mortgage I—selected Illinois law. Further-
more, UCB did not cite a single Wisconsin case in its response
to the appellees’s motion for summary judgment; instead, it
argued Illinois law throughout. In response to the appellees’
contention that Illinois law applied to Mortgage I, UCB did not
direct the district court’s attention to the original mortgage
choice-of-law provision, nor did it argue that the original
choice-of-law provision should be applied instead of the
mortgage amendment’s choice of law provision. Plainly stated,
UCB did not raise the arguments presented in its motion for
reconsideration prior to the district court’s summary judgment
decision.
    Accordingly, the district court did not abuse its discretion
in determining that UCB “acquiesced in the application of
Illinois law to its claim to foreclose Mortgage I” and, by doing
so, waived the argument that Wisconsin law applies. See Bloch
v. Frischholz, 587 F.3d 771, 784 n.9 (7th Cir. 2009) (“[D]evelop-
ing an argument for the first time in a motion to reconsider is
too late.”); Brooks v. City of Chicago, 564 F.3d 830, 833 (7th Cir.
2009) (“[A]ny arguments … raised for the first time in [a]
motion to reconsider are waived.” (citation omitted)); Lott v.
Levitt, 556 F.3d 564, 568 (7th Cir. 2009) (explaining that a
No. 14-1491                                                          7

litigant “is not entitled to get a free peek at how his dispute
will shake out under Illinois law and, when things don’t go his
way, ask for a mulligan under the laws of a different jurisdic-
tion”); see also Int’l Administrators, Inc. v. Life Ins. Co. of N. Am.,
753 F.2d 1373, 1376 (7th Cir. 1985). Thus, finding no error in the
district court’s denial of UCB’s motion for reconsideration, we
turn our attention to the district court’s summary judgment
decision.
   B. The District Court’s Summary Judgment Decision
    The district court determined that UCB could not foreclose
on Mortgage I because the Illinois single refiling rule barred it
from enforcing the promissory note underlying the mortgage.
The court accordingly entered summary judgment in favor
of the appellees on Count I. UCB appeals this decision. We
review a district court’s grant of summary judgment de novo.
Summary judgment is appropriate when there is “no genuine
issue as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). Where,
as here, the district court was faced with cross-motions for
summary judgment, we must construe all facts and inferences
in favor of the party against whom the motion under consider-
ation is made—in this case, UCB. See Orr v. Assurant Emp.
Benefits, 786 F.3d 596, 600 (7th Cir. 2015).
   The Illinois single refiling rule provides that a plaintiff who
dismisses a lawsuit “may commence a new action within one
year or within the remaining period of limitation, whichever is
8                                                          No. 14-1491

greater.” See 735 ILCS 5/13-217.1 Illinois courts interpret this
language to mean that a plaintiff who voluntarily dismisses a
lawsuit may commence only one new action within the
statutorily imposed time limit. See Carr v. Tillery, 591 F.3d 909,
914 (7th Cir. 2010). Once the plaintiff commences this one new
action, any further action is barred. See, e.g., Timberlake v. Illini
Hosp., 676 N.E.2d 636, 635–36 (Ill. 1997). In the present case, the
district court found that UCB had formerly filed and volun-
tarily dismissed two actions in Illinois against the appellees for
breach of the promissory note that Mortgage I secured. The
court thus determined that, pursuant to the Illinois single
refiling rule, UCB was statutorily barred from enforcing the
note underlying Mortgage I.
    UCB does not dispute that the Illinois single refiling rule
precludes it from enforcing the note underlying Mortgage I.
Rather, UCB argues that the Illinois single refiling rule does not
bar it from foreclosing on Mortgage I because a mortgage
foreclosure action is not the same cause of action as an action
on the underlying note. This argument, although correct
inasmuch as Illinois law considers a mortgage foreclosure
action to be a separate cause of action from an action on the
underlying note, misses the point. It does not matter that
UCB’s foreclosure action itself does not constitute an imper-
missible second refiling; what matters is, as the district court
noted, that long-standing Illinois law precludes a plaintiff from

1
   Section 13-217 appears in the statute books as amended. However,
because the Illinois Supreme Court held that the act that amended § 13-217
was unconstitutional, the unamended, pre-1995 version of § 13-217 remains
in effect. See Eskridge v. Cook County, 577 F.3d 806, 808 (7th Cir. 2009).
No. 14-1491                                                       9

foreclosing on a mortgage when an action on the underlying
note is barred by the statute of limitations or another proce-
dural rule. See, e.g., Hibernian Banking Ass’n v. Commercial Nat.
Bank, 41 N.E. 919, 922 (Ill. 1895) (“[I]t has been repeatedly
decided by this court that the mortgage is a mere incident of
the debt, and is barred when the debt it barred[.]”); see also
Dale Joseph Gilsinger, Annotation, Survival of Creditor’s Rights
Created by Mortgage or Deed of Trust as Affected by Running of
Limitation Period for Action on Underlying Note, 36 A.L.R. 6th 387
(2008) (collecting cases showing that the states are split on the
question of whether a creditor can foreclose a mortgage when
an action on the underlying note is barred). On the basis of this
long-standing Illinois precedent, the district court determined
that UCB could not foreclose on Mortgage I because it was
barred by Illinois statute (the single refiling rule) from filing an
action to enforce the note underlying Mortgage I. We find no
error in this decision.
                      III. CONCLUSION
   For the aforementioned reasons, the district court’s grant of
summary judgment to the appellees on Count I and its denial
of UCB’s motion for reconsideration are AFFIRMED.