JOHN ROBERT BLAKEY, District Judge.
Cross-defendants JKM Mundelein LLC, WBK Financial Limited Partnership and Joel K. Mann (collectively, "Cross-Defendants") respectfully move this Court to enter a judgment on the pleadings in their favor pursuant to Fed. R. Civ. P 12(c) with respect to Chicago Title Insurance Company's Counter-Claim for Declaratory Relief and to Foreclose Mortgage.
Plaintiff U.S. Bank and cross-plaintiff Chicago Title claim mortgage liens against the same real property. In its Third Amended Complaint that it filed in state court, Chicago Title sought to foreclose its mortgage and made several tort and breach of contract claims against Cross-Defendants. After considerable litigation, Chicago Title and Cross-Defendants agreed to a monetary judgment against Cross-Defendants on all of Chicago Title's claims but for its mortgage foreclosure and equitable subordination claims. On the eve of trial, Chicago Title voluntarily dismissed its remaining claims. It then refiled, in its Counter-Claim in this case, the exact same mortgage foreclosure and equitable subordination claims it made and then dismissed in state court.
The sole issue presented by this Rule 12(c) Motion is whether the doctrine of claim preclusion, also known as res judicata, bars Chicago Title's Counter-Claim. For the reasons that follow, this Court should grant Cross-Defendants' Motion.
1. In 2007, Chicago Title filed an action (Case No. 07 CH 1715) in the Circuit Court for the Nineteenth Judicial Circuit, Lake County, Illinois against Cross-Defendants, U.S. Bank's predecessor in interest (Mortgage Electronic Registration Systems ("MERS")) and others.
2. In its 2010 Third Amended Complaint in that case (a copy of which, less exhibits, is attached as Exhibit A), Chicago Title: (a) sought to foreclose a mortgage it acquired from Wells Fargo Bank; (b) sought equitable subordination to and foreclosure of a mortgage that predated Chicago Title's mortgage for the purpose of obtaining priority over U.S. Bank's mortgage lien; and (c) made several claims against Defendants seeking monetary relief.
3. After two and a half more years of litigation, Cross-Defendants agreed with Chicago Title to the entry of an Agreed Order (see Exhibit B) that disposed of all of Chicago Title's claims against the Cross-Defendants except for Chicago Title's mortgage foreclosure and equitable subordination claims.
4. Chicago Title then asked for, and obtained, a certification under Illinois Supreme Court Rule 304 that the Agreed Order was immediately appealable even though the state court case was still ongoing at that time. (See Exhibit C.) Nobody appealed so the Agreed Order became final.
5. Next, MERS moved for the summary judgment against Chicago Title with respect to Chicago Title's foreclosure related counts. In response to that motion, the state court held that MERS' mortgage lien was superior to any mortgage or other lien claimed by Chicago Title. (See Exhibit D.)
6. Chicago Title's remaining claims, its mortgage foreclosure action and its equitable subordination claims against Cross-Defendants and others, were set for a bench trial to start on December 15, 2013.
7. On the eve of trial, Chicago Title filed a motion for a voluntary dismissal of the rest of its case pursuant to 735 ILCS 5/2-1009(a). (See Exhibit E.) The state court granted that motion on December 12, 2014. (See Exhibit F.) No one appealed from that order so it became a final order and thus ended Chicago Title's state court case.
8. Three days after Chicago Title dismissed its state court proceeding, U.S. Bank filed its mortgage foreclosure action in this Court. It named Chicago Title, JKM Mundelein LLC, WBK Financial Limited Partnership and others as defendants.
9. Chicago Title answered U.S. Bank's complaint and filed its Counter-Claim (see Exhibit G — the Counter-Claim less exhibits) in which it cross-claimed against Cross-Defendants and others to foreclose the exact same mortgage that it sought to foreclose in its state court case. (Compare Counter-Claim, Count I-II with Third Amended Complaint, Counts I-II.)
10. Paragraphs 1 through 63 of Chicago Title's Counter-Claim are similar to paragraphs 2 through 64 of its Third Amended Complaint. (Id.) In fact, a large number of these paragraphs are identical or virtually identical. (Id.) The only substantive difference between Chicago Title's Counter-Claim here and its Third Amended Complaint is that Chicago Title sued MERS, US Bank's predecessor in interest, in state court while it sued U.S. Bank in this case. (Id.)
11. Cross-Defendants answered Chicago Title's Counter-Claim and raised three affirmative defenses, including the defense that Chicago Title's mortgage foreclosure action is precluded by its state court litigation. In addition, Cross-Defendants file this Rule 12(c) motion for a judgment on the pleadings with respect to Cross-Defendants' claim preclusion defense.
12. The sole issue presented by this motion for a judgment on the pleadings is whether claim preclusion — also known as res judicata — bars Chicago Title's Counter-Claim.
13. Claim preclusion (res judicata) is an affirmative defense. See Fed. R. Civ. P. 8(c)(1). Cross-Defendants therefore answered Chicago Title's Counter-Claim and raised claim preclusion as an affirmative defense. (See Cross-Defendants' Answer, First Affirmative Defense.)
14. A Fed. R. Civ. P. 12(c) motion for judgment on the pleadings, like this motion, is the proper vehicle for raising claim preclusion. See Carr v. Tillery, 591 F.3d 909, 912-913 (7
15. The time to make a Rule 12(c) motion is "after the pleadings are closed — but early enough not to delay to trial." The pleadings with respect to Chicago Title's Counter-Claim have just closed. Hence, Cross-Defendants' motion is timely.
16. Trial courts review a Rule 12(c) motion "by employing the same standard that [is applied] when reviewing a motion to dismiss under Rule 12(b)(6)." Pisciotta v. Old Nat'l Bancorp, 499 F.3d 629, 633 (7
17. The orders at issue here (the 2013 Agreed Order disposing of all of Chicago Title's monetary claims and the 2014 Order dismissing the balance of the case) were entered by an Illinois state court. (See Exhibits B and F.) So Illinois law determines the preclusive effect of those orders. Durgins v. City of E. St. Louis, 272 F.3d 841, 844 (7
18. Under Illinois law, claim preclusion prohibits litigants from relitigating claims that were or could have been litigated in an earlier proceeding. Hayes v. City of Chicago, 670 F.3d 810, 813 (7
19. An aspect of the Illinois law of preclusion is the rule against claim splitting, which prohibits plaintiffs generally from suing for a part of a claim in one action and then suing for the remainder in another action. Rein v. David A. Noyes & Co., 172 Ill.2d 325, 340, 665 N.E.2d 1199, 1207 (1996). "This rule is founded on the premise that litigation should have an end and that no person should be unnecessarily harassed with a multiplicity of lawsuits." Id.
20. Under this rule, a party cannot obtain a final judgment on part of its case, voluntarily dismiss the rest of its case and then later refile the same claims it voluntarily dismissed. Rein, 172 Ill. 2d at 340, 665 N.E.2d at 1207; Hudson v. City of Chicago, 228 Ill.2d 462, 473, 889 N.E.2d 210, 217 (2008) ("Rein . . . stands for the proposition that a plaintiff who splits his claims by voluntarily dismissing and refiling part of an action after a final judgment has been entered on another part of the case subjects himself to a res judicata defense." (Emphasis original))
21. As Hudson states, "[I]f an attorney is considering taking a voluntary dismissal after a final judgment has been entered on part of the case, he can seek the defendant's acquiescence in the refiling. If the defendant is unwilling to do so, then the attorney will know that he proceeds at his peril." Hudson, 228 Ill. 2d at 479, 889 N.E.2d at 220.
22. Both Hudson and Rein reject the notion that Illinois law (735 ILCS 5/2-1009 and 5/13-217) gives a party an automatic right to refile a voluntarily dismissed claim within one year of the voluntary dismissal regardless of the common law doctrine of res judicata. "We do not believe that these sections should be read to automatically immunize a plaintiff against the bar of res judicata or other legitimate defenses a defendant may assert in response to the refiling of voluntarily dismissed counts." Hudson, 228 at 482, 889 N.E. 2d at 222 (citing Rein, 172 Ill. 2d at 342-43, 665 N.E.2d at 1199.)
23. Rein notes that there are six exceptions to the rule against claim splitting. Rein, 172 Ill. 2d at 341, 665 N.E.2d at 1199. That rule may not apply when: (1) the parties agree in terms or in effect that the plaintiff may split his claim or the defendant so acquiesces; (2) the court in the first action expressly reserved the plaintiff's right to maintain the second action; (3) the plaintiff was unable to obtain relief on his claim because of a restriction on the subject-matter jurisdiction of the court in the first action; (4) the judgment in the first action was plainly inconsistent with the equitable implementation of a statutory scheme; (5) the case involves a continuing or recurrent wrong; or (6) it is clearly and convincingly shown that the policies favoring preclusion of a second action are overcome for an extraordinary reason. Id.
24. Not one of these exceptions applies here. Nobody agreed by word or by deed that Chicago Title could split its claim or acquiesced in any claim splitting.
25. The state court's December 13, 2014 Order did not expressly reserve Chicago Title's right to maintain a second foreclosure action. Instead, that Order said nothing at all about Chicago Title's right to refile. And, at the earliest time they could object to Chicago Title's attempt to split its claim, both plaintiff and Cross-Defendants objected and filed motions in this Court to dismiss the Counter-Claim or to enter a judgment on the pleadings with respect to it.
26. There was no subject-matter jurisdiction impediment to Chicago Title's ability to obtain relief on its entire claim in state court. That explains why no party ever raised any such impediment as a defense to Chicago Title's state court action.
27. The December 13, 2014 Order was not plainly inconsistent with the equitable enforcement of any statutory scheme. Rather, that Order was plainly consistent with the applicable law. See 735 ILCS 5/2-1009(a) and see generally the Illinois Mortgage Foreclosure Act [735 ILCS 5/15-1101-15/15-1706].
28. The 2013 Agreed Order disposed of all of Chicago Title's monetary claims. Therefore, this case does not involve a continuing or recurrent wrong.
29. Finally, Chicago Title cannot clearly and convincingly show that the policies favoring preclusion here are overcome for any extraordinary reason, or any other reason for that matter.
30. Accordingly, Rein and Hudson apply. They bar Chicago Title from refiling in this Court, in any court for that matter, that portion of its state court case that it voluntarily dismissed.
31. This Court, therefore, should grant Cross-Defendants' Rule 12(c) Motion for a judgment on the pleadings in their favor as against Chicago Title.
WHEREFORE, Cross-Defendants JKM Mundelein LLC, WBK Financial Limited Partnership and Joel K. Mann pray that this Court enter an order: (1) granting their Fed. R. Civ. P 12(c) motion for a judgment on the pleadings with respect to Chicago Title's Counter-Claim; (2) granting them a judgment on the pleadings as against Chicago Title; and (3) granting them such other relief as may be appropriate.
Plaintiff Chicago Title Insurance Company ("CTIC"), by its attorneys, hereby complains of defendants, as follows:
1. This case is brought to remedy the fraudulent and inequitable conduct of Joel K. Mann, who, through various machinations and deceptions, is attempting to unjustly enrich himself and his entities by avoiding repayment of a $1.3 million loan made against valuable real estate located in Mundelein, Illinois.
2. Plaintiff CTIC is a corporation organized and existing pursuant to the laws of the State of Nebraska and is duly authorized to transact business in the State of Illinois.
3. At all times material hereto, defendant Joel K. Mann resided at and had a business address of 1240 Cougar Ridge Road, Buellton, California.
4. Defendant WBK Financial Limited Partnership ("WBK") is a California limited partnership established in 1995. On April 16, 2009, Joel K. Mann filed in this case his Certification in which he certified under penalty of perjury pursuant to Section 1-109 of the Illinois Code of Civil Procedure that a true and correct copy of the Limited Partnership Agreement of WBK Limited Partnership ("WBK Agreement") was attached to the Certification as Exhibit A. Pursuant to the WBK Agreement attached to the Certification, the three general partners of WBK were Kathalyn Mann and Joel Mann, both of 1240 Cougar Ridge Road, Buellton, CA, and Henry H. Mann of 37675 Thompson Road, Rancho Mirage, CA. The limited partners were the Mann Revocable Trust, Joel Mann Trustee, As Its Sole and Separate Property, and the Mann Revocable Trust, Kathalyn Mann Trustee, As Her Sole and Separate Property. WBK owns the real property located at 1240 Cougar Ridge Road, Buellton, California, which is also its principal place of business.
5. Joel K. Mann was the only child of Henry Mann. On November 22, 2002, Henry Mann executed papers purporting to assign his general partnership interests in WBK to defendant WBK Family Corporation ("WBK Corp."). WBK Corp. was suspended as a California corporation as of January 2, 2008. As of the time of suspension, Joel K. Mann was the sole officer, director and shareholder of WBK Corp.
6. Defendant JKM Mundelein LLC ("JKM") is a Delaware limited liability company. At all material times, JKM's sole member and manager was Joel K. Mann, and its principal office was at 1240 Cougar Ridge Road, Buellton, California.
7. Defendant Bond Drug Company of Illinois Inc. ("Bond") is an Illinois corporation. Bond is named only for the limited purpose of enforcing the assignment of leases and rents alleged below. No monetary relief is sought against Bond and other than the enforcement of the assignment, no other equitable relief is sought. Bond is believed to be a mere stakeholder regarding the enforcement of the assignment.
8. Defendant Mortgage Electronic Registration Systems, Inc. ("MERS") is a Delaware stock corporation.
9. There may be other persons interested in this case by virtue of ownership of the Property or interests held as "Non-Record Claimants" within the meaning of the Illinois Mortgage Foreclosure Law, 735 ILCS 5/15-1210 and whose identity is unknown to CTIC. All such parties are made defendants herein as "Unknown Owners" and "Non-Record Claimants."
10. On or about August 12, 1999, Henry Mann executed a Durable Power of Attorney For Management of Property and Personal Affairs ("Power of Attorney"), wherein he appointed Joel K. Mann as his attorney in fact with the broad powers to handle his affairs. Those include the powers: (a) to acquire, transfer, dispose, and encumber any and all real property owned any time by Henry Mann; (b) to act for Henry Mann in performing duties and exercising powers held by Henry Mann in any partnership in which he was a partner; (c) to act for Henry Mann in matters and transactions affecting all trusts for which Henry Mann was, may become, or claimed to be entitled to as a beneficiary, including trust matters related to real property; and (d) to sign Henry Mann's name to legal documents.
11. Prior to August 12, 1999, Henry Maim established the Henry Mann 1994 Trust as a revocable trust, the sole trustee of which was Henry Mann. During Henry Mann's lifetime, the Henry Mann 1994 Trust was to pay to Henry Mann all income of the Trust and all principal that he would request. After Henry Mann's death and the payment of certain cash gifts to family members, all of the assets of the Henry Mann 1994 Trust would be distributed to Joel K. Mann. Henry Mann died in October 2004.
12. On August 12, 1999, Henry Mann executed a Second Amendment to the Henry Mann 1994 Trust and a Designation of Co-Trustee of Henry Mann 1994 Trust. Pursuant to those instruments, Mr. Mann appointed Joel K. Mann as a co-trustee of the Henry Mann 1994 Trust. Those instruments also provided that for so long as Joel K. Mann is acting as co-trustee, he would "have the sole and exclusive power to direct the other co-trustee with respect to all matters regarding the investment and reinvestment of the trust property now existing or as may be hereafter acquired outside the State of California;" and that if Henry Mann should die, become incapacitated, or otherwise become unable or unwilling to act as trustee or co-trustee, Joel K. Mann shall act as sole trustee.
13. As of August 12, 1999, Joel K. Mann was the sole beneficiary of a certain Trust "A" established under the Will of Gertrude K. Mann ("Trust A"), deceased, Superior Court of California, County of Riverside, Case No. 1P13293, as subsequently administered in the Superior Court of California, County of Santa Barbara, Case No. 213652. Henry Mann was one of two trustees for Trust A. On or about July 18, 2000, an Order was entered by the Superior Court of California, Court of Santa Barbara, that terminated Trust A and ordered the distribution of all of Trust A's assets to Joel K. Mann.
14. At all times material hereto, there was a certain property generally located at 701 South Midlothian Road in Mundelein, Illinois and legally described on Exhibit A attached hereto ("Property"). The Property was developed as a Walgreens drugstore, and was leased to Bond, as "Lessee," under a certain lease dated September 1, 1998, and amended by a First Amendment to Lease dated August 16, 1999 (as amended, the "Lease").
15. On or about August 31, 1999, Joel K. Mann agreed to purchase the Property by executing a certain Agreement for the Purchase and Sale of Real Estate ("Purchase Agreement"). Under the terms of the Purchase Agreement, as amended, Joel K. Mann "or his nominee(s)" agreed to purchase the Property for a purchase price of $2,680,000. Joel K. Mann's address in the Purchase Agreement was given as 1240 Cougar Ridge Road in Bueliton, California.
16. On or about February 23, 2000, Joel K. Mann closed the purchase of the Property pursuant to the Purchase Agreement. The "taxpayer" identified on the deed conveying the Property into the Land Trust was WBK Financial, LP c/o Joel Mann, 1240 Cougar Ridge Road, Buellton, California, 93427.
17. The deed conveyed the Property to American National Bank and Trust Company of Chicago ("Land Trustee"), as Trustee under Trust Agreement dated January 11, 2000 and known as Trust No. 12561106 ("Land Trust"). The Trust Agreement establishing the Land Trust had three beneficiaries: WBK; the Henry Mann 1994 Trust; and Trust "A." Joel K. Mann signed Henry Mann's name to the Trust Agreement on behalf of each of the beneficiaries. The Trust Agreement provided that inquires, notices and other matters were to be referred and all bills to be sent to WBK, c/o 1240 Cougar Ridge Road, Buellton, California. In July 2000, Joel K. Mann's attorney asserted that Joel K. Mann was a beneficiary of the Land Trust. A copy of the Trust Agreement is attached as Exhibit B.
18. In order to close the Land Trust's purchase of the Property, a loan ("2000 BOA Loan") was obtained from Bank of America, National Association ("BOA"). At the February 2000 closing, the Land Trustee, as mortgagor, and the beneficiaries of the Land Trust executed a certain mortgage ("2000 BOA Mortgage") to BOA, as mortgagee. The 2000 BOA Mortgage was recorded in the Office of the Lake County Recorder of Deeds on February 23, 2000 as document 4494956. A copy of the 2000 BOA Mortgage is attached as Exhibit C.
19. The 2000 BOA Mortgage was executed by the beneficiaries of the Land Trust in addition to the Land Trustee. In the 2000 BOA Mortgage, Joel K. Mann signed Henry Mann's name on behalf of each of the beneficiaries. In the acknowledgements to the 2000 BOA Mortgage, the notary public stated that Joel Mann personally appeared before her as a limited partner of WBK, as the trustee for the 1994. Trust, and the Co-Trustee for Trust A.
20. In connection with the closing, WBK executed a certain personal undertaking. The address of WBK given in the personal undertaking was "c/o Joel Mann, 1240 Cougar Ridge Road, Buellton, California."
21. In March 2001, WBK applied for a loan with Wells Fargo Bank, National Association ("Wells Fargo") for the purpose of refinancing the 2000 BOA Mortgage. Joel K. Mann had actual knowledge of and was involved in obtaining and closing the Wells Fargo loan. Among other things, Joel K. Mann is listed as WBK's contact person on the refinance loan application and environmental insurance application; he requested and received an amendment to the loan application in April 2001 that increased the principal amount and interest rate of the loan; and he directed WBK's counsel Gregory Clark in his collection and delivery of information requested by Wells Fargo in connection with the loan application and the closing.
22. With the assistance of Joel K. Mann, on or about April 24, 2001, WBK closed a $1.3 million loan ("2001 Loan") from Wells Fargo. To evidence the 2001 Loan, WBK executed a certain Promissory Note Secured by Mortgage ("Note") payable to the order of Wells Fargo, as "Lender," in the principal amount of $1,300,000.00. A copy of the Note is attached hereto as Exhibit D.
23. At the closing of the 2001 Loan, the loan proceeds were used to refinance the 2000 BOA Mortgage, with the remaining proceeds paid to the Land Trustee. The 2000 BOA Mortgage was not released at the time of the closing.
24. To secure the 2001 Loan, WBK executed a mortgage of the Property to Wells Fargo, entitled "Mortgage and Absolute Assignment of Rents and Leases and Security Agreement and Fixture Filing" ("2001 Mortgage"). A copy of the 2001 Mortgage is attached hereto as Exhibit E. The 2001 Mortgage was dated April 24, 2001 and was recorded against the Property on May 3, 2001 in the Office of the Lake County Recorder of Deeds as Document No. 4684742.
25. To induce the 2001 Loan, WBK warranted that it had good title to the Property and that the 2001 Mortgage would constitute a valid, first priority mortgage lien on the Property.
26. The Mortgage also assigned to Wells Fargo the Lease and the rights to receive the payment of rents thereunder. To further secure the assignment of rents contained in the 2001 Mortgage and as an express requirement of the Note, WBK executed for the benefit of Wells Fargo a "Restricted Account Agreement" dated as of April 24, 2001. A copy of the Restricted Account Agreement is attached as Exhibit F.
27. To induce the 2001 Loan, WBK warranted that it had the lessor's interest under the Lease and the ability to assign the Lease and its rents to Wells Fargo.
28. Pursuant to the terms of the Restricted Account Agreement, WBK agreed among other things, to cause all "Gross Income" of the Property, including all rents under the Lease and all proceeds from the sale of any portion of the Property, to be deposited into a certain "Restricted Account." The Restricted Account was located at and was in the sole control of Wells Fargo. The Restricted Account Agreement and the 2001 Mortgage granted Wells Fargo a security interest in the Restricted Account. Pursuant to the Restricted Account Agreement, WBK sent a payment direction letter to Bond ("Payment Direction Letter"), directing that all rents under the Lease be deposited in the Restricted Account. The Payment Direction Letter stated that the direction would not be rescinded, withdrawn, amended or otherwise modified in any respect without the prior written consent of Wells Fargo. A copy of the Payment Direction Letter is attached hereto as Exhibit G.
29. In the Note, 2001 Mortgage and Restricted Account Agreement, WBK gave its address as 1240 Cougar Ridge Road, Buellton, California.
30. Subsequent to April 24, 2001, Bond deposited the rent under the Lease into the Restricted Account and monthly payments of interest and principal were paid out of the Restricted Account to the lender on the 2001 Loan.
31. As the 2001 Loan documents indicated it would do, Wells Fargo assigned on or about December 12, 2001, all of its interest in the 2001 Loan, including without limitation, its interests in the Note, 2001 Mortgage and the Restricted Account Agreement, to LaSalle Bank National Association, as trustee for Bear Stearns Commercial Mortgage Securities Inc., Commercial Mortgage Pass-Through Certificates, Series 2001-TOP4 ("Mortgage Pool Trust"). A copy of the Assignment of Mortgage and Absolute Assignment of Rents and Leases and Security Agreement (and Fixture Filing) is attached hereto as Exhibit H. The 2001 Assignment was recorded in the Office of the Lake County Recorder of Deeds on December 26, 2001 as Document No. 4830306.
32. Following the assignment, Joel K. Mann requested that the Mortgage Pool Trust modify the Restricted Account Agreement to provide for a more timely application of the tenant's rent payments to the 2001 Loan and directed his counsel Mr. Clark to obtain such modification on behalf of WBK. Consequently, on or about April 1, 2002, WBK and the Mortgage Pool Trust modified the Restricted Account Agreement pursuant to the amendment attached hereto as Exhibit I.
33. On or about April 23, 2002, Joel K. Mann's wife transmitted to Wells Fargo certain certificates of liability for the Property by correspondence on the letterhead of WBK. The certificates listed the insured as "WBK Attn. Mr. Joel Mann, 1240 Cougar Ridge Road, Buellton, California."
34. In the latter half of 2003, Joel K. Mann decided to seek to refinance the 2001 Loan. In furtherance of this effort to refinance the 2001 Loan, Joel K. Mann contacted representatives of Wells Fargo and inquired about refinancing the 2001 Loan. Joel K. Mann also contacted David Prichard, his personal banker at BOA, and authorized him to contact Wells Fargo about the 2001 Loan.
35. Under the terms of Note, WBK waived any right to prepay the 2001 Loan more than three months prior to maturity, but it held the right to obtain a release of the Property from the 2001 Mortgage through "defeasance," as described in the Note. In 2003, Wells Fargo advised Joel K. Mann and Mr. Prichard that the "lock out" period for defeasance under the Note had not expired. Wells Fargo also advised that defeasance would require the payment of expenses, fees and other amounts.
36. By November 2006, the "lock-out" period for defeasance had ended. Joel K. Mann submitted to Mr. Prichard and BOA an application for a loan to refinance the 2001 Loan. In November and December 2006, Joel K. Mann and his attorney Michael M. Caron communicated with BOA and Mr. Pritchard regarding the 2001 Loan and the necessity of contacting Wells Fargo. Mr. Mann and his counsels supplied to BOA and its counsel copies of the 2001 Loan documentation.
37. In an effort to avoid the expense of defeasance, Joel K. Mann sought to assert that the 2001 Mortgage was invalid because it, was not executed by the Land Trustee. In late 2006, Joel K. Mann contacted representatives of Wells Fargo about the 2001 Loan. Joel K. Mann requested that Wells Fargo agree to accept prepayment of the 2001 Loan and to waive defeasance. To attempt to persuade Wells Fargo to accept his request, Joel K. Mann threatened Wells Fargo with a claim that the 2001 Mortgage was invalid because it was not executed by the Land Trustee.
38. Joel K. Mann, with Mr. Pritchard's knowledge, directed his counsel Mr. Caron to send a certain December 11, 2006 letter to Wells Fargo. In the December 11, 2006 letter, Mr. Caron asserted that Joel K. Mann owned all of the general and limited partnership interests in WBK, and that WBK and Joel K. Mann together owned 100% of the beneficial interests in the Land Trust. Mr. Caron also asserted that the 2001 Mortgage was invalid as a mortgage on the Property and as an assignment of the Lease and the rents thereunder. Nevertheless, Mr. Caron stated that "the owner of the Property intends to pay-off this loan at par on or about January 31, 2007." Although in the lending industry, a payment "at par" generally means full payment of all sums due under the loan, Mr. Mann and Mr. Caron intended the December 11, 2006 letter to exclude the expense of defeasance.
39. At the time of these communications, the 2001 Loan was held by the Mortgage Pool Trust, not Wells Fargo. In response to these communications, Wells Fargo insisted on compliance with the terms of the 2001 Loan documents, including defeasance.
40. The 2001 Loan was not paid off at par on or before January 31, 2007, and no payments of any kind were made on the 2001 Loan after the date of the December 11, 2006 letter. Instead, Joel K. Mann directed Bond to stop making further payments of rent into the Restricted Account, and persuaded Bond to accept that direction in violation of the Payment Direction Letter. Joel K. Mann thereby caused WBK to default on the monthly payments of interest and principal due under the Note on January 1, 2007 and thereafter.
41. On or about December 27, 2006, Mr. Caron formed JKM as a Delaware limited liability company. On or about January 10, 2007, Joel K. Mann caused the Land Trust to transfer title to the Property to JKM. To cause the Land Trustee to transfer the property to JKM, Joel K. Mann executed a letter of direction to the Land Trustee representing that he constituted all of the partners of WBK. JKM did not pay any money or other consideration in exchange for title to the Property.
42. On or about January 26, 2007, JKM borrowed $2.15 million from BOA ("2007 BOA Loan"). The 2007 BOA Loan was secured by a Mortgage, Assignment of Lease and Security Agreement granted to MERS, as nominee for lender, and recorded against the Property ("MERS Mortgage"). MERS holds mortgages such as the MERS Mortgage for the benefit of members of the MERS Commercial System and with respect to such mortgages, acts as the agent and at the direction of the member holding the promissory note secured by the mortgage.
43. Although the purpose of the 2007 BOA Loan was to refinance the 2001 Loan, none of the proceeds from the 2007 BOA Loan were used to repay the 2001 Loan. Instead, substantially all of the proceeds of the 2007 BOA Loan were paid to JKM and Joel K. Maim.
44. BOA retained First American Title Insurance Company ("FATIC") as the title insurer and closing agent for the 2007 BOA Loan. During the preparation of the title insurance policy for BOA, FATIC discovered the 2001 Mortgage among the instruments recorded against the Property. Accordingly, both BOA and FATIC had actual knowledge of the 2001 Mortgage prior to the closing of the 2007 BOA Loan. BOA and FATIC both knew at the closing of the 2007 BOA Loan that the 2007 BOA Loan proceeds were not being used to repay the 2001 Loan.
45. Due to the default in the payment of the installments of interest and principal due on January 1, 2007 and monthly thereafter, the Note was in default on January 5, 2007 and default interest automatically began to accrue at that time at the rate stated in the Note. The Note has been accelerated, and there is now due and owing on the Note principal in the amount of $1,227,892.40, together with accrued and unpaid interest at the default rate, late charges, prepayment fees and protective advances. Under the terms of the Note, 2001 Mortgage and Restricted Account Agreement, the lender under the 2001 Loan is entitled to collect all attorneys' fees and expenses incurred in connection with any collection of the 2001 Loan.
46. Pursuant to the statements made by Joel K. Mann and his counsel regarding the validity of the Mortgage, the Mortgage Pool Trust submitted a claim to CTIC under that certain loan policy of title insurance dated May 3, 2001, Policy No. 1409 000644065 ("Policy"). In the case of a claim, CTIC has the right under the Policy to purchase all of the Mortgage Pool Trust's right, title and interest in the 2001 Loan, including without limitation the Note, the 2001 Mortgage, the Restricted Account Agreement and all claims against WBK and others in connection with the 2001 Loan. CTIC exercised that right and on or about June 27, 2007, purchased all of said right, title and interest.
47. Upon satisfaction of its obligations to its insured under the Policy by purchase of the 2001 Loan, CTIC became subrogated to and became entitled to exercise all rights and remedies that the insured would have against any person or property in respect to the claim had the Policy not issued. CTIC thereby became subrogated to all rights and remedies of Wells Fargo and the Mortgage Pool Trust against defendants and the Property. In addition, pursuant to the June 2007 purchase agreement, CTIC received an assignment of all rights and claims against WBK and all other persons and entities relating to the 2001 Loan and all rights against WBK and other persons and entities relating to the 2001 Loan under any and all documents, instruments and agreements evidencing, securing and relating to the 2001 Loan, including without limitation the Note, the Mortgage, the Restricted Account Agreement, the Payment Direction Letter and all other collateral and ancillary instruments. An assignment of the 2001 Mortgage to CTIC was recorded July 6, 2007 in the Office of the Lake County Recorder of Deeds as Document No. 6208356. A copy of the Assignment to CTIC is attached as Exhibit J.
48. Despite repeated demand, no part of the 2001 Loan has been repaid.
49. CTIC hereby realleges and incorporates Paragraphs 1 through 48 above as though fully set forth herein.
50. At all times material hereto, Joel K. Mann has controlled the Property, the Land Trust beneficiaries and their power of direction over the Land Trustee. Joel K. Mann and the Land Trust beneficiaries knowingly authorized and permitted WBK to obtain the 2001 Loan, secured by the 2001 Mortgage on the Property, and to execute the Note, and Restricted Account Agreement. Accordingly, the 2001 Mortgage was a valid encumbrance on the Property at the time it was made and recorded.
51. Joel K. Mann and the Land Trust beneficiaries ratified and approved the 2001 Loan and the Note, Mortgage and Restricted Account Agreement. Joel K. Mann and the Land Trust beneficiaries were aware of the 2001 Loan from the time of inception and recognized it as a valid loan agreement the Property in their subsequent dealings with Wells Fargo and its successors, and with third parties, including BOA and Bond. Joel K. Mann and the Land Trust beneficiaries also accepted the benefits of the 2001 Loan, including the refinancing of the 2000 BOA Mortgage and the payment of proceeds to the Land Trust. Joel K. Mann and the Land Trust beneficiaries permitted the Lessee to make monthly rent payments into the Restricted Account from April 2001 until December 2006 for the benefit of the lender under the 2001 Loan. Accordingly, the 2001 Mortgage was a valid encumbrance on the Property at the time it was made and recorded.
52. The 2001 Loan, Mortgage, Note, and Restricted Account Agreement constitute express executory agreements in writing demonstrating an intent to mortgage the Property. Accordingly, the 2001 Mortgage was a valid encumbrance on the Property at the time it was made and recorded.
53. Prior to the January 10, 2007 conveyance of the Property, JKM, through its sole member and manager Joel K. Mann, and its counsel had actual knowledge of the 2001 Loan and the 2001 Mortgage and of the fact that the proceeds of the 2007 BOA Loan were not being applied to payment of the 2001 Loan.
54. Prior to the January 26, 2007 closing of the 2007 BOA Loan, BOA and its title insurer and closing agent FATIC had actual notice of the 2001 Loan and the 2001 Mortgage and of the fact that the proceeds of the 2007 BOA Loan were not being applied to payment of the 2001 Loan. All notice to BOA and FATIC as of the closing of the 2007 BOA Loan is imputed to BOA's agent and nominee MERS, and to the members of the MERS Commercial System who may hold the promissory note for the 2007 BOA Loan.
55. Accordingly, the Mortgage is prior and senior to the interests of all defendants. Under the Illinois Mortgage Foreclosure Act, 735 ILCS § 5/15-1207, CTIC is thereby entitled to seek foreclosure of the Property and any and all further relief available to it thereunder.
56. Furthermore, as of the date of its Mortgage, CTIC has a valid and subsisting assignment of leases and rents on the Property, including the Lease and the rents payable thereunder, prior to that of all defendants.
(a) a declaration that the Mortgage is a valid and existing mortgage lien in favor of CTIC against the Property from and after its recordation, and prior and senior to the interests of all defendants;
(b) a declaration of a valid and existing assignment of the leases and rents of the Property prior and senior to the interests of all defendants;
(c) a decree foreclosing the Mortgage against the Property free and clear of the interests of all defendants;
(d) the appointment of a receiver for the Property or the issuance of a preliminary injunction for the purpose of exercising the assignment of leases and rents, collecting the rents of the Property pendente lite and applying such collected rents to the amounts due;
(e) a temporary restraining order and a preliminary injunction enjoining and restraining Joel K. Mann and JKM Mundelein LLC from transferring, conveying, selling, mortgaging or hypothecating the Property, the rents under the Lease, all other rents, issues and profits of the Property and defendants' cash accounts of all kinds until further order of Court; and
(f) such other and further relief as this Court deems just.
57. CTIC hereby realleges and incorporates Paragraphs 1 through 48 above as though fully set forth herein.
58. The WBK loan application to Wells Fargo indicated that the purpose of the 2001 Loan was to refinance the 2000 BOA Loan; and the WBK revised application letter conditioned the making of the 2001 Loan upon the issuance of a first mortgage lien on the Property and an assignment of all rents and leases on the Property. A portion of the proceeds of the 2001 Loan were paid to BOA to refinance the 2000 BOA Loan, and the 2000 BOA Mortgage was subsequently released.
59. By refinancing the 2000 BOA Loan, the 2001 Loan directly benefited the Land Trust and its beneficiaries. Moreover, Joel K. Mann and the Land Trust beneficiaries knew that the purpose of the 2001 Loan was to refinance the 2000 BOA Loan and they knowingly accepted the benefits thereof and otherwise ratified and approved the 2001 Loan.
60. CTIC, as lender under the 2001 Loan, is therefore subrogated to the 2000 BOA Mortgage, which thereby secures the 2001 Loan as a valid and subsisting mortgage lien against the Property from and after the making of the 2001 Loan, prior and senior to the interests of all defendants. Under the Illinois Mortgage Foreclosure Act, 735 ILCS § 5/15-1207, CTIC is thereby entitled to foreclose the 2000 BOA Mortgage against the Property and obtain any and all further relief available to it thereunder.
61. Unless CTIC is subrogated to the 2000 BOA Mortgage, defendants will receive a windfall and be unjustly enriched by the satisfaction of the 2000 BOA Mortgage that had encumbered the Property, thereby violating fundamental principles of justice, equity, fairness, and good conscience.
(a) a declaration that the 2000 BOA Mortgage is a valid and existing mortgage lien in favor of CTIC against the Property from and after its recordation and prior and senior to the interests of all defendants;
(b) a declaration of a valid and existing assignment of the leases and rents of the Property by virtue of the 2000 BOA Mortgage that is prior and senior to the interests of all defendants;
(c) a decree foreclosing the 2000 BOA Mortgage against the Property free and clear of the interests of all defendants;
(d) the appointment of a receiver for the Property or the issuance of a preliminary injunction for the purpose of exercising the assignment of leases and rents, collecting the rents of the Property pendente lite and applying such collected rents to the amounts due;
(e) a temporary restraining order and a preliminary injunction enjoining and restraining Joel K. Mann and JKM Mundelein LLC from transferring, conveying, selling, mortgaging or hypothecating the Property, the rents under the Lease, all other rents, issues and profits of the Property and defendants' cash accounts of all kinds until further order of Court; and
(f) such other and further relief as this Court deems just.
62. CTIC hereby realleges and incorporates Paragraphs 1 through 48 above as though fully set forth herein.
63. As an alternative to Count I, if it is determined that the 2001 Loan is not secured by a first mortgage lien on the Property, WBK has fraudulently induced the making of the 2001 Loan.
64. On March 16, 2001, Wells Fargo received from WBK (i) a "Commercial Mortgage Origination/FrontRunner Commercial Loan Application" that stated that "Title Is/Will Be Vested As: WBK Financial Limited partnership, a CA limited partnership;" and (ii) a Revised Application Letter that stated that the "Security/Property" for the 2001 Loan would be "First mortgage lien on the Property and assignment of rents and leases. Secondary financing secured by the Property or any ownership interest in the borrowing entity not permitted."
65. In addition, the Note, Mortgage and Restricted Account Agreement, which were executed concurrently and form a part of the same transactions expressly and implicitly warrant and represent that WBK held title to the Property and was able and authorized to grant to Wells Fargo a first mortgage lien on the Property and to assign to Wells Fargo the landlord's interest under the Lease.
66. WBK made those representations with the intention of inducing Wells Fargo to make the 2001 Loan, and Wells Fargo justifiably relied on those representations, which did induce the 2001 Loan.
67. WBK now claims that its representations were false and that it did not hold good title to the Property and was not able and authorized to grant to Wells Fargo a first mortgage lien on the Property or to assign to Wells Fargo the Landlord's interest under the lease.
68. WBK thereby made willful misrepresentations to Wells Fargo and committed actual fraud under Section 1572 of the California Civil Code. CTIC, as assignee of the 2001 Loan and subrogee to Wells Fargo and the Mortgage Pool Trust, is entitled to recover from WBK, under Sections 551 and 7460 of the California Financial Code, the full amount of the 2001 Loan, together with exemplary damages not to exceed 50% of the 2001 Loan.
69. CTIC hereby realleges and incorporates Paragraphs 62 through 68 above as though fully set forth herein.
70. As a further alternative to Count I, if it is determined that the 2001 Loan is not secured by a first mortgage lien on the Property, Joel K. Mann knowingly and substantially assisted in WBK's fraud, which Joel K. Mann knew, or was generally or regularly aware, at the time he provided his assistance to constitute a fraud.
71. Joel K. Mann obtained a benefit from WBK's fraud.
72. The actions of Joel K. Mann proximately caused injury.
73. Joel K. Mann is personally liable, jointly and severally with WBK, for WBK's actual fraud.
74. CTIC hereby realleges and incorporates Paragraphs 62 through 68 above as though fully set forth herein.
75. As a further alternative to Count I, if it is determined that the 2001 Loan is not secured by a first mortgage lien on the Property, Joel K. Mann and WBK agreed to and did combine and act in concert for the purposes of fraudulently inducing the 2001 Loan.
76. The actions of Joel K. Mann proximately caused injury.
77. Joel K. Mann is personally liable, jointly and severally with WBK, for WBK's actual fraud.
78.
79. CTIC hereby realleges and incorporates Paragraphs 1 through 48 above as though fully set forth herein.
80. Subsequent to the making of the 2001 Loan, Joel K. Mann, individually and through his agents, engaged in a scheme intended to manipulate title, loot the value of the Property and avoid repayment of the 2001 Loan.
81. As part of this scheme to defraud, Joel K. Mann caused his counsel to send the December 11, 2006 letter. In the December 11, 2006 letter, Joel K. Mann promised to repay the 2001 Loan in full, but at that time, Joel K. Mann did not intend to perform that promise. Joel K. Mann intended only to lull the lender under the 2001 Loan into a belief that it would be repaid, so as to provide Joel K. Mann with the time to cause the Land Trust to convey title to the Property to JKM for no consideration. Joel K. Mann thereby intended to forestall any effort by the lender to collect on the 2001 Loan, to foreclose the Mortgage, or to remedy any technical defects. Joel K. Mann also intended to provide himself with the time necessary to cause JKM to mortgage the Property and convert the great majority of the value of the Property into cash to be paid to JKM for the benefit of Joel K. Mann personally.
82. Exemplary damages should be assessed against Joel K. Mann, WBK and JKM to deter similar conduct in the future.
(a) a money judgment in the full amount of the 2001 Loan, including without limitation, accrued interest at the default rate, late charges, protective advances, prepayment fees, attorneys' fees and expenses, plus an exemplary damage, against Joel K. Maim, WBK Financial Limited Partnership and JKM Mundelein, LLC, jointly and severally;
(b) the imposition of a constructive trust in favor of CTIC against the Property, the rents under the Lease, all other rents, issues and profits of the Property, and the proceeds from the 2007 BOA Loan traceable to the accounts of Joel K. Maim and JKM Mundelein LLC;
(c) a temporary restraining order and a preliminary injunction enjoining and restraining Joel K. Mann and JKM Mundelein LLC from transferring, conveying, selling, mortgaging or hypothecating the Property, the rents under the Lease, all other rents, issues and profits of the Property and defendants' cash accounts of all kinds until further order of Court against the assets of the constructive trust; and
(d) such other and further relief as this Court deems just.
83. CTIC hereby realleges and incorporates Paragraphs 1 through 48 above as though fully set forth herein.
84. There was at all material times a certain Illinois statute generally known as the Uniform Fraudulent Transfer Act, 740 ILCS 160/1, et seq. ("UFTA"). Section 5(a) of the UFTA states that: "A transfer made or obligation incurred by a debtor is fraudulent as to a creditor whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation: (1) with actual intent to hinder, delay or defraud any creditor of the debtor . ."
85. In January 2007, the Mortgage Pool Trust was a creditor of WBK.
86. In January 2007, Joel K. Mann caused WBK and the Land Trust to transfer the Property to JKM. The transfer was to an "insider" as defined in UFTA, because Joel K. Mann wholly owned and controlled JKM. Joel K. Mann and WBK effectively retained possession and control of the Property after the transfer through the instrumentality of JKM. Joel K. Mann, WBK and JKM did not disclose the transfer to the Mortgage Pool Trust or their intention to make that transfer but instead omitted any statement of that intention from their communications with the Mortgage Pool Trust. The transfer was made at or after the time WBK chose to default on the 2001 Loan and in anticipation of a possible foreclosure. There was no consideration paid by JKM to the Land Trust or WBK in exchange for the transfer of the asset.
87. The transfer of the Property thereby constituted an actual fraudulent transfer within the terms of Section 5(a) of UFTA.
88. Joel K. Mann, WBK and JKM each benefited from the fraudulent transfer of the Property. Among other things, the transfer transferred valuable interests in the Property to JKM at no expense and enabled Joel K. Mann and WBK to close the 2007 BOA Loan and thereby convert their interest in the Property into cash which was then transferred to their benefit.
89. The fraudulent transfers proximately caused injury to CTIC in the amount of the 2001 Loan and the value of the Property as security for the 2001 Loan.
(a) enter a money judgment in the full amount of the 2001 Loan, including accrued interest at the default rate, late charges, protective advances, prepayment fees, attorneys' fees and expenses, against Joel K. Mann, WBK Financial Limited Partnership, and JKM Mundelein, LLC, jointly and severally; and
(b) avoid the transfer to JKM to the extent necessary to satisfy the 2001 Loan;
(c) impose a lien on the Property senior and superior to all other interests in the Property; and
(d) grant such other and further relief as this Court deems just.
90. CTIC hereby realleges and incorporates Paragraphs 62 through 89 above as though fully set forth herein.
91. The Note executed by WBK for the 2001 Loan constitutes a valid, binding, and enforceable contract.
92. CTIC and its predecessors have satisfied any and all conditions precedent to their recovery under the Note.
93. As a result of WBK's default on the Note, its fraud and willful misrepresentation and its diversion of rents under the Lease and the proceeds of the 2007 BOA Loan, CTIC is entitled to recover all amounts due on the Note from WBK.
94. CTIC hereby realleges and incorporates Paragraph 62 through 89 above as though fully set forth herein.
95. On or about November 21, 2002, WBK Corp. assumed Henry Mann's general partner position with WBK. By doing so, WBK Corp. assumed all debts and obligations of WBK, including the 2001 Loan.
96. As a result of WBK's default on the Note, its fraud and willful misrepresentation and its diversion of rents under the Lease and the proceeds of the 2007 BOA Loan, CTIC is entitled to recover all amounts due on the Note from WBK Corp.
97. CTIC hereby realleges and incorporates Paragraph 62 through 89 above as though fully set forth herein.
98. Defendant Joel K. Mann has certified under penalties of perjury the WBK Agreement, which lists him as a general partner. Defendant Joel K. Mann has also, at various times, held himself out to third parties and executed documents as the general partner of WBK.
99. As alleged above in the common allegations, defendant Joel K. Mann has, at various times, acted as the de facto general partner of WBK. Joel K. Mann has also utilized and appropriated the assets of WBK as though they were his own personal assets.
100. As alleged above in the common allegations, Joel K. Mann has utilized WBK and WBK Corp. as mere instrumentalities or alter egos and has disregarded the corporate form and foinialities of WBK and WBK Corp. for fraudulent purposes. WBK Corp. has been suspended as a corporation and Joel K. Mann was an officer and director and the sole shareholder at the time of suspension.
101. Accordingly, Joel K. Mann is the general partner of WBK and is liable for its debts and obligations; or he is liable for those debts and obligations as though he were the general partner of WBK.
102. As a result of WBK's default on the Note, its fraud and willful misrepresentation and its diversion of rents under the Lease and the proceeds of the 2007 BOA Loan, CTIC is entitled to recover all amounts due on the Note from Joel K. Mann.
103. CTIC hereby realleges and incorporates Paragraphs 62 through 89 above as though fully set forth herein.
104. Paragraph 6.7 of the 2001 Mortgage executed by WBK states that WBK will indemnify and hold harmless CTIC from and against any loss, damage, cost or expense directly or indirectly arising out of any failure of WBK to perform its obligations under the Loan Documents or any inaccuracy in any representation or warranty made by WBK in the Loan Documents.
105. The 2001 Mortgage executed by WBK constituted a valid, binding and enforceable contract.
106. CTIC and its predecessors have satisfied any and all conditions precedent to their recovery under this indemnity.
107. As a result of WBK's default on the Note, its fraud and willful misrepresentation and its diversion of the rents under the Lease and the proceeds of the 2007 BOA Loan, CTIC is entitled to recover all loss, damage, cost and expense incurred on the 2001 Loan.
108. CTIC hereby realleges and incorporates Paragraphs 62 through 89 above as though fully set forth herein.
109. On or about November 21, 2002, WBK Corp. assumed Henry Mann's position as the general partner of WBK. By doing so, WBK Corp. assumed all debts and obligations of WBK, including the 2001 Loan.
110. As a result of WBK's default on the Note, its fraud and willful misrepresentation and its diversion of the rents under the Lease and the proceeds of the 2007 BOA Loan, CTIC is entitled to recover from WBK Corp. all loss, damage, cost and expense incurred on the 2001 Loan.
111. CTIC hereby realleges and incorporates Paragraphs 62 through 89 above as though fully set forth herein.
112. Defendant Joel K. Mann has certified under penalties of perjury the WBK Agreement, which lists him as a general partner. Defendant Joel K. Mann has also, at various times, held himself out to third parties and executed documents as the general partner of WBK.
113. As alleged above in the common allegations, defendant Joel K. Mann has, at various times, acted as the de facto general partner of WBK. Joel K. Mann has also utilized and appropriated the assets of WBK as though they were his own personal assets.
114. As alleged above in the common allegations, Joel K. Mann has utilized WBK and WBK Corp. as mere instrumentalities or alter egos, and has disregarded the corporate form and formalities of WBK and WBK Corp. for fraudulent purposes. WBK Corp. has been suspended as a corporation and Joel K. Mann was an officer and director and the sole shareholder at the time of suspension.
115. Accordingly, Joel K. Mann is the general partner of WBK and is liable for its debts and obligations; or he is liable for those debts and obligations as though he were the general partner of WBK.
116. As a result of WBK's default on the Note, its fraud and willful misrepresentation and its diversion of the rents under the Lease and the proceeds of the 2007 BOA Loan, CTIC is entitled to recover from Joel K. Mann all loss, damage, cost and expense incurred on the 2001 Loan.
117. CTIC hereby realleges and incorporates Paragraphs 1 through 48 above as though fully set forth herein.
118. The proceeds of the 2001 Loan benefited and enriched Joel K. Mann and his wholly owned and controlled entity WBK and enhanced the value of the Property by refinancing the 2000 BOA Mortgage encumbering the Property.
119. Joel K. Mann and JKM wrongfully appropriated the entire value of the Property by refinancing the Property through the 2007 BOA Loan and retaining the proceeds thereto without paying off the 2001 Loan.
120. As a result, Joel K. Mann, WBK and JKM unjustly retained benefits to the detriment of CTIC.
121. Allowing Joel K. Mann, WBK and JKM to retain these benefits would violate fundamental principles of justice, equity, fairness, and good conscience.
(a) a money judgment in the full amount of the 2001 Loan and accrued interest, together with attorneys' fees and expenses, against Joel K. Mann, WBK Financial Limited Partnership and JKM Mundelein, LLC, jointly and severally; and
(b) such other and further relief as this Court deems just.
PLAINTIFF(S) PRESENT/NOT PRESENT, DEFENDANT(S) PRESENT/NOT PRESENT IN OPEN COURT, THIS MATTER COMING ON FOR TRIAL/RETURN DATE, AND THE COURT FINDING ISSUES IN FAVOR OF: ___ Plaintiff Chicago Title Insurance Company ________________________________________________________________________________
IT IS HEREBY ORDERED THAT JUDGMENT IS ENTERED JOINTLY AND SEVERALLY AGAINST: Joel K. Mann, WBK Financial Limited Partnership, WBK Family Corporation and JKM Mundelein LLC ____________________________________________________________________________________
To:
PLEASE TAKE NOTICE that on February 26, 2013, at 9:00 a.m., or as soon thereafter as counsel may be heard, we shall appear before the Honorable Luis A. Berrones, or any judge sitting in his place and stead, in the County Board Room of the Lake County Courthouse, 18 N. County Street in Waukegan, Illinois, and then and there present the attached Petition for a Rule 304(a) Finding, a copy of which is included herewith and hereby served upon you, at which time and place you may appear if you see fit.
NOW COMES the Plaintiff, Chicago Title Insurance Company ("CTIC"), by and through its attorneys Larson & Associates, P.C, petitions this Court pursuant to Illinois Supreme Court Rule 304(a) for an express written finding that there is no just reason for delaying enforcement or appeal or both of this Court's February 5, 2013 Order. In support thereof, Plaintiff states as follows:
On February 9, 2012, Plaintiff and Defendants Joel K. Mann, personally, WBK Financial Limited Partnership, WBK Family Corporation and JKM Mundelein LLC (collectively, the "Defendants") appeared before this Court for a settlement conference and, as a result, entered into a settlement agreement (the "Agreement").
2. Pursuant to the Agreement, and without objection from the Defendants, on February 5, 2013, this Court entered a ruling (the "Order") on Plaintiff's Motion for Entry of Agreed Judgment Order (the "Motion"). A copy of the Order is attached hereto as Exhibit "A".
3. The Order grants a $2,500,000.00 judgment in favor of CTIC and against the Defendants.
4. In pertinent part, Illinois Supreme Court Rule 304(a) provides:
5. As it relates to the Defendants, the Order is a final judgment. See Curtis v. Lofy, 394 Ill.App.3d 170, 183 (4
6. There is no just reason for delaying enforcement of the Order. Plaintiff should be entitled to rely on the Order and enforce the Court's ruling against the Defendants.
7. While dispositive as to CTIC's claim against the Defendants, the Order does not resolve this action in its totality. The disposition of the remaining claims, however, will have no bearing on the matters addressed in the Order.
WHEREFORE, for the foregoing reasons, Plaintiff, Chicago Title Insurance Company, petitions this Court pursuant to Illinois Supreme Court Rule 304(a) for an express written finding that there is no just reason for delaying enforcement or appeal or both of this Court's February 5, 2013 Order.
PLAINTIFF(S) PRESENT/NOT PRESENT, DEFENDANT(S) PRESENT/NOT PRESENT IN OPEN COURT, THIS MATTER COMING ON FOR TRIAL/RETURN DATE, AND THE COURT FINDING ISSUES IN FAVOR OF: ___ Plaintiff Chicago Title Insurance Company ________________________________________________________________________________
IT IS HEREBY ORDERED THAT JUDGMENT IS ENTERED JOINTLY AND SEVERALLY AGAINST: Joel K. Mann, WBK Financial Limited Partnership, WBK Family Corporation and JKM Mundelein LLC ____________________________________________________________________________________
This matter coming to be heard on Plaintiff Chicago Title Insurance Company's Petition For Rule 304(a) Finding, all parties having due notice, and the Court being fully advised in the premises:
IT IS HEREBY ORDERED:
To:
PLEASE TAKE NOTICE that on December 12, 2014, at 9:15 a.m., or as soon thereafter as counsel may be heard, we shall appear before the Honorable Luis A. Berrones, or any judge sitting in his place and stead, in Room C-301 of the Lake County Courthouse, 18 N. County Street in Waukegan, Illinois, and then and there present the following:
NOW COMES plaintiff Chicago Title Insurance Company, by and through its undersigned attorneys, and pursuant to Illinois Code of Civil Procedure Section 5/2-1009(a), 735 ILCS 5/2-1009(a), respectfully moves this Court for an order dismissing this action without prejudice. In support thereof, Plaintiff states as follows.
1. Pursuant to Illinois Code of Civil Procedure Section 5/2-1009(a), 735 ILCS 5/2-1009(a), prior to or upon presentation of this motion, Plaintiff will tender to defendants their respective costs by causing a check to be personally delivered to defendants' attorneys, as follows:
WHEREFORE, plaintiff Chicago Title Insurance Company prays for the entry of an order dismissing this action without prejudice.
This matter coming before the Court for: (1) a Document Conference; (2) Plaintiff's Motion for Voluntary Dismissal; (3) Defendant Mortgage Electronic Registration Systems, Inc.'s Motion in Limine; and (4) the Motion in Limine of Defendants Joel K. Mann, WBK Financial Limited Partnership, WBK Family Corporation and JKM Mundelein LLC, all parties with notice, the Court with jurisdiction and being fully apprised in the Premises;
IT IS HEREBY ORDERED:
NOW COMES defendant and counter-plaintiff Chicago Title Insurance Company ("CTIC" or "Counter-Plaintiff'), by and through its undersigned attorney, and for its counterclaims and cross-claims for declaratory relief, a determination of lien priority, and mortgage foreclosure, alleges on information and belief, except as to allegations concerning CTIC, as follows.
1. CTIC is a Nebraska company with its principal place of business at 601 Riverside Avenue, Jacksonville, Florida 32204 and is duly qualified to conduct and conducting business in Illinois.
2. Plaintiff and counter-defendant U.S. Bank, National Association, as Trustee for the Registered Holders of GE Commercial Mortgage Corporation, Commercial Mortgage Pass-Through Certificates, Series 2007-C1 ("Plaintiff'), through its special servicer, Torchlight Loan Services, LLC, acting as trustee, is a national banking association with its principal place of business at 425 Walnut Street, Cincinnati, Ohio 45202.
3. Defendant and cross-defendant JKM Mundelein LLC ("JKM") is a Delaware limited liability company with its principal office located at 1240 Cougar Ridge Road, Buellton, California, and conducting business primarily in Illinois.
4. Defendant and cross-defendant WBK Financial Limited Partnership ("WBK") is a California limited partnership with its principal office at 1240 Cougar Ridge Road, Buellton, California 93427.
5. Cross-defendant Joel K. Mann ("Mann") is the member and/or manager of JKM. Mann is a citizen of the State of California with his principal residence at 1240 Cougar Ridge Road, Buellton, California.
6. Defendant and cross-defendant Bond Drug Company of Illinois, LLC ("Bond") is an Illinois limited liability company with its principal office at 300 Wilmot Road, Deerfield, Illinois 60015. Upon information and belief, the managers of Bond are Rick J. Hans, Kermit R. Crawford, and Mark A. Wagner, who on information and belief are citizens of the State of Illinois with a principal address of 300 Wilmot Road, Deerfield Illinois 60014. Defendant Bond is joined solely for the limited purpose of enforcing the assignment of leases and rents alleged below. No monetary relief is sought against Bond and other than the enforcement of the assignment, no other equitable relief is sought.
7. Defendant and cross-defendant Mundelein Meadows Ownership Association is an Illinois not-for-profit corporation with a registered agent located at 750 Lake Cook Road, Suite 350, Buffalo Grove, Illinois 60089.
8. Defendant and cross-defendant Beerman Pritikin Mirabelli Swerdlove f/k/a Beerman Swerdlove LLP is an Illinois limited liability partnership with its principal place of business at 161 North Clark Street, Suite 2600, Chicago, Illinois 60601.
9. The amount in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and this complaint is between citizens of different states.
10. The court has jurisdiction over this action pursuant to 28 U.S.C. § 1332.
11. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391(a).
12. At all times relevant hereto, there was a certain property generally located at 701 South Midlothian Road in Mundelein, Illinois and legally described in Exhibit A to the Complaint, which is incorporated herein by reference (the "Property"). The Property was developed as a Walgreens drugstore, and was leased to Bond, as "Lessee," under a certain lease dated September 1, 1998, and amended by a First Amendment to Lease dated August 16, 1999 (as amended, the "Lease").
13. Prior to August 12, 1999, Henry Mann established the Henry Mann 1994 Trust as a revocable trust, the sole trustee of which was Henry Mann.
14. During Henry Mann's lifetime, the Henry Mann 1994 Trust was to pay to Henry Mann all income of the Trust and all principal that he would request. After Henry Mann's death and the payment of certain cash gifts to family members, all of the assets of the Henry Mann 1994 Trust would be distributed to Mann. Henry Mann died in October 2004.
15. On or about August 12, 1999, Henry Mann executed a Durable Power of Attorney For Management of Property and Personal Affairs (the "POA"), wherein he appointed Mann as his attorney in fact with the broad powers to handle his affairs. Among other things, the POA vested Mann with the power to: (a) acquire, transfer, dispose, and encumber any and all real property owned any time by Henry Mann; (b) act for Henry Mann in performing duties and exercising powers held by Henry Mann in any partnership in which he was a partner; (c) act for Henry Mann in matters and transactions affecting all trusts for which Henry Mann was, may become, or claimed to be entitled to as a beneficiary, including trust matters related to real property; and (d) sign Henry Mann's name to legal documents.
16. As of August 12, 1999, Mann was the sole beneficiary of a certain Trust "A" ("Trust A") established under the Will of Gertrude K. Mann, deceased, Superior Court of California, County of Riverside, Case No. 1P13293, as subsequently administered in the Superior Court of California, County of Santa Barbara, Case No. 213652. Henry Mann was one of two trustees for Trust A.
17. On or about July 18, 2000, an Order was entered by the Superior Court of California, Court of Santa Barbara, that terminated Trust A and ordered the distribution of all of Trust A's assets to Mann.
18. On or about August 31, 1999, Mann executed a certain Agreement for the Purchase and Sale of Real Estate in which Mann agreed to purchase the Property (the "Purchase Agreement"). Under the terms of the Purchase Agreement, as amended, Mann "or his nominee(s)" agreed to purchase the Property for a purchase price of $2,680,000. The Purchase Agreement was to close on or before the fifth business day after lessee paid its first month's rent or at such other time as the parties agreed on in writing. Mann's address in the Purchase Agreement was given as 1240 Cougar Ridge Road in Buellton, California.
19. On or about February 23, 2000, Mann closed on the purchase of the Property pursuant to the Purchase Agreement. At closing, title to the Property was deeded to American National Bank and Trust Company of Chicago (the "Land Trustee"), as Trustee under Trust Agreement dated January 11, 2000 and known as Trust No. 12561106 (the "Land Trust"). The "taxpayer" identified on the deed conveying the Property into the Land Trust was WBK, c/o Joel Mann, 1240 Cougar Ridge Road, Buellton, California, 93427. At closing, the seller also assigned its interest, as "Lessor," under the Lease to WBK.
20. In order to finance the purchase of the Property, a loan (the "First BOA Loan") was obtained from Bank of America, National Association ("BOA"). At the February 2000 closing, the Land Trustee, as mortgagor, and the beneficiaries of the Land Trust executed a certain mortgage (the "First BOA Mortgage") to BOA, as mortgagee. The First BOA Mortgage was recorded in the Office of the Lake County Recorder of Deeds on February 23, 2000 as document 4494956. A copy of the First BOA Mortgage is attached to the Complaint as Exhibit B and incorporated herein by reference.
21. The First BOA Mortgage was executed by the beneficiaries of the Land Trust in addition to the Land Trustee. In particular, Maim signed Henry Mann's name on behalf of each of the beneficiaries. In the acknowledgments to the First BOA Mortgage, the notary public stated that Mann personally appeared before her as a limited partner of WBK, as the trustee for the 1994 Trust, and the Co-Trustee for Trust A.
22. At the February 2000 closing, the Land Trustee, as mortgagor, and the beneficiaries of the Land Trust executed a certain mortgage (the "First BOA Mortgage") to Bank of America, National Association, as mortgagee. The First BOA Mortgage was recorded in the Office of the Lake County Recorder of Deeds on February 23, 2000 as document 4494956. A copy of the First BOA Mortgage is attached to the Complaint as Exhibit B and incorporated herein by reference.
23. The beneficiaries of the Land Trust were identified in the First BOA Mortgage as: (i) WBK (ii) Henry Mann, as trustee of the Henry Mann 1994 Trust, and (iii) Henry Mann and Santa Barbara Bank & Trust, as Co-Trustees of Trust "A" established under the Will of Gertrude K. Mann, deceased, Superior Court of California, County of Riverside, Case No. 1P13293, as subsequently administered in the Superior Court of California, County of Santa Barbara, Case No. 213652. In the First BOA Mortgage, the beneficiaries represented that they were the sole beneficiaries of the Land Trust.
24. In the First BOA Mortgage, Mann signed Henry Mann's name: (a) as general partner of WBK, (b) as trustee of Henry Mann 1994 Trust, and (c) as Co-Trustee of Trust "A." In the acknowledgements to the First BOA Mortgage, the notary public stated that Mann personally appeared before her as a limited partner of WBK, as the trustee for Henry Mann and the Co-Trustee for Henry Mann.
25. In connection with the closing, WBK executed a certain personal undertaking. The address of WBK given in the personal undertaking was "c/o Joel Mann, 1240 Cougar Ridge Road, Buellton, California."
26. On or about April 24, 2001, WBK obtained a $1.3 million loan (the "Wells Fargo Loan") from Wells Fargo Bank National Association ("Wells Fargo"). To evidence the Wells Fargo Loan, WBK executed a certain Promissory Note Secured by Mortgage payable to the order of Wells Fargo, as "Lender," in the principal amount of $1,300,000.00 (the "Wells Fargo Note"). A copy of the Wells Fargo Note is attached to the Complaint as Exhibit C and incorporated herein by reference.
27. At the closing of the Wells Fargo Loan, the loan proceeds were used to refinance the First BOA Mortgage, with the remaining proceeds paid to the Land Trustee. The First BOA Mortgage was not released at the time of the closing.
28. To secure the Wells Fargo Loan, WBK executed a mortgage of the Property to Wells Fargo, entitled "Mortgage and Absolute Assignment of Rents and Leases and Security Agreement and Fixture Filing" (the "Wells Fargo Mortgage"). A copy of the Wells Fargo Mortgage is attached to the Complaint as Exhibit D and incorporated herein by reference. The Wells Fargo Mortgage was dated April 24, 2001 and was recorded against the Property on May 3, 2001 in the Office of the Lake County Recorder of Deeds as Document No. 4684742.
29. To induce the Wells Fargo Loan, WBK warranted that it had good title to the Property and that the Wells Fargo Mortgage granted to Wells Fargo would be a first priority mortgage lien on the Property.
30. The Wells Fargo Mortgage also assigned to Wells Fargo the Lease and the rights to receive the payment of rents thereunder. To further secure the assignment of rents contained in the Mortgage and as an express requirement of the Wells Fargo Note, WBK executed to the benefit of Wells Fargo a "Restricted Account Agreement" dated as of April 24, 2001. A copy of the Restricted Account Agreement is attached to the Complaint as Exhibit E and incorporated herein by reference.
31. To induce the Wells Fargo Loan, WBK warranted that it had the lessor's interest under the Lease and the ability to assign the Lease and its rents to Wells Fargo.
32. Pursuant to the terms of the Restricted Account Agreement, WBK agreed among other things, to cause all "Gross Income' of the Property, including all rents under the Lease and all proceeds from the sale of any portion of the Property, to be deposited into a certain "Restricted Account."
33. The Restricted Account was located at and was in the sole control of Wells Fargo. The Restricted Account Agreement and the Wells Fargo Mortgage granted Wells Fargo a security interest in the Restricted Account. Pursuant to the Restricted Account Agreement, WBK sent a payment direction letter to Bond, directing that all rents under the Lease be deposited in the Restricted Account. The payment direction letter stated that the direction would not be rescinded, withdrawn, amended or otherwise modified in any respect without the prior written consent of Wells Fargo. A copy of the payment direction letter sent by WBK pursuant to the Restricted Account Agreement, directing that all rents under the Lease be deposited in the Restricted Account, is attached to the Complaint as Exhibit F and incorporated herein by reference.
34. In the Wells Fargo Note, Wells Fargo Mortgage and Restricted Account Agreement, WBK gave its address as 1240 Cougar Ridge Road, Buellton, California.
35. Subsequent to April 24, 2001, Bond deposited the rent under the Lease into the Restricted Account and monthly payments of interest and principal were paid out of the Restricted Account to the lender on the Wells Fargo Loan.
36. On or about December 12, 2001, Wells Fargo assigned all of its interest in the Wells Fargo Loan, including without limitation its interests in the Wells Fargo Note, Wells Fargo Mortgage and the Restricted Account Agreement, to LaSalle Bank National Association, as trustee for Bear Stearns Commercial Mortgage Securities Inc., Commercial Mortgage Pass-Through Certificates, Series 2001-TOP4 (the "Mortgage Pool Trust"). A copy of the Assignment of Mortgage and Absolute Assignment of Rents and Leases and Security Agreement (and Fixture Filing) is attached to the Complaint as Exhibit G and incorporated herein by reference. The 2001 assignment was recorded in the Office of the Lake County Recorder of Deeds on December 26, 2001 as Document No. 4830306.
37. Following the assignment, Mann requested that the Mortgage Pool Trust modify the Restricted Account Agreement to provide for a more timely application of the tenant's rent payments to the Wells Fargo Loan and directed his counsel to obtain such modification on behalf of WBK. Consequently, on or about April 1, 2002, WBK and the Mortgage Pool Trust modified the Restricted Account Agreement pursuant to the amendment attached to the Complaint as Exhibit H and incorporated herein by reference.
38. On or about April 23, 2002, Mann's wife transmitted to Wells Fargo certain certificates of liability for the Property by correspondence on the letterhead of WBK. The certificates listed the insured as "WBK Attn. Mr. Joel Mann, 1240 Cougar Ridge Road, Buellton, California."
39. In the latter half of 2003, Mann decided to seek to refinance the Wells Fargo Loan. In furtherance of this effort to refinance the Wells Fargo Loan, Mann contacted representatives of Wells Fargo and inquired about refinancing the Wells Fargo Loan. Mann also contacted David Pritchard, his personal banker at BOA, and authorized him to contact Wells Fargo about the Wells Fargo Loan.
40. Under the terms of the Wells Fargo Note, WBK waived any right to prepay the Wells Fargo Loan more than three months prior to maturity, but it held the right to obtain a release of the Property from the Wells Fargo Mortgage through "defeasance," as described in the Note. In 2003, Wells Fargo advised Mann and Mr. Pritchard that the "lock out" period for defeasance under the Note had not expired. Wells Fargo also advised that defeasance would require the payment of expenses, fees and other amounts.
41. By November 2006, the "lock-out" period for defeasance had ended. Mann submitted to Mr. Pritchard and BOA an application for a loan to refinance the Wells Fargo Loan. In November and December 2006, Mann and his attorney communicated with BOA and Mr. Pritchard regarding the Wells Fargo Loan and the necessity of contacting Wells Fargo. Mr. Mann and his counsels supplied to BOA and its counsel copies of the Wells Fargo Loan documentation.
42. In an effort to avoid the expense of defeasance, Mann sought to assert that the Wells Fargo Mortgage was invalid because it was not executed by the Land Trustee. In late 2006, Mann contacted representatives of Wells Fargo about the Wells Fargo Loan. Mann requested that Wells Fargo agree to accept prepayment of the Wells Fargo Loan and to waive defeasance. In order to persuade Wells Fargo to accept his request, Mann threatened Wells Fargo with a claim that the Wells Fargo Mortgage was invalid because it was not executed by the Land Trustee.
43. Mann, with Mr. Pritchard's knowledge, directed his counsel to send a certain December 11, 2006 letter to Wells Fargo. In the December 11, 2006 letter, Mann's counsel asserted that Mann owned all of the general and limited partnership interests in WBK, and that WBK and Mann together owned 100 percent of the beneficial interests in the Land Trust. Mann's counsel also asserted that the Wells Fargo Mortgage was invalid as a mortgage on the Property and as an assignment of the Lease and the rents thereunder. Nevertheless, Mann's counsel stated that "the owner of the Property intends to pay-off this loan at par on or about January 31, 2007." Although in the lending industry, a payment "at par" generally means full payment of all sums due under the loan, Mann and his counsel intended the December 11, 2006 letter to exclude the expense of defeasance.
44. At the time of these communications, the Wells Fargo Loan was held by the Mortgage Pool Trust, not Wells Fargo. In response to these communications, Wells Fargo insisted on Compliance with the terms of the Wells Fargo Loan documents, including defeasance.
45. On or about December 27, 2006, Mann through his counsel formed JKM as a Delaware limited liability company. On or about January 10, 2007, Mann caused the Land Trust to transfer title to the Property to JKM. To cause the Land Trustee to transfer the property to JKM, Mann executed a letter of direction to the Land Trustee representing that he constituted all of the partners of WBK. JKM did not pay any money or other consideration in exchange for title to the Property.
46. In addition, on or about January 26, 2007, JKM borrowed $2.15 million from Bank of America National Association (the "Second BOA Loan"). The Second BOA Loan was secured by a Mortgage, Assignment of Lease and Security Agreement granted to MERS, as nominee for lender, and recorded against the Property (the "Mortgage"). None of the proceeds from the Second BOA Loan were used to repay the Wells Fargo Loan. Instead, substantially all of the proceeds of the Second BOA Loan were paid to JKM and Mann.
47. BOA retained First American Title Insurance Company ("FATIC") as the title insurer and closing agent for the 2007 BOA Loan. During the preparation of the title insurance policy for BOA, FATIC discovered the Wells Fargo Mortgage among the instruments recorded against the Property. Accordingly, both BOA and FATIC had actual knowledge of the Wells Fargo Mortgage prior to the closing of the Second BOA Loan. BOA and FATIC both knew at the closing of the Second BOA Loan that the proceeds of the Second BOA Loan proceeds were not being used to repay the Wells Fargo Loan.
48. The Wells Fargo Loan was not paid off at par on or before January 31, 2007, and no payments of any kind were made on the Wells Fargo Loan after the date of the December 11, 2006 letter. Instead, Mann caused the Lessee to stop making further payments of rent into the Restricted Account, and caused WBK to default on the monthly payments of interest and principal due under the Wells Fargo Note on January 1, 2007 and thereafter.
49. Due to the default in the payment of the installments of interest and principal due on January 1, 2007 and monthly thereafter, the Wells Fargo Note was in default on January 5, 2007 and default interest automatically began to accrue at that time at the rate stated in the Wells Fargo Note. Thereafter, the Wells Fargo Note was duly accelerated, and there is now due and owing on the Wells Fargo Note principal in the amount of $1,227,892.40, together with accrued and unpaid interest at the default rate, late charges, prepayment fees and protective advances. Under the terms of the Wells Fargo Note, Wells Fargo Mortgage, and Restricted Account Agreement, the lender under the Wells Fargo Loan is entitled to collect all attorneys' fees and expenses incurred in connection with any collection of the Wells Fargo Loan.
50. Pursuant to the statements made in the December 11, 2006 letter regarding the validity of the Wells Fargo Mortgage, the Mortgage Pool Trust submitted a claim to Chicago Title Insurance Company ("CTIC") under that certain loan policy of title insurance dated May 3, 2001, Policy No. 1409 000644065 (the "Policy"). Pursuant to rights granted to CTIC under the terms of the Policy, CTIC purchased all of the Mortgage Pool Trust's right, title and interest in the Wells Fargo Loan, including without limitation the Wells Fargo Note, the Wells Fargo Mortgage, the Restricted Account Agreement and all claims against WBK and others in connection with the Wells Fargo Loan. An assignment of the Wells Fargo Mortgage to CTIC was recorded July 6, 2007 in the Office of the Lake County Recorder of Deeds as Document No. 6208356. A copy of the Assignment to CTIC is attached to the Complaint as Exhibit I and incorporated herein by reference.
51. Despite repeated demand, no part of the Wells Fargo Loan has been repaid.
52. CTIC hereby realleges and incorporates Paragraphs 1 through 51 above as though fully set forth herein.
53. At all times relevant hereto, Mann has controlled the Property, the Land Trust beneficiaries and their power of direction over the Land Trustee. Mann and the Land Trust beneficiaries knowingly authorized and permitted WBK to obtain the Wells Fargo Loan, secured by the Wells Fargo Mortgage on the Property, and to execute the Wells Fargo Note, and Restricted Account Agreement. Accordingly, the Wells Fargo Mortgage was a valid encumbrance on the Property at the time it was made and recorded.
54. Mann and the Land Trust beneficiaries ratified and approved the Wells Fargo Loan and the Wells Fargo Note, Wells Fargo Mortgage, and Restricted Account Agreement. Mann and the Land Trust beneficiaries were aware of the Wells Fargo Loan from the time of inception and recognized it as a valid loan agreement the Property in their subsequent dealings with Wells Fargo and its successors, and with third parties, including BOA and Bond. Mann and the Land Trust beneficiaries also accepted the `benefits of the Wells Fargo Loan, including the refinancing of the First BOA Mortgage and the payment of proceeds to the Land Trust. Mann and the Land Trust beneficiaries permitted the Lessee to make monthly tent payments into the Restricted Account from April 2001 until December 2006 for the benefit of the lender under the Wells Fargo Loan. Accordingly, the Wells Fargo Mortgage was a valid encumbrance on the Property at the time it was made and recorded.
55. The Wells Fargo Loan, Wells Fargo Mortgage, Wells Fargo Note, and Restricted Account Agreement constitute express executory agreements in writing demonstrating an intent to mortgage the Property. Accordingly, the Wells Fargo Mortgage was a valid encumbrance on the Property at the time it was made and recorded.
56. Prior to the January 10, 2007 conveyance of the Property, JKM, through its sole member and manager Mann, and its counsel had actual knowledge of the Wells Fargo Loan and the Wells Fargo Mortgage and of the fact that the proceeds of the Second BOA Loan were not being applied to payment of the Wells Fargo Loan.
57. Prior to the January 26, 2007 closing of the Second BOA Loan, BOA and its title insurer and closing agent FATIC had actual notice of the Wells Fargo Loan and the Wells Fargo Mortgage and of the fact that the proceeds of the Second BOA Loan were not being applied to payment of the Wells Fargo Loan. All notice to BOA and FATIC as of the closing of the Second BOA Loan is imputed to Plaintiff.
58. Accordingly, the Wells Fargo Mortgage is prior and senior to the interests of all defendants. Under the Illinois Mortgage Foreclosure Act, 735 ILCS 5/15-1207, CTIC is thereby entitled to seek foreclosure of the Property and any and all further relief available to it thereunder.
59. Furthermore, as of the date of the Wells Fargo Mortgage, CTIC has a valid and subsisting assignment of leases and rents on the Property, including the Lease and the rents payable thereunder, prior to that of all defendants.
WHEREFORE, plaintiff Chicago Title Insurance Company respectfully requests that this Court grant the following relief:
60. CTIC hereby realleges and incorporates Paragraphs 1 through 51 above as though fully set forth herein.
61. A portion of the proceeds of the Wells Fargo Loan were paid to BOA to refinance the First BOA Loan. By refinancing the First BOA Loan, the Wells Fargo Loan directly benefitted the Land Trust and its beneficiaries. Moreover, Mann and the Land Trust beneficiaries knew that the purpose of the Wells Fargo Loan was to refinance the First BOA Loan and they knowingly accepted the benefits thereof and otherwise ratified and approved the Wells Fargo Loan.
62. CTIC, as lender under the Wells Fargo Loan, is therefore equitably subrogated to the First BOA Mortgage, which thereby secures the Wells Fargo Mortgage as a valid and subsisting mortgage lien against the Property from and after the making of the Wells Fargo Loan, prior and senior to the interests of all defendants. Under the Illinois Mortgage Foreclosure Act, 735 ILCS § 5/15-1207, CTIC is thereby entitled to foreclose the First BOA Mortgage against the Property and obtain any and all further relief available to it thereunder.
63. Unless CTIC is equitably subrogated to the First BOA Mortgage, defendants will receive a windfall and be unjustly enriched by the satisfaction of the First BOA Mortgage that had encumbered the Property, thereby violating fundamental principles of justice, equity, fairness, and good conscience.
WHEREFORE, plaintiff Chicago Title Insurance Company respectfully requests that this Court grant the following relief:
Anthony R. Medina, an Assistant Vice President of Fidelity National Title Group, the parent company of defendant Chicago Title Insurance Company, hereby verifies under penalty of perjury pursuant to 28 U.S.C. § 1746 that the factual allegations contained in Defendant Chicago Title Insurance Company's Counter-Claim for Declaratory Relief and to Foreclose Mortgage are true and correct, except as to matters alleged on information and belief and, as to such matters, the verily believes the same to be true and correct.
Executed at Omaha, Nebraska on January 15, 2015.
