VIRGINIA M. KENDALL, District Judge.
The United States of America ("Government"), on behalf of the Small Business Administration ("SBA"), filed this lawsuit against James Bursch, Mark Wrasman, and Laura Wrasman (collectively "Defendants") as guarantors of a loan made pursuant to the Small Business Act, 15 U.S.C. § 631 et seq., to Silent W. Properties, LLC ("Silent W. Properties"). The Government alleges that the loan was defaulted and seeks the principal sum of $376,993.86 plus interest. The Government now moves for summary judgment against the three Defendants jointly and severally. (Dkt. 34). For the reasons discussed below, the motion is granted.
For the purposes of this motion, the following facts are viewed in the light most favorable to Defendants—the non-movants here—and all reasonable inferences are drawn in their favor. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The Court takes the relevant facts primarily from the Government's and Bursch's Local Rule 56.1 Statement of Uncontested Facts and supporting exhibits: (Dkt. 36), (Dkt. 38), (Dkt. 39), (Dkt. 42).
Mark Wrasman owns Keystroke Graphics, a graphic design, printing, and promotional products business. (Dkt. 39) at ¶ 1. Laura Wrasman is the sole owner of Silent W Communications, Inc., a business that publishes a wedding magazine and website for the Chicagoland market. Id. at ¶ 2. The Wrasmans sought to purchase property located at 762 Shoreline Drive in Aurora, Illinois, in which to operate both businesses. Id. at ¶ 5. The Wrasmans approached Bursch, a business client of Mark Wrasman, to become a passive investor in the purchase. Id. at ¶¶ 3-4. The Defendants formed Silent W. Properties, LLC to hold the property and in which the Wrasmans were managers and Bursch was a silent investor.
As for Bursch, the Government contends that he also provided an unconditional guarantee on the note and that his guarantee was notarized by Patterson. Id. at ¶¶ 8-9; see (Dkt. 36-1) at 14-17 (U.S. SBA Unconditional Guarantee). Busch, however, only recalls completing the loan application for Pullman Bank, but not for the SBA. (Dkt. 39) at ¶ 8. Accordingly, he denies any memory of guaranteeing the SBA Note, but he has stated in his deposition that the signature on the guarantee "looks like [his] signature." Id. at ¶ 10; (Dkt. 36-1) at 33 (J. Bursch Dep.) at 22:17-23:12.
As relevant, the guarantees signed by the Wrasmans and allegedly signed by Bursch waived certain defenses to enforcement of the Note:
C. Guarantor waives defenses based upon any claim that:
See (Dkt. 36-1) at 15-16 (J. Bursch Guarantee), 20-21 (M. Wrasman Guarantee), 25-26 (L. Wrasman Guarantee).
The same day the Note was executed, Growth assigned it to the SBA. (Dkt. 36-1) at 29 (Assignment of Guarantees dated Feb. 11, 2005). Growth then made the loan on or about April 20, 2007. The last payment made by Silent W. Properties was sometime in 2012. See (Dkt. 35) at 2 ("The last payment on the Note was processed on August April [sic] 26, 2012."). Demand letters were sent to all guarantors on December 6, 2013 and again on February 10, 2014 (see (Dkt. 35) at 4), but no payments were made. (Dkt. 36) at ¶ 18. According to the Wrasmans, Silent W. Properties was dissolved by the State of Illinois in 2014. See, e.g., (Dkt. 39) at Ex. D, ¶¶ 7, 9. On February 4, 2016, the Government filed this lawsuit seeking to enforce the Note. On April 4, 2016, Bursch filed an answer, affirmative defenses, and crossclaim against Mark and Laura Wrasman. See (Dkt. 4). Bursch's crossclaim requests enforcement of an indemnification agreement between Bursch and the Wrasmans, in which the Wrasmans agreed "that they will jointly and severally indemnify Bursch for any claims related to the SBA loan. . . ." See (Dkt. 4) at 12 (April 16, 2015 Agreement between Silent W. Properties, M. Wrasman, L. Wrasman, and J. Bursch). The Government has moved for summary judgment against all Defendants; only Bursch has responded. No party has moved for summary judgment on Bursch's cross claim.
Summary judgment must be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A genuine issue of material fact exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In evaluating summary judgment motions, courts must view the facts and draw reasonable inferences in the light most favorable to the nonmoving party, here Defendants. Scott v. Harris, 550 U.S. 372, 378 (2007). But Defendants are "only entitled to the benefit of inferences supported by admissible evidence, not those `supported by only speculation or conjecture.'" Grant v. Trs. of Ind. Univ., 2017 WL 3753996, at *3 (7th Cir. Aug. 31, 2017) (citation and quotation marks omitted).
The party seeking summary judgment has the initial burden of showing that there is no genuine dispute and that they are entitled to judgment as a matter of law. Carmichael v. Vill. of Palatine, 605 F.3d 451, 460 (7th Cir. 2010); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Wheeler v. Lawson, 539 F.3d 629, 634 (7th Cir. 2008). If this burden is met, the adverse party must then go beyond the pleadings and "set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256. For this reason, the Seventh Circuit has called summary judgment the "put up or shut up" moment in a lawsuit—"when a party must show what evidence it has that would convince a trier of fact to accept its version of events." See Steen v. Myers, 486 F.3d 1017, 1022 (7th Cir. 2007). In other words, the party opposing summary judgment "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., 475 U.S. at 586. "The mere existence of a scintilla of evidence in support of the [nonmoving party's] position will be insufficient; there must be evidence on which the jury could reasonably find for [that party]." Anderson, 477 U.S. 252.
It is not the role of the Court to scour the record in search of evidence to defeat a motion for summary judgment; instead, the nonmoving party bears the responsibility of identifying evidence to defeat summary judgment. See Harney v. Speedway SuperAmerica, LLC, 526 F.3d 1099, 1104 (7th Cir. 2008). Although a failure to timely respond to the moving party's Local Rule 56.1 statement results in "deeming admitted" the moving party's factual statements, a nonmovant's failure to respond to a summary judgment motion or failure to comply with Local Rule 56.1 does not, of course, automatically result in judgment for the movant. Raymond v. Ameritech Corp., 442 F.3d 600, 608 (7th Cir. 2006). The ultimate burden of persuasion remains on the moving party to show that it is entitled to judgment as a matter of law.
The issue for the Wrasmans is straightforward: they failed to respond to the motion and their attorney often failed to appear and respond to most motions before the Court. Mark Wrasman and Laura Wrasman are former spouses ((Dkt. 39) at Ex. D, ¶ 5; Ex. E, ¶ 5), and are represented in this action by the same counsel, Kevin Gallaher. See, e.g., (Dkt. 9) at 1, 9; (Dkt. 10) at 1, 9. On April 22, 2016, even though represented by the same attorney, the Wrasmans filed separate Answers and Affirmative Defenses. See (Dkts. 9, 10). On July 26, 2016, the Government moved to compel discovery responses from the Wrasmans (Dkt. 12), and Gallaher failed to appear before the Court on that motion on August 16, 2016. (Dkt. 14). Gallaher also failed to appear for Mr. Peterson's deposition on October 21, 2016 (see (Dkt. 39) at Ex. I (R. Patterson Dep.) at 4:22-5:3), he failed to appear before the Court for a November 14, 2016 status hearing (Dkt. 16), and he did not participate in two conference calls to discuss potential settlement before Magistrate Judge Finnegan on March 6 and 8, 2017. (Dkts. 27, 28). On May 3, 2017, the Government moved for summary judgment against each of the three Defendants jointly and severally. (Dkt. 35) at 6. Defendants were given until June 5, 2017 to file responses. (Dkts. 29, 33). The Wrasmans failed to respond to the Government's motion, to file any further documents with the Court, or to communicate with the Court at any point. Certainly at this point, the Government could have sought a default order against the Wrasmans for failure to follow two courts' orders and participate in the discovery process. Nevertheless, the Government moved for summary judgment and once again failed to receive a response.
Attached to the Government's Complaint are documents titled "U.S. Small Business Administration Unconditional Guarantee" that are purportedly executed by Mark Wrasman and Laura Wrasman and notarized by R. Bruce Patterson. (Dkt. 1-3) at Ex. D & Ex. E. One of the few court-ordered responses filed by the Wrasmans were their answers to the Complaint in which they both admit that "[o]n or about April 20, 2007, Small Business Growth Corporation made a loan pursuant to the Small Business Act . . . to Silent W. Communications, Inc." and that "Silent W. Communications, Inc. made, executed and delivered . . . its written promissory note ("Note") dated February 11, 2005, in the principal sum of $475,000."
The Wrasmans managed to raise a number of affirmative defenses in their answers; namely, that the Government's claims are barred by the statute of limitations, it failed to mitigate its damages, it failed to seek adjudication of its interest in the collateral through the foreclosure of the collateral, and that it allowed the collateral to be impaired by failing to seek adjudication of its interest in the collateral through the foreclosure of the collateral. (Dkt. 9) at 8; (Dkt. 10) at 8. But of course, when it came to summary judgment, none of this was addressed and neither rebutted that the date of default was in 2012 and the first demand letter was sent December 6, 2013. (Dkt. 35) at 4. The Court, of course, must still determine if the Government is correct as a matter of law.
Under 28 U.S.C. § 2415(a), the statute of limitations expires December 6, 2019, six years from the date of demand. The complaint in this matter was filed on February 4, 2016. See (Dkt. 1). Aside from being supported by any fact in response to summary judgment, the Wrasmans' statute of limitations affirmative defense is also without merit. The Government also successfully set forth that the Wrasmans specifically waived their right to raise the remaining affirmative defenses by virtue of the terms of the loan guarantee. (Dkt. 35) at 2-5; (Dkt. 36-1) at 19-22 (M. Wrasman Unconditional Guarantee), 24-27 (L. Wrasman Unconditional Guarantee); see also United States v. Meadors, 753 F.2d 590, 594 (7th Cir. 1985) (finding "SBA guarantors are unconditional or absolute guarantors, and federal courts have held that, by signing the guaranty, they waive" the right to the rights to notice, to a reasonable disposition of the collateral, and protection against negligent impairment).
In sum, Growth made a loan to Silent W. Properties and to induce Growth to make the loan and in consideration for the loan, Mark Wrasman and Laura Wrasman unconditionally guaranteed payment of the loan. Growth endorsed and assigned the loan together with the guarantees to the SBA, and the SBA is the present owner and holder. The Government has demonstrated that it suffered damages as a result of the Defendants' actions, namely by presenting unrebutted evidence that: (1) Silent W. Properties defaulted on its loan obligations, (2) at least two demands for payment were issued to Mark and Laura Wrasman, and (3) that no payment has been made since those demands. Summary judgment in favor of the Government is granted against Defendants Mark Wrasman and Laura Wrasman.
As for Defendant Bursch, he responded to the motion for summary judgment but merely stated that he did not know if he signed the Note guarantee. He believes that this properly raises a material issue of fact requiring a trial to determine the truth. Yet, his statement is much less direct than he argues. In support of this position, Bursch attacks the credibility of R. Bruce Patterson, an attorney for Growth and a notary public, who notarized all three Defendants' guarantees. Further, Bursch contends that no witness, other than Patterson, will testify that he witnessed Bursch sign the guarantee. Id. at 6.
Bursch falls short from testifying that he did not sign the guarantee; instead, he testified that the signature on the Bursch Guaranty `looks like my signature.' (Dkt. 36) at ¶ 10. Although Bursch claims that he "testified in his deposition that he is not familiar with the purported guarantee and did not sign it, and has no recollection of signing any SBA documents at all," id. (emphasis added), this is the exact testimony:
(Dkt. 39) at Ex. H (J. Bursch Dep.) at 22:21-23:12. He was asked directly whether he affirmatively denied signing the guarantee and he gave the qualified answer that "it looks like my signature, but I don't remember signing an SBA document at all." Id. at 22:10-12. Bursch in fact never denied signing the SBA guarantee.
To muddy the water a tad more, Bursch testified at his deposition that he recalled attending a meeting on February 11, 2005 in Naperville, the same day all three Defendants' guarantees are dated. Id. at 41:17-24, 42:1-21; see (Dkt. 36-1) at Exs. 3-5 (J. Bursch, M. Wrasman, and L. Wrasman Guarantees). Again, although he said he does not recall signing any SBA loan documents specifically, he actually does remember reading and signing several documents in general:
(Dkt. 39) at Ex. H (J. Bursch Dep.) at 43:3-15. When given the opportunity to speculate about the possibility his signature was forged or some other malfeasance was at play, Bursch responded:
Id. at 23:21-24, 24:5-9. Bursch actually recognizes the very real possibility that he signed the SBA loan guarantee without realizing what the document was or its import. Taken together with his other testimony that he was at the meeting on February 11, 2005 during which he executed several documents, and that the signature on the SBA loan guarantee looked like his, but that he did not remember ever signing an SBA loan guarantee, all support that Bursch actually signed the SBA loan guarantee, even if unwittingly. But more importantly, his conjecture fails to rebut the definitive statement that he did sign the guarantee.
Bursch's effort to create a factual issue regarding his signature on the guarantee fails. See, e.g., GE Franchise Fin. Commercial LLC v. Wormsby, 2016 WL 4181192, at *4 (D. Ariz. Aug. 8, 2016) ("To allow [defendant] to avoid summary judgment without actually denying authenticity would effectively allow any loan guarantor to avoid summary judgment despite a signed agreement. That cannot be right. Defeating summary judgment does not require much, but it requires more than some metaphysical doubt as to the material facts.") (internal citations omitted); Wesco Distribution, Inc. v. Anshelewitz, 2008 WL 2775005, at *7 (S.D.N.Y. July 16, 2008) ("[Defendant's] inability to confirm or deny his signature on the guaranty does not, in the face of plaintiff's evidence, create a genuine issue of fact for trial."); Lone Star Indus., Inc. v. Nelstad Material Corp., 811 F.Supp. 147, 149 (S.D.N.Y. 1993) ("[Defendant] argues that his failure to recall signing the note creates an issue of fact barring summary judgment to [plaintiff] .. . . [There is] no genuine issue of material fact, since [defendant], who does not claim inability to recognize his own handwriting, concedes that the signature on the guarantee resembles his signature and does not deny having signed the document."); cf. Leser v. U.S. Bank Nat. Ass'n, 2012 WL 4472025, at *7 (E.D.N.Y. Sept. 25, 2012) (finding an issue of material fact because both parties submitted opposing handwriting expert affidavits, which, combined with an averment of forgery, was sufficient to rebut the presumption of authenticity and to raise an issue of fact for the fact-finder). Bursch fails to cite a single authority for the proposition that failing to recall signing a document is sufficient to creating an issue of material fact as to whether he actually signed in order to avoid summary judgment. Rather, Bursch's position rests entirely on the conclusory statement that he did not sign the guarantee, when in fact his own deposition testimony is inconsistent with that argument and cannot support such a claim. Even viewing Bursch's testimony in the light most favorable to him, Bursch simply does not remember signing the SBA loan guarantee. At best, this testimony only creates some "metaphysical doubt" as to the material facts, Matsushita Elec. Indus. Co., 475 U.S. at 586; it is not sufficient to "convince a trier of fact to accept [Bursch's] version of events." Steen, 486 F.3d at 1022.
Although the Court cannot condone what appears to be a rather sloppy notary practice as to the way in which R. Bruce Patterson, Growth's lawyer and the notary public who affixed his notary seal on each of the Defendants' guaranties (but not to the assignment of the Note to SBA) operated, Bursch cannot rely on his testimony to create a factual dispute because even Patterson's testimony fails to support that Bursch did not sign. The practice, namely, that it was Patterson's regular course of business to notarize SBA loan documents after observing the person sign in his presence and then returning to his office where he would actually stamp and date the document for notary purposes, is certainly not in keeping with the directions of Illinois Secretary of State, who states that for proper and safe notarization is to "not notarize a signature unless the signer is present at the time of notarization." Illinois Notary Public Handbook, at 2.
Accordingly, summary judgment in favor of the Government is granted against Bursch.
As a final note, according to the Court's calculations, the Note has an outstanding balance of $492,779.25, comprised of a principal balance of $376,993.86 and accrued interest totaling $115,785.39, calculated at the rate of $53.53 per day from the date of default (April 26, 2012) until the date of this order (March 28, 2018) (totaling 2,163 days).
For the reasons stated above, the Court grants the Government's motion for summary judgment. (Dkt. 34). The matter is not closed, however, because Bursch's cross claim remains pending. Accordingly, the matter is set for status on the cross claim on April 12, 2018 at 9:00 a.m.
