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Fortune Avenue, LLC v. Bedford

United States District Court, E.D. Wisconsin

August 23, 2019

FORTUNE AVENUE, LLC, Plaintiff,
v.
HOWARD BEDFORD, Defendant.

          DECISION AND ORDER

          William C. Griesbach, Chief Judge United States

         Plaintiff Fortune Avenue, LLC, sued Defendant Howard Bedford in state court for the amount allegedly due on a promissory note in the original amount of $350, 000 payable to Fortune that Bedford executed on October 11, 2011. Bedford, a citizen of the State of Illinois, removed the case to federal court asserting jurisdiction under 28 U.S.C. § 1332. Fortune is a citizen of Wisconsin and Georgia, and thus the complete diversity necessary for federal jurisdiction under § 1332 exists. Before the court is Fortune's motion for summary judgment. For the reasons below, the motion will be denied.

         BACKGROUND

         On October 21, 2011, Bedford signed an unsecured Promissory Note, which was payable to Fortune in the amount of $350, 000. See Janssen Aff., Ex. A, Dkt. No. 12-1. Bedford's decision to sign the Promissory Note was born out of a business deal with Ron Van Den Heuvel that had gone awry. In an effort to deal with troublesome creditors and to distance himself from the business deal, Bedford agreed to sign the Promissory Note, expecting it to be his final obligation to the Van Den Heuvel's. The Note provides for a variable interest rate, with a minimum interest rate of no less than 5.5% until the Note's maturity date. In the event of default, the Note calls for an accelerated interest rate of 5%, and should any payments be delinquent, the Lender may collect a delinquency charge of 5% of the monthly unpaid amount. The Note explicitly states that the governing law of the Note shall be the laws of Wisconsin, except to the extent federal law may preempt Wisconsin law. Finally, the Note states, “This Note may not be supplemented or modified except in writing and signed by Maker and Lender.” Id. at 3.

         According to the parties, Bedford made five payments in 2012, amounting to $42, 365.74. It is at this point that the parties dispute what happened next. Bedford alleges that, on December 5, 2012, he and David Van Den Heuvel, the Fortune representative collecting payments on the Note and the brother of Ron Van Den Heuvel, met at David Van Den Heuvel's office in De Pere, Wisconsin. Bedford claims David Van Den Heuvel told him not to worry about making any more payments pursuant to the Note because the Note was originally related to debts attributable to Ron, and that the debt was a family concern. Bedford asserts that he believed David Van Den Heuvel was speaking on behalf of Fortune, and that he no longer had any obligations under the Note. As such, Bedford stopped making payments on the Note.

         Fortune, on the other hand, asserts that David Van Den Heuvel never told Bedford that the remaining debt on the Note was forgiven or waived, and that Bedford, based on the default interest rate and delinquency charges, now owes it $592, 316.76. Between December 5, 2012, and January 18, 2017, there was no communication between the parties, and Bedford had made no payments on the Note. Fortune alleges that, on or about January 18, 2017, Jim Kellam, a Fortune representative, sent a letter with a renewal notice for the Note to Bedford. Bedford, however, does not acknowledge receipt of this notice, and instead asserts that the next communication he received from Fortune was dated June 13, 2018, demanding that he make payments pursuant to the Note. Shortly thereafter, on July 17, 2018, Fortune filed this action.

         LEGAL STANDARD

         Summary judgment is appropriate when the movant shows that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). In deciding a motion for summary judgment, the court must view the evidence and make all reasonable inferences that favor them in the light most favorable to the non-moving party. Johnson v. Advocate Health & Hosps. Corp., 892 F.3d 887, 893 (7th Cir. 2018) (citing Parker v. Four Seasons Hotels, Ltd., 845 F.3d 807, 812 (7th Cir. 2017)). The party opposing the motion for summary judgment must “submit evidentiary materials that set forth specific facts showing that there is a genuine issue for trial.” Siegel v. Shell Oil Co., 612 F.3d 932, 937 (7th Cir. 2010) (citations omitted). “The nonmoving party must do more than simply show that there is some metaphysical doubt as to the material facts.” Id. Summary judgment is properly entered against a party “who fails to make a showing to establish the existence of an element essential to the party's case, and on which that party will bear the burden of proof at trial.” Austin v. Walgreen Co., 885 F.3d 1085, 1087-88 (7th Cir. 2018) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)).

         ANALYSIS

         The principal issue of this motion for summary judgment is whether a written contract with a clause requiring amendments to be made in writing can be altered through an oral agreement. Bedford contends that David Van Den Heuvel, acting on behalf of Fortune, orally released him from his obligation to make further payments. Fortune, on the other hand, argues that, even if there were evidence of an oral agreement, aside from Bedford's self-serving statements, the oral agreement would be invalid under Wis.Stat. § 403.604, Wisconsin's version of the Uniform Commercial Code (UCC). Section 403.604 provides:

A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument by doing any of the following:
(a) An intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation or cancellation of the instrument, cancellation or striking out of the party's signature or the addition of words to the instrument indicating discharge.
(b) Agreeing not to sue or otherwise renouncing the rights against the party ...

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