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United States v. Van Otterloo

United States District Court, N.D. Iowa, Western Division

February 22, 2019

UNITED STATES OF AMERICA, Plaintiff,
v.
RONALD D. VAN OTTERLOO, BARBARA A. VAN OTTERLOO, and H&S PARTNERSHIP, LLP, Defendants.

          RULING ON MOTION FOR SUMMARY JUDGMENT

          MARK A. ROBERTS, UNITED STATES MAGISTRATE JUDGE

         This matter comes before the Court on Plaintiff's Motion for Summary Judgment. (Doc. 17.) Pursuant to Local Rule 7(c), the motion will be decided without oral argument.

         I. PROCEDURAL HISTORY

         On April 19, 2018, the United States of America filed a Complaint in the instant action seeking judgment on a promissory note and foreclosure of a mortgage issued by the United States of America through the Farmers Home Administration, United States Department of Agriculture. (Doc. 17-3 at 4-14.[1]) Named as defendants were Ronald D. Van Otterloo; Barbara A. Van Otterloo; H&S Partnership, LLP (“H&S”); Pinnacle Bank; and HBI, LLC. Pinnacle Bank and HBI, LLC were voluntarily dismissed. On July 17, 2018, the Clerk of Court entered default against Defendants Ronald Van Otterloo and Barbara Van Otterloo. (Doc. 10.) Plaintiff filed an Amended Complaint on July 25, 2018. (Doc. 11.) On September 19, 2018, H&S filed its Answer admitting certain allegations, denying other allegations, and asserting certain affirmative defenses. (Doc. 13). Accordingly, H&S is the only defendant contesting the action.

         On December 6, 2018, the Court adopted a proposed Scheduling Order and Discovery Plan submitted by the Parties. At that time, the case was referred to me to conduct all further proceedings and the entry of judgment, in accordance with 28 U.S.C. § 636(c) and the consent of the Parties.

         On December 3, 2018, Plaintiff timely filed the instant motion. (Doc. 17.) H&S filed a timely resistance on December 20, 2018. (Doc. 21.) Plaintiff filed a timely reply on January 28, 2019. (Doc. 27.)

         II. RELEVANT FACTS

         In support of its Motion for Summary Judgment, Plaintiff attached a Statement of Undisputed Material Facts, in compliance with Federal Rule of Civil Procedure 56(c) and Local Rule 56(a)(3). H&S filed a response as required by LR 56(b)(2) and a Statement of Additional Material facts under LR 56(b)(3), which were admitted by Plaintiff.

         In the instant case, most of the relevant facts are not in dispute. Where an objection is raised to any statement of a material fact, the dispute largely concerns the legal effect of a certain fact or facts - not whether the facts are true. From the undisputed facts the following appears:

         On July 18, 1985, the Van Otterloos executed and delivered to Plaintiff a promissory note (“the Note”) for $45, 000 bearing annual interest at 11.375 percent. (Doc. 17-2 ¶1.) The Van Otterloo defendants also executed and delivered to Plaintiff a purchase-money security interest in the form of a real estate mortgage (“the Mortgage”) for the following property:

The Westerly 60.0 feet of the Southerly 121.9 feet of the Northerly 182.0 feet of Lot Three (3) in Deans First Addition to The City of Sheldon, O'Brien County and State of Iowa

(“the Property.”) (Id. ¶ 2.) The Mortgage was recorded with the O'Brien County Recorder on July 19, 1985, in Book 63 at Page 347. (Id.) The payment history shows the last voluntary payment received on the Note was dated May 31, 2012, and that the Note is currently in default. (Id. ¶ 3.) Plaintiff's payment history shows a total balance of $105, 464.20 as of November 6, 2018. (Doc. 21-2 ¶ 4.) Plaintiff first sent acceleration letters to the Van Otterloos on July 2, 2014. (Doc. 21-3 ¶ 1.)

         H&S acquired its interest in the Property via a deed from a related corporate entity, HBI, LLC recorded on March 20, 2017. (Doc. 17-2 ¶ 5.) HBI, LLC acquired its interest by a deed from a different related corporate entity, REO Asset Management, LLC, that was recorded on December 31, 2015. Id. REO Asset Management, LLC, acquired its interest via a sheriff's sale and resulting deed executed on December 16, 2015, and recorded on December 29, 2015. (Id.) The sheriff's sale arose from a foreclosure by a junior creditor commenced in June 2015. (Id. ¶ 6.) Although Plaintiff's mortgage was properly recorded, Plaintiff was not named as a defendant in the foreclosure action. (Id.) Nothing in the record appears to explain why H&S or its predecessors proceeded with its investment in the Property based on the foreclosure of the junior interest.

         III. SUMMARY ...


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