Hartke v. WIPT, Inc., 0:17-cv-01851

Background

In July 2002 Plaintiffs (Bradley, Douglas, and Joan Hartke and two family trusts) executed a $900,000 promissory note and mortgage to buy a trucking business (Solace Transfer); Community Bank originally financed the purchase.
Plaintiffs paid two installments and ceased payments in October 2002; the loan thereafter fell into default and various Waldner-controlled entities made some payments but did not cure default.
In November 2002 Plaintiffs signed a separate $500,000 note to The One Stop secured by a mortgage on Joan Hartke’s property; Plaintiffs allege they never received proceeds and later discovered homesteads had been used as collateral.
Defendant Roger Waldner (owner of The One Stop and related entities) pled guilty in 2007 to criminal counts arising from related bankruptcy misconduct and was incarcerated; several Waldner-controlled entities later sought to enforce the notes.
In December 2016 WIPT claimed it had acquired the July 2002 note from Community Bank and demanded payment; Plaintiffs sued seeking declaratory relief that the notes and mortgages are unenforceable as time-barred.
The district court resolved cross-motions for judgment on the pleadings, granting Plaintiffs’ motion, granting Community Bank’s motion (dismissal), and denying the remaining defendants’ motions.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether enforcement of the July 2002 note is barred by the statute of limitations	The note went into default by 2002; Illinois 10-year limitations bars enforcement after no timely demand until 2016	Defendants contend Illinois §13-207 (counterclaim-saving statute) preserves their claim; also request discovery	Held: Time-barred. No timely demand until Dec. 29, 2016; §13-207 does not apply because Plaintiffs did not "own" a claim before defendants' limitations expired.
Whether enforcement of the November 2002 note is barred by the statute of limitations	The November note/mortgage is likewise untimely; Iowa 10-year limitations applies and no demand was alleged	Defendants argued potential imminence and need for discovery about receipt of proceeds and alleged conspiracy	Held: Time-barred as to collection; court finds a sufficiently imminent controversy for declaratory relief but limitations preclude enforcement.
Whether discovery is needed before judgment	Plaintiffs say statute-of-limitations is purely legal and no discovery affects the limitations analysis	Defendants sought continuance under Rule 56(d) to take discovery on factual issues (e.g., whether Plaintiffs received proceeds)	Held: Denied. The limitations question is legal and resolution is clear without further discovery.
Whether Community Bank remains a party with an interest	Plaintiffs sought factual findings before dismissing Community Bank	Defendants/Community Bank indicated it no longer holds any interest in the loan	Held: Community Bank has no interest; its judgment-on-the-pleadings motion granted and it is dismissed.

Key Cases Cited

Barragan v. Casco Design Corp., 837 N.E.2d 16 (Ill. 2005) (interpreting Illinois §13-207 counterclaim-saving statute)
United States v. Waldner, 564 F. Supp. 2d 911 (N.D. Iowa 2008) (criminal prosecution and sentence for Waldner related to bankruptcy misconduct)
Missourians for Fiscal Accountability v. Klahr, 830 F.3d 789 (8th Cir. 2016) (ripeness/declaratory-judgment standard requires adverse legal interests of sufficient immediacy)
Golden v. Zwickler, 394 U.S. 103 (1969) (standards for declaratory relief and case-or-controversy requirement)
Porous Media Corp. v. Pall Corp., 186 F.3d 1077 (8th Cir. 1999) (documents embraced by the pleadings may be considered on a judgment-on-the-pleadings motion)