Wachovia Securities, LLC v. Loop Corporation
726 F.3d 899
7th Cir.2013Background
- Banco lacks standing to appeal five district court orders; Loop suffered the injuries from the district court orders while Banco asserted a disputed senior creditor status.
- Wachovia successfully pierced Loop’s corporate veil and voided Banco’s blanket lien in Wachovia I, leading to Banco’s unsecured creditor status.
- Golf Venture intervened and asserted a prior lien; turnover orders moved EZ Links stock to satisfy Wachovia’s and Golf Venture’s judgments.
- EZ Links stock sale proceeds ultimately satisfied Wachovia’s and Golf Venture’s judgments; Banco pursued on appeal despite no direct injury.
- Court remains clear that Banco cannot use veil-piercing or unsecured status to claim standing; Loop bears injury, not Banco.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to appeal five district orders | Banco asserts injury as Loop’s senior creditor | Banco lacks injury and redressability; secured creditors prevail | Banco lacks standing; appeal dismissed |
| Effect of lack of standing on merits | N/A (Banco’s standing is central) | If no standing, merits need not be reached | Merits not addressed due to lack of standing |
| Veil-piercing to confer standing | Wachovia I piercing supports Banco’s status | Veil piercing cannot confer standing for Banco; improper use | Veil piercing cannot create standing for Banco; Loop injured instead |
| Rule 38 sanctions for frivolous appeal | Banco’s appeal delays collection | Frivolous and lacks injury; sanctions appropriate | Sanctions affirmed; Banco to pay Wachovia and Golf Venture’s fees/costs |
Key Cases Cited
- Wachovia Securities, LLC v. Jahelka, 674 F.3d 743 (7th Cir. 2012) (affirmed veil piercing and voided Banco’s lien (Wachovia I))
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (U.S. 1992) (standing requires injury in fact)
- Transamerica Ins. Co. v. South, 125 F.3d 392 (7th Cir. 1997) (standing requires adverse effect to appeal)
- Main Bank of Chicago v. Baker, 427 N.E.2d 94 (Ill. 1981) (veil not pierced to benefit corporation or stockholders)
- Forsythe v. Clark USA, Inc., 864 N.E.2d 227 (Ill. 2007) (cannot pierce own corporation’s veil to gain advantage)