Argued September 12, 2014
Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 10 C 4804 -- Charles R. Norgle, Judge.
For Wells Fargo Equipment Finance Incorporated, Plaintiff - Appellant: Debra Devassy Babu, Attorney, Askounis & Darcy, P.C., Chicago, IL.
For Titan Leasing Incorporated, Titan Rail Incorporated, Titan Transit Incorporated, Defendants - Appellees: James E. Coston, Attorney, Patricia E. Rademacher, Attorney, Coston & Coston, Chicago, IL.
Before EASTERBROOK, SYKES, and TINDER, Circuit Judges.
Easterbrook, Circuit Judge.
Gerdau Ameristeel leased a railroad locomotive from Titan Rail for use in switching at its mill in Knoxville, Tennessee. Titan Rail shipped the locomotive in summer 2008, but it was damaged in transit and sent to Knoxville Locomotive Works for repair. It did not reach Gerdau's plant until summer 2009. Gerdau rejected it, stating that it needed further modifications and repairs.
In March 2009, while the locomotive was being repaired, Titan Rail assigned the lease to Titan Leasing, an affiliated business, which then used the lease as security for a loan from Wells Fargo Equipment Finance. The loan is nonrecourse, meaning that Wells Fargo agreed to look for repayment exclusively to the stream of rentals expected from Gerdau, but Titan Leasing made several warranties. Breach of a warranty entitles Wells Fargo to get its money back from Titan Leasing. Titan Rail and Titan Transit have guaranteed all of Titan Leasing's obligations to Wells Fargo.
The warranties that matter to this appeal are in ¶ 3(m) of the security agreement. Here is the language, with the numbers in brackets added for reference later:
As of the date a Lease is assigned to Lender hereunder, the related Equipment has been  delivered and  accepted by the Lessee and the Lessee has acknowledged  receipt and  acceptance of such Equipment. Upon request by Lender, Lessor will cause such Equipment to be stamped or otherwise labeled reflecting that Lessor is the owner of such Equipment.
In this clause, " Lender" means Wells Fargo, " Lessor" means Titan Leasing, " Lessee" means Gerdau, and " the date" is March 6, 2009. On that date, the locomotive was in the hands of Knoxville Locomotive Works undergoing repairs.
Gerdau, which rejected the locomotive definitively in October 2009, has never made a payment on the lease. Wells Fargo has taken control of the locomotive and is attempting to sell it to recover some of what it loaned Titan Leasing--which has refused to return one penny. In this suit under the diversity jurisdiction, Wells Fargo contends that Titan Leasing is liable for breach of the warranties in ¶ 3(m) of the security agreement. It is unclear whether Titan Leasing is in a position to repay; it has been dissolved by Illinois's Secretary of State. Titan Rail is not in good standing (which apparently means that it has stopped filing reports and paying taxes), and Titan Transit's right to do business in Illinois has been revoked. But Illinois allows litigation against a corporation within five years of its ...