United States District Court, S.D. Indiana, Indianapolis Division
MUSA FINANCIAL LLC doing business as MORTGAGES USA; formerly known as J&M MORTGAGE BROKERS, LTD., Plaintiff,
MERCHANTS BANK OF INDIANA, P/R MORTGAGE AND INVESTMENT CORPORATION doing business as PR MORTGAGE & INVESTMENTS, and MICHAEL F. PETRIE, Defendants.
Magntis-Stinson, Chief Judge
case involves a series of interrelated contractual
relationships among and between the parties spanning more
than five years. The complex facts of the case largely arise
out of transactions in which mortgage loans are originated,
closed, and sold to other entities.
pending before this Court are three motions - (1) a Motion
for Judgment on the Pleadings filed by Plaintiff MUSA
Financial LLC (“MUSA”), [Filing No. 26]; (2) a
Motion for Leave to File an Amended Answer and Affirmative
Defenses filed by Defendants Merchants Bank of Indiana
(“Merchants”), P/R Mortgage and Investment
Corporation (“P/R Mortgage”), and Michael Petrie,
[Filing No. 39]; and (3) a Motion to Stay, also filed by
Defendants, [Filing No. 42].
the pleadings are closed-but early enough not to delay
trial-a party may move for judgment on the pleadings.”
Fed. R. Civ. P. 12(c). A motion for judgment on the
pleadings is subject to the same standard as a motion to
dismiss under Rule 12(b)(6). Gill v. City of
Milwaukee, 850 F.3d 335, 339 (7th Cir. 2017) (citing
Buchanan-Moore v. City of Milwaukee, 570 F.3d 824,
827 (7th Cir. 2009). In considering a motion for judgment on
the pleadings, courts “are confined to the matters
presented in the pleadings” and must consider those
pleadings in the light most favorable to the non-moving
party. Unite Here Local 1 v. Hyatt Corp., 2017 WL
2874805, at *5 (7th Cir. July 6, 2017) (citing Nat'l
Fid. Life Ins. Co. v. Karaganis, 811 F.2d 357, 358 (7th
Cir. 1987)). When the plaintiff moves for judgment on the
pleadings, “the motion should not be granted unless it
appears beyond doubt that the non-moving party cannot prove
facts sufficient to support his position.” Hous.
Auth. Risk Retention Grp., Inc. v. Chicago Hous. Auth.,
378 F.3d 596, 600 (7th Cir. 2004) (citation omitted).
MUSA is a mortgage lender that originates and closes mortgage
loans for the purpose of selling such loans to other parties.
[Filing No. 1 at 3.] From May 2011 to February 2015, MUSA was
owned by two members, each of whom had a 50 percent stake in
the company - Jeff Morgan and Bernard Malone. [Filing No. 1
at 3; Filing No. 1 at 5.]
is a banking corporation that entered into a series of loan
transactions and contracts with MUSA, beginning in May 2011.
[Filing No. 1 at 2-3.] P/R Mortgage is a corporation that
“sometimes competes with MUSA for the generation and
sale of loans on multifamily properties.” [Filing No. 1
at 2.] Michael Petrie is both the Chairman and CEO of
Merchants and the President of P/R Mortgage. [Filing No. 1 at
20, 2011, Merchants extended a $3 million line of credit to
MUSA. [Filing No. 1 at 4.] ¶ 2013, Merchants extended a
second line of credit to MUSA, which was raised to $800, 000
(collectively, with the 2011 line of credit, the
“MUSA Lines of Credit”). [Filing No. 1
at 5.] Merchants and MUSA also entered into two Participation
and Servicing Agreements, (the “Participation
Agreements”), in 2011 and 2012, respectively.
[Filing No. 1 at 4.]
2015, Mr. Malone passed away, leaving Mr. Morgan as the sole
member of MUSA. [Filing No. 1 at 2; Filing No. 1 at 5.] Prior
to his death, Merchants extended an approximately $1.5
million line of credit to Mr. Malone, (the “Malone
Line of Credit”), which was, in part, secured by
two life insurance policies. [Filing No. 1 at 4.]
after Mr. Malone's death, MUSA originated and closed on a
multi-family loan in the amount of $36 million, which MUSA
then sold to P/R Mortgage on May 1, 2015. [Filing No. 1 at
5.] Pursuant to the terms of the related loan purchase
agreement, P/R Mortgage was periodically required to remit
payments to MUSA, and did so for the first few months after
entering into the agreement. [Filing No. 1-1 at 3; Filing No.
20 at 4.]
December 2015, MUSA originated and closed a loan in excess of
$17 million, which it then sold to a company other than ...