United States District Court, D. Minnesota
Bradley R. Hartke, Douglas P. Hartke, Joan Hartke, individually and as Trustees of the Joan L. Hartke QTIP Marital Trust dated 7/12/1996 and as Trustees of the Robert Eugene Hartke Family Trust dated 7/12/1996; the Joan L. Hartke QTIP Marital Trust dated 7/12/1996; and the Robert Eugene Hartke Family Trust dated 7/12/1996, Plaintiffs,
WIPT, Inc., Roger Dean Waldner, The One Stop, Inc., RDW-KILT, Inc., and Community Bank, Defendants.
MEMORANDUM AND ORDER
A. Magnuson United States District Court Judge
matter is before the Court on the parties’ Motions for
Judgment on the Pleadings. For the following reasons,
Plaintiffs’ Motion for Judgment on the Pleadings is
granted, Defendant Community Bank’s Motion for Judgment
on the Pleadings is granted, and the remaining
Defendants’ various Motions are denied.
personal and corporate relationships underlying this case are
complex and opaque. For purposes of the dispositive Motions,
however, a complete understanding of the parties’
interactions is not necessary. The Court will thus briefly
describe the events giving rise to the litigation.
2002, Plaintiffs Bradley Hartke, Douglas Hartke, Joan Hartke,
and the two Hartke family trusts entered into a $900,000 note
for the purchase of a trucking business, Solace Transfer,
from Defendant The One Stop, Inc. (Larson Aff. (Docket No.
68) Ex. 2.) Defendant Community Bank, then known as
State Bank of Winslow-Warren, is an Illinois bank that
provided the financing to the Hartkes for the purchase of
Solace. (Compl. ¶¶ 17, 19-20.) Plaintiffs allege
that Defendant Roger Waldner, appearing in this matter pro
se, was the owner of The One Stop, which in turn owned
Solace. (Id. ¶ 12.) The note was secured in
part with a mortgage on farmland and other property the
Hartkes owned in southwest Minnesota. (Larson Aff. Ex. 3.)
had filed for bankruptcy protection for Solace’s
predecessor company, H&W Motor Express Company, one month
before the Hartkes’ purchase. (Compl. ¶ 16.)
Waldner had purchased H&W and transferred all of its
assets to Solace, but Solace was in debt for more than $2
million, all secured with Community Bank-issued mortgages
either personally guaranteed by Waldner or secured with
various property Waldner and his associates owned.
(Id. ¶¶14, 17, 20.) The Hartkes contend
that the $900,000 purchase price for Solace represented the
difference between Solace’s indebtedness and the money
Waldner had siphoned out of H&W.
terms of the note required “11 monthly payments of
$7,800 beginning 8-24-2002 and 1 balloon payment of
$887,894.68 on 7-24-2003.” (See Larson Aff.
Ex. 2 at 1.) The Hartkes made two monthly payments on the
note, but they allege that Solace was in serious financial
trouble even before they agreed to purchase it and that it
was never a viable business. They thus made their last
payment in October 2002. (Compl. ¶ 21.) Over the next
several years, Waldner-controlled entities such as The One
Stop and Defendant WIPT (which stands for Women’s
Investment Property Trust) also made payments on the note,
but after October 2002, the note was not ever current.
November 2002, the Hartkes signed another note, in the amount
of $500,000, in favor of The One Stop. (Larson Aff. Ex. 4.)
The note was secured with a mortgage on Plaintiff Joan L.
Hartke Marital Trust’s property. (Id. Exs. 4,
5.) According to this note, the proceeds were to be used for
“business investment,” and were to be distributed
in multiple advances; the note leaves blank the amount of any
immediate advance. (Id. Ex. 4 at 1.) The Hartkes
assert that they did not receive any money from this note.
(Compl. ¶ 48.) They also contend that Waldner used the
Hartkes’ personal residences as collateral for this
note without their consent. (Id. ¶ 47.) Waldner
insists that the Hartkes knew about the mortgaging of their
residences. The November note was eventually assigned to
Defendant RDW-KILT, another Waldner-controlled company.
(Id. ¶ 49.)
began investigating Waldner in 2005, and in 2006 he was
charged in federal court in Iowa with multiple counts of
making false statements in H&W’s bankruptcy
proceedings. He pled guilty to two counts in May 2007, and
received a 120-month sentence. United States v.
Waldner, 564 F. Supp. 2d 911 (N.D. Iowa 2008). Waldner
was released from prison in late March 2017.
2007, after Waldner pled guilty but before he was sentenced,
RDW-KILT attempted to accelerate the November note and
mortgage. (Compl. ¶ 51.) The Hartkes allege that they
discovered at that time that their homesteads were collateral
for the mortgage, and they disputed the acceleration because
neither of their spouses had signed the mortgage.
(Id. ¶ 52.) A Minnesota state court ordered
that the mortgages on the homesteads were invalid, and there
was apparently no further action on the November note and
December 2016, WIPT notified the Hartkes that it had acquired
the July note and mortgage from Community Bank, and demanded
payment from the Hartkes for $1.5 million that WIPT had
ostensibly paid on the note. (Id. ¶ 53.) The
Hartkes then brought this lawsuit, seeking declarations that
the July and November notes and mortgages are unenforceable
and that WIPT and the other Defendants are barred by the
statute of limitations from attempting to collect on them.
only real issue here is whether the relevant statutes of
limitations bar Defendants from taking any action to enforce
the notes. The notes went into default, at the latest, in
late 2002. There was no attempt to enforce the July note
until the end of 2016. The Complaint contains no allegation
regarding demands for payment on the November note.
July 2002 note provides that Illinois law governs the note
and mortgage. (Larson Aff. Ex. 2 at 2; Ex. 3 ¶ 24.) The
Illinois statute of limitations on promissory notes is ten
years “after the cause of action accrued.” 735
Ill. Comp. Stat. 5/13-206. The November 2002 mortgage
provides that it is “governed by the laws of the
jurisdiction in which Lender is located.” (Larson Aff.
Ex. 5 ¶ 24.) The One Stop was the lender on the November