SJ Properties Suites v. Specialty Finance Group, LLC (864 F. Supp. 2d 776, 2012)

DECISION AND ORDER

RUDOLPH T. RANDA, District Judge.

This Decision and Order addresses Defendant Specialty Finance Group, LLC’s (“SFG”) motion to dismiss the Amended Complaint (the “Complaint”) pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Problems related to an ill-timed construction loan agreement for a 14-story mixed-use real estate development project located at 1150 North Water Street, in downtown Milwaukee, Wisconsin (the “Project”) are at the core of this litigation commenced by the Plaintiffs, SJ Properties Suites; BuyCo, ehf (“BuyCo”); SJ-Fasteignir, ehf (“Fasteignir”); and Askar Capital, hf, (“Askar”) (collectively the “Icelandic Entities” or the “Plaintiffs”).

The 49-page, 239-paragraph Complaint asserts claims for unjust enrichment (Count I), promissory estoppel (Count II), violations of Subchapter III of Wisconsin Statutes Chapter 224 (Count III), unclean hands (Count IV), a declaration of rights under Wisconsin Statutes § 840.03 (Count V), a declaration of rights under Wisconsin Statutes § 841.01 (Count VI), and interference with interest and physical injury to real property (Count VII).

The factual allegations underlying this action span a four-year period and involve a number of entities and contracts. However, in a nutshell, the claims are based on allegations that SFG failed to fully fund its construction loan for the Project and SFG subsequently coerced the Icelandic Entities to advance monies for the Project. The Icelandic Entities maintain that SFG notified them of events of default due to cost overruns, caused them to provide emergency cash to the Project, and that, when the Project eventually collapsed, SFG refused to allow them to continue making payments on the loan.

Motion to Dismiss

SFG seeks dismissal of the entire Complaint. SFG contends that the Icelandic Entities’ claims for unjust enrichment (Count I), promissory estoppel (Count II), and most of the claim alleging violations of Subchapter III of Wisconsin Statutes Chapter 224 (Count III) are barred, and that all counts fail to state a cause of action.

For purposes of the pending motion to dismiss, the Court accepts the factual allegations in Icelandic Entities’ Complaint as true and draws all reasonable inferences in favor of the Plaintiffs. See Ray v. City of Chicago, 629 F.3d 660, 662 (7th Cir.) cert. denied, — U.S.-, 132 S.Ct. 100, 181 L.Ed.2d 28 (2011). To survive a 12(b)(6) motion to dismiss, “a complaint must contain sufficient factual material, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. As the court of appeals for this circuit has stated “the plaintiff must give enough details about the subject-matter of the case to present a story that holds together.” Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir.2010).

“Determining whether a complaint states a plausible claim for relief ... [is] a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 129 S.Ct. at 1950. In performing this analysis, courts need not accept as true any legal conclusions or conclusory statements included in the complaint. Id. at 1949-50. The Court will, however, accept as true all well-pleaded factual allegations, and will draw all reasonable inferences in the plaintiffs favor. Ray, 629 F.3d at 662. If the allegations of the complaint “fail[ ] to state a claim upon which relief can be granted,” the complaint will be dismissed. Fed. R.Civ.P. 12(b).

Background

BuyCo and Fasteignir are Icelandic private limited companies, referred to as an einkahlutafélag (“ehf’), whose principal offices are located in Reykjavik, Iceland. (Compl. ¶¶ 1-3.) (ECF No. 44.) Askar is an Icelandic limited company, referred to as a hlutafélag (“hf’), whose principal office is also located in Reykjavik, Iceland. (Id. at ¶ 3.) BuyCo and Fasteignir advanced funds for the Project. (Id. at ¶¶ 1-2.) Askar provided “mezzanine financing” for the loan. (Id. at ¶ 3.)

SFG is a Georgia unchartered limited liability company whose principal office is located in Atlanta, Georgia. (Id. at ¶¶4, 23.) SFG was, and is, a wholly owned subsidiary of Silverton Bank N.A. (“Silver-ton”). (Id. at ¶ 23.) SFG was created to target the financing needs of the hospitality industry. (Id.)

Neither Silverton nor SFG ever submitted to any type of regulation by the State of Wisconsin, including, without limitation, regulation by the Wisconsin Department of Financial Institutions (“DFI”), Division of Banking, as of the date SFG issued the loan commitment or at any other time. (Id. at ¶ 36.) SFG has not registered as a mortgage banker or broker in Georgia or any state. (Id. at ¶ 35.) In Specialty Finance Group LLC v. DOC Milwaukee LP et al, No. 10-C-315 (E.D.Wis.) (the “315 action”), SFG alleged that it is a “mortgage banker” under Wisconsin Statutes §§ 706.11(1)(f) and 224.71(3). (See id. at ¶ 41 (citing the 315 action Compl. (ECF No. 1), ¶¶ 39 & 50).)

On approximately November 9, 2006, DOC Milwaukee, LP (“DOC Milwaukee”) was created to acquire and develop the property located at 1150 North Water Street (the “Property”). (Id. at ¶ 26.) When DOC Milwaukee was formed, its partners were as follows: (1) DOC Milwaukee II, LLC, as the initial general partner; (2) Development Opportunity Corp., as a limited partner; (3) EP Milwaukee, LLC, as a limited partner; and (4) BuyCo, as a limited partner. (Id.)

DOC Milwaukee received a loan commitment on March 29, 2007, from SFG to advance a $20,900,000 loan for the Project. (Id. at ¶ 37.) Under the terms of the loan commitment, SFG was to fund a loan amount “Not to Exceed $20,900,000.00,” provided that DOC Milwaukee made equity contributions equal to 25% of the Project’s cost, with a minimum equity contribution of $6,993,302.00. (Id. at ¶ 32.) The minimum equity contribution however, established a 33.4% loan to value ratio. (Id.) When the loan commitment was issued, the loan to value ratio exceeded the 20% loan to value ratio for commercial construction required under the Interagency Guidelines for Real Estate Lending Policies (“Interagency Guidelines”) by 13.4%. (Id. at ¶ 33.) At the time of the loan commitment’s execution, it was contemplated that the loan documents would be immediately forthcoming and that the loan would close on or before April 6, 2007. (Id. at ¶ 34.)

On April 2, 2007, three days after the issuance of the loan commitment, Silverton submitted an application to the Office of the Comptroller of the Currency (the “OCC”) requesting permission to convert from a Georgia chartered commercial bank to a national association. (Id. at ¶ 56.) Silverton’s conversion application disclosed SFG as its wholly owned subsidiary. (Id.) It did not identify SFG as a registered or licensed mortgage banker in any jurisdiction, including Georgia or Wisconsin. (Id.)

Silverton’s subsequent periodic regulatory disclosures made to the OCC did not identify SFG as a registered or licensed mortgage banker in any jurisdiction, including Georgia or Wisconsin. (Id. at ¶ 59.) As a result of Silverton’s attempt to convert to a national association, it was required to submit to the OCC’s jurisdiction and rules, as the OCC was Silverton’s primary regulator. (Id.) National Banks and National Associations also must be members of the Federal Reserve System (“Federal Reserve”) and the FDIC. (Id. at ¶10.)

By submitting to the OCC’s regulation, Silverton and its subsidiaries, including SFG, also agreed to submit to the internal loan to value ratio established by 12 C.F.R. § 34, including the Interagency Guidelines that are incorporated by reference, 12 U.S.C. § 1828(o), and the Comptroller’s Commercial Real Estate and Construction Lending Handbook (the “Comptroller’s Handbook”). (Id. at ¶ 60.) Regulation by the OCC also prohibits insolvent banks from using federal foreclosure procedures if a receiver is appointed to administer assets of an insolvent national association. (Id. at ¶ 61.) The loan to value ratio established by the loan commitment exceeded those established by the Interagency Guidelines by 13.4%. (Id. at ¶ 62.)

On May 14, 2007, the OCC began its pre-conversion evaluation. (Id. at ¶ 65.) On June 5, 2007, in an internal memorandum, OCC examiners expressed concerns with Silverton’s credit risk management processes, strategic planning, and capital planning. (Id. at ¶ 68.) At about the same time, the OCC determined that there were significant weaknesses in Silverton’s banking practices, including compliance with regulatory capital requirements and statutory loan criteria. (Id. at ¶ 69.)

On June 18, and June 26, 2007, the OCC officials met with Silvertoris management to discuss their concerns. (Id. at ¶ 70.) The OCC reported to Silverton that its investigation noted unsafe and unsound undexwriting and credit administration practices, including inadequate capitalization of loans, construction draw monitoring, and a lack of compliance with loan to value ratios. (Id. at ¶ 71.) The OCC examiner’s review reported significant weaknesses in Silvertoris portfolio and requested that Silverton review its business plan to reduce the risk, particularly of its construction loans. (Id. at ¶72.) The concerns expressed in the June 2007, meetings were later memorialized in a July 26, 2007, letter that, among other matters, recommended changes to Silvertoris lending practices. (Id. at ¶ 70.)

On August 7, 2007, the OCC approved Silverton’s application for conversion to a national association, conditioned upon Silvertoris agreement to address the concerns in the OCC’s July 26, 2007, letter. (Id. at ¶ 73.) Silverton was formally converted to a national association on August 17, 2007. (Id. at ¶ 74.) As of August 17, 2007, the OCC reassigned Silverton from its Birmingham office to the Atlanta office for supervision. (Id. at ¶ 79.) From August 17, 2007, until late November 2007, there was a gap of about 90 days in the supexwision of Silverton. (Id. at ¶ 79.)

Silverton disclosed SFG as a wholly owned and operated subsidiary, established as a limited liability company that made direct commercial loans to the hospitality industry. (Id. at ¶ 76.) This list was not amended and at no time did Silverton advise the OCC that either it or its subsidiaries or branches maintained offices within Wisconsin. (Id.) Silverton also did not amend its disclosures to indicate that SFG was engaged in the business of mortgage banking or serving as a mortgage banker in any state, including Wisconsin. (Id.) A significant benefit of having SFG operate as a limited liability company that was the wholly owned subsidiary of a national association is that SFG could avoid having to register or obtain a license from state lending and banking regulators when SFG made loans for projects outside of Georgia. (Id. at ¶ 77.)

In October 2007, SFG presented a loan agreement for DOC Milwaukee to sign based upon the terms of the loan commitment, which contemplated a $20,900,000 loan with a minimum 25% equity requirement. (Id. at ¶ 84.) Days later, SFG advised that it would be unable to sign the document. (Id.)

Iri October 2007, SFG also retained Broadlands Financial Group, LLC (“Broadland’s”) to serve as a lender services agent for the Project. (Id. at ¶ 85.) By October 2007, SFG was aware that a number of subcontractors had visibly commenced work at the Project. (Id. at ¶ 86.)

By the end of November 2007, the supexvisory gap at the OCC was filled, and the OCC ordered a full-scope examination of Silverton and SFG. (Id. at ¶ 87.) The OCC began reviewing new loans and problem loans, assessing lending area risk, and conducting a targeted examination of lending risk and asset quality. (Id.) Particular attention was given by the OCC to loan to value ratios and asset quality. (Id.) As part of the evaluation process, the OCC identified Silverton and SFG loans that potentially fell outside of its commitments made to the OCC pre-conversion. (Id.)

As a result of pressures from regulators, and to stem its own losses, Silverton and its wholly owned subsidiary, SFG, began to “aggressively restrict” its loans to comply with federal lending guidelines, and attempted to obtain additional equity contributions from its borrowers to bring its total portfolio loan to value numbers into line. (Id. at ¶ 88.)

In November 2007, SFG advised DOC Milwaukee that it could not sign the loan agreement because its parent company, Silverton, was unwilling to provide funding for the loan. (Id. at ¶ 89.) SFG offered to issue a loan for a lower dollar amount and promised that it would issue a new loan based upon the original loan commitment promptly after Silverton’s issues were worked out. (Id.) When SFG so advised DOC Milwaukee, SFG was aware that the Project was already under construction. (Id. at ¶ 90.) To keep the Project going, the Icelandic Entities stepped in and advanced additional emergency cash. (Id.)

On January 9, 2008, SFG and DOC Milwaukee entered into a new loan agreement for a lower amount — $14,900,000.00 (the “SFG loan agreement”). (Id. at ¶ 9.1.) The SFG loan agreement contemplated that DOC Milwaukee would make a borrower’s equity contribution of $12,998,802 or 25% of the total cost of the Project. (Id. at ¶ 95.) Under the SFG loan agreement, Broadlands was to provide construction risk management services including Project oversight and contract funds administration. (Id. at ¶ 100.)

By January 2008, immediately prior to the execution of the SFG loan agreement, the OCC was reporting significant concerns over Silverton’s viability. (Id. at ¶ 107.) Despite the fact that the loan had closed, the mortgage had been recorded, and the Project was over 60% complete, SFG failed to fund the first draw request. (Id.) By April 24, 2008, the OCC’s target examination reported that Silverton’s asset quality had significantly deteriorated, and for the first time, expressed concerns about Silverton’s continued viability. (Id. at ¶ 110.)

About the same time in April 2008, SFG informed DOC Milwaukee that DOC Milwaukee was in default of the SFG loan agreement citing “unauthorized cost overruns.” (Id. at ¶ 111.) None of the alleged “cost overruns” were unknown events and, before the loan closed, they had been fully disclosed by HMS Victory, LLC (‘Victory”) to SFG and Broadlands. (Id.) In addition, the purported cost overrun reflected an amount to complete that was less than the “Cost Breakdown” contained in the SFG loan agreement. (Id.)

At the time of the first default notice in April 2008, SFG had advanced $7,605,866.98 (Id. at ¶ 113.) DOC Milwaukee was not in, default of the SFG loan agreement due to any delinquencies in payments on the interest or principal that SFG had advanced. (Id. at ¶ 114.) SFG then threatened the Plaintiffs that if they did not advance additional funds to DOC Milwaukee for the Project, SFG would wipe out their interest in the Project. (Id.)

On June 2, 2008, the OCC ordered a full-scope safety and soundness evaluation of Silverton and SFG. (Id. at ¶ 116.) The FDIC and OCC pressured Silverton — and the FDIC, OCC and Silverton pressured SFG — to improve its loan to value ratios for its overall portfolio. (Id.) Despite additional cash advances to buttress its equity cushion, Silverton and SFG continued to experience sagging loan to value ratios for its portfolio and continued to demand additional cash be infused into the Project. (Id. at ¶ 117.)

In September 2008, SFG demanded that DOC Milwaukee or its partners or lenders advance yet another $4,000,000.00 of additional equity into the Project in order to obtain SFG’s agreement not to foreclose. (Id. at ¶ 118) At the time, DOC Milwaukee was current on principal and interest payments, the Project was 80% complete and was still operating under the budget that had been disclosed to SFG prior to the execution of the SFG loan agreement. SFG promised that if the Icelandic Entities advanced additional emergency funds, SFG would forbear and also fund the remaining principal balance of the SFG loan agreement. (Id.) These demands were not made in good faith and the Icelandic Entities “were forced to manifest assent to the transaction out of fear of their entire investment in the Project being wiped out.” (Id.)

On October 8, 2008, SFG and DOC Milwaukee entered into a forbearance agreement. (Id. at ¶ 119.) The first forbearance agreement was also signed by the guarantors, Phil Hugh (“Hugh”), John Economou (“J. Economou”), and Steve Economou (“S. Economou”). (Id.) The Icelandic Entities were not parties to the first forbearance agreement. (Id.)

On October 24, 2008, Silverton Financial Services, Inc., Silverton’s holding company, filed an application for $77,300,000.00 under the Troubled Asset Relief Program (“TARP”). (Id. at ¶ 120.) As of that date, the OCC began evaluating Silverton for a possible Federal Deposit Insurance Corporation (“FDIC”) receivership. (Id.) On November 24, 2008, the OCC advised of its decision not to recommend approval of the TARP application. (Id. at ¶ 121.) However, on December 12, 2008, the OCC determined that Silverton should be deemed in a troubled condition, and transferred supervision of the bank to the OCC’s Special Supervision Division in Washington, D.C. (Id.)

On February 2, 2009, the OCC began a targeted examination of all loans, including those made by SFG. (Id.) On about February 10, 2009, SFG again informed DOC Milwaukee that it was in default on the SFG loan agreement, once more citing the failure to infuse additional equity into the Project. (Id. at ¶ 123.) As of that date, SFG had advanced $13,431,373.42 on the SFG loan agreement while the Icelandic Entities had advanced $17,419,807.75 through equity contributions and loans to DOC Milwaukee to complete the Project, or a 57% cushion. (Id. at ¶ 124.) At the time, the loan to value ratio was less than 43%, well inside the 80% established in the Interagency Guidelines. (Id. at ¶ 125.) In February 2009, when SFG declared the loan in default, DOC Milwaukee was not delinquent in any payments on the principal or interest on the SFG loan agreement. (Id. at ¶ 126.)

Despite having adequate protection, SFG again threatened to accelerate the SFG loan agreement, which would have required DOC Milwaukee to advance $13,431,373.42 within days or face foreclosure. (Id. at ¶ 127.) Without justification, officers of SFG threatened anew the Icelandic Entities that if they did not advance additional emergency funds to DOC Milwaukee for the Project, SFG would “wipe out their interests in the Project.” (Id. at ¶ 128.) The Icelandic Entities were forced to assent to advancing emergency funds out of fear of losing their over $17 million investment in the Project. (Id.) SFG’s threats did not constitute good faith action, and SFG made the threats even though the Icelandic Entities are neither parties to, nor guaranteed the SFG loan agreement. (Id. at ¶ 129.) However, SFG was aware that the Icelandic Entities were funding the borrower equity contribution under the SFG loan agreement and providing additional monies for the Project through loans and mezzanine financing, among other ways. As a result, SFG owed the Icelandic Entities an obligation to construe the provisions of the SFG loan agreement, including § 3.25, in good faith. (Id.)

SFG also promised that if the Icelandic Entities advanced additional emergency funds, SFG would fund the remaining principal balance of the SFG loan agreement. (Id. at ¶ 130.) It is believed that SFG’s fully funding the loan, along with the funding from the Icelandic Entities, would have been sufficient to complete construction at the Project. (Id.)

To avoid acceleration and foreclosure, and to obtain the remaining loan proceeds, SFG again required DOC Milwaukee to enter into a forbearance agreement. (Id. at ¶ 131.) The Icelandic Entities advanced emergency cash to facilitate the forbearance agreement even though the demand was not made in good faith. (Id.) Based upon information and belief, SFG was aware of issues with Silverton’s viability that would eliminate its ability to use federal foreclosure laws if the OCC appointed a receiver to administer Silverton’s and SFG’s assets. (Id. at ¶ 132.)

DOC Milwaukee entered into a second forbearance agreement with SFG on or about April 3, 2009 (the “second forbearance agreement”). (Id. at ¶ 133.) The guarantors, Hugh, J. Economou, and S. Economou also signed the second forbearance agreement. (Id). As with the first forbearance agreement, the Icelandic Entities were not parties to the second forbearance agreement. (Id.) The loan commitment, the SFG loan agreement, and the first and second forbearance agreements are collectively referred to as the “loan documents.” (Id.)

Based on information and belief, DOC Milwaukee entered into the second forbearance agreement because, at that time, acceleration and foreclosure would have wiped out millions of dollars of DOC Milwaukee’s and its investors’ equity, and would have permanently stopped work on the Project. (Id. at ¶ 135.) During such process, SFG engaged in additional abusive lending practices, and it repeatedly threatened to sell the SFG loan agreement, including a specific threat to “sell the loan to a loan shark,” if the Icelandic Entities did not take immediate steps to complete the Project using their own funds. (Id.) The Icelandic Entities were forced to assent to SFG’s abusive lending practices because they were fearful of losing their entire investment. (Id.)

On May 1, 2009, Silverton was closed by the OCC. (Id. at ¶ 136.) Subsequently, it was placed into a receivership, and the FDIC was appointed as the receiver. (Id.) On the date Silverton was closed, an entity known as Silverton Bridge Bank was chartered by the OCC to take over operations as a new national bank and controlled by the FDIC in accordance with 28 U.S.C. § 1821(n). (Id.) As a result, Silverton ceased legal existence on May 1, 2009. (Id.)

A bridge bank allows a failed bank to be liquidated in an orderly fashion, and its duration is limited to the time reasonably necessary to complete the liquidation process. (Id.) Silverton Bridge Bank was expressly chartered to accomplish these purposes. (Id. at ¶ 137.) Silverton Bridge Bank was empowered by the FDIC, as the receiver, to administer Silverton’s assets, including its wholly owned subsidiary, SFG. (Id.)

A receiver was appointed by the Comptroller of the Currency to administer the assets of Silverton, including SFG. (Id. at ¶ 138.) Even though the Icelandic Entities are not parties to, or a guarantor of the loan documents, they made loans, cash advances, and payments on the loan documents to keep work progressing at the Project, and to avoid having their interests destroyed by SFG’s threatened foreclosure. (Id. at ¶ 139.) Despite the Icelandic Entities’ advancing additional funds by the Icelandic Entities, SFG failed to advance the remaining principal balance due under the loan documents. (Id. at ¶ 140.) Because of SFG’s breach of its promises to fund, a number of unpaid subcontractors have filed liens against the Project, with the total liens in excess of $4,500,000.00. (Id.)

On June 5, 2009, the FDIC announced that the Silverton receivership would be discontinued on June 29, 2009, due to the receiver’s inability to sell Silverton’s loan portfolios. (Id. at ¶ 141.) The Icelandic Entities continued to advance funds to SFG to keep payments on the loan documents current through June 30, 2009. (Id. at ¶ 142.) The Icelandic Entities were the only parties who were willing or able to advance funds for the Project at that time. (Id.)

Although the Icelandic Entities advanced funds to keep the loan current, SFG declared the SFG loan agreement in default for a third time and advised on June 16, 2009, that it would not accept any further curative payments after June 30, 2009. (Id. at ¶ 143.) SFG advised that it intended to foreclose and “wipe out” the Icelandic Entities’ interests, as well as the interests of all subcontractors. (Id.)

In June 2009, after the FDIC stepped in, Fasteignir and Askar contacted SFG regarding arrangements to continue to service the mortgage and were informed that SFG would no longer accept payments from any of the Icelandic Entities to keep the loan current. (Id. at ¶ 144.)

On June 22, 2009, BuyCo petitioned for DOC Milwaukee to be placed into a receivership, and Seth E. Dizard was appointed as receiver. (Id. at ¶ 145.) See SJ Properties Suites, BuyCo, ehf v. DOC Milwaukee County L.P., Milwaukee County Circuit Court, No.2009CV009785, available at http://wcca.wicourts.gov (last visited Aug. 23, 2010). BuyCo petitioned for a receiver to address partnership impasse issues with EP Milwaukee, LLC, including a dispute over who had the right to be the general partner. (Id.) BuyCo also petitioned for the receivership because SFG would no longer accept payments from any of the Icelandic Entities, or other mezzanine lenders. (Id.) Dizard has the responsibility of seizing and preserving all of DOC Milwaukee’s property, including the Project, for the benefit of DOC Milwaukee’s creditors.

On February 5, 2010, the FDIC announced that it was placing a number of Silverton’s assets, including SFG’s loans and participations, for forced auction. (Id. at ¶ 146.) The FDIC retained Deutsche Bank, N.A. to auction off a total loan portfolio valued at $400,000,000.00. (Id.) The portfolio consisted of 62 whole loans — including $162,402,456.00 in whole loans held by Silverton and $253,962,558.00 in 40 separate loan participations — including SFG’s participation in the loan. (Id.) The FDIC assumed SFG’s participation and sold the SFG participation at auction in April 2010. (Id.)

On May 18, 2010, SFG assigned its interest in the Project to the FDIC. (Id. at ¶ 146.) The same day, the FDIC, which had been administering assets through its receiver, assigned that interest to 2010-1 SFG Venture LLC (“Venture”) (Id. at ¶ 148.) On June 17, 2010, SFG asked the Court to substitute in 2010-1 SFG Venture LLC as the defendant in this action. (Id. at ¶ 149.) The Court denied SFG’s request. (Id. (citing ECF No. 41.).)

FDIC Defenses

SFG’s Standing to Assert the FDIC Defenses

SFG maintains that the Icelandic Entities’ causes of action for unjust enrichment (Count I), promissory estoppel (Count II), and their cause of action under Chapter 224 of the Wisconsin Statutes (Count III), except for the portions of the count brought under Wis. Stat. §§ 224.77(l)(i) and (k), are barred by 12 U.S.C. § 1823(e) and the D’Oench doctrine (the “FDIC defenses”). (Def.’s Br. Mot. Dismiss Am. Compl. (“Def.’s Br. Mot. Dismiss”) (ECF No. 48) 23, 25.) (See also Def.’s Br. Mot. Dismiss Compl. (ECF No. 4) 21-30.) In response, the Icelandic Entities assert that SFG cannot present the FDIC defenses because it failed to identify the FDIC’s interest, there is no diminution of any interest in the loan documents, and SFG has no right to assert the defenses. (Pis.’ Resp. Br. Opp’n Mot. Dismiss Am. Compl. (“Pis.’ Opp’n Mot. Dismiss”) (ECF No. 53) 8-11.)

The FDIC defenses work to void any agreement with a bank under the control of, or in the receivership of the FDIC, if that agreement may diminish any asset of the corporation, unless it meets several conditions. See 12 U.S.C. § 1823(e). Among these conditions are that the agreement must be in writing, must be signed at the time of the acquisition of the asset by the FDIC, and must be a part of the record of the bank. 12 U.S.C. § 1823(e)(1)(A), (B), & (D).

Before determining if the FDIC defenses bar the Icelandic Entities’ claims, the Court must determine whether SFG may assert those defenses. The Icelandic Entities contend that SFG has no independent right to assert these defenses where the FDIC has not intervened or asserted an interest in the case. (Pis.’ Opp’n Mot. Dismiss 11.) They further state that, although the defenses can apply to subsidiaries of national banks, the subsidiary cannot assert the defenses without the involvement of the FDIC with respect to an asset in which it has an interest, and the FDIC has to be the real party in interest for the FDIC defenses to be asserted. (Id.)

SFG relies on Hall v. Federal Deposit Insurance Corp., 920 F.2d 334, 339 (6th Cir.1990), indicating that there are instances when the FDIC may no longer have an interest in an asset but the D’Oench doctrine applies. The Icelandic Entities counter that Hall presented a much different situation.

Hall addressed whether the Federal Savings and Loan Insurance Corporation (“FSLIC”) could invoke the D’Oench doctrine as a complete bar to the plaintiff borrowers’ suit for breach of an loan agreement by a failed savings and loan association. SFG quotes the following statement with the significant deletion of the italicized sentences:

The effect of an imposition on public funds is the same in the case where a lawsuit creates a negative asset as where it reduces the value of a positive asset. The D’Oench doctrine should protect FDIC in both cases. D’Oench is important for allowing banking authorities to determine exactly what a bank’s assets and liabilities are. The doctrine may therefore be invoked even where FDIC does not have ‘an interest in an asset.

(Defs Reply Br. Mot. Dismiss Compl. (ECF No. 49) 15 (quoting Hall, 920 F.2d at 339).) (Emphasis added.)

Hall was a lawsuit commenced against Commerce Federal Savings and Loan Association, Inc. (“Commerce”) for breach of a loan agreement based on its alleged failure to fully fund a loan. 920 F.2d at 335. Four days before trial, the FSLIC, was appointed as the receiver for Commerce, and became the defendant in the lawsuit. Id. Thereafter, a successor savings and loan acquired from the FSLIC the assets and liabilities of Commerce, with the exception of the liabilities arising from the lawsuit, which were assigned to the FSLIC.

The successor savings and loan was added to the lawsuit. Id. at 336. However, it prevailed on a motion to dismiss and, on summary judgment the FSLIC was dismissed from the action under the D’Oench doctrine. See id. at 335 n. 2, 336. The appellate court did not reinstate the successor savings and loan as a defendant because it found that the assignment was proper and that the FSLIC was the real party in interest. Id. at 337. The court expressly stated that it did not need to address the issue of whether the savings and loan as a successor in interest to .the FSLIC was protected by the D’Oench doctrine. Id. at 337 n. 6.

However, in Victor Hotel Corp. v. FCA Mortgage Corp., the Court of Appeals for Eleventh Circuit held that the FDIC defenses barred claims against a wholly-owned subsidiary of a failed institution. 928 F.2d 1077, 1083 (11th Cir.1991). The appeals court held the defenses were applicable even though the FSLIC “was not a party to th[e] action and the defenses asserted would not diminish any present or past right, title, or interest of [the] FSLIC in [the defendant’s] loan agreement” with the plaintiff. Id.; see also, People ex rel. Hartigan v. Commonwealth Mortg. Corp. of Am., 723 F.Supp. 1258, 1261 (N.D.Ill. 1989). Robinowitz v. Gibraltar Sav., 23 F.3d 951, 956 (5th Cir.1994); Sweeney v. Resolution Trust Corp., 16 F.3d 1, 4 (1st Cir.1994); Oliver v. Resolution Trust Corp., 955 F.2d 583, 585-86 (8th Cir.1992). The Court of Appeals for the Seventh Circuit has apparently hot addressed the subject. However, based on the foregoing authorities, the Court concludes that the FDIC does not need to involve itself in this lawsuit in order for SFG to raise the FDIC defenses.

The Icelandic Entities also contend that the FDIC defenses are inapplicable because SFG failed to identify the FDIC’s interest that is implicated by the claims. (Pis.’ Opp’n Mot. Dismiss 8-10.) They further state that the only evidence of a potential interest is the transfer of the loan documents to Venture through the FDIC, and that it is not clear what interests were transferred. (Id. at 8-9.) Furthermore, the Icelandic Entities note that their claims in this action are not dependent on the loan documents which they indicate the Court recognized in a prior ruling in this case. (Id. at 9 (citing the Court’s August 25, 2010, Decision and Order, 733 F.Supp.2d 1021, 1039 (E.D.Wis. 2010) (ECF No. 41.)).)

SFG argues that the FDIC has an interest in the case, as recognized by the allegation in the amended complaint. (Def.’s Reply Br. Mot. Dismiss Am. Compl. (Def.’s Reply Dismiss) 2 (citing Compl. ¶ 138).) (ECF No. 56.) It further asserts that SFG remained under FDIC control and was not transferred to Silverton Bridge Bank. (Id. (citing Purchase and Assumption Agreement Among Fed. Deposit Ins. Corp. and Silverton Bridge Bank, N. A., Schedule 3.1(i), May 1, 2009, available at http://www.fdic.gov/bank/individual/failed/ silverton_P_and_A.pdf).) SFG also argues that, even if it had been transferred, the FDIC defenses would still apply. (Id. at 3 (citing FDIC v. Greenberg, 851 F.Supp. 15, 21 (D.Mass.1994)).)

In Greenberg, the district court held that the D’Oench doctrine applied to agreements made either before or after the bank is rendered insolvent and that the FDIC, as the receiver for the bridge bank, retained all rights, powers and privileges of the bridge bank when that bank was dissolved. Greenberg, 851 F.Supp. at 21. Greenberg does not hold that FDIC defenses are available for a bridge bank. Instead, Greenberg focuses on the timing of an agreement and the applicability of the defenses to the FDIC based on that timing. See id.

SFG further relies on Hall to support its position that the FDIC does not need to have a current asset interest to assert the FDIC defenses. (Def.’s Reply Dismiss 3.) The Icelandic Entities argue that Hall is inapplicable because the facts are different, and because there has been no clarification as to whether the FDIC has an interest in this case. (Pis.’ Opp’n Dismiss 9.)

Hall stated, in dicta, that where the FDIC no longer has an interest in an asset, the logic of D’Oench may still apply to protect the FDIC. Hall, 920 F.2d at 339. The court provided examples of where the defenses are applicable, and stated that “[t]he doctrine may therefore be invoked even where FDIC does not have ‘an interest in an asset.’ ” Id.

The Icelandic Entities argue that, even if there does not need to be a specific asset, the claims can still be enforced against SFG, just not against the FDIC, relying on FDIC v. State Bank of Virden, 893 F.2d 139, 143 (7th Cir.1990). (Pls.’ Opp’n Mot. Dismiss 9-10.) They also argue that the FDIC defenses are only applicable to assets over which the FDIC has an interest, not other assets. (Id. at 10 (citing Vernon v. Resolution Trust Corp., 907 F.2d 1101, 1107-08 (11th Cir.1990)).)

Vernon v. Resolution Trust Corp., 907 F.2d 1101, 1106-07 (11th Cir.1990), notes that courts have applied the D’Oench doctrine to protect entities from claims that were clearly contemplated in the purchase agreement. However, the court declined to extend the D’Oench doctrine to all claims that would diminish the assets of a federal insurer or its successor. Vernon, 907 F.2d at 1108.

Vernon is not completely applicable to the situation presented by this case. Vernon declined to extend the D’Oench doctrine to tortious claims and dealt with stockholders, rather than borrowers. Vernon, 907 F.2d at 1107-08. The claims in the instant case are quasi-contractual and do not arise in tort law. (See infra at 794-96.)

Most importantly, Vernon was significantly narrowed by the Eleventh Circuit Court of Appeals. In OPS Shopping Center, Inc. v. Federal Deposit Insurance Corporation, 992 F.2d 306, 307-08 (11th Cir. 1993), a bank issued a letter of credit in violation of a cease and desist order issued by the FDIC, in violation of bank policy, without board approval, and without making any record of its issuance. After the bank was declared insolvent and the FDIC was appointed as its receiver, OPS brought an action against the FDIC based on the letter of credit. Id. at 308. The FDIC moved for summary judgment invoking the FDIC defenses. Id. The motion was granted.

OPS appealed contending that its claim was not barred by the FDIC defenses because the secret agreement related to a liability of the bank, rather than to a specific asset of the bank that the FDIC had acquired. Id. at 309. Responding to that argument, the court clarified that Vernon means only that a free-standing tort claim, not related to an asset acquired by the FDIC, is not subject to the FDIC defenses. Id. at 310. The court held that in contrast to the tort claims of Vernon, the claims in OPS related directly to ordinary banking transactions — the rights and obligations relating to the issuance of a letter of credit by the bank — which should be reflected in the records of regular banking transactions. Id. at 310-11. The OPS Shopping Center court also noted that, as of that date, every court of appeals that had addressed the argument that a claim must be related to a specific asset for D’Oench to apply, had rejected the argument. Id. at 309-10 (collecting decisions of the Court of Appeals for the First, Fifth, Sixth, and Eighth Circuits).

The Icelandic Entities also maintain that the FDIC defenses do not bar claims against SFG’s general assets in which the FDIC has no interest. (Pls.’ Opp’n. Mot. Dismiss 10.) They rely on Vernon, citing the language discussed above, and First Financial Savings Bank, Inc. v. American Bankers Insurance Co. of Florida, Inc., 783 F.Supp. 963, 967 (E.D.N.C.1991). Although First Financial agreed with Vernon about the extent of protection provided by the FDIC defenses, First Financial presented a different factual context that is not applicable here. First Financial also predated OPS — which emphasized the free-standing tort at issue in Vernon, rather than the specific asset language of Vernon.

SFG argues that the Icelandic Entities are merely rearguing the specific asset rule, and points to decisions of several federal appellate circuits that have rejected that contention. (Def.’s Reply Dismiss 4 (citing Bufman Org. v. FDIC, 82 F.3d 1020, 1025 (11th Cir.1996))). In Bufman, the Court of Appeals for the Eleventh Circuit acknowledged that, subsequent to Vernon, the decisions of that circuit made it clear that not all tort claims escape the FDIC defenses and the key is whether the claim is unrelated to a regular banking transaction. 82 F.3d 1020, 1025 (11th Cir. 1996).

In addition, the Icelandic Entities argue that SFG cannot foreclose using federal foreclosure procedures and still assert the FDIC defenses. The federal foreclosure action, the 315 action, was dismissed by this Court on December 22, 2010, based on the doctrine of prior exclusive jurisdiction. Because SFG cannot use the federal foreclosure procedures, the argument is moot and will not be addressed.

As the above discussion indicates, the FDIC defenses are available to SFG, a subsidiary of the Silverton Bank, because of the FDIC receivership. The Icelandic Entities’ claims for unjust enrichment and promissory estoppel are based on oral agreements that were not in the record reviewed by the FDIC. However, SFG has not established that the statutory cause of action under Chapter 224 of the Wisconsin Statutes falls within the ambit of the FDIC defenses. Therefore, SFG’s motion to dismiss based on the FDIC defenses is granted as to the unjust enrichment and promissory estoppel claims and denied as to the Chapter 224 claim.

Failure to State a Cause of Action

SFG also asserts all seven counts of the Complaint fail to state a cause of action. Despite concluding that the FDIC defenses bar the promissory estoppel and unjust enrichment counts, the Court will consider SFG’s contentions as to each of the challenged counts.

Choice of Law

In considering whether the common law counts state a cause of action, this Court first considers what state’s law governs the counts. This case is a diversity case. The Court must determine which jurisdiction’s laws apply and, then, follow the conflicts of laws rules of this state. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 494, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). SFG maintains that the Icelandic Entities’ claims are governed by Georgia law because the loan documents include provisions requiring that they be enforced under Georgia law. (Def.’s Br. Mot. Dismiss Compl. 9.) (ECF No. 4). Wisconsin law holds that it is appropriate to enforce a contractual choice of law provision unless it is contrary to public policy. See Bush v. Natl Sch. Studios, Inc., 139 Wis.2d 635, 407 N.W.2d 883, 886 (Wis. 1987).

The Icelandic Entities argue that Wisconsin choice of law principles are irrelevant for two reasons. First, they contend that because they are not parties to the loan agreements, the choice of law provision has no effect on their claims. Second, the Icelandic Entities maintain, even if the choice of law provision binds any contractual claims brought by them, their claims are not based in contract. (Pis.’ Surreply Opp’n Mot. Dismiss Am. Compl. (Pis.’ Surreply Opp’n Dismiss) 3-5.) (ECF No. 55.)

With respect to the Icelandic Entities’ argument that the choice of law provision cannot apply because they were not parties to the agreement, the court of appeals for this circuit has held that “to bind a non-party to a forum selection clause, the party must be “ ‘closely related’ to the dispute such that it becomes ‘foreseeable’ that it will be bound.” ” Hugel v. Corp. of Lloyd’s, 999 F.2d 206, 209 (7th Cir.1993). The courts of appeal for other circuits have reached similar conclusions. See e.g., Manetti-F'arrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 514 n. 5 (9th Cir.1988); Lipcon v. Underwriters at Lloyd’s, London, 148 F.3d 1285, 1299 (11th Cir.1998). At least one district court has applied such reasoning to a choice of law clause. See Cole v. Am. Cmty., Servs., Inc., No. 04-cv-738, 2006 WL 2987815, at *3 (S.D.Ohio Oct. 17, 2006).

The Court of Appeals for the Seventh Circuit also stated that “while it may be true that third-party beneficiaries to a contract would, by definition, satisfy the ‘closely related’ and ‘foreseeability’ requirements, a third-party beneficiary status is not required.” Hugel, 999 F.2d at 209 n. 7. Although Hugel is based, in part, on the fact that the third-party owned 99% of a company that owned 100% of another, and here it is unclear what percentage of DOC Milwaukee — the borrower — the Icelandic Entities owned, it was foreseeable that the contract between SFG and DOC Milwaukee would effect the Icelandic Entities.

The Icelandic Entities also point to § 779.135(2) of the Wisconsin Statutes, which voids provisions in contracts for improvements of land in Wisconsin that make the contract subject to another state’s laws. Wis. Stat. § 779.135(2) (2007-08). However, that section is part of Chapter 779, is entitled “Liens,” and further part of Subchapter 1, which is captioned “Construction Liens.” Id. The Icelandic Entities have not cited any authority holding that Wis. Stat. § 779.135(2) is applicable to a construction loan, nor has any been disclosed by this Court’s research. Therefore, this Court concludes that Georgia law applies to the contracts.

The Icelandic Entities maintain that, even if they are bound to the contractual choice of law for contract claims, their claims are outside of contracts and therefore the choice of law provision is irrelevant. (Pis.’ Surreply Opp’n Mot. Dismiss Am. Compl. 4-5.) They assert that their claims of promissory estoppel and unjust enrichment are tort, rather than contract, claims.

Contractual choice of law provisions do not control tort claims unless it is clear the parties intended them to do so. See Kuehn v. Childrens Hosp., 119 F.3d 1296, 1302 (7th Cir.1997). The Icelandic Entities argue that the loan documents between DOC Milwaukee and SFG do not show a clear intent to require tort claims to be adjudicated in Georgia. (Pis.’ Surreply Opp’n Dismiss 5.)

The elements of the equitable doctrine of promissory estoppel are that the defendant made a promise upon which he should have reasonably expected the plaintiff to rely, the plaintiff relied on the promise to his detriment, and injustice can be avoided only by enforcing the promise because the plaintiff surrendered or rendered a valuable right. Pabian Outdoor-Aiken, Inc. v. Dockery, 253 Ga.App. 729, 560 S.E.2d 280, 282 (Ga.Ct.App.2002). Unjust enrichment applies when there is no legal contract, but when the party has been conferred a benefit by the party contending unjust enrichment, which the benefitted party equitably ought to return or compensate for. Tuvim v. United Jewish Communities, Inc., 285 Ga. 632, 680 S.E.2d 827, 829-30 (Ga.2009).

The Court declines to further analyze this line of argument, because unjust enrichment and promissory estoppel are quasi-contractual claims and as such are more like contract, than tort, claims. See e.g., Carroll v. Stryker Corp., 658 F.3d 675, 682 (7th Cir.2011) (indicating that under Wisconsin law, unjust enrichment is a quasi-contractual claim); ATA Airlines, Inc. v. Fed. Exp. Corp., 665 F.3d 882, 884 (7th Cir.2011)(promissory estoppel is not a tort claim).

Unjust Enrichmenh-Count I

SFG contends that the Icelandic Entities do not have standing to bring an unjust enrichment claim because it is based on the loan documents at issue. The Icelandic Entities allege that SFG was unjustly enriched by them forwarding a total of $17,419,807.75 toward the Project so that SFG would fund the remaining amount of the loan, although the Project had more than the required equity cushion specified by the loan documents. (Compl. ¶¶ 152-55.) Even after these amounts were forwarded, SFG refused to fund the rest of the loan. (Id. at ¶¶ 157-96.) The Icelandic Entities assert that it would be inequitable to allow SFG to retain the benefit of the provision of these emergency monies when it has not contributed as much as other investors, including the Icelandic Entities, and SFG has taken advantage of all of those monies while failing to fulfill its own funding obligations. (Id. at ¶ 157.)

The Icelandic Entities were not parties to the agreements that make up the loan documents, nor do they claim to be. When addressing a question of state law while sitting in diversity, the Court’s “task is to ascertain the substantive content of state law as it either has been determined by the highest court of the state or as it would be by that court if the present case were before it now.” Thomas v. H & R Block E. Enters., 630 F.3d 659, 663 (7th Cir.2011). If the state’s highest court has yet to rule on an issue, “decisions of the state appellate courts control, unless there are persuasive indications that the state supreme court would decide the issue differently.” Id. (quoting Research Sys. Corp. v. IPSOS Publicite, 276 F.3d 914, 925 (7th Cir.2002)).

The Supreme Court of Georgia held that “[ujnjust enrichment applies when as a matter of fact there is no legal contract ..., but when the party sought to be charged has been conferred a benefit by the party contending an unjust enrichment which the benefitted party equitably ought to return or compensate for.” Engram v. Engram, 265 Ga. 804, 463 S.E.2d 12, 15 (Ga.1995) (citation omitted.). See also Fulcrum Fin. Partners v. Meridian Leasing Corp., 230 F.3d 1004, 1010 (7th Cir.2000)(stating that under Georgia law, “[t]he theory of unjust enrichment applies when as a matter of fact there is no legal contract.”) (quoting Brown v. Cooper, 237 Ga.App. 348, 514 S.E.2d 857, 860 (Ga.Ct. App.1999) and citing Stowers v. Hall, 159 Ga.App. 501, 283 S.E.2d 714, 716 (Ga.Ct. App.1981)). Therefore, SFG’s standing argument lacks merit.

SFG also contends that, because there was a contract, the unjust enrichment claim must fail. (Def.’s Br. Mot. Dismiss 12-13.) This contention is based on the Icelandic Entities’ reliance on the loan documents in their Complaint. See id. However, the Icelandic Entities clearly allege that they were not parties to the loan agreements. SFG’s contention lacks factual and legal support.

In order to state a claim of unjust enrichment, a plaintiff must allege that it conferred a benefit to the defendant for which it should be equitably compensated. See Engram, 463 S.E.2d at 15; See also, City of Atlanta v. Hotels.com, et al, 289 Ga. 323, 710 S.E.2d 766, 771 (Ga.2011). According to Complaint, SFG would inequitably benefit from the monies that were advanced by the Icelandic Entities. Specifically, the Icelandic Entities maintain that they are unsecured creditors of DOC Milwaukee. However, to protect the physical state of the Project they made emergency payments for site security and insurance, and procured engineering assessments. (Compl. ¶¶ 163-79.) Further, SFG was aware of these advances, but has done nothing to protect the Project, and instead is letting the Project deteriorate and diminish in value. (Id. at ¶¶ 178-79.) The monies advanced are maximizing the value of the Project, which is collateral for the SFG loan, so SFG is retaining the benefit of the money spent by the Icelandic Entities without compensating the Icelandic Entities. (Id. at ¶¶ 179-81.) SFG was aware that the Icelandic Entities were providing funds to protect the Project and prevent waste, but took no measures to stop the Icelandic Entities’ expenditure of those funds. SFG has been unjustly enriched by the funds that the Icelandic Entities have advanced to protect the Project. (Id. at ¶¶ 178-79.)

Both parties rely on cases that are inapplicable, either because they are based on non-Georgian law, or they are factually distinguishable. Regardless, in this case, the Icelandic Entities’ Complaint alleges sufficient facts to state a plausible cause of action for unjust enrichment. The Complaint alleges the Icelandic Entities’ maximized the value of the Project, which has conferred a benefit upon SFG. The Complaint sufficiently details that the Icelandic Entities advanced $17,419,807.75 for the Project and made emergency payments for site security and insurance, as well as procuring engineering assessments. While not all of the Icelandic Entities’ contributions are quantified, the facts alleged and the reasonable inferences from those facts sufficiently indicate that the contributions of the Icelandic Entities protected and maximized the value of the Project. Since the Project collateralizes the SFG loan agreement, the Icelandic Entities’ advancement of monies and other contributions conferred a benefit upon SFG. The Icelandic Entities’ claim has facial plausibility because they have plead factual content that allows the Court to draw the reasonable inference that SFG has been unjustly enriched. See Iqbal, 129 S.Ct. at 1949. Therefore, if the FDIC defenses were not applicable, the unjust enrichment claim would state a cause of action.

Promissory Estoppel-Count II

SFG also maintains that the Icelandic Entities’ promissory estoppel count fails to state a cause of action. The state of Georgia has long recognized the doctrine of promissory estoppel. See Gen. Commc’ns Serv. v. Ga. Pub. Serv. Comm’n, 244 Ga. 855, 262 S.E.2d 96, 96 (Ga.1979). The doctrine is codified in a statute, which states “[a] promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.” Ga.Code Ann. § 13-3-44(a) (1981). The Georgia legislature also intended for promissory estoppel to be a contractual doctrine, as evidenced by its placement in Title 13 of the Official Code of Georgia, which governs contracts. See id.

Further, the Icelandic Entities have standing to assert such a claim, because a third party, who may not be in privity of contract, can assert a claim for promissory estoppel if assurances were made to that party and the promises were not fulfilled. See Irvin v. Lowe’s of Gainesville, Inc., 165 Ga.App. 828, 302 S.E.2d 734, 736 (Ga.Ct.App.1983). A garden variety claim of promissory estoppel, differs from a conventional breach of contract claim only in basing the enforceability of the defendant’s promise on reliance rather than on consideration. ATA Airlines, Inc., 665 F.3d at 884.

The Icelandic Entities have sufficiently alleged that SFG made promises to them and they acted in reliance on those promises (Compl. ¶¶ 183-90). The Icelandic Entities relied on SFG’s promise that it would advance $20,900,000.00 toward the Project under the SFG loan agreement and loan commitment and the oral promises of SFG’s loan officers that SFG would advance additional funds over and above the amount promised in the loan agreement and loan commitment. (Id. at ¶¶ 183-84.) In reliance on these promises, the Icelandic Entities advanced $7,286,802.98 toward the Project. (Id. at ¶ 185.) Furthermore, in reliance on SFG’s promises that it would fully fund the SFG loan agreement and loan commitment, the Icelandic Entities advanced an additional $10,419,807.75 toward the Project. (Id. at ¶ 187.) The Icelandic Entities indicate that, if they had known that SFG did not intend to fully fund the SFG loan agreement, they would not have advanced additional funds toward Project. (Id. at ¶ 189.) They also allege that they suffered real and proximate harm because of SFG’s breach of its promises. (Id. at ¶ 190.)

The Icelandic Entities’ allegations are more than the labels and conclusions, and mere recitation of the elements of the cause of action proscribed by Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Therefore, if not for the FDIC defenses, the motion to dismiss would be denied as to the promissory estoppel claim.

Violation of Subchapter III of Wisconsin Statutes Chapter 221 — Count III

In moving to dismiss the Icelandic Entities’ claim against it for violating of Chapter 224 of the Wisconsin Statutes which regulates mortgage bankers, SFG argues for dismissal of the claim as a whole. However, SFG also presents arguments for dismissal of components of the claim that are premised on six statutory provisions within Chapter 224.

In Count III, the Icelandic Entities assert that SFG is a mortgage banker, relying in part on the allegation in SFG’s Complaint in the 315 action, that it was a mortgage banker. (Id. at ¶ 192.) However, in seeking dismissal of the entire claim, SFG states that the Icelandic Entities specifically allege that SFG is not a mortgage broker under Wisconsin law. (Def.’s Br. Mot. Dismiss 14.) SFG contends that, regardless of whether it disagrees with their allegations, the Icelandic Entities’ allegations must be taken as true for the purposes of this motion, citing Clorox Co. v. S.C. Johnson & Son, Inc., 627 F.Supp.2d 954, 968 (E.D.Wis.2009).

However, SFG has focused on only a portion of the pertinent paragraph in Clorox. In fact, Clorox states, “[i]n considering a motion to dismiss under Rule 12(b)(6), the court accepts all factual allegations of the complaint as true and draws all reasonable inferences in favor of the plaintiff.” Id. (citing St. John’s United Church of Christ v. City of Chicago, 502 F.3d 616, 625 (7th Cir.2007)). Therefore, for the purposes of this motion, the Court accepts as true the Icelandic Entities’ allegation that SFG asserted itself as Wisconsin mortgage banker even though the Icelandic Entities also pled that they do not believe SFG is a Wisconsin mortgage banker. {See Compl. ¶¶ 35-47, 52-54.)

The next issue that SFG presents is whether the FDIC defenses bar the claim under Wisconsin Statutes § 224.71(1). SFG maintains that of the six subsection violations alleged by the Icelandic Entities, all, except the claims. under § 224.71(2) and (k), are barred by the FDIC defenses. (Def.’s Br. Mot. Dismiss 23-25.) SFG relies upon the same arguments that this Court has previously addressed. {See supra at 788-92.) For the reasons previously stated, those arguments are not persuasive and the § 224.71 claims are not subject to dismissal based on the FDIC defenses.

In order to bring the § 224.71 claims, the Icelandic Entities must have standing. Under Wisconsin Statutes § 224.80(2), a private cause of action may be brought by “[a] person who is aggrieved by an act which is committed by a mortgage banker ... and is described in s. 224.77(1).” Wis. Stat. § 224.80(2) (2007-08). The remedies available are twice the origination costs, between $100 and $2,000 per violation; or “[t]he actual damages ... sustained because of the violation.” Id. § 224.80(2)(a)(l)-(2).

SFG contends that the language of § 224.80 makes it clear that only a borrower was intended to have standing. (Def.’s Br. Mot. Dismiss 16.) The Supreme Court of Wisconsin has explained: The goal of statutory interpretation is to “ ‘faithfully give effect to the laws enacted by the legislature.’ ” Warehouse II, LLC v. State Dep’t of Transp., 291 Wis.2d, 80, 715 N.W.2d 213, 219 (Wis.2006) (quoting State ex rel. Kalal v. Circuit Court for Dane Cnty., 271 Wis.2d 633, 681 N.W.2d 110, 123 (Wis.2004)). Wisconsin courts defer to the policy choices of the legislature and assume that the legislature’s intent is expressed in the statutory language it chose. See id. Therefore, “[statutory interpretation begins with the language of the statute.” State v. Jensen, 324 Wis.2d 586, 782 N.W.2d 415, 419 (Wis.2010). If the meaning of the statute is plain, Wisconsin courts look no further. Id.

The plain language of the statute, specifically states an action can be brought by “[a] person aggrieved by an act ... by a mortgage banker.” Wis. Stat. § 224.80(2). SFG’s contention is contrary to the statutory language which does not limit the remedy to borrowers and is, therefore, rejected. The Wisconsin Supreme Court has stated that “an ‘aggrieved party’ is defined in part as ‘one having an interest ... which is injuriously affected.’ ” See Liebovich v. Minn. Ins. Co., 310 Wis.2d 751, 751 N.W.2d 764, 774-75 (Wis.2008) (citation omitted).

SFG argues that, even if the Icelandic Entities have standing, they are not attempting to recover loan origination costs, so they are limited to actual damages which were sustained because of the violation, and the Icelandic Entities have not alleged that they sustained damages because of the violation. (Def.’s Reply Mot. Dismiss 13.) The Icelandic Entities disagree, stating that they are under no obligation to assert specific money damages at the pleading stage and that they have alleged facts to support specific violations of § 224.77. (Pls.’ Opp’n Mot. Dismiss 26.)

The Icelandic Entities’ allegations are sufficient to put SFG on notice that they were damaged and provide a plausible claim, establishing standing. The Icelandic Entities have alleged that they suffered real and proximate harm because of SFG’s violations of § 224.77(1), and specify that they had to pay additional funds, and could lose all of the money they invested in the Project due to the violations. (See Compl. ¶¶ 196-97.) This ground for dismissal is denied.

1. Section 224.77(1) (b) & (c)

The Icelandic Entities allege that SFG violated § 224.77(l)(b) and (c). (Id. at ¶ 197.) SFG argues that these allegations must be dismissed because § 224.77(l)(b) only applies to “parties to a transaction” and (l)(c) applies to “a client,” and the Icelandic Entities do not allege they were clients of SFG or parties to a transaction with SFG. (Def.’s Br. Mot. Dismiss 17-18.) The Icelandic Entities counter that SFG is seeking to artificially limit these provisions and that the language in these subsectio