BV/B1, LLC v. InvestorsBank
792 N.W.2d 622
Wis. Ct. App.2010Background
- BV/B1, LLC borrowed from InvestorsBank a $4.85 million loan with 10-year term, no personal guarantees, and a prepayment penalty.
- The prepayment penalty clause provided no-penalty if prepaid by July 30, 2006; thereafter penalty computed as fixed rate minus Treasury yield plus 2.5% times years remaining times principal.
- During closing in September 2007, InvestorsBank initially sent a payoff with no penalty, then issued revised payoff letters showing a large penalty and later a reduced penalty of $797,111.38.
- BV/B1 closed the sale by paying the reduced amount plus interest, then reserved its right to contest the penalty and later sought return of the reduced fee.
- InvestorsBank filed a claim for $833,798.52; BV/B1 moved for summary judgment arguing waiver of its right to seek more due after accepting the reduced payoff.
- The circuit court granted summary judgment in InvestorsBank’s favor, awarding over $1.6 million; BV/B1 appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the prepayment penalty clause ambiguous and suitable for summary judgment? | BV/B1: clause is ambiguous with multiple reasonable interpretations. | BV/B1: industry practice shows ambiguity; extrinsic evidence allowed. | Clause deemed plain and unambiguous; summary judgment proper. |
| Did InvestorsBank waive its right to seek the larger amount by accepting reduced payoff and releasing collateral? | BV/B1: acceptance of reduced payoff acted as waiver. | InvestorsBank offered settlement; BV/B1 rejected; no waiver. | No waiver; no accord and satisfaction; suit maintained. |
Key Cases Cited
- J.G. Wentworth S.S.C. Ltd. P'ship v. Callahan, 256 Wis. 2d 807 (Wis. Ct. App. 2002) (contract interpretation if plain meaning applies; extrinsic evidence only for ambiguity)
- Columbia Propane LP v. Wisconsin Gas Co., 261 Wis.2d 70 (Wis. 2003) (industry knowledge used to construe ambiguous technical terms)
- Energy Complexes, Inc. v. Eau Claire County, 152 Wis.2d 453 (Wis. 1989) (ambiguity precludes summary judgment where intent is disputed)
- Green Spring Farms v. Kersten, 136 Wis.2d 304 (Wis. 1987) (standard for summary judgment in contract matters)
- BKCAP, LLC v. CAPTEC Franchise Trust 2000-1, 572 F.3d 353 (7th Cir. 2009) (absurd results; cannot construe clause to render it meaningless)
- Hoffman v. Ralston Purina Co., 86 Wis.2d 445 ( Wis. 1979) (accord and satisfaction principles; distinction when no binding agreement exists)