Guterman Partners Energy, LLC v. Bridgeview Bank Group
105 N.E.3d 91
Ill. App. Ct.2018Background
- Guterman (purchaser) entered a Non-Recourse Loan Sale Agreement (LSA) to buy "all of Seller’s right, title and interest" in loan documents for two related loans; purchase price $10.1M; deposits of $100,000 (refundable during due diligence) and $300,000 (non-refundable per supplemental agreement) were paid, totaling $400,000.
- The LSA required Seller (Bridgeview) to deliver original notes, mortgages, assignments, an assignment and assumption, and to warrant it had authority to sell the Loan Documents; a broad "as is" disclaimer was also included (Section 5.2).
- Disputes existed over whether Bridgeview actually held "ownership" of the 401 Partnership promissory notes (because of intervening LaSalle Lenders transactions and bankruptcy adversary proceedings); plaintiff raised ownership concerns during due diligence.
- Closing was scheduled and extended; plaintiff did not appear to close on the agreed dates. Bridgeview declared purchaser default, retained the deposits, and later sold the loan package to a third party.
- Plaintiff sued to recover the $400,000, arguing it was excused from closing because Bridgeview could not honor its warranty that it owned the notes; Bridgeview argued it had authority to sell and/or the sale was "as is," and that purchaser defaulted.
- The trial court granted summary judgment for Bridgeview; the appellate court affirmed, holding the LSA required only that Bridgeview have the power/authority to sell its right, title, and interest and that purchaser forfeited the deposits by failing to close.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Seller warranted ownership of the notes such that Purchaser was excused from closing | Guterman: closing condition required Seller to "own" the promissory notes; Seller couldn’t satisfy that, so Purchaser had no obligation to close | Bridgeview: LSA required only that Seller have power/authority to sell its right, title, and interest; plus loans sold "as is" disclaimers | Held: LSA did not warrant absolute ownership; it required Seller's authority to sell its interest; no warranty of ownership was present |
| Whether Seller failed to satisfy conditions precedent to Purchaser's obligation to close | Guterman: Seller failed to perform conditions precedent (cannot represent ownership), so closing obligation never ripened | Bridgeview: Seller was prepared, had originals, and could deliver; Purchaser defaulted by not closing | Held: No genuine issue that Seller was ready and able; Purchaser had no excuse and thus forfeited deposits |
| Effect of the LSA's "as is" clause on warranty claims | Guterman: Claimed Section 5.2 is consistent with a separate warranty of ownership and doesn't save Seller here | Bridgeview: Section 5.2 disclaims any warranties except the express authority warranty in Section 5.1(a) | Held: Section 5.2 limits warranties; only the express authority warranty in Section 5.1(a) applied; no implied ownership warranty existed |
| Whether summary judgment was appropriate on cross-motions | Guterman: Factual disputes (ownership, due diligence) precluded summary judgment | Bridgeview: Record shows no triable issue; Purchaser failed to schedule/attend closing | Held: Summary judgment proper for Seller; Purchaser forfeited $400,000 as a matter of law |
Key Cases Cited
- Home Insurance Co. v. Cincinnati Insurance Co., 213 Ill. 2d 307 (Illinois Supreme Court) (standard for viewing summary judgment evidence in favor of nonmovant)
- Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90 (Illinois Supreme Court) (summary judgment is drastic; standard of review is de novo)
- Air Safety, Inc. v. Teachers Realty Corp., 185 Ill. 2d 457 (Illinois Supreme Court) (parol evidence rule and interpretation of unambiguous written contracts)
- Thompson v. Gordon, 241 Ill. 2d 428 (Illinois Supreme Court) (contract language must be given its plain meaning; provisions should not be rendered meaningless)