2011 IL App (1st) 102640
Ill. App. Ct.2011Background
- Hubbard Street Lofts LLC and Ruttenberg obtained a $6,400,000 loan from AmeriMark Bank, now Inland Bank.
- The Note stated Initial Rate 8.000% and used a 365/360 basis for interest calculation in the payment section.
- Hubbard Street Lofts alleged an oral agreement to draft a loan document for an 8.000% rate; the Note memorialized the terms.
- Plaintiffs asserted counts for breach of contract, Interest Act violations, oral loan preparation breach, Consumer Fraud Act, common law fraud, and declaratory judgment.
- The trial court dismissed all counts with prejudice, ruling Credit Agreements Act barred several claims and Interest Act did not apply.
- On appeal, the First District affirmed, analyzing interpretation of the Interest Act, ambiguity of the Note, and the Credit Agreements Act effects.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the court misinterpret the Interest Act sections 9 and 10? | Hubbard Street Lofts argued 12-month year applies to all mentions of rate. | Inland Bank argued Act excludes corporations and is gap-filler; note unambiguous. | No error; Act applies as gap-filler or not at all; Court affirmed dismissal. |
| Is the Note ambiguous requiring factual dispute avoided by dismissal? | Note supports multiple reasonable interpretations. | Note unambiguous; conforms to 365/360 method in payment section. | Note not ambiguous; dismissal upheld. |
| Does the Credit Agreements Act bar the oral loan preparation and related claims? | Oral agreement concerns should be recoverable; Act does not bar memorialized terms. | Act bars actions arising from oral credit agreements even if instrument is written. | Barred; counts 2, 5, 6 dismissed. |
| Should Consumer Fraud Act and common law fraud claims survive given signed Note terms? | There may be deception in calculation method. | Sophisticated party with terms disclosed; no misrepresentation. | Dismissed with prejudice; properly failed to plead deception. |
| Did the 2010 amendment to the Interest Act affect the outcome? | Amendment clarifies permissible 360-day computations supporting 365/360. | Amendment retroactive but outcome controlled by contract terms; moot. | Amendment retroactive but did not alter outcome; not dispositive. |
Key Cases Cited
- Asset Exchange II, LLC v. First Choice Bank, 2011 IL App (1st) 103718 (Ill. App. 1st Dist. 2011) (held 365/360 method unambiguous; section 9 is gap-filler; note language controls)
- RBS Citizens, National Ass'n v. RTG-Oak Lawn, LLC, 407 Ill.App.3d 183 (Ill. App. 1st Dist. 2011) (note language similar; held unambiguous; Consumer Fraud Act not implicated)
- Bank of America, N.A. v. Shelbourne Development Group, Inc., 732 F. Supp. 2d 809 (N.D. Ill. 2010) (Interest Act not applicable to corporations; gap-filler with written terms suffices)
- First National Bank in Staunton v. McBride Chevrolet, Inc., 267 Ill.App.3d 367 (Ill. App. 1994) (no justifiable reliance on oral credit agreement as a matter of law)
- Avery v. State Farm Mutual Automobile Insurance Co., 216 Ill.2d 100 (Ill. 2005) (breach of contractual promise alone not actionable under the Consumer Fraud Act)