Kreisler & Kreisler, LLC v. National City Bank
2011 U.S. App. LEXIS 20207
| 8th Cir. | 2011Background
- Kreisler & Kreisler, LLC sued National City Bank and PNC Bank Corp. (successor) in a class action for breach of contract over interest charged under a promissory note.
- The loan was for $48,407; the note's payment provision uses a 365/360 basis and the variable-rate provision ties the rate to the Prime Rate plus 1.000 percentage point.
- Kreisler alleged the bank used less than 12 calendar months to compute the annual interest, producing an effective rate greater than the agreed rate (101.389%).
- The district court dismissed, holding the note language clear, non-conflicting, and sufficiently disclosed how interest was charged.
- Illinois law governs the contract; the court must interpret the contract language in context and enforce unambiguous terms.
- The Eighth Circuit affirmed the district court, finding the payment provision clearly describes the calculation and that the provisions do not conflict.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the note’s provisions are ambiguous or conflicting on interest calculation. | Kreisler argues 365/360 conflicts with per annum in the rate provision. | Bank contends provisions are clear and harmonize to disclose the method. | Not ambiguous; provisions harmonize and disclose calculation. |
| Whether the term per annum in the rate provision creates an inconsistency with the 365/360 method. | Per annum should imply a 12-month year, supporting 365/365. | Per annum describes the index rate, not the calculation of the note’s interest; no inconsistency. | No inconsistency; year length may vary with calculation method; contract disclosure is clear. |
| Whether Illinois law requires striking down or constraining the 365/360 calculation given the language. | Language is indefinite and prevents enforcement of the 365/360 method. | Language is precise and enforceable; bank complied with terms. | Language clear and enforceable; calculation properly disclosed. |
Key Cases Cited
- Virginia Sur. Co. v. N. Ins. Co. of N.Y., 224 Ill. 2d 550, 866 N.E.2d 149 (Ill. 2007) (contract interpretation and ambiguity governance under Illinois law)
- Outboard Marine Corp. v. Liberty Mut. Ins. Co., 154 Ill. 2d 90, 607 N.E.2d 1204 (Ill. 1992) (interpretation and ambiguity analysis in contract context)
- Quake Constr. Inc. v. Am. Airlines, Inc., 141 Ill. 2d 281, 565 N.E.2d 990 (Ill. 1990) (ambiguity is a question of law; multiple meanings create factual ambiguity)
- United Airlines, Inc. v. City of Chicago, 116 Ill.2d 311, 507 N.E.2d 858 (Ill. 1987) (treats contract language and context to determine enforceability)
- Asset Exchange II, LLC v. First Choice Bank, 953 N.E.2d 446 (Ill.App.3d 2011) (per annum language not inherently ambiguous; 360-day year defined in note)
- RBS Citizens, Nat'l Ass'n. v. RTG-Oak Lawn, LLC, 943 N.E.2d 198 (Ill.App.3d 2011) (similar interpretation of note language and disclosure of interest calculation)
- United Fire & Cas. Ins. Co. v. Garvey, 328 F.3d 411 (8th Cir. 2003) (persuasive authority on Illinois contract interpretation within circuit)