PSI Resources, LLC v. MB Financial Bank
55 N.E.3d 186
Ill. App. Ct.2016Background
- PSI Resources, as assignee of three related corporations (PSI, LSI, TSI), sued MB Financial Bank (successor to Cole Taylor) for breach of contract alleging the bank misapplied customer checks among the three corporate accounts from Dec. 2007–Nov. 2010, totaling alleged misapplied items of $380,343.09.
- Each corporation received monthly bank statements (no check images) and had separate account agreements signed in Sept. 2007; the corporations shared personnel and IT systems and had the same registered-agent address.
- Plaintiff filed suit on Feb. 6, 2014. Defendant moved to dismiss under section 2-619(a)(5) arguing the claim was time-barred by the 3-year UCC limitations period (810 ILCS 5/4-111).
- Plaintiff contended the claim was a written-contract action subject to a 10-year limitations period (735 ILCS 5/13-206) and alternatively that the discovery rule tolled the 3-year period until June 2011, when an outside audit allegedly first revealed the misdeposits.
- The trial court initially denied dismissal, then granted reconsideration and allowed an amended complaint alleging the corporations’ controller concealed misconduct; ultimately the court dismissed with prejudice, holding (1) the 3-year UCC limitations period applied and (2) the discovery rule did not postpone accrual because the monthly statements put a reasonable person on inquiry before June 2011.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicable statute of limitations | Action is a written-contract claim governed by 10‑year limitations (735 ILCS 5/13‑206). | Claim concerns banking transactions involving negotiable instruments and is governed by UCC 3‑year limitations (810 ILCS 5/4‑111). | 3‑year UCC limitations applies because the breach claims relate specifically to negotiable‑instrument/banking transactions. |
| Tolling under the discovery rule | Limitations tolled until June 2011 because controller concealed misdeposits and outside audit first revealed the wrongdoing. | Monthly account statements provided enough information to put a reasonable person on inquiry before June 2011; no tolling. | Discovery rule did not toll the statute; statements gave sufficient notice to trigger inquiry well before June 2011. |
Key Cases Cited
- Continental Casualty Co. v. American Nat'l Bank & Trust Co. of Chicago, 329 Ill. App. 3d 686 (Ill. App. Ct. 2002) (common‑law breach claims tied to negotiable‑instrument banking transactions are subject to the UCC's 3‑year limitation).
- Newell v. Newell, 406 Ill. App. 3d 1046 (Ill. App. Ct. 2011) (applies section 4‑111 UCC limitations over Code's 10‑year catchall for claims involving negotiable instruments).
- Clay v. Kuhl, 189 Ill. 2d 603 (Ill. 2000) (articulates the discovery‑rule accrual standard: accrual when plaintiff knows or reasonably should know of injury and wrongful cause).
- Knox College v. Celotex Corp., 88 Ill. 2d 407 (Ill. 1981) (discovery rule: statute begins when injured party has sufficient information to put a reasonable person on inquiry).