Young v. Associated Bank, N.A.
1:24-cv-08911
N.D. Ill.May 3, 2025Background
- Plaintiffs Travis and Traci Young obtained a construction loan from Associated Bank for a major home remodel.
- Disputes arose after the contractor performed allegedly substandard work, resulting in extra costs for plaintiffs.
- Plaintiffs sued Associated Bank, alleging breach of contract for failure to properly inspect before loan disbursements and failure to ensure builder’s risk insurance.
- Defendant removed the case to federal court under diversity jurisdiction and moved to dismiss under Rule 12(b)(6).
- Plaintiffs amended their complaint to assert three counts: breach of contract (failure to inspect), breach of duty to notify (re: insurance), and breach of implied good faith and fair dealing.
- The court considered written agreements, attached exhibits, and the parties’ briefing under Wisconsin law (as required by contract terms).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to Inspect Before Disbursements | Bank had contractual duty to inspect and prevent nonconforming draws | No obligation to inspect for plaintiffs' benefit; contract says inspection not required and only for bank’s benefit | No duty found; unambiguous contract language precludes liability |
| Duty to Secure/Notify re: Insurance | Bank promised to ensure builder’s risk insurance was in place and inform if missing | No such promise; contract requires plaintiffs to secure insurance; promissory estoppel not available with valid contract | No plausible promise; promissory estoppel fails; contract controls |
| Implied Duty of Good Faith/Fair Dealing | Bank acted in bad faith by not inspecting or securing insurance, denying plaintiffs benefit of bargain | Contract expressly disclaims such obligations; no denial of bargained-for benefits | No claim stated—contract expressly disavows relied-upon obligations |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (complaint must provide fair notice—plausibility standard for motion to dismiss)
- Ashcroft v. Iqbal, 556 U.S. 662 (facial plausibility requirement for complaints)
- Matthews v. Wis. Energy Corp., 534 F.3d 547 (elements of breach of contract under Wisconsin law)
- Mass. Bay Ins. Co. v. Vic Koenig Leasing, Inc., 136 F.3d 1116 (enforceability of contractual choice-of-law provisions)
- Betco Corp., Ltd. v. Peacock, 876 F.3d 306 (scope of implied duty of good faith under Wisconsin law)
- Zenith Ins. Co. v. Employers Ins. of Wausau, 141 F.3d 300 (implied duty of good faith requires actual denial of benefit)