Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-08-02618/USCOURTS-ca7-08-02618-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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United States Court of Appeals

For the Seventh Circuit

Chicago, Illinois 60604

Argued September 15, 2009

Decided  February 8, 2010

Before

Hon. RICHARD A. POSNER, Circuit Judge

Hon. JOEL M. FLAUM, Circuit Judge

Hon. ILANA DIAMOND ROVNER, Circuit Judge

No. 08‐2618

FIRST BANK AND TRUST COMPANY OF ] Appeal from the United

ILLINOIS, ] States District Court for

Plaintiff‐Appellee, ] the Northern District of

] Illinois, Eastern Division

]

v. ] No. 0752‐1 : 1:06‐cv‐03182

]

]

AVRAM CIMERRING and CINDY CIMERRING, ]

Defendants‐Appellants. ] Ronald A. Guzman,

] Judge.

O R D E R

First Bank and Trust Company of Illinois (“First Bank”) filed a lawsuit for breach

of contract against Avram and Cindy G. Cimerring.  The suit alleged that loans made by

First Bank and guaranteed by the Cimerrings were in default, and demanded that the

Cimerrings pay the amount due on the loans.  The Cimerrings responded by denying

NONPRECEDENTIAL DISPOSITION

To be cited only in accordance with

Fed. R. App. P. 32.1

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No. 08-2618 2

that any amounts were past due, and by asserting counterclaims which we will not

discuss because they are irrelevant to the current appeal.  The district court granted

summary judgment to First Bank, holding that the loans were in default and entering

judgment for the amount owed.

The loans underlying the case were commercial loans that were guaranteed

personally by the Cimerrings.  The first was initiated in March 2004 to CGC

Wintergreen Apartments, known as the Wintergreen loan, and the second loan was

made two months later to a number of borrowers including CGC Bridgeway

Apartments, LLC, and known as the Bridgeway loan.  The Cimerrings executed a

Guaranty of Payment and Performance for each of the loans which personally

guaranteed the loans until paid in full.

As a result of subsequent amendments, the loans were cross‐collateralized and

incorporated terms under which a default on one loan would be considered a default of

the other as well.  We need not detail the subsequent amendments, because there is no

disagreement as to the relevant default provisions for the loans.  The only issue is

whether the district court properly determined that the Cimerrings defaulted on the

loan as a matter of law.  

The loan agreements provided for over 20 “Events of Default” ‐ ‐ a number of

which are arguably met here.  In the initial complaint, First Bank alleged a default based

on the failure to make timely payments.  In subsequent amendments, First Bank added

a number of other bases for the default, including: the filing of criminal charges for

which forfeiture of assets is a potential penalty, against the “borrower party” or any of

the managers; the filing of bankruptcy by any of the borrower party; and the failure of

the borrower to diligently prosecute compliance with the building code regulations.

First Bank argues to this court that the Cimerrings were barred by collateral estoppel

from contesting default.  First Bank could have obtained summary judgment on any

number of these grounds.  The district court considered only the default related to the

filing of a criminal charge, and granted summary judgment on that ground.  We affirm

on that as well, and therefore need not consider the other potential grounds of default.

The default clause related to the criminal charge provides that an event of default

occurs upon “[t]he filing of formal charges by any governmental or quasi‐governmental

entity, including, without limitation, the issuance of an indictment, under a RICO

Related Law against any Borrower Party.”  The term “RICO Related Law” is defined as

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No. 08-2618 3

“the Racketeer Influenced and Corrupt Organizations Act of 1970 or any other federal,

state, or local law for which forfeiture of assets is a potential penalty.”  On June 7, 2005,

Avram Cimerring pled guilty in Kentucky state court to 11 counts of theft by deception

of over $300.00 in violation of Kentucky Revised Statute § 514.040 and was sentenced to

three years’ pretrial diversion.  Under Kentucky law, upon a conviction for certain

offenses including theft by deception, property held in violation of the chapter and any

personal property used in the commission or furtherance of the offense shall be

forfeited.  Ky. Rev. Stat. § 514.030.  Therefore, Avram Cimerring, a borrower party

under the loan agreement, pled guilty to 11 counts of violation of a state law for which

forfeiture of assets was a potential penalty.  

Cimerring first attempts to avoid this default by asserting that there is no

evidence that he was actually charged with theft by deception, as the only evidence of

record indicates the counts to which he pled guilty.  The contention that Avram

Cimerring pled guilty to 11 counts of theft by deception but was never charged with

those offenses is specious.  The Cimerrings are entitled only to reasonable inferences of

fact.  SMS Demag Aktiengesellschaft v. Material Sciences Corp., 565 F.3d 365, 369 (7th Cir.

2009); Omosegbon v. Wells, 335 F.3d 668, 677 (7th Cir. 2003).  They have presented no

evidence from which one can reasonably infer that Avram Cimerring was not charged

with the counts to which he pled guilty.  When presented with that apparent

contradiction, the Cimerrings resort to an equally insupportable alternate argument that

Avram Cimerring was never convicted of theft by deception because his guilty plea was

accepted and he was granted pretrial diversion.  The Cimerrings further argue that not

all convictions under theft by deception will result in forfeiture of assets, and under

some facts forfeiture of assets will not occur.  

We need not tarry over any of these contentions, because they are red herrings.

The loan agreement states that it is a default if the borrower party is charged under a

law for which forfeiture of assets is a potential penalty.  The undisputed evidence of

record is that Avram Cimerring, a borrower party, was charged with 11 counts of theft

by deception, as evidenced by his plea of guilty to those charges, and that law provides

as a potential penalty the forfeiture of assets.  Cimerring ignores the plain language of

the loan agreement in arguing such irrelevancies as whether he was convicted or

whether on the facts of his criminal case ‐‐ undeveloped given the guilty plea ‐‐ his

assets could have been forfeited.  The agreement requires only a charge, and that the law

provide for the potential penalty of forfeiture of assets.  Those conditions are

indisputably met: he was charged under a law that provides for forfeiture of assets, and

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No. 08-2618 4

that constitutes a default under the loan agreement regardless of whether he was

convicted and whether forfeiture actually was ordered.  Therefore the district court

properly determined that First Bank had established default as a matter of law.  

Cimerring attempts to avoid that conclusion by arguing that, under the “mend

the hold” doctrine, First Bank cannot assert the criminal charge as a basis for default

because it first asserted the Cimerrings were in default based on the shortfall in

payments.  The mend the hold doctrine provides that a contract party is not permitted

to change its position on the meaning of a contract in the middle of litigation over it.  See

RLI Insurance Co. v. Conseco, Inc., 543 F.3d 384, 392 (7th Cir. 2008); Thorogood v. Sears,

Roebuck and Co., 547 F.3d 742, 746 (7th Cir. 2008); Utica Mut. Ins. Co. v. Vigo Coal Co., Inc.,

393 F.3d 707, 716 (7th Cir. 2004).  First Bank has consistently maintained that the loans

are in default because payments were not timely made, but had added additional

grounds of default as well, thus not reversing its position but expanding it.  We need

not determine whether such an action can be considered a change of position under the

mend the hold doctrine, because the Illinois courts have held that the mend the hold

doctrine cannot be applied absent a showing of detriment or unfair surprise.  United

Farm Family Mut. Ins. Co. v. Frye, 887 N.E.2d 783, 790 (Ill. App. 4 Dist. 2008); Trossman v.

Philipsborn, 869 N.E.2d 1147, 1164 (Ill. App. 1 Dist. 2007); Grinnell Mut. Reinsurance Co. v.

LaForge, 863 N.E.2d 1132, 1141 (Ill. App. 4 Dist. 2006).  The Cimerrings have made no

argument to this court that the additional grounds of default resulted in such detriment

or unfair surprise, nor is any apparent on the record.  In fact, the record indicates the

opposite.  Avram Cimerring pled guilty on June 7, 2005.  On July 8, 2005, the

Cimerrings signed an amendment to the loan agreement increasing the loan amount, at

which time they represented that no conditions of default existed of which they were

aware.  Avram Cimerring was, of course, aware of his own guilty plea, and the

existence of the default provision related to the filing of criminal charges.  There is no

indication of detriment or unfair surprise here, and therefore the Cimerrings have failed

to demonstrate a basis for application of the mend the hold doctrine.  The only

remaining argument, that the default was not a continuing one, was not raised in the

district court and is waived.  Metzger v. Illinois State Police, 519 F.3d 677, 681‐682 (7th Cir.

2008); Mote v. Aetna Life Ins. Co., 502 F.3d 601, 608 n. 4 (7th Cir. 2007).

The decision of the district court granting summary judgment in favor of First

Bank is AFFIRMED.

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