In the

United States Court of Appeals

For the Seventh Circuit

____________

No. 04-1401

PPM FINANCE, INCORPORATED, in its capacity

as agent for JACKSON NATIONAL LIFE

INSURANCE COMPANY,

Plaintiff-Counter-Defendant-Appellee,

v.

NORANDAL USA, INCORPORATED,

Defendant-Counter-Plaintiff-Appellant,

v.

PPM AMERICA SPECIAL INVESTMENTS CBO II, L.P.

and PPM AMERICA SPECIAL INVESTMENTS FUND, L.P.,

Counter-Defendants-Appellees.

____________

Appeal from the United States District Court for

the Northern District of Illinois, Eastern Division.

No. 02 C 7987—Amy J. St. Eve, Judge.

____________

ARGUED SEPTEMBER 15, 2004—DECIDED DECEMBER 16, 2004

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2 No. 04-1401

Before EVANS, WILLIAMS, and SYKES, Circuit Judges.

EVANS, Circuit Judge. In this commercial dispute, one

creditor, Jackson National Life Insurance Company, sued

another, Norandal USA, Incorporated, demanding that

Norandal fork over a substantial sum of money it obtained

from a common debtor, who we will simply call Scottsboro.

The district court agreed with Jackson and granted its motion for summary judgment to the tune of $4.4 million, including prejudgment interest. Aggrieved by this decision,

Norandal appeals.

Norandal is a processor of aluminum products. In February of 1999, it agreed to sell its Alabama processing plant

to Scottsboro for approximately $92 million. To fund the

acquisition, Scottsboro secured $69 million from Jackson,

plus additional credit extensions. It got another $7.5 million

loan from PPM America Special Investments CBO II, L.P.

and PPM America Special Investments Fund, L.P. (collectively PPM). To cover the remainder, Scottsboro executed

a promissory note to Norandal for $7.8 million. Thus,

Jackson, PPM, and Norandal all became Scottsboro creditors.

To determine their relative rights, these creditors and

Scottsboro entered into a subordination agreement giving

Jackson a senior security interest in Scottsboro’s assets.

Under the agreement, Norandal was required to turn over

to Jackson any payments it received from Scottsboro while

Scottsboro was in default to Jackson. During negotiations,

Norandal requested a provision that would require Jackson

to notify Norandal of any defaults by Scottsboro. Jackson

refused.

From October of 1999 through January of 2001, Scottsboro

defaulted on several obligations to Jackson. Despite these

defaults, Jackson continued to loan Scottsboro money, which

Scottsboro in turn used to make 15 scheduled payments to

Norandal. Jackson did not notify Norandal of Scottsboro’s
No. 04-1401 3

defaults until July of 2001. Only days later, Jackson and

PPM filed involuntary petitions for relief in bankruptcy

against Scottsboro.

In November of 2002, Jackson filed this suit against

Norandal to recover the money Norandal received from

Scottsboro. Jackson’s complaint alleged that Norandal

breached the subordination agreement by not turning over

the payments it received from Scottsboro at a time when

Scottsboro was in default to Jackson. In response, Norandal

filed three counterclaims, including one seeking a declaratory judgment that Jackson had no right to recover because

it had failed to give prompt notice that Scottsboro had

defaulted. We review the district court’s entry of summary

judgment to Jackson de novo, Fix v. Quantum Indus.

Partners LDC, 374 F.3d 549, 552 (7th Cir. 2004). The same

standard of review applies to the district court’s interpretation of the subordination agreement, Bourke v. Dun &

Bradstreet Corp., 159 F.3d 1032, 1036 (7th Cir. 1998).

This case presents rather straightforward questions of

contract interpretation. Under Illinois law, courts must ascertain parties’ intentions exclusively from an agreement’s

language if it is clear and unambiguous. Kaplan v. Shure

Bros., Inc., 266 F.3d 598, 604 (7th Cir. 2001); Air Safety,

Inc. v. Teachers Realty Corp., 706 N.E.2d 882, 884 (Ill. 1999).

And if clear and unambiguous, one party’s particular interpretation of its terms at the time of execution is immaterial. Kaplan, 266 F.3d at 604; Am. Nat’l Trust Co. of Chi. v.

Ky. Fried Chicken of S. Cal., Inc., 719 N.E.2d 201, 211 (Ill.

App. Ct. 1999).

Under the subordination agreement, Norandal could not

accept or retain payments from Scottsboro if Scottsboro was

in default to Jackson:

2.3. Restriction on Payments. Notwithstanding any provision of any Subordinated Debt Document to the

contrary, no Obligor [Scottsboro] may make, and no
4 No. 04-1401

Subordinated Creditor [Norandal] may receive, accept

or retain any payment of principal, interest or any other

amount with respect to the Subordinated Debt until the

Senior Debt is paid in full . . . except that (I)

[Scottsboro] may make and [Norandal] may receive

scheduled payments of principal and interest . . . under

the Subordinated Note on an unaccelerated basis so

long as no Senior Default shall have occurred and be

continuing or would result therefrom . . . .

The agreement further provides that Norandal must turn

over to Jackson any funds it received in violation of section

2.3:

2.5. Incorrect Payments. If any payment or distribution

on account of the Subordinated Debt not permitted to

be made by any Obligor [Scottsboro] or received by any

Subordinated Creditor [Norandal] under this Agreement

is received by [Norandal] before all Senior Debt is paid

in full in cash, such payment or distribution shall not

be commingled with any asset of [Norandal], shall be

held in trust by [Norandal] for the benefit of [Jackson]

and shall be paid over to [Jackson], or [its] representatives, for application on a pro rata basis . . . to the

payment of the Senior Debt then remaining unpaid,

until all of the Senior Debt is paid in full in cash.

The district court concluded that this language is clear

and unambiguous and requires Norandal to disgorge the

money it received from Scottsboro. A contract provision is

ambiguous only if it is subject to more than one reasonable

interpretation. Commonwealth Ins. Co. v. Stone Container

Corp., 351 F.3d 774, 778 (7th Cir. 2003); Lapham-Hickey

Steel Corp. v. Prot. Mut. Ins. Co., 655 N.E.2d 842, 846 (Ill.

1995). Under section 2.5, note payments “not permitted to

be made by [Scottsboro] or received by [Norandal] under

this Agreement” “shall be paid over to [Jackson].” And

under section 2.3, payments are not permitted to be made
No. 04-1401 5

if Scottsboro was in default to Jackson. These provisions are

unequivocal and susceptible to only one reasonable interpretation—Norandal must remit to Jackson any money

it received from Scottsboro while Scottsboro was in default

to Jackson.

Norandal argues that the subordination agreement is

ambiguous. Specifically, it claims that the payments made

by Scottsboro to Norandal must have been permitted under

section 2.3 because Jackson actually facilitated these payments by loaning Scottsboro more money. In support,

Norandal cites the testimony of John Krupinski, Scottsboro’s

former CFO, who testified that Jackson knowingly permitted Scottsboro to make payments to Norandal despite it

being in default to Jackson. But Jackson’s post-default

loans had no bearing on the parties’ rights and obligations

under section 2.3. Indeed, section 3 of the agreement expressly allowed Jackson to increase the amount of Scottsboro’s

senior debt without affecting Norandal’s obligations under

the agreement.

Norandal’s primary argument is that Jackson was required to notify it that Scottsboro was in default and that

Jackson’s failure to do so bars it from recovering the money

paid to Norandal. As the district court aptly noted, however,

nothing in the subordination agreement required Jackson

to notify Norandal of Scottsboro’s default. Indeed, Norandal

admits that it asked for a notice provision during contract

negotiations, a request that Jackson rebuffed.

Faced with this situation, Norandal advances three arguments, which we reject. First, it argues that the agreement’s

silence regarding notice is a “gap,” and that a notice requirement should be read into it. We initially note that

Norandal forfeited this argument because it failed to make

it before the district court. E.g., Ocean Atl. Dev. Corp. v.

Aurora Christian Schs., Inc., 322 F.3d 983, 1004 (7th Cir.

2003). Forfeiture notwithstanding, Norandal’s contention is
6 No. 04-1401

frivolous. As Jackson points out, a gap in a contract arises

when the contract does not account for unforeseen events.

See Dato v. Mascarello, 557 N.E.2d 181, 183-84 (Ill. App. Ct.

1989). But here, Norandal sought a notice provision, failed,

and then entered into the subordination agreement anyway.

We know for a fact that the parties contemplated notice; its

omission from the agreement was no oversight. Norandal is

now seeking to rewrite the agreement to require notice, but

courts are not in the business of rewriting contracts to

appease a disgruntled party unhappy with the bargain it

struck. See Owens v. McDermott, Will & Emery, 736 N.E.2d

145, 154 (Ill. App. Ct. 2000); Barille v. Sears Roebuck & Co.,

682 N.E.2d 118, 122 (Ill. App. Ct. 1997); Saunders v. Mich.

Ave. Nat’l Bank, 662 N.E.2d 602, 610 (Ill. App. Ct. 1996).

Norandal also argues that notice is required because “senior default notice” is included in the subordination agreement’s definition section. But this definition provision did

not give Norandal the right to be notified because “senior

default notice” did not appear anywhere else in the agreement. In contrast, the phrase “subordinated default notice”

is defined in the agreement but also appears in section 6,

which requires Norandal to notify Jackson if Scottsboro

defaults. Despite Norandal’s arguments to the contrary,

there simply is no provision in the agreement imposing a

reciprocal obligation.

Norandal’s final argument on this point is that the

district court erred by failing to consider extrinsic evidence

showing that Jackson was required to provide notice under

the subordination agreement. But courts look to extrinsic

evidence to determine the parties’ intentions only if an

agreement is ambiguous, e.g., Air Safety, 706 N.E.2d at 884,

and as we have explained, this one is not. And in any event,

the extrinsic “evidence” cited by Norandal does not support

the interpretation it urges. Norandal points to the fact that

Jackson actually gave it written notice of default just prior

to Scottsboro’s bankruptcy as evidence that notice was re-
No. 04-1401 7

quired. But just because Jackson ultimately notified Norandal

of Scottsboro’s default does not mean that its failure to do

so earlier forfeited its right to recover under the agreement.

Norandal’s next attack is factual. It contends that the

district court erred by concluding that there is no genuine

issue of material fact as to whether Scottsboro defaulted.

Krupinski, aided by financial statements, testified that

Scottsboro failed to maintain the minimum debt service

coverage ratio, interest coverage ratio, and tangible net

worth ratio; made unauthorized capital expenditures; failed

to disclose certain inventory; and experienced a labor strike.

All of these events violated the subordination agreement. In

response to this evidence, Norandal advances only the

testimony of Jeff Podwika, a PPM loan officer who testified

that prior to December of 2000 he was “comfortable with

the situation” as to Scottsboro. He also testified generally

that when one of his accounts is in default, he typically

sends some form of communication informing the borrower

that it has defaulted. But this testimony was not specific

enough to refute the evidence supplied by Jackson. Notably,

Podwika did not specifically refute the testimony and

financial statements offered by Jackson establishing that

Scottsboro was in default nor did he say at any point that

Scottsboro was not in default. Norandal failed to offer specific, concrete evidence suggesting that Scottsboro was not

in default, which is fatal to its assertion that the case must

be resolved by a jury. Salvadori v. Franklin Sch. Dist., 293

F.3d 989, 996 (7th Cir. 2002) (nonmovant must present definite, competent evidence in rebuttal to defeat a summary

judgment motion).

Norandal also argues that the district court erred in crediting Krupinski’s testimony because he lacked personal

knowledge about whether Scottsboro defaulted. But that is

simply untrue. Krupinski directly participated in calculating the financial statements which demonstrated that

Scottsboro was in default. Moreover, Norandal does not
8 No. 04-1401

identify which portions of Krupinski’s testimony fell outside

of his personal knowledge. And in any event, as Jackson

correctly points out, Krupinski was designated as a witness

under Fed. R. Civ. P. 30(b)(6), which authorized him to

testify not only to matters within his personal knowledge but

also to “matters known or reasonably available to the

organization.” See Pugh v. City of Attica, Ind., 259 F.3d 619,

627 n.7 (7th Cir. 2001). Thus, Krupinski was free to testify

to matters outside his personal knowledge as long as they

were within the corporate rubric.

Next, Norandal claims that Jackson waived its right to

recover by facilitating Scottsboro’s payments to Norandal.

In Illinois, “waiver” is a voluntary and intentional relinquishment of a known right. E.g., Chatham Corp. v. Dann

Ins., 812 N.E.2d 483, 494 (Ill. App. Ct. 2004). Waiver may

be express through agreement or implied through conduct.

E.g., Ryder v. Bank of Hickory Hills, 585 N.E.2d 46, 49 (Ill.

1991). Here, we agree with the district court’s conclusion

that Jackson did not waive its right to recover. In the first

instance, section 8 of the agreement required any waiver to

be in writing and signed by the parties. That never happened. Despite this, Norandal claims that Jackson’s postdefault loans constituted an implied waiver. “Waiver will be

implied when a party’s conduct is inconsistent with an

intention to assert the right.” Id. Jackson’s post-default loans

to Scottsboro were not inconsistent with its later efforts to

recoup that money pursuant to the agreement. Indeed,

section 3 explicitly authorized Jackson to make additional

loans without affecting Norandal’s obligations under the

agreement.

Finally, Norandal objects to the district court’s award of

prejudgment interest, a decision we review for an abuse of

discretion. E.g., Ameritech Info. Sys., Inc. v. Bar Code

Resources, 331 F.3d 571, 574 (7th Cir. 2003). The Illinois

Interest Act provides that a creditor shall be awarded

interest at the rate of 5% per year for all moneys after they
No. 04-1401 9

become due on any “instrument of writing.” 815 ILCS 205/2

(2002); Sna Nut Co. v. Haagen-Dazs Co., 302 F.3d 725, 734

(7th Cir. 2002). The purpose of granting prejudgment interest is “to make a deprived plaintiff whole.” Jahn v.

Kinderman, 814 N.E.2d 116, 122 (Ill. App. Ct. 2004) (citing

In re Estate of Wernick, 535 N.E.2d 876, 887 (Ill. 1989)). To

demonstrate debt on an “instrument of writing,” a creditor

must establish three elements: (1) a written instrument that

establishes indebtedness; (2) a specific or inherent due date;

and (3) that the indebtedness is subject to easy calculation.

Adams v. Am. Int’l Group, Inc., 791 N.E.2d 26, 30 (Ill. App.

Ct. 2003).

All of these requirements were met here. Norandal claims

that the district court abused its discretion because the

subordination agreement did not specify a due date when

payments must be turned over. But under the plain terms

of the agreement, money became due once Norandal failed

to remit the payments it received from Scottsboro while

Scottsboro was in default to Jackson. Thus, the time of default is clear—the contract contains an inherent due date.

See Reserve Ins. Co. v. Gen. Ins. Co. of Am., 395 N.E.2d 933,

940-42 (Ill. App. Ct. 1979) (recognizing time of default as an

“inherent” due date to trigger entitlement for prejudgment

interest). Norandal also argues that the agreement does not

establish a debtor-creditor relationship because Jackson did

not loan it money. But the Illinois Interest Act is not

confined to lending institutions; rather, it applies generally

to “creditors” on “instruments of writings.” See 815 ILCS

205/2 (2002); Ameritech, 331 F.3d at 575 (rejecting similar

argument). The subordination agreement clearly placed

Norandal in the role of debtor vis-á-vis its senior creditor,

Jackson. And finally, Norandal’s claim that the amount

owed is not easily calculated is frivolous—Norandal received

15 equal payments totaling close to $3.8 million after

Scottsboro had defaulted. This sum is easily calculated.
10 No. 04-1401

For these reasons, the judgment of the district court is

AFFIRMED.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—12-16-04