ILLINOIS OFFICIAL REPORTS

Appellate Court

Hubbard Street Lofts LLC v. Inland Bank, 2011 IL App (1st) 102640

Appellate Court

Caption

HUBBARD STREET LOFTS LLC and ANDREW RUTTENBERG, on

Behalf of Themselves and All Those Similarly Situated, PlaintiffsAppellants, v. INLAND BANK, as Successor in Interest to AmeriMark

Bank, Defendant-Appellee.

 District & No. First District, Second Division

Docket No. 1-10-2640

Filed December 13, 2011

Held

(Note: This syllabus

constitutes no part of

the opinion of the court

but has been prepared

by the Reporter of

Decisions for the

convenience of the

reader.)

In an action arising from a loan plaintiffs obtained from defendant bank,

the trial court properly dismissed plaintiffs’ claims, inter alia, that the

bank charged an interest rate above the rate permitted by the Interest Act

and the Promissory Note and Bank Holiday Act, that the use of a 365/360

method of calculating interest violated the Interest Act, that it violated

the Credit Agreements Act and the Consumer Fraud Act, and that it

committed common law fraud.

Decision Under 

Review

Appeal from the Circuit Court of Cook County, No. 09-CH-49410; the

Hon. Mary Anne Mason, Judge, presiding.

Judgment Affirmed.
Counsel on

Appeal

Segal, McCambridge, Singer & Mahoney, Ltd., of Chicago (Steven A.

Hart, Scott W. Henry, and Anastasios T. Foukas, of counsel), for

appellants.

Foley & Lardner LLP, of Chicago (William J. McKenna and Thomas C.

Hardy, of counsel), for appellee.

Panel JUSTICE CUNNINGHAM delivered the judgment of the court, with

opinion.

Presiding Justice Quinn and Justice Connors concurred in the judgment

and opinion.

OPINION

¶ 1 This appeal arises from a July 28, 2010 order entered by the circuit court of Cook

County, which granted defendant-appellee Inland Bank’s motion to dismiss a class action

complaint on all counts with prejudice. On appeal, the appellants, Hubbard Street Lofts LLC

and Andrew Ruttenberg, argue that: (1) the trial court erred in dismissing the counts for

breach of contract, violation of the IllinoisInterest Act (Interest Act) (815 ILCS 205/1 et seq.

(West 2010)), and declaratory judgment in the appellants’ complaint because the court

misinterpreted sections 9 and 10 of the Interest Act; (2) the trial court improperly dismissed

the breach of contract count in the appellants’ complaint because the promissory note was

ambiguous; and (3) the trial court erred in dismissing the counts for breach of the oral loan

preparation contract, violation of the Consumer Fraud and Deceptive Practices Act

(Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2010), and common law fraud in the

appellants’ complaint because the promissory note at issue was written and signed by the

parties. For the following reasons, we affirm the judgment of the circuit court of Cook

County.

¶ 2 BACKGROUND

¶ 3 On or around March 17, 2006, plaintiffs-appellants Hubbard Street Lofts, LLC and

Andrew Ruttenberg (collectively, Hubbard Street Lofts) obtained a loan of $6,400,000 from

AmeriMark Bank, whose successor in interest in this case is Inland Bank. Hubbard Street

Lofts claim that prior to the drafting of the promissory note (the Note), the parties had an

agreement that Hubbard Street Lofts would pay AmeriMark Bank a fee to draft a loan

document based on the representation that the interest rate on the loan would be 8.000% per

year. The Note contained in the record is the loan document that memorialized the parties’

agreement. The Note is 11⁄2 pages long and contains multiple sections that are at issue in the

case including:

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(1) The heading, which states:

“Principal Amount: $6,400,000.00 Initial Rate: 8.000% Date of Note: March 17, 2006”

(2) The payment section, which states (in relevant part):

“PAYMENT. *** The annual interest rate for this Note is computed on a

365/360 basis; that is, by applying the ratio of the annual Interest rate over a

year of 360 days, multiplied by the outstanding principal balance, multiplied by

the actual number of days the principal balance is outstanding.”

(3) The variable interest rate section, which states:

“VARIABLE INTEREST RATE.The interest rate on this Note is subject to change

from time to time based on changes in an index which is Lender’s Prime Rate (the

‘index’). This is the rate Lender charges, or would charge, on 90-day unsecured loans

to the most creditworthy corporate customers. This rate may or may not be the lowest

rate available from Lender at any given time. Lender will tell Borrower the current

Index rate upon Borrower’s request. The interest rate change will not occur more

often than each Day. Borrower understands that Lender may make loans based on

other rates as well. The Index currently is 7.500% per annum. The interest rate

to be applied to the unpaid principal balance of this Note will be at a rate of

0.500 percentage points over the index, resulting in an Initial rate of 8.000%per

annum. NOTICE: Under no circumstances will the Interest rate of this Note be more

than the maximum rate allowed by applicable law.”

(4) The signature clause, which states:

“PRIOR TO SIGNING THIS NOTE, BORROWER READ AND

UNDERSTOODALLTHE PROVISIONS OFTHIS NOTE,INCLUDING THE

VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO

THE TERMS OF THE NOTE.”

¶ 4 Most notable is the payment section of the Note and the way it provides for interest to

be calculated. A recent decision in the Illinois Appellate Court, First District, shed some light

on the different methods of interest calculation that are currently used by lenders. This court

noted that banks generally use three different methods of computing interest, which are the

365/365method (exact-dayinterest), the 360/360 method (ordinaryinterest), and the 365/360

method (bank interest). Asset Exchange II, LLC v. First Choice Bank, 2011 IL App (1st)

103718, ¶ 20 (quoting In re Oil Spill by the “Amoco Cadiz” off the Coast of France on

March 16, 1978, No. 92-3282, 1993 WL360955, *1-2 (7th Cir. Sept. 14, 1993)). The exact- 1

day method is calculated by taking an interest rate, dividing it by 365, and then applying it

to each day of the year. The ordinary interest rate method is calculated the same way, only

using 360 as the number of days instead of 365. The 365/360 bank method, which was used

in the Note in the instant case, is slightly different. It is calculated by first dividing the

interest rate by 360, and then applying it to each day in a 365- or 366-day year. This

We note that the plaintiffs’ attorneys in Asset Exchange are the same attorneys that

1

represent Hubbard Street Lofts in the instant case.

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effectively allows the banks to charge an extra five or six days of interest each year. The

application of this method is the basis of the parties’ dispute in this case.

¶ 5 On December 9, 2009, Hubbard Street Lofts filed a seven-count class action lawsuit

against AmeriMark Bank in the circuit court of Cook County, claiming that: (1) AmeriMark

Bank breached the contract with Hubbard Street Lofts by charging an interest rate above the

rate permitted by the Interest Act and the Promissory Note and Bank Holiday Act

(Promissory Note Act) (815 ILCS 105/0.01 et seq. (West 2010)); (2) AmeriMark Bank

breached an oral loan preparation contract; (3) AmeriMark Bank charging interest using a

365/360 method of calculation violated the Interest Act; (4) AmeriMark Bank breached the

duty of good faith and fair dealing; (5) AmeriMark Bank violated the Consumer Fraud Act;

(6) AmeriMark Bank committed common law fraud; and (7) seeking declaratory judgment

in relation to Hubbard Street Lofts’ Interest Act claims. On January 15, 2010, Inland Bank

filed an appearance as the successor in interest for AmeriMark Bank. Hubbard Street Lofts

then moved for substitution of judge which was granted on February 3, 2010.

¶ 6 On February 16, 2010, Inland Bank filed a motion to dismiss the complaint pursuant to

section 2-615 of the Illinois Code of Civil Procedure (735 ILCS 5/2-615 (West 2010)), and

to strike the class allegations pursuant to section 2-801 of the Illinois Code of Civil

Procedure (735 ILCS 5/2-801 (West 2010)). Hubbard Street Lofts filed a response to Inland

Bank’s motion on March 24, 2010, that claimed that: (1) the complaint could not be

dismissed because the Note is ambiguous and permits multiple interpretations; (2) Hubbard

Street Lofts sufficiently stated a cause of action under the Interest Act; (3) Inland Bank had

discretion in the manner it charged interest to Hubbard Street Lofts and used this discretion

in violation of the duty of good faith and fair dealing; (4) Inland Bank committed common

law fraud; and (5) class actions are not limited to individuals. Hubbard Street Lofts also filed 2

a supplemental response to Inland Bank’s motion asking the court to follow the reasoning

used in Martinucci v. First Suburban National Bank of Maywood, No. 09 L 12936 (Cir. Ct.

Cook Co.).

¶ 7 On July 28, 2010, the trial court heard oral arguments byboth parties. Inland Bank argued

that the Interest Act did not apply to the Note in this case and that Hubbard Street Lofts’ first,

third and seventh counts based on the Interest Act were therefore resolved. Inland Bank also

claimed the that Credit Agreements Act (Credit Agreements Act) (815 ILCS 160/0.01 et seq.

(West 2010)) barred Hubbard Street Lofts’ second count for breach of an oral loan

preparation contract and that Hubbard Street Lofts should not be certified as a class. Hubbard

Street Lofts argued that the Note is ambiguous; that the Interest Act applies to the Note and

prescribes that the interest be calculated over a full 12-month year consisting of 365 days (the

exact-daymethod); and that the Credit Agreement Act does not apply in this case to bar their

breach of an oral loan preparation contract count. The trial court held that the Credit

Agreements Act did in fact bar Hubbard Street Lofts’ count for breach of an oral loan

preparation contract. The trial court also found sua sponte that the Credit Agreements Act

There was an additional claim in this memorandum; however, two of the pages of the 2

memorandum are missing from the record and cannot be located.

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also barred Hubbard Street Lofts’ breach of duty of good faith and fair dealing count,

Consumer Fraud Act count, and common law fraud count. The trial court reasoned that these

counts were based on alleged oral agreements that were not memorialized by the Note, and

thus these counts were “exactly the types of claims that the [Credit Agreements] Act is

designed to foreclose.” The trial court found that despite the deficiencies under the Credit

Agreements Act, Hubbard Street Lofts’ Consumer Fraud Act count would fail because

Hubbard Street Lofts are sophisticated business persons and therefore not “consumers” under

the Consumer Fraud Act that affords protection. Also, the trial court held that the common

law fraud count would fail for lack of specificity. Regarding Hubbard Street Lofts’ Interest

Act claims, the trial court found that the Interest Act is a gap-filling provision and does not

apply to the Note because the parties agreed on the method of calculation. The trial court

ruled that the Interest Act does not require a mention of the method of computation each and

every time an interest rate is mentioned. The trial court also ruled that the Note was

unambiguous. The trial court dismissed all counts with prejudice, holding that there were no

amendments Hubbard Street Lofts could make that would state a proper cause of action.

Because all the counts were dismissed, the trial court did not reach a decision on the issue

of the motion to strike the class allegations. On August 27, 2010, Hubbard Street Lofts filed

their notice of appeal.

¶ 8 ANALYSIS

¶ 9 Inland Bank, in the lower court, filed a motion to dismiss pursuant to section 2-615 of

the Illinois Code of Civil Procedure (735 ILCS 5/2-615 (West 2010)) and to strike the

plaintiffs’ class allegations pursuant to section 2-801 of the Illinois Code of Civil Procedure

(735 ILCS 5/2-801 (West 2010)). The trial court granted Inland Bank’s section 2-615 motion

to dismiss all counts and therefore rendered the issue of the section 2-801 motion moot. In

this court, Hubbard Street Lofts only raise arguments regarding the section 2-615 motion and

that is all that we will consider in this case. When reviewing an order granting a motion to

dismiss pursuant to section 2-615 of the Illinois Code of Civil Procedure, this court utilizes

the de novo standard of review. Neppl v. Murphy, 316 Ill. App. 3d 581, 583, 736 N.E.2d

1174, 1178 (2000). The critical inquiry is whether, in the light most favorable to the plaintiff,

the allegations of the complaint are sufficient to state a cause of action upon which relief can

be granted. Board of Directors of Bloomfield Recreation Ass’n v. Hoffman Group, Inc., 186

Ill. 2d 419, 424, 712 N.E.2d 330, 333 (1999).

¶ 10 We first consider Hubbard Street Lofts’ claim that the trial court erred by dismissing their

first, third, and seventh counts because the court misinterpreted sections 9 and 10 of the

Interest Act. In relevant part, section 9 of the Interest Act states:

“Whenever, in any statute, act, deed, written or verbal, contract, or in any public or

private instrument whatever, any certain rate of interest is or shall be mentioned, and no

period of time is stated for which such rate is to be calculated, interest shall be calculated

at the rate mentioned, by the year, in the same manner as if ‘per annum’ or ‘by the year’

had been added to the rate.” 815 ILCS 205/9 (West 2010).

Additionally, section 10 of the Interest Act States:

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“In all computations of time, and of interest and discounts, a month shall be considered

to mean a calendar month, and a year shall consist of twelve calendar months; and in

computations of interest or discount for any number of days less than a month, a day shall

be considered a thirtieth part of a month, and interest or discount shall be computed for

such fractional parts of a month upon the ratio which such number of days shall bear to

thirty.” 815 ILCS 205/10 (West 2010).

Section 16 of the Promissory Note Act, also cited by Hubbard Street Lofts, is identical to

section 10 of the Interest Act. Hubbard Street Lofts argue that section 10 of the Interest Act

statutorily defines the term “year” as the calendar year of 12 months in all computations of

time related to determining interest. Also, Hubbard Street Lofts claim that section 9

prescribes that the 12-month year applies to each and every instance where an interest rate

is mentioned in an instrument and where no period of time is stated in the written document

for such rate to be calculated. Hubbard Street Lofts point out that the heading of the Note

states “Initial Rate: 8.000%” and the variable interest rate section of the Note states “[t]he

index is currently 7.500% per annum. The interest rate to be applied to the unpaid principle

balance of this Note will be at a rate of 0.500 percentage points over the index, resulting in

an initial rate of 8.000% per annum.” They contend that because these portions of the Note

do not also contain a specific period of time, the Interest Act applies the 12-month calendar

year to these sections. Hubbard Street Lofts argue that these sections control over the

365/360 calculation method mentioned in the payment section of the Note. In support of this

argument, Hubbard Street Lofts cite two trial court decisions from the Twentieth Judicial

District in St. Clair, Illinois. In both cases, the trial court held that each and every time an

interest rate is mentioned without a time period for which it is to be calculated, the Interest

Act applies the 12-month year to the interest rate. Kitson v. Bank of Edwardsville, No. 02-L0807 (Cir. Ct. St. Clair Co., Jan. 24, 2008); Patterson v. Regions Bank, No. 06-CH-436 (Cir.

Ct. St. Clair Co., Mar. 27, 2008). The citation of trial court rulings in the appellate court is

unusual to say the least. Further, it is nonbinding on this court. Multiple rulings made by this

court defeat Hubbard Street Lofts’ claims and are much more persuasive and applicable to

the instant case.

¶ 11 Through a motion to file supplemental authority, Inland Bank cites a recent case that

appeared in this court. In that case, the appellate court ruled on many of the same issues

presented in the instant case. Those issues resulted from a promissory note that contained

identical language and provisions as the Note at issue in this case. We therefore rely upon

the analysis and reasoning in that case to guide us in resolving the issues in this case. In Asset

Exchange II, LLC, 2011 IL App (1st) 103718, the plaintiffs, as in the instant case, cited two

trial court decisions from the Twentieth Judicial District in support of their claim that the

defendant acted deceptively in using a 360-day year to calculate the interest rate. The

appellate court in Asset Exchange reasoned that “circuit court decisions have no precedential

effect on Illinois appellate courts, and therefore have no bearing on our decision.” Id. at 19

n.2. We agree with this reasoning and find Hubbard Street Lofts’ citations to Kitson and

Patterson unpersuasive. A more detailed analysis of Asset Exchange will be particularly

instructive for the issues in this case.

¶ 12 In Asset Exchange, the parties entered into a loan agreement for $1,250,000. Id. at ¶ 4.

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The heading of the note stated “Initial Rate: 8.25,” and the payment section stated “The

annual interest rate for this Note is computed on a 365/360 basis; that is, by applying the ratio

of the annual interest rate over a year of 360 days, multiplied by the outstanding principal

balance, multiplied by the actual number of days the principal balance is outstanding.”

(Internal quotation marks omitted.) Id. The variable interest rate section, in relevant part,

stated “[t]he index is currently 7.250% per annum. The interest rate to be applied to the

unpaid principal balance during this Note will be at a rate of 1.000 percentage point over the

Index, resulting in an initial rate of 8.250% per annum.” (Emphasis omitted.) (Internal

quotation marks omitted.) Id. at ¶ 5. The plaintiffs in Asset Exchange filed a seven-count

3

class action lawsuit alleging that the defendants deceptively applied the 365/360 interest rate

calculation method and that Illinois law required the rate to be calculated based on the 12-

month calendar year. Id. at ¶ 7. The trial court dismissed the plaintiffs’ first, third, fourth,

sixth and seventh counts with prejudice, and dismissed the plaintiffs’ second and fifth counts

without prejudice. Id. at ¶ 1. The plaintiffs appealed arguing that the trial court misinterpreted

the Interest Act; the trial court erred in dismissing the breach of contract claim; and the trial

court erred in dismissing the common law fraud claim. Id. at ¶ 2.

¶ 13 The appellate court held primarily that section 4 of the Interest Act shows that it does not

apply to corporations. Id. at ¶ 21. Further, the court found that even if the Interest Act were

to apply, the plaintiffs’ claims would still fail. Id. at ¶ 24 provision and did not require a time

period to be inserted with each and every mention of an interest rate; that the explanation of

the 365/360 calculation method in the payment section of the note was sufficient to

determine the way the interest rate would be calculated throughout the note; and that the note

was unambiguous. Id. at ¶¶ 27-30. The court found that the explanation of the 365/360

calculation method qualified as stating a time period for calculation within the instrument.

Id. at ¶ 30. The court reasoned that it would not be practical to require the method to be

mentioned each and every time the interest rate was mentioned. Id. Even when reading the

statute in the manner requested by the plaintiffs, the court in Asset Exchange held that the

terms “per annum” and by the “year” in the variable interest rate section of the note referred

to the 360-day year. Id. at ¶ 32. The appellate court also found that the plaintiffs’ claim for

breach of contract was properly dismissed because the note was unambiguous and the

defendants were simply complying with the terms of the note. Id. at ¶¶ 37-40. Finally, the

court held that the dismissal of plaintiffs’ common law fraud claim was proper because the

plaintiffs were sophisticated business persons who signed a contract with terms that were

stated clearly. Id. at ¶ 43. The court reasoned that the plaintiffs were under a duty to know

and understand those terms before they executed the agreement. Id. at ¶¶ 43-44.

¶ 14 Although Asset Exchange was decided after the notice of appeal was filed in this case,

the facts are clearly similar to the facts in this case; thus, we find its reasoning particularly

instructive. Notably, the plaintiffs in Asset Exchange filed the same seven counts in their

complaint at trial and raised almost identical issues on appeal as Hubbard Street Lofts raised

This court notes that the plaintiffs in Asset Exchange alleged the same seven countsin their 3

complaint at trial that Hubbard Street Lofts alleged at trial in this case, making these two actions

extremely analogous. Asset Exchange II, LLC v. First Choice Bank, 2011 IL App (1st) 103718, ¶ 1. 

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in the instant case. Moreover, the language in the promissory note in Asset Exchange and in

the instant case is exactly the same in regard to the payment sections, and is nearly identical

in the headings and variable interest rates sections. The only differences are in the

percentages of interest rates charged. Because of these glaring similarities, we are inclined

to agree with the rulings of the court in Asset Exchange. Additionally, an analysis of other

state and federal cases yield the same results.

¶ 15 In Bank of America, N.A. v. Shelbourne Development Group, Inc., 732 F. Supp. 2d 809

(N.D. Ill. 2010), a federal district court case, the parties entered into a loan agreement. The

plaintiff ultimately filed suit to demand payment under the agreement. Shelbourne, 732 F.

Supp. 2d at 816. The defendants filed counter claims alleging that the plaintiff violated the

Interest Act; breached the duty of good faith and fair dealing; violated the Consumer Fraud

Act; and committed common law fraud. Id. at 817. In the loan agreement in that case there

was a provision that stated “all interest and fees, if any, will be computed on the basis of a

360-day year and the actual number of days elapsed.” (Internal quotation marks omitted.) Id.

at 816. The defendants claimed that the plaintiff acted deceptively in using the 360-day year

to calculate the interest despite another provision in the loan agreement that mandated the

use of a per annum interest rate. Id. The district court held that although the defendants’

claim was preempted by the National Bank Act (12 U.S.C. § 28 (2006)), the claim would

nevertheless fail under the Interest Act as well. Id. at 821. The court held that the Interest Act

does not apply to corporations and is merely a gap-filling provision where no time period is

stated for which interest is to be calculated. Id. The court ruled that a time period calculation

method needs only to be stated somewhere within the instrument, and because there was a

clause that stated that interest will be computed based on a 360-day year, section 9 of the

Interest Act did not apply in that case. Id.

¶ 16 When a court interprets a statute, the primary goal is to ascertain and give effect to the

intent of the legislature. Devoney v. Retirement Board of the Policemen’s Annuity & Benefit

Fund, 199 Ill. 2d 414, 424-25, 769 N.E.2d 932, 938-39 (2002). In interpreting statutes, the

court must construe the statute as a whole and consider its parts together. Fisher v. Lexington

Health Care, Inc., 188 Ill. 2d 455, 462-63, 722 N.E.2d 1115, 1119 (1999). Illinois courts

have held that section 9 of the Interest Act is a gap-filling provision and only applies when

no time period for calculation of interest appears anywhere in the instrument in question.

Section 10 defines the terms, namely, the term “year,” that section 9 applies when

appropriate. Therefore, if section 9 and its terms are judged to be gap-fillers and inapplicable

in situations such as in the instant case, as the trial court held, then it follows that the section

10 definitions are gap-fillers as well and would not apply in this case. Accordingly, we hold

that the trial court did not err in dismissing Hubbard Street Lofts’ first, third and seventh

counts.

¶ 17 It is important to note for clarification that both parties presented arguments based on a

recent amendment to the Interest Act that was enacted after the trial court made its ruling.

On August 3, 2010, an additional section was added to the Interest Act (815 ILCS 205/4(5)

(West 2010)), which in relevant part states “a rate or amount of interest may be lawfully

computed when applying the ratio of the annual interest rate over a year based on 360 days.

The provisions of this amendatory Act of the 96th General Assembly are declarative of

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existing law.” See Pub. Act 96-1421, § 5 (eff. Aug. 3, 2010). Inland Bank argues that this

amendment proves that it is legal to use the 365/360 method, and therefore Hubbard Street

Lofts’ Interest Act arguments are moot. Hubbard Street Lofts respond by clarifying that they

are not challenging the legality of the 365/360 method, they are only claiming that their

agreement and the Note provide for the use of a different method. Hubbard Street Lofts

contend that retroactive application of the amendment to this case is unconstitutional. The

provisions of the “amendatory Act of the 96th General Assembly are declarative of existing

law.” 815 ILCS 205/4(5) (West 2010). Accordingly, we adopt the position that the

amendment applies retroactively. However, the issue is whetherthe parties agreed to use the

365/360 calculation method as provided by the Note, not whether the method itself is legal.

Therefore, the amendment of the Interest Act has no bearing on the outcome of this case and

we will not address it further.

¶ 18 Hubbard Street Lofts next argue that their breach of contract count should not have been

dismissed because the Note is ambiguous. It is well established that if a contract is

ambiguous, it presents a question of fact and cannot be decided on a motion to dismiss.

Monroe Dearborn Ltd. Partnership v. Board of Education, 271 Ill. App. 3d 457, 462, 648

N.E.2d 1055, 1058 (1995). However, whether or not a contract is ambiguous is a question

of law for the court to decide. Id. Hubbard Street Lofts argue that there are at least two

reasonable interpretations of the Note’s interest terms and several possible interpretations.

They also claim that theywere to be charged no more than 8.000% per calendar year because

when “both a general and a specific provision in a contract address the same subject, the

more specific clause controls.” Grevas v. United States Fidelity & Guaranty Co., 152 Ill. 2d

407, 411 (1992). Hubbard Street Lofts argue that the heading and the variable interest rate

are the more specific clauses of the agreement. Lastly, Hubbard Street Lofts argue that if the

term “year” is defined as 360 days through the payment section of the Note, then it must also

define the term “annual” and “per annum” throughout the Note. They argue that to do so

would create inherently contradictory terms.

¶ 19 As discussed, in Asset Exchange, the court found the exact terms used in the agreement

in the instant case to be clearly unambiguous. Additionally, in RBS Citizens, National Ass’n

v. RTG-Oak Lawn, LLC, 407 Ill. App. 3d 183, 943 N.E.2d 198 (2011), a case which Inland

Bank cited heavily in its argument before this court, the court found that a promissory note

with similar language describing the 365/360 method was unambiguous. In RBS, the plaintiff

filed a foreclosure suit and in response, the defendants filed counterclaims and affirmative

defenses alleging violations of the Interest Act, duty of good faith and fair dealing, the

Consumer Fraud Act, and common law fraud. RBS, 407 Ill. App. 3d at 184, 943 N.E.2d at

203. The plaintiff filed a motion to dismiss and the trial court granted the motion on all

affirmative defenses and counterclaims with prejudice. Id. The promissory note in RBS

contained a section entitled “Interest,” which in relevant part stated “[i]nterest shall be

computed on the principal balance outstanding from time to time, on the basis of a three

hundred sixty (360) day year, but shall be charged for the actual number of days within the

period for which interest is being charged.” (Internal quotation marks omitted.) Id. The

appellate court found that the language in question clearly communicated how the interest

was to be calculated and was therefore unambiguous. Id. at 190, 943 N.E.2d at 206. The

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court also noted that the section in question was the only one that discussed how interest

would be calculated and that the term “per annum” was not mentioned in the section, thereby

removing the risk of confusion. Id. The language in the interest section of the RBS agreement

is very similar to the language in the payment section of the instant case.

¶ 20 Hubbard Street Lofts attempt to counter this argument by pointing out that the Note in

this case contains different sections that use terms like “annual” and “per annum.” They

argue that the use of the terms in various sections of the document make the Note less clear.

However, in RBS the court found no indication that the defendants were deceived by the

terms and noted that just because the defendants were unaware of how interest would be

calculated does not mean that the provision in question is ambiguous. Id. In the instant case,

the specific clause in question is clearly the 365/360 method found in the payment section

of the Note. The use of the terms “annual” and “per annum” cannot reasonably be said to

confuse the manner in which interest will be calculated. Therefore, there is no ambiguity in

this provision of the Note.

¶ 21 Although Hubbard Street Lofts admit that the manner in which Inland Bank and the trial

court construed the Note is a reasonable interpretation, they argue that other interpretations

can apply as well. We disagree. On the contrary, we hold that the interpretations advanced

by Hubbard Street Lofts are not reasonable. For example, Hubbard Street Lofts argue

numerous complex mathematical formulas in support of their ambiguity argument. Some of

the formulas yield absurd results. Nevertheless these arguments do not create an ambiguity

where none exists.

¶ 22 Inland Bank responds by claiming that Hubbard Street Lofts forfeited these arguments

by not raising them in the trial court. Inland Bank refers to RBS in which the defendants

similarly attempted to present an alternative mathematical argument that was rejected by the

appellate court. RBS, 407 Ill. App. 3d at 188, 943 N.E.2d at 205. Furthermore, a “theory upon

which a case is tried in the lower court cannot be changed on review.” Kravis v. Smith

Marine, Inc., 60 Ill. 2d 141, 147, 324 N.E.2d 417, 420 (1975). Hubbard Street Lofts’ main

and repeated argument in the trial court was that the Note in this case was ambiguous. Thus,

they cannot now claim that the Note must be interpreted in different ways that were never

mentioned in the trial court. Accordingly, we reject those arguments and hold that the trial

court did not err in dismissing Hubbard Street Lofts’ breach of contract count.

¶ 23 Lastly, Hubbard Street Lofts argue that the court erred in dismissing their second, fifth

and sixth counts because the Note at issue was written and signed and therefore not barred

by the Credit Agreements Act. Hubbard Street Lofts contend that the Credit Agreements Act

prevents actions related to credit agreements unless the agreement is in writing. They further

argue that no court has found that the Credit Agreements Act bars claims related to a credit

agreement when it is written and signed by both parties. The trial court reasoned that the

Credit Agreements Act was designed to protect against actions where plaintiffs contend that

they had an oral agreement with the defendant, and that the memorialization of the contract

does not reflect what they agreed to. Thus, the trial court found Hubbard Street Lofts’

second, fifth and sixth counts in the complaint were the prototype of claims that are barred

by the Credit Agreements Act.

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¶ 24 Inland Bank cites First National Bank in Staunton v. McBride Chevrolet, Inc., 267 Ill.

App. 3d 367, 373, 642 N.E.2d 138 (1994), which states that “[t]here is no justifiable reliance

on an oral credit agreement as a matter of law in Illinois.” In McBride, a bank officer

promised orally to hold a check that caused an overdraft in a corporation’s account until the

Monday after a weekend; however, the bank officer in fact did not hold the check and the

corporation suffered losses. Id. at 369-70, 643 N.E.2d at 140. The trial court held that the

Credit Agreements Act barred all claims by the corporation because the agreement was not

in writing and the appellate court affirmed. See generally McBride, 267 Ill. App. 3d 367, 642

N.E.2d 138. The court held that there is no limitation on the types of actions that are barred

under the Credit Agreements Act so long as they are related to a credit agreement. Id. at 372,

643 N.E.2d at 142. “[A]ll actions which depend for their existence upon an oral credit

agreement are barred by the [Credit Agreements] Act.” Id. The court further reasoned that

a customer has no recourse in the law if the bank fails to honor their oral agreement. Id.

¶ 25 In this case, Hubbard Street Lofts claim that they had an agreement with Inland Bank that

the interest rate for the loan would be calculated at 8.000% based on the 365/365 method.

This agreement however is not in writing. What is in writing is the Note that prescribes the

365/360 method by which to calculate the interest rate of the loan. Because Hubbard Street

Lofts cannot show in writing, or in any other way for that matter, that they had an agreement

with Inland Bank to apply the 8.000% interest for 365 days, this count is barred by the Credit

Agreements Act. Therefore, the trial court did not err in dismissing Hubbard Street Lofts’

second, fifth and sixth counts.

¶ 26 Notwithstanding its reasoning regarding the Credit Agreements Act, the trial court also

dismissed Hubbard Street Lofts’ fifth count for violation of the Consumer Fraud Act because

Hubbard Street Lofts were sophisticated business persons and not the average “consumers”

which the Consumer Fraud Act was designed to protect. The court found that Hubbard Street

Lofts’ sixth count, based on common law fraud, failed because it was not pled with

specificity. Both these counts were therefore dismissed with prejudice because the trial court

found that there was no amendment that would cure the defective pleading. The trial court’s

reasoning is consistent with Asset Exchange II, LLC, 2011 IL App (1st) 103718 (which held

that a common law fraud claim was properly dismissed where plaintiffs were sophisticated

businessmen who had a duty to know the terms of a contract before signing); Shelbourne,

732 F. Supp. 2d 809 (which held that a Consumer Fraud Act claim cannot be raised based

on terms that are revealed within the very documents that were signed, and common law

fraud claim is inapplicable where there was no false statement since interest was calculated

by the method prescribed in the loan document); RBS, 407 Ill. App. 3d 183, 943 N.E.2d 198

(which held that Consumer Fraud Act claim was properly dismissed where note was

unambiguous, there was no deviation from the terms of the note, and nothing in the record

of negotiations or agreements indicates deception). Furthermore, “[a] breach of contractual

promise, without more, is not actionable under the Consumer Fraud Act.” Avery v. State

Farm Mutual Automobile Insurance Co., 216 Ill. 2d 100, 169, 835 N.E.2d 801, 844 (2005).

¶ 27 Hubbard Street Lofts also claim that they were deceived by the use of the 365/360

calculation method, yet offer no facts or evidence that support that theory. Similarly, there

is no evidence that Inland Bank deviated from the terms of the Note or used any calculation

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method other than the 365/360 method specified in the payment section. Therefore, Hubbard

Street Lofts’ Consumer Fraud Act and common law fraud counts were properly dismissed.

¶ 28 For the foregoing reasons, the judgment of the circuit court of Cook County is affirmed.

¶ 29 Affirmed.

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