In the

United States Court of Appeals

For the Seventh Circuit ____________________ 

No. 21-2894 

ERIC D. HOVDE and STEVEN D. HOVDE, 

Plaintiffs-Appellants, 

v.

ISLA DEVELOPMENT LLC and JEFFREY T. RIEGEL, 

Defendants-Appellees. 

____________________ 

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 1:18-cv-07323 — Franklin U. Valderrama, Judge. 

____________________ 

ARGUED APRIL 13, 2022 — DECIDED OCTOBER 24, 2022 

____________________ 

Before ROVNER, WOOD, and ST. EVE, Circuit Judges. 

ROVNER, Circuit Judge. Jeffrey Riegel sought to build a condominium development in Isla Mujeres, and toward that end 

he formed ISLA Development LLC (“ISLA”) and secured a 

loan of millions of dollars from Steve and Eric Hovde. That 

project, however, ultimately failed, and more than ten years 

later, the Hovdes filed suit seeking to recover their funds from 

ISLA and Riegel.
2 No. 21-2894 

Riegel formed ISLA in 2004 and acted as its manager and 

sole member. In exchange for the loan from the Hovdes, ISLA 

promised to pay the Hovdes a 25% interest rate, and Riegel 

agreed to act as a guarantor. Financial problems eventually 

shut down the project and the Hovdes sued ISLA and Riegel. 

The district court granted summary judgment to the defendants as to the claim based on the Mortgage Note (“Note”), 

holding that the claim was brought beyond the expiration of 

the ten-year statute of limitations period. That left the claim 

against Riegel based on his status as a guarantor. The district 

court initially held that the case could proceed as to Riegel, 

but a different district court judge who subsequently took 

over the case determined that the statute of limitations could 

be asserted in the action against the guarantor as well, holding that a waiver did not operate to block that defense and the 

claim against Riegel was therefore untimely. The Hovdes now 

appeal those grants of summary judgment. 

We turn first to the claim based on the obligations under 

the Note. By its terms, the Note provided that the principal 

and interest on the loans would be due in June 2007, but the 

Note’s event-of-default acceleration clause provided that if an 

Event of Default occurred, “the outstanding unpaid principal

balance of the Note, the accrued interest thereon and all other 

obligations of the Borrower to the Bank under the Loan Documents shall automatically become immediately due and 

payable,” thus triggering the ten-year statute of limitations. 

One such “Event of Default” specified in the contract was 

if an “Act of Bankruptcy shall occur,” and “Act of Bankruptcy” is defined in the contract to include if ISLA or Riegel 

“admit in writing its inability to pay its debts as they mature.” 

The district court properly held that two emails sent by Riegel 
No. 21-2894 3

to the Hovdes constituted an admission in writing of an inability to pay the debts and therefore an event of default. In an 

email on August 7, 2008, to Steven Hovde, Riegel revealed 

that a tax bill of $137,000 had to be paid by August 18, that he 

had been buying time with the tax officials most of the spring 

and summer but that it was now absolute and non-negotiable, 

and that he needed an advance of $250,000 just to make it until 

an anticipated closing in mid-September. Steven Hovde responded on August 11 that he had no more money to give 

and that the last time he lent money he had told Riegel to shut 

the project down and that they would not lend any additional 

amounts. On September 2, Riegel sent another email, stating 

that he had pursued financing options but that “[a]t this point 

in time, my resources are exhausted.” In that email he detailed 

the financial challenges, including stating that as of two 

weeks prior all construction workers were suspended and 

that the management team was kept on but was not paid that 

past Friday, and that if all construction workers and management staff were terminated that day then outstanding severance and federal taxes would total another $200–250,000. He 

further stated that funds of $75,000 were needed by Wednesday morning “to avoid having Social Security persons in Mexico shut down the entire operation immediately.” He continued that he was told that trucks would be coming to confiscate all computer equipment from the offices and other assets 

and materials at the construction site to pay the social security 

bill owed, and that “[s]uch an action would be the instant 

death of the project.” He concluded by stating that he was “a 

very ‘stand up’ guy but at this point, with no resources of my 

own, I would not be able to attempt re-assembling a team on 

the ground.” 
4 No. 21-2894 

The district court did not err in holding that the language 

of the emails met the contract language of an admission in 

writing of an inability to pay his debts as they mature. Although the Hovdes argue that Riegel was continuing to seek 

alternative funding sources, and that the property itself and 

other assets still had some value, that does not alter the conclusion that the emails constituted an admission of an inability to pay the debts. The language does not require actual insolvency; it merely requires an admission of an inability to 

pay the debts as they mature—whether or not true—and the 

court properly held that the language in the emails constituted that admission. Accordingly, the statute of limitations 

began to run as of September 2, 2008. 

The Hovdes next argue that a Forbearance Agreement of 

November 5, 2008, constituted a “new promise to pay” that 

restarted the ten-year limitations period, thus making the November 2, 2018, lawsuit timely. Riegel argues that this claim 

was never presented to the district court and therefore is 

waived. In response to that contention, the Hovdes did not 

identify any part of the record raising the legal theory that the 

Forbearance Agreement constituted a new promise to pay. Instead, they argued that the court was presented with the relevant facts, including the existence of the Forbearance Agreement, and that the applicable statute was before the court as 

well, “even if the precise ‘new promise to pay’ phrase was not 

used by the parties.” Appellant’s Reply Brief at 1. But those 

facts were raised only with respect to a distinctly different argument, which was that the Forbearance Agreement temporarily tolled the running of the statute of limitations thus extending the ten-year limit. The district court rejected that argument because even if the period was tolled during the 

forty-two days that the Forbearance Agreement was in effect, 
No. 21-2894 5

the Hovdes would have had to bring the claim by October 18, 

2018, and the claim filed on November 2, 2018, therefore was 

still untimely. The argument that the Hovdes assert here, that 

the Forbearance Agreement was a new promise to pay that 

triggered a new 10-year limitations period, was never asserted below, and is inconsistent with the argument actually 

made below. To the extent that the Hovdes are arguing that 

the court could have put together the Forbearance Agreement 

and the limitations period and fashioned such an argument, 

that is not the court’s role. The argument that the Forbearance 

Agreement constituted a new promise to pay was never argued to the district court at all and therefore is not properly 

raised on appeal. Compare Rozumalski v. W.F. Baird & Assocs., 

Ltd., 937 F.3d 919, 925–26 (7th Cir. 2019) (holding that an issue 

cannot be raised on appeal if the party failed to make the specific argument below even if the issue may have been before 

the district court in more general terms), and Domka v. Portage 

Cty., Wis., 523 F.3d 776, 783 (7th Cir. 2008) (holding that an 

argument was waived where the specific argument was never 

presented to the district court but a different one arising out 

of the same facts was argued), with United States v. Billups, 536 

F.3d 574, 578 (7th Cir. 2008) (argument not forfeited on appeal 

where the argument was presented in the district court but a 

new twist in support of that argument is presented on appeal). Accordingly, the court properly granted summary 

judgment on that claim as untimely. 

Finally, the Hovdes argue that the district court erred in 

determining that the claim against Riegel with respect to the 

guaranty was also untimely. The district court initially held 

that the guaranty by its language waived all defenses, and 

therefore that Riegel’s reliance on the defense of the statute of 

limitations was waived as well. The court later revisited the 
6 No. 21-2894 

issue, and held that the waiver in the guaranty did not operate 

to preclude reliance on the statute of limitations, and that the 

claim against Riegel based on the guaranty was untimely. 

The Hovdes now argue that the court erred in holding that 

the statute of limitations defense was not waived in the guaranty agreement. There are two provisions in the guaranty that 

are relied upon for this issue. First, the language in the guaranty provides: “[t]his guaranty shall in all respects be continuing, absolute and unconditional, and shall remain in full 

force and effect with respect to any Guarantor until satisfaction in full of the Borrower’s Liabilities.” The second provision sets forth the waiver of defenses, and although the parties consider only the last part of the provision (bolded in the 

text below), examination of the whole provision is helpful to 

provide context:

Guarantor hereby agrees that, except as 

hereinafter provided, its obligations under 

this Guaranty shall be unconditional, 

irrespective of (i) the validity or enforceability 

of Borrower's Liabilities or any part thereof, or 

of any promissory note or other document 

evidencing all or any part of Borrower's 

Liabilities, (ii) the absence of any attempt to 

collect Borrower's Liabilities from Borrower or 

any other guarantor or other action to enforce 

the same, (iii) the waiver or consent by Lenders 

with respect to any provision of any instrument 

evidencing Borrower's Liabilities, or any part 

thereof, or any other agreement heretofore, now 

or hereafter executed by Borrower and 

delivered to Lenders, (iv) failure by Lenders to 
No. 21-2894 7

take any steps to perfect and maintain its 

security interest in, or to preserve its rights to, 

any security or collateral for Borrower's 

Liabilities, (v) the institution of any proceeding 

under Chapter 11 of Title 11 of the United States 

Code (11 U.S.C. §101 et seq.), as amended (the 

"Bankruptcy Code"), or any similar proceeding, 

by or against Borrower, or Lender[s’] election in 

any such proceeding of the application of 

Section 1111(b)(2) of the Bankruptcy Code, (vi) 

any borrowing or grant of a security interest by 

Borrower as debtor-in-possession, under 

Section 364 of the Bankruptcy Code, (vii) the 

disallowance, under Section 502 of the 

Bankruptcy Code, of all or any portion of 

Lender[s’] claim(s) for repayment of Borrower's

Liabilities, or (viii) any other circumstance 

which might otherwise constitute a legal or 

equitable discharge or defense of a guarantor. 

(emphasis added). The issue here is whether those provisions

waive the statute of limitations defense, or whether more explicit language referencing the statute of limitations is needed 

in order to waive it.

A guaranty is a contract and therefore is analyzed under 

standards governing contract interpretation in general. Blackhawk Hotel Assocs. v Kaufman, 421 N.E.2d 166, 168 (Ill. 1981); 

T.C.T. Bldg. P’ship v. Tandy Corp., 751 N.E.2d 135, 139 (Ill. App. 

2001). “A guarantor is given the benefit of any doubt which 

may arise from the language of the contract; his understanding is strictly construed; his liability may not be varied or extended beyond its precise terms by construction or 
8 No. 21-2894 

implication; and he is bound only to the extent and in the matter and under the circumstances pointed out in his obligation.“ Exch. Nat. Bank of Chi. v. Bergman, 505 N.E.2d 1236, 1238 

(Ill. App. 1987); T.C.T. Bldg. P’ship, 751 N.E.2d at 139–40 (holding that “a guaranty is to be strictly construed in favor of the 

guarantor such that the guarantor is accorded the benefit of 

any doubt that arises from the contract language.”) If the 

terms of a contract present no ambiguity, they will be given 

effect as written. Id. 

The parties rely on different lines of reasoning in Illinois

cases. The Hovdes point to cases holding that guaranties, like 

any other contract, should be given their plain meaning, and 

that waivers in guaranties should therefore be enforced where 

they are clear and unambiguous. See Chrysler Credit Corp. v. 

Marino, 63 F.3d 574, 577 (7th Cir. 1995); BA Mortg. & Int'l Realty Corp. v. Am. Nat. Bank & Tr. Co. of Chi., 706 F. Supp. 1364, 

1376 (N.D. Ill. 1989). They argue that the language in the guaranty encompasses legal or equitable defenses, and therefore 

includes the statutes of limitations defense.

Riegel, in contrast, points to cases refusing to enforce general waivers where an important statutory right is at issue and 

finding a waiver for such circumstances only where it is explicit. See Gallagher v. Lenart, 874 N.E.2d 43, 62 (Ill. 2007). Under that reasoning, only a waiver that explicitly includes 

“statutes of limitations” would be effective to waive it. That 

requirement of explicit language, which was applied to “important statutory rights,” has never been applied in the context of statutes of limitations, but Riegel asserts that the reasoning would extend to that context. 

We need not determine whether a waiver of the statute of 

limitations must be explicit to that defense, because even if 
No. 21-2894 9

more general waiver language can be sufficient, the language 

here does not suffice. Any review of a contract begins with the 

plain language, and the language of the alleged waiver here 

by its terms does not encompass the statute of limitations defense. The language relied upon by the Hovdes provides that 

the “guaranty shall in all respects be continuing, absolute and 

unconditional, and shall remain in full force and effect with 

respect to any Guarantor until satisfaction in full of the Borrower's Liabilities” and that a guarantor’s “obligations under 

this Guaranty shall be unconditional, irrespective of ... any 

other circumstance which might otherwise constitute a legal 

or equitable discharge or defense of a guarantor.” 

In guaranty agreements the terms “unconditional” and 

“absolute” are terms of art. Unlike a conditional guaranty, 

“[a]n unconditional guaranty does not require a creditor to 

attempt collection from the principal debtor before looking to 

the guarantor.” N. Tr. Co. v. VIII S. Mich. Assocs., 657 N.E.2d 

1095, 1105 (Ill. App. 1995), citing United States v. Shirman, 41 

F.R.D. 368, 372 (N.D. Ill. 1966); 38 Am. Jur. 2d Absolute or conditional guaranty § 13 (2022) (“A guaranty that is absolute and 

unconditional is one that requires no condition precedent to 

its enforcement against the guarantor other than mere default 

by the principal debtor; such a guaranty is also called a guaranty of payment”); In re Clore, 547 B.R. 915, 922 (Bankr. C.D. 

Ill. 2016) (stating that “as used in guaranty agreements, the 

terms ‘absolute’ and ‘unconditional’ are recognized terms of 

art designed to exclude any and all contractual conditions.”) 

Therefore, the above provisions make clear that the obligations of the guarantor are one of payment not collection and 

are not conditioned upon the failure of efforts to collect the 

payment from the principal debtor. 
10 No. 21-2894 

The Hovdes acknowledge that the terms “continuing, absolute, and unconditional” are terms of art when used in 

guaranties. They argue, however, that the language that the 

guaranty is “in all respects ... continuing, absolute and unconditional” and “shall remain in full force and effect” until 

the satisfaction of the borrowers’ liabilities, indicates that Riegel’s obligations remain ongoing regardless of the statute of 

limitations. That language certainly makes clear that the guaranty requires no condition precedent to its enforcement 

against the guarantor other than mere default by the principal 

debtor, and that its obligation does not terminate until the 

debt is paid. But it says nothing as to whether an action to 

enforce that guaranty can be maintained outside the statute of 

limitations. 

The Hovdes maintain that such language is sufficient to 

waive the statute of limitations defense when combined with 

the language waiving legal and equitable defenses. We turn, 

then, to the precise language in that separate provision, which 

states that “the Guarantor agrees that, except as hereinafter 

provided, its obligations under this Guaranty shall be unconditional, irrespective of ... (vii) any other circumstance which 

might otherwise constitute a legal or equitable discharge or 

defense of a guarantor.” (emphasis added) As the italicized 

language makes clear, all of the subsections, including the 

waiver of defenses, are relevant only insofar as they would 

relate to the unconditional nature of the obligation. In other 

words, the provision ensures that the guaranty shall be unconditional and that no legal or equitable defense can alter the 

status of the obligations as unconditional. In keeping with 

that focus on the nature of the guarantor’s obligations, the 

specific examples that follow relate to the obligations of the 

guarantor. In fact, all of the subsections that follow make clear 
No. 21-2894 11

that the obligations of the guarantor, Riegel, are unconditional regardless of the actions of the lender, the Hovdes, with 

respect to the borrower, ISLA. Thus, those listed provisions 

declare that Riegel’s obligations are not impacted by: (i) the 

validity or enforceability of ISLA’s liabilities; (ii) the failure to 

attempt to collect from ISLA; (iii) any waiver or consent by 

the Hovdes with respect to ISLA’s liabilities; (iv) any failure 

by the Hovdes to take any steps to perfect and maintain its 

security interest in, or to preserve its rights to, any security or 

collateral for ISLA’s liabilities; (v) any bankruptcy proceeding

by or against ISLA, or the Hovdes’ election in any such proceeding; (vi) any borrowing or grant of a security interest by 

ISLA as debtor-in-possession under the Bankruptcy Code; 

(vii) or the disallowance under the Bankruptcy Code of any 

portion of the Hovdes’ claim for repayment of ISLA’s liabilities. The listed provisions, in short, make clear that Riegel’s 

obligation is independent of and unaffected by the obligations 

of ISLA and any actions of the Hovdes with respect to ISLA.

The “catch-all” provision in subsection (viii) concludes 

that section, providing that Riegel’s obligations “shall be unconditional, irrespective of ... (viii) any other circumstance 

which might otherwise constitute a legal or equitable discharge or defense of a guarantor.” As with the provision that 

precedes it, that subsection makes clear that any other circumstances that a guarantor otherwise could assert as a legal defense or a discharge cannot operate to alter the unconditional 

nature of the guarantor’s obligation. In other words, the unconditional nature of the obligation cannot be impacted by 

any such defenses.

That language could operate to waive any defenses that 

would otherwise render the guarantor’s obligation 
12 No. 21-2894 

conditional. But its scope is limited to that context. It addresses only the preservation of the unconditional nature of 

the obligation; it does not address defenses unrelated to that 

issue. 

But the statute of limitations does not impact the unconditional nature of the obligation. In fact, it does not impact the 

obligation itself—unconditional or otherwise—at all. Illinois, 

like many states, recognizes that the statute of limitations is 

not a defense that impacts a party’s obligation; it merely impacts the enforceability in court of that obligation. See Fleming 

v. Yeazel, 40 N.E.2d 507, 508 (Ill. 1942) (holding that statutes of 

limitations “bar the right to sue to recover but do not extinguish the debt or the property right”); Midland Funding, LLC 

v. Johnson, 137 S. Ct. 1407, 1411–12 (2017) (recognizing that under the law of many states, the right to payment remains after 

the limitations period expires, and distinguishing a claim or 

obligation, which survives the limitations period, from an 

“enforceable” claim or obligation); see also Pantoja v. Portfolio 

Recovery Assocs., LLC, 852 F.3d 679, 684 (7th Cir. 2017) (holding that most states treat a debt as a legal obligation even after 

the statute of limitations has run even though that limitations 

period means it can no longer be legally enforced); Tinsley v. 

Consumer Adjustment Co., Inc., 2020 WL 1558105, at *4 (C.D. Ill. 

Apr. 1, 2020) (citing Pantoja, noting that “most states—including Illinois—do not extinguish or invalidate debts even after 

the statute of limitations has run, and creditors generally retain the legal right ‘to appeal to the debtor to honor the debt 

out of a sense of moral obligation even if the legal obligation can no longer be enforced in court’”); Stimpson v. Midland 

Credit Mgmt, Inc., 944 F.3d 1190, 1199 (9th Cir. 2019) (noting 

that “[i]n most states, a statute of limitations does not extinguish a party’s rights, but merely precludes a judicial 
No. 21-2894 13

remedy”); 54 C.J.S. Limitations of Actions § 20 (2022) (noting 

that a statute of limitations bars only the remedy in an action 

to collect on a debt but that a creditor retains the right to payment of debt even after the limitations period has expired). 

The language of the waiver states that the guarantor’s obligation is unconditional irrespective of any legal defense of the 

guarantor. That language is therefore exceedingly narrow, 

keyed by its terms to prohibit only circumstances that would 

render the guaranty obligation conditional. Nothing in the 

statute of limitations defense renders the guarantor’s obligation conditional; it merely renders the unconditional obligation unenforceable in a court. Language in a guaranty contract 

must be given effect as written, and any ambiguity must be 

interpreted in a manner favoring the guarantor. T.C.T. Bldg. 

P’ship, 751 N.E.2d at 139–40. Because the statute of limitations 

does not address the obligation, it is not included in a waiver 

limited to defenses or discharge that would impact the unconditional nature of the guaranty.

The language at issue here stands in contrast to more expansive language that courts frequently encounter in waivers, 

in which the language applies not only to defenses as to the 

obligation itself but also to defenses to liability or enforcement. See Intl. Supply Co. v. Campbell, 907 N.E.2d 478, 481–82 

(Ill. App. 2009) (guaranty waived “all legal and equitable defenses regarding enforcement of the personal guarantee”); 

FIMSA, Inc. v. Unicorp Fin. Corp., 759 F. Supp. 1297, 1300 (N.D. 

Ill. 1991) (“the undersigned ... waives every defense, counterclaim or setoff ... to any action by FIMSA in enforcing this guaranty); WEC 98C-3 LLC v. Saks, Inc., 2022 WL 474204, *4 (N.D. 

Ill. Feb. 16, 2022) (guaranty provided that “the liability and obligation of Guarantor ... shall not be subject to any ... defense); 

Morris v. Columbia Nat. Bank of Chi., 79 B.R. 777, 781 (N.D. Ill. 
14 No. 21-2894 

1987) (guaranty provided that “[e]ach of the undersigned 

waives every defense, counterclaim, or setoff which any of 

them may now have or hereafter may have to any action by the 

holder in enforcing this guaranty.”); BA Mortg. & Intl. Realty, 

706 F. Supp. at 1376 (guaranty waived “[a]ny defense ... that 

the Guarantors ... may or might have to its respective undertakings, liabilities and obligations hereunder, each and every 

such defense being hereby waived by the undersigned Guarantors.”); RBS Citizens, Nat. Assn. v. RTG-Oak Lawn, LLC, 943 

N.E.2d 198, 203 (Ill. App. 2011) (forbearance agreement provided that the borrower has “no claims or defenses to the enforcement of the right and remedies of Lender thereunder”) (emphasis added in all parentheticals). The language in this case 

does not waive all defenses to enforcement or to the legal action or to liability; it provides only that the obligation remains 

unconditional irrespective of any circumstances that would 

otherwise constitute a defense or discharge. Because the statute of limitations defense does not operate to absolve a person 

in a contract from the obligation but merely renders that obligation unenforceable in court because not timely brought, the 

language does not preclude the assertion of that defense by 

its plain language. Accordingly, the district court did not err 

in determining that the claims were barred by the statute of 

limitations. 

The decision of the district court is AFFIRMED.