In the 

United States Court of Appeals 

For the Seventh Circuit ____________________

Nos. 15‐3326 & 15‐3327

BANK OF COMMERCE, et al.,

Plaintiffs‐Appellees,

v.

KENNETH E. HOFFMAN, JR.,

Defendant‐Appellant.

____________________

Appeals from the United States District Court for the

Central District of Illinois.

Nos. 13‐cv‐04001 & 13‐cv‐04075 — Sara Darrow, Judge.

____________________

ARGUED APRIL 13, 2016 — DECIDED JULY 15, 2016

____________________

Before EASTERBROOK, MANION, and ROVNER, Circuit

Judges.

MANION, Circuit Judge. This litigation centers on the mean‐

ing of a settlement agreement and release signed by Kenneth

Hoffman. Hoffman had several loan obligations to Country

Bank, for which Bank of Commerce is now the successor in

interest, and the settlement released Hoffman from his small‐
2 Nos. 15‐3326 & 15‐3327

est loan. He urges that the release covered a bigger loan guar‐

antee, too. We conclude that the release agreement did not,

however, free him from that larger obligation.

As a result, we affirm the district court’s decision to grant

summary judgment in favor of the Bank of Commerce.  

I. Background

The facts underlying this litigation trace back to 2009,

when Kenneth Hoffman executed the first of three loan agree‐

ments with Country Bank. In June 2009, he executed a $1.5

million tax‐increment finance note, also known as a TIF note,

for a development project by Fyre Lake Ventures LCC. This

first loan was backed by a TIF bond, a mechanism for local

governments to finance real estate development, and Hoff‐

man was not personally responsible to pay this loan.1 In Feb‐

ruary 2010, Fyre Lake Ventures signed a $9 million loan from

Country Bank, with Hoffman acting as a co‐guarantor for

$900,000 of this loan. Separately, Hoffman borrowed $157,300

from the bank in April 2011, this time with his wife Barbara.

The Hoffmans’promissory note was secured by mortgages on

three lots in a Milan, Illinois housing development.

Achallenging economy caused Country Bank to fail in Oc‐

tober 2011. The FDIC was appointed as receiver and, later, the

Bank of Commerce became successor in interest to the FDIC.

In the succession process, Bank of Commerce took over the

obligations owed to Country Bank. The economic problems

                                                 

1 TIF is an acronym for tax‐increment financing, which is a mechanism

utilized by municipalities to encourage development by issuing tax‐ex‐

empt municipal bonds to pay for part of the development infrastructure.

Appellee Br. at 6 n.5.
Nos. 15‐3326 & 15‐3327 3

also impacted the Hoffmans, and by October 2011, all three

obligations that Hoffman signed had fallen into default.

After negotiations in 2012, the FDIC and both Hoffmans

signed the settlement agreement and release that we are

asked to interpret here. In exchange for titles to the three Mi‐

lan lots, the Hoffmans were released of their obligations to

Country Bank and its successors. The question is which loans,

exactly, were released: only the $157,300 note signed by the

Hoffmans or also the Fyre Lake guarantee?

Less than three months after signing this release, the FDIC

sued Kenneth Hoffman and numerous other guarantors of

the Fyre Lake loan, $900,000 of which he personally guaran‐

teed. Because that loan was in default, the FDIC sued to col‐

lect. Hoffman and the FDIC entered cross‐motions for sum‐

mary judgment, which disputed whether Hoffman’s settle‐

ment with the FDIC released him from his obligations on the

Fyre Lake loan. The plain language of the Hoffman‐FDIC set‐

tlement states that Illinois contract law, which all parties agree

applies here, governs this agreement. As a result, the district

judge applied state law. While the judge found that the dis‐

puted language in the settlement agreement was ambiguous,

she went on to conclude that parole evidence supported the

bank’s interpretation of the settlement: Hoffman was only re‐

leased from his obligation on the $157,300 loan. The district

court thus entered summary judgment for Bank of Com‐

merce, which, by this point, had succeeded the FDIC.

After losing in district court, Hoffman brought these con‐

solidated appeals against the FDIC and its successor in inter‐

est, Bank of Commerce.
4 Nos. 15‐3326 & 15‐3327

II. Discussion

We review summary judgment awards de novo. Spierer v.

Rossman, 798 F.3d 502, 507 (7th Cir. 2015). “The standard for

summary judgment is well established: with the court draw‐

ing all inferences in the light most favorable to the non‐mov‐

ing party, the moving party must discharge its burden of

showing that there are no genuine issues of material fact and

that he is entitled to judgment as a matter of law.” Id. At this

point, “[i]f the moving party has properly supported his mo‐

tion, the burden shifts to the non‐moving party to come for‐

ward with specific facts showing that there is a genuine issue

for trial.” Id.

In this case, when we examine whetherthe Hoffman‐FDIC

settlementreleased Hoffman from his $900,000 personal guar‐

antee on the $9 million Fyre Lake loan, we conclude that the

district court’s ruling was correct. The bank carried its burden,

as a moving party, to show that there was no genuine issue of

any material fact. At this point, the burden of proof therefore

shifted to Hoffman, who could only survive summary judg‐

ment by establishing that specific facts created a material fac‐

tual dispute. For the reasons we discuss below, however,

Hoffman never showed any genuine issue for trial. On the

contrary, the established facts and law completely under‐

mined his case. As a result, the district court appropriately

entered summary judgment for Bank of Commerce.

Before addressing this case on the merits, we briefly exam‐

ine whether we have jurisdiction over this litigation.

A. Jurisdiction

When the FDIC originally filed suit over the $9 million

Fyre Lake obligation, the FDIC grounded its complaint on
Nos. 15‐3326 & 15‐3327 5

federal jurisdiction. This was appropriate because, when the

FDIC “is a party” to a lawsuit, the case is “deemed to arise

underthe laws of the United States.” 12 U.S.C. § 1819(b)(2)(A).

But during the course of this litigation, the FDIC assigned its

interest in Hoffman’s obligations to Bank of Commerce.

We have not expressly ruled on whether federal jurisdic‐

tion is lost when another party is substituted for the FDIC.

The traditional principle in diversity cases is that, if jurisdic‐

tion existed when the case was filed or removed, jurisdiction

will not be disturbed by subsequent acts. Matter of Shell Oil

Co., 966 F.2d 1130, 1133 (7th Cir. 1992). Our approach follows

the Supreme Court, which has “consistently held that if [di‐

versity] jurisdiction exists at the time an action is commenced,

[it] may not be divested by subsequent events.” Freeport‐

McMoRan, Inc. v. K N Energy, Inc., 498 U.S. 426, 428 (1991).

We find it appropriate to apply the same principle in FDIC

litigation: even though the FDIC assigned its interest to an‐

other party, which was then substituted for the FDIC in this

litigation, this case remains “deemed to arise under the laws

of the United States.” See 12 U.S.C. § 1819(b)(2)(A). Thus, we

conclude that we have jurisdiction over this case, and we turn

to the parties’ arguments regarding the settlement contract.

B. The Ambiguous Language

The threshold question on the merits is whether the par‐

ties’ agreement has a clear meaning within the document’s

four corners. Under Illinois law, if a contract only permits one

interpretation, that meaning controls. AM Int’l, Inc. v. Graphic

Mgmt. Assocs., Inc., 44 F.3d 572, 574 (7th Cir. 1995) (citing Om‐

nitrus Merging Corp. v. Ill. Tool Works, Inc., 628 N.E.2d 1165,

1168 (Ill. Ct. App. 1993)). If a contract’s language is reasonably
6 Nos. 15‐3326 & 15‐3327

or fairly susceptible to multiple meanings, Illinois courts will

find the contract ambiguous. Bourke v. Dun & Bradstreet Corp.,

159 F.3d 1032, 1037 (7th Cir. 1998) (quoting Flora Bank & Tr. v.

Czyzewski, 583 N.E.2d 720, 725 (Ill. Ct. App. 1991)). And when

determining whether an agreement is ambiguous, the court

must construe that contract as a whole. Flora Bank & Tr. v.

Czyzewski, 583 N.E.2d 720, 725 (Ill. Ct. App. 1991).

We agree with the district court’s reading of the contract,

which juxtaposes conflicting statements in the Hoffman‐FDIC

settlement. On the one hand, the contract contains specific

statements that absolve the Hoffmans from liability arising

from “the Loan Documents or the Properties.” The scope of

this release is limited: “the Properties” are clearly defined as

the three Milan parcels that secured the $157,300 loan. Fur‐

ther, Fyre Lake is not named anywhere in the contract. On the

other hand, the settlement agreement also contains language

that generally releases the Hoffmans from all liabilities. The

FDIC, for itself and its successors, states that it:

hereby releases and discharges KENNETH E.

HOFFMAN JR. and BARBARA A. HOFFFMAN ...

from any and all liabilities, obligations, claims, actions,

causes of action, liens, fees, and demands of whatso‐

ever kind or nature, whether known or unknown, that

FDIC‐RECEIVER had, now has, or may have against

such Released Parties, including, but not limited to,

those arising out of, based on, or in any way connected

with the Loan Documents, or any portion thereof, or

the Properties orrelating to claims against the Released

Parties.

This sweeping language, read only in isolation, could release

Kenneth Hoffman from liability on the Milan properties, the
Nos. 15‐3326 & 15‐3327 7

Fyre Lake guarantee, and any other obligation he might have

to the FDIC. Within its four corners, then, the Hoffman‐FDIC

settlement contains conflicting language.

The Illinois courts have repeatedly examined contracts

with multiple release statements, where the “general lan‐

guage is inconsistent and conflicts with the specific lan‐

guage.” See, e.g., Countryman v. Indus. Commʹn, 686 N.E.2d 61,

64 (Ill. Ct. App. 1997). These contracts are deemed ambiguous.

See id. As a threshold matter, we thus conclude that the con‐

tract before us is ambiguous. This ambiguity requires us to

determine the contract’s specific meaning through extrinsic

evidence. Richard W. McCarthy Trust Dated Sept. 2, 2004 v. Ill.

Cas. Co., 946 N.E.2d 895, 903 (Ill. Ct. App. 2011).

C. The Extrinsic Evidence and Rules of Construction

When interpreting an ambiguous contract, Illinois courts

rely on two methods: extrinsic evidence and the rules of con‐

struction. See Countryman, 686 N.E.2d at 64; McCarthy Trust,

946 N.E.2d at 903. We utilize both today, as we examine the

settlement contract that Hoffman and the FDIC signed.

Hoffman’s own testimony leads us to conclude that the

Hoffman‐FDIC contract admits only one meaning. His words

establish that he knew he was negotiating for a release of the

$157,300 loan only, not for a multi‐loan release.

Hoffman testified that, when negotiating the release on his

smaller loan, he specifically asked loan officer Erica Covey

whether he could also be released from his Fyre Lake obliga‐

tions. While Covey was apparently sympathetic to his situa‐

tion, Hoffman’s understanding was that “she wasn’t quite

sure how, you know, all of this could be tied together.” And
8 Nos. 15‐3326 & 15‐3327

as he further testified, both parties understood that their con‐

tract on the $157,300 obligation had “nothing to do” with the

Fyre Lake guarantee. The obligations remained separate.

Against this unambiguous record, Hoffman asks us to ac‐

cept his claim that, when he executed the settlement agree‐

ment, he subjectively believed he was obtaining relief from

both the $157,300 loan and the $900,000 Fyre Lake guarantee.

This contradicts his testimony, strains credibility, and is insuf‐

ficient to create a genuine factual issue. To reach a trier of fact,

Hoffman would have to show material facts in the record that

conflict with his own sworn testimony.

Like the parole evidence, the Illinois rules of construction

also establish that Hoffman was only released from his

$157,300 loan. When a contract might allow different con‐

structions, Illinois courts prefer the reading that is “fair, cus‐

tomary, and such as prudent men would naturally execute.”

Trade Ctr., Inc. v. Dominickʹs Finer Foods, Inc., 711 N.E.2d 333,

338 (1999) (quoting Chi. Title & Trust Co. v. Telco Capital Corp.,

685 N.E.2d 952, 956 (1997)) (internal marks omitted). This fair

reading is preferred over an interpretation that makes a con‐

tract “inequitable, unusual, or such as a reasonable man

would not be likely to enter.” Id. And on the particular type of

facts before us, Illinois courts have expressly provided a rule

of construction for finding the contract’s meaning: “where an

ambiguity exists in a contract due to a conflict between two of

its provisions, the more specific provision relating to the same

subject matter controls over the more general provision.”

Countryman, 686 N.E. 2d at 64.

The specific provisions in the Hoffman‐FDIC agreement

refer to the $157,300 debt secured by mortgages on three Mi‐
Nos. 15‐3326 & 15‐3327 9

lan properties. A reasonable interpretation of what these spe‐

cific provisions mean leaves no ambiguity. The contract states

that the FDIC believes it is entitled, by the particular loan de‐

fault at issue, to foreclose on the three Milan properties. It

states that the FDIC will accept, in lieu of foreclosure, the

deeds to these three properties. And with the deeds in lieu of

foreclosure, the Hoffmans’ $157,300 obligation is wiped out.

On the specific language of this contract, therefore, the mean‐

ing is unequivocal: Hoffman’s $157,300 obligation is the loan

forgiven.

The contract also contains a general release, with sweep‐

ing language by the FDIC, “[f]or itself and its past, present

and future predecessors, creditors, employees, agents, attor‐

neys, affiliates, insurers, successors or assigns.” As we have

shown, this part of the contract releases the Hoffmans from

“any and all liabilities, obligations, claims, actions, causes of

action, liens, fees, and demands of whatsoever kind or nature,

whether known or unknown.” This general language, read in

isolation, might appear to release all manner of liabilities.

When interpreting a contract with specific and general re‐

lease language on the same subject matter, Illinois courts must

allow the specific language to control. See id. This does not

mean that the general language is knocked out of the contract,

never to be seen again. Instead, we interpret the general pro‐

vision in light of the specific provision. Here, under the Illi‐

nois legal standard, this means that the Hoffman‐FDIC agree‐

ment is designed to release all manner of liabilities that are

specifically related to the $157,300 loan. Thus, Hoffman is free

from this loan only. He can never owe the FDIC or its succes‐

sors anything on this particular loan. When we acknowledge

the plain meaning of the specific release, and read the general
10 Nos. 15‐3326 & 15‐3327

release in light of the specific language on the same subject

matter, this is the necessary interpretation.

III. Conclusion

On the record before us, there are no genuine issues of ma‐

terial fact that should have prevented the district court from

entering summary judgment against Hoffman. Nor do we

find error in the district court’s application of the law. We

therefore do not disturb the lower court’s ruling that Hoffman

was solely released from his $157,300 obligation.

The judgement of the district court is thus AFFIRMED.