ILLINOIS OFFICIAL REPORTS

Appellate Court

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

Appellate Court

Caption

ASSET EXCHANGE II, LLC, on Behalf of Themselves and All Those

Similarly Situated, Plaintiff-Appellant, v. FIRST CHOICE BANK,

Defendant-Appellee.

 District & No. First District, Second Division

Docket No. 1-10-3718

Filed

Rehearing denied

Modified opinion filed

July 12, 2011

August 18, 2011

August 23, 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.)

The trial court properly dismissed plaintiff’s action alleging that

defendant bank improperly charged a higher interest rate than that which

the parties agreed upon when they signed a promissory note, since the

note unambiguously stated that the interest rate would be calculated

based on a 360-day year, but then multiplied by the actual number of

days in a calendar year, that method was not a violation of the Illinois

Interest Act in the context of the commercial loan at issue, and the bank’s

compliance with the unambiguous terms of the contract precluded

plaintiff’s action.

Decision Under 

Review

Appeal from the Circuit Court of Cook County, 09-CH-48598; the Hon.

James R. Epstein and the Hon. Michael B. Hyman, Judges, presiding.

Judgment Affirmed.
Counsel on

Appeal

Steven A. Hart, Scott W. Henry, and Anastasios T. Foukas, all of Segal

McCambridge Singer & Mahoney, Ltd., of Chicago, for appellant.

Scott L. Schmookler and Daniel R. Bryer, both of Clausen Miller P.C.,

of Chicago, and Rebecca S. Yocum, of Bottaro, Morefield, Kubin &

Yocum, L.C., of Kansas City, Missouri, for appellee.

Panel JUSTICE CONNORS delivered the judgment of the court, with opinion.

Presiding Justice Cunningham and Justice Harris concurred in the

judgment and opinion.

OPINION

¶ 1 This appeal arises out of a putative class action filed by Asset Exchange II, LLC

(plaintiff), against First Choice Bank (Bank), alleging that the Bank improperly charged

plaintiff a higher interest rate than that which the parties had agreed upon when they signed

a promissory note (Note). Plaintiff alleged seven causes of action against the Bank: (1)

breach of contract, (2) breach of an oral loan preparation contract, (3) violation of the Illinois

Interest Act (815 ILCS 205/0.01 et seq. (West 2010)), (4) breach of the duty of good faith

and fair dealing, (5) breach of the Illinois Consumer Fraud and Deceptive Business Practices

Act (805 ILCS 505/1 et seq. (West 2010)), (6) common-law fraud, and (7) a declaratory

judgment. The Bank filed a motion to dismiss pursuant to sections 2-615 and 2-606 of the

Illinois Code of Civil Procedure (735 ILCS 5/2-615, 2-606 (West 2010)). Following briefing,

the court heard oral arguments on June 24, 20101

, and took the matter under advisement. On

October 8, 2010, the trial court issued a written memorandum and opinion dismissing counts

I, III, IV, VI, and VII of the plaintiff’s complaint with prejudice. Counts II and V were

dismissed without prejudice.

¶ 2 Of those four causes of action that were dismissed with prejudice, plaintiff appeals the

dismissal of three, arguing: (1) the trial court misapplied the Illinois Interest Act to the Note,

(2) the trial court erred in dismissing plaintiff’s breach of contract claim, and (3) the trial

court erred in dismissing plaintiff’s common-law fraud claim. For the following reasons, we

affirm the judgment of the trial court.

¶ 3 I. BACKGROUND

¶ 4 The facts of this case are not in dispute. Plaintiff Asset Exchange is a limited liability

company owned by two “sophisticated businessmen.” On December 14, 2007, plaintiff

entered into a commercial loan agreement with the Bank, whereby the Bank agreed to loan

1

The transcripts of those oral arguments were not included in the record.

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plaintiff $1,250,000. The Note had a maturation date of December 12, 2008. In the heading

section of the Note, it states: “Initial Rate: 8.25%.” According to the “Payment” section of

the Note, the annual interest rate was to be calculated on a 365/360 basis. Specifically, the

“Payment” section, in bold writing, reads:

“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.”

¶ 5 In the “Variable Interest Rate” section immediately following the “Payment” section, the

Note states:

“The interest rate on this Note is subject to change from time to time based on

changes in an index which is the Prime Rate as established by First Choice Bank (the

‘Index’). The Index is not necessarily the lowest rate charged by Lender on its loans

and is set by Lender in its sole discretion. If the Index becomes unavailable during

the term of this loan, Lender may designate a substitute index after notifying

Borrower. 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 7.250% 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. NOTICE: Under no circumstances

will the interest rate on this note be more than the maximum rate allowed by

applicable law.” (Emphasis added.)

¶ 6 Just above the signatures of plaintiff’s principals, the Note states, in bold type and all

capital letters:

“Prior to signing this Note, Borrower read and understood all the provisions of this

Note, including the variable interest rate provision. Borrower agrees to the terms of

the Note.”

¶ 7 On December 14, 2009, two years after signing the Note, plaintiff filed its putative

seven-count class action lawsuit, alleging that the Bank surreptitiously slipped the 365/360

interest provision into the Note. Plaintiff asserted that because the Note referred to a “per

annum” interest rate, Illinois law required interest on plaintiff’s loan be calculated using the

actual number of days in a calendar year, and not the 360-day year referred to in the Note.

¶ 8 The Bank moved to dismiss plaintiff’s complaint based upon sections 2-606 and 2-615

of the Code. Section 2-606 states that if a claim is founded upon a written instrument, a copy

of it must be attached to the pleading as an exhibit. 735 ILCS 5/2-606 (West 2010). The

Bank argued that plaintiff failed to attach a valid copy of the Note to the complaint and failed

to recite relevant provisions of the Note in their entirety. The Bank further argued that

pursuant to section 2-615 of the Code, the allegations in plaintiff’s complaint were

insufficient to state a cause of action upon which relief could be granted.

¶ 9 The trial court, in a written memorandum opinion and order, found that the complaint

should be dismissed for failure to comply with section 2-606 of the Code. However, the trial

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court noted that because plaintiff attached a signed copy of the Note to its response to the

Bank’s motion to dismiss, it would address the substance of the motion in the interest of

judicial economy.

¶ 10 With respect to the Illinois Interest Act claim, plaintiff argued that by using a year of less

than 365 or 366 days (as in 360 days) to compute and charge interest at the represented per

annum rates in the Note, the Bank knowingly and unlawfully applied a definition of “year”

that was in violation of the Illinois Interest Act and thus charged and received more interest

than authorized by law. The Bank moved to dismiss this allegation, contending that the Act

does not apply to the type of loan at issue.

¶ 11 Plaintiff admitted that the type of commercial loan at issue in this case was exempt from

the usury provision (section 4 (815 ILCS 205/4 (West 2010)) of the Illinois Interest Act), but

maintained that the Bank nevertheless violated section 9 and section 10 of the Illinois

Interest Act (815 ILCS 205/9, 10 (West 2010)). The trial court found that regardless of

plaintiff’s characterization of the interest charged, it was in fact attacking the amount of

interest charged in alleging that it was at a greater rate of interest than permitted by Illinois

law. The trial court noted that the Illinois Interest Act explicitly allows commercial loans

like these, regardless of a state’s usury laws. Accordingly, the trial court found that the

Interest Act did not apply to the kind of commercial loan at issue. The trial court then found

that even if section 9 or 10 of the Act did apply to the loan, the terms of the Note did not

violate those sections.

¶ 12 With respect to plaintiff’s breach of contract claim, the trial court found that a party

cannot breach a contract by complying with its terms and that the Note’s terms were not

ambiguous. The 365/360 provision established the method for computing the applicable

interest. In applying this method, the Bank complied with the terms of the Note and,

therefore, plaintiff’s allegations of breach of contract failed.

¶ 13 With respect to plaintiff’s common-law fraud claim, the trial court found that the claim

lacked particularity and specificity, and that plaintiff could not contend that it was deceived

by the Bank’s alleged misrepresentations when it had the opportunity to ascertain the terms

by reading the Note in its entirety. The trial court dismissed plaintiff’s common-law fraud

claim. Plaintiff now appeals.

¶ 14 II. STANDARD OF REVIEW

¶ 15 We review an order granting a motion to dismiss pursuant to section 2-615 de novo.

Green v. Rogers, 234 Ill. 2d 478, 491 (2009). “A section 2-615 motion to dismiss tests the

legal sufficiency of the complaint. On review, the question is ‘whether the allegations of the

complaint, when construed in the light most favorable to the plaintiff, are sufficient to

establish a cause of action upon which relief may be granted.’ ” Green, 234 Ill. 2d at 491

(quoting Vitro v. Mihelcic, 209 Ill. 2d 76, 81 (2004)).

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¶ 16 III. ANALYSIS

¶ 17 On appeal, plaintiff contends that (1) the trial court misapplied the Illinois Interest Act

to the Note, (2) the trial court erred in dismissing plaintiff’s breach of contract claim, and (3)

the trial court erred in dismissing plaintiff’s common-law fraud claim.

¶ 18 A. Illinois Interest Act

¶ 19 Plaintiff alleges that the Bank acted deceptively by using a 360-day year to calculate

interest despite allegedly conflicting provisions mandating the use of a “per annum” interest

rate. We find that a recent opinion by this court, as well as recent opinions from Illinois

federal district courts, provides a framework for our analysis. Initially, we note that we are

aware that “lower federal court decisions are not binding on Illinois courts, but may be

considered persuasive authority.” People ex rel. Ryan v. World Church of the Creator, 198

Ill. 2d 115, 127 (2001). In Illinois, there is a scarcity of state case law dealing with the

Illinois Interest Act’s application to the 365/360 method of calculation in a commercial

loan.2

 Accordingly, we will expand our analysis to include federal case law interpreting the

Illinois Interest Act’s application to commercial loans.

¶ 20 At the heart of this litigation is a dispute regarding the calculation of interest rates for

commercial loans. On this matter, the Seventh Circuit has explained:

“Because the Gregorian calendar makes it impossible to have both equal daily

interest charges and equal monthly interest charges throughout the year, banks have

developed three methods of computing interest. These are the 365/365 method (exact

day interest), the 360/360 method (ordinary interest) and the 365/360 method (bank

interest). [Citations.] Under the 365/365 method each day has the same interest

charge; the bank simply divides the annual interest rate by 365 to get a daily interest

factor, applied to each day of the year. Under the 360/360 method each month carries

the same interest charge; every completed month is assumed to have thirty days, and

accumulates one-twelfth of the annual interest. Interest for incomplete months is

calculated by dividing the number of days by 360. At the end of a year both of these

methods produce the same interest because in each case the calculation will be

Principal x Rate x 1. [Citation.]

The 365/360 method is a hybrid. Here the bank first divides the annual interest

rate by 360 to produce a daily interest factor. It then applies the factor to each of the

365 or 366 days in the year, even though the borrower has paid the nominal ‘annual’

interest due after 360 days. Thus this method generates five or six extra days of

2

We note that plaintiff contends in its petition for rehearing that “state case law does indeed

exist,” and thereafter cites to two circuit court decisions from the Twentieth Judicial District that

found claims similar to plaintiff’s claims to be valid. We remind plaintiff’s counsel that circuit court

decisions have no precedential effect on Illinois appellate courts, and therefore have no bearing on

our decision. See Norton v. City of Chicago, 293 Ill. App. 3d 620, 625 (1997) (“An unpublished order

of a trial court is without precedential value.”) Moreover, the two circuit court decisions plaintiff cites

to were decided prior to the Illinois appellate court and Illinois federal court cases relied upon in this

opinion.

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interest for the bank each year, increasing the effective interest rate for the calendar

year by 1/72.” In re Oil Spill by the “Amoco Cadiz” off the Coast of France on

March 16, 1978, No. 92-3282, 1993 WL 360955, *1-2 (7th Cir. Sept. 14, 1993).

The 365/360 method, although not universal, is the prevailing method in commercial loans.

Id. at *4.

¶ 21 Plaintiff alleges that the use of the 360-day year enumerated in the Note resulted in a

higher charge of interest rate than that which the parties agreed upon. Similar arguments

have been presented in several recent Illinois state and federal cases, and courts have found

that they must fail because the Illinois Interest Act excludes from its coverage loans to

corporations. Specifically, section 4 of the Illinois Interest Act provides that “[i]t is lawful

to charge, contract for, and receive any rate or amount of interest or compensation with

respect to *** [a]ny loan made to a corporation.” 815 ILCS 205/4(1)(a) (West 2010). Based

on section 4’s plain meaning, both state and federal courts in Illinois have concluded that the

Illinois Interest Act “does not apply to transactions involving corporations.” See Bank of

America, N.A. v. Shelbourne Development Group, Inc., 732 F. Supp. 2d 809, 821 (N.D. Ill.

2010) (recognizing that Illinois courts have concluded that the Illinois Interest Act does not

apply to transactions with corporations); Computer Sales Corp. v. Rousonelos Farms, Inc.,

190 Ill. App. 3d 388, 392 (1989) (noting that the general usury provision of the Illinois

Interest Act does not apply to transactions with corporations); Jones & Brown, Inc. v. W.E.

Erickson Construction Co., 73 Ill. App. 3d 481, 483 (1979) (“[T]he defense of usury is a

personal one and not available to a [corporation].”) There is no dispute here that plaintiff is

a corporation within the meaning of the Illinois Interest Act, and thus the Act does not apply

to plaintiff’s loan agreement with the Bank.

¶ 22 Even if we were to find that the Interest Act applies to the loan in this case, to the extent

that plaintiff contends that the 365/360 method is illegal or improper, section 4(5) of the

Interest Act was recently amended to clarify this exact issue. The amendment states, “[f]or

purposes of item[ ] (a) *** of subsection (1) of this Section, 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.” 815 ILCS 205/4(5) (West 2010) (added by Pub. Act 96-1421 (eff. Aug. 3,

2010)). Section 4(5) was added in order to clarify the preexisting provisions of section 4 of

the Illinois Interest Act. Specifically, section 4(5) states: “The provisions of this amendatory

Act of the 96th General Assembly are declarative of existing law.” Id.

¶ 23 Plaintiff concedes that section 4(1)(a) and section 4(5) of the Illinois Interest Act render

any usury arguments moot due to its status as a corporation and the express allowance of the

365/360 method as a means of calculating interest. However, plaintiff contends that section

9 and section 10 of the Illinois Interest Act apply to commercial transactions and render this

one unlawful. We find no authority, and plaintiff cites to none, that refutes our earlier

statement that the Illinois Interest Act, as a whole, does not apply to transactions involving

corporations. We are unpersuaded by plaintiff’s unsupported argument that certain

provisions of the Illinois Interest Act should apply to commercial transactions while others

should not.

¶ 24 Nevertheless, even if section 9 and section 10 of the Illinois Interest Act were to apply

to the transaction at issue, the result would be the same. A court’s primary goal when

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interpreting the language of a statute 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 (2002) (Freeman, J., dissenting, joined by Kilbride, J.). The plain

language of the statute is the best indication of the legislature’s intent. In re Christopher K.,

217 Ill. 2d 348, 364 (2005). When the plain language is clear and unambiguous, a court shall

enforce it as written and will not read into it exceptions, conditions, or limitations that the

legislature did not express. Abruzzo v. City of Park Ridge, 231 Ill. 2d 324, 332 (2008).

¶ 25 Section 9 of the Illinois 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.” (Emphasis added.) 815 ILCS 205/9

(West 2010).

¶ 26 Plaintiff contends that because the heading of the Note states, “Initial Rate: 8.250%,” and

is not followed by a time period, the phrase “per annum” or “by the year” should be read into

the heading. Plaintiff then contends that the definition of “year” in section 10 of the Interest

Act is 365 days, or a calendar year, and thus the interest rate should have been calculated

based on 365 days, not 360 days.3 We disagree.

¶ 27 In Shelbourne, the loan agreement between a bank and a commercial borrower stated that

all interest and fees were to be computed on the basis of “a 360-day year and the actual

number of days elapsed.” (Internal quotation marks omitted.) Shelbourne, 732 F. Supp. 2d

at 816. The borrower alleged that the bank acted deceptively by using a 360-day year to

calculate interest despite allegedly conflicting provisions mandating the use of a per annum

interest rate. Id. The court found that the Illinois Interest Act did not apply to loans to

corporations. However, it found that even if it applied to loans to corporations, the Act

would nevertheless not apply in this case because section 9 of the Act only applies when

“ ‘no period of time is stated’ in the instrument.” Id. at 822. The court stated that the loan

documents clearly provided that interest was to be calculated on a 360-day year.

Accordingly, the court found that “Section 9’s gap-filling mechanism does not apply.” Id.

at 822.

¶ 28 Similarly here, the “Payment” section of the Note states, “The annual interest rate for this

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

over a year of 360 days.” (Emphasis added.) The Note provided that interest was to be

calculated based on a 360-day year. Thus, as in Shelbourne, we find that section 9’s gapfilling mechanism has no bearing on this case because the Note provided a time period for

calculation of interest.

¶ 29 Plaintiff nevertheless maintains that section 9 should be read as requiring a time period

to be inserted adjacent to every mention of interest rate throughout an instrument, and that

3

Plaintiff also cites section 16 of the Promissory Note and Bank Holiday Act, which defines

a year as 12 calendar months or a calendar year. 815 ILCS 105/16 (West 2010).

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in the absence of such time period at every mention of interest rate, the interest rate must be

calculated on a “per annum” or “by the year” basis. We disagree. Rather, we are persuaded

by the analysis in Shelbourne that such language must only be inserted if no period of time

is stated in the instrument.

¶ 30 Here, the “Payment” section, of a 21⁄2-page promissory note, clearly states a time period

of “a year of 360 days.” Cf. Kreisler & Kreisler, LLC v. National City Bank, No.

4:10CV956 CDP, 2011 WL 846191, at *1, *5 (E.D. Mo. Mar. 8, 2011) (finding that a threepage promissory note was not ambiguous when the paragraph immediately preceding the

interest rate paragraph stated that the computation method would be 365/360, and that the

interest rate would be calculated based on “a year of 360 days”). We will not read any

additional conditions, such as finding that section 9 mandates a time period after every

mention of an interest rate, into the statute. See Abruzzo, 231 Ill. 2d at 332. Rather, we agree

with other courts that have found section 9 to be a mere gap-filler when an instrument leaves

out a time period all together. See Shelbourne, 732 F. Supp. 2d at 822.

¶ 31 Moreover, even if we were to read section 9 the way plaintiff requests, we would still

find the Note to be proper. Under the “Variable Interest Rate” of the Note, it states, “[T]he

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

of 1.00 percentage point over the Index, resulting in an initial rate of 8.250% per annum.”

(Emphasis added.) Accordingly, it is clear from a reading of the Note in its entirety that “per

annum” or “by the year” in this Note refers to a 360-day year. This court, and other courts

applying Illinois law, have recently found that using the 365/360 method to calculate

interest, in conjunction with using the term “per annum” in a promissory note, is not

unlawful or ambiguous.

¶ 32 In RBS Citizens National Ass’n v. RTG-Oak Lawn, LLC, 407 Ill. App. 3d 183 (2011),

RTG, a limited liability company, defaulted on a loan it had with a bank. RTG argued that

Illinois prohibits the receipt of interest in any amount greater than expressly authorized

under the statutory definitions of “per annum” and “year.” RTG averred that if the stated

interest rate is per annum, the bank’s use of the 365/360 method in computing interest was

improper. RBS Citizens, 407 Ill. App. 3d at 188. This court noted that the interest provision

of the loan documents “explicitly provides that interest will be ‘computed *** on the basis’

of a 360-day year, but ‘shall be charged for the actual number of days’ in the applicable

period.” Id. at 189. This court found that “such language is clear in communicating that the

interest rate would be ‘computed’ on a 360-day year, while interest ‘charged’ would be

based on the number of actual days that occurred (i.e., based on a 365-day year).” Id.

Furthermore, this court found that references to “per annum” in other sections of the note did

not render the computation language ambiguous. Id. at 190.

¶ 33 Similarly here, the “Payment” section of the Note states that the interest rate is computed

“by applying this 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.” The next paragraph states that the initial interest rate is 8.250% per annum.

As in RBS Citizens, we find that the use of “per annum” in other sections of the note did not

render the computation language found in the “Payment” section ambiguous. See also

Shelbourne, 732 F. Supp. 2d at 823-24 (“[T]here is no conflict between using the 365/360

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method and stating that the applicable interest rates were ‘per annum.’ ”); Kreisler &

Kreisler, 2011 WL 846191, at *1-2 (three-page promissory note not ambiguous when

paragraph immediately preceding the per annum interest rate paragraph stated that the

interest rate would be calculated on “a year of 360 days”).

¶ 34 Accordingly, even if we were to read “per annum” or “by the year” into the Note after

every mention of the interest rate, we would still find that “per annum” or “by the year” in

this particular Note refers to a year of 360 days.

¶ 35 Accordingly, the terms of the Note unambiguously stated that the interest rate would be

calculated based on a 360-day year, but then multiplied by the actual number of days in a

calendar year. This method of computing interest is not a violation of the Illinois Interest Act

in the context of the type of commercial loan at issue here, and therefore the circuit court

properly dismissed the counts of plaintiff’s complaint based on violations of the Illinois

Interest Act.

¶ 36 B. Breach of Contract

¶ 37 Plaintiff’s next argument on appeal is that its breach of contract claim should not have

been dismissed by the trial court. “The elements of a breach of contract claim are: (1) the

existence of a valid and enforceable contract; (2) performance by the plaintiff; (3) breach of

contract by the defendant; and (4) resultant injury to the plaintiff.” Henderson-Smith &

Associates, Inc. v. Nahamani Family Service Center, Inc., 323 Ill. App. 3d 15, 27 (2001). As

the trial court stated, “[i]t is axiomatic that a party cannot breach a contract by complying

with its terms.”

¶ 38 Plaintiff claims that the Note was ambiguous and open to more than one interpretation,

and thus the contract should have been construed against the drafter. See Duldulao v. Saint

Mary of Nazareth Hospital Center, 115 Ill. 2d 482, 493 (1987) (ambiguous contractual

language is generally construed against the drafter of the language); Flora Bank & Trust v.

Czyzewski, 222 Ill. App. 3d 382, 388 (1991) (same). The Bank responds that the Note is

unambiguous and therefore plaintiff’s breach of contract claim was properly dismissed. We

agree with the Bank.

¶ 39 As we discussed above, the terms of the Note at issue were not ambiguous, and thus

there was no breach of contract since the Bank complied with the terms of the Note. As this

court noted in RBS Citizens, we can find nothing in the record which indicates that the terms

of the Note were concealed from plaintiff or that plaintiff was somehow improperly induced

into signing the Note. “Simply because the defendants claim they were unaware of how

interest would be ultimately calculated and charged is not an appropriate factor to consider

in determining the ambiguity, or lack thereof, in a contract.” RBS Citizens, 407 Ill. App. 3d

at 190 (citing Breckenridge v. Cambridge Homes, Inc., 246 Ill. App. 3d 810, 819 (1993),

which states, “A party who has had an opportunity to read a contract before signing, but

signs before reading, cannot later plead lack of understanding.”) The terms of the Note were

not ambiguous.

¶ 40 Viewing the allegations of the breach of contract claim in a light most favorable to

plaintiff, we find that they are not sufficient to establish a breach of contract cause of action

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upon which relief could be granted since the complaint does not allege that the Bank failed

to comply with the terms of the unambiguous contract. See Green, 234 Ill. 2d at 491.

Accordingly, the trial court properly dismissed plaintiff’s breach of contract case.

¶ 41 C. Common-Law Fraud

¶ 42 Plaintiff’s final contention on appeal is that the trial court improperly dismissed its claim

for common-law fraud. In order to establish a claim for common-law fraud in Illinois, a

plaintiff must allege and prove:

“(1) a false statement of material fact; (2) the party making the statement knew or

believed it to be untrue; (3) the party to whom the statement was made had a right

to rely on the statement; (4) the party to whom the statement was made did rely on

the statement; (5) the statement was made for the purpose of inducing the other party

to act; and (6) the reliance by the person to whom the statement was made led to that

person’s injury.” (Internal quotation marks omitted.) Martin v. Heinold

Commodities, Inc., 163 Ill. 2d 33, 75 (1994).

¶ 43 Plaintiff argues, relying on the same arguments as those used in support of its breach of

contract claim, that no reasonable person could have ascertained the truth of the Bank’s plan

by looking at the Note. We reiterate that the terms of the Note were not ambiguous in this

case, and nothing in the complaint alleges that plaintiff was induced into signing the Note,

or that the Note was drafted with an intent to deceive. Moreover, plaintiff had an opportunity

to read the Note, which was only 21⁄2 pages in length, and which stated in bold type the terms

of the interest calculation. As this court has stated:

“One is under a duty to learn, or know, the contents of a written contract before

he signs it, and is under a duty to determine the obligations which he undertakes by

the execution of a written agreement. [Citation.] And the law is that a party who

signs an instrument relying upon representations as to its contents when he has had

an opportunity to ascertain the truth by reading the instrument and has not availed

himself of the opportunity, cannot be heard to say that he was deceived by

misrepresentations.” Leon v. Max E. Miller & Son, Inc., 23 Ill. App. 3d 694, 699-700

(1974).

¶ 44 “The application of this rule is particularly appropriate where the parties to the

agreement are sophisticated business persons ***.” Northern Trust Co. v. VIII South

Michigan Associates, 276 Ill. App. 3d 355, 365 (1995). Here, plaintiff is a corporation

headed by two sophisticated businessmen who had ample opportunity to read the Note and

comprehend the terms laid out in the concise instrument. Because the terms of the Note were

unambiguous, plaintiff’s allegations in its complaint regarding common-law fraud must fail.

The trial court properly dismissed the common-law fraud claim pursuant to section 2-615

of the Code.

¶ 45 IV. CONCLUSION

¶ 46 For the foregoing reasons, we affirm the judgment of the circuit court of Cook County.

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¶ 47 Affirmed.

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