Court Opinion

ID: 2997425
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:36:18.449598+00
Date Added: 2024-06-11T11:45:33.979084
License: Public Domain

In the
 United States Court of Appeals
              For the Seventh Circuit
                         ____________

No. 03-1617
THOMAS P. DAVIS and
CATHY M. DAVIS,
                                           Plaintiffs-Appellants,
                                v.

G.N. MORTGAGE CORPORATION and
COUNTRYWIDE HOME LOANS, INC.,
                                           Defendants-Appellees.
                         ____________
           Appeal from the United States District Court
      for the Northern District of Illinois, Eastern Division.
         No. 01 C 6569—Charles R. Norgle, Sr., Judge.
                         ____________
  ARGUED JANUARY 15, 2004—DECIDED JANUARY 31, 2005
                    ____________

 Before COFFEY, KANNE, and EVANS, Circuit Judges.
  COFFEY, Circuit Judge. On September 9, 1999, Thomas
P. Davis and Cathy M. Davis obtained a $288,000 adjust-
able rate mortgage (“ARM”) from the G.N. Mortgage
Corporation (“GN”) for the purpose of refinancing prior,
non-business personal debts which was to be secured by
their home in Manhattan, Il. A few months later, GN sold
the note to Countrywide Home Loans, Inc. (“Countrywide”).
The Davises paid off the 30-year ARM from GN less than
three years later, on February 20, 2002, and at that time
2                                               No. 03-1617

were assessed over $12,000 in penalties pursuant to the
terms of a five-year prepayment penalty rider included in the
mortgage document. The Davises objected to the penalty and
filed a diversity suit against GN and Countrywide, alleging
that the prepayment penalty agreement was fraudulently
obtained, that enforcement of the penalty constituted a
breach of contract and that the penalty violated the Illinois
Interest Act, 815 ILCS 205/1 et seq., and the Illinois
Consumer Fraud Act, 815 ILCS 505/1 et seq. The core of the
Davises’ claim is that the parties had agreed to a twenty-
four month prepayment rider, but that GN had neverthe-
less fraudulently induced them into signing one that
provided for a penalty if the loan was paid before sixty
months had elapsed. The district court granted the
defendants-appellees’ motions for summary judgment on
each of the Davises’ legal claims, and the Davises appealed.
We affirm.

                   I. BACKGROUND
   On September 9, 1999, Thomas and Cathy Davis (the
“Davises”), husband and wife and citizens of the State of
Illinois, closed on a $288,000 adjustable rate mortgage loan
(the “loan”) with an initial interest rate of 10.9% from the
GN Mortgage Corporation in order to refinance personal
debt. Aside from the Davises, the only other party present
at the loan closing was Patricia Bogdanovich (“Bogdanovich”),
the closing agent for TICOR Title Insurance Company,
which was the title company authorized by GN to conclude
the transaction.
  At the closing, which took place at TICOR’s offices in
Joliet, Illinois, Bogdanovich presented the Davises with two
stacks of paper, each purportedly consisting of 24 documents
and totaling 43 pages. Included in the stacks were dupli-
cate copies of the proposed adjustable rate note, mortgage,
adjustable rate rider to the mortgage, and accompanying
documents entitled “Prepayment Penalty Note Addendum,”
No. 03-1617                                                       3

“Alternative Mortgage Transaction Parity Act Disclosure,”
and “Notice of Right to Cancel.” Although the Davises ad-
mit that they failed to read or compare the two sets of doc-
uments thoroughly at the time of the closing,1 they allege
that Bogdanovich told them that the stacks were identical
in content and accurately represented the agreement be-
tween themselves and GN, including a provision setting
forth a two-year prepayment penalty period. The Davises
signed all of the documents in one of the stacks and
Bogdanovich delivered the signed stack to GN while the
Davises retained the unsigned stack for their records.2
  Early in 2000, GN sold the Davises’ mortgage, including
all its rights and obligations emanating from the loan agree-
ment, to Countrywide Home Loans, Inc. Thereafter, in the
summer of 2001, the Davises requested that Countrywide
apprise them of the amount required to satisfy the remain-
ing balance on their loan as of its two-year anniversary;
September 9, 2001. Countrywide responded by informing
the Davises that a prepayment penalty of approximately
$12,000 (six months’ worth of interest on the loan) would
apply if the loan was paid off prior to the expiration of the
five-year prepayment penalty period, according to the signed
prepayment penalty addendum in their loan file. This came
as a surprise to the Davises, who had no knowledge that
they had agreed to a five-year prepayment penalty rider

1
  Indeed, it appears from the record that the Davises failed to
thoroughly read and understand the documents they signed until
September of 2001, just before they refinanced the loan, at which
time they learned that they would be charged a penalty.
2
  After the closing, either because they were ignorant of it or they
had no reason to believe that the terms of the note were any
different than they had agreed to, the Davises failed to exercise
their right under federal law to cancel the agreement without
costs within three business days of signing it.
4                                                     No. 03-1617

and instead believed that they had signed, and were only
subject to, a two-year prepayment penalty clause based on
alleged representations by Bogdanovich as well as their
own broker.3
  Upon reviewing the unsigned copy of the mortgage con-
tract that they retained from the closing, the Davises dis-
covered two documents which they had not previously read
entitled “Prepayment Penalty Note Addendum,” both of
which had been drafted by GN. The riders were identical
except that one provided for a “twenty-four month penalty
period,” while the other provided for a “sixty month penalty

3
  The parties agree that GN had initially proposed a three-year
prepayment penalty period. Indeed, the Davises’ loan file contains
a document entitled “Conditional Loan Approval,” containing
notation of a three-year prepayment penalty period. That docu-
ment, however, is not signed. The Davises allege that, prior to
closing on the loan, their mortgage broker, Monica Boatman
(“Boatman”), represented to them that GN had agreed to a two
year prepayment penalty period. However, for purposes of this
appeal, we will disregard the statement attributed by the Davises
to Boatman that GN had agreed to a two-year penalty period
because it constitutes inadmissible hearsay. See Bombard v. Fort
Wayne Newspapers, Inc., 92 F.3d 560, 562 (7th Cir. 1996) (“a party
may not rely upon inadmissible hearsay . . . to oppose a motion for
summary judgment.”). Boatman’s alleged comment is clearly an
out-of-court statement offered by the plaintiffs for the truth of the
matter asserted and, therefore, may not be relied upon by the
Davises to resist summary judgment. See Fed. R. Evid. 802;
Galdikas v. Fagan, 342 F.3d 684, 695 (7th Cir. 2003); Bombard, 92
F.3d at 562. Nevertheless, we will assume without deciding, that
the alleged statements of the title company’s closing agent,
Bogdanovich, are statements of a party opponent (the assumption
being that Bogdanovich was acting as GN’s agent at the closing)
and thereby admissible under Federal Rule of Evidence
801(d)(2)(D). As such, they may be considered as part of this ap-
peal. Notwithstanding Bogdanovich’s statements, however, the
Davises’ claims still fail as a matter of law as discussed infra.
No. 03-1617                                                   5

period.” The addendum that the Davises signed at the
closing was of the “sixty month” species, a fact which they
do not dispute. However, the Davises claim that at the clos-
ing they signed both a two-year and a five-year addendum.
They base this conclusion on the fact that they found a two-
year rider in the papers they retained after the closing and
that Bogdanovich told them that the two stacks of docu-
ments presented at the closing (one signed and returned to
GN and the other left with the Davises) were identical.
Therefore, the Davises allege that because they signed every
document in one of the stacks and found both a five-year
and a two-year rider in their stack, they must have signed
both versions at the closing. Unfortunately for the Davises
though, they are unable to produce a signed two-year
agreement. On the other hand, the mortgage companies
maintain that the parties never executed a two-year prepay-
ment penalty addendum and that no such rider, signed or
unsigned, exists; therefore, the Davises were rightfully
charged a penalty when they refinanced before the sixty-
month period in the duly signed document elapsed.
   On August 23, 2001, the Davises filed a diversity action
against GN and Countrywide in the United States District
Court for the Northern District of Illinois. In their original
complaint, the Davises sought a declaration that their loan
was subject to either a two-year prepayment penalty period
or no prepayment penalty period whatsoever. They also
claimed that they were entitled to relief under the Illinois
Interest Act, 815 ILCS 205/1 et seq., which, inter alia, makes
it unlawful for a loan to provide for a prepayment penalty
when that loan has an interest rate in excess of eight per-
cent per annum (the Davis’ ARM carried an initial interest
rate of 10.9% per annum) and is secured by a mortgage on
residential real estate. 815 ILCS 205/4(2)(a). Before the matter
was adjudicated, however, the Davises chose to refinance
their loan at a lower, fixed interest rate with another mort-
gage company paying Countrywide the contested $12,781.76
6                                                      No. 03-1617

prepayment penalty in the process, thereby mooting this
portion of their claim. As a result, on April 2, 2002, the
Davises sought leave to file an amended complaint, which
the court conditionally granted.4
   The plaintiffs filed their amended complaint on May 23,
2002, whereupon the trial judge addressed their failure to
properly plead diversity jurisdiction and granted them ten
days’ leave to file a second amended complaint to cure the
deficiency, which they accomplished. The second amended
complaint,5 filed on May 30, 2002, contained four counts,
alleging: (1) that each of the defendants violated the
Illinois Interest Act when they imposed a prepayment
penalty without an agreement authorizing them to do so;
(2) that Countrywide breached the parties’ contract by
imposing a five-year prepayment penalty period; (3) that

4
  Before the district court ruled on this motion, it required that
the Davises present documentation supporting their proposed
amended complaint. Accordingly, the plaintiffs produced a two-
page declaration from Thomas Davis, dated April 19, 2002, that re-
counted his version of what occurred at the signing of the mort-
gage contract.
5
  In response to the district court’s concerns over the existence of
federal jurisdiction, the plaintiffs properly pled, in their second
amended complaint, that they were citizens of Illinois, not merely
residents of the state. Neither of the defendants is an Illinois corp-
oration or has the State of Illinois as its principal place of busi-
ness. There also remained a question as to whether the amount in
controversy exceeded $75,000, given that the dispute appears to
be over a $12,000 prepayment penalty. However, the plaintiffs’
claim under the Illinois Interest Act sought statutory damages in
“an amount equal to twice the total of all interest, discount and
charges determined by the loan contract.” 815 ILCS 205/6. Given
that the loan amount was for $288,000, diversity jurisdiction was
proper. Cf. McCarthy v. Option One Mortgage Corp., 362 F.3d
1008 (7th Cir. 2004) (finding diversity jurisdiction in Illinois
Interest Act claim based on a $145,800 loan).
No. 03-1617                                                       7

GN through their agent Bogdanovich intentionally commit-
ted common law fraud when they misrepresented the terms
of the Davises’ mortgage loan; and (4) that GN fraudulently
caused the Davises to sign inconsistent prepayment penalty
riders, in violation of the Illinois Consumer Fraud Act, 815
ILCS 505/1 et seq.
  At the time that the Davises filed their amended complaint,
they also sought discovery from the defendants. However,
due in part to settlement negotiations and two separate
stays issued by the trial judge—one giving the Davises
leave to file a second amended complaint and the other al-
lowing GN to file a motion for summary judgment—GN
failed to reply to any of the Davises’ discovery requests.6
However, both of the mortgage company defendants had
previously complied with initial discovery requirements in
accordance with Federal Rule of Civil Procedure 26(a)(1),
and each provided the Davises copies of their respective

6
  The plaintiffs’ initial discovery requests from October 2001 had
been postponed through the beginning of 2002 because of agree-
ment by the parties to allow for settlement negotiations. Their
settlement efforts failed, and on March 20, 2002, the district court
issued a scheduling order that included a discovery cut-off date of
July 31, 2002. Accordingly, on April 9, 2002, the Davises served
discovery requests on both mortgage company defendants, as well
as a notice of deposition for Bogdanovich. The trial judge, how-
ever, stayed discovery three days later pending his ruling on the
Davises’ motion for leave to file an amended complaint, which the
court later granted. The stay was lifted on May 23, 2002, seven
days before the plaintiffs filed their second amended complaint.
  On July 11, 2002, the Davises’ counsel sent a letter to the
defendants requesting immediate compliance with their outstand-
ing discovery requests. That same day, GN filed a motion to stay
discovery based upon its intention to file a motion for summary
judgment. The district judge granted this stay. Thus, throughout
this entire pretrial process, the defendants failed to respond to
any of the plaintiffs’ discovery requests.
8                                               No. 03-1617

loan files for the September 9, 1999, transaction. Neither
company’s copy of the Davises’ loan file contained a two-
year addendum (either signed or unsigned), but both con-
tained a signed, five-year addendum.
  On July 24 and July 26, 2002, GN and Countrywide, re-
spectively, filed motions for summary judgment. At this
time, the plaintiffs filed an emergency motion to reconsider
and vacate the district court’s July 12 order staying discov-
ery pending defendants’ motions for summary judgment
and to obtain discovery pursuant to Federal Rule of Civil
Procedure 56(f). The trial court denied this motion on
July 26, 2002. The district court granted the defendants
summary judgment on all of the Davises’ claims on Febru-
ary 13, 2003. We affirm.

                      II. ANALYSIS
  At the outset, we note that in a case where subject mat-
ter jurisdiction in federal court is premised on diversity
jurisdiction under 28 U.S.C. § 1332, we apply the substan-
tive law of the forum state, here Illinois. See Merrill v.
Trump Indiana, Inc., 320 F.3d 729, 731 (7th Cir. 2003). Thus
we are obligated to “determine the issues presented herein
as we believe the [Illinois] courts would.” See Trytko v.
Hubbell, Inc., 28 F.3d 715, 719 (7th Cir. 1994) (quoting
Kutsugeras v. Avco Corp., 973 F.2d 1341, 1346 (7th Cir.
1992)).

A. The District Court’s Grant of Summary Judgment in
   Favor of the Mortgage Companies
  Summary judgment is proper if the “pleadings, depositions,
answers to interrogatories, and admissions on file, together
with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.” Fed. R. Civ. P.
56(c). We review a district court’s grant of summary
No. 03-1617                                                    9

judgment de novo, considering “all of the available affida-
vits, depositions, transcripts, and exhibits in the light most
favorable to the non-moving party.” Driebel v. City of
Milwaukee, 298 F.3d 622, 636 (7th Cir. 2002). A genuine
factual issue is one “ ‘that properly can be resolved only by
a finder of fact because [it] may reasonably be resolved in
favor of either party.’ ” Zemco Mfg. Inc. v. Navistar Int’l
Transp. Corp., 270 F.3d 1117, 1123 (7th Cir. 2001) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986)).
Such an issue “is material only if it might affect the out-
come of the case under the governing law.” Doe v. Roe No. 1,
52 F.3d 151, 153 (7th Cir. 1995) (internal quotation marks
omitted); see also Korf v. Ball State Univ., 726 F.2d 1222,
1226 (7th Cir. 1984). “[W]e are not required to draw every
conceivable inference from the record,” Gleason v. Mesirow
Fin., Inc., 118 F.3d 1134, 1139 (7th Cir. 1997), and mere spe-
culation or conjecture will not defeat a summary judgment
motion, Estate of Phillips v. City of Milwaukee, 123 F.3d
586, 591 (7th Cir. 1997).
  The Davises assert that the district court erred in grant-
ing summary judgment to the defendants because a gen-
uine issue of material fact exists concerning whether or not
they signed a two-year prepayment penalty addendum to
their loan at the closing. Premised primarily on Thomas
Davis’s two-page personal declaration, the Davises allege
that: (1) their loan application originally reflected a proposed,
three-year prepayment penalty period; (2) their own loan
broker, Boatman, had informed them prior to closing that
GN had agreed to a two-year prepayment penalty period;
(3) at the closing, the Davises were presented with two
stacks of documents by Bogdanovich and instructed to sign
one copy which would be returned to GN, while the other
should be retained for their (the Davises’) records; (4) while
they failed to read and compare these two stacks line-by-
line, Bogdanovich, the closing agent, told them that the
stacks were identical and represented their agreement with
10                                                 No. 03-1617

GN in all material aspects, including the agreed-upon two-
year prepayment penalty rider; and (5) upon later review,
the Davises found that their stack of loan documents con-
tained both an unsigned two-year prepayment penalty
addendum as well as an unsigned five-year addendum.
  Based on these alleged facts,7 the Davises argue that a
reasonable trier of fact could infer that at the closing they
signed a two-year addendum in addition to the five-year
addendum discovered in the defendants’ files. Furthermore,
the plaintiffs claim that the existence of an unsigned two-
year addendum in their records is material to all of their
claims renewed on appeal; i.e., it is material to their breach
of contract claim because it establishes that the agreed-
upon and intended prepayment penalty period under the
contract is unclear, and it is material to the statutory and
common law fraud claims because it explains the allegedly
deceptive circumstances surrounding the obtainment of the
prepayment penalty agreement.

    1. Breach of Contract Claim
  The Davises claim Countrywide breached the
September 9, 1999, loan contract by enforcing a five-year
prepayment penalty rather than honoring an allegedly
agreed-upon two-year prepayment penalty. However, the

7
  The Davises also highlight the fact that, at an April 12, 2002,
status hearing, one of GN’s attorneys stated that an unsigned,
two-year prepayment penalty agreement existed in the plaintiffs’
loan file. However, GN’s counsel withdrew this statement at the
very next status hearing, expressing to the court and the Davises
that his statement had been made in error. In its order granting
the defendants summary judgment, the trial judge determined
that the statement did not constitute a judicial admission and,
therefore, could not go towards creating a genuine issue of
material fact as to the existence of a signed, two-year penalty
agreement.
No. 03-1617                                                 11

only evidence of any agreement to a two-year prepayment
penalty period, beyond the statements the Davises claim
Bogdanovich made at the closing, is an unsigned copy of a
two-year prepayment penalty addendum that they (the
Davises) received and retained from the closing for their
records.
  Illinois adheres to a “four corners rule” of contract inter-
pretation, which provides that “ ‘[a]n agreement, when re-
duced to writing, must be presumed to speak the intention
of the parties who signed it. It speaks for itself, and the
intention with which it was executed must be determined
from the language used. It is not to be changed by extrinsic
evidence.’ ” Air Safety, Inc. v. Teachers Realty Corp., 706
N.E.2d 882, 884 (Ill. 1999) (quoting Western Ill. Oil Co. v.
Thompson, 186 N.E.2d 285, 287 (Ill. 1962)). This approach
is consonant with the general rule under Illinois contract
law that “if the contract imports on its face to be a complete
expression of the whole agreement, it is presumed that the
parties introduced into it every material item, and parole
evidence cannot be admitted to add another item to the
agreement.” Sunstream Jet Express, Inc. v. Int’l Air Service
Co., Ltd., 734 F.2d 1258, 1265 (7th Cir. 1984) (quoting Pecora
v. Szabo, 418 N.E.2d 431, 735-36 (1981); see J & B Steel
Contractors, Inc. v. C. Iber & Sons, Inc., 642 N.E.2d 1215,
1217 (Ill. 1994). In other words, “[u]nder the parol evidence
rule, extrinsic or parol evidence concerning a prior or con-
temporaneous agreement is not admissible to vary or con-
tradict a fully integrated writing.” Id. (emphasis in original)
(internal quotations omitted). However, “even when a con-
tract is integrated on its face, if the contract is ambiguous,
as a matter of law, then extrinsic and parole evidence is
admissible to explain the terms of the ambiguous contract.”
Sunstream, 734 F.2d at 1266 (quoting Storybrook Homes,
Inc. v. Carlson, 312 N.E.2d 27, 29 (Ill. App. Ct. 1974)
(internal quotations omitted); see Pappas v. Waldron, 751
12                                               No. 03-1617

N.E.2d 1276, 1282 (Ill. App. Ct. 2001) (citing Air Safety,
706 N.E.2d at 884).
  Accordingly, our task is to determine whether the loan
agreement is fully integrated, clear and unambiguous,
Krautsack v. Anderson, 768 N.E.2d 133, 146 (Ill. App. Ct.
2002). The threshold question for us to examine is whether
the contract in question, here the mortgage loan note, is a
fully integrated document, despite the lack of a specific
integration clause. See J & B Steel Contractors, Inc., 642
N.E.2d at 1217. The determination of whether a contract is
integrated is a question of law for the trial judge to decide.
See id. An integrated writing is one “intended by the
parties to be a final and complete expression of the entire
agreement,” Krautsack, 768 N.E.2d at 146 (internal quo-
tation marks omitted), which means it “ ‘contains such lan-
guage as imports a complete legal obligation,’ ” Eichengreen v.
Rollins, Inc., 757 N.E.2d 952, 958 (Ill. App. Ct. 2001)
(quoting Armstrong Paint & Varnish Works v. Continental
Can Co., 133 N.E. 711, 713 (1921)). Importantly, “only the
subject writing may be considered to determine the inte-
gration question.” Id. at 957; see also J & B Steel, 642
N.E.2d at 1218-20 (affirming the vitality of this rule, which
was first established in Illinois in Armstrong, 133 N.E. 711
(1921)).
  The loan agreement entered into between GN and the
Davises is fully integrated, final in nature, and creates a
completed legal obligation between the parties. When view-
ing the loan agreement in its entirety, we find an uncompli-
cated set of documents that, when read together, clearly
and specifically state that the loan is subject to a prepay-
ment penalty period of five years duration, as provided for
in a separately executed addendum. The Davises, in their
attempt to establish non-integration, cite to the underlying
promissory note, which provides that the borrower has the
right to repay the loan at any time without penalty. How-
ever, other documents in the agreement, i.e., the one-page
No. 03-1617                                                 13

prepayment penalty note addendum itself, plainly states
that “notwithstanding and provision to the contrary [to lan-
guage] contained in said Promissory Note or Deed of Trust . . .
[t]he first sixty months of the loan term is called the ‘pen-
alty period.’ ” GN Mortgage Corporation’s Memorandum in
Support of Its Motion for Summary Judgment, Exh. D. The
inherent purpose of the addendum to the contract is to alter
the terms of the underlying agreement (here the promissory
note) and the existence of such a document can not reason-
ably be construed as establishing non-integration. Also, the
documents comprising the loan agreement were all exe-
cuted on the same day, contemporaneous with each other
and, after reviewing each, we hold them to be internally
coherent and fully integrated. In addition, the Davises
have failed to present us with any case law to even suggest
that the lack of a specific integration clause in the loan
agreement, in and of itself, would render the agreement
incomplete or unintegrated. See Eichengreen, 757 N.E.2d at
957-58 (discussing J & B Steel, 642 N.E.2d 1215 (Ill.
1994)).
  Notwithstanding the clear, comprehensive and integrated
nature and language of the loan contract, the Davises also
argue that the agreement is facially ambiguous because of
the existence of an unsigned two-year penalty addendum
document in their stack of the closing papers. This reason-
ing is unpersuasive; for the Davises cannot cite their un-
signed copy of a two-year prepayment penalty rider, the
very extrinsic evidence they seek to introduce, to establish
that the contract is facially ambiguous thereby requiring
the consideration of extrinsic evidence. The introduction of
parole evidence to establish ambiguity in a facially unam-
biguous, signed, dated and fully integrated contract is a
practice which the Illinois Supreme Court has, to this date,
neither condoned nor sanctioned, and accordingly we refuse
to do so today. Air Safety, Inc., 706 N.E.2d at 884-85;
Commonwealth Ins. Co. v. Titan Tire Corp., 2004 WL
14                                                   No. 03-1617

2439727, *4 n.4 (7th Cir. 2004); see also See PPM Finance,
Inc. v. Norlandal USA, Inc., No. 04-1401, slip op. at 6 (7th
Cir. Dec. 16, 2004) (stating that Illinois courts will “look to
extrinsic evidence to determine the parties intentions only
if an agreement is ambiguous.”).
  The Davises argue that we should employ the “provisional
admission approach” and consider extrinsic evidence con-
cerning even facially unambiguous agreements. However,
in Air Safety, the Illinois Supreme Court reiterated the state
of contract law and the four-corners rule in Illinois when it
stated: “If the language of the contract is facially unambig-
uous, then the contract is interpreted by the trial court as
a matter of law without the use of parole evidence. Air
Safety, Inc., 706 N.E.2d at 884. In that same case, the
Supreme Court made clear that Illinois has “never officially
adopted the provisional admission approach.” Air Safety,
Inc., 706 N.E.2d at 885 n.1. In addition, the Court “expressly
decline[d] to rule on whether the provisional admission
approach may be applied to interpret a contract which does
not contain an integration clause until such a case is squarely
before [it].” Id.; but cf. AM Int’l, Inc. v. Graphic Mgmt.
Assocs., 44 F.3d 572, 574 (7th Cir. 1995). It is true that, al-
though never definitively adopted either by the legislature
of Illinois or the highest court of that State, this court as
well as a number of the Illinois appellate courts have enter-
tained the theory that under Illinois law “objective evidence
supplied by disinterested third parties may establish an
extrinsic ambiguity” in an otherwise unambiguous contract
under certain limited circumstances.8 Commonwealth Ins.

8
  However, even if the Illinois Supreme Court were to adopt the
provisional admission rule, we do not believe that this rule would
apply in situations, such as the one before us, where a party is
seeking to introduce a completely new and different term into a
facially integrated and unambiguous contract. There is a sub-
                                                     (continued...)
No. 03-1617                                                       15

Co., 2004 WL 2439727, *4 (quoting Ocean Atl. Dev. Corp. v.
Aurora Christian Schs., Inc., 322 F.3d 983, 1003-04 (7th
Cir. 2003)); see also Air Safety, Inc., 706 N.E.2d at 885
(listing Illinois appellate court decisions). However, because
the Davises do not proffer objective third-party evidence,9
this suggested rule is inapplicable and, therefore, it is
unnecessary for us to predict whether the Illinois Supreme
Court would adopt this new rule of law. See Commonwealth
Ins. Co., 2004 WL 2439727, *4 n.4.10

8
  (...continued)
stantial difference between the interpretation of contractual terms
and the addition of supplemental terms which were not contained
in the original writing. Although not discussed at length in the
case law, the provisional rule would seem only to encompass the
interpretation of a contract’s term(s), rather than the wholesale
substitution of one term for another. See, e.g., Air Safety, Inc., 706
N.E.2d at 885 (Under the provisional method “an extrinsic
ambiguity exists when someone who knows the context of the con-
tract would know if the contract actually means something other
than what it seems to mean.”); Ahsan v. Eagle, Inc., 678 N.E.2d
1238, 1241 (Ill. App. Ct. 1997); Meyer v. Marilyn Miglin, Inc., 652
N.E.2d 1233, 1238-39 (Ill. App. Ct. 1995); see also Ocean Atl. Dev.
Corp., Inc., 322 F.3d 983, 1003-04; AM Int’l, Inc., 44 F.3d 572, 575.
9
  Even if this court were to “provisionally admit” the two-year,
unsigned prepayment penalty rider, we would not be moved to
hold in favor of the Davises’ theory of the law. The fact remains
that the signed rider states on its face that the term shall be five
years. In addition, no signed or unsigned two-year rider was ever
found in the Davises’ loan file at GN or Countrywide. There is
nothing ambiguous about the terms of the five-year addendum,
nor does the existence of an unsigned two-year agreement inter-
ject ambiguity into an otherwise unambiguous, cohesive and fully
integrated contract.
10
  The only objective evidence which the Davises have produced in
order to establish an extrinsic ambiguity with (their copy of an
unsigned two-year addendum) was not supplied by a disinterested
                                                   (continued...)
16                                                   No. 03-1617

  In all, the entire loan contract, including its five-year
prepayment penalty agreement, is clear, unambiguous and
fully integrated; rendering extrinsic evidence inadmissible
to vary the contract’s terms. The Davises essentially ask us
to rewrite the signed and dated contract to include a
shorter prepayment penalty period, “but courts are not in
the business of rewriting contracts to appease a disgruntled
party unhappy with the bargain it struck.” PPM Finance,
Inc., No. 04-1401, slip op. at 6 (7th Cir. Dec. 16, 2004). Thus,
after review and consideration of the totality of the evi-
dence, as is required, we hold that the signed and dated
five-year addendum is the only legally binding agreement
between the parties as to a prepayment penalty, and ab-
sent fraud, Countrywide cannot be found to have breached
their agreement with the Davises by merely enforcing their
rights to collect a penalty under the contract.

     2. Common Law Fraud
  The Davises, in a separate count of their complaint, go on
to allege that GN perpetrated a common law fraud during

10
   (...continued)
third party, but was proffered by the Davises themselves, thus ex-
cepting them from the purview of the suggested rule. See Common-
wealth Ins. Co., 2004 WL 2439727, *4. The only other evidence
(besides the unsigned two-year addendum) that the Davises offer
to establish extrinsic ambiguity is in the form of the Davises’ own
affidavit concerning the events surrounding the signing of the
contract and statements as to what Bogdanovich allegedly told
them the night of the closing. However, as subjective evidence, the
Davises’ statement about what Bogdanovich allegedly said would
not be considered admissible to demonstrate extrinsic ambiguity
in the contract because they are subjective in nature. See Ocean
Atl. Dev. Corp., 322 F.3d at 1004 (The parties’ own subjective
construction of the contract will not provide grounds for stepping
outside the four corners of the contract.).
No. 03-1617                                                  17

the execution of the contract, which occurs “where there is
a surreptitious substitution of one paper for another, or
where by some other trick or device a party is made to sign
an instrument which he did not intend to execute.”
Belleville Nat’l Bank v. Rose, 456 N.E.2d 281, 283 (Ill. App.
Ct. 1983) (citing Turzynski v. Libert, 259 N.E.2d 295, 298
(Ill. App. Ct. 1970)). The Davises claim that GN, along with
its purported agent (Bogdanovich), mislead them by mis-
representing the terms of the mortgage loan at the closing.
The Davises allege GN did so by presenting them with dif-
ferent versions of the prepayment penalty addendum, one
of which (the five-year version) was different from what
they bargained for and expected.
  Under applicable Illinois law, an allegation of fraud must
be established by clear and convincing evidence. Cwikla v.
Sheir, 801 N.E.2d 1103, 1110 (Ill. App. Ct. 2003). However,
unlike the plaintiffs’ breach of contract claim, Illinois sub-
stantive law instructs that we are free to consider parole
evidence to assist us in determining the true intent of the
parties when a common law fraud has been alleged.11 See
O’Brien v. Cacciatore, 591 N.E.2d 1384, 1390 (Ill. App. Ct.
1992); McMahon Food Corp. v. Burger Dairy Co., 103 F.3d
1307, 1314 (7th Cir. 1996). Under Illinois law, the elements
the plaintiffs need to satisfy in order to establish common
law fraud are: “(1) a false statement of a material fact; (2)
defendant’s knowledge that the statement was false; (3)
defendant’s intent that the statement induce plaintiff to
act; (4) plaintiff’s reliance upon the truth of the statement;
and (5) plaintiff’s damages resulting from reliance on the

11
  While the Davises also allege the mutual mistake exception to
the parol evidence rule before this court, that argument was not
made before the district court at summary judgment. As such, it
will not be considered. Coker v. Trans World Airlines, Inc., 165
F.3d 579, 586 (7th Cir. 1999).
18                                                No. 03-1617

statement.” Capiccioni v. Brennan Naperville, Inc., 791
N.E.2d 553, 558 (Ill. App. Ct. 2003).
   In order to satisfy the reliance element of their claim, the
Davises must demonstrate not only that they relied on the
GN’s representations regarding a two-year prepayment
rider, but that they were justified in doing so. See Soules v.
Gen. Motors Corp., 402 N.E.2d 599, 601 (Ill. 1980). When
addressing the issue of justified reliance, Illinois courts have
long recognized that “a party is not justified in relying on
representations made when he has ample opportunity to
ascertain the truth of the representations before he acts.
When he is afforded the opportunity of knowing the truth
. . . he cannot be heard to say he was deceived by misrepre-
sentations.” Elipas Enterprises, Inc. v. Silverstein, 612
N.E.2d 9, 13 (Ill. App. Ct. 1993) (quoting Schmidt v.
Landfield, 169 N.E.2d 229, 232 (Ill. 1960)); see also Leon v.
Max E. Miller & Son, Inc., 320 N.E.2d 256, 260 (Ill. 1974);
Miller v. William Chevrolet/GEO, Inc., 762 N.E.2d 1, 9 (Ill.
App. Ct. 2001). This rule applies with equal force in
instances where fraud is alleged with respect to the execu-
tion of a written contract. See Belleville, 456 N.E.2d at 284;
see also N. Trust Co. v. VIII S. Mich. Assoc., 657 N.E.2d
1095, 1103 (Ill. App. Ct. 1995) (“A party cannot close his
eyes to the contents of a document and then claim that the
other party committed fraud merely because it followed this
contract.”). This is the so-called “due diligence rule,” Kolson
v. Vembu, 869 F. Supp. 1315, 1322 (N.D. Ill. 1994), which
defeats the Davises’ common law fraud claim.
  Assuming arguendo that were we to conclude that the
Davises satisfy the other elements of a common law fraud
claim (e.g., a knowingly false statement as to a material fact
which was proffered to induce reliance), which they do not,
the evidence in the record would be deemed to be insufficient
to establish that any reliance on their part was justified.
The Davises’ claim is premised on oral statements allegedly
made by the closing agent, Bogdanovich, explaining at the
No. 03-1617                                                   19

time of the execution of the contract that the mortgage in-
cluded a two-year prepayment penalty period. However,
notwithstanding the alleged statements by Bogdanovich,
the Davises had an opportunity and obvious obligation to
read the documents before they signed them (as well as up
to three days after signing to review and cancel the con-
tract under federal law if they believed the agreement to be
flawed). Due to the significance of the mortgage transaction
(a $288,000 loan) and the Davises’ preoccupation with the
prepayment penalty agreement in particular, they were not
justified in relying on the alleged verbal statements alone.
The fact is that the Davises certainly had an incentive to
independently read and understand the contract in order
to confirm that the terms they were agreeing to, especially
the addendum regarding the prepayment penalty period,
were correctly set forth in the final version of the contract.
Their failure to read the prepayment addendum document
which they signed is even less justified in light of the fact
that, in addition to the ample two-hour closing meeting, the
Davises also were made aware that they had a full three-
day period in which to review the entire agreement and
rescind it if they so decided.12 Indeed, considering the
multiple obligations which the mortgage document imposed
upon them, as well as the amount of money involved
($288,000), the Davises would have been well advised to
visit a qualified attorney within that time period to review
and fully explain the documents if in fact they had any
doubts or concerns over its contents. Nonetheless, because
the Davises were “afforded the opportunity of knowing the
truth of the representations . . . [, yet did] not avail [them-

12
  The Davises signed and dated a “NOTICE OF RIGHT TO
CANCEL” form which alerted them to the fact that they had “a
legal right under federal law to cancel this transaction, without
cost, within THREE BUSINESS DAYS.” Tr. 42, Exh. E. (Emphasis
in original).
20                                             No. 03-1617

selves] of the means of knowledge open to [them, they]
cannot be heard to say [they were] deceived by misrepresen-
tations.” Elipas Enterprises, 612 N.E.2d at 13 (quoting
Schmidt, 169 N.E.2d at 232). Thus, on the facts set forth
here and in the record, we hold that the reliance element
of the Davises’ common law fraud claim cannot be met as
a matter of law.

  3. Illinois Consumer Fraud Act
  The plaintiffs also claim that GN’s actions during and
surrounding the closing on the loan violated the Illinois
Consumer Fraud Act (“ICFA”). In order to be held liable for
a violation of the ICFA the Davises must establish that: (1)
the defendant undertook a deceptive act or practice; (2) the
defendant intended that the plaintiff rely on the deception;
(3) the deception occurred in the course of trade and
commerce; (4) actual damage to the plaintiff occured; and
(5) the damage complained of was proximately caused by
the deception. Capiccioni, 791 N.E.2d at 558 (citing
Connick v. Suzuki Motor Co., Ltd., 675 N.E.2d 584, 593 (Ill.
1996)); 815 ILCS 505/2. While a complaint made pursuant
to the ICFA “must be pled with the same specificity as that
required under common law fraud,” Elson v. State Farm
Fire & Cas. Co., 691 N.E.2d 807, 816 (Ill. App. Ct. 1998),
the ICFA does not require a plaintiff to “show actual
reliance or diligence in ascertaining the accuracy of mis-
statements,” Zimmerman v. Northfield Real Estate, Inc.,
510 N.E.2d 409, 417-18 (Ill. App. Ct. 1986). Thus, because
the Davises’ lack of due diligence in reviewing the docu-
ment at the closing or requesting further assistance or
explanation of the prepayment penalty addendum during
the 96-hour review period is not dispositive of the con-
sumer fraud claim, we will examine their ICFA claim
separately from the common law fraud claim. See Cozzi
No. 03-1617                                                21

Iron & Metal, Inc. v. U.S. Office Equip., Inc., 250 F.3d 570,
576 (7th Cir. 2001); Miller, 762 N.E.2d at 13.
   The Davises contend that GN deceived them by enclosing
both a two-year and a five-year prepayment penalty agree-
ment in the closing documents and representing to them,
through their agent Bogdanovich, that the unsigned and
undated documents reflected the Davises’ agreement with
GN for a two-year prepayment penalty period. They main-
tain that this resulted in their signing two inconsistent
penalty riders, one for five years and the other for two
(there is no evidence that a two-year rider was ever signed,
i.e., they never produced a signed two-year addendum and
their assumption that they did sign one is completely un-
supported in the record). While it is suspicious, and at the
very least suggests poor business practices at GN, for the
Davises to be given a copy of both a two-year and a five-
year prepayment penalty addendum at the closing, the fact
remains that they actually signed only the five-year rider.
Nowhere in the record do the Davises (nor does anyone else)
state definitively that a two-year addendum was signed nor
has any such signed addendum been presented to us in the
record, much less introduced into evidence. The circum-
stances surrounding the closing on the loan that the
Davises point to as proof of deception, including evidence
of Bogdanovich’s alleged misrepresentations, falls far short
of rising to the level of sufficient evidence to permit a rea-
sonable trier of fact to find for the plaintiffs on this claim
when considering the signed five-year agreement. See
Zemco Mfg. Inc., 270 F.3d at 1123.
  Moreover, when analyzing a claim under the ICFA, the
allegedly deceptive act must be looked upon in light of the
totality of the information made available to the plaintiff.
See Tudor v. Jewel Food Stores, Inc., 681 N.E.2d 6, 8 (Ill.
App. Ct. 1997); Saunders v. Michigan Ave. Nat’l Bank, 662
N.E.2d 602, 608 (Ill. App. Ct. 1996); see also Bober v. Glaxo
Wellcome PLC, 246 F.3d 934, 938-39 (7th Cir. 2001) (apply-
22                                                  No. 03-1617

ing the Illinois ICFA). In this case, GN alerted the Davises,
in a number of ways, to the fact that they were agreeing to
a five-year penalty period. First, the one-page, five-year pen-
alty addendum that the Davises were asked to read and
that they did sign contained a disclaimer in bold at the top,
warning the Davises: “Do not sign this loan agreement
before you read it. This loan agreement provides for
the payment of a penalty if you wish to repay the
loan prior to the date provided for repayment in the
loan agreement.” (Emphasis in original.) Second, the adden-
dum that they signed contains three separate references to
a sixty-month/five-year penalty period. Third, GN required
that the Davises execute this addendum to the mortgage
separately from the remainder of the document, apparently
in an attempt to denote its significance. Finally, though less
telling, GN provided the Davises with an Alternative
Mortgage Transaction Parity Act Disclosure form at the
closing (which the plaintiffs signed) informing them that a
prepayment penalty would be charged and that they should
refer to the accompanying loan documents for the details of
the provision. Even if there was some confusion on the
Davises’ part during the closing (and there may well have
been), at no time during the closing nor at anytime within
the three day grace period did the Davises ever question,
much less challenge the documents they had signed. In
sum, there is no evidence to establish by clear and con-
vincing evidence that GN engaged in a deceptive act in the
course of obtaining the loan agreement from the
plaintiffs.13

13
  The Davises had also claimed in the district court that the
defendants violated the Illinois Interest Act, 815 ILCS 205/1 et
seq., by imposing a prepayment penalty without an effective agree-
ment to do so. As we have shown, however, there was an effective
agreement between the parties—namely, a five-year prepayment
penalty addendum. In any event, as the district court correctly
                                                    (continued...)
No. 03-1617                                                    23

B. Plaintiffs’ Request to Conduct Additional Discovery
  Finally, the Davises claim that it was an abuse of discre-
tion on the part of the trial judge to deny their motion for
a continuance to conduct additional discovery. Federal Rule
of Civil Procedure 56(f) provides that, if a party opposing a
summary judgment motion has demonstrated that it is un-
able to “present by affidavit facts essential to justify [its]
opposition, the court may refuse the application for judg-
ment or may order a continuance to permit affidavits to be
obtained or depositions to be taken or discovery to be had
or may make such other order as is just.” Fed. R. Civ. P. 56(f).
The Davises argue that, had they been allowed extra time
to depose their own broker as well as the title company
representative present at the closing (Bogdanovich) and
various other employees of the defendants—all of whom,
according to the Davises’ unsupported representations,
they were unable to obtain statements from through their
own efforts—that they would have been able to produce
evidence sufficient to withstand summary judgment.
  “A trial judge’s decision to consider a defendant’s motion
for summary judgment before allowing the plaintiff to de-
pose certain witnesses is a discovery matter, which we review
under the abuse of discretion standard.” Grayson v. O’Neill,

13
  (...continued)
pointed out, the five-year addendum was drafted in accordance
with the Alternative Mortgage Transaction Parity Act, which pre-
empts the Illinois Interest Act when, as here, a non-federal hous-
ing creditor elects to be governed by and complies with federal
law. 12 U.S.C. § 3803(c); see also McCarthy v. Option One Mortgage
Corp., 362 F.3d 1008 (7th Cir. 2004). (No. 03-3474, 7th Cir. 2004);
Nat’l Home Equity Mortgage Ass’n v. Face, 239 F.3d 633, 635 (4th
Cir. 2001). As such, the appellants’ claim that the defendants
violated the Illinois Interest Act, to the extent it remained in
contention on appeal, fails.
24                                                 No. 03-1617

308 F.3d 808, 815-16 (7th Cir. 2002). We are very troubled
with the substance of the plaintiffs’ Rule 56(f) motion, which
leads us to conclude that the district court did not abuse its
discretion in denying additional discovery. Initially, we
note that the Davises’ assertion that no discovery occurred
prior to the district court’s summary judgment ruling is in-
accurate. To the contrary, by late November 2001, both of
the defendants had complied with their initial discovery
obligations under Federal Rule of Civil Procedure 26(a)(1).
In particular, they had disclosed complete copies of the
Davises’ loan file, neither of which included a two-year signed
or unsigned prepayment penalty addendum.
  Nonetheless, the Davises argued before the district court
that, because “a question of fact exists with regard to the
location of a two-year prepayment penalty rider signed by
the plaintiffs . . . , [they] must be allowed to depose all em-
ployees, agents, or representatives of defendants . . . who
had any physical contact with plaintiffs’ loan file.” Edelman
Dec. at 2. However, the plaintiffs fail to set forth any specific
evidence which they might have obtained from these depo-
sitions that would create a genuine issue as to this material
fact. The only reason to believe that additional, relevant evi-
dence would materialize from deposing the defendants’ em-
ployees is the Davises’ apparent hope of finding a prover-
bial “smoking gun”—that is, someone who will testify that
he or she knows that a signed, two-year prepayment penalty
provision did actually exist at some time and that the
defendants have either hidden, destroyed, or otherwise dis-
posed of this document. This, however, is based on nothing
more than mere speculation and would amount to a fishing
expedition, which is an entirely improper basis for revers-
ing a district court’s decision to deny a Rule 56(f) motion.
Grayson, 308 F.3d at 817; United States v. On Leong Chinese
Merch. Assoc. Bldg., 918 F.2d 1289, 1294-95 (7th Cir. 1990).
Likewise, the Davises’ desire to now depose the GN and
Countrywide officials that had authority over their loan
No. 03-1617                                                25

(Brian Brandt and Patrice McPherson, respectively) is also
an insufficient reason for this court to hold that the district
court abused its discretion. Both Brandt and McPherson
stated via affidavit that the Davises’ loan file did not con-
tain either a signed or unsigned two-year prepayment pen-
alty addendum and the depositions sought would be solely
for purposes of casting doubt on the affiants’ credibility and
to reach “the unlikely possibility . . . [that] an adverse
witness may contradict an earlier statement or volunteer
an admission.” On Leong, 918 F.2d at 1294. However, this
is not a valid reason for a court to grant a motion for a con-
tinuance to conduct additional discovery because, as this
court has explained, Rule 56(f) “is not a shield that can be
raised to block a motion for summary judgment without
even the slightest showing by the opposing party that his
opposition is meritorious.” Id.
  The Davises have failed to adequately explain, either in
their briefs before this court or in the declaration of their
counsel, Daniel Edelman, attached to their Rule 56(f) mo-
tion, and it remains a mystery why they failed to acquire
an affidavit or deposition testimony from Boatman and
Bogdanovich—the two third-party witnesses whose alleged
statements are necessary to support the plaintiffs’ belief
that they signed a two-year prepayment penalty agreement.
According to the Davises, Boatman would testify that she
informed them prior to the closing that GN agreed to a two-
year prepayment penalty period, while Bogdanovich would
state that she watched the Davises sign each document af-
ter having told them that the two stacks of documents were
identical and conformed to the terms of their agreement
with GN.
  Assuming that both of these witnesses would need to be
subpoenaed before testifying, the plaintiffs had ample time
(a total of 74 days of open discovery) to attempt to secure
their testimony as well as approach the trial court and de-
26                                                    No. 03-1617

mand compliance to their discovery requests if needed.14 In-
deed, neither Boatman (who was the Davises’ own broker for
the loan), nor Bogdanovich (who worked for the title com-
pany that facilitated the closing and delivered the signed
copies to GN), is a GN employee. The plaintiffs’ only
explanation for their inability to acquire statements from
these third-party sources is a conclusory and self-serving
statement alleging that because their mortgage broker and
the title agent have existing relationships with GN, they
wish not to sour that bond by commenting on the Davises’
closing. However, this speculative explanation for the
Davises’ inability to gather evidence from Boatman and
Bogdanovich is feeble at best and, as such, is both inade-
quate and insufficient to avoid circuit precedent holding
that “[w]hen a party fails to secure discoverable evidence
due to his own lack of diligence, it is not an abuse of
discretion for the trial court to refuse to grant a continu-
ance to obtain such information.” Pfeil v. Rogers, 757 F.2d
850, 857 (7th Cir. 1985).
  Also, we are of the opinion and thus hold that the district
court did not commit a reversible error by denying the
Davises’ Rule 56(f) motion due to the fact that they have
failed to establish they suffered any actual or substantial
harm as a result of the denial of their discovery request.

14
   While the plaintiffs had issued subpoenas to depose Boatman
and Bogdanovich on October 31, 2001, discovery was stayed shortly
thereafter by agreement of the parties so that settlement nego-
tiations could occur. That agreed-upon stay remained in effect
apparently until the district court’s March 20, 2002, scheduling
order. Discovery was not postponed again until April 12, when the
trial judge ordered discovery to be stayed until it could rule on the
plaintiffs’ motion for leave to file an amended complaint. This stay
was lifted on May 23, 2002. Afterwards, discovery remained open
until July 12 of that year, when the district court again postponed
discovery pending its ruling on the defendants’ motions for
summary judgment.
No. 03-1617                                              27

Balderston v. Fairbanks Morse Engine Div. of Coltec Indus.,
328 F.3d 309, 319 (7th Cir. 2003). Regardless of what their
proposed discovery might possibly have uncovered, the fact
remains that the Davises failed to properly examine the
documents they were executing, for if they had, they would
have discovered that they had signed a five-year prepay-
ment penalty agreement. Because the harm they suffered
was due to their own negligence, the Davises were not
justified in relying on any alleged representations made by
GN or its agent and are precluded from now claiming that
GN committed fraud. Finally, the Davises have failed to
demonstrate that additional discovery would reasonably
allow them to establish the deception prong of the Illinois
Consumer Fraud Act. The Davises’ justification for a
continuance of discovery in support of their ICFA claim is
not genuine and convincing, but barely colorable, especially
in light of their burden, i.e., to prove fraud by clear and
convincing evidence, Turzynski, 259 N.E.2d at 299. As
such, the Davises were not justified in pursuing additional
discovery under Rule 56(f), and the district court was per-
mitted to use its discretion in denying the Rule 56(f)
motion. See Pfeil, 757 F.2d at 856.

                   III. CONCLUSION
  Because the Davises have failed to establish the exis-
tence of a genuine issue of material fact as to any of their
claims, and because the defendants are entitled to a judg-
ment as a matter of law on each of those counts, summary
judgment is proper. Fed. R. Civ. P. 56(c). In addition, the
plaintiffs have failed to “provid[e] a compelling argument
why discovery should be continued.” Balderston, 328 F.3d
at 318. Thus, the district court’s order granting the
defendants’ motions for summary judgment is AFFIRMED.
28                                        No. 03-1617

A true Copy:
      Teste:

                   ________________________________
                   Clerk of the United States Court of
                     Appeals for the Seventh Circuit

               USCA-02-C-0072—1-31-05