Schafer v. UnionBank/Central , 2012 IL App (3d) 110008 ( 2012 )

ILLINOIS OFFICIAL REPORTS
Appellate Court
Schafer v. UnionBank/Central, 2012 IL App (3d) 110008
Appellate Court JAMES B. SCHAFER and MARY E. SCHAFER, Plaintiffs-Appellants,
Caption v. UNIONBANK/CENTRAL, a/k/a UnionBank Princeton, a Corporation,
Defendant-Appellee (Hatzer and Nordstrom, a Corporation, Defendant).
District & No. Third District
Docket No. 3-11-0008
Filed July 18, 2012
Held Plaintiffs’ pleadings were sufficient to state a cause of action for
(Note: This syllabus conversion against defendant bank and the Credit Agreements Act did not
constitutes no part of preclude plaintiffs from challenging the validity of their commercial
the opinion of the court security agreement with the bank when the bank asserted the agreement
but has been prepared as an affirmative defense to plaintiffs’ action, especially when a genuine
by the Reporter of issue of material fact existed as to whether the agreement allowed the
Decisions for the bank to take possession of plaintiffs’ farm equipment; therefore, the entry
convenience of the of summary judgment for the bank was reversed.
reader.)
Decision Under Appeal from the Circuit Court of Bureau County, No. 06-MR-10; the
Review Hon. Cornelius J. Hollerich, Judge, presiding.
Judgment Reversed and remanded.
Counsel on Roger C. Bolin (argued), of Boyle & Bolin, of Hennepin, for appellants.
Appeal
Timothy J. Howard (argued) and Jeffrey G. Sorenson, both of Howard &
Howard Attorneys PLLC, of Peoria, for appellee.
Panel JUSTICE HOLDRIDGE delivered the judgment of the court, with
opinion.
Justice Lytton specially concurred, with opinion.
Presiding Justice Schmidt dissented, with opinion.
OPINION
¶1 Plaintiffs, James and Mary Schafer (the Schafers), appeal from the trial court’s grant of
summary judgment on their complaint alleging Centrue Bank (formerly UnionBank) (the
Bank) converted their personal property. The Bank raised as an affirmative defense to the
complaint the existence of a commercial security agreement (CSA) which purported to give
the Bank the authority to take immediate possession of the property at issue in the complaint.
Following discovery and lengthy motion practice, the Bank sought summary judgment on
its affirmative defense. The Schafers responded that the CSA as drafted contained a mutual
mistake of fact as to the nature and extent of the personal property secured and, thus, a
genuine issue of material fact existed as to the validity of the Bank’s affirmative defense. In
support of their response to the summary judgment motion, the Schafers submitted certain
affidavits and deposition testimony of the loan officer who executed the CSA for the Bank.
The Bank moved to strike the affidavit and testimony. The trial court granted the Bank’s
motion to strike and its motion for summary judgment. The Schafers then appealed. For the
following reasons, we reverse the judgment of the circuit court and remand for further
proceedings.
¶2 FACTS
¶3 On April 29, 2003, the Schafers borrowed $30,000 from the Bank. The only employee
of the Bank involved in the transaction was Jeff Hunt. In conjunction with their execution
of a promissory note for the $30,000, the Schafers signed the CSA by which they granted the
Bank a security interest in certain assets to secure the payment and performance on certain
“Secured Debts.” The CSA contained two boxes on the front page that could be checked to
indicate whether “Secured Debts” referred to all the debts the Schafers owed to the Bank or
only specific debts, such as the debt instrument being executed simultaneously with the CSA.
The box for “All Debts” was checked. If the box for “Specific Debts” had been checked,
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there was a corresponding blank space in which to write a description of the specific debts
to be secured by the CSA. Pursuant to the CSA, the Schafers granted the Bank a security
interest in property including, but not limited to, inventory, equipment, and farm product and
supplies. The loan originated on April 29, 2003, and was paid in full the following month.
¶4 In 2005, the Bank instituted foreclosure proceedings on 18 separate real estate mortgages
given by the Schafers. In December 2005, the Bank’s collection officer, Stephen Sendelbach,
discovered the April 2003 CSA in the credit file. When the foreclosures failed to recoup all
funds due under the mortgages, the Bank, relying upon the CSA, arranged for the Schafers’
farm equipment to be taken from their farm. The property was taken on December 27, 2005.
¶5 On March 8, 2006, the Schafers filed a complaint for declaratory judgment against the
Bank and Hatzer & Nordstrom, the commercial auctioneer where the property was being
stored pending a public auction. The complaint alleged that the Bank took possession of the
property without lawful authority. The complaint sought an order requiring the return of the
property. In addition to the complaint for declaratory judgement, the Schafers also filed a
motion seeking a preliminary injunction to prevent the impending sale of their property by
the auctioneer. The Schafers attached to their complaint for declaratory judgment what they
alleged was a “[t]rue, correct, and genuine copy” of the CSA. They alleged, on information
and belief, that the CSA was the instrument upon which the Bank relied to justify its seizure
of their property. Also attached to the complaint was an affidavit from Hunt in which he
stated that it was “the intention of [the Bank] and the Schafers at the time the loan originated
to release any lien or security interest created at the time of loan origination when that
particular loan was paid.” He further stated that “[n]o security interest in any collateral was
to survive the payment of the specific loan made April 29, 2003.”
¶6 The Bank filed a motion to dismiss the motion for preliminary injunction. On March 14,
2006, following a brief hearing at which James Schafer and Sendelbach testified, the court
denied the preliminary injunction. Shortly thereafter, the property taken by the Bank was sold
at auction.
¶7 Approximately three years later, on March 25, 2009, the Schafers filed an amended
complaint for declaratory relief which was substantially the same as the original complaint.
The amended complaint merely dropped the auctioneers as defendants. The Bank filed a
motion to dismiss the amended complaint, maintaining that the CSA was a clear and
unambiguous bar to the cause of action alleged in the amended complaint. The Bank further
maintained that the complaint failed to allege how the CSA was not a clear and unambiguous
bar to recovery. In their response to the motion to dismiss, the Schafers maintained that the
CSA as drafted was the result of a mutual mistake of fact. Attached to the response was a
new affidavit executed by Jeff Hunt, in which he contradicted his previous statement that the
CSA was “a true” copy. He now asserted that the CSA was “inaccurate” in that the box on
the CSA for “All Debts” was marked in error.
¶8 The trial court granted the Bank’s motion to dismiss the amended complaint. The court
observed that mutual mistake was raised in the response to the motion to dismiss but ruled,
nonetheless, that the complaint itself failed to allege sufficient facts that would state the
elements necessary for relief. The court pointed out that, since the property had already been
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sold at auction, declaratory relief could no longer be granted, and any future cause of action
would have to be for monetary damages. Thereafter, the Schafers obtained leave to file a
second amended complaint.
¶9 A second amended complaint was filed on September 29, 2009, in which the Schafers
alleged that the Bank had taken their personal property without their consent and sought
judgment for the fair market value of the items. The complaint for conversion contained no
mention of the CSA, and Hunt’s affidavit was not attached.
¶ 10 The Bank filed an answer and affirmative defense to the second amended complaint. The
Bank denied that the removal of the personal property had been unlawful and accomplished
without consent. For its sole affirmative defense, the Bank attached a copy of the CSA,
maintaining that the CSA secured “all present and future debts owed by the Schafers to [the
Bank].” The Bank pointed out that the CSA authorized it to “enter upon [the Schafers’]
premises and to take possession of all or any part of [their] [p]roperty to protect [the Bank’s]
interest, all without payment or compensation to [the Schafers]” and to “use any remedy
allowed by state or federal law, or provided in any agreement evidencing or pertaining to the
[s]ecured [d]ebts.” The Schafers filed a general denial to material allegations contained in
the affirmative defense.
¶ 11 The Bank filed a motion for summary judgment on October 22, 2010. The gist of the
motion was that it lawfully seized and sold the property at issue pursuant to the terms of the
CSA, which the Bank maintained secured all present and future debts of the Schafers. The
Bank pointed out that the CSA contained a provision stating “[n]o modification of the
Agreement is effective unless made in writing and signed by [both parties].” Attached to the
motion for summary judgment was an affidavit from Roger Dotson, the Bank’s executive
vice president and head of operations, stating that “[t]here is no written modification of the
CSA signed by [the parties].” It was noted in the motion that Dotson’s statement was
confirmed by Hunt’s affidavit.
¶ 12 Dotson also stated that “the Bank filed a UCC-1 Financing Statement with the Illinois
Secretary of State as Document No. 6943608, naming [the Schafers] as debtors and for the
benefit of [the Bank]” and that the Bank never terminated the financing statement. Hunt also
verified both of these facts in his deposition, relevant portions of which were attached to the
Bank’s motion for summary judgment.
¶ 13 In further support of its motion, the Bank established that, on various dates between 1999
and 2002, it made no less than 18 real estate mortgage loans to the Schafers, and they had
defaulted on all of these loans. On October 20, 2005, after these loans went into default, the
Bank sent a notice of acceleration and demand for full payment. The notice identified 18
loans and itemized the various defaults under each loan. Upon being asked in his deposition
if he received the original notice, James Schafer replied, “Yeah, I think so.” On various dates
between November 22, 2005, and December 21, 2005, the Bank filed 18 complaints for
foreclosure against the Schafers. In December 2005, the Schafers continued to be in default
on all of their then outstanding loans from the Bank.
¶ 14 The Schafers filed their response to the Bank’s motion for summary judgment on
November 24, 2010. They incorporated by reference Hunt’s affidavit dated August 7, 2009,
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which had previously been with their response to the Bank’s motion to dismiss the amended
complaint. They also attached the transcript of Hunt’s deposition which was taken on July
7, 2010. They argued that Hunt’s affidavit and deposition testimony established that the CSA
mistakenly indicated that it was the intention of the parties that it secured all their debts to
the Bank rather than securing only the loan originating on April 12, 2003, the same date the
CSA was executed. The Schafers further maintained, therefore, that the CSA should have
been released when that loan was paid in full on May 12, 2003.
¶ 15 The Bank moved to strike Hunt’s affidavit and bar his testimony concerning the intent
of the parties with respect to the CSA. The Bank argued that Hunt’s testimony, in both his
affidavit and deposition, sought to modify the CSA in violation of the parol evidence rule
and the Illinois Credit Agreements Act (Credit Agreements Act) (815 ILCS 160/1 et seq.
(West 2008)).
¶ 16 On December 6, 2001, the trial court entered an order granting both the motion to strike
the affidavit and bar certain testimony by Hunt and the motion for summary judgment. The
Schafers filed a timely notice of appeal.
¶ 17 ANALYSIS
¶ 18 In this appeal from the trial court’s grant of summary judgment, we are presented with
two issues. First, did the Schafers sufficiently raise a claim of mutual mistake of fact in their
pleadings? Second, does the Credit Agreements Act bar any attempt by the Schafers to
challenge the Bank’s use of the CSA as an affirmative defense to their conversion action?
We review a grant of summary judgment de novo. Forsythe v. Clark USA, Inc., 224 Ill. 2d
274, 280 (2007). “Section 2-1005 of the Code of Civil Procedure provides for summary
judgment when the pleadings, depositions, and admissions on file, together with any
affidavits, show that there is no genuine issue as to any material fact ***.” Id.; 735 ILCS 5/2-
1005 (West 2008). We review the record in the light most favorable to the nonmoving party.
Forsythe, 224 Ill. 2d at 280.
¶ 19 I. Sufficiency of the Pleadings
¶ 20 We first address the Bank’s argument that, because the Schafers did not seek to reform
the CSA in their pleadings, they are precluded from challenging the Bank’s affirmative
defense. The gist of the Bank’s argument is that, because the Schafers did not plead
reformation of the CSA, they may not challenge its validity as an affirmative defense against
their complaint for conversion. We disagree. There is a very good reason why the Schafers
did not plead reformation of the CSA by the court. They were not seeking reformation of the
CSA. They filed an action for conversion against the Bank, seeking compensation for
personal property alleged to have been wrongfully taken from them. To state an action for
conversion, a plaintiff must allege: (1) an unauthorized and wrongful assumption of control
of his property by another; (2) dominion or ownership by a person over the personalty of
another; (3) his right to the property; (4) his absolute and unconditional right to immediate
possession of the property; and (5) a demand for the property. Douglass v. Wones, 120 Ill.
App. 3d 36, 41 (1983). Reviewing the Schafers’ second amended complaint, we find all of
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the elements of a cause of action for conversion are present in the complaint. We are aware
of no pleading requirement that would require a plaintiff to include in his complaint any
pleading in anticipation of a possible affirmative defense.
¶ 21 The Bank filed an answer to the Schafers’ complaint, denying that their property had
been unlawfully removed without their consent. Additionally, as an affirmative defense, the
Bank attached a copy of the CSA and alleged that the document “authorized” the Bank to
enter upon the Schafers’ property and take possession of their personal property. The
Schafers filed an answer to the affirmative defense, denying all material factual allegations
contained in the affirmative defense. Viewing these pleadings in the light most favorable to
the nonmovant, we see a complaint sufficiently raising a claim of conversion of personal
property, an answer denying the complaint, along with an affirmative defense interposing the
CSA as a defense to the complaint, and a response to the affirmative defense denying all the
factual allegations contained therein. We find no need for further pleadings to present the
issues to the circuit court.
¶ 22 The Bank maintains, nonetheless, that the Schafers are seeking to reform the CSA and
therefore must plead a cause of action in reformation. We disagree. The Schafers are not
seeking relief in the form or reformation of the CSA; rather, they are challenging the
preclusive effect of the document as a defense to their complaint. The Bank’s argument
would appear to be that, because the Schafers did not style their response to the affirmative
defense as a petition for reformation, the Bank is entitled to summary judgment on the
conversion complaint. The law, however, does not hold so strictly to a doctrine of form over
substance. 735 ILCS 5/2-603(c) (West 2008) (“Pleadings shall be liberally construed with
a view to doing substantial justice between the parties.”). Here, the Schafers have sufficiently
raised an allegation in their pleadings that the CSA does not accurately reflect the agreement
of the parties. Granted, the allegation is raised in their response to the Bank’s affirmative
defense and not in their complaint. However, as we noted previously, there was no need to
anticipate the Bank’s affirmative defense, and the Schafers’ response to the affirmative
defense was a sufficient point in the pleadings to challenge the affect of the CSA.
¶ 23 Moreover, even if we were to acknowledge that the Schafers were required to specifically
plead a count in reformation, there is sufficient authority for the proposition that reformation
is adequately pled as long as there are sufficient facts pled from which mutual mistake can
be established:
“In stating the basis for reformation, a party seeking reformation based on mutual
mistake need not allege in express terms that the written instrument was erroneously
executed through mistake as long as his pleading sets out specific facts from which ‘such
a conclusion is inevitable or fairly deductible.’ (Darst v. Lang (1937), 367 Ill. 119, 125;
see also St. Joseph Data Service, Inc. [v. Thomas Jefferson Life Insurance Co. of
America], 73 Ill. App. 3d [935], 943[(1979)]; All Brake & Drive Unit Service, Inc. v.
Peterson (1979), 69 Ill. App. 3d 594, 597.) Such facts must be sufficient to answer the
basic question of who, when, and where so as to apprise the defendant of the facts giving
rise to the claim.” Briarcliffe Lakeside Townhouse Owners Ass’n v. City of Wheaton, 170
Ill. App. 3d 244, 252 (1988).
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¶ 24 Similarly, in All Brake & Drive Unit Service, the court held that, although a party had not
alleged mistake in his pleadings, he had sufficiently raised the issue of mutual mistake of fact
in a certain written instrument where he alleged facts from which it appeared that the contract
purchase price in the agreement was not in conformity with the original agreement of the
parties to the sale. All Brake & Drive Unit Service, 69 Ill. App. 3d at 597.
¶ 25 We also find that the case cited by the Bank, IMC Global v. Continental Insurance Co.,
378 Ill. App. 3d 797 (2007), is clearly distinguishable. In IMC Global, the court observed
that the plaintiff in that matter could have sought leave of court at the close of proofs to
conform the pleadings to the proofs and seek reformation of the document at issue. Id. at 805.
In the instant matter, we find no need to seek to conform the pleadings to the proofs. The
pleadings as they existed sufficiently raised the issue of mutual mistake of fact in its
appropriate pleading context, i.e., not as a request for relief from the court, but as an
allegation that the Bank’s affirmative defense was factually inaccurate.
¶ 26 II. Summary Judgment
¶ 27 Having determined that the Schafers’ pleadings were sufficient, we must determine
whether the circuit court properly granted summary judgment to the Bank based upon the
CSA. We must determine whether the Credit Agreements Act precludes the Schafers from
challenging the validity of the CSA when it is raised by a creditor as an affirmative defense
to a conversion action. This is a matter of first impression in Illinois, although our courts
have consistently held that the Credit Agreement Act precludes any action by a debtor against
a creditor “so long as the action is in any way related to a credit agreement.” (Internal
quotation marks omitted.) Bank One, Springfield v. Roscetti, 309 Ill. App. 3d 1048, 1055
(1999). Here, however, the debtors have not raised an action against the creditor under the
credit agreement; rather, they only address the agreement when it was raised by the creditor
as its defense to a conversion action.
¶ 28 Interpreting or construing a statute is a matter of law to be reviewed de novo. Maksimovic
v. Tsogalis, 177 Ill. 2d 511, 514 (1997). The plain language of the Credit Agreements Act
reveals no prohibition against the Schafers challenging the validity of the CSA when it is
raised by the creditor as an affirmative defense to a complaint for conversion:
“A debtor may not maintain an action on or in any way related to a credit agreement
unless the credit agreement is in writing, expresses an agreement or commitment to lend
money or extend credit or delay or forebear repayment of money, sets forth the relevant
terms and conditions, and is signed by the creditor and the debtor.” 815 ILCS 160/2
(West 2008).
¶ 29 Our courts have held that the debtor may not seek to modify or amend a credit agreement
by means of a subsequent oral modification. Bank One, Springfield, 309 Ill. App. 3d at 1058.
However, in the instant matter, the Schafers do not allege an oral modification to the CSA.
Rather, they maintain that the CSA, as executed, was not accurate. We are aware of no
Illinois authority standing for the proposition that a debtor cannot challenge the validity of
a CSA raised as an affirmative defense to a conversion action.
¶ 30 No court, however, has addressed whether a debtor could challenge the validity of a
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credit agreement when it is raised by the creditor in an action against the debtor. Our review
of the plain language of the statute reveals no clear and unambiguous prohibition against a
plaintiff in a conversion action from challenging the validity of any document purporting to
authorize the taking of that plaintiff’s property. We see no reason to read into the Credit
Agreements Act a prohibition that clearly does not exist.
¶ 31 We find that the Schafers were not precluded from raising the validity of the CSA in the
instant matter. Given that there is a genuine issue of material fact as to whether the CSA, in
fact, authorized the Bank’s actions in taking possession of the Schafers’ personal property,
we find that summary judgment was not appropriate.
¶ 32 CONCLUSION
¶ 33 The judgment of the circuit court of Bureau County, granting summary judgment to the
defendant, is reversed, and the cause is remanded for further proceedings.
¶ 34 Reversed and remanded.
¶ 35 JUSTICE LYTTON, specially concurring.
¶ 36 I agree with the majority opinion in all its particulars. But since the majority does not
reach the issue, I write separately to state my belief that the Credit Agreements Act (Act)
(815 ILCS 160/1 et seq. (West 2008)) does not apply to the contract in this case because it
contains a mutual mistake of fact.
¶ 37 I
¶ 38 The formation of a contract requires three basic elements: (1) offer and acceptance
(Steinberg v. Chicago Medical School, 69 Ill. 2d 320 (1977)), (2) consideration (Meadows
v. Radio Industries, Inc., 222 F.2d 347 (7th Cir. 1955)), and (3) mutual assent, also referred
to as a meeting of the minds or mutuality (Martin v. State Farm Mutual Automobile
Insurance Co., 348 Ill. App. 3d 846 (2004)). Without any one of these requirements, there
can be no contract. See Liccardi v. Stolt Terminals (Chicago), Inc., 283 Ill. App. 3d 141
(1996).
¶ 39 In analyzing whether there is mutual assent, the parties must show an intent to be bound
by the contract terms. Walter A. Wood Mowing & R.M. Co. v. Trexler, 97 Ill. App. 170
(1901). There can be no valid assent if there has been mistake, fraud or duress. If mistake is
proven in the formation of any contract, the contract is unenforceable. In re M.M.D., 213 Ill.
2d 105 (2004). In cases of mutual mistake, “the contract is voidable by the adversely affected
party.” See Restatement (Second) of Contracts § 152 (1981). Thus, a contract may be
rescinded or reformed by an injured party on the basis of mistake. See Tower Investors, LLC
v. 111 East Chestnut Consultants, Inc., 371 Ill. App. 3d 1019 (2007) (rescission); Gromer
v. Molby, 385 Ill. 283 (1944) (reformation).
¶ 40 In this case, James Schafer and an agent of the Bank both testified that the wrong box
was checked concerning the security for the loan. If so, a mutual mistake was made, and
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plaintiffs may void the term and reform it.
¶ 41 II
¶ 42 The intent of the drafters of the Act was to disallow the use of exceptions to the statute
of frauds as defenses to enforcement of a credit contract. Teachers Insurance & Annuity
Ass’n of America v. La Salle National Bank, 295 Ill. App. 3d 61 (1998). Illinois courts have
properly applied the Act to attempts to modify or change written contracts by showing
additional or separate oral agreements. See McAloon v. Northwest Bancorp, Inc., 274 Ill.
App. 3d 758 (1995); First National Bank in Staunton v. McBride Chevrolet, Inc., 267 Ill.
App. 3d 367 (1994).
¶ 43 However, while the Act applies to valid credit agreements, it cannot affect a voided,
unenforceable contract. Simply put, when a contract is unenforceable, it becomes a nullity,
and the Act cannot resurrect it.
¶ 44 Here, Unionbank/Central argues that this court must declare that the contract is
enforceable as it is. If there is mutual mistake, however, there is no binding contract and no
enforcement thereof, only rescission or reformation. The Act, by it terms, eliminates the
application of any exceptions to statute of frauds to credit contracts; it does not and cannot
apply to invalid contracts or contract terms.
¶ 45 PRESIDING JUSTICE SCHMIDT, dissenting.
¶ 46 The trial court correctly granted summary judgment in this case since plaintiffs never
sought to reform the contract. The issues in litigation are determined by the pleadings, and
an issue cannot be sustained by evidence absent a corresponding pleading. Broberg v. Mann,
66 Ill. App. 2d 134, 137 (1965). The complaint fixes the issue in controversy and the theories
upon which recovery is sought. IMC Global v. Continental Insurance Co., 378 Ill. App. 3d
797, 804 (2007). A circuit court lacks jurisdiction to adjudicate an issue not presented
through proper pleadings. Id. at 804-05. Proof without pleadings is as defective as a pleading
without proofs, and “a party cannot plead one cause of action in its complaint and receive
judgment on the basis of a different cause of action.” Season Comfort Corp. v. Ben A.
Borenstein Co., 281 Ill. App. 3d 648, 652 (1995). It is improper for a court to reform a
contract when the party did not seek reformation in its complaint. IMC Global, 378 Ill. App.
3d at 804.
¶ 47 The majority decides that plaintiffs sufficiently raised the issue of reformation. Supra
¶ 25. It cites to a number of cases for the proposition that reformation is sufficiently pleaded
when “there are sufficient facts pled from which mutual mistake can be established.” Supra
¶ 23. I agree with its interpretation of those cases. I do not agree with the majority’s
determination that plaintiffs pled sufficient facts; indeed plaintiffs have pled no facts with
regard to mutual mistake. Their burden is to present sufficient facts from which “a
conclusion [of mutual mistake] is inevitable or fairly deducible.” Darst v. Lang, 367 Ill. 119,
125 (1937). Plaintiffs must plead facts “sufficient to answer the basic questions of who,
when, and where.” Briarcliffe Lakeside Townhouse Owners Ass’n v. City of Wheaton, 170
Ill. App. 3d 244, 252 (1988). Plaintiffs merely made a general denial of defendant’s
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affirmative defense. Plaintiffs’ general denial provides no facts.
¶ 48 Someday, this court will be required to decide whether the Credit Agreements Act (the
Act) (815 ILCS 160/1 et seq. (West 2008)) precludes a party from asserting a mutual mistake
of fact with regard to a credit agreement; this is not that day.
¶ 49 “A debtor may not maintain an action on or in any way related to a credit agreement
unless the credit agreement is in writing” and meets certain other requirements. 815 ILCS
160/2 (West 2008). Plaintiffs filed an action for conversion. Defendant pleaded the CSA as
an affirmative defense. In response, plaintiffs argue that the written credit agreement does
not reflect the parties’ agreement. Therein lies the problem. Plaintiffs want to maintain an
action related to a different credit agreement that is not in writing. This is prohibited by the
Act. Id.
¶ 50 The majority decides that the Act does not apply here, as the CSA was raised as an
affirmative defense. Supra ¶ 28. What difference does it make when it was raised? Plaintiffs’
entire case rests on proving that the true credit agreement entered into by the parties has not
been reduced to writing. Of course this conversion action is related to a credit agreement. To
decide otherwise ignores the facts of this case and the plain language of the Act. See R&B
Kapital Development, LLC v. North Shore Community Bank & Trust Co., 358 Ill. App. 3d
912, 918-19 (2005).
¶ 51 The majority’s approach results in a race to file. It allows a party to nullify the Act if the
party can file an initial pleading that does not mention a credit agreement. Surely the plain
language of the Act refutes such a finding. The Act deals with “an action on or in any way
related to a credit agreement.” 815 ILCS 160/2 (West 2008).
¶ 52 The concurrence asserts that the Act does not apply since, due to a mutual mistake, the
CSA is voidable, an argument not made by plaintiffs. Plaintiffs argued that the CSA, as
written, does not reflect the true agreement reached by the parties. The general rule in such
circumstances is that the contract is not void, but may be reformed to reflect the terms upon
which the parties originally agreed. Mid-Century Insurance Co. v. Founders Insurance Co.,
404 Ill. App. 3d 961, 967-68 (2010); Wheeler-Dealer, Ltd. v. Christ, 379 Ill. App. 3d 864,
869 (2008). Since the CSA is not void, the question that remains to be answered is whether
mutual mistake is a valid defense to a credit agreement under the Act.
¶ 53 This is not the time to answer that question. As plaintiffs never pled mutual mistake or
sought to reform the CSA, this court should not reach the issue of whether or not the Illinois
Credit Agreements Act precludes the reformation of a credit agreement due to mutual
mistake of fact. The trial court correctly granted summary judgment in favor of defendant.
¶ 54 Therefore, I respectfully dissent.
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