Count I of the complaint alleged misrepresentation against defendant First Chicago Corporation; count II alleged misrepresentation against Hesterman individually; and count III alleged promissory estoppel against all defendants. The defendants filed a motion to dismiss the complaint, arguing, inter alia, that section 2 of the Act ( 815 ILCS 160/2 (West 1994)) barred any action relating to an oral promise to extend credit. Relying on the opinion of the Appellate Court, Fourth District, in First National Bank v. McBride Chevrolet, Inc. (1994), 267 Ill. App.3d 367, the trial court granted the defendant's motion and dismissed the complaint. The plaintiff timely appealed.
The trial court reasoned that the Credit Agreements Act was designed to protect against actions where plaintiffs contend that they had an oral agreement with the defendant, and that the memorialization of the contract does not reflect what they agreed to. Thus, the trial court found Hubbard Street Lofts' second, fifth and sixth counts in the complaint were the prototype of claims that are barred by the Credit Agreements Act. ¶ 24 Inland Bank cites First National Bank in Staunton v. McBride Chevrolet, Inc., 267 Ill.App.3d 367, 373, 204 Ill.Dec. 676, 642 N.E.2d 138, 142 (1994), which states that “[t]here is no justifiable reliance on an oral credit agreement as a matter of law in Illinois.” In McBride, a bank officer promised orally to hold a check that caused an overdraft in a corporation's account until the Monday after a weekend; however, the bank officer in fact did not hold the check and the corporation suffered losses.
To date, six Illinois cases have construed the Act. InFirst National Bank v. McBride Chevrolet, Inc., 267 Ill. App.3d 367, 642 N.E.2d 138 (1994), a lender foreclosed upon certain mortgages and guaranties. The defendants raised various affirmative defenses and counterclaims, all predicated upon an oral promise by the bank's officer to hold an overdraft check until sufficient funds could be deposited.
The language bars all actions by a debtor based on or related to an oral credit agreement. ( First National Bank v. McBride Chevrolet (1994), 267 Ill. App.3d 367, 372.) As stated in their complaint and acknowledged in their brief, plaintiffs' action for breach of contract and fraud was founded upon alleged oral misrepresentations by defendants. Plaintiffs alleged that on two separate occasions Charter had orally agreed to lend monies and then had failed to disburse the funds.
The Illinois courts have interpreted this provision to proscribe "[a]ll actions which depend for their existence upon an oral credit agreement." Klem v. First Nat'l Bank of Chicago, 655 N.E.2d 1211, 1213 (Ill.App.Ct. 1995) (quoting First Nat'l Bank in Staunton v. McBride Chevrolet, Inc., 642 N.E.2d 138, 142 (Ill.App.Ct. 1994), appeal denied, 647 N.E.2d 1008 (Ill. 1995)). Indeed, "there is no limitation as to the type of actions by a debtor which are barred by the Act, so long as the action is in any way related to a credit agreement."
There is no justifiable reliance on an oral credit agreement as a matter of law in Illinois." First National Bank in Staunton v. McBride Chevrolet, Inc., 267 Ill. App. 3d 367, 373 (1994). An allegedly fraudulent misrepresentation has been held to be within the scope of what is barred by the Credit Act. Westinghouse Electric Corp. v. McLean, 938 F.Supp. 487, 492 (N.D. Ill. 1996) (cited with approval in Teachers Insurance & Annuity Ass'n of America v. LaSalle National Bank, 295 Ill. App. 3d 61, 69-70 (1998)).
¶ 23 Illinois courts have relied on the broad language of the Act in determining whether a credit agreement was entered into by the parties. First National Bank in Staunton v. McBride Chevrolet, Inc., 267 Ill. App. 3d 367, 372 (1994). There is no limitation as to the type of actions by a debtor which are barred by the Act, so long as the action in any way related to a credit agreement.
The ICAA bars all actions that are in any way related to an alleged credit agreement, whether those actions sound in contract or tort. See Nordstrom v. Wauconda Nat'l Bank, 668 N.E.2d 586, 588 (Ill.App.Ct. 1996); McAloon, 654 N.E.2d at 1095; First Nat'l Bank v. McBride Chevrolet, Inc., 642 N.E.2d 138, 142 (Ill.App.Ct. 1994). It also bars traditional exceptions to the statute of frauds, such as fraud, part performance, and equitable estoppel.
ts have uniformly barred the claims and defenses of debtors which have relied on the existence of oral credit agreements. See Resolution Trust Corporation v. Thompson, 989 F.2d 942 (7th Cir. 1993) (court barred claims and defenses of debtor based on alleged oral promise of creditor to forgive unpaid balance of loan); Whirlpool Financial Corporation v. Sevaux, 874 F. Supp. 181 (N.D. Ill. 1994) (hereinafter "Whirlpool II") (court barred all claims and defenses relying on alleged oral promise to finance a loan); General Electric Capital Corporation, 1993 U.S. Dist. LEXIS 17690, No. 93 C 5614, 1993 WL 524814 (N.D. Ill. Dec. 15 1993) (court barred all claims and defenses related to an alleged oral agreement to extend or modify existing written credit agreements);McAloon v. Northwest Bancorp, Inc. 274 Ill. App.3d 758, 654 N.E.2d 1091, 211 Ill. Dec. 281 (2d Dist. 1995) (court barred all claims and defenses founded on alleged oral representations by bank to lend money); First National Bank in Staunton v. McBride Chevrolet, Inc., 267 Ill. App.3d 367, 642 N.E.2d 138, 204 Ill. Dec. 676, (4th Dist. 1994) (court barred all claims and defenses relying on oral promise of bank to hold a check overnight).
Courts have uniformly barred the claims and defenses of debtors which have relied on the existence of oral credit agreements. See Resolution Trust Corporation v. Thompson, 989 F.2d 942 (7th Cir. 1993) (court barred claims and defenses of debtor based on alleged oral promise of creditor to forgive unpaid balance of loan); Whirlpool Financial Corporation v. Sevaux, 874 F. Supp. 181 (N.D.Ill. 1994) (hereinafter "Whirlpool II") (court barred all claims and defenses relying on alleged oral promise to, finance a loan); General Electric Capital Corporation v. Donogh Homes, No. 93 C 5614, 1993 WL 524814 (N.D.Ill. Dec. 15, 1993) (court barred all claims and defenses related to an alleged oral agreement to extend or modify existing written credit agreements); McAloon v. Northwest Bancorp, Inc., 274 Ill. App.3d 758, 211 Ill.Dec. 281, 654 N.E.2d 1091, (2d Dist. 1995) (court barred all claims and defenses founded on alleged oral representations by bank to lend money); First National Bank in Staunton v. McBride Chevrolet, Inc., 267 Ill. App.3d 367, 204 Ill.Dec. 676, 642 N.E.2d 138 (4th Dist. 1994) (court barred all claims and defenses relying on oral promise of bank to hold a check overnight). The Credit Act bars all claims, whether sounding in contract or tort. First National Bank in Staunton v. McBride Chevrolet, Inc., 267 Ill.App.3d at 372, 204 Ill.Dec. at 680, 642 N.E.2d at 142.