Sevaux was agreeing to the Note as part of a commercial loan transaction. Note PP 1.1, 2, 8. Sevaux filled in the applicable interest rate, signed and dated the Note on or about December 20, 1991, and returned it to WFC. He then instructed WFC to wire the $ 1 million to Raymond.
Sevaux alleges that on July 28, 1992, WFC informed him that it would not be investing or lending any further monies to Raymond. Although payment on the Note was originally due July 1, 1992, the parties agreed to extend the time for repayment to November 30, 1992, and later to June 30, 1993. Sevaux failed to repay the Note on the June 30 maturity date.
On August 5, 1993, WFC filed this action for payment on the Note, and Sevaux has filed an Amended Answer and Counterclaims against WFC, wherein Sevaux pleads: (1) fraud in the inducement, (2) fraud under 815 ILCS 105/10, (3) estoppel by breach of fiduciary duty, (4) constructive fraud, (5) failure of consideration, and (6) want of consideration under 815 ILCS 105/9. He also raises five counterclaims: (1) fraud, (2) breach of contract, (3) promissory estoppel, (4) breach of fiduciary duty and (5) constructive fraud. Essentially, Sevaux alleges that WFC falsely represented an intent to invest $ 17 million in Raymond, and that in reliance on that promise Sevaux signed the $ 1 million Note and invested $ 1 million of his own money into Raymond. WFC is also alleged to have falsely represented that Sevaux would never have to pay on the Note and falsely promised that the $ 17 million investment would extinguish Sevaux's obligation thereunder. Sevaux asserts that because of WFC's scheme he forewent other financial options to his own and Raymond's financial detriment. Although we denied WFC's motion to dismiss Sevaux's counterclaims and affirmative defenses in our August 24, 1994 opinion, Whirlpool Financial Corp. v. Sevaux, No. 93 C 4725, 1994 WL 550705 (N.D. Ill. August 24, 1994) (Sevaux I), WFC now moves for summary judgment on the same issue.
II. Summary Judgment Standard
Summary judgment is appropriate if "there is no genuine issue of material fact and . . . the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). This standard places the initial burden on the moving party to identify "those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986) (quoting Fed. R. Civ. P. 56(c)). Once the moving party has met this burden, the non-moving party "must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(c); see Maxwell v. City of Indianapolis, 998 F.2d 431, 433 (7th Cir. 1993). In deciding a motion for summary judgment, the facts must be read in a light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). However, "self-serving affidavits without factual support in the record will not defeat a motion for summary judgment." Slowiak v. Land O'Lakes, Inc., 987 F.2d 1293, 1295 (7th Cir. 1993).
WFC raises two arguments in support of its assertion that it is entitled to summary judgment on Sevaux's counterclaims and affirmative defenses. First, it claims that the Illinois Credit Agreements Act ("the Act") applies, and that counterclaims and defenses based on unwritten credit agreements, such as the agreement alleged by Sevaux, are therefore precluded. Second, WFC contends that the lack of any agreement between the parties, WFC's failure to make any false statements to Sevaux, the absence of a fiduciary relationship between the parties, and delivery of $ 1 million to Raymond as per Sevaux's instructions prevents Sevaux from maintaining any of his counterclaims or defenses. Because we agree with WFC's first argument as to applicability and effect of the Act on the alleged agreement between Sevaux and WFC,
we need not address WFC's remaining arguments.
The Act imposes special writing requirements on claims stemming from any type of "credit agreement,"
which is defined as an "agreement or commitment by a creditor to lend money or extend credit or delay or forbear repayment of money not primarily for personal, family or household purposes, and not in connection with the issuance of credit cards." 815 ILCS 160/1(1). In particular, the Act prohibits a debtor from "maintaining 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 forbear repayment of money, sets forth the relevant terms and conditions, and is signed by the creditor and the debtor." 815 ILCS 160/2. Moreover, a debtor cannot raise a claim, counterclaim or defense based on an allegation that there was an "agreement by a creditor to modify or amend an existing credit agreement or to otherwise take certain actions, such as entering into a new credit agreement, forbearing from exercising remedies in connection with an existing credit agreement, or rescheduling or extending installments due under an existing credit agreement," unless the writing requirements of the Act are satisfied. 815 ILCS 160/3. In other words, the Act imposes a stringent version of the Statute of Frauds--since it requires the signatures of both creditor and debtor on the agreement--on loans and credit advanced by financial institutions. Resolution Trust Corp. v. Thompson, 989 F.2d 942, 944 (7th Cir. 1993).
WFC argues that Sevaux's counterclaims and defenses are all based on the alleged oral agreement to undertake $ 17.5 million of Raymond's financing. Since this purported understanding was not embodied in a signed writing, WFC contends that Sevaux's counterclaims and defenses are barred by the Act. Essentially, this is the same argument raised in WFC's motion to dismiss which we denied on August 24, 1994. However, at that time we were required to accept Sevaux's complaint as true, and we held that because he alleged the breach of an agreement to invest $ 17.5 million, as opposed to an agreement to lend $ 17.5 million, the Act did not apply. Sevaux I, 1994 WL 550705, at *2. We specifically reserved judgment on the question of whether, if discovery revealed facts indicating that credit was involved in the refinancing package, the Act would preclude Sevaux's counterclaims and defenses. Id. at *3 n.2. We now must reach this issue and decide whether (1) there is no genuine issue as to the existence of debt in the $ 17.5 million package of financing between WFC and Sevaux, and (2) whether the existence of debt in the refinancing brings Sevaux's counterclaims and defenses into the ambit of the Act.
WFC points to Sevaux's deposition as primary support for its assertion that at least some of the $ 17.5 million package involved the extension of credit to Raymond and Sevaux. When describing the meetings he had with WFC representatives in Venezuela on November 24-26, 1991, Sevaux stated that he originally intended to secure a $ 4-5 million loan. Sevaux Dep. at 159-60. He claimed that Palmieri then suggested a complete refinancing of the company, and he summed up Palmieri's statement as:
We're going to replace, first we are going to lend you $ 4.5 million for the needs which I've just described and then, for your long term, for your term debt, we are going to replace your Venezuelan borrowings by a $ 13 million financing made by us.
Sevaux Dep. at 161. The parties next discussed what form the refinancing would take--for example, whether part of it would include a sale of preferred stock--and which holding companies would borrow from (or sell stock to) WFC. Sevaux Dep., at 161-62. Sevaux then claims that Palmieri took him aside and told him that in order to get the package of $ 17.5 million, WFC would have to get fifty percent of Raymond. Sevaux Dep., at 162. Sevaux did not state in his deposition that the parties then agreed that the "package" of $ 17.5 million would consist wholly of equity, as opposed to the part-debt/part-equity package which was under consideration. Nor does Sevaux contend in his deposition that he understood the agreement to have been transformed into one involving only an equity position for WFC. Indeed, Sevaux claims that the parties did not finalize what form the package would take,
and he described the agreement in the following terms:
I think the $ 13 million would be, the idea that it would be debt to replace the debt and the 4.5 was more or less equity, but there, again, nothing was decided . . . .