a corporation owned by Daniel E. McLean ("McLean") and Donald Tolva ("Tolva", together "Defendants"), entered into a Construction Loan Agreement with WCC (the "Construction Loan Agreement") and executed a note in favor of WCC due to mature on December 1, 1989 (the "1987 Note"), which McLean and Tolva personally guaranteed.
In September of 1988, McLean purchased Tolva's shares of Four Seasons and indemnified Tolva in connection with liabilities related to the development, including Tolva's obligations under his original guaranty.
In April of 1989, Four Seasons exhausted the interest reserve provided for under the Construction Loan Agreement and began making monthly interest payments out of funds loaned to Four Seasons by McLean.
Four Seasons received two extensions on the 1987 Note in November of 1989 and May of 1990. The May 1990 extension was memorialized in a letter agreement between Four Seasons and Westinghouse (the "Second Extension Agreement"). Under the Second Extension Agreement, Westinghouse had the power to disburse additional funds to pay the interest due on the note and other project expenses if it so chose. The Defendants allege, and Westinghouse denies, that pursuant to this provision, WCC's employee Michael Healey promised that WCC would advance further funds to continue the project. (Westinghouse's Local Rule 12(N) Responses to Defendants Statement of Facts, hereinafter "12(N) Response" at P 47).
Four Seasons was unable to pay the interest on the 1987 Note for the period of June 1, 1990, to June 30, 1990. WCC did not make additional disbursements to pay the interest due.
On July 26, 1990, WCC sent a notice of default to Four Seasons, McLean and Tolva. At the time this notice was sent, Four Seasons owed WCC $ 1,477,009.01.
In August, 1990, McLean, on behalf of himself, Four Seasons and Tolva, offered to turn over the project to WCC by means of a deed in lieu of foreclosure in exchange for a release of obligations to WCC under the Construction Loan Agreement, the 1987 Note, the original guarantees and both extensions. At this time, and through 1991, the project was significantly less valuable than the outstanding loan balance. In other words, at this time, the Defendant's obligations to WCC were undersecured.
In January 1991, Four Seasons and McLean agreed to the basic terms of an agreement whereby WCC would accept: (1) a deed in lieu of foreclosure; (2) a note in the amount of $ 500,000 due in three years (the "1991 Note"); and (3) two guarantees, one executed by McLean and one by Tolva. McLean was required to execute a guarantee in the amount of $ 627,168.78 plus interest (the "McLean Guaranty"), and Tolva executed a personal guarantee in the amount of $ 100,000 plus interest (the "Tolva Guaranty"), both issued in favor of Westinghouse's predecessor Westinghouse Credit Corporation ("WCC") (together the "1991 Guarantees"). The Defendants allege, and Westinghouse denies, that Healey promised the Defendants that Westinghouse would not enforce the note when it came due in three years. (12(N) Response at P 56).
On October 29, 1993, Westinghouse sent Four Seasons, McLean and Tolva a letter notifying them that the 1991 note would be due in full on January 29, 1994.
II. LEGAL STANDARD
Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, admissions and affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56; Hedberg v. Indiana Bell Telephone Co., Inc., 47 F.3d 928 (7th Cir. 1995); Wainwright Bank & Trust Co. v. Railroadmens Fed. Sav. & Loan Ass'n of Indianapolis, 806 F.2d 146, 149 (7th Cir. 1986). The movant has the burden of establishing that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). The primary inquiry is whether the evidence presents a sufficient disagreement to require a trial, or whether it is so one-sided that one party must prevail as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). If the moving party meets this burden, the non-moving party must then respond by setting forth specific facts which demonstrate the existence of a genuine issue for trial. Fed. R. Civ. P. 56(e); Posey v. Skyline Corp., 702 F.2d 102, 105 (7th Cir.), cert. denied, 464 U.S. 960, 78 L. Ed. 2d 336, 104 S. Ct. 392 (1983); see Curtis v. Bembenek, 48 F.3d 281 (7th Cir. 1995). All reasonable inferences from the record are to be drawn in favor of the non-moving party. Johnson v. Runyon et al., 47 F.3d 911 (7th Cir. 1995); Donovan v. City of Milwaukee, 17 F.3d 944, 947 (7th Cir. 1994).
In the plaintiffs motion for summary judgment, Westinghouse asserts that their is no genuine issue of material fact because: (1) Defendants' counterclaims and defenses are barred by the Illinois Credit Agreement Act, 815 ILCS § 160, because they rely on the existence of an oral credit agreement; (2) Defendants failed to assert justifiable reliance in their fraud counterclaim and defense as a matter of law; and/or (3) Defendants counterclaim and defense of wrongful economic duress must fail because Westinghouse did not act improperly and the Defendants were not unable to exercise their free will.
A. Applicability of the Act
In order to address Westinghouse's first argument, the court must determine whether the Illinois Credit Agreement Act (the "Credit Act") applies to this situation. The Credit Act states in relevant part:
For the purpose of this Act, the following terms have the meanings given them;