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February 25, 2004.

IVANHOE FINANCIAL, INC., a Delaware corporation, Plaintiff,
HIGHLAND BANC CORP, an Illinois corporation and WIESLAW DOMARADZKI, Defendants

The opinion of the court was delivered by: PAUL PLUNKETT, Senior District Judge


Plaintiff has sued defendants for breach of contract (Count I), fraudulent misrepresentation (Count II) and negligent misrepresentation (Count III) for their alleged submission to plaintiff of false loan documents. The case is before the Court on defendants' Federal Rule of Civil Procedure ("Rule") 12(b)(6) motion to dismiss the claims in Counts II and III. For the reasons set forth below, the motion is denied.


  Plaintiff is a Delaware corporation with its principal place of business in Florida. (Compl. ¶ 1.) Defendant Highland Banc Corp. is an Illinois corporation with its principal place of business Page 2 in Illinois. (Id. ¶ 2.) Highland is also a licensed Illinois mortgage broker. (Id.) Defendant Domaradzki is the president and an owner of Highland. (Id. ¶ 3.) Domaradzki controls, manages and operates Highland. (Id.)

  On January 12, 2001, Domaradzki, on behalf of Highland, entered into a broker/lender agreement with plaintiff, (Id. ¶ 6.) The agreement required Highland to package and submit to plaintiff residential first or second mortgage applications for possible funding by plaintiff, (Id.) Among other things, the agreement made Highland responsible for the complete and accurate preparation of the loan applications. (Id. ¶ 7.) The agreement also required Highland to warrant that all documents it submitted in connection with each loan package were "valid and genuine" and all information provided was "complete, true and accurate." (Id. ¶ 9.) If Highland breached these terms on any loan, the agreement says, plaintiff could require it to repurchase that loan. (Id. ¶ 10.)

  In the fall of 2002, defendants submitted loan packages to Ivanhoe for residential mortgage loans to Kamil Spicak and Myroslaw Ruptash, respectively. (Id. ¶¶ 11, 14.) Plaintiff, assuming the documents were accurate, issued a $646, 220.00 loan to Spicak and a $301,950.00 loan to Ruptash. (Id. ¶¶ 12, 15.) Subsequent investigation revealed that both loan packages contained false information about the value of the property securing the mortgage and the borrower's earnings, which, in each case, were far less than stated. (Id. ¶¶ 12-13, 15-16.)

  When plaintiff discovered the problems with the Spicak and Ruptash loans, it demanded that defendants repurchase them in accordance with the agreement. (Id. ¶¶ 174 8.) Defendants have yet to comply with that demand. (Id. ¶ 20.)

  Plaintiff contends that defendants have breached the broker/lender agreement and are liable for fraudulent or negligent misrepresentation. Page 3


 Choice of Law

  Before we turn to the allegations of the complaint, we must determine which law governs this suit. Federal courts sitting in diversity apply the choice of law rules of the forum state. Kohler v. Leslie Hindman, Inc., 80 F.3d 1181, 1184 (7th Cir. 1996). One of Illinois' choice of law rules is that a contractual choice of law clause will be enforced as long as the contract is valid. Id. at 1185. The broker/lender agreement, which the parties agree is valid, contains the following provision: "This Agreement shall be governed by the laws of the State of Florida and any action which may be commenced in connection with this Agreement shall be instituted in the State of Florida." (See Defs.' Mot. Dismiss, Ex. B ¶ 13.)*fn1 Before we can enforce that provision, however, we must determine what it means.

  Plaintiff urges a narrow construction, contending that the clause applies only to claims grounded in contract. Defendants, of course, disagree, and argue that the clause applies to all claims based on or related to the contract. Whatever else the clause may mean, this much is undisputed: the clause governs the interpretation of contractual provisions. Thus, we must use Florida law to determine the scope of this provision.

  In Florida, as in most places, contracts are construed "to give effect to the intent of the parties." Bums v. Barfield, 732 So.2d 1202, 1205 (Fl. App. Ct. 1999). The best evidence of that intent is the language of the contract and "its plain meaning controls." Id. "Unless the document in question contains a glossary of terms requiring a different meaning . . ., to find the plain and Page 4 ordinary meaning of words, one looks to the dictionary." Winn-Dixie Stores. Inc. v. 99 Cent Stuff Trail Plaza. LLC, 811 So.2d 719, 722 (Fl. App. Ct. 2002). According to Webster's Dictionary, the term "agreement" means "a. A properly executed and legally binding compact, b. The writing or document embodying this compact." WEBSTER'S II NEW RIVERSIDE UNIVERSITY DICTIONARY 87 (1994). Plaintiff's tort claims are not encompassed by the parties' agreement, as that word is commonly understood. Cf. SAI Ins. Agency. Inc. v. Applied Sys., Inc., 858 So.2d 401, 403 (Fla. App. Ct. 2003) (noting that the phrase "Agreement . . . shall be governed by, and interpreted in accordance with, the laws of the State of Illinois" did not mean that "the substantive law of Illinois will govern all disputes between the parties."). If the parties had intended the choice of law provision to cover claims beyond the four corners of the contract, they would have used more expansive language. See Seifert v. U.S. Home Corp., 750 So.2d 633, 637 (Fla. 1999) (contract provisions that require arbitration of claims "under" or "arising out of contract include only those claims that "relat[e] to the interpretation of the contract and [its] performance" while provisions that require arbitration of all claims "arising out of or relating to the contract . . . encompass virtually all disputes between the contracting parties, including related tort claims") (internal quotation marks and citations omitted) (emphasis added). Because the plain language of the choice of law provision indicates that it applies solely to disputes grounded in the agreement, plaintiffs tort claims are not governed by it.

  Since the choice of law provision does not settle the question, we must determine which state's law applies to the tort claims. Of course, choice of law only matters if there are substantive differences between ...

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