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Old Republic Surety Co. v. Quad City Bank & Trust Co.

May 18, 2009

OLD REPUBLIC SURETY COMPANY, A WISCONSIN CORPORATION, PLAINTIFF,
v.
QUAD CITY BANK & TRUST COMPANY, AN IOWA CHARTERED COMMERCIAL BANK, DEFENDANT.



The opinion of the court was delivered by: Michael M. Mihm United States District Judge

ORDER

Before this Court are the parties' cross motions. Plaintiff filed a Motion for Judgment on the Pleadings [#8] and Defendant filed a Motion for Summary Judgment [#10]. For the reasons set forth below, Plaintiff's Motion [#8] is GRANTED and [#10] Defendant's Motion [#10] is DENIED.

Jurisdiction

The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332(a)(1) as there is diversity of citizenship (Plaintiff is a Wisconsin Corporation with its principal place of business in Brookfield, Wisconsin, and Defendant is an Iowa chartered commercial bank with its principal place of business in Bettendorf, Iowa) and the alleged amount in controversy exceeds the jurisdictional requirements.

Background

Plaintiff, Old Republic Surety Company ("Old Republic") filed its Complaint against Defendant, Quad City Bank & Trust Company ("Quad City"), claiming that Quad City wrongfully denied Old Republic's request for payment under its Clean Irrevocable Letter of Credit ("ILOC"). Old Republic includes the language of the ILOC in its Complaint:

We warrant to you that all your drafts under this CLEAN IRREVOCABLE LETTER OF CREDIT will be duly honored upon presentation of your draft drawn on us at 3551 7th Street, Suite 100 Moline IL 61265 on or before the expiration date or on or before any automatically extended date as set forth.

This CLEAN IRREVOCABLE LETTER OF CREDIT expires on 02/06/08, but will be automatically extended for additional one year terms if you have not received by certified mail notification of our intention not to renew 30 days prior to the original expiry date and each subsequent expiry date.

Old Republic alleges that Quad City did not notify Old Republic of Quad City's intent not to renew the ILOC 30 days prior to the original expiry date of February 6, 2008, via certified mail.

On August 12, 2008, Old Republic sent a sight draft to Quad City in the amount of $119,192.03. On August 27, 2008, Quad City sent to Old Republic a "Notice of Dishonor," which refused to honor Old Republic's sight draft. Old Republic alleges that, pursuant to 810 ILCS 5/5-111, Quad City is liable to Old Republic in the amount of $119,192.03, together with interest from the date of the wrongful dishonor, reasonable attorney's fees, and other expenses of litigation.

Quad City argues that it did not wrongfully dishonor the ILOC because it sent a facsimile ("fax") transmission to Old Republic on January 7, 2008, (30 days prior to the original expiry date). The fax transmission stated:

We warrant to you that all your drafts under this CLEAN IRREVOCABLE LETTER OF CREDIT will be duly honored upon presentation of your draft drawn on us at 3551 7th Street, Suite 100 Moline IL 61265 on or before the expiration date or on or before any automatically extended date as set forth.

This CLEAN IRREVOCABLE LETTER OF CREDIT expires on 06/06/08, and is not automatically renewable without notification from Quad City Bank and Trust Company.

The fax transmission's cover sheet states that "An original hard copy was sent certified mail today." Quad City argues that this fax transmission operated to provide sufficient notice to Old Republic that the ...


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