McHenry Savings Bank v. Autoworks of Wauconda, Inc.

924 N.E.2d 1197, 399 Ill. App. 3d 104
CourtAppellate Court of Illinois
DecidedMarch 4, 2010
Docket2-08-1200
StatusPublished
Cited by28 cases

This text of 924 N.E.2d 1197 (McHenry Savings Bank v. Autoworks of Wauconda, Inc.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McHenry Savings Bank v. Autoworks of Wauconda, Inc., 924 N.E.2d 1197, 399 Ill. App. 3d 104 (Ill. Ct. App. 2010).

Opinions

JUSTICE O’MALLEY

delivered the opinion of the court:

Plaintiff, McHenry Savings Bank, and defendant Autoworks of Wauconda, Inc., entered into a loan agreement under which plaintiff loaned Autoworks $400,000. As part of the agreement, Autoworks, through its president, defendant Carl Bauer, and its vice president, defendant David W. Schwager, executed a promissory note in favor of plaintiff, along with a floor plan loan agreement. Additionally, Carl Bauer, Schwager, defendant Arthur Bauer, and defendant-appellee Eric Hoffman all executed guaranties guaranteeing the terms of the promissory note. Autoworks eventually defaulted on the promissory note and plaintiff filed suit to collect the amount due. After an arbitration and a bench trial, the trial court entered judgment in favor of plaintiff and against all defendants in varying amounts. Plaintiff appeals, contending that the trial court misinterpreted the language of the promissory note and Hoffman’s guaranty, thereby erroneously reducing the attorney fees to which it was entitled. Plaintiff also contends that the attorney fees it sought were reasonable and that the trial court improperly reduced the fees on a summary basis rather than through an evaluation of each entry in plaintiff’s fee petition. We affirm as modified in part and reverse in part.

The following factual summary is drawn from the record on appeal. On October 20, 2002, plaintiff and Autoworks entered into a loan agreement. Plaintiff agreed to loan Autoworks $400,000. Autoworks executed a promissory note and a floor plan loan agreement. The promissory note obligated Autoworks to repay the loan amount in a single balloon payment, including all principal and interest, due October 20, 2003. The promissory note also identified events of default, including Autoworks’ failure to make any payment when due and Autoworks’ failure to comply with any term of the floor plan loan agreement. The promissory note included a provision dealing with attorney fees:

“[Plaintiff] may hire or pay someone else to help collect this Note if [Autoworks] does not pay. [Autoworks] will pay [plaintiff] that amount. This includes, subject to any limits under applicable law, [plaintiffs] attorneys’ fees and [plaintiffs] legal expenses, whether or not there is a lawsuit, including attorneys’ fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. If not prohibited by applicable law, [Autoworks] also will pay any court costs, in addition to all sums provided by law.”

The promissory note also included a confession-of-judgment provision:

“[Autoworks] hereby irrevocably authorizes and empowers any attorney-at-law to appear in any court of record and to confess judgment against [Autoworks] for the unpaid amount of this Note as evidenced by an affidavit signed by an officer of [plaintiff] setting forth the amount then due, attorney’s fees plus costs of suit, and to release all errors, and waive all rights of appeal.”

In addition to the promissory note, the four individual defendants executed guaranties guaranteeing the terms of the promissory note. Each guaranty was identical and each was labeled a “Commercial Guaranty.” Each guaranty defined the indebtedness to which it pertained:

“INDEBTEDNESS GUARANTEED. The Indebtedness guaranteed by this Guaranty includes the Note, including (a) all principal, (b) all interest, (c) all late charges, (d) all loan fees and loan charges, (e) all collection costs and expenses relating to the Note or to any collateral for the Note. Collection costs and expenses include without limitation all of [plaintiff’s] attorneys’ fees.” (Emphasis in original.)

Each guaranty also defined its duration:

“This Guaranty will take effect when received by [plaintiff] without the necessity of any acceptance by [plaintiff], or any notice to Guarantor or to [Autoworks], and will continue in full force until all Indebtedness shall have been fully and finally paid and satisfied and all of Guarantor’s other obligations under this Guaranty shall have been performed in full. Release of any other guarantor or termination of any other guaranty of the Indebtedness shall not affect the liability of any remaining Guarantors under this Guaranty.”

Additionally, each guaranty specifically included an attorney fee provision:

“Attorneys’ Fees; Expenses. Guarantor agrees to pay upon demand all of [plaintiffs] costs and expenses, including [plaintiffs] attorneys’ fees and [plaintiffs] legal expenses, incurred in connection with the enforcement of this Guaranty. [Plaintiff] may hire or pay someone else to help enforce this Guaranty, and Guarantor shall pay the costs and expenses of such enforcement. Costs and expenses include [plaintiff’s] attorneys’ fees and legal expenses whether or not there is a lawsuit, including attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Guarantor also shall pay all court costs and such additional fees as may be directed by the court.” (Emphasis in original.)

Autoworks eventually defaulted on the promissory note, and on September 30, 2004, plaintiff filed suit to recover the outstanding loan balance from Autoworks and the individual defendants. On January 5, 2005, a default judgment was entered against Autoworks. Hoffman filed affirmative defenses, which plaintiff answered, and on August 19, 2005, an arbitration was held between plaintiff and the individual defendants. Schwager and Arthur Bauer did not attend the arbitration hearing; Hoffman and Carl Bauer did. The arbitrators found in favor of plaintiff and entered an arbitration award against all defendants jointly and severally. The amount of the award was $54,159.76, inclusive of attorney fees.

On September 19, 2005, Hoffman filed his notice rejecting the results of the arbitration. On September 21, 2005, plaintiff filed a motion to debar Schwager and Arthur Bauer from rejecting the arbitration award, because they had not attended the arbitration. On October 5, 2005, the trial court debarred Schwager and Arthur Bauer from rejecting the arbitration award and entered final judgment against them jointly and severally in the amount of $54,159.76. The case proceeded in the trial court against Carl Bauer and Hoffman.

After the arbitration hearing, plaintiff filed a motion seeking partial summary judgment. Later, plaintiff was given leave to file a memorandum in support of its partial summary judgment motion, and the trial court set a briefing schedule. As plaintiff proceeded, however, it determined that it would not pursue a motion for summary judgment.

On October 26, 2006, plaintiff issued a citation to discover assets against Arthur Bauer. The citation was dismissed following a hearing. Plaintiff also issued a citation to discover assets against Schwager, but Schwager failed to appear, resulting in the issuance of a rule to show cause. Plaintiff pursued collection against Arthur Bauer and Schwager, and both filed for bankruptcy. Plaintiff caused the judgment to be registered in Wisconsin, and it undertook title searches and obtained an asset turnover order.

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Cite This Page — Counsel Stack

Bluebook (online)
924 N.E.2d 1197, 399 Ill. App. 3d 104, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mchenry-savings-bank-v-autoworks-of-wauconda-inc-illappct-2010.