People ex rel. Department of Natural Resources v. Regions Bank

2025 IL App (4th) 230085-U
Appellate Court of Illinois·Decided March 27, 2025·No. 4-23-0085·Unpublished

Opinion

NOTICE 2025 IL App (4th) 230085-U This Order was filed under FILED

Supreme Court Rule 23 and is March 27, 2025 NO. 4-23-0085

not precedent except in the Carla Bender limited circumstances allowed 4th District Appellate under Rule 23(e)(1).

IN THE APPELLATE COURT Court, IL

OF ILLINOIS

FOURTH DISTRICT

THE PEOPLE OF THE STATE OF ILLINOIS ex rel. ) Appeal from the THE DEPARTMENT OF NATURAL RESOURCES, ) Circuit Court of Plaintiff-Appellee, ) Sangamon County v. ) No. 19L2 REGIONS BANK, )

Defendant-Appellant. ) Honorable ) Adam Giganti,

) Judge Presiding.

JUSTICE ZENOFF delivered the judgment of the court.

Justices DeArmond and Vancil concurred in the judgment.

ORDER

¶1 Held: The appellate court reversed the trial court’s judgment in favor of plaintiff where the letter of credit at issue did not contain an “evergreen” provision that renewed the letter indefinitely.

¶2 In this breach of contract case, defendant, Regions Bank (Regions), appeals from an agreed order entering a judgment of $320,608 in favor of plaintiff, the Department of Natural Resources (DNR), following the trial court’s denial of Regions’s motion to dismiss. In denying the motion to dismiss, the court found that the contested letter of credit contained an “evergreen” provision that renewed the letter indefinitely because neither Regions nor its predecessors tendered a notice of nonrenewal to DNR. For the reasons that follow, we reverse the court’s judgment and hold that the letter’s renewal clause was not an evergreen provision, and thus, the letter was no longer in force when DNR attempted to draw on it in 2016.

¶3 I. BACKGROUND

¶4 On October 25, 1984, DNR issued a permit to Surefire Coal, Inc. (SCI). At the time, the Illinois Administrative Code required SCI to obtain a performance bond in an amount determined by DNR. 62 Ill. Adm. Code §§ 1806.11, 1806.12, amended at 6 Ill. Reg. 1 (eff. June 1, 1982) (repealed at 11 Ill. Reg. 8049 (eff. July 1, 1987)). This bond was intended to assure completion of the reclamation plan specified in the permit if DNR had to perform the work in case of forfeiture. Ill. Rev. Stat. 1979, ch. 96 ½, ¶ 7906.02. Irrevocable letters of credit issued by a bank were accepted as collateral for a bond. 62 Ill. Adm. Code § 1806.12(g), amended at 6 Ill. Reg. 1 (eff. June 1, 1982) (repealed at 11 Ill. Reg. 8049 (eff. July 1, 1987)). DNR provided a form letter of credit for banks to use as a template.

¶5 On December 12, 1985, Regions’s predecessor, First National Bank of Wood River (First National Bank), issued a letter of credit for $320,608 at SCI’s request, using DNR’s form letter. The letter authorized DNR to draw on the issuing bank if SCI’s acts or failures to act warranted forfeiture of the letter of credit. Pertinent to this appeal, the letter provided:

“This Letter of Credit will automatically extend for an additional term of One (1)

year unless [First National Bank] provides at least ninety (90) days notice prior to the expiration date that it does not wish to extend the Letter of Credit for an additional period. [DNR] has the right to draw this Irrevocable Letter of Credit in the event [SCI] does not replace this Irrevocable Letter of Credit prior to thirty (30)

days before the expiration of this Irrevocable Letter of Credit with a replacement bond that complies with [DNR] Regulations, pursuant to 62 Ill. Admin. Code 1806.12(c) [(1982)] and/or 62. Ill. Admin. Code 1808.13 [(1985)].”

Neither First National Bank nor any of its successors provided a nonrenewal notice.

¶6 On June 16, 2016, DNR presented a sight draft to Regions, demanding payment of $320,608 under the letter of credit because SCI defaulted on its mining obligations when it was involuntarily dissolved in 2005. Regions dishonored the draft and refused payment on the grounds that (1) the letter of credit renewed automatically on December 12, 1986, for an additional one-year period and then expired on December 12, 1987, and (2) DNR’s presentation did not comply with the terms and conditions of the letter of credit. On July 14, 2016, DNR presented a second sight draft to Regions, correcting the deficiencies that Regions noted. Regions again refused to pay, asserting that the letter of credit expired on December 12, 1987.

¶7 On January 7, 2019, DNR sued Regions for breach of contract for nonpayment under the letter of credit, alleging that the letter had not expired because its terms contained an evergreen clause that “automatically renewed year after year unless [First National Bank] provided notice” of nonrenewal. On March 7, 2019, Regions filed a motion to dismiss the complaint under section 2-619(a)(9) of the Code of Civil Procedure (735 ILCS 5/2-619(a)(9) (West 2018)), arguing that the letter of credit expired on December 12, 1987, and DNR’s failure to make a complying presentation on or before that date precluded relief.

¶8 The trial court denied the motion to dismiss on August 5, 2019. The court found that the letter of credit contained a valid evergreen clause; thus, the letter did not expire two years after it was issued and DNR stated a valid claim against Regions for breach of contract. The court reasoned that the “lack of an explicit expiration date in the letter of credit at bar, coupled with the required action by Regions to provide a 90-day notice of non-renewal prior to the expiration date, means that the expiration date is extended each and every year Regions fails to provide a notice of non-renewal.”

¶9 On January 12, 2023, the parties filed a joint motion for the entry of a final judgment on DNR’s complaint. The parties asked the trial court to enter a judgment in favor of DNR for the principal amount of $320,608, without prejudice to Regions’s right to appeal. The court granted this joint motion on January 17, 2023, and entered the judgment proposed by the parties.

¶ 10 This appeal followed.

¶ 11 II. ANALYSIS

¶ 12 A. Jurisdiction

¶ 13 We must first ascertain whether we have jurisdiction over this appeal, “regardless of whether either party has raised the issue.” Secura Insurance Co. v. Illinois Farmers Insurance Co., 232 Ill. 2d 209, 213 (2009).

¶ 14 DNR is correct that an appellate court typically “will not review a consent decree, because a decree entered by consent is no more than a court’s recording of an agreement reached by the parties in settlement of a dispute or claim and is not a judicial determination of their rights.” People ex rel. Fahner v. Colorado City Lot Owners & Taxpayers Ass’n, 106 Ill. 2d 1, 8 (1985). Here, however, Regions appeals the agreed order only insofar as it incorporated and made appealable the trial court’s denial of Regions’s motion to dismiss.

¶ 15 When the trial court denied Regions’s motion to dismiss, it ruled on the dispositive legal issue of the case—whether the letter of credit was still in force. However, as the denial of a motion to dismiss is an interlocutory order, Regions could not appeal it at that time. Mund v. Brown, 393 Ill. App. 3d 994, 996 (2009). The only remaining matter was the amount of the judgment, which was an undisputed issue given the court’s ruling on the motion to dismiss. The agreed order addressed this and, thus, constituted the final, appealable order in this case.

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