Lowis & Gellen LLP Attorney Charlotte Felber attended a recent Kellogg Executive Lecture Series on "Information Strategies for a Competitive Advantage" with Professor Michael Mazzeo. The lecture focused on: (1) information efficiencies for surpassing the herd; (2) differentiation by acquiring unique information from atypical searches and developing actionable knowledge; and (3) using internal information, which is often superior and unique, but being aware of potential bias and the consequences. Through educational opportunities such as the Kellogg Executive Lecture Series, Lowis & Gellen LLP attorneys stay apprised of current business and legal strategies in order to better serve their clients.

Step Change 2011

Gerald Haberkorn participated in Step Change 2011 where he joined hundreds of fellow runners to race to the top of London's most iconic building for the Child's Voice Appeal. He not only completed the challenge of climbing 1,037 steps 38 floors, his participation helped make a difference to the lives of children across the UK, by raising funds to improve the NSPCC and Childline phone line services.

Visit NSPCC @ nspcc.org.uk

The Illinois Appellate Court, First District, recently issued a decision in one of the “365/360 method” cases. (See attached). As you are aware, claims and defenses under the Illinois Interest Act based on lenders’ use of the 365/360 method for calculating interest are quite prevalent now, especially with the use of Laser Pro loan documents. In RBS Citizens v. RTG-Oak Lawn, LLC, RBS filed a complaint for mortgage foreclosure, which included claims seeking recovery of unpaid amounts under the loan, after the defendants defaulted on a loan. In response, the defendants asserted affirmative defenses and counterclaims based on RBS’s use of the 365/360 method, including alleged violations of the Interest Act (815 ILCS 205/1 et seq.), the duty of good faith and fair dealing, the Consumer Fraud Act (815 ILCS 505/1 et seq.), and common law fraud. Like many other circuit court judges presented with similar claims, Judge Delort of the Circuit Court of Cook County dismissed the defendant’s affirmative defenses and counterclaims with prejudice.

In a well-reasoned opinion, the Appellate Court affirmed the trial court’s dismissal as to all claims. With respect to the Interest Act, the court found that the language in the note explicitly provided that interest would be computed with the 365/360 method. The court rejected the defendant’s argument to the contrary -- that the note was ambiguous due to use of the term “per annum” in other provisions -- noting that the term “per annum” was not used in the paragraph discussing how interest would be charged or calculated. Because success of the remaining claims all required that the note’s interest provision be found improper, the court affirmed the circuit court’s dismissal of those claims as well.

The RBS court addressed one final issue. The defendants had signed forbearance agreements containing waiver of defense provisions. The court strongly suggested that by executing the forbearance agreements, the defendants waived any affirmative defense or counterclaim based upon the Interest Act and common law fraud. While the court did not actually rule on this issue, choosing instead to directly dispose of the Interest Act claim, the language in the opinion emphasizes the importance of including these types of waiver provisions in forbearance agreements.

This opinion, coupled with last year’s enactment of Senate Bill 1118, is obviously good news to lenders and should largely put to rest borrowers’ use of Interest Act claims as a defense to lenders’ actions on notes, although we expect to see some additional claims based on the particular language of different notes. SB 1118 amended the Interest Act to clarify that an annual interest rate for commercial loans may be lawfully computed on a 360-day year.

Lowis & Gellen LLP have been successfully chosen as the winner of the Corporate Intl Magazine 2010 Legal Award for:

“Mergers & Acquistions Law Firm of the Year in Illinois”
&
“Banking & Finance Law Firm of the Year in Illinois”

December 2010 Lowis & Gellen partners Pam Gellen and Scott Wolfe successfully defended a University hospital and its doctors in an alleged wrongful death case. The suit was brought on behalf of a 29 year old mother of 4 who died from a pulmonary embolus just minutes after delivering twins. The plaintiff claimed the woman was at high risk for deep vein thrombosis (DVT) and pulmonary embolus (PE) in the latter part of her pregnancy and should have been provided with DVT prophylaxis. An expert for the plaintiff testified that DVT prophylaxis would have prevented a DVT and would have prevented the PE and death. The defense argued that the patient was not considered high risk and the options for DVT prophylaxis were either ineffective (TED hose or sequential compression boots) or carried an unacceptable risk of bleeding (prophylactic anticoagulation). The jury apparently believed the defense argument that the doctors didn't have a crystal ball and without knowing the outcome, the doctors could legitimately conclude that the risk of anticoagulation outweighed the risk of DVT and PE without anticoagulation.

The plaintiff asked the jury to award over $13million. The jury returned a verdict in favor of the defendants.