1ST Class Legal (I.S.), Ltd. v. Niro, et al.

Northern District of Illinois, ilnd-1:2016-cv-06793

RESPONSE by 1st Class Legal (I.S.), Ltd. in Support of MOTION by Plaintiff 1st Class Legal (I.S.), Ltd., Counter Defendant 1st Class Legal (I.S.), Ltd. for summary judgment on Counterclaim {{34}}

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Case: 1:16-cv-06793 Document #: 48 Filed: 03/14/17 Page 1 of 15 PageID #:558 MARC S. MAZER WEILL & MAZER, A Professional Corporation 90 New Montgomery Street Suite 1400 San Francisco, CA 94105 Telephone: (415) 421-0730 STEVE M. VARHOLA LYMAN LAW FIRM, LLC 227 West Monroe Street, Suite 2650 Chicago, Illinois 60606 (312) 762-9517 Attorneys for Plaintiff and Counter-Defendant 1st CLASS LEGAL (I.S.), LTD. UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION 1st CLASS LEGAL (I.S.), LTD., a foreign) Case No.: 16-cv-6793 corporation,)) Plaintiffs,)) Honorable Robert. M. Dow, Jr. v.)) RAYMOND NIRO, individually and doing) business as NIRO, HALLER & NIRO, an) Illinois Law Partnership, NIRO, LTD., an) Illinois Corporation, formerly known as NIRO,) HALLER & NIRO, LTD.,)) Defendants.)) and related Counter claim)) PLAINTIFF-COUNTERDEFENDANT'S REPLY MEMORANDUM OF LAW IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT Defendant Niro Law, Ltd.'s (hereinafter "Niro") Response to Plaintiff-Counterdefendant 1st CLASS LEGAL (I.S.), LTD.'s ("Plaintiff") Motion for Summary Judgment essentially concedes the following relevant issues:  Niro has admitted every fact set forth in Plaintiff's Statement of Material Facts. PLAINTIFF'S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT CASE NO. 1:16-cv-06793 1 Case: 1:16-cv-06793 Document #: 48 Filed: 03/14/17 Page 2 of 15 PageID #:559  Niro has previously conceded to this Court that the issue presented on this Motion is a pure question of law: the interpretation of the contract in issue.1  Niro's effort to recharacterize the transaction as an "investment" rather than a loan is disingenuous and asserted in response to this Motion for the first time in this litigation. The agreement on its face is a loan; Niro's Counterclaim calls the transaction a loan; documents authored by Niro and produced in this action acknowledge the transaction was a loan; Niro represented to the Court in its initial status conference statement that the subject transaction is a "financing transaction", and any attempt to characterize it as an "investment" would run afoul of prohibitions against fee-sharing agreements with non-attorneys as noted by the Illinois Rules of Professional Conduct cited below.  Niro's arguments about the expectations of the parties to the contract are irrelevant, because they are unsupported by evidence and the contract is unambiguous. Moreover, the subject contract is fully integrated and, by its terms, supersedes all prior representations and agreements between the parties thereto. Niro's efforts to inject issues outside the single legal issue presented by this Motion should be rejected by the Court. For the foregoing reasons and as discussed below, Plaintiff is entitled to summary judgment in its favor on Niro's Counterclaim. I. POINTS CONCEDED BY NIRO. In its Response, Niro "agreed" with each fact set forth in Plaintiff's Statement of Material Facts. In particular, it agreed that it is seeking damages based only upon the amount of the alleged shortfall of the subject loan. It also agrees that it does not contend it attempted to seek alternative funding. Niro concedes that there is no dispute between United Kingdom law and Federal/Illinois law applicable to this Motion.2 1 In reliance thereon, this Court denied Plaintiff's request for oral argument stating that if the motion was purely a question of law with no dispute as to material facts (as represented by Defendant Niro's attorney), no oral argument is necessary. If the Court is inclined to consider Niro's arguments which effectively raise questions of fact by going beyond the "four corners" of the written contracts, and which are disputed, Plaintiff again requests oral argument in this matter. PLAINTIFF'S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT CASE NO. 1:16-cv-06793 2 Case: 1:16-cv-06793 Document #: 48 Filed: 03/14/17 Page 3 of 15 PageID #:560 Niro does not dispute Plaintiff's statement of the legal standard. Of particular relevance, Niro concedes that the non-movant (i.e. Niro) must provide specific facts demonstrating a genuine issue for trial. Fed.R.Civ.P. 56(e); Fass v. Sears, Roebuck & Co., 532 F.3d 633, 640- 641 (7th Cir. 2008). "The plaintiff cannot merely allege the existence of a factual dispute to defeat summary judgment. … Instead, [it] must supply evidence sufficient to allow a jury to render a verdict in [its] favor." Basith v. Cook County, 241 F.3d 919, 926 (7th Cir. 2001) (internal quotation marks and citations omitted). Niro also does not dispute that damages are an essential element of a claim for breach of contract, and that summary judgment is appropriate where damages are not shown. This Motion, therefore, is limited to the following very narrow issue: Can Niro legally claim the shortfall of loan funding as a measure of its damages for its claim of alleged breach of the Master Loan Agreement ("MLA") with Plaintiff? If not, and since Niro is only claiming the shortfall as its only damages in its Counterclaim, the Motion for Summary Judgment should be granted. II. NIRO'S CLAIM THAT THE DAMAGES SOUGHT ARE "EXPECTATION DAMAGES" IS WITHOUT MERIT. Niro asserts that Illinois applies expectation damages to breach-of-contract claims, citing Bend Mut. Ins. Co. v. Procaccio Painting & Drywall Co., 794 F.3d 666, 679 (7th Cir. 2015). The case is entirely inapplicable to the present dispute between a lender and a borrower. Bend Mut. Ins. Co. was a dispute between a worker's compensation insurer and its insured 2 Niro makes the odd claim that the law of Illinois governs this dispute. As noted in the moving papers, ¶55 of the Master Loan Agreement expressly provides that "any litigation … shall be subject to the laws of England and Wales." However, in view of Niro's concession that there is no conflict between forum law and U.K. law, the issue does not merit discussion now. PLAINTIFF'S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT CASE NO. 1:16-cv-06793 3 Case: 1:16-cv-06793 Document #: 48 Filed: 03/14/17 Page 4 of 15 PageID #:561 regarding the propriety of premium adjustments. In no way is the contract in that action comparable to the MLA. Niro's citation is plainly distinguishable and offers no support for its argument. Plaintiff's Motion is not based on rules of damages applicable to all breach of contract claims; it is based on rules specific to breach of contracts to loan money. Moreover, Niro's claim for the balance of funds not loaned does not constitute a proper claim for expectation damages. Expectation damages "put the non-breaching party in the same position it would have been in if the breach had not occurred." Commonwealth Edison Co. v. Allied Chem. Nuclear Prod., Inc., No. 79 C 2866, 1988 WL 105369, at *3 (N.D. Ill. Oct. 5, 1988). But Niro is seeking nothing of the sort. Under the explicit language of the agreements in issue, Niro could only obtain funds for the prosecution of the underlying patent litigation and subject to obligations to repay from eventual proceeds. Niro's claim for damages asks for the payment of funds allegedly promised to be loaned, with no corresponding obligation as called for in the Loan agreements. Far from seeking to be placed in the same position as if the alleged breach had not occurred, Niro is seeking an unjustified windfall. III. NIRO'S CONTENTION THAT THE MLA IS NOT A LOAN BUT IS AN INVESTMENT CONTRACT IS DISINGENUOUS AND MADE WITHOUT SUPPORT IN THE LAW OR THE FACTS. Niro's second argument is that the contract in issue was not a loan, but rather an investment "in the patent infringement claims of the Niro clients identified in the CSLAs". The contention is an effort to mislead the Court and is quite stunning. Niro's clients are NOT parties to the MLA or the three related CSLAs (hereinafter sometimes referred to collectively as the "Loan Agreement"). There is nothing in the Loan Agreement to show that Niro's clients are parties to these agreements. The only parties to the PLAINTIFF'S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT CASE NO. 1:16-cv-06793 4 Case: 1:16-cv-06793 Document #: 48 Filed: 03/14/17 Page 5 of 15 PageID #:562 Loan Agreement are Plaintiff and Niro. The MLA defines the Borrower as being "a firm of attorneys known as Niro, Haller & Niro".3 The patent infringement claims of the Niro clients presumably are owned entirely by the Niro clients, since Niro has presented no evidence that the Niro clients assigned any part of those claims to either Niro or Plaintiff. There is no evidence that the Niro clients agreed to allow Plaintiff to "invest in its patent infringement claims", as contended by Niro. As shown below, if Niro is claiming that there is any "joint venture" or other "fee sharing agreement" with Plaintiff, it would be unlawful under Illinois law. Ray Niro knew of this problem and consequently requested that the financing structure be in the form of a "loan" in order to avoid the ethical problems of sharing legal fees with Plaintiff.4 It is Niro which is making representations and warranties, and is obligating itself under the provisions of the Loan Agreement. It is NOT Niro's clients who are obligating themselves to do anything. Niro understood that the obligation for funding the loans was contingent upon Niro not being in default of any provision in the MLA. The MLA provides that funding is contingent upon Niro not being in default. One of those provisions is a warranty that, "in Borrower's reasonable judgment, the prospects of success in the Proceedings5 are good taking into consideration all of the information known by the Borrower at that time". Further, under Paragraph 35.6 of the MLA, Niro is considered to be in default when the prospect of success of 3 Niro claims that it and "Niro, Haller & Niro" are one and the same. Although disputed, for purpose of this Motion only, it may be assumed that Niro is the "Borrower" under the MLA. 4 Ray Niro acknowledged in his email of December 1, 2011 pertaining to the drafting of the Loan Agreement, that in order to avoid "ethics issues, the structure may have to be a loan for the payment of expenses and fees, not the splitting of legal with non-lawyers". See, Plaintiff's Exhibit 4 attached to Plaintiff's Reply to Niro's Additional Facts. 5 The term "Proceedings" is defined under the MLA to mean the litigation of claims held by Niro's clients described in the related CSLAs. PLAINTIFF'S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT CASE NO. 1:16-cv-06793 5 Case: 1:16-cv-06793 Document #: 48 Filed: 03/14/17 Page 6 of 15 PageID #:563 the Proceedings have been reduced for "whatever reason to a point at which, on balance, the Borrower would not have accepted the case…". Paragraph 12.1 of the MLA provides that Lender (1CL) is only "obligated to advance the Loan" if there is not default of provisions of the MLA. Neither Niro's Answer nor its Counterclaim characterizes the "Master Loan Agreement" or related "Case Specific Loan Agreements" as an "investment" or an agreement for purchase of an investment in the patent infringement claims held by Niro's clients. To the contrary, throughout its Answer and Counterclaim, Niro characterizes the transaction as a loan and references specific provisions in the subject written agreements which reference the transaction as a "loan". In its Counterclaim, Niro alleges that it submitted "drawdown requests" and that Plaintiff failed to fund pursuant to those "drawdown requests". According to the "drawdown requests" produced by Niro in discovery, the transaction was referred to as a "loan". For example, each "drawdown request" states "we wish to borrow the Loan…" (Emphasis added) and each states that "the proceeds of this Loan shall be applied…." (See, Exhibit 3 attached to Plaintiff's Reply to Niro's Additional Facts).6 The term "drawdown request" is specifically defined in the MLA as a "request for the advance of the case specific Loan or any part thereof…".7 The MLA is replete with references indicating that this transaction is a "Loan" and does not in any manner state that the transaction is an "investment". 6 Paragraph 10 of the MLA states that "the Loan shall be used only for" "Payment of costs incurred in the Proceedings", and other specific purposes. 7 Each "drawdown request" also makes the representation that "each and every condition of the Agreement is satisfied" and is seeking to "borrow" the Loan. Plaintiff disputes this representation and, as a result, believes that the funding of the loan was improperly obtained in breach of the MLA. Although this issue is not yet before the Court, it is relevant only for the purpose for showing the Court that the Niro's belated assertion that the transaction is an "investment" rather than a "Loan" is disingenuous. PLAINTIFF'S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT CASE NO. 1:16-cv-06793 6 Case: 1:16-cv-06793 Document #: 48 Filed: 03/14/17 Page 7 of 15 PageID #:564 In its first Status Conference Statement to the Court (Docket No. 11), Niro "acknowledges that it entered into a financing agreement with Plaintiff." In its Answer to the Complaint, Niro does not ever refer to the transaction as being an "investment in the patent infringement claims held by Niro's clients". Only after being served with this Motion for Summary Judgment has Niro asserted that this is an investment, rather than a loan. This latest contention is just a desperation contrivance of Niro to avoid judgment on its Counterclaim. A. The Question of Whether the Transaction is a Loan or Not is a Question of Contract Interpretation and a Question of Law for the Court to Determine. Niro appears to be arguing that there is some ambiguity allowing the Court to treat the MLA as an investment agreement rather than a loan. The resolution of claims of ambiguity is for this Court to determine: When interpreting a contract under Illinois law, the court's first decision is whether the contract is ambiguous. This is a question of law. Metalex Corp. v. Uniden Corp. of America, 863 F.2d 1331, 1333 (7th Cir. 1988) (citing La Salle Nat. Bank, 827 F.2d at 78). If the court concludes that the contract is unambiguous, the court must interpret the contract and state the meaning of the contract. This, too, is a question of law. La Salle Nat. Bank, 827 F.2d at 78. Gen. Elec. Capital, Corp. v. Equifax Servs., Inc., 797 F. Supp. 1432, 1447 (N.D. Ill. 1992). Furthermore, the language of the agreement must be read in its natural sense and not given some unwarranted interpretation: Unless a contract clearly specifies its own meanings-which it does not, in this case-in evaluating intrinsic ambiguity the Court must give the words their "ordinary and natural meaning" without questioning the logic of that meaning. Interim Health Care of N. Ill., Inc. v. Interim Health Care, Inc., 225 F.3d 876, 880 (7th Cir. 2000); William Blair, 294 Ill.Dec. 348, 830 N.E.2d at 770. … The fact that parties disagree about the meaning of a contractual provision does not mean the contract is ambiguous. Interim Health Care of N. Ill., Inc. v. Interim Health Care, Inc., 225 F.3d 876, 879 PLAINTIFF'S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT CASE NO. 1:16-cv-06793 7 Case: 1:16-cv-06793 Document #: 48 Filed: 03/14/17 Page 8 of 15 PageID #:565 (7th Cir. 2000) (internal citations omitted). Ambiguity can be found only if the contract language is "reasonably or fairly susceptible of more than one construction." Id. A contract term is ambiguous if it can reasonably be interpreted in more than one way due to the indefiniteness of the language or due to the term having a double or multiple meaning. William Blair and Co., LLC v. FI Liquidation Corp., 358 Ill.App.3d 324, 294 Ill.Dec. 348, 830 N.E.2d 760, 769 (2005). Markin v. Chebemma Inc., 526 F. Supp. 2d 890, 894 (N.D. Ill. 2007). If the agreement is unambiguous, the obligations of the parties must be determined without reference to extrinsic evidence: "Under Illinois's 'four corners' rule, if a written agreement is unambiguous, then the scope of the parties' obligations must be determined from the contract language without reference to extrinsic evidence." SMS Demag Aktiengesellschaft v. Material Scis. Corp., 565 F.3d 365, 372 (7th Cir. 2009); see also, Camico Mut. Ins. Co. v. Citizens Bank, 474 F.3d 989, 993 (7th Cir. 2007). Contract interpretation is particularly suited to disposition by summary judgment. Metalex Corp. v. Uniden Corp. of America, 863 F.2d 1331 (7th Cir. 1988). The question of whether a contract is ambiguous is a question of law in Illinois. (Emphasis added) Curia v. Nelson, 587 F.3d 824, 829 (7th Cir. 2009).8 Applying the foregoing rules, only one result can be reached. The MLA and the CSLAs all refer to themselves as loans. Niro points to nothing in the language of the agreements themselves that he claims to be ambiguous. There is no basis for this Court to find any ambiguity within the four corners of the agreements, and therefore Niro's effort to recast the agreements must fail for that reason alone. 8 Niro's Response to the Motion contains numerous assertions of asserted facts entirely extrinsic to the four corners of the agreements. None of these matters should be considered, because the agreements are unambiguous and the issue raised by the present motion is a pure question of law. In the unlikely event that summary judgment is denied, Plaintiff will address and refute the numerous inaccuracies in Niro's allegations. PLAINTIFF'S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT CASE NO. 1:16-cv-06793 8 Case: 1:16-cv-06793 Document #: 48 Filed: 03/14/17 Page 9 of 15 PageID #:566 B. Niro's Own Pleading Admits the Transaction was a Loan. In its Answer and Counterclaim, Niro consistently refers to the agreements in issue as loans. In summarizing Plaintiff's business, Niro alleges at Paragraph 9 of its Counterclaim: 1CL is in the business of providing non-recourse loans to attorneys who have significant monetary claims for advancing a certain sum of money in consideration of the attorneys agreeing to pay back the loans from a portion of the contingency fees received in the litigation. The loans are structured such that if there was no recovery in the litigation, the attorneys would be under no obligation to repay the funding and there would be no recourse. 1CL represents itself to be a sophisticated litigation funding company with extensive experience in funding litigation around the world. (Emphasis added) C. Niro Referred to, and Treated the Transaction as, a Loan. On April 7, 2015, Ray Niro sent an email to Plaintiff, stating in relevant part with regard to the underlying transactions: "These were non-recourse loans. Had they been otherwise, we would never have accepted the deal." An email from Ray Niro, on behalf of Niro, clearly indicated that the transaction must be considered a loan and cannot be considered an agreement to share legal fees, since such agreement would be unlawful in Illinois (See, Plaintiff's Exhibit 4 attached to the Plaintiff's Reply to Niro's Additional Facts)9. D. The Transaction Cannot be Considered an Investment, Because If It Were So Considered, it Would be Illegal Fee-Sharing Under Illinois Law. Niro's suggestion that the agreements be considered "investments" must be rejected for another reason. That interpretation would render the agreements to be fee-sharing agreements prohibited by Illinois law. 9 This email was produced by Niro and bears a Bates-stamp confirming that it was produced by Niro. PLAINTIFF'S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT CASE NO. 1:16-cv-06793 9 Case: 1:16-cv-06793 Document #: 48 Filed: 03/14/17 Page 10 of 15 PageID #:567 Rule 5.4(a) of the Illinois Rules of Professional Conduct (134 Ill.2d R. 5.4) provides in relevant part: "A lawyer or law firm shall not share legal fees with a nonlawyer", subject only to limited exceptions not applicable here (payment to deceased attorney's estate or inclusion of nonlawyers in retirement plans. See also¸ O'Hara v. Ahlgren, Blumenfeld & Kempster, 127 Ill.2d 333, 130 Ill.Dec. 401, 537 N.E.2d 730 (1989) (revenue-sharing agreement between attorney's widow and new law firm to which she sold her husband's practice held to violate rule). It is well established that courts should construe contracts to make them legal and enforceable instead of illegal and unenforceable. Carpenter v. Hartford Fire Ins. Co., 990 F. Supp. 2d 180, 190 (D.R.I. 2014); Cunningham v. Nat'l City Bank, No. CIV. A. 08-10936-RGS, 2009 WL 69325, at *2 (D. Mass. Jan. 7, 2009), aff'd, 588 F.3d 49 (1st Cir. 2009). "Since a general rule of construction presumes the legality and enforceability of contracts, ambiguously worded contracts should not be interpreted to render them illegal and unenforceable where the wording lends itself to a logically acceptable construction that renders them legal and enforceable." Walsh v. Schlecht, 429 U.S. 401, 408, 97 S. Ct. 679, 685, 50 L. Ed. 2d 641 (1977). Since the interpretation being urged by Niro would lead to the agreements being illegal and unenforceable, this constitutes another independent reason to reject Niro's interpretation. IV. NIRO'S EFFORTS TO DISTINGUISH PLAINTIFF'S AUTHORITY IS UNAVAILING, AND THE AUTHORITY NIRO CITES IS INAPPLICABLE. Niro's primary argument to distinguish the authority cited by Plaintiff for the general rule regarding the measure of damages is the bogus claim that the contracts in issue are not loans. Niro argues that the rule should not apply because the underlying contract did not provide a prescribed rate of interest or a date certain for repayment. But numerous loan contracts provide for fluctuating terms of repayment affected by various contingencies, and demand notes are PLAINTIFF'S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT CASE NO. 1:16-cv-06793 10 Case: 1:16-cv-06793 Document #: 48 Filed: 03/14/17 Page 11 of 15 PageID #:568 payable when called for by the lender, not a date certain. In any event, the argument misses the point: the measure of damages does not result from the terms of the contract, but because a loan of money can be obtained from another source. Niro argues that the case Alderton v. Williams, 139 Mich. 296, 102 N.W. 753 (1905), supports its position. In that case, the plaintiff had agreed to fund the defendant's stave business and to take a share of the profits. The contract was found to be a joint venture, and therefore the measure of damages for a loan was inapplicable: "Those cases and the principle underlying them have no application to the case at bar. Here plaintiff defaulted, not in making an agreed loan, but in contributing to a joint adventure." Alderton v. Williams, 139 Mich. 296, 300–01, 102 N.W. 753, 755 (1905). Thus, the result in Alderton turned on the court's determination that the contract in issue was not a loan. As shown in the preceding section, that argument is unavailing for Niro here. Niro next attempts to claim that it is entitled to damages in addition to the higher rate of a substitute loan "where such damages were reasonably within the contemplation of the parties," citing Stanish v. Polish Roman Catholic Union of Am., 484 F.2d 713, 724 (7th Cir. 1973). Niro's citation is unavailing, and indeed supports Plaintiff. Standish explicitly states the general rule noted in the moving papers: When the person who contracted to make the loan neglects or refuses to do so, and the [borrower] is compelled to procure the money elsewhere, the measure of damages, is the difference, if any, between the interest he contracted to pay, and what he was compelled to pay to procure the money; And in Indiana there is usually no abandonment of this rule simply because the borrower, like Stanish here, was unable to arrange a substitute loan elsewhere, even at a higher rate of interest. Stanish v. Polish Roman Catholic Union of Am., 484 F.2d 713, 724 (7th Cir. 1973) (citing Lowe v. Turpie, 147 Ind. 652, 44 N.E. 25, 30, 32, 33, 47 N.E. 150 (1896)). The plaintiff in Stanish did PLAINTIFF'S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT CASE NO. 1:16-cv-06793 11 Case: 1:16-cv-06793 Document #: 48 Filed: 03/14/17 Page 12 of 15 PageID #:569 not seek to recover the amount of funds not advanced, as Niro does here. The case does not discuss the propriety of such a claim and offers no support to the damages claimed by Niro herein. It is noteworthy that the Stanish court rejected the plaintiff's attempt to recover his expected profits on the transaction as not being a "reasonably foreseeable" result. But even if Stanish offered some authority for a claim of consequential damages, that is not the claim Niro has made in this action. It has made only a claim that it is entitled to the amount of funds not advanced. Stanish does not support the claim. And if Niro wished to raise a basis for some other claim for damages in response to this Motion, it was Niro's burden to introduce competent evidence to meet its burden, to establish what the reasonable expectations of the parties were. Niro has failed to do so, instead relying on sheer speculation and argumentation. This will not suffice to meet the nonmovant's burden on a motion for summary judgment. Finally, Niro relies on two Illinois cases, neither of which avail it. In Hill v. Ben Franklin Sav. & Loan Ass'n, 177 Ill. App. 3d 51, 531 N.E.2d 1089, 1095 (1988), the borrower sought damages for a failure to lend money in the nature of expectation damages, and introduced evidence on the issue. The trial court rejected the claim and did not consider the issue. The appellate court noted an absence of Illinois law on the issue of the proper measure of damages for a contract to lend money but reversed, finding that the presentation of evidence mandated consideration of the question: The parties have not cited, nor have we found, any Illinois cases defining the proper measure of damages for breach of a contract to lend money. However, assuming the Restatement rule is applicable to this transaction, plaintiffs presented sufficient evidence that Ben Franklin knew the purported breach of the agreement and immediate institution of foreclosure proceedings on the properties might make other financing difficult to obtain. PLAINTIFF'S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT CASE NO. 1:16-cv-06793 12 Case: 1:16-cv-06793 Document #: 48 Filed: 03/14/17 Page 13 of 15 PageID #:570 Hill v. Ben Franklin Sav. & Loan Ass'n, 177 Ill.App.3d at 60, 531 N.E.2d at 1095.10 Niro, unlike the borrower in Hill, has failed to present an iota of competent evidence of its claimed damages. Nor can it; Niro has admitted that it did not even attempt to find an alternative source of funds. Niro has not introduced anything from which this Court can find a basis to claim expectation damages, and its failure to do so is fatal when confronted by a motion for summary judgment. The final Illinois case relied on by Niro is N.W.I. Int'l, Inc. v. Edgewood Bank, 291 Ill. App. 3d 247, 259, 684 N.E.2d 401, 409 (1997), as modified on denial of reh'g (Sept. 5, 1997). In that case, the court expressed its views on the issue of damages for breach of an agreement for the loan of money. Similar to Hill, the court noted, "There is a dearth of Illinois cases that address the proper measure of damages to be awarded for breach of a contract to lend money." But the Court did note: A northern district of Illinois case observes that the "measure of damages for wrongful failure to lend money [breach] is the higher cost of alternative financing unless it is foreseeable to the lender that substitute financing will not be available. * * * If it is foreseeable that substitute financing will not be available, the lender is liable for the foreseeable actual damages resulting from the breach." Lester v. Resolution Trust Corp., 125 B.R. 528, 532 (N.D.Ill.1991); see also Restatement (Second) of Contracts sec. 351, Comment e (1981); Hill v. Ben Franklin Savings & Loan Ass'n, 177 Ill.App.3d 51, 126 Ill.Dec. 462, 531 N.E.2d 1089 (1988). Thus, if it were not foreseeable that NWI would be unable to secure alternative financing, Edgewood would only be liable for the difference between the cost of any alternative financing and the cost of financing under the agreement between NWI 10 The Restatement rule referred to by the court is that "[T]he proper measure of damages for breach of a contract to lend money is the difference between the interest rate plaintiffs contracted to pay and the actual rate plaintiffs were compelled to pay to secure financing." Hill, 177 Ill. App. 3d at 60, 531 N.E.2d at 1095. PLAINTIFF'S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT CASE NO. 1:16-cv-06793 13 Case: 1:16-cv-06793 Document #: 48 Filed: 03/14/17 Page 14 of 15 PageID #:571 and Edgewood-prime plus 1%. (Emphasis added) If, on the other hand, it was foreseeable that NWI would be unable to secure alternative financing, Edgewood would be liable for "the foreseeable actual damages resulting from the breach." N.W.I. Int'l, Inc., 291 Ill. App. 3d at 259, 684 N.E.2d at 409. The above language again highlights the reason Niro cannot prevail. It admits it did not even attempt to seek alternative financing. Therefore, it cannot offer any argument premised on the unavailability of alternative financing; there is no proof, and cannot be any proof, that alternative financing was unavailable. This appears to be why Niro finds it necessary to rely on sheer speculation and rhetoric, arguing (without providing any supporting evidence whatsoever) that "no sane lender" would have made a loan, despite Niro's request that the transaction be in the form of a "loan" in order to avoid it being characterized as a "fee-sharing" arrangement. Niro's ipse dixit is not an appropriate substitute for admissible evidence. CONCLUSION For the foregoing reasons, Plaintiff respectfully requests that the Court grant it judgment on the Counterclaim as a matter of law and all other relief it deems just. Dated: March 14, 2017 Respectfully submitted, 1ST CLASS LEGAL (I.S.), LTD. By: /s/Marc S. Mazer Marc S. Mazer WEILL & MAZER, A Professional Corporation 90 New Montgomery Street, Suite 1400 San Francisco, CA 94105 (415) 421-0730 Attorneys for Plaintiff and Counter-Defendant 1st Class Legal (I.S.), Ltd. PLAINTIFF'S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT CASE NO. 1:16-cv-06793 14 Case: 1:16-cv-06793 Document #: 48 Filed: 03/14/17 Page 15 of 15 PageID #:572 CERTIFICATE OF SERVICE The undersigned, an attorney, certifies that on March 14, 2017, he caused the foregoing Plaintiff and Counter-Defendant's, 1st CLASS LEGAL, LTD., Reply Memorandum of Law in Support of Its Motion for Summary Judgment to be served upon all counsel of record via the court's electronic docketing system. Dated: March 14, 2017 1ST CLASS LEGAL (I.S.), LTD. By: /s/Steve M. Varhola Steve M. Varhola LYMAN LAW FIRM, LLC 227 West Monroe Street, Suite 2650 Chicago, Illinois 60606 (312) 762-9517 Attorneys for Plaintiff and Counter-Defendant 1st Class Legal (I.S.), Ltd. PLAINTIFF'S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT CASE NO. 1:16-cv-06793 15