7th Circuit upholds ruling in favor of borrowers

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A dispute between a lender and subsidiaries created by a restaurant owner to refinance its debt made its way before the 7th Circuit Court of Appeals for the second time. This time, the judges ruled in favor of the borrowers.

Quality Dining Inc. created subsidiaries BKCAP LLC, GRAYCAP LLC, and SWCAP LLC and made a deal with Captec Financial and GE Capital for 34 separate loans, with each loan secured by a restaurant. Captec assigned 13 of its loans to Captec Franchise Trust 2000-1. The borrowers and lender disagreed about the prepayment requirements for 12 of the loans, landing the parties in court and before the 7th Circuit in 2009.

There is ambiguity in the prepayment provision of the loan agreements, so the judges sent the case back to the District Court for a full trial on the merits. The 7th Circuit found both parties’ arguments as to how to interpret the loan agreement impossible without additional evidence. The District Court then ruled in favor of the borrowers, awarded prejudgment interest, and denied attorney fees for lender Captec Franchise Trust 2000-1.

The lender appealed, claiming the borrowers’ interpretation of the prepayment provision is unreasonable based on the language of the decision issued by the 7th Circuit in the first appeal. The judges did say the borrowers’ interpretation was unreasonable, but the lender’s argument is way off base, wrote Judge John Tinder. The judges didn’t call the lender’s interpretation unreasonable, but they should have, he wrote.

The evidence offered at trial supports the borrowers’ interpretation, and the District Court didn’t err in considering the testimony of the borrowers’ lead negotiator, who testified about an original lenders’ lead negotiator’s construction of the prepayment provision.

There is also no question that the borrowers are entitled to prejudgment interest after September 2009, Tinder wrote, and that the lender is not entitled to attorney fees.



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  1. Joe, you might want to do some reading on the fate of Hoosier whistleblowers before you get your expectations raised up.

  2. I had a hospital and dcs caseworker falsify reports that my child was born with drugs in her system. I filed a complaint with the Indiana department of health....and they found that the hospital falsified drug screens in their investigation. Then I filed a complaint with human health services in Washington DC...dcs drug Testing is unregulated and is indicating false positives...they are currently being investigated by human health services. Then I located an attorney and signed contracts one month ago to sue dcs and Anderson community hospital. Once the suit is filed I am taking out a loan against the suit and paying a law firm to file a writ of mandamus challenging the courts jurisdiction to invoke chins case against me. I also forwarded evidence to a u.s. senator who contacted hhs to push an investigation faster. Once the lawsuit is filed local news stations will be running coverage on the situation. Easy day....people will be losing their jobs soon...and judge pancol...who has attempted to cover up what has happened will also be in trouble. The drug testing is a kids for cash and federal funding situation.

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