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SECOND DIVISION
Date Filed: June 21, 2005

No. 1-04-2818

JUSTICE HALL delivered the opinion of the court:

The plaintiff, R&B Kapital Development LLC, appeals fromorders of the circuit court of Cook County dismissing its amendedcomplaint for negligent misrepresentation, breach of fiduciaryduty and breach of contract against the defendants, North ShoreCommunity Bank and Trust Company (North Shore) and Chicago Titleand Trust Company (Chicago Title). On appeal, the plaintiffraises the following issues: (1) whether the Credit AgreementsAct (the Act) (815 ILCS 160/0.01 et seq. (West 2004)) bars countsI and II of the amended complaint; (2) whether the amendedcomplaint alleged sufficient facts to support causes of actionfor negligent misrepresentation and breach of fiduciary duty; and(3) whether waiver and estoppel defenses bar the plaintiff'scause of action for breach of the escrow agreement. Thepertinent factual allegations of the amended complaint are setforth below.

In the fall of 2000, Robert Beevers, the plaintiff's agent,applied for a construction loan at North Shore for the renovationof property owned by the plaintiff. Mr. Beevers dealt with AnnTyler, the loan administration officer, and Lauretta Burke,senior vice-president of North Shore. During the processing ofthe loan, Mr. Beevers apprised North Shore of the plaintiff'sprior bad experiences in its dealings with construction companiesand construction financing. Either or both Ms. Tyler and Ms.Burke represented to Mr. Beevers that North Shore was experiencedin construction financing and would assist the plaintiff insetting up a secure procedure. North Shore prepared aconstruction loan escrow trust and disbursing agreement (theescrow agreement). The escrow agreement provided that ChicagoTitle would act as the disbursing agent for the construction andrelated development costs. The plaintiff and North Shoreexecuted the escrow agreement on October 16, 2000.

On December 6, 2000, based on the representations of NorthShore and its officers, the plaintiff executed the loandocuments, which included a disbursement request andauthorization. The disbursement request authorized $981,505 inloan funds to be issued to Chicago Title to fund the escrow. Atthe time of the closing of the loan, North Shore paid foursubcontractors, all of whom had been hired by the plaintiff'sprevious general contractor. Ms. Tyler collected and inspectedthe subcontractors' lien waivers and authorized payment to them. The plaintiff's new general contractor, Tenant Improvements, wasalso paid for work to date, leaving a balance of $581,109.25 inthe escrow.

Ms. Tyler established a procedure for the construction drawsagainst the escrow. North Shore would fill out an "OwnersPayment Authorization," a "Sworn Owner's Statement to ChicagoTitle Insurance Company" and a "Certificate of Completion." Ms.Tyler would fax the documents to Mr. Beevers to verify that thework identified on the documents was complete and, if so, he wasto execute the documents on behalf of the plaintiff. Under thisprocedure, payments from the escrow were made to TenantImprovements, $150,000; Edwards Engineering, Inc., $143,000; andanother $215,000 to Tenant Improvements. While the work had beencompleted, Mr. Beevers had no way of knowing that thesubcontractors were not listed for payment and were not going tobe paid; he relied on Ms. Tyler's representations that the properconstruction loan procedure had been established.

At the time of each construction draw, Ms. Tyler dealt withJames Sugrue, president of Tenant Improvements, but she failed toascertain which subcontractors were being paid from the draws andfailed to request or examine any lien waivers. Neither defendantprovided the plaintiff with a sworn statement by the generalcontractor setting forth the names, addresses of and the amountsdue to the subcontractors hired by Tenant Improvements, eventhough both defendants were aware that there were subcontractorshired by Tenant Improvements working on the project. The balanceof the escrow was paid to Edwards Engineering.

In April 2001, Tenant Improvements stopped work on theplaintiff's property without having finished the project and thenliquidated its assets for the benefit of its creditors. BetweenMay 2001 and January 2002, the plaintiff received notices ofmechanics' liens from subcontractors hired by Tenant Improvementsbut who had not been paid for their work on the project. Afterreceiving the first of these notices, Mr. Beevers contacted Ms.Tyler, who assured him that Chicago Title was paying thesubcontractors through the escrow. An attorney for North Shorecontacted Mr. Beevers and advised him that Chicago Title was atfault for failing to pay the subcontractors directly. Theoutstanding mechanics' liens totaled $708,783.54.

Counts I and II of the amended complaint were directedagainst North Shore. Count I alleged negligent misrepresentationin that North Shore, through its agents Ms. Tyler and/or Ms.Burke:

"falsely represented that it would:

a. Use a construction escrow to ensure that loandisbursements would be properly made to pay for materialsand supplies,

b. Process escrow payments to make sure that thesubcontractors received payments for their work, and

c. Otherwise act professionally and responsibly toassist plaintiff in applying the construction loan proceedsto the proper recipients upon the proper paperwork."

Count II alleged a breach of fiduciary duty in that, based on therepresentations of Ms. Tyler and Ms. Burke, the plaintiff placedits faith and trust in them and followed their recommendationsfor disbursement of the loan proceeds.

Count III was directed at Chicago Title and alleged that theescrow agreement required Chicago Title to review the necessarydocumentation to make proper disbursements and specificallyrequired Chicago Title to disburse the funds to thesubcontractors. It further alleged that Chicago Title breachedthe escrow agreement when it disbursed a total of $537,030.25 toTenant Improvements, the general contractor.

North Shore filed a motion to dismiss pursuant to section 2-619.1 of the Code of Civil Procedure (Code) (735 ILCS 5/2-619.1(West 2004)). In its motion, North Shore maintained that it wasentitled to judgment on the pleadings (735 ILCS 5/2-615(e) (West2004)) and dismissal of the complaint pursuant to sections 2-619(a)(7) and (a)(9) of the Code (735 ILCS 5/2-619(a)(7), (a)(9)(West 2004)). North Shore argued that the amended complaint wasbarred under the Act (815 ILCS 160/0.01 et seq. (West 2004)) andthat the allegations of the amended complaint failed to state acause of action for negligent misrepresentation or for breach offiduciary duty.

Chicago Title filed a motion to dismiss count III of theamended complaint pursuant to section 2-615 of the Code (735 ILCS5/2-615 (West 2004)). Chicago Title argued that count III shouldbe dismissed because the plaintiff authorized it to disbursefunds to Tenant Improvements.

The court denied North Shore's motion for judgment on thepleadings but granted its motion to dismiss pursuant to section2-619. Subsequently, the circuit court granted Chicago Title'smotion to dismiss pursuant to section 2-615. The plaintiff fileda timely notice of appeal from both orders.

The plaintiff contends that the Act does not bar counts Iand II of the amended complaint because the escrow agreement isnot a credit agreement as defined by the Act. The issue ofwhether an escrow agreement is a credit agreement under the Acthas not previously been addressed by our Illinois courts.

The construction of a statute is a question of law for whichthe standard of review is de novo. See Quad Cities Open, Inc. v.City of Silvis, 208 Ill. 2d 498, 508, 804 N.E.2d 499 (2004).

Section 2 of the Act states as follows:

"A debtor may not maintain an action on or in any wayrelated to a credit agreement unless the credit agreement isin writing, expresses an agreement or commitment to lendmoney or extend credit or delay or forbear repayment ofmoney, sets forth the relevant terms and conditions, and issigned by the creditor and the debtor." 815 ILCS 160/2(West 2004).

Under the Act, a credit agreement means "an agreement orcommitment by a creditor to lend money or extend credit or delayor forbear repayment of money not primarily for personal, familyor household purposes, and not in connection with the issuance ofcredit cards." 815 ILCS 160/1(1) (West 2004).

In construing the meaning of a statute, the primaryobjective of the court is to ascertain and give effect to theintention of the legislature. In re Detention of Lieberman, 201Ill. 2d 300, 307, 776 N.E.2d 218 (2002). The court's inquirymust always begin with the language of the statute, which is thesurest and most reliable indicator of legislative intent. Revolution Portfolio, LLC v. Beale, 332 Ill. App. 3d 595, 603,774 N.E.2d 14 (2002). The language of a statute must be givenits plain and ordinary meaning, and where the statutory languageis clear and unambiguous, the court has no occasion to resort toaids of construction. Beale, 332 Ill. App. 3d at 603.

Beginning with First National Bank in Staunton v. McBrideChevrolet, Inc., 267 Ill. App. 3d 367, 642 N.E.2d 138 (1994),Illinois courts have relied on the broad language of the Act indetermining whether a credit agreement was entered into by theparties. In McBride Chevrolet, Inc., the reviewing court foundthat a bank officer's promise to hold a check overnight was acredit agreement under the Act and held that the Act barred thedefendants' counterclaim for tortious interference with abusiness relationship based on the bank's failure to honor itspromise to hold the check. The court rejected the defendants'arguments that the promise was not a credit agreement under theAct and that the counterclaim was not barred by the statute offrauds, stating as follows:

"The Act, however, is broadly worded. It bars actions by adebtor 'on or in any way related to a credit agreement'unless there is a written agreement. [Citation.] There isno limitation as to the type of actions by a debtor whichare barred by the Act, so long as the action is in any wayrelated to a credit agreement. This is in contrast to thelanguage of section 1 of the Frauds Act, which bars actionsupon certain agreements which are not in writing.[Citation.] The language of the Act bars all actions by adebtor based on, or related to, an oral credit agreement. *** Therefore, all actions which depend for their existenceupon an oral credit agreement are barred by the Act." (Emphasis in original.) McBride Chevrolet, Inc., 267 Ill.App. 3d at 372.

In McAloon v. Northwest Bancorp, Inc., 274 Ill. App. 3d 758,654 N.E.2d 1091 (1995), the reviewing court found the Act barredthe plaintiff's actions for breach of contract, common law fraudand misrepresentation. The suit was based on the defendant'sbreach of an oral agreement to lend funds. The court held thatthe Act barred traditional exceptions to the Frauds Act. Thecourt agreed with McBride Chevrolet, Inc., that "enforcing theAct as written causes harsh results for bank customers in somecircumstances, but the Act is very broadly worded and dictatessuch a result." McAloon, 274 Ill. App. 3d at 765; see also Klemv. First National Bank of Chicago, 275 Ill. App. 3d 64, 655N.E.2d 1211 (1995) (Act barred former employee's oral agreementwith former employer to provide credit for new venture); TeachersInsurance & Annuity Ass'n of America v. LaSalle National Bank,295 Ill. App. 3d 61, 691 N.E.2d 881 (1998) (rejecting cases thatconstrued Minnesota's similar statute to permit borrowers toassert counterclaims and affirmative defenses based on creditagreements in lender suits).

In Bank One, Springfield v. Roscetti, 309 Ill. App. 3d 1048,723 N.E.2d 755 (1999), the reviewing court reversed the circuitcourt's finding that the Act did not apply to a loan guaranty. Analyzing the state and federal cases construing the Act, thereviewing court observed that a "credit agreement often consistsof several documents that, together, create the terms of theextension of credit. The documents are, in many instances,conditioned upon each other, and a default under one is usually adefault under all. Significantly, the Act does not limit thedefinition of 'credit agreement' to being a single document." Roscetti, 309 Ill. App. 3d at 1058. The court found that, sincethe guaranty was a condition precedent to the loan and without itthere would have been no credit agreement at all, the guaranty,together with the note, the floor plan, and possibly otherdocuments, constituted the comprehensive credit agreement. Moreover, the guaranty contained an integration claim thatintegrated it with any "'related documents.'" Roscetti, 309 Ill.App. 3d at 1058.

In Nordstrom v. Wauconda National Bank, 282 Ill. App. 3d 142,145, 668 N.E.2d 586 (1996), the reviewing court addressed theissue in a context similar to the case before us. The courtdetermined that while an agreement to obtain insurance was not,itself, a credit agreement, the requirement of insurance for thecollateral was an integral part of the credit agreement. Theplaintiff could not maintain an action alleging promissoryestoppel or breach of contract based on the promise of themortgagee's agent to provide the insurance because the oralmodification agreement was related to the credit agreement, andthe claims predicated on it were barred by the Act. Nordstrom,282 Ill. App. 3d at 145-46.

Similarly, in this case, the escrow agreement was anintegral part of the construction loan. Article 2, section A, ofthe escrow agreement set forth that the plaintiff had placed amortgage on the property and that for the benefit of North Shoreand the plaintiff, Chicago Title "has been requested to provide adisbursing service as a means to pay for construction and relateddevelopment costs." The plaintiff's mortgage with North Shoreprovides in pertinent part as follows:

"Related Documents. The words 'Related Documents' meanand include without limitation all promissory notes, creditagreements, loan agreements, environmental agreements,guaranties, security agreements, mortgages, deeds of trust,and all other instruments, agreements and documents, whethernow or hereafter existing, executed in connection with theindebtedness." (Emphasis added.)

The loan documents also included a disbursement request andauthorization to disburse funds to the plaintiff "via CHICAGOTITLE" in the amount of $981,505. There is no dispute that thesum was to fund the construction escrow. The mortgage provisionand the disbursement request and authorization persuade us thatthe escrow agreement was an integral part of the comprehensivecredit agreement the plaintiff entered into with North Shore. Finally, although the escrow agreement was executed prior to thenote and the mortgage, the use of the escrow agreement as part ofthe loan transaction was a direct result of the constructionfinancing the plaintiff sought from North Shore.

In light of the broad language of the Act and in keepingwith the line of cases thus far interpreting the Act, wedetermine that the plaintiff's alleged causes of action fornegligent misrepresentation and breach of fiduciary duty arebarred by the Act because they are based on oral statementsrelated to a credit agreement.

Finally, the plaintiff maintains that the existence of acredit agreement between the parties does not insulate lendersfrom claims, relying on Davis v. Merrill Lynch BusinessFinancial Services, Inc., No. O3 C 2680 (N.D. Ill. February 13,2004). The plaintiff's reliance is misplaced. In holding thatcertain claims were not barred by the Act, the district courtnoted that those claims were not premised on oral statements bythe defendant.

We conclude that counts I and II of the amended complaintare barred by the Act, and therefore, the circuit court did noterr in dismissing those counts. In light of our determination,we need not address whether the plaintiff's complaint states acause of action for negligent misrepresentation or breach offiduciary duty.

The granting of a motion to dismiss a complaint pursuant tosection 2-615 of the Code is reviewed de novo. Carroll v. Faust,311 Ill. App. 3d 679, 684, 725 N.E.2d 764 (2000).

"When the legal sufficiency of a complaint is challenged bya section 2-615 motion to dismiss, all well-pleaded facts allegedin the complaint are taken as true." Carroll, 311 Ill. App. 3dat 684. "On review of a section 2-615 dismissal, the reviewingcourt must determine whether the allegations of the complaint,when interpreted in a light most favorable to the plaintiff,sufficiently set forth a cause of action on which relief may begranted." Carroll, 311 Ill. App. 3d at 684. "The motion shouldbe granted only if the plaintiff can prove no set of facts tosupport the cause of action asserted." Carroll, 311 Ill. App. 3dat 684. "This process does not require the reviewing court toweigh findings of fact or determine credibility, and, as such, itis not required to defer to the trial court's judgment." Carroll, 311 Ill. App. 3d at 684.

The escrow agreement provided in pertinent part as follows:

"The parties hereto (North Shore and the plaintiff)agree that Escrow Trustee (Chicago Title) will disburseTrust deposits made for construction payment tosubcontractors. In the event that the General Contractorand any subcontractor jointly authorize the Escrow Trusteeto pay any funds due one to the other, the Escrow Trusteemay comply with such authorization."

The escrow agreement named Tenant Improvements as the "generalcontractor." The escrow agreement further provided that, priorto the initial disbursement of funds, the plaintiff was requiredto furnish North Shore and Chicago Title with:

"a Sworn Owner's Statement disclosing the variouscontracts entered into by the Owner/Borrower relating to theconstruction of the Project and setting forth the names ofthe contractors, their addresses, the kind of service, workor materials to be furnished, the amounts of such contracts,the amounts paid to date, if any, the amounts of currentpayments, if any, and the balances to become due, if any"

and

"a sworn statement to the Owner by the GeneralContractor setting forth the names and addresses of suchpersons furnishing labor, service or materials (i.e.subtrades and material suppliers), the kind of labor,service or materials to be furnished, the amounts of thecontracts, amounts paid to date, if any, amounts of currentpayments, if any, and balances to become due if any."

Thereafter, for disbursements from the escrow, the plaintiffwas required to furnish Chicago Title with the following: (1) acurrent dated sworn owner's statement; (2) a current dated swornstatement to owner by contractor; (3) sufficient funds to coverthe requested disbursement; (4) written approval by the plaintiffof the current construction draw; (5) certification that the workhad been completed; and (6) "[s]tatements, waivers, affidavits,supporting waivers, and releases of lien from such persons" forthe purposes of extending title insurance.

In its motion to dismiss, Chicago Title argued that theplaintiff had waived the contractual provision requiring it topay only subcontractors by specifically directing Chicago Titleto pay Tenant Improvements. Chicago argued further that, becauseit relied on the plaintiff's direction to pay TenantImprovements, the plaintiff was estopped from asserting anyclaim against Chicago Title based on those payments.

Waiver and equitable estoppel are affirmative defenses andunder Illinois law must be affirmatively pled or they are waived. Hubble v. O'Connor, 291 Ill. App. 3d 974, 684 N.E.2d 816 (1997). In this case, Chicago Title did not raise these defenses in ananswer but used them as the basis of its section 2-615 motion todismiss. An affirmative defense is properly asserted in asection 2-615 motion only if the defense is apparent from theface of the complaint. Advocate Health & Hospitals Corp. v. BankOne, N.A., 348 Ill. App. 3d 755, 810 N.E.2d 500 (2004); Senese v.Climatemp, Inc., 222 Ill. App. 3d 302, 582 N.E.2d 1180 (1991)(laches properly raised in section 2-615 motion where anunreasonable delay appeared on the face of the complaint and theplaintiff failed to explain the delay).

The amended complaint alleged that Chicago Title breachedthe escrow agreement when it issued $537,030.25 in disbursementsfrom the escrow directly to the general contractor, TenantImprovements, by failing to review the contractor's affidavitsand failing to request subcontractor waiver of liens at the timeof disbursing the funds to Tenant Improvements. The amendedcomplaint further alleged that Chicago Title knew or should haveknow that Tenant Improvements was not the sole contractor on theproject, that subcontractors would have to be retained, andmaterials supplies had to be furnished by other companies. Theescrow agreement was attached as an exhibit. Also attached asexhibits were sworn owner's statements and owner's authorizationssigned by Mr. Beevers on behalf of the plaintiff authorizingpayments to Tenant Improvements.

Chicago Title argues that the plaintiff's authorizations,via Mr. Beevers, of the payments to Tenant Improvements,contained in the exhibits to the amended complaint, were a clearmanifestation of its intention to waive the requirements of theescrow agreement. Exhibits attached to the complaint become apart of the complaint and will also be considered. Brock v.Anderson Road Ass'n, 287 Ill. App. 3d 16, 21, 677 N.E.2d 985(1997) (abrogation on other grounds recognized in Albers v.Breen, 346 Ill. App. 3d 799, 806 N.E.2d 667 (2004)). An exhibitattached to a complaint controls, and a motion to dismiss doesnot admit allegations of the complaint if such allegations are inconflict with the facts disclosed in the exhibit. Brock, 287Ill. App. 3d at 21.

Waiver is the voluntary and intentional relinquishment of aknown right inconsistent with an intent to enforce that right. In re Nitz, 317 Ill. App. 3d 119, 130, 739 N.E.2d 93 (2000). "Parties to a contract have the power to waive provisions placedin the contract for their benefit, and such a waiver may beestablished by conduct indicating that strict compliance with thecontractual provisions will not be required." Nitz, 317 Ill.App. 3d at 130. "The party claiming the implied waiver has theburden of proving a clear, unequivocal, and decisive act of itsopponent manifesting an intention to waive its rights." Nitz,317 Ill. App. 3d at 130.

The doctrine of equitable estoppel prevents a party fromasserting a right it would otherwise be able to assert. Hubble,291 Ill. App. 3d at 986. In order to establish equitableestoppel, the party must show that it was led to detrimentallyrely upon the conduct or statements of the opposing party andthat such reliance was in good faith. Hubble, 291 Ill. App. 3dat 986-87. It is established that "'"[a] party claiming thebenefit of an estoppel cannot shut his eyes to obvious facts, orneglect to seek information that is easily accessible, and thencharge his ignorance to others."'" Hubble, 291 Ill. App. 3d at987, quoting Vaughan v. Speaker, 126 Ill. 2d 150, 169, 533 N.E.2d885 (1988) (Ryan, J., specially concurring), quoting Vail v.Northwestern Mutual Life Insurance Co., 192 Ill. 567, 570, 61N.E. 651 (1901). Thus, to benefit from equitable estoppel, theparty claiming it must have "'had no knowledge or means ofknowing the true facts." Hubble, 291 Ill. App. 3d at 987,quoting Lissner v. Michael Reese Hospital & Medical Center, 182Ill. App. 3d 196, 207, 537 N.E.2d 1002 (1989).

Article 3(B)(2) of the escrow agreement provided that beforeChicago Title could disburse funds from the escrow, the plaintiffwas required to furnish it, inter alia with a "current datedSworn Statement to Owner by the General Contractor." Thisdocument would have listed the subcontractors and the materialsuppliers. The amended complaint alleged the documents plaintiffwas to furnish to Chicago Title were prepared by North Shore andfaxed to Mr. Beevers for signature. From the allegations in theamended complaint, a sworn statement to owner by generalcontractor was never sent to Mr. Beevers for signature.

"In order to determine the applicability of waiver, one mustfocus on the conduct of the nonbreaching party." Nitz, 317 Ill.App. 3d at 130. The plaintiff does not dispute that it approvedat least two draws to be paid to Tenant Improvements. However,according to the facts alleged in the amended complaint, ChicagoTitle disbursed funds from the escrow fund without questioningthe plaintiff or North Shore as to the absence of a swornstatement by the general contractor to the owner setting forththe names, addresses and amounts due the subcontractors hired byTenant Improvements.

The facts in the amended complaint and the exhibits do notestablish that the plaintiff clearly intended to waive any of therequirements of the escrow agreement. Since the affirmativedefenses of waiver and estoppel do not appear on the face of thecomplaint, the circuit court erred when it granted ChicagoTitle's section 2-615 motion to dismiss.

In the alternative, Chicago Title argues that the amendedcomplaint fails to allege a breach of the escrow agreement andthat Chicago Title had no duty to provide lien waivers. However,the amended complaint alleged that Chicago Title breached theescrow agreement when it "wrongfully issued disbursements fromthe trust account directly to the general contractor." Thisallegation is supported by the exhibits attached to the complaintshowing that Chicago Title paid the general contractor and disbursed funds in the absence of the sworn statement by thegeneral contractor to the owner. Therefore, the circuit courterred when it granted Chicago Title's section 2-615 motion todismiss.

We affirm the order dismissing counts I and II of theamended complaint. We reverse the order dismissing count III ofthe amended complaint and remand the cause for furtherproceedings.

Affirmed in part and reversed and remanded in part.

BURKE, P.J., and WOLFSON, J., concur.