IN THE COURT OF CLAIMS OF THE STATE OF ILLINOIS UNION PLANTERS BANK, N.A., Claimant, 3 vs. No. 05-CC-3350 DEPARTMENT OF NATURAL RESOURCES, STATE OF ILLINOIS, Respondent. i UNION MOTION FOR SUMMARY JUDGMENT COMES NOW Claimant, Union Planters Bank, NA, as successor in interest to The First National Bank of Wood River (?Union Planters?), pursuant to 735 ILCS and states as follows for its Motion for Summary Judgment. 1. A Memorandum in Support of this Motion is ?led and served on opposing counsel contemporaneously with this Motion. The Memorandum in Support is incorporated by this reference as if fully set forth herein. 2. Union Planters allegedly issued a letter of credit to the Illinois Department of Mines and Minerals n/k/a the Department of Natural Resources (?Department?) dated December 12, 1985 up to the amount of $320,608.00 (?Letter of Credit?). 3. The Letter of Credit expired by its terms on December 12, 1987. 4. Union Planters is entitled to judgment as a matter of law for any one of the following reasons: a. The Department waited seventeen years and three months after the Letter of Credit expired before it noti?ed Union Planters that it intended to present the Letter of Credit for payment; b. To date, the Department has failed to provide the statement required for presentment under the express terms of the Letter of Credit; and c. The Department waited nineteen years and three months after the Letter of Credit was issued before inquiring about presentment. This nineteen year delay is unreasonable and bars the Department?s right to payment. 5. Accordingly, the Department is not entitled to payment on the expired Letter of Credit, as a matter of law. WHEREFORE, for all the reasons set forth herein and in the accompanying Memorandum in Support, Union Planters respectfully requests the Court to grant its Motion for Summary Judgment pursuant to 735 ILCS and enter an Order declaring that the Letter of Credit expired on December 12, 1987, that Union Planters has no payment obligations to the Department thereunder, and for such other relief as the Court deems just. Respectfully submitted, GREENSFELDER, HEMKER GALE, P.C. By Wax/gay WMWU William A. Schmitt, #02494655 Michelle L. Rousseau, #6274630 12 Wolf Creek Drive, Suite 100 Belleville, Illinois 62226 Telephone: (618) 257-7308 Facsimile: (618) 257-7353 ATTORNEYS FOR UNION PLAN ERS BANK, N.A. CERTIFICATE OF SERVICE The undersigned certi?es that Union Planters? Motion for Summary Judgment, a copy of which is attached hereto, was served by enclosing the same in an envelope addressed to all parties listed below at their last known addresses with postage fully prepaid and by depositing said envelope in a United States Post Of?ce Mailbox in Swansea, Illinois, on the 19th day of July, 2007, to: Bradley R. Bucher Assistant Attorney General 500 South Second Street Spring?eld, Illinois 62706 IN THE COURT OF CLAIMS OF THE STATE OF ILLINOIS UNION PLANTERS BANK, N.A., Claimant, vs. No. 05-CC-3350 DEPARTMENT OF NATURAL RESOURCES, STATE OF ILLINOIS, Respondent. MEMORANDUM IN SUPPORT OF UNION MOTION FOR SUMMARY JUDGMENT This Memorandum is submitted by Claimant, Union Planters Bank, NA, as successor in interest to The First National Bank of Wood River (?Union Planters?), in support of its Motion for Summary Judgment pursuant to 735 ILCS I. INTRODUCTION Union Planters allegedly issued a letter of credit to the Illinois Department of Mines and Minerals n/k/a the Department of Natural Resources (?Department?) dated December 12, 1985 up to the amount of $320,608.00 (?Letter of Credit?). A true and correct copy of the purported Letter of Credit is attached to the Complaint and this Motion as Exhibit A. Seventeen years and three months after the Letter of Credit expired, the Department noti?ed Union Planters, by letter dated March 29, 2005, that it intended to present the Letter of Credit to Union Planters for payment. A copy of the Department?s letter is attached to the Complaint and this Motion as Exhibit B. The Letter of Credit expressly provides that it ?will automatically extend for an additional term of One (1) year unless the Bank provides at least ninety (90) days notice prior to the expiration date.? (Ex. A) (emphasis added). By virtue of this language the initial term of the Letter Credit was for one year. Therefore, the latest date upon which the Letter of Credit could have been presented for payment was December 12, 1987, two years after it was issued. The Department is not entitled to payment on this expired Letter of Credit, as a matter of law. II. ARGUMENT A. Standard for Summary Judgment ?Summary judgment is proper only where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.? Stein V. Scott, 252 Ill. App. 3d 611, 615 (15t Dist. 1993); Wheaton Nat?l Bank v. Aarvold. 38 Ill. App. 3d 658, 663 (2nd Dist. 1976) (?Summary judgment is properly granted when the record presents purely questions of law or where the only disputed issues of fact do not relate to relevant matters?). When no genuine issue of fact exists, a motion for summary judgment should be granted and the cause terminated for the moving party. First Nat?] Bank of Peoria v. Bessler, 69 Ill. App. 3d 125, 128 (3rd Dist. 1979). ?The purpose of the summary judgment procedure is to promote ef?cient and economic use of the judicial system.? 1g. The Letter of Credit at issue in this case expired by its term seventeen years and three months years prior to the Department?s letter to Union Planters. Therefore, Union Planters is entitled to judgment as a matter of law. B. The Letter of Credit Expired On December 12, 1987, As A Matter Of Law. letter of credit is a contract which obligates the issuer to pay in the event of a default by the customer, who procured the letter?s issuance.? Molter Corp. v. Amwest Surety Ins. Co., 267 Ill. App. 3d 718, 721 (3d Dist. 1994). In construing the nature and terms of a letter of credit, the same general principles apply that govern other written contracts. 1d. ?Where the terms of a contract are clear and unambiguous, the terms alone will determine the duties of the parties.? id. Where the question before the court involves one of construction, a court may ascertain the meaning of the contract from the instrument itself as a matter of law. Newcastle Properties, Inc. v. Shalowitz, 221 Ill. App. 3d 716, 722-723 (lSt Dist. 1991). A construction which makes the effect of a letter of credit more equitable is preferred to one that causes a result that is inequitable. Transparent Prod. v. Pavsaver Credit Union, 1988 WL 6692 *2 1988). The terms and conditions of the letter of credit govern the bank?s obligation to pay. Christenson v. Broadway Bank__and Trust Co., 129 Ill. App. 3d 928, 930 (1St Dist. 1984) (concluding bank had no obligation to pay under the letter of credit beyond it?s expiration date). Where an expiration date is ?xed in a letter of credit, such provision becomes an important condition, and there must be strict compliance before there can be liability for payment. m. at 930?931. Here, the Letter of Credit expressly provides as follows: ?This Letter of Credit will automatically extend for an additional term of One (1) year unless the 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.? (Ex. A) (emphasis added). This provision indicates that the initial term of the Letter of Credit was for one year and would automatically extend for ?an additional term of One (1) year? unless the bank provided notice. (Ex. A). The Letter of Credit is dated December 12, 1985. (Ex. A). Thus, the absolute latest date of expiration was December 12, 1987 two years after the date of issuance. The Department ?rst contacted Union Planters regarding presentation of the Letter of Credit by letter dated March 29, 2005, seventeen years and three months after the Letter of Credit expired. (Ex. B). There is nothing in the record that reflects that the Department presented the Letter of Credit or otherwise contacted the bank regarding the Letter of Credit prior to March 29, 2005.1 Notably, the Department does not suggest otherwise. The Letter of Credit also provides that ?[t]he Department has the right to draw this Irrevocable Letter of Credit in the event Permittee does not replace this Irrevocable Letter of credit prior to thirty (30) days before the expiration of the Irrevocable Letter of Credit with a replacement bond.? (Ex. A) (emphasis added). This phrase clearly contemplates that the Letter of Credit was not inde?nite, but would expire at a given time, as it did on December 12, 1987, more than seventeen years before the Department?s letter. Therefore, the Department is not entitled to payment under the Letter of Credit, as a matter of law. Furthermore, documents that are presented by the bene?ciary of a letter of credit must comply with those stipulated in its terms. ?e Christenson, 129 Ill. App. 3d at 930. The Letter of Credit requires the Department to present a sight draft that ?include[s] a signed statement from the Department that the Perrnittee?s [Sure?re Coal, Inc] acts or failures to actwarrant forfeiture of this Irrevocable Letter of Credit, pursuant to 62 Ill. Admin. Code 1806.12(c) and 1808.13.? (Ex. A). The Department has yet to provide such a statement to Union Planters, although more than nineteen years has passed since the Letter of Credit expired. The Department?s letter clearly fails to comply with the terms of the Letter of Credit. For this additional reason, the Department is not entitled to payment, as a matter of law. 1 Union Planters served a request for production on the Department requesting ?all correspondence, emails, or other written communications by or between respondent (or any of respondent?s predecessors) and claimant (and any of claimant?s predecessors) which do or may relate to the facts of this lawsuit.? The Department re3ponded by stating that documents responsive to this request are contained on the enclosed compact discs. (Ex. C). The Department did not produce any correspondence or other communications from the Department to Union Planters or its predessor banks regarding the Letter of Credit other than the March 29, 2005 letter. C. The Department Failed To Demand Payment Within A Reasonable Amount of Time, As A Matter Of Law. Even assuming solely for the sake of argument that the Letter of Credit did not contain an expiration date, the Department failed to demand payment within a reasonable amount of time, as a matter of law. In the absence of a ?xed expiration date in a letter of credit, the law will read into the instrument a provision that it was to be presented for payment within a reasonable amount of time.2 Lamborn v. Nat?l Park Bank of New York, 240 NY. 520, 526 (N .Y. 1925); s_e_e also Transparent Products. 1988 WL 6692 at (holding plaintiff?s failure to request payment on letter on letter of credit for more than one year after it was issued was unreasonable). As discussed above, the Department waited until March 29, 2005, nineteen years and three months after the Letter of Credit was issued, before inquiring about presentment. If a little more than one year is unreasonable, it necessarily follows that waiting more than nineteen years is manifestly unreasonable. Accordingly, the Department?s delay in presenting the Letter of Credit bars its right to payment. 2 It is worth noting that the current version of the Uniform Commercial Code provides: ?If there is no stated expiration date or other provision that determines its duration, 3 letter of credit expires one year after its stated date of issuance or, if none is stated, a?er the date on which it is issued.? 810 Accordingly, the Department?s claim for payment would also be barred under the current UCC. CONCLUSION For all the foregoing reasons, Union Planters respectfully requests the Court to grant its Motion for Summary Judgment pursuant to 735 ILCS and enter an Order declaring that the Letter of Credit expired on December 12, 1987, that Union Planters has no payment obligations to the Department thereunder, and for such other relief as the Court deems just. Respectfully submitted, GREENSFELDER, HEMKER GALE, P.C. By William A. Schmitt, #02494655 Michelle L. Rousseau, #6274630 12 Wolf Creek Drive, Suite 100 Belleville, Illinois 62226 Telephone: (618) 257?7308 Facsimile: (618) 257-7353 ATTORNEYS FOR CLAIMANT, UNION PLANT ERS BANK, NA. CERTIFICATE OF SERVICE The undersigned certi?es that Union Planters? Memorandum in Support of Motion for Summary Judgment, a copy of which is attached hereto, was served by enclosing the same in an envelope addressed to all parties listed below at their last known addresses with postage fully prepaid and by depositing said envelope in a United States Post Of?ce Mailbox in Swansea, Illinois, on the 19th day of July, 2007, to: Bradley R. Bucher Assistant Attorney General 500 South Second Street Spring?eld, Illinois 62706 jig/@522, (762W RECEIVED . .. - . 0F MINES AND Mir-9mm LAND RECLAMATION an. THE FIR SI MATH QNAL DANK WOOD RIVER. ILL. 62095 December 12, 1985 Irrevocable letter of Credit Amount: $320,608.00 Permit No. 129 Illinois Department of Mines and Minerals Land Reclamation Division 227 South 7th Street Room 201 Springfield, IL 62706 The First National Bank of Wood River, Wood River, IL (Issuing Bank) hereby issues this Irrevocable Letter of Credit to the Illinois Department of Mines and Minerals (Department) for SureFire Coal, Inc. Permit No. 129 (Permittee) . This Irrevocable Letter of Credit authorizes the Department to draw on "the Issuing Bank, up to the amount of $320,608.00, by sight draft presented for payment to the Issuing Bank. The sight draft shall include a signed statement from the Department that the Permittee 3 acts or failures to act warrant forfeiture of this Irrevocable letter of Credit, pursuant to 62 Ill. Admin. Code 1806.12 (0) and 1808.13. The Issuing Bank authorizes the Department, its lawful assigns, or the attorneys for .the Department and its assigns, to sue, to waive notice and process, to appear on behalf of, and to confess judgment against the Issuing Bank, in the event that this Irrevocable Letter of Credit is dishonored. This Irrevocable letter of Credit shall be deemed to be made in Sangamon County, Illinois, for purposes of enforcement and any actions thereon shall be enforce- able in the Courts of Illinois and shall be construed under Illinois law. The Issuing Bank is a national banking corporation operating under charter issued for national banking corporations and conducts its business at the address shown above. The Issuing Bank shall give prompt notice to the Permittee and to the Department of any notice received or action alleging the insolvency or bankruptcy of the Issuing Bank, or alleging any violations of regulatory requirements which could result in suspension or revocation of the Issuing Bank's charter or license to do business. In the event the Issuing Bank becomes unable to fulfill its obligations under this Irrevocable Letter of Credit for any reason, notice shall be given immediately to the Permittee and the Department, provided that such notice shall in no way relieve the Issuing Bank of its obligations under this Irrevocable letter Of Credit. I EXHIBIT 3 El December 12, 1985 Page 2 . Upon the incapacity of the Issuing Bank by reason of bankruptcy, insolven- cy, or suspension or revocation of its charter or license, the Permittee, within thirty (30) days after receiving notice thereof from the Department, shall substitute for this Irrevocable letter of Credit a replacement bond that fully complies with the Department's regulations. Upon the Permittee's failure to submit a replacement bond as herein provided, the Department shall suspend Permit No. 129 until such substitution has been made. This Irrevocable Letter of Credit is a binding obligation on the Issuing Bank, independent of the acts and omissions of the Permittee, payable upon presentment to the Department or its written order. The Department and/ or the State of Illinois shall in no way be obligated to the Issuing Bank or Permittee for repayment of all or any portion thereof subject to the provisions of 62 Ill. AdIdn. Code 1808.14. This Letter of Credit will automatically extend for an additional term of One (1) year unless the 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. The Department has the right to draw this Irrevocable letter of Credit in the event Permittee 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 the Department Regulations, pursuant to 62 Ill. Admin. Code 1806.12(c) and/or 62 I11. Admin. Code 1808.13. FIRST NATI BANK OF men RIVER Ingram Execut?e Vice President Department of . Natural Resources Rod R. Blagojevich, Governor One Natural Resources Way - Spring?eld, Illinois 627024271 Joel Brunsvold, Director March 29, 2005 Union Planters Bank National Association 6200 Poplar Avenue Memphis, TN 38119 Dear Sirs: The Illinois Department of Natural Resources, Of?ce of Mines and Minerals, Land Reclamation Division (Department) regulates mine reclamation and issues permits for mining under the authority of the Surface Coal Mining Land Conservation and Reclamation Act. A mining permit, No. 129, was issued to Sure?re Coal, Inc. by the Department on October 25, 1984. Bonds for permit No. 129 was posted with the Department are as follows: An irrevocable letter of credit written in the amount of $320,608.00 issued by The First National Bank of Wood River Illinois, Certi?cate of Deposit No. 112107 written in the amount of $52,695.59 issued by The First National Bank of Wood River Illinois, and Certi?cate of Deposit No. 15052 written in the amount of $14,665.00 issued by the Bank of Sesser Illinois. The Department has forfeited bonds posted under Sure?re Coal, Inc.'s permit No. 129. In researching the above banks, the Department was referred to the National Information Center, Federal Reserve System which list Union Planters Bank, National Association as the successor to both The First National Bank of Wood River Illinois and the Bank of Sesser Illinois. At this time, the Department is requesting instructions from Union Planters Bank on presentation of the bond instruments for collection to an Illinois of?ce or agent. Enclosed for your reference are copies of the Sure?re Coal, Inc. permit No. 129 bond instruments. Should you have any questions, please feel free to contact Mr. Ernest Ashby at 217-785-5199. Sincerely, Maw? Scott K. Fowler, Supervisor Land Reclamation Division SKF :Eszb cc: J. Hosselton EXHIBIT Printed on recycled and recyclable paper 03290801.de IN THE COURT or CLAIMS or THE STATE OF ILLINOIS UNION PILANTERS BANK, N. A. I Claimant, -vs- I A - - - No.3, O5-CC-33I50 I. STATE OF ILLINOIS, I, Respondent. i .4. RESPONSE TO 3 REQUEST FOR PRODUCTION Now comes the Respondent the State of Illinois by its attorney, Lisa Madigan, Attorney I General forthe State of Illinois and hereby responds to the Claimant' 3 Request for Prdductidn served upon it by the Claimant herein as follows: 1. . All statements reports, teetimony or depositions obtained from any person 'lvVhomIsIoerer which do or may relate to the facts of this lawsuit RESPONSE: I I Documents responsive to this request are contained on the enclosed compact discs. 2. All correspondence, emails, memos or other Written communications by or between respondent(or anyof claImant (and any ofclaimant?s' I - predecessors) which do or may relate to the facts of this- law5uit. I . 3 Documents responsive to this request are contained on the enclosed compact discs. 3 All correspondence, emails, memos or other written communications by or between respondent and SIuIreFire Coal, Inc. (Or any of Its successors or related companies) A. which do or may relate to the facts of this lawsuit. I RESPONSE. Documents responsive to this request are contained on the enclosed compact discs. EXHIBIT 4.- 'Allwrite-ups of interviews of persons which. do or may relate to the facts of this lawsuit. 6 I I I i Documents responsive to this request are contained on the enclosed compact discs. All othercontracts, permits or other documents orwritings which do or 'may relate I to the facts of this lawsuit and in particular to any defense which respondent asSerts to this lawsuit 1 Documents responsive to this request are containedon the enCIosed compact discs. 6. Claimant fUrther requests that an affidavit of compliance be filed In reSponse to _'this request RESPONSE: Verification of Scott Fowler is attached hereto. I - Respectfully submitted, STATE OF ILLINOIS, espondent_ LISA MADIGAN Attorney General, State of Illinois .- . - .- - - 'Attorneyfor Respondent, Bradley Bucher 6220106 . 4 - ASSIstant Attorney General - . - 500 South Second Street . A- . - . (C Springfield, IL 62706 . - BY: . - . (217) 782-1841 . Bhd'lfy R. Bucher . Assistant Attorney General Of-Counsel. -. knoWledge, information and belief. Union Planters Bank, NA. V. State of Illinois - Court of ClaimeNo.? STATE OF ILLINOIS VV . COUNTY OF SANGAMQN VERIFICATION I Scott Fowler, hereby affirm and verify that Respondent' 5 Answers to . Claimant' lnterrogatories and Request for Production are complete to the best of my 343mm" SEAL t: a 1* THESSA HOFFMAN . :r NDTAHYPUQLIC stArE or ILLINOIS Scott Fowler Subscribed and sworn to before me I. this /day of jgmd?oor m. I Notar?45ublic CERTIFICATE OF SERVICE 5. Bradley Bucher Assistant Attorney General, herein certifies that he has served a copy of the foregoing Respondent? Response to Claimant?s Request for Production lupon: WilliamA. Schmitt - 12 Wolf Creek Drive Suite 100 Swansea, IL 62226 by mailing a true copy thereof at the address referred to above in an "envelop-e?duly addressed bearing proper first class postage and deposited in. the United States mail at Springfield, Illinois on January 11, 2007. BradleMucher .. Assistant Attorney General IN THE COURT OF CLAIMS OF THE STATE OF ILLINOIS UNION PLANTERS BANK, N.A., Claimant, vs. i No. 05-CC-3350 DEPARTMENT OF NATURAL RESOURCES, STATE OF ILLINOIS, Respondent. i Upon consideration of the Motion for Summary Judgment and Memorandum in Support ?led herein by Union Planters Bank, NA, as successor in interest to The First National Bank of Wood River (?Union Planters?), the Court being fully advised in the premises and having jurisdiction over all of the parties and the subject matter, hereby ?nds and orders as follows: 1. Union Planters issued a letter of credit to the Illinois Department of Mines and Minerals n/k/a the Department of Natural Resources (?Department?) dated December 12, 1985 up to the amount of $320,608.00 (?Letter of Credit?). 2. Seventeen years and three months after the Letter of Credit expired, the Department noti?ed Union Planters, by letter dated March 29, 2005, that it intended to present the Letter of Credit to Union Planters for payment. 3. The Letter of Credit expressly provides that it ?will automatically extend for an additional term of One (1) year unless the Bank provides at least ninety (90) days notice prior to the expiration date.? By virtue of this language the initial term of the Letter Credit was for one year. Therefore, the latest date upon which the Letter of Credit could have been presented for payment was December 12, 1987, two years after it was issued. IT IS THEREFORE ORDERED, ADJUDGED AND DECREED: A. There is no genuine issue of material fact and Claimant, Union Planters, is entitled to judgment, as a matter of law. B. Accordingly, summary judgment is hereby entered in favor of Claimant, Union Planters, and against Respondent, the Department of Natural Resources, together with an award of costs in favor of Claimant, Union Planters. DATED: 2007. CERTIFICATE OF SERVICE The undersigned certi?es that the Order, a copy of which is attached hereto, was served by enclosing the same in an enveIOpe addressed to all parties listed below at their last known addresses with postage fully prepaid and by depositing said envelope in a United States Post Of?ce Mailbox in Swansea, Illinois, on the 19th day of July, 2007, to: Bradley R. Bucher Assistant Attorney General 500 South Second Street Spring?eld, Illinois 62706 ?mmaww?w