Heller Financial, Inc. v. Lee

United States District Court for the Northern District of Illinois

2002 WL 1888591 (N.D. Ill. 2002)

A nonrecourse loan may contain provisions making the borrower personally liable for the debt.

Relevant Facts

Royal Plaza, Limited and Maddlee, Incorporated (the defendant) was formed to purchase a hotel. To finance the purchase, the defendant secured a nonrecourse loan for $9.9 million from Heller Financial, Incorporated (the plaintiff). The loan provided that the defendants would be personally liable in the event any liens were placed on the property during the term of the loan. The hotel was subsequently purchased and managed by a third party. During the term of the loan, six liens were placed on the property. The plaintiff, upon discovering the liens, notified the defendants of the default and demanded a balance of the loan. The hotel was sold at a public sale whereby the plaintiff received the proceeds. However, the proceeds were insufficient to cover the balance of the debt. Accordingly, the plaintiff sued under the loan agreement. The trial court denied the defendants’ motion for summary judgment, but granted the plaintiff’s cross-motion for partial summary judgment. The defendants appealed.

Issue

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Holding & Reasoning

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Concurrence

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Dissent

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Last updated:

December 20, 2020

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Procedural History

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Citations

2002 WL 1888591 (N.D. Ill. 2002)