Classic Cheesecake Company, Inc. v. J.P. Morgan Chase Bank, N.A.

546 F.3d 839 (7th Cir. 2008)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

P, a bakery company, managed to interest several hotels and casinos in Las Vegas in buying its products. P needed additional capital to establish a distribution center in Las Vegas, to hire employees to staff it and to buy additional equipment. P visited a local office of Bank (D), made a pitch, to a vice president named Dowling, for a loan that would be partially guaranteed by the Small Business Administration and therefore would have to be approved by that agency. They emphasized to Dowling that time was of the essence. Dowling asked them for tax returns, accounts receivable, and other documentation in support of the loan application, and having received the documents she orally assured P that the loan would be approved, provided that student loans of one of the principals were paid off--a condition on which the Small Business Administration insisted because the loans had been financed in part by the federal government and were in default. On September 17 Dowling said the loan was a 'go,' and three days later one of P's principals asked Dowling to request that letters from the student loan agencies confirming that the loans had been repaid be sent directly to Dowling 'to speed up the confirmation process.' P knew that Dowling's saying the loan was 'a go' did not mean that the loan had been approved. On August 19, Dowling's superior at the bank had told her it was a no go. He added that he had discussed the matter with the SBA had the same issues and concerns. Dowling said nothing to P and continued to make verbal assurances that the loan would be approved. The loan was turned down on October 12th. P sued D. It claims that the breach delayed it from seeking loans elsewhere for a critical two and a half months and that as a result of the delay P incurred in the aggregate a loss of more than $1 million. Ps also charge that Dowling's assurance that the loan was 'a go' when she knew it had been at least tentatively rejected was fraudulent, and therefore tortious. P got a judgment and a small damages award and appealed.