Ford v. Dovenmuehle Mortg., Inc.

• Decision Date: 09 June 1995
• Docket Number: No. 1-93-1457,1-93-1457
• Citation: 651 N.E.2d 751,273 Ill.App.3d 240,209 Ill.Dec. 573
• Parties: , 209 Ill.Dec. 573 Celestine FORD, Plaintiff-Appellant, v. DOVENMUEHLE MORTGAGE, INC., Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 751

651 N.E.2d 751

273 Ill.App.3d 240, 209 Ill.Dec. 573

Celestine FORD, Plaintiff-Appellant, v. DOVENMUEHLE MORTGAGE, INC., Defendant-Appellee.

No. 1-93-1457.

Appellate Court of Illinois First District, Fifth Division.

June 9, 1995.

Daniel A. Edelman, Cathleen M. Combs, Tara G. Redmond, J. Eric Vander Arend, Michelle A. Weinberg, Edelman & Combs, Chicago, Lawrence Walner & Associates, Ltd., for appellant.

James R. Daly, Suzanne S. Greene, Jane D. Wessel, Jones, Day, Reavis & Pogue, Chicago, for appellee.

Justice GORDON delivered the opinion of the court:

Plaintiff, Celestine Ford, filed a two-count complaint alleging that the defendant, Dovenmuehle Mortgage, Inc. (Dovenmuehle), a mortgage service company, breached a Veterans Administration ("VA") guaranteed residential mortgage contract and violated section 2 of the Illinois Consumer Fraud and Deceptive Business Practices Act (the Consumer Fraud Act) (Ill.Rev.Stat.1991, ch. 121 1/2, par. 262 now codified at 815 ILCS 505/2 (West 1992)) by imposing a late charge computed on 4% of the aggregate monthly payment of principal, interest, taxes and insurance ("PITI") rather than 4% of the monthly installment of principal and interest ("P & I"). This appeal is taken from the denial of plaintiff's motion for "classwide summary determination of major issues" and the granting of defendant's cross motion for summary judgment on both counts. ¹

The material facts of this case are undisputed. In 1975, plaintiff obtained a mortgage loan, guaranteed by the Veterans Administration, from Percy Wilson Mortgage and Finance Corporation. The mortgage documents executed at closing consisted of a mortgage contract and a promissory note, which were written on standard VA forms. Dovenmuehle serviced plaintiff's mortgage and assessed late charges against plaintiff's delinquent payments.

The late charge provision of plaintiff's mortgage contract provided in pertinent part:

"Together with, and in addition to, the monthly payments of principal and interest payable under the terms of the note secured hereby, the Mortgagor will pay to the Mortgagee * * * on the first day of each month until the said note is fully paid, the following sums:

(a) A sum equal to the ground rents, if any, next due, plus the premiums that will next become due and payable on policies of fire and other hazard insurance covering the mortgaged property, plus taxes and assessments next due on the mortgaged property * * *

(b) The aggregate of the amounts payable pursuant to subparagraph (a) and those payable on the note secured hereby, shall be paid in a single payment each month, to be applied to the following items in the order stated:

I. ground rents, if any, taxes, assessments, fire, and other hazard insurance premiums;

II. interest on the note secured hereby; and

III. amortization of the principal of the said note.

Any deficiency in the amount of any such aggregate monthly payment shall, unless made good prior to the due date of the next payment, constitute an event of default under this mortgage. At Mortgagee's option, Mortgagor will pay a "late charge" not exceeding four per centum (4%) of any installment when paid more than fifteen (15) days after the due date thereof to cover the extra expense involved in handling delinquent payments * * *."

Plaintiff's motion for "classwide summary determination of major issues," brought pursuant to sections 2-801 and 2-1005(d) of the Code of Civil Procedure (Ill.Rev.Stat.1991, ch. 110, pars. 2-801, 2-1005(d) now 735 ILCS 5/2-801, 5/2-1005(d) (West 1992)), requested summary judgment on the breach of contract count of her complaint. With respect to her request for summary judgment, plaintiff argued that the term "installment" in the late charge clause should be construed to mean principal and interest only since that was how that term was used on page one of the note and mortgage contract and since the late charge clause in the mortgage contract used the term "aggregate monthly payment" to refer to principal, interest, taxes and insurance. Alternatively, the plaintiff argued that the term "installment" was ambiguous and should be construed against the drafter or user of a form contract in accordance with the doctrine of contra proferentum.

Defendant's cross motion for summary judgment on both counts, and its memorandum in support thereof, argued that, as to the breach of contract count, the mortgage contract unambiguously provided for late charges to be assessed on total overdue amounts of principal, interest, taxes and insurance. Defendant alternatively argued that, even if an ambiguity was found to exist, the pertinent extrinsic evidence, including the VA's regulations and interpretations which authorized imposition of late charges on PITI, and the applicable rules of contract construction compelled resolution of the ambiguity in favor of Dovenmuehle. With respect to the consumer fraud count, defendant argued that its late charge practice was clearly authorized by plaintiff's mortgage contract and by the laws administered by the VA, a regulatory body acting under statutory authority of the United States, and, thus, was exempt from the Consumer Fraud Act pursuant to section 10b(1) of that Act (Ill.Rev.Stat.1989, ch. 121 1/2, par. 270b(1) now 815 ILCS 505/10b(1) (West 1992)).

In granting defendant's motion for summary judgment, the trial court found that the documents were not ambiguous. He also rejected plaintiff's argument that the word "installment," as it appeared in those documents, meant principal and interest only. The court ruled that the first use of the word installment, which occurred in the payment clause of those documents, did not define installment but, rather, was a "description of the method and timing of payment of principal and interest." The court further found that the terms installment and payment were used interchangeably throughout the mortgage documents and that those terms took their meaning from "modifying language, context, or both." In the context of the late payment charge provision, the court held that the term installment included the totality of principal, interest, taxes and insurance. While specifically noting that it did not need to resort to extrinsic evidence to interpret the contract terms, the court recognized that its interpretation was permitted by VA regulations as evidenced by an opinion letter from the Solicitor of the VA. That opinion letter also served as a basis for the court's grant of summary judgment to the defendant on count I of plaintiff's complaint alleging consumer fraud violations and the court's finding that the Consumer Fraud Act did not apply.

In accordance with section 2-1005 of the Code of Civil Procedure, summary judgment is to be granted when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. (Ill.Rev.Stat.1991, ch. 110, par. 2-1005(c) now 735 ILCS 5/2-1005(c) (West 1992).) Where the facts are not in dispute, the interpretation of a written contract is a question of law and summary judgment is appropriate. (USG Interiors, Inc. v. Commercial & Architectural Products, Inc. (1993), 241 Ill.App.3d 944, 182 Ill.Dec. 277, 609 N.E.2d 811; Butler v. Economy Fire & Casualty Co. (1990), 199 Ill.App.3d 1015, 146 Ill.Dec. 94, 557 N.E.2d 1281.) Our review in this instance is de novo such that we may make a determination independent of that made by the trial court. Butler; Myers v. Health Specialists, S.C. (1992), 225 Ill.App.3d 68, 167 Ill.Dec. 225, 587 N.E.2d 494.

Where the sole dispute between the parties concerns the meaning of a contract provision, the threshold issue is whether the contract is ambiguous. (USG Interiors, Inc.) In making this determination, the court must construe the contract as a whole, viewing each part in light of the others. (E.g., Board of Trade v. Dow Jones & Co. (1983), 98 Ill.2d 109, 74 Ill.Dec. 582, 456 N.E.2d 84.) An ambiguity is said to exist in a contract when the contract contains language that is susceptible to more than one reasonable interpretation. (Farm Credit Bank v. Whitlock (1991), 144 Ill.2d 440, 163 Ill.Dec. 510, 581 N.E.2d 664; United States Fidelity & Guaranty Co. v. Wilkin Insulation Co. (1991), 144 Ill.2d 64, 161 Ill.Dec. 280, 578 N.E.2d 926.) A contract is not ambiguous simply because the parties disagree as to its meaning. Kokinis v. Kotrich (1979), 74 Ill.App.3d 224, 30 Ill.Dec. 42, 392 N.E.2d 697, aff'd (1980), 81 Ill.2d 151, 40 Ill.Dec. 812, 407 N.E.2d 43; White v. White (1978), 62 Ill.App.3d 375, 19 Ill.Dec. 380, 378 N.E.2d 1255.

The plaintiff argues on appeal that the trial court erred in failing to find the mortgage contract ambiguous or, alternatively, in failing to give the term "installment" a single and uniform meaning of principal and interest only. In support of her ambiguity argument, the plaintiff relied on the trial court's attribution of different meanings to that term depending on the context within which it appeared in the mortgage documents. Plaintiff contends that the result of such an interpretation creates a likelihood of misunderstanding and, thus, an ambiguity. The plaintiff also relies on Moore v. Lomas Mortgage USA (N.D.Ill.1992), 796 F.Supp. 300, where the court therein reviewed similar contractual language and determined that the contract was ambiguous. ²

Although other courts and other judges have reviewed similar contractual language and have reached differing conclusions, ³ we are not compelled to adopt their conclusions with respect to our determination of ambiguity. Moreover, the mere fact that they have reached different conclusions, some finding ambiguity and some not, does not compel us to find the existence of an ambiguity. (See USG Interiors, Inc. (mere fact that parties disagree on a term of a contract is not proof of ambiguity).) We must make a de novo and independent review of the four corners of the documents (see La Throp v. Bell Federal...