CASE 26-1 REGER DEVELOPMENT, LLC v. NATIONAL CITY BANK U.S. COURT OF APPEALS, SEVENTH CIRCUIT 592 F.3D 759 (2010) Reger Development borrowed money from National City Bank, using a revolving line of credit supported by a promissory note. At the point that National City discussed the possibility of calling the note, Reger Development sued the bank for breach of contract and fraud. Reger had met with the bank prior to using the line of credit to discuss the loan. Reger asked about changing the terms of the credit agreement. The bank representative, Duncan, responded that the National City documents were nonnegotiable. Reger then executed the contract. The main question here is whether the promissory instrument entitles National City to demand payment from Reger at will. CIRCUIT JUDGE FLAUM The first clause in the Note reads: PROMISE TO PAY: Reger Development, LLC ("Borrower") promises to pay to National City Bank ("Lender"), or order, in lawful money of the United States of America, on demand, the principal amount of Seven Hundred Fifty Thousand & 00/100 Dollars ($750,000.00) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance. Interest shall be calculated from the date of each advance until repayment of each advance. PAYMENT: Borrower will pay this loan in full immediately upon Lender's demand. Borrower will pay regular monthly payments of all accrued unpaid Interest due as of each payment date, beginning July 25, 2007, with all subsequent Interest payments to be due on the same day of each month after that. The Note proceeds to reference payment on lender's demand several times in other provisions. It also features a "NO COMMITMENT" clause that states: "NOTWITHSTANDING ANY PROVISION OR INFERENCE TO THE CONTRARY, LENDER SHALL HAVE NO OBLIGATION TO EXTEND ANY CREDIT TO OR FOR THE ACCOUNT OF BORROWER BY REASON OF THIS NOTE." The contract then includes integration language defining it as the final and complete agreement between parties. Language above the signature line specifies in capital letters that the borrower has read and understood the terms of the document. On August 19, 2008, National City asked the company to pay down $125,000 towards the principal of the line of credit, which appellant did the next business day. Then, on September 9, 2008, National City asked that Reger Development "term out" $300,000 of the Note by having one of Kevin Reger's other businesses agree to take out a three-year loan in that amount secured by a second mortgage on some real estate. Kevin Reger "expressed surprise" about these developments and asked if National City would call the line of credit if Reger Development did not agree to the requests. The bank acknowledged that Reger Page 0611 Development was not in default but stated that "there is a possibility that we may demand payment ofthe line." Reger Development then filed a complaint in Illinois state court accusing National City of breaching the terms of the Note. While Illinois law generally holds that "a covenant of fair dealing and good faith is implied into every contract absent express disavowal," the duty to act in good faith does not apply to lenders seeking payment on demand notes. In light of this controlling law, appellant's complaint appears vacuous. Reger Development's allegations are "that National City breached the Contract Documents by arbitrarily and capriciously (1) demanding payment under the Line of Credit even though Reger Development was in good standing and (2) unilaterally changing and attempting to change the fundamental terms of the Contract Documents without Reger Development's consent." Reger Development attempts to substantiate the first part of the breach claim by pointing to several provisions in the Note that it believes to be fundamentally inconsistent with the nature of a demand instrument. These include the "INTEREST AFTER DEFAULT" provision, which reads, in relevant part, "[upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by adding a 2.000 percentage point margin"; the prepayment clause, which allows the borrower to pay down "all or a portion of the amount owed earlier than it is due"; and the clause that grants National City the right to access the borrower's financial information. Reger Development describes the latter as a "financial insecurity" provision that conditions the right to demand payment on some economic cause. We are not persuaded by the suggestion that these references to due dates and default somehow overpower the repeated, explicit contract language setting forth the lender's right to demand payment at any time. A bank that wishes to call the Note can specify some future date on which it needs payment as a "due date." Failure to pay at that point in time, as well as failure to make monthly interest payments required by the Note, would constitute default, but the mere use of the terms "due date" or "default" would not alter the nature of the agreement. Similarly, the "PREPAYMENT" provision cannot bear the interpretive load that appellant wants to place on its shoulders. The clause reads: "Borrower may pay without penalty all or a portion of the amount owed earlier than i is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments of accrued unpaid Interest." Both its content and placement (immediately following the "payment" and "variable interest rate" clauses) are innocuous. The language merely reinforces National City's right to collect scheduled monthly interest payments and does not deviate from the structure of a demand note. For the foregoing reasons, we Affirm the district court's grant of National City's motion to dismiss the Reger Development complaint