Illinois Appellate Lawyer Blog

Richard Magley gave security interests to secure a number of loans. The Small Business Administration was guarantor of some of the loans, including two advanced by Cadleway Properties and Ossian Bank. The SBA removed the entire dispute to federal court. Cadleway and Ossian both claimed to be the beneficiary of a guaranty of a loan on a certain property. On summary judgment, the federal district court ruled that the bank was the beneficiary. The district court did not rule how much money, if anything, Ossian was entitled to receive.

The appellate court ruled that the dispute between Cadleway and Ossian was not “sufficiently discrete” to create an appealable interlocutory order. Here’s the court’s explanation:

. . . [T]he district judge has not specified who is entitled to what relief. Cadleway did not begin this litigation in quest of a declaratory judgment about ownership; it wants money from Magley. So does the Bank. Does Magley owe any money on this guaranty? The district court has not decided. It has held so far that whatever Magley owes goes to the Bank rather than Cadleway, but it has not decided whether Magley owes even 1¢; for all we can tell, the lenders may collect in full from other sources and never draw on the guaranty . . . If Magley does owe something, the amount may be disputed and another appeal will be required. That’s why a decision that resolves a dispute about liability while leaving relief to be determined cannot be appealed under Rule 54(b).

The appeal was dismissed for lack of jurisdiction. The opinion also contains discussion about the propriety of continuing district court jurisdiction in view of SBA settlements, thus eliminating a federal question. Click here for the opinion, Cadleway Properties v. Ossian State Bank, No. 06-2033 (2/15/07).