News
November 27, 2002

The First District of the Illinois Appellate Court has affirmed the verdict of the trial court awarding to the former owners of the Merchandise Mart, a well-known Chicago landmark, more than $50 million that had been placed in escrow.  LaSalle National Bank (as Trustee) v. Metropolitan Life Ins. Co., No. 1-00-4074 (Ill. App. 1st Dist. Nov. 26, 2002).

The case concerned a 1987 loan from Metropolitan Life Insurance Company that was secured by a mortgage on the Merchandise Mart. The loan agreement permitted prepayment after the first ten years, but included a penalty under certain conditions. The borrower sold the Merchandise Mart in 1998, triggering the prepayment provisions. When MetLife calculated the penalty to be $47.4 million, the borrower brought a declaratory judgment action in Cook County, Illinois, seeking a determination that MetLife had breached the contract's prepayment terms.

In 1998, the Circuit Court ordered MetLife to release the mortgage upon the borrower's deposit of the disputed penalty with the court. Following a six-week bench trial in 2000, the court held that MetLife had breached the loan agreement and awarded to the borrower the full amount on deposit, by then over $52 million. On appeal, the First District affirmed the Circuit Court's judgment in its entirety, stating: "After a full hearing on the merits, the circuit court properly concluded that MetLife has no right to a prepayment penalty."

Jenner & Block partners Jerold S. Solovy, C. John Koch, and Avidan J. Stern, and associate Suzanne J. Prysak handled the appeal, which Mr. Solovy argued.  Jenner & Block also successfully tried the case in the Circuit Court. Jerold S. Solovy and former partner Joel J. Africk (now the CEO of the Respiratory Health Association of Metropolitan Chicago) led a trial team that also included partners Ronald L. Marmer, Michael T. Brody, and Avidan J. Stern.