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Classic Cheesecake Co. v. JPMorgan Chase Bank

United States Court of Appeals, Seventh Circuit
546 F.3d 839 (2008)


Classic Cheesecake Co. (plaintiff) applied to JPMorgan Chase Bank (Chase) (defendant) for a loan to expand its business. Classic needed the loan funds fairly quickly to be able to capitalize on a new opportunity and conveyed this urgency to the Chase representative, Dowling. The proposed loan would be partially guaranteed by the Small Business Administration (SBA), a federal entity. The SBA required that a Classic principal pay off federal student loans that were in default before it would approve the loan. Dowling provided verbal assurances to Classic that the Chase loan would be approved if the student loans were paid off. The Classic principal then paid off the student loans. Ultimately, two and a half months after Classic applied for the loan, Chase declined the application. Classic sued Chase under a promissory-estoppel theory. Classic claimed that it had relied on Dowling’s verbal promises of success to refrain from shopping with any other lenders. Classic further claimed that it had lost over $1 million due to its delay in pursuing other lenders for the loan. In its defense, Chase argued that, under the statute of frauds, any such promise would not be enforceable unless it was in writing.

Rule of Law


Holding and Reasoning (Posner, J.)

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