An Edwardsville-based real estate company has filed a class action lawsuit against First Cloverleaf Bank, claiming the bank wrongly raked in extra money from it and other companies after basing annual interest rates on a period of less than 12 months.
Prime Development filed the putative class action lawsuit May 6 in St. Clair County Circuit Court against First Cloverleaf Bank.
Bernard Ysursa of Belleville representes Prime Development.
Prime Development claims First Cloverleaf enticed it into executing a commercial loan with the bank by quoting interest at a certain interest rate. However, the bank either did not include a time period or stated a "per annum" rate in Prime Development's loan agreement, according to the complaint.
First Cloverleaf Bank has four locations: three in Edwardsville and one in Wood River.
"Plaintiff and the class paid the Bank monthly installment payments on their loans," the suit states. "Upon receipt of the installment payments, and unbeknownst to Plaintiff and the Class, the Bank unlawfully allocated interest to itself at the rate of 101.4% (101.7% leap year) of the agreed-upon annual rate of interest that the Bank stated in the Loan Agreements, and then allocated the remainder of the installment payment to a reduction in principal on the loans."
By using a period of less than 12 months to compute the interest on the unpaid portion of Prime Development's loan, the bank charged extra interest than it represented to Prime Development and other class plaintiffs, the complaint says.
Because of the way it prepared its loans, First Cloverleaf caused confusion among its clients about the yearly interest cost, Prime Development claims.
"As a proximate cause of the above-described deceptive and unfair conduct of the Bank, Plaintiff and Class were deceived into borrowing money from the Bank and were damaged to the extent that they were charged interest at a higher rate than quoted by the Bank and agreed upon as conspicuously stated in their Promissory Notes and Loan Agreements," the suit states.
According to an article in the St. Louis Business Journal, Prime Development was forced into bankruptcy in 2007, owing more than $6.6 million to First Bank, Bank of Edwardsville and Bank of O'Fallon.
Prime Development was the developer of the Fairfield subdivision in Glen Carbon and the Stonebriar subdivision on the outskirts of Troy, the article states.
In its four-count complaint, Prime Development alleges breach of contract, violations of the Illinois Consumer Fraud and Deceptive Business Practices Act and violations of the Illinois Interest Act.
Prime Development wants the court to certify its complaint as a class action; to award it and the class economic, actual and compensatory damages; to adjust downward the principal balance on current loans that the bank computes interest at less than 12 months; and to award it pre-judgment interest, costs, attorneys' fees and other relief the court deems just.
St. Clair County Circuit Court case number: 10-L-231.
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Bank of Edwardsville
St. Louis Business Journal