ILLINOIS APPELLATE COURT AFFIRMS DISMISSAL OF FORECLOSURE BASED ON 5-YEAR STATUTE OF LIMITATIONS FOR REVOLVING CREDIT LOANS

Robert Deisinger
Jun 25
4 min read

Illinois’ First District Court of Appeals recently affirmed an order dismissing BMO Bank’s (“BMO”) action to foreclose a mortgage which secured a $100,000 line of credit (“LOC”) issued in favor of James Zbroszczyk. BMO Bank N.A. v. Zbroszczyk, 2025 IL App (1st) 241333 (June 18, 2025). The equity LOC was a revolving line which allowed Zbroszczyk to draw up to $100,000 and make re-occurring draws on any amounts he paid back as long as he did not exceed the $100,000 LOC.

Zbroszczyk took out the LOC in 2008 and the LOC was set to expire in February 2018. Under the LOC agreement, Zbroszczyk was required to make regular monthly payments defined as the amount of the accrued finance charges on amounts he drew from the LOC, but he was not required to make payments on principle. BMO was required to send “periodic statements” showing the current balance and the “minimum payment owed.” If the borrower failed to make the monthly payment BMO Bank could terminate the credit line and require payment of “the entire outstanding balance in one payment.”

It appears Zbroszczyk used the entire LOC and then failed to make his regular monthly payment due in August 2013. For unexplained reasons, BMO did not send its first “delinquency notice” until August 22, 2022, declaring the outstanding LOC balance of $99,973.28 to be due. Even more perplexing, given the date of the default, BMO waited until October 2023 to file its foreclosure complaint based on the same August 2013 default date and the same outstanding balance. Zbroszczyk moved to dismiss pursuant to sections 2-619 and 13-205 of the Illinois Code of Civil Procedure, the latter of which provided a 5-year statute of limitations for actions on unwritten contracts.

Zbroszczyk argued the 5-year window started running when he missed his August 2013 payment so BMO’s foreclosure action was time barred.

BMO opposed the motion arguing that the 10-year statute of limitations under section 13-206 applied (pertaining to actions on a promissory note or other written evidence of indebtedness) and started running in February 2018, the maturation date of the LOC. The trial court adopted a hybrid position finding the 10-year statute of limitations applied, but the running of the statute of limitations began when Zbroszczky missed his August 2013 payment. Finding BMO’s foreclosure action to be time-barred, the court dismissed the complaint with prejudice, awarded attorneys’ fees to Zbroszczyk, and denied BMO’s motion to reconsider. BMO appealed.

On appeal both parties stuck to their original arguments. The First District surmised that it first had to determine whether the 5-year or 10-year statute of limitations applied and to do that it had to define the LOC agreement. The Court concluded the LOC agreement fit “squarely within the definition” of a “revolving credit loan,” a definition neither party had suggested. The Court noted there was no specific statute of limitations which addressed revolving credit loans, but through the process of elimination, determined that a revolving credit loan was most akin to a credit card in that both are loans without predetermined amounts of debt. Based on this finding, the Court concluded the 5-year statute of limitations under section 13-205 applied to BMO’s foreclosure action.

Applying that statute, the Court concluded there was no need to choose the August 2013 or February 2018 accrual date to determine when the 5-year statute of limitations began to run because BMO’s foreclosure action was time barred under both. The Court affirmed the judgment of dismissal and the trial court’s award of attorneys’ fees to Zbroszczyk. Although a harsh result, it is one that could have been avoided by diligently enforcing the LOC terms.

1 Zbroszczyk, at *P4. Future references are to this citation until indicated otherwise.

2 Zbroszczyk, at *P5. Future references are to this citation until indicated otherwise.

3 Zbroszczyk, at *P4.

4 Zbroszczyk, at *P6.

5 Zbroszczyk, at *P10. Future references are to this citation until indicated otherwise.

6 Zbroszczyk, at *P1, P10.

7 Although it seems counter-intuitive that the LOC agreement could be classified as an “unwritten contract,” under Illinois law an agreement is only considered a “written contract” if all “essential terms” are in writing and ascertainable from the contract itself. Zbroszczyk, at *P37. Here, a key term of the LOC agreement, the amount of the debt, was not fixed but rather contingent on what Zbroszczky borrowed. Zbroszczyk, at *P40. Since this key element of the parties’ agreement could not be determined from the LOC agreement itself, it was not a “written contract” for purposes of the statute of limitations. Zbroszczyk, at *P37, 40.

8 Zbroszczyk, at *P34. Future references are to this citation until indicated otherwise.

9 Zbroszczyk, at *P15.

10 Zbroszczyk, at *P16.

11 Zbroszczyk, at *P16-20.

12 Zbroszczyk, at *P21.

13 Zbroszczyk, at *P34.

14 The Court noted it was permitted to affirm the lower court on any basis supported by the record. Zbroszczyk, at *P26.

15 Zbroszczyk, at *P32, 34.

16 Zbroszczyk, at *P35-37.

17 Zbroszczyk, at *P35, 41.

18 Zbroszczyk, at *P44.