                             In the

United States Court of Appeals
                For the Seventh Circuit

No. 11-1550

H ARRIS N.A.,
                                                 Plaintiff-Appellee,
                                 v.

L OREN W. H ERSHEY,
                                             Defendant-Appellant.


            Appeal from the United States District Court
       for the Northern District of Illinois, Eastern Division.
     No. 1:09-cv-06661—Sidney I. Schenkier, Magistrate Judge.



   A RGUED F EBRUARY 15, 2013—D ECIDED M ARCH 29, 2013




 Before F LAUM, W OOD , and H AMILTON, Circuit Judges.
  H AMILTON , Circuit Judge.     In this appeal, a loan
guarantor has sought to avoid liability on his guaranty
despite a complete absence of any defense supported
by evidence or colorable legal arguments. We affirm
the district court’s grant of summary judgment in favor
of the lender. Because the appeal is frivolous, we also
impose sanctions on the guarantor under Federal Rule
of Appellate Procedure 38.
2                                               No. 11-1550

I. Factual and Procedural Background
  In February 2008, as the United States was on the
brink of its most serious financial crisis since the Great
Depression, plaintiff-appellee Harris N.A. agreed to
lend Acadia Investments L.C. up to $12.5 million on a
revolving basis. Acadia Investments is a limited liability
company consisting of members of the Hershey family
and three trusts — one charitable trust and two family
trusts. The loan was personally guaranteed by defendant-
appellant Loren W. Hershey, a managing member of
Acadia. In August 2008, the amount of the loan was
enlarged to $15.5 million, again guaranteed by Hershey.
The agreement enlarging the loan amount required
Acadia to reduce its principal debt to Harris to less than
35 percent of the value of Acadia’s assets by the end
of each quarter and to make a principal payment of
$3 million by January 31, 2009.
  By February 2009, Acadia had not made the $3 million
principal payment and was in default. The parties
agreed to a forbearance agreement in June 2009 to give
Acadia more time to cure the default. The forbearance
agreement required Acadia to make a $3 million principal
payment by August 6, 2009. When Acadia failed to do
so in the agreed time, Harris declared a default and filed
this suit to collect the debt from Acadia and to enforce
Hershey’s guaranty. The federal courts have jurisdic-
tion under 28 U.S.C. § 1332 because the parties are of
diverse citizenship.
  The district court granted summary judgment in favor
of Harris as to all issues except the calculation of prejudg-
No. 11-1550                                               3

ment interest. Harris N.A. v. Acadia Investments L.C.,
2010 WL 4781458 (N.D. Ill. Nov. 16, 2010) (Gettleman, J.).
The prejudgment interest issue was resolved by stipula-
tion, and on February 4, 2011, with the consent of all
parties to his jurisdiction, Magistrate Judge Schenkier
entered a final judgment in favor of Harris and against
both Acadia and Hershey in the principal amount
of $15,500,000, plus $978,821.81 in prejudgment interest.
  Hershey and Acadia filed separate appeals. The
appeals were consolidated, but Acadia sought bank-
ruptcy protection and its appeal has been stayed. Order,
Harris N.A. v. Acadia Investments, L.C., No. 11-1707, Doc. 8
(7th Cir. April 13, 2011). Hershey has pursued this
appeal of his guaranty on his own behalf. Both Acadia
and Hershey were represented by counsel in the
district court, but Hershey, who is a member of the
Ohio bar, has represented himself in this appeal.


II. The Merits
  Hershey raised numerous defenses to Harris’s claim,
all of which the district court rejected. Hershey has
raised many of these defenses again on appeal, although
the legal and factual bases for most are simply not
clear. None of the defense arguments has merit.
   Hershey’s main argument on appeal is that Harris
induced Acadia to execute the forbearance agreement
by promising to help Acadia sell investments to pay
its debt to Harris, and that this fraudulent inducement
plus the breach of the promise rendered the forbear-
4                                               No. 11-1550

ance agreement invalid. Hershey also argues that Harris
was commercially unreasonable in refusing to accept
interest payments that Acadia allegedly sent to Harris
in May, July, and, August 2009, and in declaring the
entire debt due upon Acadia’s default in August 2009.
Finally, Hershey disputes the amount of the prejudg-
ment interest in the final judgment.


    A. Standard of Review
  We review the district court’s grant of summary judg-
ment de novo, drawing all reasonable factual inferences
in favor of the non-moving party, here, Mr. Hershey.
Parent v. Home Depot U.S.A., Inc., 694 F.3d 919, 923 (7th
Cir. 2012). Summary judgment is appropriate if “the
movant shows that there is no genuine dispute as to
any material fact and the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). If the moving
party meets this burden, the non-moving party must
then go beyond the pleadings and set forth specific
facts showing that there is a genuine issue for trial.
Ptasznik v. St. Joseph Hospital, 464 F.3d 691, 694 (7th Cir.
2006). A mere scintilla of evidence in support of the non-
moving party’s position is not sufficient; there must
be evidence on which the jury could reasonably find for
the non-moving party. Id., citing Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 252 (1986).
No. 11-1550                                             5

 B. Validity of the Forbearance Agreement and the Declara-
    tion of Default
  Hershey argues first that the June 2009 “Forbearance
Agreement and Second Amendment to the Credit Agree-
ment” is not enforceable because he and Acadia were
induced to sign the agreement by Harris’s supposed
material misrepresentations and/or false promises that
Harris would help Acadia sell some of its assets. Hershey
bases this defense on evidence from the parties’ negotia-
tions over the forbearance agreement, specifically, an
email that David Hanni of Harris sent to Hershey on
May 26, 2009 regarding some Acadia assets, referred to
as Fannie Mae strips, that it wanted to sell to meet part
of its obligations to Harris. Hanni wrote to Hershey:
     Loren, have not seen the formal ‘bid package’ you
   mention but I took the liberty of getting a quote
   this morning on the strips. If we bought these today
   from Acadia we would offer $1,964,887.00. Let me
   know how that stacks up against quotes from
   other sources.
App. 146.
  Hershey claims that this email is evidence that Harris
promised to help Acadia sell the Fannie Mae strips.
Hershey also claims that he and Acadia agreed to the
forbearance agreement based on this promise. According
to Hershey, Harris never followed through by buying
the Fannie Mae strips or by otherwise helping Acadia
liquidate its assets to pay Harris. This is the factual
basis for the asserted defenses of fraud in the induce-
ment, duress, and violation of the duty of good faith
and fair dealing.
6                                               No. 11-1550

  The first problem with these defenses is the complete
inadequacy of the evidence. The Hanni email of May 26
is not a promise to buy anything, let alone an open-
ended commitment to provide unspecified help to
Acadia in liquidating its assets. The email was
not phrased in terms of an offer to help Acadia sell its
assets. The most generous reading of this email from
Hershey’s perspective is that, despite its cautious
wording, perhaps it might be read as an offer to buy
a specific asset on that specific day at the specified
price. There is no evidence that Hershey or Acadia ever
accepted the offer, which obviously expired the same
day. Hershey has offered no explanation or response
to this problem. Hershey also has not offered other
specific evidence to support his defenses.
  The second problem with these defenses is posed by
the Illinois Credit Agreement Act, 815 Ill. Comp. Stat. 160/1
et seq., which adopted a “strong form” of the statute of
frauds by requiring a writing signed by both parties to
modify a written credit agreement covered by the Act.
See 815 ILCS 160/2; Resolution Trust Corp. v. Thompson,
989 F.2d 942, 944 (7th Cir. 1993). Hershey offers no
such writing signed by both parties reflecting any
relevant promises by Harris that might avoid or defeat
the guaranty.
  Hershey tries to avoid application of the Illinois
Credit Agreement Act on the theory that the Harris loan
to Acadia was primarily for “personal, family or house-
hold purposes.” Such credit agreements are excluded
from the Act. See 815 ILCS 160/1(1). He elaborates on this
theory in several ways. He points out that Acadia Invest-
No. 11-1550                                              7

ments is a family investment company for certain pur-
poses of federal securities laws, that he dealt with
a division of Harris that tailors its banking services to
family-owned businesses, and that distributions from
Acadia were used primarily to pay the Hershey family’s
living and personal expenses.
  This attempt to avoid the Act based on the purpose of
the loan must fail. Credit agreements are excused from
the Act’s strong form of the statute of frauds only if they
are “primarily for personal, family, or household pur-
poses.” 815 ILCS 160/1. But Hershey and Acadia admit-
ted before the district court that the loan was not
primarily for such purposes. Harris, in its statement of
material facts submitted to the district court, asserted
the following as an undisputed fact:
     The primary purpose of this revolving credit
   facility was to allow Acadia to finance contribu-
   tions and capital calls into various private equity
   funds, hedge funds, and real estate funds (collec-
   tively, “Private Equity Funds”), that Acadia both
   then owned and would subsequently acquire, with
   approximately $5.5 million of these funds to be
   utilized to refinance outstanding indebtedness of
   Acadia with KeyBank in Cleveland, Ohio, and to
   further pay off a $1.3 million short-term promissory
   note Harris had approved for Hershey to finance
   two Private Equity Fund capital calls that Acadia
   was required to make at that time.
Hershey and Acadia responded: “This fact is not con-
tested.” Hershey has offered no basis for excusing him
from this admission in the district court concerning
8                                              No. 11-1550

the “primary purpose” of the loan. In fact, the original
credit agreement itself provided: “The proceeds
from the Loan hereunder shall be used by the Borrower
primarily, but not exclusively, for the purpose of pur-
chasing and/or funding limited partnership equity in-
terest in the Funds [identified in an exhibit to the agree-
ment], and refinancing an existing secured credit facil-
ity.” App. 263, § 1.2.
  Apart from the factual admission, Hershey has offered
no legal authority or coherent argument for interpreting
the Illinois Credit Agreement Act’s “primary purpose”
element as allowing a debtor to look beyond the
immediate uses of the loan proceeds. Such indirect and
ultimate benefits are not sufficient to take advantage of
the Act’s exception for loans “primarily for personal,
family, or household purposes.” The Act would other-
wise have virtually no real application. We can assume
that all commercial loans covered by the Act are
intended for the ultimate personal benefit of indi-
viduals, families, and households, perhaps through
several layers of business organization ownership and
perhaps many years of business activity.
  The Illinois Credit Agreements Act bars Hershey’s
defenses, as they are based on alleged modifications to
the agreement that are not in writing, let alone signed
by both parties. Whirlpool Financial Corp. v. Sevaux, 874
F. Supp. 181, 185-86 (N.D. Ill. 1994), aff’d, 96 F.3d 216
(7th Cir. 1996). Thus, Hershey’s defenses of fraudulent
inducement, duress, and false promises fail for this
reason, as well.
No. 11-1550                                             9

  Hershey also argues that it was commercially unrea-
sonable for Harris to accelerate the debt according to the
terms of the forbearance agreement after Acadia
defaulted in August 2009. He makes two arguments to
this effect. First, he argues that it was commercially
unreasonable to accelerate the debt because Harris
rejected interest payments that Acadia had attempted to
make in May, July, and August 2009. (According to Her-
shey, Acadia sent $58,614.87 on May 4, 2009; $60,375
on July 31, 2009; and $60,590.65 on August 4, 2009. App.
70, ¶ 34.)
  This argument also lacks merit. Nothing in the for-
bearance agreement required Harris to accept the interest-
only payments when a principal payment was due.
See App. 263-67, 268, 326 (no requirement that Harris
accept interest in payments). Even if Harris had
accepted the interest payments, they would not have
saved Acadia from default in August 2009 because
they amounted to only $179,580.52, less than six percent
of the $3 million in principal that the forbearance agree-
ment required Acadia to pay by August 6, 2009.
  Second, Hershey claims that in September 2009, he
gave Harris Acadia’s 2008 tax return showing its assets
totaled almost $56.2 million. He argues that should
have been sufficient collateral to assure Harris that
Acadia could satisfy the loan requirement to keep the
loan principal less than 35 percent of its assets. Hershey
claims it was commercially unreasonable for Harris
to accelerate the debt after he presented the return to
Harris in September 2009. We need not devote much
effort to rejecting this argument. Hershey has not
10                                           No. 11-1550

offered any legal authority or coherent argument for
using this theory to avoid his obligations as a guarantor
after the admitted and undisputed default under the
forbearance agreement in August 2009. In addition,
under the circumstances here, a debtor’s statement of
its own finances eight months prior to a default,
from December 2008 to August 2009 — one of the most
devastating financial periods since the Great Depres-
sion — provided no assurance of the debtor’s ability to
pay a debt in September 2009 on which it had already
defaulted at least twice since December 2008. Harris
was entitled to accelerate the debt upon Acadia’s
default under the forbearance agreement, as the agree-
ment clearly authorized.


 C. Prejudgment Interest
  In the district court the parties disputed the correct
calculation of prejudgment interest on the $15.5 million
principal debt. District Judge Gettleman denied sum-
mary judgment on the question because of conflicting
evidence as to whether and for how long a portion of
the debt would bear interest at the LIBOR rate. 2010
WL 4781458, at *7. The parties consented to have this
final disputed issue resolved by the magistrate judge.
Judge Schenkier held a hearing on February 4, 2011
and was informed by both counsel that the parties
had reached an agreement on the relatively modest
amount in dispute and had agreed on both a total
amount of prejudgment interest and the terms of the
final judgment. The judge then entered the final judg-
No. 11-1550                                               11

ment that included $978,821.81 in prejudgment interest
through February 4, 2011.
  The attorney for both Acadia and Hershey then with-
drew, and Hershey personally filed a motion to modify
the final judgment and a motion to stay execution
of the final judgment. His motions sought credit for a
post-judgment payment of $101,895 that he said had
been wired directly to Harris and another supposed
payment for $335,649.03. Hershey did not offer any evi-
dence that such payments had been made. There was
certainly no need for the final judgment to take into
account a payment that had not yet been made. Harris
will of course need to give Hershey and Acadia appro-
priate credit for any payments made on their account
toward satisfaction of the final judgment, but Hershey
has shown no basis for setting aside his counsel’s stipu-
lation on the calculation of prejudgment interest or for
otherwise modifying the final judgment.
  Accordingly, we AFFIRM the judgment of the district
court.


III. Sanctions Under Rule 38
  Federal Rule of Appellate Procedure 38 authorizes
a United States court of appeals to award damages
and single or double costs to an appellee where an
appeal is frivolous. Rule 38 has both a compensatory
purpose and a deterrent purpose. Ruderer v. Fines, 614
F.2d 1128, 1132 (7th Cir. 1980); Clarion Corp. v. American
Home Products Corp., 494 F.2d 860, 865-66 (7th Cir. 1974);
see also Burlington Northern R.R. Co. v. Woods, 480 U.S. 1, 7
12                                              No. 11-1550

(1987). The rule can compensate the winner of a judg-
ment for the expense and delay of defending against
a meritless appeal, and it seeks to deter such appeals
to protect the appellate court’s docket for cases worthy
of consideration. Ruderer, 614 F.2d at 1132.
  Rule 38 requires either a separate motion by the
appellee or notice from the court and a reasonable op-
portunity to respond. During and after oral argument,
we ordered appellant Hershey to show cause why sanc-
tions should not be imposed under Rule 38 for a
frivolous appeal. He has responded in writing.1
  We do not invoke Rule 38 lightly. Reasonable lawyers
and parties often disagree on the application of law in
a particular case, and this court’s doors are open to con-
sider those disagreements brought to us in good faith.
See, e.g., Kile v. Comm’r of Internal Revenue, 739 F.2d 265,
269 (7th Cir. 1984); NLRB v. Lucy Ellen Candy Div., 517 F.2d
551, 555 (7th Cir. 1975) (“A frivolous appeal means some-
thing more to us than an unsuccessful appeal.”). An
appeal can be frivolous, though, “when the result is
obvious or when the appellant’s argument is wholly
without merit.” Spiegel v. Continental Illinois Nat’l Bank,
790 F.2d 638, 650 (7th Cir. 1986), quoting Indianapolis
Colts v. Mayor and City Council of Baltimore, 775 F.2d 177,
184 (7th Cir. 1985); accord, e.g., Wiese v. Community Bank
of Central Wis., 552 F.3d 584, 591 (7th Cir. 2009). When
an appeal is frivolous, Rule 38 sanctions are not


1
  As noted, appeal No. 11-1707, has been stayed pending
Acadia’s bankruptcy proceedings; this sanction applies only
to Hershey’s appeal brought on his own behalf.
No. 11-1550                                              13

mandatory but are left to the sound discretion of the
court of appeals to decide whether sanctions are appro-
priate. Burlington Northern, 480 U.S. at 4; Smeigh v.
Johns Manville, Inc., 643 F.3d 554, 566 (7th Cir. 2011) (de-
clining to impose sanctions in close case).
  We find that this appeal is frivolous. The original
credit agreement and guaranty and the first amendment
are all undisputed, and Hershey has agreed that Acadia
was in default in early 2009 when it missed a required
repayment of $3 million in principal. He also concedes
that he and Acadia agreed to the forbearance agree-
ment, which required a payment of $3 million in
principal by August 6, 2009, and that the payment was
not made.
  We have reviewed the record from the district court,
including briefing on the bank’s motion for summary
judgment, as well as all of Hershey’s submissions to
this court. We do not find in any submission to this court
a coherent argument based on record evidence and a
reasonable view of applicable law that would provide
even an arguable basis for reversing any part of the
district court’s judgment.
  We find instead efforts to dispute facts that Hershey
and Acadia agreed were undisputed in the district
court. We find an effort to twist an email with an unac-
cepted offer to buy an asset for a specific price on a
specific date into a broad but enforceable promise
to help Acadia sell its assets. We find an effort to repu-
diate Hershey’s own counsel’s stipulation to resolve
the minor dispute over the calculation of prejudgment
interest, and we find an effort to claim credit for a sup-
14                                              No. 11-1550

posed prejudgment payment that is not supported by
evidence and appears not to have been made at
all. During oral argument, members of the court asked
Hershey to support his repeated beliefs about the merits
of his arguments by directing the court to specific evi-
dence and legal authority. Hershey could provide no
meaningful or relevant responses.
  We have found appeals frivolous where the appellants
simply failed to put together a coherent argument that
came to grips with the applicable law, the relevant
facts, and the district courts’ reasoning. E.g., Williams v.
U.S. Postal Service, 873 F.2d 1069, 1075 (7th Cir. 1989)
(imposing Rule 38 sanctions where appellant failed to
cite relevant cases or address district court’s reasoning);
Rosenburg v. Lincoln American Life Ins. Co., 883 F.2d
1328, 1339-40 (7th Cir. 1989) (imposing Rule 38 sanctions
on life insurance company that refused to pay death
benefit and then appealed adverse jury verdict without
coming to grips with applicable law and relevant evi-
dence); see also Greviskes v. Universities Research Ass’n,
Inc., 417 F.3d 752, 760 (7th Cir. 2005) (ordering appel-
lant to show cause why Rule 38 sanctions should not
be imposed where arguments on appeal were “almost
incomprehensible and entirely nonsensical” and there
was “simply no legal foundation” for claims). By
this standard, this appeal is frivolous.
  It is not enough, though, that the appeal is frivolous.
We must also consider whether, in the exercise of our
sound discretion, Rule 38 sanctions are otherwise appro-
priate. E.g., Smeigh, 643 F.3d at 565-66. A brief that fails
No. 11-1550                                           15

to provide clear and cogent arguments for overturning
a district court decision can cause us to doubt whether
the appellant pursued the appeal with any reasonable
expectation of altering the judgment. Spiegel, 790 F.2d
at 650.
  Several factors persuade us that sanctions are appro-
priate in this case. The dispute here is over an eight-
figure loan from a bank to a sophisticated borrower: a
family investment vehicle that is run by an experienced
attorney and investor who guaranteed payment of the
debt. That attorney and investor, appellant Hershey,
has presented no plausible basis for setting aside the
district court’s judgment, which was supported by a
concise and correct explanation. Any competent at-
torney should have understood that Hershey’s briefs
and argument simply failed to address the applicable
law and relevant evidence. His briefs and argument
were exercises in obfuscation and confusion, with
repeated and vague assertions of the need to hear all
the evidence and look to all the circumstances. Hershey’s
appeal amounts in sum to a vague and unsupported
assertion that the bank acted in bad faith by declaring a
default and asserting its contractual rights against the
borrower and guarantor long after the loan had gone
into default. The Illinois Credit Agreement Act bars Her-
shey’s efforts to avoid the written terms of the credit
agreements, and Hershey’s efforts to avoid the terms of
the Act required him to deny and dispute facts that he
had already admitted in the district court.
  At the same time, post-judgment interest rates are so
low that there is a clear incentive for Hershey to try to
16                                             No. 11-1550

stall enforcement of the judgment. (Post-judgment
interest on this Feb. 4, 2011 judgment is just 0.28 percent
per year. See http://www.federalreserve.gov/releases/h15/
data.htm, with weekly data for Treasury bills with
constant maturity of one year.) Hershey surely
must understand as much. The objective circumstances
here — the combination of Hershey’s sophistication, the
clarity of the district court’s correct decision, Hershey’s
complete failure to come to grips with applicable law
and facts, and the financial incentive for delay — are
such that we find it appropriate to impose Rule 38 sanc-
tions. We see no apparent mitigating factors that
weigh against imposition of Rule 38 sanctions.
   Accordingly, appellee Harris N.A. may submit an
affidavit and supporting papers within 28 days after
issuance of this opinion specifying its damages from
this frivolous appeal by Mr. Hershey. Mr. Hershey may
file a written response no later than 28 days after Harris
files its affidavit.
                                             S O O RDERED.




                          3-29-13
