Commercial Banking, Collections, and Bankruptcy

Dist. Ct. did not err in dismissing for failure to state viable cause of action, plaintiff's action alleging that defendant violated Fair Debt Collection Practices Act while attempting to collect on four fines imposed on plaintiff by City of Chicago arising from parcel of real estate that plaintiff no longer owned. Dist. Ct. could properly find that instant fines are not "debts" as that term is defined under FDCPA since instant fines were essentially penalties imposed for breaking law, as opposed to consensual transactions covered by FDCPA.

Dist. Ct. erred in granting defendant's motion for summary judgment in action alleging that defendant violated provisions of Truth-in-Lending Act by providing plaintiff with only one copy of notice of plaintiff's 3-day right to rescind loan instead of required two copies of said notice. While plaintiff signed sheet acknowledging receipt of both copies, said acknowledgement constituted only rebuttable presumption of delivery, which plaintiff overcame for purposes of summary judgment by alleging that: (1) his stack of materials from loan closing included only one copy of said notice; (2) said stack of materials was undisturbed following loan closing; and (3) his recollection of what occurred at loan closing differed from procedure described by defendant's representative. Fact that plaintiff's stack of loan closing materials contained documents that post-dated instant loan closing did not require different result.

In bankruptcy proceeding in which Trustee moved to rescind voidable payments made to creditor within 90 days of date bankruptcy petition had been filed, Dist. Ct. did not err in allowing creditor to file amended petition one day after original petition had been filed where original petition had been filed without signature of licensed attorney, and where amended petition contained said signature. Bankruptcy Rule 1009(a) permitted instant amendment where debtor had promptly obtained legal counsel and sought to file amended petition, and amended petition related back to date of filing of original petition. Ct. rejected creditor's argument that filing of original petition without signature of licensed counsel deprived Bankruptcy Court of jurisdiction such that Bankruptcy Court could not cure defect through instant amendment.

Bankruptcy Ct. did not err in approving $100,000 settlement of Trustee's promissory estoppel claim on behalf of debtor against third-party, arising out of third-party's alleged promise to transfer broadcasting license. While instant creditor asserted that settlement was unreasonable where Trustee's claim was worth $4.1 million, record showed that claim was more likely valued at $600,000, such that instant settlement was reasonable given percentage chance that Trustee would not have prevailed on claim, as well as litigation costs that would have reduced any favorable judgment.

Dist. Ct. erred in granting defendant-manufacturer's motion for summary judgment in plaintiff's Indiana law and related Magnuson-Moss Warranty Act claims alleging breach of express warranty and breach of implied warranty associated with defendant's sale of $233,000 motor home that contained numerous defects. While Dist. Ct. found that plaintiffs could not pursue their breach of warranty claims since plaintiffs had failed to give defendant reasonable opportunity to cure said defects, record showed that plaintiffs discussed problems with motor home with defendant over two-month period in which defendant made only partial repairs to motor home. Moreover, related Ind. state claim for breach of express warranty did not require plaintiffs to give defendant reasonable opportunity to cure defects. Additionally, record contained issue of material fact with respect to breach of implied warranty of merchantability claim arising out of alleged misrepresentation regarding size of motor home's engine where record lacked evidence to establish whether smaller engine rendered motor home unfit for its ordinary uses. Ct. also found that Ind. Deceptive Consumer Sales Act applied to plaintiff's claim that defendant misrepresented model year of motor home where said motor home was completed during 2008 production cycle and where said motor home did not have characteristics of defendant's other 2009 motor homes.

Dist. Ct. did not err in finding that creditor’s tort-related claim could not be viewed as administrative expense, and thus having preference over claims of other creditors, where instant claim arose out of loss incurred by creditor after debtor’s gas collection and control system malfunctioned and caused creditor to sell its neighboring hotel for less than what it could have obtained had malfunction not occurred. Administrative expenses include those debts that are incurred for preservation of bankruptcy estate after Trustee has taken control of estate, such that instant debt could not be classified as administrative expense where: (1) malfunction occurred only four days after Trustee had taken control of operation; (2) bankruptcy estate lacked sufficient funds to have prevented malfunction of system that arose after problems with system had surfaced over period of years; and (3) at time of malfunction, Trustee was in process of liquidating of debtor’s business and had done nothing with respect to debtor’s assets at time of malfunction that might have enhanced their value for benefit of all creditors.