Commercial Banking, Collections, and Bankruptcy

Dist. Ct. did not err in granting defendant HUD’s motion for summary judgment in conversion action by plaintiffs-former managers of condemned housing development seeking $2.7 million reserve fund held by defendant for use in maintaining said condemned property. In order to have tortious conversion of property claim, plaintiffs must first establish that money in reserve fund is its property, and plaintiff failed to establish ownership of said fund, where contracts between plaintiffs and defendant did not address ownership of fund after plaintiffs no longer operated housing development, and where possibilities of ownership of fund included plaintiffs, City of Joliet that condemned property, U.S. Treasury and/or tenants. Fact that plaintiff gave defendant security in whatever property interest they possessed in fund, or that plaintiffs treated additions to fund as taxable income did not require different result.

Bankruptcy Ct. did not err in granting creditor’s proof of claim in amount of $618,974 against debtor in bankruptcy proceeding, where creditor, who was business partner of debtor in failed LLC business, alleged that partners of said business had implied-in-fact contract to equalize capital contributions made to said business, and that said claim was necessary to achieve said equality. Ct. rejected debtor’s contention that relevant operating agreement precluded existence of implied-in-fact contract to equalize capital contributions, or that Bankruptcy Ct. erred in relying on extrinsic evidence to find that implied-in-fact contract existed among instant business partners. Use of extrinsic evidence was appropriate, where plain language of agreement did not demonstrate that it was complete expression of company’s members’ agreement. Fact that agreement limited members’ recovery to company’s assets upon dissolution did not require different result. Also, Dist. Ct. could properly look to fact that debtor sought equal contributions from other members for debtor’s $32,000 payment as evidence that members had entered into implied-in-fact equalization contract.

Magistrate Judge did not err in granting defendant-debt collector’s motion for summary judgment in plaintiff-debtor’s action, alleging that defendant violated Fair Debt Collection Practices Act (FDCPA) by seeking to collect on attorney's fees that were generated when defendant sought to collect on attorney fees that were provided for creditor in contract that plaintiff had signed with respect to payment of medical costs generated by her children. While plaintiff argued that violation occurred because defendant was attempting to collect for attorney fees that plaintiff did not owe, relevant provision in payment agreement stated that plaintiff had agreed to pay costs of collection on medical debt, including attorney fees. While plaintiff argued that defendant could not seek attorney fees incurred while attempting to collect on attorney fees incurred when seeking recovery on medical debt, term “costs of collection” in payment agreement broadly encompassed all costs with collection, including costs of collecting on attorney’s fees provided for in agreement. As such, defendant’s efforts to recover “fees-on-fees” did not violate FDCPA.

In successful action by plaintiff-bank, seeking recovery from defendant-title insurance company for breach of contract, breaches of fiduciary duty, negligence and negligent misrepresentation arising of scheme that resulted in losses to plaintiff from defaults on loans given to purchasers, who had little equity in subject condominiums, Dist. Ct. did not err in denying plaintiff’s request for prejudgment interest even though plaintiff was prevailing party. Under 12 USC section 1821(l), Dist. Ct. had discretion to decide whether prejudgment interest should be awarded at all. Moreover, section 1821(l) allowed Dist. Ct. to consider only prejudgment interest that would be appropriate, which allowed Dist. Ct. to consider state law that would have governed case, but for plaintiff- FDIC’s role as receiver of instant bank that made actual loans, especially where plaintiff’s claims against defendant are all state-law claims brought under federal jurisdiction by FIRREA. Also, Dist. Ct. could properly find that prejudgment interest was not appropriate under state law, since defendant was not entity that wrongfully withheld money from plaintiff. Dist. Ct. also did not err in denying plaintiff’s motion to amend judgment to increase damages awarded by jury, where issues of defendant’s causation were not sufficiently clear, so as to disturb jury’s verdict, which did not award all of plaintiff’s requested damages. Dist. Ct. erred, though, in finding that defendant was entitled to set-off of $500,000, which reflected amount that co-defendant agreed to pay plaintiff, where defendant failed to carry its burden of proving that any portion of settlement sum was attributable to same injuries for which defendant was found liable. (Partial dissent filed.)

Dist. Ct. lacked jurisdiction to consider plaintiff’s claim under Fair Debt Collection Practices Act (FDCPA), where plaintiff alleged that defendant-debt collector failed to provide complete written notice of her statutory rights within five days of defendant’s debt collection letter and failed to identify herself as debt collector or stated that she was attempting to collect debt in subsequent telephone call. Plaintiff lacked standing to pursue her FDCPA claim, where plaintiff could not show in response to defendant’s motion for summary judgment that she suffered concrete injury that was traceable to her purely procedural FDCPA violations. Moreover, plaintiff did not allege that she paid any money that she should not have paid or disputed, and plaintiff’s contention that she incurred only emotional harms arising out of instant alleged violations was insufficient to constitute injury in fact to support her standing to bring instant action.

Dist. Ct. erred in granting defendant’s motion for summary judgment in plaintiff-hospital’s action, alleging that defendant breached its contract with plaintiff by failing to appropriately handle plaintiff’s “revenue cycle” that required defendant to set up billing codes, bill patients/third-party payors, process paperwork and collect payments. While Dist. Ct. agreed with defendant’s argument that even if it breached said contract, plaintiff could not recover any damages, since plaintiff sought only consequential damages that were impermissible under terms of instant contract in absence of showing willful misconduct, Ct. of Appeals found that plaintiff could proceed on instant action, where lost revenue would have been direct and expected result of defendant’s failures to collect and process revenue as required under instant contract. Moreover, overall language of instant contract for revenue collection services made clear that parties did not intend to insulate defendant entirely from damages for its alleged breaches. Ct. of Appeals further held that: (1) jury could find that at least some of defendant’s alleged breaches amounted to willful misconduct to extent defendant made obviously inadequate efforts to perform on contract while trying to minimize its own out-of-pocket expenses; and (2) contract did not foreclose recovery of all lost revenue, but rather precluded recovery only of revenue that was lost as indirect result of defendant’s breach.

Dist. Ct. did not err in granting defendant-manufacturer’s motion for summary judgment in action by plaintiff-purchaser of recreational vehicle, alleging that defendant breached express and implied warranties under state law, as well as violated federal Magnuson-Moss Act, where defendant’s recreational vehicle had multiple defects. In order to make claim of breach of express warranty, purchaser must give warrantor reasonable opportunity to repair defects, and under Indiana law, purchaser must give warrantor more than two opportunities to repair defects. However, in instant case, although plaintiffs identified over 11 minor and major defects, record showed that plaintiff never allowed defendant more than two opportunities to repair said defects. Fact that recreational vehicle was out of service for total of 230 days did not require different result, where Ct. found that time that recreational vehicle spent in repair was not so excessive that warranty failed of its essential purpose.