Commercial Banking, Collections, and Bankruptcy

Dist. Ct. did not err in dismissing for failure to state cause of action plaintiffs’ claims under Fair Debt Collection Practices Act, alleging that defendants’ dunning letters, which offered to settle plaintiffs’ debts at substantial discount, but also told plaintiffs that any resulting settlement “may have tax consequences,” were misleading because plaintiffs were insolvent at time they received said letters, and thus would not have incurred tax liability for any discharged debts. Challenged statement regarding potential tax consequence was not false or misleading, since defendants’ use of term “may” did not mean that plaintiffs would incur tax liability, and instant insolvent plaintiffs might become solvent prior to settling their debt, which would have triggered possibility of tax consequence for said settlement. Ct. rejected plaintiffs’ contention that instant tax consequence warning gave false impression that plaintiffs should pay entire debt to avoid tax liability, since rational debtor would have known that income taxes are calculated as percentage of income, such that debtor would be better off in taking offer to pay discounted debt, since benefit of discount would still outweigh any tax consequence of receiving discount.

Dist. Ct. did not err in granting judgment in favor of defendant in breach of contract action, after granting defendant’s motion in limine (that was filed two months prior to start of scheduled trial) to bar plaintiff from presenting testimony from its Chairman regarding his opinion on calculation of plaintiff’s damages, where Dist. Ct. found that such testimony required specialized knowledge of expert, and where plaintiff had not timely named its Chairman (or anyone else) as expert witness. Plaintiff conceded that such testimony required expert witness, and Ct. rejected plaintiff’s claim that it provided sufficient notice, where: (1) plaintiff had only indicated that Chairman would be fact witness; and (2) duty to disclose witness as expert is not excused when witness who will testify as both fact and expert witness is only identified as fact witness. Also, plaintiff affirmed at two status hearings after close of discovery that it would not have affirmative expert witness at trial and never provided defendant with summary of what Chairman might have said at trial regarding his damages calculations. Moreover,

Dist. Ct. did not err in granting defendant-manufacturer’s motion for summary judgment in plaintiff’s action alleging that defendant breached terms of express limited warranty with regards to alleged defects in $414,583 motor home purchased by limited liability company that was controlled by plaintiff. Terms of said warranty excluded from coverage all vehicles purchased by business entities, and Ct. rejected plaintiff’s claim that defendant had waived said exclusion by performing certain repairs on motor home prior to plaintiff filing instant lawsuit.

Bankruptcy Ct. did not err in finding that Ill. Dept. of Revenue (IDOR) failed to establish value of its interests in debtor’s commercial properties that were sold to satisfy creditor claims, for purposes of IDOR seeking portion of sales proceeds, where: (1) prior to said sales, Bankruptcy Ct. allowed under section 363(f) of Bankruptcy Code sales to proceed free and clear of interests held by any entity including IDOR; (2) proceeds of sales were lower than banks’ superior secured interests in said properties; and (3) Bankruptcy Ct.’s section 363(f) orders effectively precluded IDOR from seeking to impose successor liability on purchasers of said properties for state taxes owed by debtors. Although section 363(e) of Bankruptcy Code allowed IDOR instant opportunity to seek portion of sales proceeds to compensate it for decrease in value of its interests in said properties caused by issuance of section 363(f) orders, IDOR’s argument that it was entitled to recoup full amount of instant tax deficiencies was not supported by record, and record otherwise failed to contain any evidence regarding purchasers’ financial ability to pay any amount of subject tax deficiencies. Moreover, likelihood of IDOR collecting on tax deficiencies from sale proceeds was minimal both before and after instant sales, given fact that: (1) banks holding superior interests in said properties could have blocked any sale terms that favored IDOR at expense of said banks; and (2) banks could have simply foreclosed on said properties without having to pay any proceeds to IDOR.