Commercial Banking, Collections, and Bankruptcy

Dist. Ct. did not err in affirming Bankruptcy Ct.’s order finding that claims made by creditors who had executed retail foreign currency and spot metal transactions with debtor (future commissions merchant) were not entitled to same priority given to claims qualifying as “customer property,” which are entitled to priority over all other claims. Bankruptcy Ct. could properly conclude that foreign currency and spot metal transaction did not constitute “commodity contracts” for purposes of including said transactions into customer property category.

Dist. Ct. did not err in dismissing on res judicata grounds plaintiff’s Fair Housing Act action, alleging that defendants had wrongfully foreclosed on his home, where state court had previously approved final judicial sale of plaintiff’s home as part of defendants’ foreclosure action against plaintiff. Plaintiff conceded in state court action that instant lawsuit concerned same “events and actions” at issue in state court foreclosure action that pertained to plaintiff’s defaulted mortgage, as well as his claims that he had actually made payments on said mortgage. Moreover, other elements of res judicata had been established, where: (1) parties were same or in privity in both actions; and (2) state court judgment was final. Ct. further noted that plaintiff actually presented matters at issue in instant lawsuit while litigating state-court foreclosure action.

In action by plaintiff-debtor alleging that defendant-debt collector violated venue provision of Fair Debt Collection Practices Act (FDCPA), 15 USC section 1692i, Dist. Ct. erred in granting defendant’s motion for summary judgment, where defendant initiated debt collection action in wrong venue as explained in Suesz, 757 F.3d 636 (7^th Cir. 2014). Ct. of Appeals rejected defendant’s claim that it was entitled to safe harbor provision of FDCPA that would excuse instant infraction since at time it initiated debt collection action instant venue was permissible under Newsom, 76 F.3d 813 (7^th Cir. 1996), where Supreme Ct. in Jerman, 559 U.S. 573, held that FDCPA’s statutory safe harbor for bona fide mistakes did not apply to mistakes of law. Also, under Jerman, Dist. Ct. could not find that safe harbor provision protected some mistakes of law that were based on established case law that was later overruled as mistake. (Dissent filed.)

In action concerning dispute over home mortgage loan, record failed to support Dist. Ct.’s order finding as part of settlement of instant dispute that plaintiff had agreed to release any claims he had against another bank, as well as trust company, neither of which had been party in instant action. Dist. Ct. could make no such finding because it had failed to conduct evidentiary hearing on matter. As such, remand was required to conduct such hearing.

Dist. Ct. did not err in affirming Bankruptcy Ct. order that sustained Trustee’s objection to debtors’ claim for $30,000 exemption arising out of one debtor’s interest in Trust proceeds given to her after her parents had deceased. Language in Trust gave debtor vested right to one-third of trust residuum 60 days after her father’s death, which was prior to time debtors filed their Chapter 7 bankruptcy petition. As such, said Trust proceeds became part of bankruptcy estate subject to distribution to debtors’ creditors. Fact that instant issue was resolved via Trustee objection rather than as separate adversary proceeding did not require different result, since Trustee was merely responding to debtors’ own contention that proceeds were exempt from bankruptcy estate under section 522, as opposed to more accurate contention that Trust proceeds fell under section 541(c)(2) as property that was excluded from bankruptcy estate altogether.

Dist. Ct. did not err in granting defendant-Airport Authority’s motion to dismiss section 1983 action by plaintiff-entity providing services to airlines at airport, alleging that defendant’s notice to plaintiff that it intended to amend its rules and regulations to require that plaintiff pay defendant 1.5 percent of its revenues and increase its rent payments to defendant violated Contracts Clause of Constitution, because said amendments impaired plaintiff’s rights as contained in existing lease agreement with defendant. Plaintiff could not bring Contracts Clause action because it failed to show that it did not have available remedy in form of breach of contract action. Moreover, because defendant’s primary argument is that parties had agreed pursuant to prior settlement agreement that amended rules and regulations would govern terms of parties’ lease, instant dispute is matter of contract interpretation that could be resolved in breach of contract action without resolution of any constitutional claim. Ct. noted, though, that if defendant raised its regulatory authority as defense in future contract action, plaintiff could refile Contracts Clause claim in federal court.

Dist. Ct. erred in granting defendant’s motion for new trial on issue of damages with respect to jury’s verdict on defendant's counterclaim, alleging that plaintiff had repudiated its contract with defendant that resulted in defendant incurring extra expenses to have third-parties perform services at issue in instant contract, under circumstances where jury had agreed with defendant that plaintiff had wrongfully repudiated said contract, but that defendant was not entitled to any damages. Dist. Ct. can only grant defendant’s Rule 59 motion for new trial under circumstances where defendant shows that jury’s verdict constituted miscarriage of justice, and defendant failed to establish this standard, where jury could have reasonably believed that zero damages was appropriate either because defendant had failed to mitigate its damages, or because defendant could have convinced plaintiff to return its employees to job site without defendant incurring any additional expense by merely paying plaintiff what it had owed to plaintiff at time plaintiff withdrew its employees from job site. (Dissent filed)