Commercial Banking, Collections, and Bankruptcy

Public Act 99-24

Topic: 
Mortgage foreclosure
(Mulroe, D-Chicago; Lang, D-Skokie) provides that a court is not required to appoint a special representative for a deceased mortgagor to defend the action if there is a (1) beneficiary under a transfer on death instrument; (2) person or entity that was conveyed title to the property by the deceased mortgagor prior to death; (3) person or entity that was conveyed title to the property under the administration of the deceased’s estate; or (4) trust that was conveyed title to the property. Effective January 1, 2016.
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House Bill 2640

Topic: 
Condominium Property Act
(Cassidy, D-Chicago; Steans, D-Chicago) makes the following changes to the Condominium Property Act. (1) Bylaws must require that each unit owner receive a copy of the proposed annual budget at least 25 (instead of 30) days before adoption by the board of managers. (2) Authorizes a board to ratify and confirm actions taken in response to an emergency. Bylaws must require that the board of managers give notice to the unit owners of the emergency and general description of the actions taken because of the emergency within seven business days after the emergency. (3) Provides that the condominium instruments may be amended with the approval of, or notice to, any mortgagee or other lienholder of record if required under the provisions of the instruments. Current law is only “with the approval of any mortgagees required under the provisions of the condominium instruments.” (4) If there is an error in an instrument so that the instrument does not conform to the Act or other law, the association may correct the instrument by an amendment adopted by two-thirds of the board of managers without a unit-owner vote. If there is a provision in a condominium instrument requiring or allowing unit owners, mortgagees, or other lienholders of record to vote to approve an amendment to a condominium instrument, or for the mortgagees or other lienholders of record to be given notice of an amendment to a condominium instrument, that provision is not applicable to an amendment to the extent that the amendment corrects an omission, error, or inconsistency to conform the condominium instrument to the law. (5) Expands what a board may discuss in a closed session to include “information relating to” litigation, employment, and a unit owner’s unpaid share of common expenses. (6) Authorizes board members to participate in and act at any meeting of the board of managers in person, by telephonic means, or by use of any acceptable technological means in which all persons participating in the meeting can communicate with each other. This kind of participation constitutes attendance and presence in person at the meeting. (7) Amends the Common Interest Community Association Act. Deletes language providing that all provisions of the declaration, bylaws, and other community instruments severed by the Act shall be revised by the board of directors independent of the membership to comply with the Act. House Bill 2640 passed both chambers last week.
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Instant Technology LLC v. DeFazio

Federal 7th Circuit Court
Instant Technology LLC v. DeFazio
Civil Court
Contracts
Citation
Case Number: 
Nos. 14-2132 & 14-2243 Cons.
Decision Date: 
July 14, 2015
Federal District: 
N.D. Ill., E. Div.
Holding: 
Affirmed
Dist. Ct. did not err in finding after bench trial that defendants-former employees of plaintiff did not breach terms of restrictive covenants when defendants began employment with competing employment agency following their termination from plaintiff. Plaintiff failed to establish that defendants accessed plaintiff’s proprietary information about its clients after leaving their positions at plaintiff. Moreover, while defendants admitted to breaching covenant not to solicit plaintiff's staff or recruit plaintiff’s clients, Dist. Ct. could properly find that said covenants were unreasonable, where: (1) tech-staffing firms generally do not build relationships with its clients; (2) information about said clients could be found in other public forums; and (3) plaintiff could not rely on its interest in “stable workforce” to justify covenant not to recruit.

VDF Futureceuticals, Inc. v. Stiffel Laboratories, Inc.

Federal 7th Circuit Court
VDF Futureceuticals, Inc. v. Stiffel Laboratories, Inc.
Civil Court
Contracts
Citation
Case Number: 
No. 14-3232
Decision Date: 
July 10, 2015
Federal District: 
N.D. Ill., E. Div.
Holding: 
Affirmed
Dist. Ct. did not err in granting defendants’ motion for partial summary judgment in action alleging that defendants violated terms of licensing agreement calling for defendants to pay plaintiff royalties under licensing agreement to market CoffeeBerry-based skin care products. While plaintiff argued that defendants had engineering unauthorized assignment of license by purchasing stock of original licensee in order to avoid paying plaintiff portion of royalties owed to it, license agreement did not forbid defendants from obtaining control of original licensee. Moreover, second basis for appeal (i.e., that plaintiff should receive portion of $8.5 that defendants paid for licensee’s stock because portion of purchase price represented advanced royalties owed to plaintiff) was without basis, since record reflected that $8.5 million represented actual purchase price of stock, as opposed to sale of CoffeeBerry products.

PNC Bank, N.A. v. Hoffmann

PNC Bank, N.A. v. Hoffmann
Illinois Appellate Court
Civil Court
Citation to Discover Assets
Citation
Case Number: 
2015 IL App (2d) 141172
Decision Date: 
Wednesday, July 8, 2015
District: 
2d Dist.
Division/County: 
DuPage Co.
Holding: 
Affirmed.
Justice: 
SPENCE
Plaintiff bank filed suit against Defendant as guarantor of multimillion-dollar loan, and obtained judgment for $10.6 million. Bank issued third-party citations to discover assets, including financial services office where Defendant had an IRA. Court properly denied Defendant's Section 12-1005 motion for damages, as Bank did not "seize" her IRA, as it did not take possession of IRA. Citation to discovery assets informed third party of potential penalties if it transferred or disposed of the judgment debtor's property. Even if IRA were "seized", good-faith exception would apply. (HUDSON and BIRKETT, concurring.)

Peterson v. McGladrey LLP

Federal 7th Circuit Court
Peterson v. McGladrey LLP
Civil Court
Bankruptcy
Citation
Case Number: 
No. 14-1986
Decision Date: 
July 7, 2015
Federal District: 
N.D. Ill., E. Div.
Holding: 
Affirmed
Dist. Ct. did not err in dismissing Trustee’s lawsuit on behalf of insolvent investment funds, alleging that defendant-accounting firm committed accounting malpractice by failing to conduct sufficient audit of funds to detect fact that funds had been manipulated to disguise Ponzi scheme that caused funds' investors to lose money. Doctrine of in pari delicto applied to block any liability on part of defendant, where record showed that funds had committed separate fraud on investors through use of misleading documents that induced investors to invest money in funds, and that misconduct on part of funds was equal to or greater than any misconduct on part of defendant in failing to conduct sufficient audit. Ct. rejected Trustee’s claim that in pari delicto defense did not apply where, as here, defendant and funds committed separate acts of misconduct that contributed to single loss to investors.

Tilstra v. BouMatic LLC

Federal 7th Circuit Court
Tilstra v. BouMatic LLC
Civil Court
Contracts
Citation
Case Number: 
No. 14-3333
Decision Date: 
June 30, 2015
Federal District: 
W.D. Wisc.
Holding: 
Affirmed
Record contained sufficient evidence to support jury’s $471,124 verdict in favor of plaintiff in action alleging that defendant breached terms of dealership agreement by forcing plaintiff to sell his dealership to third-party at below-market price. Terms of agreement precluded defendant from terminating without good cause agreement calling for defendant to supply plaintiff with dairy farming equipment for plaintiff’s resale to customers, and record showed that defendant essentially terminated agreement by telling plaintiff that it would reduce plaintiff’s sales territory to zero if it did not sell dealership to third-party. Moreover, defendant failed to establish good cause for seeking sale of dealership to third-party, and agreement did not allow defendant to seek sale of dealership based on belief that said sale might increase defendant’s profits.

Lawson v. Sun Microsystems, Inc.

Federal 7th Circuit Court
Lawson v. Sun Microsystems, Inc.
Civil Court
Contracts
Citation
Case Number: 
Nos. 13-1502 & 13-1503 Cons.
Decision Date: 
June 30, 2015
Federal District: 
S.D. Ind., Indianapolis Div.
Holding: 
Reversed and remanded
Defendant-employer was entitled to judgment notwithstanding verdict in action alleging that defendant breached terms of compensation plan by improperly paying plaintiff-employee commission on computer maintenance and support services deal that was sold to defendant’s client, where defendant based commission on 2006 incentive plan. While plaintiff claimed that he was entitled to larger commission under terms of 2005 incentive plan, record showed that plaintiff did not close deal with client until March of 2006, and amendment to 2005 plan set December 25, 2005 deadline for deals to become final in order to qualify for commission under 2005 incentive plan. Ct. rejected plaintiff’s contention that 2005 plan remained effective until sometime in 2006 when 2006 plan became effective.

Bank Financial, FSB v. Brandwein

Bank Financial, FSB v. Brandwein
Illinois Appellate Court
Civil Court
Foreclosure
Citation
Case Number: 
2015 IL App (1st) 143956
Decision Date: 
Friday, June 26, 2015
District: 
1st Dist.
Division/County: 
Cook Co., 1st Div.
Holding: 
Affirmed.
Justice: 
GORDON

Manager of LLC signed promissory note to Plaintiff bank for $275,000 loan, for mortgage on commercial property (auto repair shop). Court properly granted Plaintiff bank’s motion for summary judgment in foreclosure action, as no evidence that Defendant was damaged by alleged tortious interference. Even if rent was “difficult for Defendant to collect, if tenants did pay Defendant, then no breach of contract, no cognizable harm, and no tortious interference. Thus, no factual support for claim of tortious interference. (PALMER and REYES, concurring.)

Commodity Futures Trading Comm. v. Battoo

Federal 7th Circuit Court
Commodity Futures Trading Comm. v. Battoo
Civil Court
Injunction
Citation
Case Number: 
No. 14-3133
Decision Date: 
June 23, 2015
Federal District: 
N.D. Ill., E. Div.
Holding: 
Affirmed
Dist. Ct. did not err in denying request of certain Liquidators for modification of injunction that had been entered in Commodity Futures Trading Commission and SEC proceedings that essentially froze defendant’s assets after defendant had defaulted on claims that he had defrauded certain investors, where injunction had been entered to determine true ownership of defendant’s assets. While Liquidators argued that injunction should be modified so as to permit release of certain funds to Liquidators because defendant no longer had control over his assets, denial of modification request was appropriate, since there had been no final determination that Liquidators were true owners of said funds and no determination as to how losses would be distributed among claimants to defendant’s funds.