Commercial Banking, Collections, and Bankruptcy

House Bill 2635

Topic: 
Mechanics Lien Act
(Sandack, R-Downers Grove; Harmon, D-Oak Park) allows a lien claimant to proceed directly against a bond substituted for the lien on the owner’s real estate or funds. The court may dismiss parties other than the principal, surety of the bond, and the lien claimant. Defenses against the lien claimant are limited to those that could be asserted by the principal or contracting owner. The “prevailing party” in an action brought under this new subsection shall be awarded its attorney fees. The “prevailing party” is defined as a lien claimant that recovers at least 75% of the amount of its lien claim, or the principal of the bond if the lien claimant recovers less than 25% of the amount of its lien claim. The attorney’s fees for a lien claimant that is a prevailing party is limited to the amount remaining on the bond after the payment of the claim and interest, and the attorney’s fees awarded to a bond principal shall be limited to 50% of the amount of the lien claim. Passed both chambers.
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Senate Bill 45

Topic: 
Uniform Interstate Depositions and Discovery Act
(Barickman, R-Bloomington; Andersson, R-Geneva) simplifies the procedures to take the deposition of an Illinois person who is subpoenaed for discovery purposes from an out-of-state court. The Act creates establishes a simple, clerical procedure in which a subpoena from an out-of-state court is reissued as a discovery subpoena in Illinois. Passed both chambers.
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The Private Bank and Trust Company v. EMS Investors, LLC

The Private Bank and Trust Company v. EMS Investors, LLC
Illinois Appellate Court
Civil Court
Mortgages
Citation
Case Number: 
2015 IL App (1st) 141689
Decision Date: 
Wednesday, May 27, 2015
District: 
1st Dist.
Division/County: 
Cook Co., 3d Div.
Holding: 
Affirmed.
Justice: 
HYMAN
Lender released and discharged a third co-borrower as to mortgages secured by property of the third co-borrower. Intent of parties to release and language of release that controls its scope and effect. Release of one co-borrower, in absence of reservation of rights, does not necessarily release all other joint and several co-borrowers. (PUCINSKI and LAVIN, concurring.)

Bank of America v. WS Management, Inc.

Bank of America v. WS Management, Inc.
Illinois Appellate Court
Civil Court
Fraudulent Transfer Act
Citation
Case Number: 
2015 IL App (1st) 132551
Decision Date: 
Monday, May 18, 2015
District: 
1st Dist.
Division/County: 
Cook Co., 1st Div.
Holding: 
Affirmed in part and vacated in part; remanded in part.
Justice: 
CONNORS
Plaintiff bank attempted to collect $1.5 million judgment entered in Kansas against shopping center management company in foreclosure action. Findings that Defendants did not commingle funds and maintained arm's length relationships, and that two Defendant companies were solvent, were not against manifest weight of evidence. Attorney fees are not recoverable as punitive damages under Fraudulent Transfer Act. Generally, in protracted litigation involving multiple complex issues, an evidentiary hearing should be conducted on request of losing party, especially if prevailing party was represented by multiple attorneys and was entitled to fees and costs as to some but not all claims. Court orders do not indicate basis for decision, and contain no finding of whether fees were reasonable, fee award vacated, and remanded for explanation of basis for fee award and for evidentiary hearing on attorney fees. (DELORT and CUNNINGHAM, concurring.)

Senate Bill 884

Topic: 
Venue changes
(Radogno, R-Lemont) makes the following changes to the venue section of the Code of Civil Procedure. (1) Deletes current law that if all defendants are nonresidents of Illinois, and action may be commenced in any county. (2) Makes the residence of an Illinois private corporation or railroad or bridge company and any foreign corporation authorized to transact business in Illinois to be any county in which it is doing business if after due inquiry no other office can be found in Illinois. Any county in which it has a registered office would still be considered to be a county of residence. (3) Deletes current law in which a partnership may be sued in any county in which any partner resides. A partnership may be sued in any county in Illinois in which it is doing business if after due inquiry no office can be found in Illinois. (4) Deletes current law in which an Illinois insurance company or one doing business in Illinois may be brought in any county in which the plaintiff or one of the plaintiffs may reside. (5) Creates a new motion to dismiss for inconvenient venue. It requires the court to dismiss an action in which none of the parties is a resident of Illinois and over which another forum has jurisdiction unless the cause of action primarily arose in Illinois or the interests of justice require that the action proceed in Illinois. Allows the court to award costs and reasonable attorney’s fees in connection with the dismissal. A condition of dismissal is that if the plaintiff elects to file an action in another forum within six months after the dismissal order, the defendant must accept service of process from the court. If the statute of limitations has run in the other forum, the defendant must waive that defense. If the defendant refuses to abide by these conditions, the action shall be reinstated for further proceedings in the court in which the dismissal was granted. If the court in the other forum refuses to accept jurisdiction, the plaintiff may, within 30 days after the final order refusing jurisdiction, reinstate the action in which the dismissal was granted.
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1756 W. Lake Street LLC v. American Chartered Bank

Federal 7th Circuit Court
1756 W. Lake Street LLC v. American Chartered Bank
Civil Court
Bankruptcy
Citation
Case Number: 
No. 14-3435
Decision Date: 
May 15, 2015
Federal District: 
N.D. Ill., E. Div.
Holding: 
Affirmed
Dist. Ct. did not err in granting defendant-bank’s motion for summary judgment in adversary action brought by plaintiff-debtor in Chapter 11 proceeding, seeking to set aside transfer of deed to plaintiff’s property after plaintiff had defaulted on $1.5 million loan, where said transfer occurred pursuant to agreement by defendant to forebear foreclosing on said property, and where, according to plaintiff, property was worth $200,000 more than loan balance. While plaintiff argued that it was entitled to set aside transfer of deed because it received less than equivalent value for said property when defendant merely forgave loan in exchange for transfer of deed, record showed that plaintiff had already received any alleged $200,000 difference in form of eleven prior forbearances that defendant had granted to plaintiff after plaintiff’s defaults on loan, as well as, among other thing, repeated extensions of loan maturity dates, which enabled plaintiff to remain in business and obtain gross income that was greater than $400,000.

Burford v. Accounting Practice Sales, Inc.

Federal 7th Circuit Court
Burford v. Accounting Practice Sales, Inc.
Civil Court
Contract
Citation
Case Number: 
No. 14-2692
Decision Date: 
May 13, 2015
Federal District: 
S.D. Ill.
Holding: 
Affirmed and reversed in part and remanded
Dist. Ct. erred in granting defendants’ motion for summary judgment in action alleging that defendants wrongfully terminated contract with plaintiff calling for plaintiff to market and facilitate purchase and sale of accounting practices on behalf of defendants. While Dist. Ct. based ruling on finding that plaintiff could not prevail on contract claim because instant contract was of indefinite duration, and thus was terminable at will by either party, terms of contract actually provided that it could be terminated by defendants only if plaintiff had violated terms of agreement. As such, defendants could not prevail on summary judgment because parties had contracted around default rule that makes indefinite contracts terminable at will by either party.

In re: Pejian

Federal 7th Circuit Court
In re: Pejian
Civil Court
Bankruptcy
Citation
Case Number: 
No. 14-2052
Decision Date: 
May 11, 2015
Federal District: 
N.D. Ill., E. Div.
Holding: 
Reversed and remanded
Bankruptcy Ct. erred in overruling objection by debtor to bank’s filing of late proof of claim with respect to bank’s secured mortgage to property partially owned by debtor. While bank argued that, as secured creditor, it was entitled to file proof of claim at any time until Bankruptcy Ct. confirmed proposed Chapter 13 repayment plan, secured creditor must file proof of claim by 90-day deadline set forth by Rule 3002(c). Ct. noted, though, that secured creditor’s failure to file timely claim did not void its lien.

F.D.I.C. v. RLI Insurance Co.

Federal 7th Circuit Court
F.D.I.C. v. RLI Insurance Co.
Civil Court
Indemnity
Citation
Case Number: 
No. 14-2736
Decision Date: 
April 30, 2015
Federal District: 
N.D. Ill., E. Div.
Holding: 
Affirmed
Dist. Ct. did not err in granting plaintiff’s motion for summary judgment in action seeking indemnity from financial institution bond issued by defendant, where said indemnity arose out of plaintiff’s reliance on forged signatures in two leases used to support applications for two loans. Instant bond covered losses resulting directly from reliability on documents that bore forged signatures, and instant leases satisfied “security interest” requirement in indemnity bond. Ct. further rejected defendant’s argument that: (1) plaintiff failed to show that its loss resulted directly from reliance on forged signatures; (2) plaintiff did not possess said leases at time it dispensed funds in reliance on forged signatures; and (3) plaintiff failed to file instant claim within applicable limitations period.

In re: Marcus-Rehtmeyer

Federal 7th Circuit Court
In re: Marcus-Rehtmeyer
Civil Court
Bankruptcy
Citation
Case Number: 
No. 14-1891
Decision Date: 
April 28, 2015
Federal District: 
N.D. Ill., E. Div.
Holding: 
Reversed and remanded
Bankruptcy Ct. erred in denying creditor’s objection to discharge of debtor’s $169,000 debt based on fact that debtor had concealed her assets and income during prior citation proceedings that creditor had initiated, where Bankruptcy Ct. considered existence of debtor’s assets/income only as of date of citation examination. Moreover, while Bankruptcy Ct. could reasonably find that creditor had failed to show that debtor had concealed ownership interests in certain property and stocks, record showed that debtor had obtained employment income either prior to or during citation proceedings, that debtor had failed to reveal said income although required to do so, and that debtor had concealed said income with intent to hinder, delay or defraud said creditor. Fact debtor may not have received said income at time of instant citation examination is not material, where debtor had continuing obligation to report said income during entire pendency of citation to discover assets.