Commercial Banking, Collections, and Bankruptcy

Teed v. Thomas and Betts Power Solutions, L.L.C.

Federal 7th Circuit Court
Teed v. Thomas and Betts Power Solutions, L.L.C.
Civil Court
Fair Labor Standards Act
Citation
Case Number: 
Nos. 12-2440 & 12-3029 Cons.
Decision Date: 
March 26, 2013
Federal District: 
W.D. Wisc.
Holding: 
Affirmed
Dist. Ct. did not err in granting under doctrine of successor liability plaintiff’s motion to substitute instant defendant, which had purchased assets of plaintiff’s employer, in action alleging that plaintiff’s employer had violated FSLA in failing to pay plaintiffs overtime. While current defendant objected to substitution where it had purchased employer’s assets under condition that it would be free of all employer’s FSLA liabilities, Dist. Ct. could properly find that successor liability applied under federal standards, even though it would not apply under Wisc. law, where: (1) successor liability is appropriate in suits to enforce federal labor and employment laws, including FSLA actions, even though purchaser of assets disclaimed liability as condition of purchase; (2) allowing current defendant to take assets without assuming liabilities would give said defendant windfall; and (3) instant $500,000 FSLA judgment was modest in relation to $22 million asset purchase. Ct. observed, though, that: (1) successor liability would not have applied if employer had sold its assets in piecemeal fashion; and (2) current defendant did not argue that successor liability should not apply where, as here, employer was insolvent at time of asset purchase, and where application of doctrine would therefore upset priority of competing creditors.

House Bill 2508

Topic: 
Motor Vehicle Franchise Act
(Hoffman, D-Belleville) Provides that it is a violation of the Act to require a motorcycle dealer to (1) install fixtures, lighting, or displays not specifically related to products not made by the manufacturer; (2) buy fixtures or lighting only from the manufacturer's approved distributor; (3) segregate certain aftermarket products away from the other manufacturer's products; or (4) locate to a new or alternate facility. Passed out of House Judiciary Committee.
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House Bill 2832

Topic: 
Recorder reviewing documents
(Lang, D-Skokie) Provides that a county recorder may establish a “review index” and procedures for investigating filings that would cause the recorder to reasonably believe that the filing may be fraudulent, unlawfully altered, or intended to unlawfully cloud or transfer the title of any real property. Provides for the following: (1) the filing of a notice sheet regarding a suspected fraudulent filing; (2) criteria that a recorder may rely upon to identify a filing as appropriate to be placed in the review index; (3) notification requirements of a recorder's determinations regarding a filing; (4) procedures for removal of a filing from the review index; (5) administrative review of a recorder's determination; (6) priority of filing; and (7) fees associated with filing a deed or instrument that is determined to be fraudulent. Immunizes the recorder or the recorder’s employees or agents for any omission or error under this new Section. It applies to documents only filed after the effective date. On second reading in the House.
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Harmon v. Gordon

Federal 7th Circuit Court
Harmon v. Gordon
Civil Court
Contracts
Citation
Case Number: 
No. 11-3176
Decision Date: 
March 21, 2013
Federal District: 
N.D. Ill., E. Div.
Holding: 
Affirmed
Dist. Ct. did not err in granting defendant’s motion for summary judgment in breach of contract action alleging that defendant improperly terminated contract calling for plaintiff to provide defendant with financial and consulting services that plaintiff claimed was for duration of defendant’s professional basketball career. Dist. Ct. could properly find that subject contract covered at most four years where plaintiff conceded in prior deposition that new contract would be drafted after completion of defendant’s initial four-year basketball contract, and instant contract otherwise lacked provisions for compensation beyond said four-year period. Moreover, plaintiff could not counter concessions made in his deposition with subsequent sworn written statement. Also, while defendant terminated contract in third year, plaintiff failed to present sufficient evidence to support any remedy for loss of income arising out of fourth year of contract. Finally, Dist. Ct. did not err in dismissing on res judicata grounds plaintiff’s tortious interference with prospective business advantage claim based on Illinois law, where plaintiff’s similar claim based on California law had been dismissed for failure to state cause of action.

Frontier Ins. Co. v. Hitchcock

Federal 7th Circuit Court
Frontier Ins. Co. v. Hitchcock
Civil Court
Contracts
Citation
Case Number: 
No. 11-3510
Decision Date: 
March 19, 2013
Federal District: 
S.D. Ind., Indianapolis Div.
Holding: 
Affirmed
Dist. Ct. did not err in directing defendants to provide collateral pursuant to terms of contract with plaintiff that also called for defendants to indemnify plaintiff for amounts paid on surety bond. While record showed that plaintiff had not actually paid any amounts on bond at time of lawsuit, Dist. Ct. could properly reject defendants’ claim that plaintiff could seek collateral to pay on bond only after plaintiff’s obligation to third-party covered by bond had been satisfied. Moreover, record showed that plaintiff’s obligation to third-party had been quantified at time of final judgment in instant action. However, Ct. noted that defendant could seek refund of portion of collateral from clerk of district court should plaintiff eventually pay less than face value of surety bond.

West Bend Mutual Ins. Co v. Belmont State Corp.

Federal 7th Circuit Court
West Bend Mutual Ins. Co v. Belmont State Corp.
Civil Court
Commercial Law
Citation
Case Number: 
Nos. 11-1811 & 11-1959 Cons.
Decision Date: 
March 19, 2013
Federal District: 
N.D. Ill., E. Div.
Holding: 
Affirmed and reversed in part
In action by plaintiff-insurance company seeking to recover money paid when its insured failed to pay subcontractors and suppliers on construction projects, Dist. Ct. did not err in finding in favor of defendant-bank, which had applied $100,000 in checks that had been made payable to defendant and had been written on insured’s bank account by individual employed by insured where said funds were used to pay individual’s personal loan. While Ill. law requires bank named as payee to ask drawee (in this case, insured) how funds are to be applied, and instant record indicated that defendant did not ask insured how funds should be applied, Dist. Ct. could still find in favor of defendant where plaintiff failed in its burden to show what insured would have done (i.e., pay subcontractors etc.) if defendant had asked insured how funds should have been applied. Moreover, Dist. Ct. properly directed defendant to turn over $62,000 in rent payments that had been funneled through insured’s bank account since defendant could not assert more senior security interest where insured had actual possession of rent payments. However, Dist. Ct. erred in awarding plaintiff attorney fees generated in seeking said recovery under section 2-1402(f)(1) of Ill. Code of Civil Procedure where Dist. Ct. had failed to find that defendant had contumaciously evaded citation filed to obtain said rent payments.

Johnson Controls, Inc. v. Edman Controls, Inc.

Federal 7th Circuit Court
Johnson Controls, Inc. v. Edman Controls, Inc.
Civil Court
Arbitration
Citation
Case Number: 
Nos. 12-2308 & 12-2623 Cons.
Decision Date: 
March 18, 2013
Federal District: 
E.D. Wisc.
Holding: 
Affirmed
Dist. Ct. did not err in granting defendant’s motion to confirm arbitrator’s decision in underlying dispute in which arbitrator found that plaintiff had breached contract with defendant calling for defendant to be exclusive distributor of plaintiff’s products in Panama. Arbitrator’s award will be upheld as long as arbitrator was arguably construing or applying terms of contract, and arbitrator’s citation to evidence indicating that plaintiff was selling its own products directly to third-parties in Panama to support finding that plaintiff breached contract was within scope of his authority. Moreover, arbitrator could properly award defendant attorney’s fees based on 33% contingency fee contract and was not required to use lodestar method where: (1) underlying agreement did not require lodestar method to calculate fees; and (2) experts testified that instant contingency contract qualified as “commercially-reasonable fee.”

House Bill 169

Topic: 
TODI tweaks
(Bradley, D-Marion) makes six changes to the recently enacted Transfer on Death Instrument to clear up title questions as follows. (1) Current law states that if a beneficiary has not accepted the TODI within six months of the owner’s death, any co-beneficiary, contingent beneficiary, legatee, heir, or personal representative of the deceased owner’s estate may file a written demand on the non-accepting beneficiary requiring the filing of an acceptance or disclaimer within 30 days. (2) House Bill 169 specifically defines the term “authorized representative” to mean “an agent under a power of attorney, a guardian, a standby guardian, a short-term or temporary guardian, an executor, an administrator, or an administrator to collect.” It was used in the TODI Act but not defined. (3) Proposal 98-5 protects any purchaser or mortgagee who acquires its title or lien from the beneficiaries of the real estate for value and without notice before commencement of any action. But the amendment does not relieve the beneficiaries of liability to the claimant under the Act. (4) Currently, a TODI may be used only for residential real estate as defined in the Residential Real Property Disclosure Act. This has caused several problems with residential cooperatives and condominiums that don’t fit with the TODI Act. House Bill 169 resolves this problem by deleting any reference to “units in residential cooperatives” and includes “common elements” as what may be passed by a TODI as it relates to a residential condominium unit. (5) The current Act doesn’t prohibit an agent from creating or revoking a TODI if properly authorized under the instrument appointing the agent, but the concept of an agent doing so conflicts with the other requirements for the execution or revocation of a TODI. House Bill 169 eliminates the power to create or revoke a TODI by an agent even if expressly authorized under the agency. (6) The current Act requires strict compliance with the signing, attestation, and acknowledgement provisions in Section 45. House Bill 169 adds the word “substantial” to this compliance requirement so that mere technical errors do not render the TODI void. Examples include if the notary public failed to include the names of the witnesses in its acknowledgement, or if the attestation clause fails to contain a provision stating the witnesses believed the owner to be of sound mind and memory.
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Stayart v. Google Inc.

Federal 7th Circuit Court
Stayart v. Google Inc.
Civil Court
Misappropriation
Citation
Case Number: 
No. 11-3012
Decision Date: 
March 6, 2013
Federal District: 
E.D. Wisc.
Holding: 
Affirmed
Dist. Ct. did not err in dismissing for failure to state cause of action plaintiff’s action alleging that defendant’s internet search engines, which began with plaintiff’s name and eventually lead to websites advertising drugs used to treat male erectile dysfunction, violated Wisconsin misappropriation statute. While plaintiff alleged that her name carried significant commercial value, and that defendant used her name without her permission to generate revenue, plaintiff’s lawsuit was subject to legitimate public interest exception where: (1) plaintiff had previously filed similar federal misappropriation lawsuit against Yahoo!; (2) court documents, including plaintiff’s prior lawsuit, are matters within public interest; and (3) relevant search engine inquiries took place after plaintiff had filed prior lawsuit. Ct. further found that defendant’s use of plaintiff’s name was too incidental to support misappropriation claim.

Caterpillar Financial Services v. Peoples National Bank, N.A.

Federal 7th Circuit Court
Caterpillar Financial Services v. Peoples National Bank, N.A.
Civil Court
Liens
Citation
Case Number: 
No. 12-2854
Decision Date: 
March 4, 2013
Federal District: 
S.D. Ill.
Holding: 
Affirmed
Dist. Ct. did not err in entering judgment in favor of plaintiff in action accusing defendant of converting sales of collateral to which plaintiff had secured claim that was superior to secured claim of defendant. While record showed existence of three secured claims to same collateral, and that defendant had acquired third-party’s secured claim that was more senior than plaintiff’s secured interest in collateral, defendant could not enforce third-party’s secured interest where defendant had failed to produce copy of third-party’s actual security interest to said collateral. As such, defendant could not establish that third-party’s security interest covered collateral that defendant took possession to satisfy its loan. Moreover, defendant could not invoke “composite document theory” as substitute for actual security agreement by relying on financing statement that recited existence of security and subordination agreements, where financing agreement was unclear whether missing security agreement had itemized equipment in which third-party had acquired security interest.