Commercial Banking, Collections, and Bankruptcy

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.

House Bill 2269

Topic: 
Cook County residential real estate transactions
(Evans, D-Chicago) extends the sunset date for requiring a thumbprint of the transferor in a Cook County residential real estate transaction from July 1, 2013 to July 1, 2018. Scheduled for hearing this Wednesday in House Judiciary Committee.
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In the Matter of Canopy Financial Inc.

Federal 7th Circuit Court
In the Matter of Canopy Financial Inc.
Civil Court
Bankruptcy
Citation
Case Number: 
No. 12-3239
Decision Date: 
February 28, 2013
Federal District: 
N.D. Ill., E. Div.
Holding: 
Affirmed
Bankruptcy Ct. did not abuse its discretion in denying creditor’s motion to vacate default that Bankruptcy Ct. had entered under Fed. R. Bankr. P. 9024, where creditor had failed to answer complaint filed by Trustee seeking return of $80,000 “fraudulent” payment made by debtor to creditor at time debtor was insolvent. Record showed that Trustee served complaint on registered agent of creditor, and Bankruptcy Ct. could properly attribute agent’s omissions to creditor. Moreover, creditor failed to provide sufficient facts to establish that any error in agent’s failure to notify creditor of existence of complaint was excusable. Ct. further noted that creditor had burden of both production and persuasion in its motion to vacate instant default, and creditor failed to meet said burdens where creditor neglected to present any statement from agent regarding actions taken or not taken to inform creditor of existence of complaint.

House Bill 2505

Topic: 
Circuit court clerk costs
House Bill 2505 (Soto, D-Chicago) amends the Clerks of Courts Act to allow the county board to require its circuit court clerk in its county to retain not less than 1% nor more than 5% of fines, fees, and costs collected and disbursed for deposit in the Circuit Court Clerk Operation and Administrative Fund. It is not applicable if an amount or percentage is otherwise provided by statute. Exempts amounts held in trust for bail bond or child support payment amounts. Just introduced.
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