Commercial Banking, Collections, and Bankruptcy

House Bill 3636

Topic: 
Mechanics Lien Act
(Burke, D-Evergreen Park; Mulroe, D-Chicago) does three things in response to the LaSalle Bank National Association vs. Cypress Creek opinion. (1) Requires that the owner or interested person’s demand for suit to be commenced or answered within 30 days must contain this language in at least 10-point, boldface type: “Failure to respond to this notice within 30 days after receipt, as required by Section 34 of the Mechanics Lien Act, shall result in the forfeiture of the referenced lien.” (2) Defines a “lien creditor” as someone who does work or furnishes material under this Act. A lien creditor is preferred over other encumbrances except that previous encumbrances are preferred only to the extent of the value of the land at the time the contract was made for the improvements, and each lien creditor is preferred to the value of all later improvements regardless of whether the lien creditor provided those improvements. (3) If the sale proceeds are insufficient to satisfy claims of both prior encumbrances and lien creditors, the sale proceeds are to be distributed as follows. (a) Any previous encumbrance has a paramount lien in the portion of the proceeds attributable to the value of the land at the time of making of the contract for improvements. (b) Any lien creditors have a paramount lien in the portion of the proceeds attributable to all later improvements made to the property. (4) It has an immediate effective date. House Bill 3636 is in the House awaiting concurrence on Senate Amendment No. 2.
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In re: Knight-Celotex, LLC

Federal 7th Circuit Court
In re: Knight-Celotex, LLC
Civil Court
Bankruptcy
Citation
Case Number: 
No. 11-3588
Decision Date: 
September 5, 2012
Federal District: 
N.D. Ill., E. Div.
Holding: 
Affirmed
In bankruptcy proceedings involving corporate entity, as well as principal owner of said entity, in which law firm represented individual who was Trustee for both corporate entity and principal owners in their bankruptcy petitions, Bankruptcy Ct. did not err in rejecting principal owner's objection to Trustee assigning to creditor claims that corporate entity had lodged against principal owner, even though principal owner argued that Trustee was judicially estopped from making said assignment. While principal owner contended that Trustee had disavowed said claims against him prior their assignment since, according to principal owner, approval of law firm's retention agreement signaled that Trustee held no interests adverse to principal owner based on certain representations made by law firm in retention agreement application, Ct. found that judicial estoppel did not apply since Trustee never explicitly disavowed said claims against principal owner or expressed any interest in abandoning said claims. Moreover, Ct. noted that all parties were aware of Trustee's continued interest in said claims at time of law firm's retention agreement application.

Kawasaki Kisen Kaisha, Ltd. v. Plano Molding Co.

Federal 7th Circuit Court
Kawasaki Kisen Kaisha, Ltd. v. Plano Molding Co.
Civil Court
Contract
Citation
Case Number: 
Nos. 11-2949 & 11-2967 Cons.
Decision Date: 
August 29, 2012
Federal District: 
N.D. Ill., E. Div.
Holding: 
Affirmed and reversed in part and remanded
Dist. Ct. did not err in granting defendant's motion for summary judgment in action alleging that steel injection molds purchased by defendant were improperly packed during shipment of molds to defendant and fell onto railroad track that caused derailment of plaintiff's train, as well as caused damage to property of others on said train, where "K-Line" bill of lading, which was one of two bases for imposing liability on defendant for derailment, named other entities as shipper and consignee, and where plaintiffs failed to show either that consignee was agent of defendant or that defendant had power to control consignee, which otherwise served as coordinator of molds' transportation from China to U.S. However, Dist. erred in granting defendant's summary judgment motion with respect to separate "World" bill of lading, where record contained triable issue as to whether defendant actually made arrangements with consignee to ship molds, and where terms of "World" bill of lading would make defendant liable for instant derailment.

Stuller, Inc. v. Steak N Shake Enterprises, Inc.

Federal 7th Circuit Court
Stuller, Inc. v. Steak N Shake Enterprises, Inc.
Civil Court
Injunction
Citation
Case Number: 
No. 11-2656
Decision Date: 
August 24, 2012
Federal District: 
C.D. Ill.
Holding: 
Affirmed
In action seeking declaration that plaintiff-franchisee was not required to comply with new pricing policy generated by defendant-franchisor, Dist. Ct. did not err in granting plaintiff's request of issuance of preliminary injunction to prevent defendant from enforcing said policy and/or terminating franchise agreement during pendency of lawsuit. Record showed that plaintiff had likelihood of success based on language in franchise agreement, and plaintiff demonstrated that it had no adequate legal remedy where implementation of policy that required 50% pricing reduction or else face termination of franchise agreement held potential for plaintiff's loss of good will and reputation if plaintiff prevailed on merits and attempted to raise prices back to existing level.

Public Act 97-966

Topic: 
Mechanics Lien Act
(Althoff, R-Crystal Lake; Tyron, R-Crystal Lake) requires work to be done or materials furnished within three years for residential property and five years for any other kind of property. Senate Bill 3792 sunsets on January 1, 2016; at which time the limitation then reverts to three years for any kind of property at that time. Effective January 1, 2013.
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Public Act 97-953

Topic: 
Residential construction and radon
(McAsey, D-Lockport; Collins, D-Chicago) creates the Radon Resistant Construction Act. It requires all new residential construction include passive radon resistant construction. "New residential construction" is any original construction of a single-family home or a dwelling containing two or fewer apartments, condominiums, or townhouse. "Passive radon resistant construction" includes an installed pipe that relies solely on the convective flow of air upward for soil-gas depressurization and may consist of multiple pipes routed through conditioned space from below the foundation to the roof above. Effective June 1, 2013.
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Public Act 97-921

Topic: 
Trust modernization II
(McAsey, D-Lockport; Silverstein, D-Chicago) Public Act 97-921 adds flexibility to Illinois estate planning and administration of trusts by the use of "directed trusts." Directed trusts allow a settlor to establish a trust and separate the administrative authority between a trustee and another person or entity acting as a fiduciary, such as an investment advisor, distribution advisor, or trust protector. It is modeled after Delaware law, and more than 30 states already allow for directed trusts in some form. Effective January 1, 2013.
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Public Act 97-920

Topic: 
Trust modernization I
(McAsey, D-Lockport; Dillard, R-Hinsdale) modernizes Illinois trust law by allowing "decanting" of trusts. Public Act 97-920 allows an irrevocable trust to evolve to meet a family's changing needs without court involvement. It is modeled after the laws of Delaware and New York. Effective January 1, 2013.
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Pagel v. TIN Inc.

Federal 7th Circuit Court
Pagel v. TIN Inc.
Civil Court
Family and Medical Leave Act
Citation
Case Number: 
No. 11-2318
Decision Date: 
August 9, 2012
Federal District: 
C.D. Ill.
Holding: 
Reversed and remanded
Dist. Ct. erred in granting defendant-employer's motion for summary judgment in action alleging that defendant terminated plaintiff in attempt to interfere with plaintiff's FMLA rights after plaintiff had reported to his supervisor that he had chest pains and needed to go to hospital. While defendant explained that plaintiff was terminated for failing to meet expectations with respect to sales volume and contacts, record contained dispute as to whether defendant had failed to make reasonable adjustment to employment expectations to account for plaintiff's FMLA leave and then terminated him when he failed to meet unadjusted expectations. Record also showed that supervisor relied on inaccurate data in finding that plaintiff did not meet some of company's reporting requirements.