M. Hedayat and Associates, P.C. Hero Banner

Articles Posted in Opinion

Published on:

Seal_of_the_Supreme_Court_of_Illinois

1010 Lake Shore Ass’n v. Deutsche Bank National Trust Co.
2015 IL 118372 Date: December 3, 2015

The Illinois Supreme Court recently ruled on the tricky interplay between the Illinois Condominium Property Act and Illinois Mortgage Foreclosure Law. Both pieces of legislation are meant to give real estate owners, investors, managers, and ultimately residents, confidence that their needs will be met through the legal process. In this case however, the Bank was ultimately trumped by the condo association – even after the Bank’s successful foreclosure. The implications of the decision are stark if not altogether surprising: the condominium association always gets its money. Always.

Facts

In 2010 Deutsche Bank National Trust Co. as Trustee for Loan Trust # 2004-1, Asset-Backed Certificates, Series 2004-1 (“Deutsche”) purchased a unit at a judicial foreclosure sale. On March 27, 2012 condominium association 1010 Lake Shore Assoc. (the “Management Association”) sent Deutsche a Demand for Payment referencing unpaid common area expenses incurred during the time the unit was owned by the former occupant. Deutsche filed an Answer and the Management Association moved for Summary Judgment; arguing that there was no question of material fact as to the amount owed or Deutsche’s failure to pay assessments.

Ciruit Court Opinion: MSJ

The Management Association argued in its Motion for Summary Judgment in the Circuit Court of Cook County that based on Sec.9(g)(3) of the Illinois Condominium Property Act (“Act”), 765 ILCS 605/9(g)(3), the lien arising from the former owner’s unpaid assessments was not extinguished by Deutsche’s foreclosure because Deutsche had failed to pay assessments accruing after the judicial sale.

For its part, Deutsche responded that it could not be held liable under Sec.9(g)(3) for unpaid assessments that accrued before it purchased the unit. Following a hearing the Trial Court granted Summary Judgment and awarded the Management Association possession of the property. Continue reading

Published on:

7th Circuit Court Seal

Stifel, Nicolaus & Co. v. Lac Du Flambeau Band of Lake Superior Chippewa
U.S. Court of Appeals for the 7th Circuit Docket Nos. 14-2150, 14-2287 Opinion Date: November 24, 2015

In this case, the most recent appeal in a series of suits concerning the sale of bonds by a corporation (the “Corporation”) owned by the Lac du Flambeau Band of Lake Superior Chippewa Indians (collectively, the “Tribal Entities”), the 7th Circuit clarifies the standards applicable to injunctions as well as review of lower-Court decisions and, finally, jurisdiction.

Facts
The Corporation was chartered under tribal law to own and operate the Lake of the Torches Resort Casino (the “Casino”) on tribal lands in northern Wisconsin. The Casino  is operated under tribal-state compact with the State of Wisconsin.

In 2007 the Tribe decided to diversify its operations by investing in a project to build a riverboat casino, hotel, and bed and breakfast in Natchez, Mississippi. To secure funding for the investment and refinance some existing debt, the Corporation issued taxable gaming revenue bonds in January 2008. Godfrey, as counsel to the Corporation and bond counsel for the transaction, issued 2 opinion letters as to the meaning of several bond-related documents and the legality of the transaction.

The 2008 bond issue did not go as planned, and Wells Fargo filed suit. In that action, Wells Fargo alleged that the Corporation breached a bond indenture and stated that, as trustee for the bondholders, it wanted a receiver appointed. In that case, the 7th Circuit had held that a bond indenture constituted an “unapproved management contract” under the Indian Gaming Regulatory Act (“IGRA”) and was therefore void.

Continue reading

Published on:

Seal_of_the_Supreme_Court_of_Illinois

Christopher B. Burke Engineering, Ltd. vs. Heritage Bank of Central IL

Docket No. 118955 Opinion Filed November 19, 2015

In this Opinion the Illinois Supreme Court comes down on the side of common sense when it comes to lienable improvements under §1 of the Illinois Mechanics Lien Act 770 ILCS 60/1. After reversing the lower Courts however, the case was sent back down to the Circuit Court to determine whether the owner of the property “knowingly permitted” improvements to be made.

Facts

In 2006 Carol and Glen Harkins (collectively, the “Harkins”) offered to buy property from Carol Shenck (“Shenck”) for the purpose of subdividing it and developing a subdivision. Burke Engineering (“Burke”) was hired by the Harkins to perform necessary prep work related to the development of the property. So while the work performed by Burke was integral to, and resulted in, improvements to the property (plat of subdivision, etc.), at the time that the work was done under a contract with Harkins, the property was still owned by Shenck. Eventually, the Harkins closed and development began according to the work done by Burke.

Heritage Bank of Central Illinois (“Heritage”) financed the purchase of the property in 2007 and held a Mortgage Lien. But thanks to the Great Recession, work stopped in 2008 and the Harkins failed to pay Burke (or anyone else). As 2008 dragged on however, Burke had still not been paid and eventually the company filed a Mechanics Lien against property – which by this time was owned by the Harkins (the “Lien”). In response, the Harkins filed Bankruptcy. This left Burke to foreclose its lien or not get paid at all.

Continue reading

Published on:

ada25-logoThis guest-post is a synopsis of “whether a corporation has a cause of action for retaliation under the ADA,” by Attorney William Goren from his blog, Understanding the ADA.

While the Author concludes the answer is “No” based on the retaliation provision in the ADA, he explores whether a corporation would have an associational discrimination claim because the phrasing of the statute is significantly different than the retaliation statute.

While the Author concludes that no claim exists because of the phrasing of the retaliation provision in the ADA, he also explores whether a corporation would have an associational discrimination claim because the phrasing of the statute is significantly different than the retaliation statute.

Continue reading

Published on:

7th Circuit Court Seal

BRC Rubber & Plastics, Inc. v. Cont’l Carbon Co.
U.S. Court of Appeals for the Seventh Circuit
Docket: 14-1555 and 14-1416  Opinion: November 5, 2015

In this opinion the 7th Circuit Court of Appeals sets the record straight about an alleged Output-Requirements Contract and settles a dispute based on the terms of a supplier agreement.

Facts

Continental Carbon Company (CCC) sells carbon black, a material used in rubber products. BRC Rubber & Plastics (BRC) makes rubber products for the auto industry. In 2010 the companies entered into a contract under which CCC agreed to supply about 1.8 Million lbs./yr. of carbon black to BRC.  In 2011 however, Continental could no longer keep up with demand from other customers and had to refuse certain orders from BRC, which inturn put BRC in a bind with its customers, causing a chain reaction.BRC sued, alleging that CCC had breached the contract.

Procedural History

The Indiana District Court treated the agreement between them as an “Output/Requirements” contract that obligated CCC to sell as much carbon black as BRC wanted while requiring BRC to buy all its carbon black from CCC. On that basis, the District Court concluded, CCC had indeed breached its obligation by failing to sell as much carbon black as BRC wanted.
Continue reading

Published on:

Seal_of_the_Supreme_Court_of_Illinois

Henderson Square Condo. Assoc’n v. LAB Townhomes, LLC et al.
Citation: 2015 IL 118139 Opinion Date: November 4, 2015

After LAB Townhomes, the developer of Henderson Square, made false sales claims, built shoddy units, and engaged in fraud and negligent conduct in order to sell units, the Condominium Association sued it under the Chicago Municipal Code’s prohibition on the use of material misrepresentations, as well as Illinois case and statutory law relating to breach of the implied warranty of habitability, fraud, and negligence.

Following an initial defeat in the Trial Court based on allegedly filing late, the Appellate Court and eventually the Illinois Supreme Court determined that the bad actions of the developer permitted a longer time-horizon for the Plaintiff condo owners to pursue their rights.

Continue reading

Published on:

7th Circuit Court Seal

Donnawell v. Hamburger, No. 15-1006 (7th Cir. 2015)

Appeal from District Court, ND Illinois, Eastern Div. 12 C 9074
Argued Oct.01, 2015 — Decided Oct.20, 2015

In this appeal of a shareholder derivative suit concerning a stock option plan used as executive compensation, the Plaintiff appealed from dismissal with prejudice by the District Court for the Northern District of Illinois, Eastern Division.

The Plaintiff was a stockholder in DeVry Education Group, a Delaware company that owns and operates for-profit colleges. Plaintiff brought a Shareholder Derivative Action against current and former DeVry Board members. It ended up in Federal Court due to diversity of citizenship (Illinois vs. Delaware).

The 7th Circuit affirmed the District Court’s dismissal, applying Delaware corporate law.

Continue reading

Published on:

7th Circuit Court Seal

EAR vs. Brandt/Brandt vs. Horseshoe Hammond, 14‐2174
Appeal from District Court (ND IL ED) 12‐cv‐00271
Decided Oct. 13, 2015

Introduction

In an Adversary Proceeding in the Chapter 11 Bankruptcy case of Equipment Acquisition Resources (EAR), Plan Administrator William Brandt (Brand) sought to avoid and recover the so-called “fraudulent transfers” made to EAR’s founder that he subsequently lost gambling at Horseshoe Casino.

Facts

EAR was established in 1997 to manufacture and refurbish machinery for use in creating technology products. Beginning in 2005 however, it also began defrauding creditors through crooked equipment financing activities. As a result, founder Sheldon Player and a company Officer named Malone pocketed about $17 Million each.

It was not until September 2009 that an outside forensic accounting firm hired by EAR’s Board of Directors detected the fraud. In response to the revelation about the wrongdoing, the company’s Board and all Officers resigned. EAR’s shareholders then elected William Brandt as the sole Board Member and Chief Restructuring Officer. Shortly thereafter the company sought Chapter 11 Bankruptcy protection.

Procedural History

Brandt filed an Adversary proceeding against Player and Malone in the Chapter 11 case pursuant to 11 U.S.C. 544, 548, and 550 to avoid and recover the transfers made to them. Brandt prevailed, then had to collect from Horseshoe.

In the ensuing case in the District Court, Horseshoe moved for Summary Judgment under the aegis of the statutory “Good Faith” defense in 11 U.S.C. 550(b)(1). Horseshoe prevailed in the District Court.

Brandt appealed the District Court’s ruling, arguing that it had misinterpreted §550(b)(1) and, in addition, it should have granted his prior Motion to Compel production of documents related to investigations conducted by Horseshoe concerning Player.

Continue reading

Published on:

Seal_of_the_Supreme_Court_of_Illinois

Seymour vs. Collins, 2015 IL 118432

Supreme Court of Illinois, September 24, 2015

In Seymour the Illinois Supreme Court addresses whether action, or inaction, in connection with a Federal case such as a Bankruptcy, should give rise to estoppel in connection with a State cause such as personal injury. The Answer is something of a surprise.

Facts

In 2008 the Seymours filed a Chapter 13 Bankruptcy Petition. 2 years into their Plan or Reorganization, they filed a personal injury action based on a 2010 automobile accident. In 2010 they successfully moved to modify their Plan; reducing their monthly payments because Mr. Seymour was unable to work due to the accident and the couple’s sole source of income was now workers’ compensation.

Procedural Background

Despite having moved to modify their Plan, the Seymours never officially apprised the Bankruptcy Court that their circumstances changed; nor did they amend their Bankruptcy Schedules. On that basis, the Defendants in the State Court case were able to secure summary judgment using an estoppel argument. The notion was that since the Debtors failed to advise the Bankruptcy Court of their case, they should not be permitted to proceed in State Court Continue reading

Published on:

7th Circuit Court Seal

Peoples Gas Light & Coke Co, v. Beazer East Inc.
7th Cir. Court of Appeals Docket: 14-3634 Opinion: September 21, 2015

In 1920 Peoples Gas and Beazer’s predecessor entered into a contract under which Beazer agreed to operate the coke byproduct and carbureted water gas plant at Crawford Station, Chicago using its patented coke-oven technology and Peoples Gas agreed to purchase all the gas and coke manufactured at the plant for distribution to consumers.

Chicago Coke opened in 1921. 7 years later Peoples acquired the assets of Chicago Cok and, eventually, its stock. Peoples then took over operations until 1956. Some of that land is still owned by Peoples. Peoples worked with the U.S. and Illinois EPA to investigate any potential contamination at the Crawford site and entered into agreements with the EPA to do cleanup. For investigation and removal work at Crawford, Peoples incurred over $70,000,000 in costs. Peoples sued Beazer to recover costs under CERCLA, 42 U.S.C. 9607(a) and 42 U.S.C. 9613(f)(3)(B).
Continue reading

Featured In