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Tortious Interference with Contract and the Statute of Frauds – An Illinois Case Summary

Written on September 4, 2015 by

The Northern District of Illinois recently discussed the pleading and proof elements of tortious interference with contract and the promissory estoppel doctrine in a commercial railcar lease dispute. In Midwest Renewable Energy, LLC v. Marquis Energy-Wisconsin, LLC 2014 WL 4627921 (N.D. Ill. 2014), the plaintiff sublessor of railcars sued the sublessee for damages after the plaintiff’s lessor terminated a lease (“Master Lease”) for the same cars.  The sublessee moved for summary judgment.

Result: Motion granted.  Plaintiff’s tortious interference and promissory estoppel claims are defeated.

Q: Why?

A: After the railcar lessor terminated the Master Lease with the plaintiff and started dealing directly with the sublessee, the plaintiff sued it’s sublessee for tortious interference and promissory estoppel. Granting summary judgment for the sublessee , the Court enunciated the key tortious interference with contract elements under Illinois law.

Tortious Interference with Contract

A tortious interference with contract plaintiff must show (1) the existence of a valid and enforceable contract between the plaintiff and another, (2) the defendants’ awareness of the contract, (3) the defendants’ intentional and unjustified inducement of a breach of the contract, (4) subsequent breach of the contract caused by the defendants’ wrongful conduct, and (5) damages.  If a plaintiff fails to perform its contractual obligations, it can’t prove breach and its tortious interference claim will fail.

Here, the plaintiff’s tortious interference claim failed because it couldn’t show that its lessor breached the Master Lease. The plaintiff actually breached it by subletting it to defendant without the (Master) lessor’s knowledge and consent (the Master Lease required the lessor’s consent to any sublease or assignment) and also by failing to make several months’ of railcar lease payments.  Since the lessor was able to terminate the lease on plaintiff’s breach, the plaintiff failed to establish that the lessor breached – an essential tortious interference element.

Promissory Estoppel

Next, the Court rejected the plaintiff’s promissory estoppel count. Plaintiff predicated this claim on the defendant/sublessee’s promise to buy out plaintiff’s rights under the Master Lease.

Promissory estoppel is a doctrine under which the plaintiff may recover without the presence of a contract. To prove promissory estoppel, a plaintiff must show (1) defendant made an unambiguous promise to plaintiff, (2) plaintiff relied on such promise, (3) plaintiff’s reliance was expected and foreseeable by defendants, and (4) plaintiff relied on the promise to its detriment.  Aspirational negotiations or proposals do not equate to a clear promise under the doctrine.

Plaintiff’s promissory estoppel claim failed because it couldn’t show a clear promise by the defendant to buy out plaintiff’s Master Lease rights. The evidence reflected that any lease buy-out talks were merely negotiations; not ironclad promises.

The promissory estoppel clam was also defeated by the statute of frauds – which requires certain contracts to be in writing.  Under Section 2A of the UCC, lease contracts for goods (like railcars) have to be in writing unless the total lease payments are less than $1,000.  810 ILCS 5/2A–201(1). Where the statute of frauds applies, to a contract, it also requires an assignment of the contract to be in writing and signed by the party being sued.

Here, since the statute of frauds applied to the Master Leases and well over $1,000 was at stake, any assignment from plaintiff to defendant of the Master Lease had to be in writing.  The Court rejected the plaintiff’s claim that several e-mail exchanges with the sublessee satisfied the statute’s writing requirement.  The Court found that since the none of the emails contained the contract parties, subject matter or price term of the supposed assignment agreement, the sporadic emails didn’t meet the writing requirement. (*5).

Take-aways: The case is post-worthy for its discussion of the key tortious interference with contract elements and how important it is for a plaintiff to show that it complied with the contract it is claiming was wrongfully interfered with. The case also provides good summary of promissory estoppel elements and cements the proposition that the statute of frauds will still apply to bar the claim if the subject matter is one that has to be in writing under the law.  Finally, this case amplifies the importance of careful lease drafting and review.  Parties to lease agreements – whether for real estate or tangible goods – should be cognizant of assignment and sublease provisions.  They almost always require the prime lessor’s knowledge and written consent.

 

 

Tenant Can Recover Attorneys’ Fees in Successful Counterclaim Versus Landlord Under Chicago Ordinance

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Question: Can a successful counter-claimant suing under the Chicago Residential Landlord-Tenant Ordinance (RLTO) recover his attorneys’ fees against the plaintiff landlord?

Answer: Yes

Source: Shadid v. Sims, 2015 IL App (1st) 141973

Reasons:

In a case of first impression, the First District considered whether a tenant could recover his attorneys’ fees incurred in prosecuting RLTO violations against a landlord in a forcible suit.

The court held that the tenant could recover his fees after winning his RLTO counterclaim based on the condition of the premises (that the premises were infested with rats, bedbugs and cockroaches).  To bolster its ruling, the court looked to the RLTO’s history and policy underpinnings.

RLTO, enacted in 1986, is a “landmark” ordinance aimed at leveling the playing field between lessors and lessees; the latter of whom were often in a disadvantaged bargaining position compared to their lessor counterparts.  RLTO arms tenants with several causes of action against landlords including claims that involve the condition of the premises. 5-12-110.

The RLTO also provides that “except in cases of forcible entry and detainer actions, the prevailing plaintiff….shall be entitled to all court costs and reasonable attorneys’ fees….. 5-12-180.

In Shadid, the landlord argued that since it (and not the tenant) was the plaintiff, the tenants could not recover its attorneys fees in prosecuting their counterclaims. The court rejected this argument and found no functional difference between a plaintiff and a counter-plaintiff since, under the Illinois Code of Civil Procedure, complaints and counterclaims must each be answered and litigated in the same manner. (¶¶ 8-9); 735 ILCS 5/2-401(d)(plaintiff includes counterclaimants).

The court noted that if tenants were foreclosed from recovering fees just because they were counter-plaintiffs instead of plaintiffs, this would lead to the “absurd” and discriminatory result of a tenant being denied attorneys’ fees recovery just because a tenant happened to proceed under the rubric of counter-plaintiff (or counter-claimant) instead of plaintiff.

Pointing to RLTO’s legislative history and construing case law, the court described RLTO’s “clear intent” as protecting tenants from predatory landlords based on tenants’ historically vulnerable position vis a vis landlords. (¶ 7).

The court also rejected the landlord’s argument that RLTO § 5-12-180 disallowed the tenant’s fees since the underlying case was a forcible entry and detainer action.  The court noted that the tenants’ counterclaim was premised on the landlord’s RLTO violations; the tenants were not trying to evict the landlord or attempting to recover fees for defeating the landlord’s eviction case.

Ultimately, the court ruled that in light of RLTO’s legislative purpose of protecting tenants, it was the City Council’s (the governing body that enacted the Ordinance) intent that tenants should recover prevailing party attorneys fees when they won on RLTO counterclaims.  The court backed its holding up with the policy argument that if tenants were precluded from recovering fees, attorneys would lack the financial incentive to pursue valid counterclaims for aggrieved tenants. (¶ 11)

Take-aways: Add this to the pro-tenant case canon.  Shadid stands for clear proposition that while a landlord can’t recover fees prosecuting a straight eviction suit (as opposed to non-eviction claims involving a lease or tenant dispute), a tenant who counterclaims under RLTO can indeed recover his attorneys’ fees he expends in prosecuting its counterclaim.

E-Signatures Simplify Copyright Transactions in the Digital Age

Written on September 2, 2015 by

In a classic B-grade horror movie from 1985 called “The Stuff,” the earth is invaded by an alien life form that looks like frozen yogurt. Unlike most frozen yogurt, however, the Stuff tastes so good that it is addictive. When consumed, it takes over the mind and body of anyone who eats it, causing them to become zombie-like. Chaos ensues until the final climactic scene, when the good guys blow up the yogurt factory.

That dramatic finale was just a precursor to the real drama – the subsequent litigation over who owned the copyright in the film footage of the exploding factory. In the case, Effects Associates v. Cohen (9th Cir. 1991), Larry Cohen (described by the court as “a low-budget horror movie mogul”), commissioned Effects Associates to create some special effects footage of the exploding factory. Cohen was not satisfied with the footage and withheld half of the payment. Cohen’s dissatisfaction with the work product, however did not deter him from incorporating it into the film.

The parties had entered an oral agreement for Effects to create the footage, but they never discussed who would own the copyright. Needless to say, copyright infringement litigation ensued when Cohen stiffed the vendor on the bill.

I mention this case because it highlights the importance of carefully following the statutory prescriptions of the Copyright Act for copyright transactions relating to the licensing or transfer of copyrights.

Cohen claimed that he owned the copyright and therefore could use the footage. The problem is that §204 of the Copyright Act states that a transfer of copyright ownership or an exclusive license of any right is not valid unless it is “in writing” and “signed by owner of the rights conveyed.”

Having nothing in writing, Cohen asserted a novel defense, which the court summarized tongue in cheek as “Moviemakers do lunch, not contracts.” Cohen asserted that the writing requirement of §204 should be inapplicable because it is customary in the movie industry to transfer copyright without a written contract.

The court emphatically rejected this argument and upheld the primacy of the requirement that a copyright transfer or exclusive license must be in writing. A simple agreement is sufficient. “It doesn’t have to be the Magna Carta,” said the court, but it does have to be in writing. This ensures that a copyright owner does not inadvertently give away his copyright, and encourages the parties to consider precisely what rights are being transferred and at what price.

Most would agree that §204 has a beneficial purpose. But is that rule satisfactory for our current technology-laden business environment? When “The Stuff” first invaded Hollywood in 1985, there was no such thing as e-mail. Entering an agreement by clicking “I agree” on a computer screen would have been considered science fiction.

So Effects Associates v. Cohen, while firmly upholding the writing requirement, does not answer the question that inquiring minds in the digital age want to know – can an electronic agreement satisfy the twin requirement of §204 that the transfer must be “in writing” and “signed by the owner of the rights conveyed”?

Given that e-commerce has been thriving for roughly twenty years, it seems odd that until recently there was not a clear answer to whether clicking on “I agree” or “Continue” on a computer screen could effectuate a valid transfer of copyright.

Fortunately, a case decided last year should remove any doubts – these digital expressions of intent do satisfy the requirements of §204. The requirement that the transaction be “in writing” is easily met, since the text of a document on a computer is commonly understood to be in writing. More troublesome is whether such an agreement has been “signed” by the transferor. Metropolitan Regional Information Systems v. American Home Realty Network (4th Cir. 2013) confirms that a simple click can be a valid signature. As a result, the statutory provision enacted in the pen and paper era is fully effective in the digital age.

Nothing in the Copyright Act itself addresses this specific inquiry. Rather, the deus ex machina is a federal statute known as the E-Sign Act, enacted by Congress in 2000.

That Act mandates that for any transaction in interstate commerce, no signature can be denied legal effect simply because it is in electronic form. The definition of “electronic signature” is appropriately broad — it covers any “electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.”

Although the E-Sign Act was drafted with consumer contracts in mind, it has been applied to other types of contracts as well, and nothing in the Act excludes transactions relating to copyrights. (Some transactions, such as wills, adoptions, and divorces are expressly excluded from the E-Sign Act). Thus, the court held, the E-Sign Act validates the process of transferring copyrights by means of electronic agreements. To hold otherwise “would thwart the clear congressional intent embodied in the E-sign Act”.

The logic of the Metropolitan case would appear to resolve a related lingering copyright question. No case has ever addressed whether a “work made for hire” agreement between a commissioning party and an independent creator can be entered electronically.

A work made for hire agreement vests authorship and ownership of the copyright in the commissioning party rather than the creator. To enhance certainty in these transactions, the Copyright Act requires that such agreements must be in writing and signed by both parties. Again, the E-Sign Act comes to the rescue and validates the agreement as long as it has the digital signatures of both parties.

Perhaps these results may have been obvious even without the ruling in Metropolitan, but like the Stuff, it’s nice to have the problem put to rest.

Unjust Enrichment: For When the ‘Handshake Deal’ Goes Bad

Written on September 1, 2015 by

An imploded business arrangement for importing and then selling Christmas decorations sets the stage for the Northern District’s (IL) analysis of a slew of signature commercial litigation issues in Sunny Handicraft, Inc. v. Envision This!, LLC, 2015 WL 231108. 

While the case only involves a ruling on a 12(b)(6) pleadings motion, it’s still post-worthy for its discussion of some important and recurring issues that arise in breach of contract lawsuits.

The plaintiff ornament maker entered into an agreement with defendants – a buyer (“Buyer”) and end-retailer (“Retailer”) of the decorations, respectively – for about $3.5M worth of Christmas-themed merchandise. Plaintiff sued when the defendants failed to pay.

The Buyer, for its part, counter-sued the plaintiff to recoup unpaid advertising costs and miscellaneous shipping charges. The Retailer moved to dismiss several complaint counts and the plaintiff moved to dismiss the purchaser defendant’s counterclaims.

Granting the Retailer’s motion to dismiss the unjust enrichment count, the court pronounced that unjust enrichment  is a ‘quasi-contract’ theory where a court implies a contract in order to prevent unjust results. 

An unjust enrichment plaintiff must allege that defendant has unjustly retained a benefit to the plaintiff’s detriment and that retention violates fundamental principles of equity, justice and good conscience.

But a party can’t claim unjust enrichment where an express contract governs the parties’ relationship. A plaintiff can, however, plead unjust enrichment as an alternative theory to a breach of contract claim as long as the plaintiff doesn’t incorporate the express contract allegations into its unjust enrichment ones.

Generally, a court will not impose unjust enrichment liability against a third party that receives a benefit from the plaintiff’s agreement with another party. So, if x and y have a contract, x normally won’t be able to sue z just because z happens to benefit from x’s services. 

The only time a third party can be liable for unjust enrichment is where the plaintiff can show that the plaintiff had a reasonable expectation of being paid by the third party. *4.

The court granted the Retailer’s motion to dismiss the plaintiff’s unjust enrichment claim and denied the plaintiff’s motion to dismiss the Buyer’s unjust enrichment counterclaim.  On the former claim, the plaintiff failed to allege any conduct by the Seller that would lead plaintiff to have a reasonable expectation of being paid by the Seller.

Plaintiff’s conclusory allegation that the Retailer “was aware” that Plaintiff expected payment was too bare to survive dismissal.  The plaintiff was required to plead specific conduct by the Retailer that could lead plaintiff to reasonably expect payment.

The court did allow the Buyer’s unjust enrichment counterclaim to proceed.  The Buyer pled unjust enrichment in the alternative to its breach of contract count and alleged that it conferred a measurable benefit – marketing services and paid shipping expenses – on the plaintiff and that the plaintiff’s retention of the Buyer’s services without paying for them was unfair.

Afterwords:

– Unjust enrichment is viable alternative claim even where there is an express contract that governs;

– A plaintiff can implicate a third party in an unjust enrichment case where he can offer evidence or plead facts that demonstrate the plaintiff had a reasonable expectation of being paid by the third party.

Contracts Payable Over Time and The Statute of Limitations: From When and How is the Breach Determined?

Written on August 28, 2015 by

The statute of limitations defense and the equitable doctrine of laches are firmly-entrenched legal devices aimed at fostering finality in litigation.  The limitations and laches defenses both look to the length of time a plaintiff took to file suit and strive to balance a plaintiff’s right to have his claim heard on the merits with a defendant’s competing right to timely defend a lawsuit.

The inherent tension between the goals advanced by the limitations and laches defenses and the legal principle that everyone should have his or her day in court comes into sharp relief in cases involving multi-year contracts that are to be performed over time like a contract payable in annual installments.

Akhtert v. D’avis, 2013 IL App(1st) 113556-U, serves as a recent example of how difficult it can be to apply the statute of limitations and laches defenses where an oral contract doesn’t provide a clear end date and where it calls for yearly installment payments.

The oral agreement there provided that the defendant would use plaintiff’s medical facility to treat defendant’s patients in exchange for paying plaintiff between 40-50% of defendant’s gross income.  The defendant made monthly payments for about two years (from 2002-2004) and stopped.

The plaintiff didn’t sue until nearly seven years later (in 2011) and sought several years’ worth of payments it claimed it was owed by the defendant.  The defendant moved to dismiss plaintiff’s breach of contract claim on statute of limitations grounds and sought dismissal of plaintiff’s accounting action based on laches.  The trial court dismissed plaintiff’s claims as untimely and plaintiff appealed.

Held: Reversed in part.

Q: Why?

A: The court first held that the plaintiff’s breach of contract was timely as to all payments due within five years of the complaint’s 2011 filing date.

The statute of limitations for oral contracts in Illinois is five years, measured from the date where a creditor can legally demand payment from a debtor. 735 ILCS 13-205, (¶14).  Where a money obligation is payable in installments, the limitations period begins to run against each installment on the date the installment becomes due.  Each installment carries its own limitations period.

So, if you have a 2000 oral contract calling for annual payments starting in 2001 and wait until August 31, 2015 to sue, the suit will still be timely as to payments coming due within five years of the filing date (e.g. for all payments due on or after August 31, 2010).

Here, the court found the plaintiff’s suit was timely as to payments coming due on or after March 8, 2006 – five years preceding the 2011 complaint filing date.  Any payments due before March 8, 2006 were time-barred.

Next, the court addressed the defendant’s laches argument – asserted as a defense to plaintiff’s equitable accounting claim.  Laches is a “neglect or omission to assert a right, taken in conjunction with a lapse of time of more or less duration, and other circumstances causing prejudice to an adverse party” and applies where a plaintiff is seeking equitable (as opposed to legal or monetary relief). (¶ 25).

Laches applies where (1) a plaintiff files suit, (2) the plaintiff delays in filing the suit despite having notice of the existence of his claim, (3) the defendant lacks knowledge or notice of the existence of plaintiff’s claim, and (4) injury or prejudice resulting to the defendant by the plaintiff’s delay in filing suit.  Where the period of delay in bringing suit exceeds the applicable limitations period (here – the five-year period for breach of oral contracts), that delay will automatically constitutes laches.

The burden of showing laches is squarely on the defendant.  The mere lapse of time (between plaintiff’s knowledge of facts giving rise to a claim and plaintiff’s filing suit) isn’t enough.  The defendant must also show prejudice: that it is unfair to make him defend plaintiff’s delayed suit.

Here, the defendant couldn’t establish any unfairness in having to defend against plaintiff’s claims so it’s laches claim failed as to payments due within five years of the complaint filing date.

Take-aways:

Contracts payable in installments provide a separate limitations period for each breach;

An oral installment contract claim will be timely as to any payments pre-dating complaint date by five years;

Laches requires more than passage of time/delay between when a plaintiff is first armed with facts giving him a claim and when he actually files suit.  A defendant must also show prejudice – such as inability to track down witnesses and documents – in his ability to mount a defense based on the plaintiff’s lag time in bringing a claim to state a winning laches defense.

 

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Contractual Disclaimers in Illinois: Social Relationships and Uneven Bargaining Positions

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Non-Shareholder of Closely-Held Corp. Can Be Liable Under Piercing Claim – IL Court

The Illinois First District recently considered whether a non-member of a closely-held corporation could be held personally responsible for debts of that LLC in Buckley v. Abuzir, 2014 IL App (1st) 130469, a trade secrets case involving rival Chicago-land bakeries.  The plaintiff sued a corporate defendant (a competing bakery) alleging it hired away plaintiff’s top employee and stole plaintiff’s customers and secret…

Is It A Corporate Obligation? Or An Individual/Personal One? Agent of A Disclosed Principal And Breach of Contract Litigation

Sometimes it’s difficult to determine who the contracting parties are.  A common example is where the contract text names the parties are two corporations but it’s signed by an individual.  Or, the contract signer clearly notes his corporate affiliation (by stating his job title) next to his signature, but the body of the contract states that the…

Lindsay Lohan’s Privacy Suit Versus Rapper ‘Pitbull’ Sunk By First Amendment (2013 – NY)

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Liquidated Damages In Illinois Contracts: Some Quick Hits

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Hitler’s Copyright: Even Villains Can Own Copyrights

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Recovering Lost Profits In Breach of Contract Litigation: A Case Illustration

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Landlord’s Five-Day Notice That Ends On a Sunday Dooms Eviction Suit (Illinois 1st Dist.)

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The home sellers’ failure to plead the buyers’ anticipatory repudiation of a real estate contract spelled defeat in Kelly v. Orrico, 2014 IL App (2d)  130002, a recent Second District case.  In Kelly, the plaintiffs and defendants – who happened to be friends and neighbors (they lived on the same street) – entered into a real estate contract for plaintiffs…

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Default Orders, Default Judgments and Dismissals for Want of Prosecution (“DWPs”): Illinois Basics

Jackson v. Hooker, 397 Ill.App.3d 614 (1st Dist. 2010) is dated but relevant for its interesting procedural history and nuanced discussion of appellate procedure, the difference between default orders and default (money) judgments and the appropriate time to vacate a dismissal for want of prosecution (“DWP”). After obtaining an order of default against the defendant, the plaintiff…

Home Fire Alarm Installer Defeats Negligence Suit Where Alarm Contract Contains Broad Disclaimers

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Collecting Judgments In Illinois: The ‘Charging Order’ Against An LLC Member’s Interest

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Promissory Note Suits: Is It A Negotiable Instrument? (And Why It Matters)

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Illinois Forcible Entry and Detainer 2015 QuickGuide – Hot Off the Press

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Corporate Successor Liability In Illinois: The General Rule and Exceptions

Corporate successor liability’s focal point is whether a purchasing corporation (Company 2) is responsible for the purchased corporation’s (Company 1) pre-sale contract obligations.  It’s an important question because the Company 1 will usually have no assets after the purchase.  Creditors of Company 1 will then try to pin liability on Company 2. The general rule in Illinois…

Land Trust Beneficiary Can Sue On Title Policy; Title Insurer Not An Information Provider Under Economic Loss Rule – IL 2d Dist.

Two key questions the Illinois Second District appeals court asked and answered in Warczak v. Attorneys’ Title Guaranty Fund, Inc., 2015 IL App (2d) 140677-U are (1) whether a land trust beneficiary can sue under a title insurance policy naming the trustee as the covered entity (answer: yes) and (2) if a title insurer that issues a title commitment to a…

Construction Contract Ambiguity: Court Considers Expert Testimony To Clarify Contract Terms

A construction site injury provides the setting for the First District’s recent application of Illinois contract interpretation rules to the question of when and how contracting parties’ prior course of dealing can inform the court’s analysis of an ambiguous written agreement. In Gomez v. Bovis Lend Lease, 2013 IL App (1st) 130568, the plaintiff plumbing subcontractor was injured when…

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The two key rules that govern challenging  a confessed judgment in Illinois are Supreme Court Rule 276 and  Code Section 2-1301 (735 ILCS 5/2-1301).  The latter provides that “any person for a debt bona fide due may confess judgment by himself or herself or attorney duly authorized, without process” and that the “application to confess judgment shall…

Stored Communications Act Claim Survives Summary Judgment In Social Media Account Hijacking Case

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BMW Dealership Defeats Fraud Suit On Statute of Limitations Grounds

Occasionally, I’ll have a case that appears to be governed by two or more conflicting statutes of limitations.  For example, one statute will give a plaintiff four years to file suit while an apparently equally applicable one compresses the time to sue to two years.  As plaintiff, I usually (not always) argue for the longer limitations period to apply, while as…

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The Illinois Credit Agreements Act, 815 ILCS 160/1, et seq. (the “ICAA”) and its requirement that credit agreements be in writing and signed by both creditor and debtor, recently doomed a borrower’s counterclaim in a multi-million dollar loan default case. The plaintiff in Contractors Lien Services, Inc. v. The Kedzie Project, LLC, 2015 IL App (1st) 130617-U, sued…

Tortious Interference With Prospective Economic Advantage – An Illinois Case Note

In Davidson v. Schneider, 2014 WL 656780 (N.D.Ill. 2014), the Court describes the quantum of proof required for a plaintiff to survive summary judgment on both the damages element of a breach of contract claim and the “reasonable expectancy” prong of a tortious interference claim. The plaintiff and defendant were competitors in the baseball vision testing business. …

Commercial Real Estate Broker’s Judgment Against Property Owner Upheld Where Owner Negotiated Deal Behind Broker’s Back

In AMA v. Kaplan Realty, Inc., 2015 IL App(1st) 143600, the court looked to the common dictionary definitions of “exclusive” and “refer” as they apply to a real estate listing agreement to find that a commercial real estate broker could recover unpaid commissions from a property owner who negotiated a property sale without the broker’s knowledge….

Land Trust Beneficial Interest is Personal Property: Corporate-Owned Real Estate Can’t Be Liened by Beneficiary Creditor

It’s easy to robotically parrot the “beneficial interest in a land trust is personal property” rule but First Clover Leaf Bank v. Bank of Edwarsville, 2014 WL 6612947 (5th Dist. 2014) actually examines the rule’s impact against the factual backdrop of a judgment creditor trying to lien a debtor’s residence. The creditor plaintiff obtained a $400,000-plus judgment…

Lawyer’s Breach of Fiduciary Duty and Constructive Trust Claim Against Ex Law Partner Barred By 5-Year Statute of Limitations

  Jimmy Connors is one of my all-time favorite tennis players and professional athletes.  Not just because he was such a fiery competitor who seemed to literally spill his blood and guts every time he took the court.  But because of his choice of racket. In an era dominated by space-age racket technologies like Kevlar, ceramics…

Hitler’s Copyright: Even Villains Can Own Copyrights

On January 30, 1939, Adolf Hitler gave a speech to the Nazi Reichstag. He told his followers, “In the course of my life I have very often been a prophet, and usually been ridiculed for it….Today I will once more be a prophet: If the international Jewish financiers in and outside of Europe should succeed…

‘Jumpman’ Lawsuit Focuses on Scope of Copyright Prosecution for Photographs

  Who knew that the most famous image of the greatest basketball player of all time was inspired by a Nureyev-like ballet move called a grand jeté? The basketball player, of course, is Michael Jordan and the image is the ubiquitous silhouette that can be seen on every pair of Air Jordan shoes. It has…

Copyright Files: Blogger’s Use of Copyrighted Photo Is ‘Transformative’ Use: Illinois Northern District Rules

‘Shuffle’ Case is Just in Time for Football Season Since football season is upon us, I thought it would be appropriate to write about one of the most amazing football films ever made. No, it is not “Knute Rockne, All American” (1940) or “Rudy” (1993). It’s not “Friday Night Lights,” “The Blind Side” (2009) or…

Copyright Files: Turtles Lawsuit about pre-1972 Recordings Shakes Up the Music Industry

  The state of music copyright law is a mess, and it’s about to get messier. The history of music copyright law is tortuous. Since musical compositions first became eligible for federal copyright in 1831, the law has developed into a snarl of different rights, different ownership, and different licensing practices, made even more complex…

Trademark Law Files: When Is Pomegranate Juice Not Pomegranate Juice?

When is Pomegranate Juice Not Pomegranate Juice? One of the most difficult foods to consume is the pomegranate. They are wonderfully healthful, filled with Vitamin C and antioxidants, but how to eat one has always been a mystery. Sure, there are dozens of YouTube videos telling us how easy it is to get those pesky…

Constructive Service and ‘Posting’ Notices Under Illinois Eviction Law

Several sections of the Illinois forcible statute (735 ILCS 5/9-101 et seq.) allow a landlord to “post” notices and process in an eviction case.  For pre-suit demands, the statute allows for posting of a landlord’s five-day notice (9-211) and a thirty-day demand for condominium unit owners (9-104.1). Once the lawsuit is filed, a landlord can serve the…

Sub-subcontractor Recovers From General Contractor Under Implied Contract/Unjust Enrichment Theory

C. Szabo Contracting v. Lorig Construction, 2014 IL App (2d) 131328’s plaintiff  sub-subcontractor (it contracted with a subcontractor) tried to use unjust enrichment to recover against a twice-removed general contractor on a highway construction job. The plaintiff installed underground pipes under a subcontract.  When the subcontractor didn’t pay, the Plaintiff sued the general contractor to recover over $200K…

Automatically Renewing Contracts: The Gift That Keeps On Giving (?)

My early experiences with automatic contract renewals weren’t warm and fuzzy ones. In the ’80s, I recall frantically signing up for the Dick Clark Columbia House “13 tapes for a dollar” offers.  The cassettes would arrive and I’d be in a state of frenzied excitement for a day or two.  But once the euphoria and novelty subsided, I…

The Illinois Wage Payment and Collection Act: Some Basics

This post provides some basics on the Illinois Wage Payment and Collection Act, 820 ILCS 115/1 et seq. (the Wage Payment Act), a powerful tool for former employees who want to get paid. The Wage Payment Act requires every employer to pay full and “final compensation” to separated employees no later than the next regularly scheduled…

Illinois Court Gives Agency Law Tutorial In Commercial Lease Fight

Three agency law issues that we regularly encounter in commercial litigation practice are (1) authority, (2) ratification and (3) a contract that doesn’t identify a valid entity. The authority question posed is whether an individual – typically a company employee or independent contractor – can bind the company by the individual’s conduct. Ratification applies where a corporate principal accepts the benefits of an…

Bad Check Laws in Illinois – Civil Liability Provisions

The civil provisions of the Illinois Deceptive Practices Act, 720 ILCS 5/17-1, govern situations where a defendant issues bad checks with intent to defraud.  Section 5/17-1(B)(d) provides: (B) General Deception. A person commits a deceptive practice when, with intent to defraud, the person does any of the following: (d) With intent to obtain control over…

Illinois Home Repair and Remodeling Act (HRRA) – Are Oral Home Improvement Contracts (Over $1,000) Enforceable?

The Illinois Home Repair and Remodeling Act, 815 ILCS 513/1 et seq. (“HRRA” or the “Act”) was enacted in January 2000 to protect consumers from unscrupulous home repair contractors.    The HRRA sections that seem to spawn the most litigation are Sections 10, 15, 15.1, 20 and 30.  These sections provide: Section 10 (815 ILCS 513/10) – “home repair and remodeling” means any improvement…

Sole Shareholder Of Dissolved Corporation Can Sue Under Nine-Year Old Contract – Eludes Five-Year ‘Survival’ Rule

Haskins, d/b/a Windows Siding Unlimited, Inc. v. Hogan, 2015 IL App (3d) 140609-U – A Synopsis In 2003, Plaintiff’s former company entered into a written contract with defendant to install windows for just over $5K.  Defendant failed to pay.  The company was administratively dissolved in 2005.  Seven years later, in 2012, Plaintiff – who was the sole shareholder of the company…

Facebook Posts Not Hearsay Where Offered To Show How Ex-Wife Presented Relationship To Others – Illinois Case Note

Reversing a family law judge’s decision to terminate ex-spousal maintenance, the Second District appeals court in In re Marriage of Miller, 2015 IL App(2d) 140530 delves into the foundation requirements for getting Facebook pages into evidence and again highlights the crucial role social media plays in litigation in this digitally saturated culture. The trial court granted the ex-husband (“Husband”) motion…

Vacating a Money Judgment in Illinois: When and How to Do It

Code Sections 2-1301 and 2-1401 (735 ILCS 5/2-1301, 735 ILCS 5/2-1401) govern motions to vacate judgments in Illinois.  Section 2-1301 applies where you’re trying to vacate a final judgment within 30 days of its entry (i.e. if judgment entered on April 15, 2014, you have through May 16, 2014 to move to vacate it under 2-1301).  Section…

Oral Contracts in Illinois – Are they Enforceable?

Yes.  Oral contracts are enforceable.  The main exceptions are contracts governed by the Statute of Frauds (SOF), which requires certain contracts to be in writing.  See 740 ILCS 80/1, 2; 810 ILCS 5/2-201.  The Illinois Credit Agreements Act (ICA) also requires certain agreements to lend money in a commercial setting be in writing. 815 ILCS 160/1 et seq. The mnemonic device…

Contractor’s Substantial Performance Of Home Repair Work Defeats Homeowners’ Breach of Contract Suit – IL 5th Dist.

Brown v. Daech & Bauer, 2015 IL App (5th) 140203-U, serves as a recent example of a court applying the substantial performance doctrine in favor of a contractor in a disgruntled homeowner’s breach of contract suit versus the contractor. The homeowner plaintiffs sued the contractor for defective work on plaintiffs’ home after some hail damage….

Collecting Your Illinois (Cook County) Judgment: Now What?!

735 ILCS 5/2-1402 and Supreme Court Rule 277 govern post-judgment or supplementary proceedings in Illinois. 735 ILCS 5/12-101 through 12-183 provide additional post-judgment specifics like the mechanics of levying on a debtor’s property, the seven-year period to enforce a judgment (12-108), the lien on debtor’s real estate and personal property, enforcement in other counties, etc. The…

Contractor’s Legal Malpractice Suit Can Go Forward In Case of (Alleged) Misfiled Mechanics’ Lien: IL 1st Dist.

Construction Systems, Inc. v. FagelHaber LLC, 2015 IL App (1st) 141700, dramatically illustrates the perilous consequences that can flow from a construction contract’s failure to identify the contracting parties and shows the importance of clarity when drafting releases intended to protect parties from future liability. The plaintiff contractor sued its former law firm (the Firm) for failing to properly…

Illegality Defense Doesn’t Defeat HVAC Subcontractor’s Damage Claim Against General Contractor On CTA Project

It’s basic contract law that an agreement to do something criminal (example – murder, arson, selling drugs, etc.) is unenforceable against the person who doesn’t perform (example: if I fail to pay a hit man, he can’t sue me for the $).  The illegality defense also applies in the civil context where it can defeat an agreement that…

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