Articles Posted in Business Disputes

When a film production equipment rental company in Chicago began losing business to a new competitor, it sought to blame a state economic development agency. The company sued the state agency, alleging that the agency conspired to steer state incentives to the new business in violation of the U.S. Constitution and the Sherman Antitrust Act. The appellate panel disagreed, finding that the actions of the state agency were not actionable, as the competitor had consistently reached out to the state agency for help, applied for grants and development programs that the plaintiff did not, and offered superior equipment and facilities for film production.

Since 1979, Chicago Studio has operated a film and television production studio in Chicago, Illinois. Chicago Studio has four studio stages measuring 62,000 square feet. Chicago Studio requires production companies to lease its production equipment for a 0.4% charge. The studio does not have installed air conditioning, but Chicago Studio provides industry-standard portable air conditioning units for an additional charge. Additionally, Chicago Studio does not have screen docks, which allow large trailers to unload equipment inside the studio.

Cinespace began operating a studio in Chicago around 2010. By the end of 2012, Cinespace had 600,000 square feet of floor space and 10 stages. The studio expanded to 1.5 million square feet of floor space and 30 stages by Januar 2015. Cinespace’s studio can accommodate two-story sets and includes air conditioning, inside breezeways and scene docks, concrete floors, sound-proof walls, and new offices. Cinespace permits production companies to use any equipment rentals they choose, including an unaffiliated equipment rental company called Cinelease that charges 0.2%.

Chicago Studio sought to put the blame for its failure to make a profit following Cinespace’s opening on the Illinois Department of Commerce and Economic Opportunity, Illinois Film Office, and Betsy Steinberg, a state employee responsible for promoting the Illinois film industry. Chicago Studio alleged that the defendants unlawfully steered state incentives and business to Cinespace in violation of the Sherman Act and equal protection and due process under the Fourteenth Amendment. The district court granted the defendants’ motions to dismiss the Sherman Act and due process claims. It later granted summary judgment on the equal protection claim to the defendants. Chicago Studio then appealed. Continue reading ›

After a tradeshow exhibit vendor was stiffed on the payment of a contract by a middleman, it sued the tool manufacturer to recover its debt. At the same time, it filed a claim in the bankruptcy proceeding of the middleman. The district court ruled that the plaintiff could not pursue a claim against the manufacturer because it had a claim pending in the middleman’s bankruptcy proceeding. The 7th Circuit panel reversed, finding that there was no concept of judicial estoppel where a pending claim in a bankruptcy proceeding barred seeking the collection of a debt from a third party.

TRUMPF, Inc., the U.S. subsidiary of an international business, makes specialty tools such as precision laser cutters. TRUMPF sells many of its products at trade shows. It hired Lynch Exhibits to handle its appearance at the 2017 FABTECH show in Chicago. Lynch then subcontracted with CSI Worldwide to provide some of the necessary services.

CSI contended that it told TRUMPF that it was unsure of Lynch’s reliability. CSI stated that it would do the work only if TRUMPF paid it directly or guaranteed Lynch’s payment. According to CSI, TRUMPF assented. The two entities did not sign any undertaking to that effect. CSI did the work and then billed Lynch. Lynch did not pay. CSI filed an involuntary bankruptcy petition against Lynch, who then filed a voluntary bankruptcy petition. CSI claimed approximately $530,000 as a creditor, and also filed suit against TRUMPF under diversity jurisdiction, seeking $530,000 on theories including unjust enrichment and promissory estoppel. Continue reading ›

All too often attorney misconduct in the course of litigation goes unreported and unpunished. Incivility in litigation delays the resolution of cases, taxes an already overburdened judiciary, and increases the cost of litigating a matter. Despite this, attorney incivility is regrettably on the rise in state and federal courts around the country. One federal magistrate judge recently decided that enough was enough and issued a benchslap to a pair of attorneys for misconduct at a deposition. In his recent opinion in Sokolova v. United Airlines, Magistrate Judge Jeffrey Cole issued a scathing rebuke of the attorneys while offering a primer on proper deposition decorum.

The deposition that spawned dueling sanctions motions and accusations and cross-accusations of discovery misconduct got off to an unceremonious start with plaintiffs’ counsel arriving nearly 30 minutes late according to the opinion. Things improved little from there. Almost immediately after starting the deposition, things went off the rails when plaintiffs’ attorney took issue with the interpreter’s translation of the oath. Continue reading ›

When companies decide where to establish a headquarters or where to expand, they must weigh several factors such as access to qualified candidates and tax laws. One factor businesses are considering more and more is the litigation climate of a state or local jurisdiction. According to a recent study, that does not bode well for Illinois, which ranked last among states for the quality of its litigation climate among businesses. Additionally, the City of Chicago and Cook County ranked as the worst local jurisdiction in the nation according to the same study.

Since 2002, the U.S. Chamber Institute for Legal Reform has conducted a survey to explore how fair and reasonable the states’ liability systems are perceived to be by U.S. businesses. Last year’s survey was performed by The Harris Poll and consisted of more than 1,300 respondents consisting of in-house general counsel, senior litigators, and other senior executives at companies with at least $100 million in annual revenues.

The survey broadly focuses on perceptions of a state’s liability system by asking participants to assign a state a grade of A, B, C, D, or F in each of the following areas:

  • Overall treatment of tort and contract litigation
  • Enforcing meaningful venue requirements
  • Treatment of class action suits and mass consolidation suits
  • Damages
  • Proportional discovery
  • Scientific and technical evidence
  • Trial judges’ impartiality
  • Trial judges’ competence
  • Juries’ fairness
  • The quality of the appellate review

These grades were then used to develop the ranking of each state. The study also sought to identify specific cities or counties that might impact a state’s ranking. Accordingly, participants were given a list of cities or counties with reputations for having a poor litigation climate and asked to select two that have the least fair and reasonable litigation environments.

The results of the study were published in a report titled The 2019 Lawsuit Climate Survey: Ranking the States. Overall, Illinois ranked 50 out of 50. Illinois beat out Louisiana (49th), California (48th), Mississippi (47th), and Florida (46th) for the dubious distinction as the state with the worst litigation climate. Illinois has ranked in the bottom five states every year since 2005. Its highest ranking came in 2002, the first year the study was conducted when Illinois was ranked 34th. Continue reading ›

Labor unions are supposed to negotiate with employers on behalf of the workers, but according to a recent lawsuit against Fiat Chrysler, the officials of the United Auto Workers union (UAW) allegedly exploited their position to line their own pockets, rather than negotiate better terms for their workers. According to the lawsuit, filed by General Motors, Fiat Chrysler allegedly bribed UAW officials in order to get more favorable rates than their competitors.

Gary Jones, the former president of the UAW, has not been charged by the Justice Department, but he came under scrutiny when federal prosecutors found that union officers from a regional office Jones used to lead had charged more than $1 million in personal spending, including luxury travel. Jones took a leave of absence in November after the FBI raided his home in August and has since resigned as president of the UAW while the union was working to force him out of that position.

Several officers of the UAW and three people who used to work as executives for Fiat Chrysler have all pleaded guilty in cases that revealed that both the auto company and the union siphoned off millions of dollars (some of which was intended for a training center) for personal luxuries, including extravagant travel and meals. Continue reading ›

After two companies got into a dispute about the timeframe for payment of invoices, the 7th Circuit Court of Appeals found that the district court had erred in not considering the parties’ course of dealings to determine what a fair time to pay would have been.

In 1999, Valley Drive Systems, Inc. began manufacturing parts for Arctic Cat, Inc. In 2002, Driveline assumed control of Valley Drive Systems, Inc.’s assets. In June of that year, Driveline and Arctic Cat entered into a contract where Driveline would provide specifically-manufactured hubs, axels/half-shafts, outer and inner tie rods, shift shafts, and steering stops. The contract made Driveline a “just-in-time supplier” for Arctic Cat. Driveline provided its goods and filled orders daily with regular deliveries to Arctic Cat. Continue reading ›

A condo association held an insurance policy on its condo buildings. In 2014, a hail and wind storm damaged the siding on several of the buildings. The storm, however, damaged only the south and west-facing sides of the buildings. The association’s insurer initially paid the association several million to repair the damage, which covered the replacement cost of siding for the south and west sides of the buildings. The association found, however, that matching siding was no longer produced. The insurer refused to pay the cost of replacing the siding on all sides of the building, so the association sued. The district court ruled in favor of the association, and the insurer appealed. The appellate panel affirmed. The panel found that requiring the insurer to replace all sides of the building was a sensible construction of the contract, given that replacing the siding such that two sides of the building did not match the other two would reduce the value of the properties and keep the insured from being made whole.

Windridge of Naperville Condominium Association held an insurance policy via Philadelphia Indemnity Insurance Company. In May 2014, a hail and wind storm-damaged buildings owned by Windridge. These buildings were insured by Philadelphia Indemnity. The storm directly damaged the siding only on the buildings’ south and west sides. Philadelphia Indemnity paid Windridge $2.1 million for the damage, which covered the replacement of the siding on the south and west sides.

Windridge, however, sought replacement of the siding on all four sides of the building, as matching siding for the south and west sides was no longer available. Philadelphia Indemnity refused to pay those costs, arguing that it was only responsible for replacing the siding that was directly damaged by the storm. The district court granted summary judgment for Windridge, and Philadelphia Indemnity appealed. Continue reading ›

A company that purchases tax liens in order to obtain tax deeds to properties sued Law Bulletin for breach of contract over a misprinted hearing date in a Take Notice, which the company alleged cost it $1 million when the circuit court denied the company’s tax deed application due to the misprint. Following a trial, the jury entered a verdict in favor of Law Bulletin and against the company finding that the company had not fully performed its obligations under the parties’ contract. The First District Appellate Court affirmed finding that the trial court had not committed an error in denying the company’s pre-trial motion for summary judgment or mid-trial motion for a directed verdict.

Every year, Wheeler Financial purchased hundreds of tax liens from the Cook County Treasurer’s Office at the annual auction to sell tax liens on properties with delinquent tax bills. Under the Illinois Property Tax Code, if the property owner fails to satisfy a tax lien by paying the amounts due within the applicable redemption period, the tax lien purchaser may obtain fee simple title to the property. To obtain title to the property, the tax lien purchaser must apply to the circuit court for a tax deed and publish a Take Notice in a newspaper giving the property owner certain information including the hearing date on which the petition for tax deed will be heard by the court.

Law Bulletin publishes these Take Notices in its newspaper, the Chicago Daily Law Bulletin. Wheeler Financial used the Law Bulletin exclusively to publish its Take Notices for 15 years, publishing between 1000 to 1600 Take Notices annually with the Law Bulletin during that time. In one instance, Law Bulletin misprinted the hearing date for the tax deed for a particular property. When the circuit court discovered that the wrong hearing date had been published in the Take Notice, it denied Wheeler Financial’s petition for a tax deed. Continue reading ›

The First District Appellate Court of Illinois recently affirmed the entry of summary judgment against the plaintiff in a commercial breach of contract and mechanic’s lien dispute. In upholding the grant of summary judgment, the Court found that the plaintiff’s discovery responses doomed its mechanic’s lien claim, providing yet another example of why it is crucial for a party to carefully review its discovery responses – something the best commercial litigation attorneys make painstaking efforts to do.

The case stems from a dispute arising over an alleged verbal contract between the plaintiff, MEP Construction, LLC, and defendant, Truco MP, LLC, to build out the defendant’s restaurant. According to the plaintiff’s complaint, under the oral contract, it agreed to provide “construction management and other related services” to the defendant for a cost of $791,781.16 (though the parties later agreed to have the plaintiff do an additional $80,000.00 of work). The plaintiff further alleged that it “fully performed” its contractual obligations, but the defendant only made partial payment of $612,447.15 and refused to pay anything further. The plaintiff later recorded a mechanic’s lien naming the defendant and others and claiming an amount of $251,870.45 was owed to it.

In August 2017, the plaintiff filed a three-count complaint against the defendant alleging breach of contract and seeking to foreclose on the mechanic’s lien. In the course of discovery, the defendant issued a document request to the plaintiff asking for all documents showing all payments that the plaintiff had made for work performed either “by MEP or at the direction of MEP.” The plaintiff’s response to the document request stated that all “contractors, subcontractors and material were paid directly by Truco.” The defendant also sought production of all contracts between the plaintiff and “any and all contractors, sub-contractors or other persons with whom MEP contracted for purposes of performing work” at the property. The plaintiff responded to this request by stating that all contractors and subcontractors “contracted directly with Truco” and were paid directly by Truco. Continue reading ›

An insurance company defended a construction firm against a claim by a condo association for defective design and construction of a building, as it thought the claim arose during the company’s policy period. The insurance company was not estopped from later denying payment for the claim when it was discovered that the claim had in fact arisen 10 years before the policy went into effect.

In 2002, the Blue Moon Lofts Condominium Association filed a complaint against The Structural Shop, Ltd in Illinois state court seeking damages arising out of TSS’s allegedly defective design and construction of a building. Blue Moon served notice of action to TSS’s registered agent, Thomas Donohoe on November 2002. TSS never responded to the notice or appeared in the state court action to defend itself, leading in May 2003 to the state court declaring the company in default. In 2009, the state court entered a default judgment and set the damages amount at $1,356,435 plus costs.

Many years later, Essex Insurance Company sold TSS a policy for claims first made against TSS from May 2012 to May 2013. Essex knew nothing about the prior litigation. For a time, both TSS and Essex believed that Blue Moon had failed to properly serve TSS in 2002, and thus had first brought notice of the claim to TSS in 2012 when it attempted to collect the default judgment. Laboring under this mistaken belief, TSS petitioned the state court to vacate the default judgment. The court granted the motion and vacated the judgment. TSS then informed Essex of the developments and Blue Moon’s claim. Essex, unaware that Blue Moon had properly served TSS in 2002, considered the claim to have arisen during the policy period and thus acted on its duty to defend TSS. Continue reading ›

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