Articles Posted in Business Disputes

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Diversity of citizenship cannot be asserted merely on information and belief when it comes to the members of a Limited Liability Company (LLC). For diversity jurisdiction purposes, the citizenship of an LLC is determined by the citizenship of each of its members. A simple declaration of diversity of citizenship is not enough. The court needs to understand the identity and citizenship of each member. In case any member is an unincorporated association, such as an LLC or partnership, the citizenship must be traced through all layers of ownership to ensure no member shares a common citizenship with the opposing party.

Merely claiming that all members are citizens of a certain state or that no members are citizens of a certain state is insufficient. It is also not enough to claim that an LLC was organized under a specific state’s laws, maintains its principal place of business in a certain state, or that an LLC has a parent corporation. The citizenship of an LLC must be proven by underlying facts, not merely alleged on information and belief. If the members of an LLC have members, the citizenship of all those members must also be set forth. Continue reading ›

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In 2023, there were several significant developments in Illinois civil case law.

The case of “PPP-SCH Inc. v. SVAP Hoffman Plaza, L.P.” clarified that a voluntary dismissal disposing of all remaining claims in a case makes appealable those orders preceding the voluntary dismissal that were “final in nature”. However, this ruling was later modified and superseded on denial of rehearing by the same case.

In “Disability Services of Illinois v. Department of Human Services”, the court allowed the transfer and consolidation of a civil rights case and an administrative review case for the sake of convenience and efficiency due to the similarity of legal and factual issues in both cases.

“Wilson v. Estate of Burge” highlighted that claims under Illinois law for intentional infliction of emotional distress and civil conspiracy were subject to a one-year statute of limitations under the Illinois Local Governmental and Governmental Employees Tort Immunity Act. Furthermore, the court found that a suspect who was wrongfully convicted based on a confession procured by torture, sufficiently pleaded that an assistant state’s attorney engaged in extreme and outrageous conduct, as required to state a claim for intentional infliction of emotional distress.

The “City of Chicago v. SBR Revocable Living Trust” case was notable for the dismissal of an appeal as moot due to a subsequent order.

Additionally, the court’s interpretation of jurisdiction in “In re K.F.” gave clarity on appeals from final judgments in civil cases and cases arising under the Juvenile Court Act. In “Hernandez v. Illinois Institute of Technology”, the court provided guidance on how to apply Illinois law to unprecedented circumstances like the disruption of traditional university operations caused by the COVID-19 pandemic.

Finally, “Doe v. Burke Wise Morrissey & Kaveny, LLC” resulted in the reversal of an appellate court judgment and affirmation of a circuit court judgment, demonstrating the Supreme Court’s role in shaping Illinois civil case law. Continue reading ›

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Recent Illinois law regarding the defense of officers and directors of corporations and LLCs encompasses several key factors:

1. Fiduciary Duties: Officers and directors of corporations and LLCs are fiduciaries, holding duties of good faith, loyalty, and honesty to the corporation. They are not permitted to enhance their personal interests at the expense of the corporation’s interests, and should not be in a position where their own individual interests might interfere with their duties to the corporation.

2. Business Judgment Rule: Under the business judgment rule, a presumption exists that corporate decisions made by an officer or director are made on an informed basis and with an honest belief that the action was in the corporation’s best interests. This presumption can be rebutted by allegations that a director acted fraudulently, illegally, or without sufficient information to make an independent business decision [3].

3. Contractual Obligations: Illinois law provides officers of a corporation with a qualified privilege against liability for tortious interference with a contract with the corporation. To overcome this privilege, the plaintiff must assert and plead that the corporate officers acted with malice and without justification.

4. Piercing the Corporate Veil: Generally, corporate officers and directors are not personally liable for the corporation’s actions, as corporations are considered distinct legal entities separate from their officers, shareholders, and directors. However, under certain circumstances, the corporate veil can be pierced to hold officers and directors personally responsible, such as when there is such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist, or adherence to the fiction of separate corporate existence would sanction fraud or promote injustice.

5. Specifics for LLCs: In the context of LLCs, allegations that officers and directors disguised equity contributions as loans, enabling the company to make interest payments to insiders during a time when the company was either insolvent or undercapitalized, could be sufficient to state a claim for breach of fiduciary duty under Illinois law.

These principles form the foundation of a defense for corporate officers and directors in Illinois. Continue reading ›

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In the dynamic landscape of condominium and homeowners’ associations (HOAs), board officers and directors are tasked with making crucial decisions to maintain the welfare of their communities. However, there are times when disputes arise, leading association members or condo owners to bring legal action against these leaders. At DiTommaso Lubin — the Business Litigators, we concentrate on defending condominium and HOA board officers and directors facing lawsuits under Illinois law. In this blog post, we will explore the unique legal challenges in Illinois and our legal team’s indispensable roles in safeguarding these community leaders.

Understanding Illinois Condo & HOA Governance

Illinois, like many states, has a comprehensive set of laws and regulations governing condominiums and homeowners’ associations. These laws define the roles and responsibilities of board officers and directors, as well as the rights and obligations of association members or condo owners. Compliance with these laws is essential to maintaining the harmony and functionality of these communities.

Common Legal Issues Faced by Board Officers and Directors in Illinois

Board officers and directors in Illinois can find themselves entangled in various legal disputes, including:

  1. Breach of Fiduciary Duty: Board members owe a fiduciary duty to the association members or condo owners. Allegations of mismanagement, conflicts of interest, or self-dealing can lead to claims of breaching this duty.
  2. Failure to Enforce Declarations and Bylaws: Ensuring the consistent enforcement of community rules and regulations is a crucial responsibility of board members. Failure to do so can result in legal actions by residents who believe their rights have been violated.
  3. Financial Mismanagement: Improper handling of association funds, budgetary issues, or a lack of transparency in financial matters can lead to allegations of financial mismanagement and legal consequences.
  4. Discrimination and Fair Housing Act Violations: Board officers must ensure that all residents are treated fairly and in compliance with fair housing laws. Allegations of discrimination can result in legal action under both state and federal laws.
  5. Contract Disputes: Board officers and directors often enter into contracts for services and maintenance. Disputes can arise if one party feels that the terms of the contract have not been fulfilled.

Continue reading ›

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Introduction

Shareholder derivative lawsuits are legal actions brought by individual shareholders on behalf of a corporation against its officers, directors, or other insiders. These lawsuits typically allege misconduct, mismanagement, or breaches of fiduciary duties by those in control of the corporation. Defending against a shareholder derivative lawsuit can be complex and challenging, but with the right strategies and considerations, it is possible to protect the interests of both the corporation and its shareholders. In this blog post, we’ll explore the key steps and considerations involved in defending against a shareholder derivative lawsuit.

1. Understand the Basics of Shareholder Derivative Lawsuits

Before diving into defense strategies, it’s crucial to have a clear understanding of what a shareholder derivative lawsuit entails. These lawsuits are filed on behalf of the corporation, not individual shareholders, and seek to hold company insiders accountable for alleged wrongdoing. Understanding the legal framework is the first step in formulating an effective defense.

2. Evaluate the Merits of the Lawsuit

The first line of defense in any shareholder derivative lawsuit is a thorough evaluation of the merits of the claims. Engage experienced legal counsel to assess the allegations and evidence. Determine whether the allegations have a factual basis and whether they meet the legal requirements for pursuing a derivative action. If the claims lack merit, you may have grounds to seek dismissal. Continue reading ›

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Any contract you’ve signed with a company (including the “Terms of Service” most of us don’t read before clicking the box next to “I agree that I have read and agree to the terms”) has included a clause about where you and that company can resolve legal disputes. In some cases, it’s in a certain state, or even a specific county, but increasingly courts have been forcing their customers, vendors, and employees into arbitration.

Arbitration was originally designed as a way for companies to settle legal disputes with other companies outside of court so they wouldn’t flood the court system. But several years ago companies started including arbitration clauses in their contracts with individuals, often without those individuals realizing they were signing away their rights to a fair trial.

As the issue of companies getting out of control when it comes to their arbitration clauses has become more widespread, judges and legislators have started taking measures to curb companies’ use of arbitration agreements with individuals – especially when it comes to their customers and employees.

So far, Pennsylvania is the only state to pass a law requiring all corporations doing business in the state to consent to being sued in Pennsylvania court by anyone, for conduct the corporation engaged in anywhere. Continue reading ›

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Donald J. Trump is already facing dozens of criminal charges for allegedly falsifying business records and misusing campaign funds in an alleged attempt to influence the 2016 presidential election. Yet Trump is back in court suing his former attorney, Michael Cohen, for $500 million.

The lawsuit accuses Cohen of talking publicly about things that should have remained confidential between him and his former client. The lawsuit also accuses Cohen of telling lies about Mr. Trump in the media and in Cohen’s two books, Disloyal: A Memoir: The True Story of the Former Personal Attorney to President Donald J. Trump, and Revenge: How Donald Trump Weaponized the U.S. Department of Justice Against His Critics.

The first book was published prior to the 2020 presidential election, whereas the second was released in 2022. Among other things, the books accuse Trump of being a racist and of lying about just about everything. Continue reading ›

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We all know attorneys are not allowed to represent both sides in a lawsuit, but what if the law firm currently representing one side used to represent the other side? Wouldn’t that be considered a conflict of interest? It’s especially likely to pose a problem if the issue involved in the lawsuit is the same issue the law firm previously handled for the other side.

If the law firm had recently represented the company they’re currently suing, it’s obvious how that could cause problems. But what if the prior legal work in question was performed more than a decade ago? Would that be long enough to erase the conflict of interest?

All that is in question as Walgreens seeks to disqualify a law firm currently filing a lawsuit against it on behalf of major health insurance providers.

Walgreens claims the law firm, Crowell & Moring, has breached its fiduciary duty to the giant retail company by representing major health insurers suing Walgreens over drug prices. The law firm sought to have the claims dismissed, but U.S. District Judge Virginia Kendall said Walgreens had provided enough evidence to keep their claim alive, at least for now. Continue reading ›

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A Call from a Friend Led Him to a Multi-Million-Dollar Case

A lot of people tend to assume lawyers have enormous salaries, but a lot of lawyers, especially those working at small firms, make only a modest income. So, the millions of dollars that might be on their way to attorney David Wasinger as part of a settlement agreement he negotiated and a case he won is anything but business as usual for him.

Wasinger is the only partner of a small law firm in St. Louis, Missouri. He works with just four other lawyers and his firm handles mostly business disputes. He had never represented a whistleblower until he got a call from an old business acquaintance in early 2012.

A whistleblower is someone who works in an organization that is allegedly committing fraud against the government, and they decide to alert the authorities. Because whistleblowers are risking their jobs and their reputation, they usually receive 15-25% of the settlement or court-ordered award that comes out of the lawsuit as an incentive to alert the government to fraud.

A share of that money goes to the lawyers representing the whistleblower, which is why whistleblower cases are highly competitive. Wasinger’s position is unique in that he didn’t compete to represent this client – the client reached out to him because they already had a relationship. When you’re blowing the whistle on fraud worth billions of dollars, you need someone you can trust.

The first lawsuit Wasinger brought to court accused Bank of America’s Countrywide unit of engaging in widespread fraud. In January of 2023, the U.S. Attorney’s office in Manhattan announced it would be asking for as much as $2.1 billion in penalties from the bank after a jury found it to be guilty of fraud. Continue reading ›

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When someone files a lawsuit alleging physical or emotional abuse, they can often find the legal process to be retraumatizing. They are forced to relive the incident(s) that hurt them over and over again, first when hiring a lawyer, then in deposition, then again in court. It’s not an easy process, and it’s a big reason that many victims never pursue legal action. It’s also a big reason many of those who do file never pursue it all the way to court.

Moss Gropen is one such victim who alleges he was abused and neglected by Palomar Medical Center. According to the lawsuit, Gropen went to the hospital for a scheduled procedure to remove fluid from the area surrounding his lungs. Instead, he claims he was admitted to the emergency room where doctors inserted a chest tube, then put him in a windowless room and left him alone with substandard nutrition. Gropen alleges he suffered from uncontrollable sobbing and anxiety, which resulted in post-traumatic stress disorder (PTSD), from which he says he continues to suffer.

Gropen is suing the hospital along with several of its doctors and employees for causing his PTSD. When he appeared at the offices of the hospital’s lawyers in July to provide his deposition, his wife came with him to provide emotional support during what was bound to be a challenging time for Gropen.

The lawyers immediately objected to the presence of Gropen’s wife at the deposition because she is a witness in the lawsuit. Having Gropen’s wife present while he provides his deposition could lead to the two of them colluding on their testimony. Gropen refused to provide testimony without his wife present and ended up leaving the office without providing testimony. Continue reading ›

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