Articles Posted in Business Disputes

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 ›

An electrical subcontractor sued the general contractor after the general contractor withheld $58,000. The general contractor claimed that it was owed a setoff for work performed by other electricians, but the trial court found that the money spent by the general contractor was not within the scope of the original agreement, and the electrical contractor had performed additional work and worked overtime to complete the project, despite delays caused by other contractors. The Illinois appellate court affirmed, finding that the trial court had not made a determination against the manifest weight of the evidence.

Hunter Construction Services entered into a general contract to construct a Buffalo Wild Wings restaurant in Dickinson, North Dakota. Hunter had built 14 similar stand-alone Buffalo Wild Wings prior to the North Dakota project. Hunter reached out to Mormat Electrical & Construction Services, LLC to be the electrical subcontractor on the project. Mormat had worked on other Buffalo Wild Wings projects and understood the general scope and labor requirements, even though the North Dakota project was larger than most. Mormat agreed, and Hunter and Mormat entered into an oral subcontract for electrical work. The electrical budget was $135,000, and Mormat was responsible for all the electrical labor and wiring over 120 volts, including the wiring and installation of all light fittings and fixtures as well as the equipment connections related to heating and cooling, kitchen appliances, and mechanical equipment. The scope of work necessitated a four to five man electrical crew.

Prior to entering into the contract, Mormat, a nonunion contractor, informed Hunter that it could not acquire a North Dakota electrical permit because it did not employ an electrician capable of being licensed in North Dakota. Hunter and Mormat agreed that a local contractor would need to be present on site to pull the necessary permits and perform inspections. Integrity Electrical was hired directly by Hunter on a time and material basis to provide the permit and supervision for the project. Continue reading ›

Worldwide, the impact of global change is being felt. While some people deny that climate change is even happening, the courts are, in fact, seeing the effects in the litigation scene. Suits concerning the issue are trending upwards. Jurisdictional restraints and distance are not stopping litigants from coming forward to file suit. Science, damages, and people being passionate about the cause have increased the number of people wanting to seek retribution, restraint or some form of way to mend harm done by being awarded damages and the cutting of carbon emissions. The biggest offenders? Large corporations. The Human Rights Commission in London is currently investigating the catastrophic effects of Typhoon Yolanda which affected those in the Philippines. The nexus between the polluting corporations with the effects on the environment is what will need to be established and whether the condition was exacerbated as a result of that pollution. The difficulty in being able to produce evidence to present this case and the distance of greater than six thousand miles is no bar.

One possible reason for the increase in lawsuits is the lack of response from governance. People are also more environmentally conscious and know of the impacts of gas emissions
when it comes to health, land and air quality. Successful litigation in this realm has not been as successful as environmentalists would like. However, the pendulum is shifting. Public
awareness and better-equipped machines with techniques to track results also tie in with that. A worldwide consensus is now there when it comes to damage. It is proving that a single
corporation is responsible and to what degree used to be more difficult than it is now. We also know that from a few prior posts on our blog, those actions have started in the USA
also. We discussed this when we looked at a suburban business in Chicago that is under scrutiny for implementation of a system in which the way they sterilized caused emissions of
a cancer-causing substance. The operational facility provided sterilization services to the medical, pharmaceutical and food industries. Ironically, the health damage by its emissions made locals
worse off. Continue reading ›

Our longtime co-counsel and colleague Dmitry Feofanov argued an important case this week before the Illinois Supreme Court concerning a consumer’s ability to revoke acceptance of a brand new RV with a hidden defect — a leaky roof.  The consumers revoked acceptance after the RV dealer couldn’t provide an estimated completion date for the repairs. An RV is a summer product and the consumers feared (correctly) that they would lose the use of the RV which is a summer product for the entire summer if they did not revoke acceptance.  The trial and appellate courts ruled that the consumers should have given the dealer the opportunity to repair the RV. We filed an amicus brief in the Supreme Court on behalf of the National Association of Consumer Advocates supporting the position that a consumer or buyer of goods does not have to provide an opportunity to cure for a material defect as material defect undercuts the value of the product to the buyer and can revoke acceptance.

You can also listen to the oral argument below.

Continue reading ›

Where an asset purchase agreement between two companies did not contemplate the forfeiture of an entire reserve payment as a result of an audit of assets taking one month longer than originally contemplated, and such a forfeiture would result in a windfall for one of the parties.

ARC Welding Supply Co. was a distributor of compressed gases and welding supplies in Vincennes, Indiana. As part of an asset purchase agreement American Welding & Gas, Inc. paid ARC $1,534,796.06 for ARC’s assets, of which the primary assets where its asset cylinders. Some cylinders were already rented to ARC’s clients, so determining the number of asset cylinders that could be transferred from ARC to American was difficult. As a result, American withheld $150,000 for 180 days to protect against a shortage of up to 1,200 out of a potential 6,500 cylinders.

American conducted an audit of the number of cylinders, beginning with those at ARC’s facility, and then those that were rented to existing clients. American did not visit every client, only those for whom rental records could not clearly indicate the number of cylinders in the client’s possession. The agreement originally specified that settlement would occur on or before April 15, 2015. Ron Adkins, American’s President, and CEO, informed ARC’s owner, Charles McCormick, that the audit was taking longer than expected and the overall count was shorter than expected. As a result, American wanted to extend the time for the audit as a means of locating every possible cylinder. At the conclusion of the audit in May 2015, the final number of cylinders was 4,663, 1,837 short of the estimated total of 6,500. As a result, American did not pay the $150,000 that was held back, and ARC filed suit. Continue reading ›

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