Articles Posted in Business Disputes

The district court granted summary judgment to a bank on a breach of contract claim where a bank customer was precluded from suing bank for payment of fraudulent checks because customer did not report fraud within 90 days of receiving statement containing copy of first fraudulent check, and account agreement specified that fraud was required to be reported within 90 days.

Designer Direct, Inc. has a bank account with PNC Financial Services Group, Inc. Three of Designer Direct’s officers are authorized signers on its bank account. Between October 2016 and May 2017, Designer Direct’s former office manager, Kristiana Ostojic, forged one of those officers’, Stephen Rebarchak, signature on thirty-nine checks drawn on the account. Each check was made payable either to Ostojic or KO Development. The sum total of the fraudulent checks was $185,421.94

Ostojic deposited each check at either US Bank or JP Morgan Chase. The checks were then eventually presented to PNC for payment and were processed during the normal course of business through an automated system. PNC mailed account statements to Designer Direct each month. Each statement identified checks drawn on the account by date, check number, and amount. PNC also included copies of drawn checks with each statement.

Rebarchak reviewed all of the statements sent by PNC but did not see the electronic check copies because Ostojic intercepted the online statements and removed the check images before he could see them. When Rebarchak did finally see one of the checks, in May 2017, he was immediately aware of the fraud and notified PNC the next day. Designer Direct eventually sued PNC in federal district court in the Northern District of Illinois for breach of contract, alleging that PNC breached the account agreement by failing to exercise ordinary care in the payment of the checks. Continue reading ›

Where the mortgage on a development company’s property was mistakenly recorded as satisfied, and then later corrected, the mistaken release did not extinguish the debt, and the contract was still effective.

Trinity 83 Development borrowed $2 million from a bank in return for a mortgage on real property and a note. Five years later, in 2011, the bank sold both the mortgage and the note to ColFin Midwest Funding, who relied on Midland Loan Services to collect the payments due. Two years later, Midland recorded a “satisfaction” document indicating that all debts associated with the note and mortgage had been paid. This recording was in error, as the loan was still outstanding. Unaware of the mistake, Trinity continued making payments on the loan. Continue reading ›

Where a construction manager overstated amount in mechanic’s lien by more than 100%, and overstatement consisted of work performed by other contractors that manager did not have a contractual relationship with, the circuit court did not err in granting summary judgment to restaurant owner alleging constructive fraud on part of the construction manager.

In August 2017, MEP Construction filed suit against Truco MP and Randhurst Improvements seeking to foreclose upon a mechanic’s lien and other relief. The complaint alleged that Truco and MEP entered into a verbal contract in April 2014 in which MEP would provide construction management and related services to Truco for the purpose of building out Truco’s restaurant in Mount Prospect, Illinois. MEP alleged that it fully performed the work it was required to perform as of May 2015 and that Truco paid only $612,447.15 of $791,781.16. MEP recorded a mechanic’s lien in September 2015 with the Cook County Recorder of Deeds. Continue reading ›

Our firm today filed an amicus brief or friend of the court brief in the on behalf of the National Association of Consumer Advocates and Consumers for Auto Reliability and Safety in an important consumer rights case and commercial law case, arising out of an interpretation of a provision of the Uniform Commercial Code. That provision expressly allows for consumers to revoke acceptance of and return for a full refund a product with hidden defects without having to allow the seller the opportunity to repair the defects. The express language of UCC requires this result yet the trial and the appellate court ignored the plain language of the UCC and that the majority of states interpret this provision of the UCC to allow for revocation of acceptance without any opportunity to cure. The Illinois Supreme Court decisions dictate that Illinois should follow the majority view of the other States in interpreting UCC provisions.

This case involves an RV that Plaintiffs bought in April for a summer vacation. When the RV turned out to be allegedly defective (massive water leaks), and when, by August, the RV Dealer/Warrantor allegedly would not give an estimate as to when it would repair the RV, and allegedly refused to “cure,” Plaintiffs revoked acceptance and canceled their contract.  Continue reading ›

When a contract dispute arose between two telecommunications companies over the rates charged during the switching process of telephone call transmission, district court committed error in granting partial summary judgment to plaintiff, as it was likely that the same facts and issues would appear before the appellate court in the future after the FCC resolved certain regulatory issues.

Local Exchange Carriers and Interexchange Carriers are types of telecommunications service providers. LECs operate in limited geographical regions, and IXCs transport calls between them, enabling consumers to make long distance telephone calls. IXCs pay a fee in exchange for access to an LEC’s network. These rates are set either by regulatory agencies or in negotiated agreements between the IXC and the LEC.

In February 2009, Peerless Network, a LEC, and Verizon, an IXC, entered into one such agreement. The contract provided for lower rates for certain switching services. If a rate in the agreement did not apply, Peerless billed Verizon at its tariff rates, which were the rates that Peerless had filed with the Federal Communications Commission. In 2013, the relationship between Peerless and Verizon broke down, and Verizon began withholding payment. In September 2014, after negotiations failed to resolve the dispute, Peerless sued Verizon.

Peerless’ complaint alleged several counts, including breach of the Tandem Service Agreement, and breach of federal and state tariffs. Verizon asserted that Peerless was not entitled to the higher rates that it charged, due to its status as an Access Stimulator, which is a LEC that charges high rates to companies engaged in high volume call services, such as adult entertainment calls, chat lines and “free” conference call lines. Such LECs charge high rates to IECs and then pass a portion of the tariff revenue back to the companies that generated the high call volume. In turn, the FCC regulates the maximum rates that LECs meeting this definition can charge. Continue reading ›

Best-Chicago-Commercial-Litigation-Lawyers-200x300Knowing where to bring a lawsuit and what state’s laws to apply can have a huge impact on the success of business litigation. Courts have developed extensive and complicated rules and procedures for determining where a lawsuit should be brought and which jurisdiction’s laws to apply, but that procedure is rarely simple or straightforward. Conflicts between the laws of two or more states can complicate the matter further. Agreeing in advance to jurisdiction and venue can provide certainty and save a great deal of time and money in the unfortunate event litigation does ensue. For this reason, companies often address in the contract itself how any disputes or litigation will be handled. A common example includes “forum selection” or “choice of venue” provisions, which identify a specific state (or even a specific county within a state) as the proper jurisdiction and venue for litigation.

Forum selection is a particularly important part of a contract when the parties are from different jurisdictions, especially when the laws of those jurisdictions differ significantly from one another. A forum selection provision gives a business the security of knowing that any litigation will take place in a familiar location applying a familiar set of substantive laws. However, a poorly worded forum selection provision may not provide the security hoped for as a recent opinion from Delaware’s Chancery Court in a partnership dispute case demonstrates. The case, In re Bay Hills Emerging Partners I, L.P., et al, involved the issue of whether a forum selection provision in a limited partnership agreement required all lawsuits to be filed exclusively in Kentucky. Continue reading ›

IMG_6355_3-300x189The district court rejected personal jurisdiction over a business and two of its employees where the alleged breach of contract and tortious interference occurred in a different state, and the employees and business lacked sufficient contacts with Illinois to justify jurisdiction.

Tower Communications and TSC Construction are competitors in the business of building and repairing wireless communication infrastructure. In 2017, both companies were working on an infrastructure construction project that spanned North and South Carolina. Tower sued TSC, alleging that during this project TSC poached Tower’s employees, Gary Juknevicius and Ruslan Tulegenov, and that TSC obtained confidential information from the poached employees and used that information to benefit its business.

The employment agreements that Juknevicius and Tulegenov had provided that they could not work for a competing company that worked on the same project as Tower for a period of six months after their employment ended. The agreement also prevented the employees from soliciting Tower’s employees, and from disclosing confidential information to a competitor. Included in the agreements was an arbitration clause. Continue reading ›

A bank’s negligence suit against a check-cashing company was dismissed when the district court found that there was no private right of action under which the bank could sue to enforce regulations regarding the safeguarding of personal financial information.

USAA provides banking services to members and veterans of the United States military. PLS Group, Inc. provides payday loan and check cashing services at 300 retail locations in eleven states. PLS charges its customers a fee to cash checks or purchase money orders. PLS often cashes checks drawn on USAA bank accounts. When it cashes a check, PLS obtains information about the drawer of the check, including their name and signature, account and routing numbers, and encoded information used to verify the legitimacy of the checks.

In October 2012, PLS settled a suit brought by the Federal Trade Commission which alleged that PLS did not properly secure its’ customers’ information. Despite making changes to its processes, problems with unauthorized access to customers’ personal information continued. Nine individuals were later indicted by the government for engaging in a check-cashing scheme that used information from PLS employees to create fraudulent checks. Some of these counterfeit checks were drawn on USAA bank accounts. PLS employees involved in the scheme received a portion of the proceeds from the scheme. Continue reading ›

A developer of healthcare software was denied damages for breach of contract. The court found that the developer had failed to take advantage of a substitute opportunity when its customer ceased paying on its consulting agreement and transferred its obligations to a successor company. Rather than contracting with the successor company, the owner of the software developer formed an entirely separate company to administer the new consulting arrangement. The court rejected this convenient manuever as a failure to mitigate damages, finding that the new arrangement would have completely offset the developer’s losses.

Orawin is a software technology consulting company, owned and operated by a single person. In 2002, the company developed software for SeniorDent, Inc., a dental management company that focuses on providing dental care to nursing home residents. In 2013, the two companies entered into a Consulting Services Agreement which required Orawin to maintain the software’s dental and vision operating systems and provide modifications determined by SeniorDent. SeniorDent agreed to pay Orawin a monthly retainer upon receipt of invoices.

SeniorDent later attempted to merge with Healthcare Delivered, LLC (“HCD”). HCD and Orawin entered into an amended consulting agreement, transferring all rights and obligations from SeniorDent to HCD. Two months later, the merger of SeniorDent and HCD fell apart, and HCD distributed SeniorDent to a holding company owned by the original owners of SeniorDent (“F&R”). HCD then transferred all of its rights to SeniorDent to the holding company. The owner of Orawin later sought payment for consulting services from HCD, and was told that the F&R was responsible for paying his invoice. The owner of Orawin later formed a new company, O&O, to provide services to the newly reorganized SeniorDent. SeniorDent paid O&O its standard fee beginning in December 2015 and has continued to pay every month since. Continue reading ›

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