Chicago Business Litigation Lawyer Blog

Best Websites to Learn About Consumer Law Issues — Our DuPage, Lake, and Cook County, and Chicago Illinois Consumer Attorneys Can Assist You in Illinois Consumer Fraud and Deceptive Business Practices Act Lawsuits

June 7, 2009 | Peter S. Lubin and James V. DiTommaso

One of the best websites to learn about consumer law issues Is the Illinois Attorney General’s website. The site contains numerous links to useful consumer protection warnings and links to other top consumer websites. The Illinois Attorney General also provides forms for filing consumer fraud complaints with the Attorney General.

Our consumer rights private law firm handles individual and class action cases that government agencies and public interest law firms such as the Illinois Attorney General may not pursue. Class action lawsuits our law firm has been involved in or spear-headed have led to substantial awards totalling over a million dollars to organizations including the National Association of Consumer Advocates, the National Consumer Law Center, and local law school consumer programs. DiTommaso Lubin is proud of our achievements in assisting national and local consumer rights organizations obtain the funds needed to ensure that consumers are protected and informed of their rights. By standing up to consumer fraud and consumer rip-offs, and in the right case filing consumer protection lawsuits and class-actions you too can help ensure that other consumers’ rights are protected from consumer rip-offs and unscrupulous or dishonest practices.

Our Naperville, Aurora, Waukegan, Joliet, Elgin, Highland Park, Northbrook, Wilmette, Wheaton, Oak Brook, and Chicago consumer lawyers provide assistance in consumer fraud and consumer rights cases including in Illinois and throughout the country. You can click here to see a description of the some of the many individual and class-action consumer cases we have handled. A video of our lawsuit which helped ensure more fan friendly security at Wrigley Field can be found here. You can contact one of our Chicago area consumer protection lawyers who can assist in lemon law, unfair debt collection, junk fax, prerecorded telephone solicitations, and other consumer, consumer fraud or consumer class action cases by filling out the contact form at the side of this blog or by clicking here.

Second District Court of Appeal Upholds Nominal Judgment for Plaintiffs’ Failure to State Reasonable Basis for Damages

June 1, 2009 | Peter S. Lubin and James V. DiTommaso

In a hard-fought Illinois consumer fraud lawsuit over deception by a condominium developer, the Second District Court of Appeal has upheld an award involving both nominal damages and punitive damages. In Kirkpatrick v. Strosberg, Nos. 2-06-0724 and 2-06-0731 (Ill. 2nd Aug. 8, 2008), four plaintiffs, led by John Kirkpatrick, sued a real estate developer over misrepresentations about the square footage and ceiling height of the luxury condominiums they purchased in Glen Ellyn, Ill.

Defendant Morningside Development Group is general partner of defendant Glen Astor Condominium Investors LP, a residential real estate developer. Defendant David Strosberg is Morningside’s president. Glen Astor entered into contracts with the plaintiffs for their purchase of luxury condos on the top floor of a development. Before purchasing the condos, the plaintiffs allege, they read sales materials promising nine-foot ceilings and specific amounts of square footage in the units. In three cases, floor plans specifying square footage were incorporated into their contracts. A rider to the contracts specified that dimensions are approximate and subject to adjustments due to the location of building components. During construction, the builder had to lower the ceilings by six inches because of the size of roof components. After buying the condos, the plaintiffs realized that both the square footage and the ceiling heights were smaller than promised.

At trial for the subsequent lawsuit, the court determined that the difference in square footage resulted from differences between how LeNoble and the plaintiffs’ own appraiser measured the square footage, but that LeNoble’s smaller measurements were appropriate and proper. Thus, the court struck down the square footage claims. Finally, it found for the plaintiffs on the breach of contract claims regarding the lowered ceiling. It found that there were actual damages, but that the plaintiffs’ expert appraiser had not given adequate information about damages. The breach of contract took place in 1997, the court said, but Philips gave a diminished value as of 2004 that was “nothing more than a guess without proper basis.” Thus, the court awarded nominal damages of $100 each on the breach of contract and Consumer Fraud Act claims regarding the ceilings. It also awarded $300,000 in punitive damages and $83,000 in attorney fees.

Material Breach of Contract Invalidates Covenant Not to Compete, Illinois First District Rules

May 27, 2009 | Peter S. Lubin and James V. DiTommaso

Our firm’s Illinois non-compete agreement litigation lawyers were pleased to note a ruling by the First District Court of Appeal that a doctor may not bring a lawsuit against his former business partner for breaching a non-compete agreement. Bisla v. Parvaiz, No. 1-07-1647 (Ill. 1st., Feb. 21, 2008), arose out of a soured employment arrangement between Dr. Virenda Bisla and Dr. Akhtar Parvaiz, both doctors in Chicago. Bisla hired Parvaiz as an employee in 1998, under an agreement specifying that Parvaiz would have the opportunity to become a 50% partner in Bisla’s medical company after three years, if he met certain criteria. It also specified that Bisla would provide medical insurance for Parvaiz and his family, and malpractice insurance in Indiana for Parvaiz.

Neither type of insurance was provided to Parvaiz, according to the First District. And when the three years in the agreement had passed, Bisla did not offer Parvaiz a 50% share of the company, as agreed. Instead, he offered Parvaiz a 45% share, spread over five years, and presented him with a new employment contract and stock purchase agreement. Bisla told Parvaiz that it was in his best interests to sign these papers, but Parvaiz refused because they did not comply with the original employment agreement. He continued working for Bisla’s company for the next five years, but believed that they were using an oral contract since the first employment contract had expired.

The next year, Bisla’s company was temporarily dissolved by the State of Illinois for nonpayment of a filing fee. Bisla did not tell Parvaiz about the dissolution, which automatically terminated their employment agreement. However, in 2005, Parvaiz began working for a competing medical company. When Bisla found out, he demanded a share of the proceeds, then fired Parvaiz and eventually brought a lawsuit seeking to stop him from competing. Parvaiz countered that he believed the agreement was over. The trial court agreed, finding that their agreement was invalid because the employment agreement was breached by both the temporary dissolution and Bisla’s refusal to make Parvaiz a partner. It denied the injunction Bisla sought against Parvaiz, and Bisla appealed.

Fourth District Court of Appeal Finds Company May Be Liable For Causing Another Company’s False Claim to Be Presented

May 22, 2009 | Peter S. Lubin and James V. DiTommaso

In an Illinois state qui tam lawsuit, the Fourth District Court of Appeal has ruled that an accounting company may be held liable for knowingly allowing another company to submit a fraudulent claim to the state. In Illinois Health Facilities Authority ex rel. Scachitti v. Morgan Stanley, 887 N.E.2d 601 (April 2, 2008), three individual plaintiffs brought suit against financial services company Morgan Stanley Dean Witter and accounting firm Ernst & Young for an alleged scheme to defraud the Illinois Health Facilities Authority under the Illinois Whistleblower Reward and Protection Act.

The case arose out of a bond refinancing attempt by the Authority. In order to pay off revenue bonds, it issued “advance refunding” bonds, which are normally tax-exempt. However, if the proceeds of these bonds are reinvested in securities with a higher yield, they lose their tax-exempt status unless the profits go to the U.S. Treasury. To ensure they did not lose the tax exemption, the Authority hired Morgan Stanley as an underwriter for the advance refunding bonds and Ernst & Young to verify Morgan Stanley’s work.

Defendants accuse Morgan Stanley of fraudulently “yield burning” by charging abovemarket rates for the bonds — ensuring that they would not become taxable — and pocketing the $21,000 difference. They also accuse Ernst of abetting this behavior by knowingly hiding it in its audit. They both companies for violating the Whistleblower Act, and Ernst for aiding and abetting Morgan Stanley’s violations. The Cook County trial court dismissed the claims against Ernst for failure to state a sufficient cause of action. The plaintiffs appealed.

Attorney Fees Are Actual Damages in Legal Malpractice Claims, Second District Rules

May 17, 2009 | Peter S. Lubin and James V. DiTommaso

Our Illinois legal malpractice lawyers recently noted an appellate decision from the Second District establishing that attorney fees are “actual damages” within the meaning of Illinois law. Nettleton v. Stogsdill, No. 2-07-1215 (Ill. 2nd Dec. 29, 2008). The ruling arose out of a legal malpractice claim by Margaret Nettleton, who was unhappy with the representation provided by attorney William J. Stogsdill, Jr., in her divorce.

Nettleton retained Stogsdill in 2001 for her divorce, whose trial was set for late 2002. On the day before trial, however, an associate from Stogsdill’s office appeared to ask for a continuance because Stogsdill was in another trial and unable to attend or prepare. The motion was denied, but a two-day continuance was granted the next day when Stogsdill himself appeared. On the day of the new trial, Stogsdill asked for a voluntary nonsuit, which was denied because he hadn’t given notice to all of the parties. He then called Nettleson to the stand, where he asked her to state and spell her name. He then rested her case. The divorce was not granted. Stogsdill filed a second petition for dissolution, but Nettleton fired him about two months later. (She was represented by four other firms before her divorce was granted.)

Nettleton eventually sued, alleging that Stogsdill and his firm committed malpractice by being unprepared, by moving for a nonsuit without her consent and by putting her on the witness stand and then resting without her consent. The damages she cited included loss of the attorney fees paid to both Stogsdill and other attorneys. The trial court granted Stogsdill’s motion for summary judgment on the grounds that Nettleton hadn’t demonstrated actual damages caused by Stogsdill’s actions — she hadn’t shown that she would have received a larger divorce settlement if not for Stogsdill. After various other legal maneuvers, Nettleton appealed.

Fourth Circuit Rules That False Claims Act Applies to Contracting Fraud Against Iraqi Coalition Provisional Authority

May 15, 2009 | Peter S. Lubin and James V. DiTommaso

Individual whistleblowers may sue a defense contractor that allegedly defrauded the Iraqi provisional government out of millions during the early part of the Iraq war, the Fourth U.S. Circuit Court of Appeals ruled April 10. United States of America ex rel. DRC Inc. v. Custer Battles LLC, No. 07-1220 (April, 2009) was a federal whistleblower lawsuit testing whether the federal False Claims Act, which allows lawsuits against contractors defrauding the federal government, applies to the multinational interim Iraqi government set up after the U.S. invasion of that country. The Fourth Circuit found that it did, reasoning that U.S. personnel working for the CPA may still have been working in their capacity as federal employees.

The case grew out of the discovery of fraud by Custer Battles LLC, a contractor hired to help the CPA replace existing Iraqi dinars that bore Saddam Hussein’s face with dinars without his face. They were paid $15 million for this work, including a $3 million check from the U.S. Treasury and other payments from the CPA’s funds authorized by U.S. personnel. The fraud was discovered after the firm’s founders accidentally left a spreadsheet at a meeting site showing they had inflated the bills submitted to the CPA for reimbursement by many thousands of dollars.

Subcontractor DRC Inc., its managing director, Robert Isakson, and former Custer Battles employee William Baldwin sued Custer Battles on behalf of the federal government under the False Claims Act. They alleged fraud on both contracts as well as illegal retaliation against Baldwin, who said he was fired after trying to investigate the fraud. The trial court dismissed parts of the claim on summary judgment and limited the plaintiffs’ recovery to the $3 million that it could trace with confidence to the U.S. Treasury. Considering only that part of the case, the jury returned the maximum possible $3 million verdict, plus $165,000 in damages for Baldwin’s retaliation claim.

FTC Website Explains Consumers Right to Be Free From Fraudulent and Harrassing Debt Collectors — Our Chicago Consumer Lawyers and Attorneys Can File Private Lawsuits if You are a Victim of Unfair Debt Collection Practices

May 12, 2009 | Peter S. Lubin and James V. DiTommaso

The Federal Trade Commission (“FTC”) website provides useful information regarding recognizing telephone and telemarketing frauds. A full copy of the Fair Debt Collection Practices Act is also linked to the site and you can view it here. The FTC website states:

Debt Collection FAQs: A Guide for Consumers

If you’re behind in paying your bills, or a creditor’s records mistakenly make it appear that you are, a debt collector may be contacting you.

Land Owners May Pursue Lawsuit Alleging Chicago Landmark Ordinance Violates Illinois Constitution, First District Rules

May 11, 2009 | Peter S. Lubin and James V. DiTommaso

In a decision with wide-reaching implications for Chicago land owners and developers, the First District Court of Appeal found March 6 that at least part of the Chicago Landmarks Ordinance was unconstitutionally vague. Hanna v. City of Chicago, No. 1-07-3548 (Ill. 1st Dist. March 6, 2009) is an Illinois real estate lawsuit alleging that the ordinance was overly vague, improperly delegated the city’s legislative authority and violated the due process and equal protection clauses of the Illinois Constitution.

Plaintiff Albert Hanna owned property in Chicago’s Arlington Deming neighborhood, and plaintiff Carol Mrowka owned property in the East Village neighborhood. Both had been approved as Landmark Districts, which means that property owners in those areas must get approval from the Commission of Chicago Landmarks for any alteration, construction, demolition or other work on their property. Land owners may contest the designation at a hearing. The plaintiffs sued the City of Chicago, the Commission and several city officials to overturn the ordinance, which authorizes the designations.

Count I of the complaint alleges that the ordinance is so vague that citizens have no way to tell how they should behave to comply with it. Counts II and III allege that the ordinance violates provisions of the Illinois Constitution reserving legislative power to the city council and state legislature. Counts V through XX allege that the ordinance violates the constitution’s equal protection clause and substantive due process clause. In trial court, the city moved to dismiss the multiple counts of their complaint for failure to state a claim. The trial court granted the motion as to counts I through III and V through XX. The plaintiffs now appeal that decision.

Defense Contractor Northrop Grumman Settles False Claims Act Lawsuit Over Defective Satellite Parts

May 8, 2009 | Peter S. Lubin and James V. DiTommaso

Northrop Grumman Corporation agreed April 2 to settle a federal whistleblower lawsuit for $325 million, the New York Times reported. The lawsuit alleged that TRW Inc, a defense contractor that Northrop later acquired, intentionally suppressed evidence that certain electrical parts it manufactured did not work properly, causing the expensive failure of several defense satellites in orbit. Then, an attorney quoted in the article said, the contractor charged the federal government millions of dollars to investigate the problems with a satellite. The deal included another settlement of an unrelated case by Northrop against the government, leaving the company with no net gain or loss.

The qui tam lawsuit grew out of allegations from scientist Robert Ferro, who worked for a subcontractor to TRW. Ferro found problems with certain transistors TRW manufactured for defense satellites, the article said, and reported them to TRW. But TRW not only did not report the problems to the government, but allegedly continued to sell the parts and blocked Ferro’s attempts to include the information in a report to the Air Force later. He filed a lawsuit in 2002, but because the case was under seal (as required by federal law), his name was only revealed after the settlement. As part of the settlement, Ferro will receive $48.8 million.

Federal, state and local laws allow people like Ferro to bring whistleblower lawsuits against organizations they believe are defrauding government agencies or misusing government resources. Because this typically requires inside knowledge about an organization, the False Claims Act has two unusual features giving them a special incentive. One is the requirement that the original claim and the whistleblower’s name be kept from public knowledge. The other is that the whistleblower stands to receive 15% to 30% of any money the government wins. Prosecutors can choose to intervene under the False Claims Act, but even if they do not, the whistleblower has the right to continue the suit as a “private attorney general,” often with help from a private law firm.

GMAC ‘Unfairly’ Repossessed Vehicle Under Illinois Consumer Fraud Act, Appeals Court Decides

May 6, 2009 | Peter S. Lubin and James V. DiTommaso

DiTommaso Lubin’s auto fraud, lemon law, and consumer fraud trial lawyers were impressed by a recent First District Court of Appeals ruling against the credit arm of General Motors for a wrongful repossession. The court said a trial court was correct to rule that General Motors Acceptance Corporation acted unfairly when it repossessed a truck in violation of its agreement with the owner. In Demitro v. General Motors Acceptance Corporation, No. 1-06-3417 (Ill. 1st. Feb. 9, 2009), the appeals court declined to overturn a Cook County trial court ruling that GMAC violated the Illinois Consumer Fraud and Deceptive Business Practices Act.

Demitro purchased a Chevrolet Suburban in 2002 and had no trouble making payments until 2003, when he underwent surgery and went on disability in May of 2003. His payment checks for June and July of that year bounced, and in August, he spoke with a GMAC representative who told him so. The next day, Demitro called GMAC and authorized about one month’s payment to be deducted from his checking account. The GMAC representative then called a repossession agency that had already been authorized to take Demitro’s truck and put the repossession on hold. The representative sent Demitro a letter giving him seven days to make the back payments and keep his account current. After that time expired, it said, GM could exercise its right to repossess the truck.

On the very next day, Demitro awoke to discover that his truck had been repossessed. The GMAC representative was notified. He acknowledged that the repossession was a mistake and a violation of the seven-day extension in the letter, but nonetheless recommended to management that they keep the truck. They did, and informed Demitro that he was now liable for repossession charges of $39,695.04 as well as the outstanding balance on his account. Unable to get to the bank, Demitro informed GMAC that his telephone payment would bounce. GMAC later withdrew that payment from his account after he had added more money, but failed to credit him for the payment.