George Michael Marovich

In the case In re IFC Credit, after IFC Credit Corporation filed for chapter 7 bankruptcy, the trustee brought an adversary proceeding against former officers Rudolph Trebels and Mark Langs alleging breach of fiduciary duty and unjust enrichment based on their roles in transactions like the Norvergence and Wildwood deals as well as personal use of company funds. Creditors Coactiv Capital Partners and First Chicago Bank and Trust had filed separate suits against the officers and others arising from overlapping allegations, and the bankruptcy court enjoined those suits. The district court affirmed the injunction, holding that the creditors' claims were sufficiently "related to" the bankruptcy case under 28 U.S.C. § 1334(b) because they sought to recover the same funds from the officers and allowing separate litigation would affect the amount of property available for distribution in the estate.

business & regulatoryprocedure

Shareholders of Northfield Laboratories filed a class action alleging that the company and its executives violated federal securities laws by making misleading statements about clinical trial results for the company's blood substitute product PolyHeme, including adverse events such as heart attacks. The court granted the defendants' motions to dismiss the complaint without prejudice. Plaintiffs failed to plead with particularity facts creating a strong inference that defendants knew the negative trial results at the time the challenged statements were made in 2002 through 2004, as required by the Private Securities Litigation Reform Act, even though knowledge was alleged by 2005. Because the primary claims under Section 10(b) and Rule 10b-5 were inadequately pled, the control person claims under Section 20(a) were also dismissed.

business & regulatoryprocedure

Heller Financial, Inc. sued Ohio Savings Bank for breach of a Recognition Agreement tied to separate loan contracts that each bank had with a Florida property developer. The agreement required OSB to notify Heller before accelerating its loan or foreclosing on the Florida property, but OSB allegedly failed to do so. OSB moved to dismiss the complaint for lack of personal jurisdiction. The court granted the motion, holding that OSB lacked sufficient minimum contacts with Illinois to satisfy federal or state due process requirements because the contract negotiations occurred mainly by phone and fax, the agreement was executed in Florida, and performance would have taken place in Florida. The alternative request to transfer venue was dismissed as moot.

procedurebusiness & regulatory

The case involves Conagra seeking over $28 million in insurance coverage from Arkwright Mutual Insurance and broker Hobbs for damages from two warehouse fires in Kansas and Missouri in 1991 and 1992 under a policy issued in 1989. After an initial state court action was stayed, the suit proceeded in federal court with disputes over procedure, discovery, and merits including policy interpretation and claims handling. The court denied Conagra's motions for summary judgment against both defendants, granted Arkwright's motion for partial summary judgment, granted in part and denied in part Hobbs' summary judgment motion, and denied Hobbs' motion to reduce damages, applying Illinois law to the insurance and related claims.

business & regulatorypropertyprocedure

The case involves Technic Engineering suing the Basic family members for breaching fiduciary duties or participating in such breaches by transferring assets from Environmental to a new entity, Envirotech, while Environmental faced a large arbitration claim from Technic and was insolvent. The Individual Defendants moved for summary judgment on Count VI of the complaint. The court denied the motion, holding that genuine issues of material fact exist regarding whether the defendants owed fiduciary duties to creditors like Technic under Illinois law when the corporation was insolvent or in the zone of insolvency, whether they were officers or directors involved in the transfers, and whether they induced or participated in any breach. The reasoning focused on evidence of the defendants' roles, knowledge of the dispute, and benefits received from the asset transfers that left Environmental unable to pay the eventual $1.1 million award.

business & regulatory

In Cuyler v. United States, the plaintiff, as special administrator of a child's estate, sued the United States under the Federal Tort Claims Act alleging that Navy hospital personnel negligently failed to report suspected child abuse by a babysitter on a naval base, which allowed the abuse to continue and caused the decedent's death. The United States moved to dismiss under Rule 12(b)(6), arguing the complaint failed to state a claim. The court denied the motion, holding that the Illinois Child Abuse Reporting Act imposes a duty on mandated reporters like the hospital staff to report suspected abuse of children, that violation of this duty can support a negligence claim under Illinois law, and that the complaint sufficiently alleged proximate cause and breach of applicable regulations and protocols. The court reasoned that the statute's purpose includes protecting other children in the same environment and that precedents support civil liability for such failures.

torts & liabilityprocedurefederal power

In Cameron v. Navistar International Transportation Corp., plaintiff William Cameron sued his former employer alleging violations of the Americans with Disabilities Act after he was terminated, along with state-law claims for retaliatory discharge related to a worker’s compensation filing and intentional infliction of emotional distress. The district court granted Navistar’s motion for summary judgment on all counts. The court determined there was no genuine dispute that Cameron could not perform the essential functions of assembler positions due to his work restrictions around suspended tools and that no permanent light-duty positions existed. It further found that Cameron had failed to provide adequate medical documentation to justify his extended absences, violating company policy, and that his conflicting doctor’s notes did not establish a qualifying disability under the ADA or support his other claims.

labor & employmentcivil rights

The case involved beneficiaries suing Metropolitan Life Insurance Company for accidental death benefits under a group life insurance policy after an Illinois state trooper died of a myocardial infarction. The policy covered losses from accidental bodily injury independent of other causes but excluded those caused by or resulting from sickness or disease. The court granted MetLife's motion for summary judgment, determining that the death resulted from the decedent's preexisting cardiac condition (including long-standing atrial fibrillation) rather than an unforeseen accident, even assuming his stressful police work contributed to the heart attack.

business & regulatory

This case involved plaintiffs who obtained a multimillion-dollar judgment in Texas federal court against ANB Investment and sought to enforce it in Illinois after registering the judgment there under 28 U.S.C. § 1963. After the automatic stay expired but before a supersedeas bond was approved, plaintiffs served citations to discover assets on Northern Trust (ANB's new parent) and an executive, prompting motions to quash the citations or stay the supplementary proceedings. Applying Federal Rule of Civil Procedure 69(a) and Illinois law under 735 ILCS 5/2-1402, the court held that the citations were properly issued and not defective because plaintiffs had a right to pursue discovery of assets prior to the bond's approval. The court denied the motions to quash and to stay the citations but left in place the Texas court's stay of execution on the judgment itself, reasoning that the timing of the bond did not retroactively invalidate the earlier supplementary proceedings.

procedure

In Cervantes v. Jones, plaintiff James Cervantes sued South Elgin Deputy Chief of Police Larry Jones under 42 U.S.C. § 1983 and Illinois law for malicious prosecution, claiming Jones fabricated evidence linking Cervantes to a 1992 murder and gave false grand jury testimony that resulted in Cervantes' indictment and three years of pretrial detention before acquittal. Jones moved for summary judgment after the court had previously denied a motion to dismiss. The court granted the motion, holding that Cervantes failed to establish the elements of a malicious prosecution claim because the prosecutor independently reviewed investigative reports and decided to seek an indictment, and because Cervantes presented no evidence that Jones fabricated evidence or caused the prosecution. The court also noted that absolute immunity for grand jury testimony and the existence of probable cause would further bar the claims.

criminal lawcivil rights

In SMFC Funding Corp. v. United Financial Mortgage Corp., SMFC sued United for breaching their mortgage purchase agreement by selling a loan that was not of "investment quality" as required, after the loan turned out to be fraudulent and went into default. SMFC sought summary judgment on its claims for breach of contract and breach of express indemnification. The court granted the motion, finding no genuine issues of material fact, that the loan violated the agreement's requirements, and that United was obligated to repurchase the loan or indemnify SMFC for its losses of $122,858.70. The decision was based on the undisputed facts that the loan was wholly fraudulent and failed to meet the investment quality standards outlined in the incorporated Seller/Servicer Guide.

business & regulatorypropertyprocedure

This case involves an insurance coverage dispute where Illinois Tool Works Inc., as assignee of policyholders RBK Furniture and Robert Kaplan, sued American Alliance Insurance Co. for breaching its duty to defend and indemnify under a policy after ITW sued the insureds for soil and groundwater contamination from hazardous waste on adjacent properties under CERCLA as well as trespass and nuisance claims. The court had previously ruled that the insurer breached its duty to defend, making it liable for defense costs and any reasonable settlement. On summary judgment, the court held that the $2 million settlement between ITW and the insureds was entered in reasonable anticipation of liability and was reasonable in amount, entitling ITW to recover the $1 million policy limit plus prejudgment interest from the date payment was due, along with a small amount of unpaid defense costs. The decision rested on Illinois law requiring insurers to cover settlements made in reasonable anticipation of liability after a breach of the duty to defend, with no genuine factual disputes on the reasonableness of the settlement or the calculation of interest.

environmentbusiness & regulatoryprocedureproperty

This consolidated securities case involved derivative claims by GIC shareholders alleging that directors breached fiduciary duties under California and Delaware law by concealing adverse financial information about new products, which inflated the stock price and allowed certain directors and insiders to sell millions of shares for over $516 million. It also included a direct claim by BKP Partners under §14(a) of the Securities Exchange Act of 1934, arising from a stock-for-stock merger in which Next Level shareholders received GIC shares allegedly valued at an artificially high price due to the same nondisclosures. The court dismissed the §14(a) claim with prejudice because Next Level's unregistered shares did not trigger the statute's proxy solicitation rules. It denied dismissal of the derivative claims, finding that demand on the board was futile under Delaware law since the directors' personal stock sales and involvement in the alleged misconduct raised reasonable doubt about their independence and disinterest.

business & regulatoryprocedure

The case involved Lutheran General Hospital suing an ERISA-governed employee benefit plan (PII) for unpaid balances on neonatal intensive care for premature twins, based on an alleged assignment of benefits from the father (a plan participant), and suing the parents for breach of contract on any remaining amounts. PII moved to dismiss the ERISA count for lack of standing, arguing the hospital was neither a participant nor beneficiary, while the parents moved to dismiss the contract count under a services agreement barring collection from members for covered services. The court denied both motions, holding that the signed consent form created a valid assignment of benefits sufficient for standing under ERISA precedents and that the complaint's ambiguity about whether services were covered or non-covered, combined with the need to draw inferences in the plaintiff's favor, precluded dismissal of the contract claim.

healthcarelabor & employmentprocedure

In Spegon v. Catholic Bishop of Chicago, plaintiff Kevin Spegon sued his former employer, alleging violations of the Fair Labor Standards Act for unpaid overtime wages and discriminatory discharge after accepting an offer of judgment for $1,100 plus costs and reasonable attorney's fees. Spegon's counsel then moved for $7,280.70 in fees and costs. The court granted the motion but awarded only $752.70, determining that the requested amount was unreasonable due to limited success on the claims, excessive hours billed on straightforward matters, and the small recovery relative to the fees sought.

labor & employmentprocedure

This case involved Illinois Tool Works suing American Alliance Insurance Co. (with Home Indemnity Co. and Home Insurance Co. later dismissed) as assignee of RBK Furniture and its owner, claiming breach of the duty to defend and indemnify under a commercial general liability policy in an underlying CERCLA lawsuit alleging hazardous waste contamination of ITW's adjacent property via trespass and nuisance. The court granted ITW's motion for judgment on the pleadings. The core reasoning was that the underlying complaint alleged facts amounting to wrongful entry or eviction under the policy's personal injury coverage, triggering the insurer's duty to defend under Illinois law even if coverage was ultimately disputed.

environmentpropertytorts & liability

This case involved an appeal by Schwinn Cycling & Fitness Inc. and related entities from a bankruptcy court order dismissing their adversary proceeding, in which they sought to enjoin a Pennsylvania state-court products liability lawsuit brought by the Benonis family over an injury from an exercise bicycle sold by the original Schwinn debtors. The underlying bankruptcy involved the debtors' 1992 Chapter 11 filing, a 1993 asset sale under Section 363 in which the buyer expressly did not assume pre-closing product liability claims, and a 1994 confirmed liquidating plan with an injunction protecting the estate and successors. The district court affirmed the dismissal, holding that the sale order, assumption agreement, and confirmation order did not bar or enjoin the Benonis claims or provide the relief requested, that final bankruptcy orders cannot limit non-parties' rights in this manner, and that related-to jurisdiction was tenuous though the court retained power to interpret its own orders.

business & regulatorytorts & liabilityprocedure

In Anisimov v. Lake, the plaintiff sued her former employer, a dentist, under the civil rights remedy of the Violence Against Women Act of 1994 and related Illinois tort claims, alleging that he committed multiple acts of gender-motivated violence including sexual assault and rape while she worked at his office. The defendant moved to dismiss, arguing that the VAWA provision exceeded Congress's authority under the Commerce Clause or the Fourteenth Amendment and that the complaint failed to state a valid claim. The court denied the motion, holding that the VAWA's civil remedy was a valid exercise of federal power and that the allegations sufficiently stated a claim for gender-motivated crimes of violence. The decision rested on Congress's extensive findings regarding the aggregate economic impact of gender-based violence on interstate commerce and the statute's explicit limitations to acts motivated by gender animus rather than random violence.

civil rightsfederal powertorts & liability

In Rodriguez v. City of Chicago, a Chicago police officer sued the City under Title VII, alleging religious discrimination after he was assigned to protect abortion clinics despite his Roman Catholic beliefs opposing abortion; he sought an exemption from such duties and claimed the City failed to accommodate his faith. The court granted summary judgment to the City, finding no violation of Title VII. The core reasoning was that the City offered reasonable accommodations, such as the option to transfer to a district without abortion clinic details under the union contract, which would eliminate the conflict between the officer's job requirements and religious practices without undue hardship to the employer.

religious libertylabor & employmentcivil rightsabortion

The case involved a bankruptcy debtor, Pullman Construction Industries, that sought to recover pre-petition tax payments made to the IRS as avoidable preferential transfers under Section 547 of the Bankruptcy Code. The district court affirmed the bankruptcy court's ruling that Pullman could not recover the trust-fund portion of the payments because it lacked a property interest in those funds, that the non-trust-fund payments were not made on account of an antecedent debt because the obligation arose on the deposit due date rather than the return filing date, and that Pullman was not entitled to prejudgment interest. The reasoning rested on the statutory treatment of trust-fund taxes under 26 U.S.C. §§ 7501 and 6302, the timing rules for tax deposits in 26 C.F.R. § 31.6302(c)-1, the elements of a preference action, and the lack of an express waiver of sovereign immunity for interest awards against the United States.

taxesbusiness & regulatoryprocedure