Justia U.S. 7th Circuit Court of Appeals Opinion Summaries

The district court dismissed a complaint asserting breach of contract, breach of a covenant of good faith and fair dealing, breach of a settlement agreement, promissory estoppel, equitable estoppel, quantum meruit, unjust enrichment, constructive trust, accounting, reformation of contract, and several types of fraud in connection with agreements for "street furniture." After extensive discussion of whether the plaintiff, a sociedad anónima formed in Uruguay, was the equivalent of a corporation formed in the U.S., and the fact that the contract called for application of the law of Spain, the Seventh Circuit affirmed. The court concluded that, while the defendant did not treat plaintiff well, no rule of law entitles every business to a profit on every deal.

In negotiations for architectural services for construction of a hotel, the parties agreed that defendant would pay an additional $15,000, apart from design fees, if defendant elected not to use plaintiff's construction affiliate. The agreement stipulated that architectural designs would remain plaintiff's intellectual property. Defendant did not use plaintiff's construction affiliate and the relationship deteriorated. Plaintiff claimed that it had no further design obligations; defendant refused to pay what $28,000 demanded by plaintiff. Plaintiff accepted an $18,000 payment in satisfaction, but registered a copyright for designs that it had produced and filed copyright infringement claims against defendant. The district court ruled in favor of defendant, holding that plaintiff had not complied with registration requirements (17 U.S.C. 408(b)) when it submitted re-created designs because its office had been robbed. The Seventh Circuit affirmed. Plaintiff did not identify anything in the designs that was original and protectable; the designs were, for the most part, based on the Holiday Inn Express prototype.

The qui tam suit, brought by a former contractor for one of the defendants, alleges that defendants violated the False Claims Act, 31 U.S.C. 3729(a)(1) in connection with a sale of F-16 fighter jets to Greece, which paid for the jets with money borrowed from the United States. The district court granted summary judgment in favor of defendants. The Seventh Circuit affirmed. An FCA claim requires proof of an objective falsehood. There was no evidence to support allegations: that defendant lied about use of funds loaned by the U.S. to capitalize a Greek business development company; that defendant failed to disclose promptly its decision to delete a price adjustment clause from the draft contract; that defendant made misrepresentations relating to provisions concerning spare part purchases and an ill-fated "depot program;" and concerning a number of misrepresentations in two amendments to the contract.

XMH sought Chapter 11 bankruptcy relief and obtained permission to sell a subsidiary's assets (11 U.S.C. 363), indicating that a contract between the subsidiary and WG would be assigned to purchasers. WG objected, claiming that the contract was a sublicense of a trademark and could not be assigned without permission. The bankruptcy judge agreed with WG, but allowed XMH to renegotiate so that the subsidiary would retain title to the contract but the purchasers would assume all duties and receive all fees. The district court granted a motion substituting the purchasers for XMH and ruled that the order barring assignment was erroneous. First holding that the order was appealable and that it should exercise jurisdiction despite the absence of the bankruptcy trustee as a party, the Seventh Circuit affirmed. If WG had wanted to prevent assignment, it could have identified the contract as a trademark sublicense to trigger a default rule that trademark licenses are assumed to be not assignable. The contract was not simply a sublicense: WG retained control over "all other aspects of the production and sale of the Trademarked Apparel." Such a designation would have been more effective than a clause forbidding assignment because it would have survived bankruptcy.

The railroad owns a 2.8-mile right-of-way that it has leased to the Chicago Transit Authority for almost 50 years. When the lease became too costly, the CTA sought to condemn a perpetual easement. The district court enjoined the condemnation as preempted by the Interstate Commerce Commission Termination Act, 49 U.S.C. 10501(b). The Seventh Circuit affirmed. The railroad and its right-of-way fall under the Act; the proposed state condemnation would be a regulation of railroad transportation preempted by the Act. The court employed an "as applied" analysis and concluded that the condemnation would prevent or unreasonably interfere with rail transportation by changing the relationship between the parties. Under the proposed easement, the CTA's rights would not be subject to termination for any reason. The railroad would lose property rights to reclaim the property if the CTA ceases passenger transportation operations on the Right of Way or violates any term of the lease and to oust the CTA from the Right of Way if the CTA fails to meet its lease obligations.

Petitioner, a citizen of Thailand, was extradited for trial on drug charges in Illinois. Once in the U.S., she wrote letters to people in Thailand who were suspected of being involved in the drug trade in order to assist the Drug Enforcement Administration. The government moved to dismiss the charges against her and commenced removal proceedings. In 2006 the Seventh Circuit vacated an order by the BIA finding petitioner removable and ineligible for asylum and withholding of removal. On remand, petitioner was allowed to present evidence and to rebut testimony that she was involved in drug trafficking in Thailand; she attempted to establish entitlement to protection under the Convention Against Torture. The immigration judge issued an order finding petitioner removable; the BIA ordered that her appeal be dismissed. The Seventh Circuit denied appeal. The evidence produced at a full and fair hearing squarely linked petitioner to the serious crime of drug trafficking, barring her from the relief she sought.

Defendant used a gun to rob a convenience store, taking $54. He entered a plea of guilty to robbery under the Hobbs Act, 18 U.S.C. 1951, and brandishing a firearm during and in relation to a crime of violence, 18 U.S.C. 924(c). The government dismissed a felon-in-possession (18 U.S.C. 922(g)) count. The district court sentenced defendant to 96 months and 84 months imprisonment, to be served consecutively. The Seventh Circuit affirmed the district court's refusal to dismiss the Hobbs Act count. In this case, there is no risk that the Hobbs Act will obliterate all limits on federal power. Although robbery itself is not necessarily economic activity, this crime targeted a business engaged in interstate commerce. An act of violence against even one business, like the convenience store in this case, could conceivably deter economic activity and thus harm national commerce. The economic harm does not necessarily depend upon the amount of money with which any particular defendant absconds.

Defendant entered a plea of guilty to using the Internet to traffic in child pornography (18 U.S.C. 2252A(a)(1) and (b)(1)). All sides agreed that the correct guideline range for the offense was 210 to 262 months. However, because the statutory maximum penalty was 240 months, the range was compressed to 210 to 240 months. The judge imposed a term of 180 months. The Seventh Circuit affirmed. The judge properly considered the seriousness of the offense and the need for deterrence and was not required to specifically address each of defendant's arguments for a lower sentence.

In 2006 creditors forced the corporation, which owned a golf course, into Chapter 11 bankruptcy and the trustee approved sale of the course to the local recreation district over the objections of the corporation's owners. The sale, at a price higher than market value, closed in 2007 and creditors were paid in full. The bankruptcy court rejected multiple allegations of fraud and closed the case in 2010. The Seventh Circuit affirmed and awarded damages and costs, calling the allegations and multiple motions, not only groundless, but "obsessive, a form of harassment, unprofessional, and an abuse of the bankruptcy court, the district court, and this court."

A developer built a subdivision in a floodplain. The developer and buyers knew that the land is low-lying and prone to flooding. The developer constructed levees, floodwalls, retention ponds, and a stormwater holding system. The company that handled construction and sale of buildings in Parcel D had the developer fill one of the retention ponds, so that it could build additional homes; it also constructed duplexes where the developer had planned single-family housing. In 2003 several homes were inundated when a retention pond overflowed. In a state court suit, the company settled with homeowners for$335,000; homeowners agreed to take $35,000 from the company and seek the rest from its insurer. A federal court concluded that the company's insurance policy did not apply, reasoning that homeowners had not suffered "property damage" as defined by the policy because the state court complaint sought changes to curtail future loss. The Seventh Circuit affirmed, noting that neither party had asked the court to apportion the settlement between losses and improvements and that it was too late to do so.