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

The title company provided real estate closing services. From 1984 through 1995, it served as exclusive agent for defendant and managed an escrow account that defendant contractually agreed to insure. The title company was not profitable and its managers used escrow funds in a "Ponzi" scheme. In 1989, there was a $26 million shortfall. To fill the hole, the managers began looting another business, Intrust, to pay defendant's policyholders ($40.9 million) and to pay defendant directly ($27 million), so that defendant was a direct and indirect beneficiary of the title company's arrangement with Intrust. In 2000 the state agency learned that the funds were missing, took control of Intrust and placed it in receivership. In July 2010, the Receiver filed suit for money had and received, unjust enrichment, vicarious liability), aiding and abetting breach of fiduciary duty, and conspiracy. The district court dismissed based on the statute of limitations. The Seventh Circuit affirmed. The Illinois doctrine of adverse domination does not apply. That doctrine tolls the statute of limitations for a claim by a corporation against a nonboard-member co-conspirator of the wrongdoing board members.

Debtor, a company that operated a tug boat service, filed for Chapter 11 bankruptcy and the bankruptcy court converted the case to a Chapter 7 liquidation. The principals were going through a divorce, and each sought ownership of real property used to operate the business. They reached a settlement that divided $911,620 from the sale of the property. The principals each received $229,126; the bankruptcy estate received $458,252. The principals paid the bankruptcy attorneys $65,000 from their personal shares. A financial services firm, a creditor of the estate that provided financial consulting services during the Chapter 11 proceedings, objected to the payout to the attorneys. The bankruptcy court rejected the claim. The district court and Seventh Circuit affirmed, finding the settlement to be in the best interests of the estate.

Defendant pled guilty to possessing crack cocaine with intent to distribute, 21 U.S.C. 841(a)(1), agreed to cooperate in exchange for a chance at a lower sentence, and waived the right to appeal "any and all issues." The district court sentenced him to life imprisonment, the statutory minimum given the amount of crack, prior convictions for felony drug offenses, and the government's decision not to move for a sentence below the mandatory minimum. The Seventh Circuit dismissed an appeal, finding the plea agreement enforceable and rejecting an argument that the government breached that agreement by not moving under 18 U.S.C. 3553(e) to reduce his sentence below the statutory minimum. There is nothing in the record indicating that the government harbored any improper motive or acted irrationally in declining to move for a sentence reduction. Although defendant had begun to cooperate, his efforts had not resulted in any charges or arrests.

After being attacked in his home by alleged co-conspirators in a prescription narcotics conspiracy, defendant stated, in open court, that he would shoot his former associates if he ever encountered them again. His prior felony conviction made it illegal for him to possess firearms, but he enlisted the help of an acquaintance, a confidential informant, in obtaining untraceable guns. In an Illinois parking lot, he purchased guns manufactured outside the state and was arrested as a felon in possession of a firearm (18 U.S.C. 922(g)(1)). The district court rejected an argument that ATF had removed the guns from the stream of interstate commerce when it took the guns off the private market and added them to its prop collection. He entered a conditional plea and was sentenced to 56 months. The Seventh Circuit affirmed, rejecting an argument that federal agents should not be permitted to federalize local gun-possession offenses by offering suspects interstate prop guns rather than letting them buy local.

Defendant pleaded guilty to transporting a minor in interstate commerce for the purpose of prostitution, 18 U.S.C. 2423(a) and was sentenced to 210 months' imprisonment. Appeal was dismissed on the basis of waiver in the plea agreement. Defendant filed a collateral attack within a year, arguing that his attorney had a conflict of interest, because he formerly represented one of defendant's prostitutes in a different case, and furnished ineffective assistance of counsel because he did not obtain a formal waiver of the conflict. The district court denied the petition, concluding that the record did not supply any reason to think that counsel's work on the 2003 prostitution claim would have diminished his ability to represent defendant effectively. A subsequent motion under Fed. R. Civ. P. 60(b)(6) was accompanied by more factual detail, but was denied. The Seventh Circuit affirmed denial of the petition and vacated with respect to the 60(b) motion, instructing the district court to dismiss the motion as a successive collateral attack, barred by 28 U.S.C. 2244(b) even though the first ruling was still pending on appeal.

In April 2010, plaintiff sought an injunction, challenging appropriations under Public Act 96-39, the 2009 "Illinois Jobs Now" capital bill, which included line item appropriations to funds from the Build Illinois Bond Fund (30 ILCS 425/9) to the Department of Commerce and Economic Opportunity for grants to not-for-profit organizations (including religious entities) and local governments for capital construction, infrastructure, improvement, and repair costs. The district court dismissed, finding that: the Eleventh Amendment barred state law claims; plaintiff lacked standing to challenge discretionary appropriation to the Governor; the complaint failed to state an as-applied challenge to appropriations because funds had not been dispersed; and the complaint failed to state a claim that appropriations were facially invalid under the "Lemon" test. After the 30-day period for filing notice of appeal expired, the court granted a motion for extension based on plaintiff's attorney's candidacy in the gubernatorial race. The Seventh Circuit held that the court abused its discretion in granting the extension and dismissed an appeal for lack of jurisdiction.

An officer followed defendant's car because of a tip that included the license plate number. He observed that the windows were tinted, and after stopping defendant for failure to signal a right turn, smelled marijuana and saw defendant try to conceal a bag. Defendant stated that he had a gun in the car and the officer's canine alerted to drugs. A search of his car yielded a loaded revolver, crack cocaine, marijuana, and a digital scale. He was convicted as a felon in possession of a firearm, possession of crack cocaine with intent to deliver, and possession of a firearm in furtherance of a drug transaction. The Seventh Circuit affirmed, finding that misstatement of the date on the indictment did not amount to constructive amendment. The court also rejected an argument that the officer lacked probable cause for the stop; a turn signal was required, even if the angle of the turn was less than 90 degrees.