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

The American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) is composed of industry members, academicians, design professionals, and government officials. Its standards provide guidelines for refrigeration processes and design and maintenance of energy efficient buildings. Thermal manufactures liner insulation systems for nonresidential metal buildings. Thermal’s liner systems compete with “over-the-purlin systems,” which comprise about 90% of the market for metal building roof insulation systems. Since 1999, ASHRAE has published Standard 90.1, which rates the energy efficiency of insulation assemblies and has considerable influence in the commercial building industry. In 2011, the Department of Energy determined that Standard 90.1 would be the national commercial building reference standard; within two years every state had to certify that it had adopted a commercial building code that is at least as stringent as Standard 90.1. Until 2010, Standard 90.1 treated non-laminated metal building insulation assemblies, like Thermal’s liner systems, differently from other insulation assemblies. Owners had to obtain special permission to install liner systems. Thermal alleged that representatives of the North American Insulation Manufacturer’s Association and the Metal Building Manufacturers Association, both of which have voting members on ASHRAE’s Envelope Subcommittee, procured this result by providing inaccurate data. ASHRAE declined to accept results of tests commissioned by Thermal. Thermal sued, alleging unfair competition, violation of Wisconsin’s Deceptive Trade Practices Act, antitrust violations, and violation of the Lanham Act. The court rejected all of the claims. The Seventh Circuit affirmed. View "Thermal Design, Inc. v. Am. Soc'y of Heating, Refrigerating & Air-Conditioning Eng'rs, Inc." on Justia Law

Northern, operated by VanDuinen, was a general contractor on public construction projects, legally required to obtain surety bonds. Hanover was Northern’s bonding agent and required Northern to enter into an Indemnity Agreement, which VanDuinen signed in his individual capacity and as Northern’s President. The Midway Airport Project was financed by the FAA and managed by Parsons. In 2008 Northern won the bid and began subcontracting. in 2009 subcontractors complained that Northern failed to pay them in accordance with the bonds and contracts. Work was halted, resulting in a separate complaint, by Parsons, for failure to complete the Project as required. The FAA opted to retain possession of remaining contract funds, $127,086.00, pending resolution of the disputes and completion of the work. Hanover received claims from subcontractors McDaniel ($127,452.78) and Rex Electric ($78,495.00) and a claim for performance from Parsons. Hanover demanded collateral under the Agreement. Northern refused to post collateral or to indemnify Hanover. In 2009 McDaniel filed for bankruptcy; the bankruptcy trustee sued Hanover seeking payment for work performed. In 2012, Hanover paid the trustee $127,452.78 to resolve both McDaniels’s and Rex Electric’s claims. Hanover resolved Parson’s claim by stepping in as general contractor and arranging for completion of the Project. Parsons paid Hanover the $127,086.00 of contract funds the FAA had withheld. Hanover sued Northern and VanDuinen. The district court granted summary judgment in Hanover’s favor. The Seventh Circuit affirmed. The Agreement is unambiguous. Northern breached it, and Hanover is entitled to contractual damages. View "Hanover Ins. Co. v. Northern Bldg. Co." on Justia Law

The general contractor of a Wisconsin construction project, hired Harsco to supply scaffolding. Krien, injured in a fall when a plank on a scaffold on which he was standing, broke, sued Harsco. The parties settled his claim for $900,000. Harsco filed a third‐party complaint against the contractor, seeking indemnification plus interest and attorneys’ fees. The district judge granted the contractor summary judgment. The Seventh Circuit reversed and remanded after examining the complex provisions of the contract between the two. The plank may or may have been supplied by Harsco and may or may not have been defective, as claimed by Krien, who could not sue Riley in tort, because against his employer his only remedy for a work‐related accident was a claim for workers’ compensation, but there has never been judicial resolution of these questions, because Krien’s suit was settled before there was any judgment. Indemnification, however, is a form of insurance, and could apply even if the party seeking indemnification was negligent. Riley’s duty to indemnify Harsco extends to legal expenses incurred by Harsco in defending against Krien’s suit and in litigating this suit. View "Krien v. Harsco Corp." on Justia Law

Volpentesta owned and operated a construction business and used the company to defraud customers, investors, subcontractors, and the government. Charged with six counts of mail and wire fraud and 17 counts of federal tax violations, Volpentesta was represented by Federal Defender Gaziano. Due to the volume of discovery (about 11,000 pages of Bates-stamped discovery and 40 banker’s boxes of documents seized by the IRS), Gaziano ensured that Volpentesta could review the discovery electronically from the jail. When Volpentesta complained that the computer was too slow, Gaziano obtained an order for periodic transport to review the documents. Volpentesta eventually filed nine motions to substitute counsel, most related to the difficulty in reviewing discovery. The court ultimately allowed him to proceed pro se. Volpentesta was convicted, sentenced to a total of 133 months in prison, and ordered to pay more than one million dollars in restitution. The Seventh Circuit affirmed, rejecting arguments that he was deprived of his Sixth Amendment right to effective assistance of counsel; that his waiver of his right to counsel was not knowingly, voluntarily, and intelligently given; and that the district court erroneously denied his motions to continue the trial once he had decided to represent himself. View "United States v. Volpentesta" on Justia Law

Elliot, which provides construction and maintenance services, owns and leases bucket trucks. In 1996, Elliot entered into a lease with TECO, a manufacturer of such trucks, agreeing agreed to hold TECO harmless from liability arising from injuries resulting from use, operation, or transportation of the vehicle or its location or condition. In 2000, Large was injured while operating a truck, which his employer, Elliot, had leased from TECO. Large sued TECO. TECO’s successor in interest (Mobile) filed a third-party complaint against Elliot, seeking defense and indemnification pursuant to the lease. Mobile later settled with Large without Elliot’s participation, leaving the third-party complaint against Elliot as the only outstanding issue. After a change in Virginia law, Mobile again moved for summary judgment, which the district court granted, holding Elliot responsible to defend and indemnify Mobile. The Seventh Circuit affirmed, rejecting Elliot’s argument that a later invoice superseded the terms of the lease, eliminating Elliot’s duty to defend and indemnify except in the case that Elliot violated obligations under the invoice by failing to either adequately train Large in the use of the truck or to provide him with copies of the truck’s operation and maintenance manuals. View "Large v. Mobile Tool Int'l, Inc." on Justia Law

Clark, the owner and president of an East St. Louis Illinois company, was charged with making false statements in violation of 18 U.S.C. 1001(a)(3). Clark’s company had entered into a hauling services subcontract with Gateway, general contractor on a federally funded highway project in St. Louis, Missouri. Employers must pay laborers working on certain federally-funded projects the “prevailing wage,” calculated by the Secretary of Labor based on wages earned by corresponding classes of workers employed on projects of similar character in a given area, and maintain payroll records demonstrating prevailing wage compliance, 40 U.S.C. 3142(b) The indictment charged that Clark submitted false payroll records and a false affidavit to Gateway, representing that his employees were paid $35 per hour, when they actually received $13-$14 per hour. The district court dismissed for improper venue, finding that when a false document is filed under a statute that makes the filing a condition precedent to federal jurisdiction, venue is proper only in the district where the document was filed for final agency action. The Seventh Circuit reversed. Although the effects of the alleged wrongdoing may be felt more strongly in Missouri than in Illinois, the Southern District of Illinois is a proper venue. View "United States v. Clark" on Justia Law

Prince was the general contractor for construction of an apartment building. Rybaltowski was an employee of a waterproofing company. His boss took Rybaltowski to the project site to perform an unpaid demonstration of the proposed caulking of windows. While Rybaltowski was at the site, a beam supporting masonry equipment fell on him. Less than an hour after the accident, Prince signed a subcontract with the waterproofing company. The insurance policy at issue was a Commercial General Liability Insurance policy with an exclusion from coverage for bodily injury to any contractor arising out of or in the course of the rendering or performing services of any kind or nature whatsoever by such contractor. “Contractor” was defined to include employees of subcontractors. The district court entered judgment in favor of the insurer, finding it had no duty to defend. The Seventh Circuit reversed and remanded, reasoning that the policy can be interpreted so that services are not provided until the contractor begins compensated work on the project. View "Atl. Cas. Ins. Co. v. Prince Contractors, Inc." on Justia Law

SAMS contracted with Environs to provide architectural services for construction of a Homewood Suites hotel in Fort Wayne. Environs was to be paid a flat fee of $70,000. The contract stated: The Owner [SAMS] agrees that to the fullest extent permitted by law, Environs Architects/Planners, Inc. total liability to the Owner shall not exceed the amount of the total lump sum fee due to negligence, errors, omissions, strict liability, breach of contract or breach of warranty. The hotel was nearly complete when serious structural defects were discovered. The building department condemned the structure. Attempts to remedy failed; the hotel was demolished without opening. SAMS estimated its loss at more than $4.2 million. While SAMS’s suit against Environs was pending, the Indiana Supreme Court held that the “economic loss rule” applies to construction contracts under Indiana law: a party to a contract cannot be liable under a tort theory for any purely economic loss caused by negligent performance of the contract, absent any personal injury or damage to other property. The district court applied the rule to grant summary judgment rejecting SAMS’s negligence claim and held that SAMS’s recovery on its breach of contract claim would be limited to $70,000. The Seventh Circuit affirmed. View "Sams Hotel Grp., LLC v. Environs, Inc." on Justia Law

Uribe was driving along I- 70 in Indiana, apparently in compliance with all traffic laws, in a vehicle that had no visible evidence of noncompliance with vehicle requirements other than that it was a blue Nissan with a registration number that traced back to a white Nissan. A deputy following Uribe’s car initiated a traffic stop “to check for registration compliance.” Uribe consented to a search of the vehicle, which yielded nearly a pound of heroin and indictment for possessing with intent to distribute 100 grams or more of heroin, 21 U.S.C. 841(a)(1) and (b)(1)(B)(i). The district court granted Uribe’s motion to suppress, finding the government’s explanations insufficient to establish that at the time of the stop the deputy had a reasonable, articulable suspicion that Uribe was engaged in criminal activity. The Seventh Circuit affirmed, finding that one lawful act in isolation, driving a car of one color with a registration number attached to a car of a different color, does not give rise to reasonable suspicion that a driver is engaged in criminal activity. View "United States v. Uribe" on Justia Law

Arbor builds homes in Indiana and contracted with Willmez Plumbing, which was to obtain insurance naming Arbor as an additional insured. Willmez subcontracted to Alarcon. After the work was ostensibly completed, the buyers noticed a foul odor and felt ill. Alarcon had not connected the plumbing to the main sewer line. Raw sewage had discharged into the crawl space. Willmez corrected the connection. Arbor contracted for cleanup that required excavation and decontamination and cost about $65,000. The owners demanded replacement of the house. Arbor told Willmez to notify its insurer West Bend. Hearing nothing, Arbor assumed the insurer had no objections and agreed to build a new home, pay closing costs and moving expenses, and to compensate for any increase in mortgage rate. Arbor sued Willmez, alleging negligence, breach of contract, slander of title, and constructive fraud, and sent West Bend a copy. The district court granted West Bend summary judgment, finding that it was relieved of duties to defend or indemnify by “fungi and bacteria exclusion” and “voluntary payments” provisions. The Seventh Circuit affirmed. Although Arbor’s quick and decisive action was laudable, failure to obtain West Bend’s consent to the settlement relieved it of any obligation. View "West Bend Mut.l Ins. Co v. Arbor Homes, LLC" on Justia Law