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

In this action challenging an insurance company’s doubling of Plaintiff’s insurance premium, the Seventh Circuit reversed the district court’s dismissal of Plaintiff’s complaint for failure to state a claim, holding that Plaintiff was entitled to relief on her contract claim and that the allegations Plaintiff raised were enough to permit her to go forward on her other theories.When Plaintiff was sixty-seven years old, she discovered that Metropolitan Life Insurance Company (MetLife) more than doubled her insurance premium. Plaintiff brought this lawsuit against MetLife on behalf of herself and a proposed class, alleging breach of contract, deceptive and unfair business practices, and common-law fraud. The district court granted MetLife’s motion to dismiss for failure to state a claim, concluding that the insurance policy unambiguously permitted MetLife to raise Plaintiff’s premium. The First Circuit disagreed, holding that the allegations raised in the complaint were enough to entitle Plaintiff to prevail on the liability phase of her contract claim and to go forward on her remaining claims. View "Newman v. Metropolitan Life Insurance Co." on Justia Law

Meyer, a disbarred lawyer, owns JHM, which installed and maintained laundry machines in apartment buildings; Dolphin, which sold commercial laundry equipment to JHM and others; and JH Meyer, which operated a laundry facility. In 2012-2013, Firestone financed JHM’s business with loans totaling about $250,000. Because JHM obtained its equipment from Dolphin, the loans actually financed Dolphin’s purchases from the manufacturer. Firestone retained a security interest in JHM’s assets. Dolphin, JH Meyer, and Meyer guaranteed JHM’s loan obligations. In 2013 Firestone sued JHM for default and sued Meyer, Dolphin, and JH Meyer under the guarantees. The defendants raised the affirmative defense and counterclaim of promissory estoppel, asserting that after Firestone issued JHM two loans, Firestone’s Vice President McAllister told Meyer that Firestone would set up a $500,000 line of credit for JHM and that, until the line of credit was established, Firestone would finance “any” equipment that JHM needed on “identical terms” to the first two loans. Firestone subsequently issued the third loan. After McAllister left Firestone, Firestone’s CEO approved the final loan. The defendants assert that Firestone’s refusal to issue further loans harmed them. The Seventh Circuit affirmed summary judgment in favor of Firestone. Meyer’s allegations were implausible because no financial firm would commit orally to loaning substantial sums to a startup. Meyer conceded that he “made no payments” to Firestone. A reasonable jury could not conclude that Meyer has satisfied any of the elements of promissory estoppel. View "Firestone Financial Corp. v. Meyer" on Justia Law

Apple Leisure specializes in packaged travel sales and resort management. In 2011 Scott and Natasha Mueller purchased an Apple all-inclusive honeymoon trip to Secrets Resort in Punta Cana, Dominican Republic, through a Fond du Lac, Wisconsin travel agent. The contract attached to their travel vouchers explains in boldface type that “[t]he exclusive forum for the litigation of any claim or dispute arising out of … [this] trip shall be the Court of Common Pleas of Delaware County, Pennsylvania.” While on her honeymoon, Natasha became ill after Secrets Resort served her contaminated fish. She was diagnosed with Ciguatera poisoning, a foodborne illness caused by eating certain reef fish infected with Ciguatera neurotoxins. The Muellers sued in the Eastern District of Wisconsin. The district judge applied the doctrine of forum non conveniens and dismissed the case based on the forum-selection clause. The Seventh Circuit affirmed. The judge’s decision was procedurally and substantively sound. A forum-selection clause channeling litigation to a nonfederal forum is enforced through the doctrine of forum non conveniens; only an exceptional public-interest justification can displace a contractual choice of forum. The Muellers have not identified any public interest to justify overriding the forum-selection clause in their travel contract. View "Mueller v. Apple Leisure Corp." on Justia Law

Apple Leisure specializes in packaged travel sales and resort management. In 2011 Scott and Natasha Mueller purchased an Apple all-inclusive honeymoon trip to Secrets Resort in Punta Cana, Dominican Republic, through a Fond du Lac, Wisconsin travel agent. The contract attached to their travel vouchers explains in boldface type that “[t]he exclusive forum for the litigation of any claim or dispute arising out of … [this] trip shall be the Court of Common Pleas of Delaware County, Pennsylvania.” While on her honeymoon, Natasha became ill after Secrets Resort served her contaminated fish. She was diagnosed with Ciguatera poisoning, a foodborne illness caused by eating certain reef fish infected with Ciguatera neurotoxins. The Muellers sued in the Eastern District of Wisconsin. The district judge applied the doctrine of forum non conveniens and dismissed the case based on the forum-selection clause. The Seventh Circuit affirmed. The judge’s decision was procedurally and substantively sound. A forum-selection clause channeling litigation to a nonfederal forum is enforced through the doctrine of forum non conveniens; only an exceptional public-interest justification can displace a contractual choice of forum. The Muellers have not identified any public interest to justify overriding the forum-selection clause in their travel contract. View "Mueller v. Apple Leisure Corp." on Justia Law

In 2006, Warciak’s mother signed an agreement with T-Mobile to begin cell phone service. In 2012, she signed another agreement when she purchased a new phone. Each agreement contained an arbitration clause. Although Warciak uses a phone on his mother’s plan and is an authorized user who can make changes to the account, he never signed either agreement nor is he otherwise a party to them. In 2016, Warciak received a spam text message promoting a Subway sandwich. He sued Subway under federal and state consumer protection statutes. Subway moved to compel arbitration based on the agreements between T-Mobile and Warciak’s mother. In the district court, Subway argued that federal estoppel law required Warciak to arbitrate under his mother’s contracts. Warciak countered that under Illinois law he is not bound by his mother’s contracts. The district court applied federal law. The Seventh Circuit reversed, holding that state law applies and that Subway cannot claim estoppel because it cannot show detrimental reliance. View "Warciak v. Subway Restaurants, Inc." on Justia Law

A “pickle line” processes hot rolled steel coil through acid tanks to remove impurities. In 2006, Toll purchased a used pickle line, in need of repair. Kastalon had previously serviced the machine. In 2008, Kastalon agreed to move and store the machine, at no cost, until Toll could order reconditioning. Both parties believed that Toll would move the equipment within months; they did not discuss a specific timeframe. For two years, Kastalon stored the equipment indoors. Toll negotiated with various companies, to run or sell the equipment, but was not in communication with Kastalon. Kastalon eventually greased and wrapped the equipment before moving it to outside storage under tarps. Toll employees with whom Kastalon had communicated were laid off. Kastalon thought that Toll had gone out of business and that the equipment had been abandoned. Kastalon had the equipment scrapped, without inspecting it, and received $6,380.80. In June 2011, Toll requested a price for reconditioning and learned that they had been scrapped. Toll obtained quotes for replacement: the lowest was about $416,655. Toll sued. The Seventh Circuit reversed, in part, summary judgment entered in favor of Kastalon. A reasonable jury could conclude that Toll’s prolonged silence, alone, did not constitute unambiguous evidence of intent to abandon. The court did not consider whether Kastalon had an extra-contractual duty not to dispose of the equipment or Kastalon’s evidence that the loss was not due to Kastalon’s failure to exercise reasonable care. Affirming rejection of a contract claim, the court stated the parties’ oral agreement was not sufficiently definite as to duration. View "Toll Processing Services, LLC v. Kastalon, Inc." on Justia Law

As Oilgear’s CEO, Hitt held restricted stock. When Hitt left his position in 2014, Oilgear exercised its option to repurchase the shares. Oilgear and Hitt agreed that he would receive $753,000: $108,000 immediately and $215,000 (plus interest) each June for the next three years. Oilgear also owes money to JPMorgan Chase Bank. Hitt, Oilgear, and the Bank signed an agreement acknowledging that Oilgear’s debt to Hitt is subordinate to Oilgear’s debt to the Bank and that Hitt will not be paid while Oilgear is in default of its obligations to the Bank. After paying the 2015 installment, Oilgear defaulted on an obligation to the Bank. The Bank agreed to waive most consequences of the default if Oilgear promised the Bank that it would not resume paying Hitt without the Bank’s consent. The Bank did not consent to the payment of Hitt’s 2016 installment. The Seventh Circuit affirmed a declaratory judgment that Oilgear is entitled to defer payment of the 2016-2017 installments. Oilgear paying Hitt without the Bank’s consent would vitiate the Bank’s waiver and a default “would exist.” View "Oilgear Co. v. Hitt" on Justia Law

In 1995, Peoria signed a lease that allowed RTC to construct and operate a gas conversion project at the city’s landfill, providing that when the lease terminated, the city had an absolute right to retain, at no cost, the “structures” and “below‐grade installations and/or improvements” that RTC installed. Years later, RTC entered bankruptcy proceedings. Banco provided RTC with postpetition financing secured with liens and security interests in effectively all of RTC’s assets. RTC defaulted. Litigation ensued. The city notified RTC that it was terminating the lease and would retain the structures and installations. After RTC stopped operating the gas conversion project, Peoria modified the system to comply with environmental regulations for methane and other landfill gasses and continued to use the property. Banco sued, alleging unjust enrichment and arguing that it had a better claim to the property because its loan was secured by a lien on all of RTC’s assets and the bankruptcy court had given its loan “super-priority” status. The Seventh Circuit affirmed summary judgment in favor of the city. No matter the priority of its claim to RTC’s assets, Banco has no claim to Peoria’s assets. By the terms of the lease between RTC and the city, the disputed structures and installations are city property. The lease gave RTC no post‐termination property interest in that property. View "Banco Panamericano, Incorporat v. City of Peoria, Illinois" on Justia Law

After the Garcias bought their Lake Station Property in 2004, it was used as an automobile repair shop and a day spa. It previously was used as a dry cleaning facility and contained six underground storage tanks: four were used for petroleum-based Stoddard solvent, one was used for gasoline, and the last for heating oil. In 1999, the dry cleaning company reported a leak from the Stoddard tanks to the Indiana Department of Environmental Management (IDEM). In 2000, a site investigation was conducted and five groundwater monitoring wells were installed. IDEM requested additional information and testing in 2001 and 2004. The Garcias claim they had no knowledge of the preexisting environmental contamination before insuring with Atlantic. A 2014 letter from Environmental Inc. brought the contamination to the Garcias’ attention. The Garcias hired Environmental to investigate and learned that Perchloroethylene solvent and heating oil still affected the property. Atlantic obtained a declaration that its Commercial General Liability Coverage (CGL) policies did not apply. The Seventh Circuit affirmed, reading a “Claims in Process” exclusion to preclude coverage for losses or claims for damages arising out of property damage—known or unknown—that occurred or was in the process of occurring before the policy’s inception. View "Atlantic Casualty Insurance Co v. Garcia" on Justia Law

Nelson, Schultz, and Rodgers formed an LLC to develop a mixed‐use luxury skyscraper on Chicago’s Magnificent Mile. The LLC’s operating agreement provided that development fees would be divided among the LLC’s managers “as they mutually agree” and that a manager of the LLC could be removed for cause by a majority vote of its owners. In 2005, Rodgers and Schultz voted to remove Nelson, allegedly causing him a loss of $1.13 million on the Ritz‐Carlton Residences. Nelson sued for breach of contract and torts. During discovery Schultz and Rodgers asked Nelson to produce bank statements and tax returns, which, they said, they needed to defend against his claims. After Nelson refused, the district court granted the defendants’ motion to compel their production and warned Nelson, twice, that it would dismiss the case if he did not produce the documents or provide an affidavit documenting a diligent search for them. Nelson did neither. The Seventh Circuit affirmed dismissal of the case for want of prosecution, rejecting an argument that the district judge erred by not assessing whether his misconduct justified dismissing the case. The judge sufficiently evaluated the matter and did not abuse his discretion by dismissing the suit after multiple warnings. View "Nelson v. Schultz" on Justia Law