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

Rabinak worked full‐time as a business representative for the Chicago Regional Council of Carpenters and, incidental to that position, served on the Council’s Executive Board. He received quarterly payments of $2,500 for his service on the Board, paid by checks separate from those for Rabinak’s weekly salary. When he retired, Rabinak qualified for a pension from the United Brotherhood of Carpenters Pension Fund, governed by ERISA. The compensation amount upon which the Fund calculated his annual retirement benefit did not include the $10,000 he had received each year from the Council. The Fund’s appeals committee denied an appeal. The Seventh Circuit affirmed. The plan’s definition of compensation includes only “salary,” and the $2,500 quarterly payments for Board service were paid separately from Rabinak’s weekly salary payments and coded differently as well. The conclusion that the payments at issue were not salary payments under his particular plan was not arbitrary and capricious. View "Rabinak v. United Bhd. of Carpenters Pension Fund" on Justia Law

In 2011 Bankers leased Chicago office space from CBRE. Another tenant, Groupon, needed more office space. CBRE asked Bankers to sublease to Groupon and relocate. Bankers and CBRE signed a Listing Agreement, including terms required by 225 ILCS 454/15-5(a), 15-75. Bankers told CBRE that it wanted to net $7 million from its deals with Groupon and the lessor of the replacement space. CBRE presented Bankers with cost-benefit analyses (CBAs), comparing the costs of leasing new space with the benefits of subleasing the old space to Groupon. A May 2011 CBA showed a net savings of $6.9 million to Bankers from relocating to East Wacker Drive. Bankers responded by subleasing to Groupon and leasing that space. CBRE’s calculation was inaccurate. It omitted Bankers’ promise to give Groupon a $3.1 million tenant improvement allowance. Had Bankers known it would profit by only $3.8 million, it would have rejected the deal; CBRE would not have obtained $4.5 million in commissions. In an arbitration proceeding, the panel issued three “final decisions,” all favoring CBRE, and awarded costs. The Seventh Circuit reversed. The panel exceeded its authority. It was authorized to interpret the contract (Listing Agreement), which did not include the CBAs or a disclaimer contained in the CBAs. View "Bankers Life & Cas/ Ins. Co. v. CBRE, Inc." on Justia Law

Berg was a long‐time pit broker at the Chicago Mercantile Exchange. In 1991 and 1994, Berg bought disability‐income insurance policies. In 2005, he started to experience a tremor in his arms and hands, which interfered with his ability to write quickly and legibly. In 2007, the tremor forced him to leave his job. In 2010, a neurologist diagnosed Berg with an “essential tremor.” Berg applied for total disability benefits. Although the insurers approved Berg’s claim, they designated his disability onset date as February 2010, rather than September 2007. In 2012, Unum discontinued Berg’s total‐disability benefits, asserting that he was eligible only for residual‐disability benefits because when he applied, his regular occupation was “unemployed person.” The district court granted summary judgment to the defendants. The Seventh Circuit reversed, rejecting an argument that, until he saw a physician in 2010, Berg did not meet the policy’s definition: “Total Disability means that the Insured can not [sic] do the substantial and material duties of his or her regular job,” that “[t]he cause of the total disability must be an injury or a sickness,” and that “[t]he injury or sickness must be one which requires and receives regular care by a Physician.” The clause does not contain a temporal element. View "Berg v. New York Life Ins. Co." on Justia Law

In 2009, Hoffman executed a $1.5 million tax‐increment finance (TIF) note for a development project by Fyre Lake Ventures, backed by a TIF bond, a mechanism for local governments to finance real estate development. Hoffman was not personally liable on the loan. In 2010, Fyre signed a $9 million loan, with the same lender; Hoffman acted as a co‐guarantor for $900,000. Separately, Hoffman borrowed $157,300 from the lender with his wife; the note was secured by mortgages on three lots in a Milan, Illinois housing development. By October 2011, all of the loans were in default. After negotiations, the FDIC (as receiver for the lender) and the Hoffmans signed a settlement agreement. In exchange for titles to the Milan lots, the Hoffmans were released of their obligations. Less than three months later, the FDIC sued Hoffman and other guarantors of the Fyre loan, $900,000 of which he personally guaranteed. The district judge found the settlement agreement ambiguous and concluded that parole evidence supported the bank’s interpretation of the settlement: Hoffman was only released from his obligation on the $157,300 loan. The Seventh Circuit affirmed, interpreting the agreement's general language in light of the specific language referring to the smaller loan. View "Fed. Deposit Ins. Corp. v. Hoffman" on Justia Law

Caudill, the owner of a real estate brokerage, sued Keller Williams for breach of a 2001 franchise contract. Caudill's position as Regional Director of Keller Williams was terminated in 2010; her franchise was terminated in 2011. The suit settled with an agreement including a prohibition against disclosure of its terms, except to tax professionals, insurance carriers, and government agencies; those recipients had to promise to keep them in confidence. Any violation entitled the victim to damages of $10,000. Months later, Keller Williams issued an FDD (Franchise Disclosure Document) to about 2000 existing or potential franchisees and other parties, describing Caudill’s lawsuit in detail. The FDD was not required by the Federal Trade Commission under 16 C.F.R. 436.2(a). Caudill sought $20 million (2000 x $10,000) in damages. The district judge rejected her claim, noting that under Texas law a liquidated damages clause is enforceable only if “the harm caused by the breach is incapable or difficult of estimation and … the [specified] amount of liquidated damages is a reasonable forecast of just compensation.” The Seventh Circuit affirmed. It is unreasonable to suppose, without evidence, that the dissemination of the FDD caused Caudill a $20 million loss. Although the burden of proving that a liquidated damages clause is actually a penalty clause is on the defendant, Keller Williams established that there was no basis for the requested damages. View "Caudill v. Keller Williams Realty, Inc." on Justia Law

In 2013, Panther, a marketing and brand management company, signed a contract with IndyCar, to purchase access to coveted space in the “Fan Village” at IndyCar racing events, an area where sponsors set up displays to attract fans. The Army National Guard had been Panther’s team sponsor, 2008-2013. After it signed the 2013 contract, Panther learned that another team, RLL, intended to provide the Guard with Fan Village space. Believing that RLL had conspired with IndyCar and the Docupak agency to persuade the Guard to sponsor RLL instead of Panther, Panther brought suit in state court against RLL, Docupak, IndyCar, and active‐duty Guard member Metzler, who acted as the liaison between the Guard and Panther. The defendants removed the case to federal court, where the United States was substituted as a party for Metzler, 28 U.S.C. 2679(d); Panther filed an amended complaint that did not name either Metzler or the United States. The district court dismissed the complaint against RLL, IndyCar, and Docupak and found the United States’s motion to dismiss for lack of jurisdiction moot. The Seventh Circuit vacated and remanded for dismissal for lack of jurisdiction; the basis for federal jurisdiction disappeared when Panther amended its complaint. View "Panther Brands, LLC v. Indy Racing League, LLC" on Justia Law

NAMC, which buys, services, and sells residential mortgages, and GSF, a residential mortgage lender that also sells mortgages, entered into an Agreement whereby GSF would sell loans to NAMC. To use the Fannie Mae Desktop Originator System (DO), which evaluates potential mortgagors under Fannie Mae’s eligibility standards, GSF needed a sponsoring lender. GSF had several sponsors from 2006 until 2011; one was NAMC. Every time GSF downloaded a report it paid Fannie Mae a $15 fee and the sponsoring lender had to pay Fannie Mae between $20 and $28. GSF was not aware that the sponsoring lender also had to pay a fee. In 2008 NAMC terminated its Agreement with GSF, but failed to notify GSF to stop using it as a sponsoring lender. NAMC was billed by Fannie Mae for almost $278,000 for GSF’s use of the system, 2008-2011. The district judge granted summary judgment in favor of GSF in a suit charging breach of contract, breach of fiduciary duty, fraud, and unjust enrichment. The Seventh Circuit affirmed. “NAMC is a sophisticated enterprise... its failure to cancel its sponsorship of GSF when it severed all its other relations to that company was an inexplicable blunder for which it has only itself to blame.” View "Nationwide Advantage Mortgage Co. v. GSF Mortgage Corp." on Justia Law

Riverside, owned half by GMH and half by Heritage (Rezko’s company), owned a valuable Chicago property. Sirazi had helped Rezko finance several investments, including guaranteeing a $5 million loan from Republic. The loan came due in 2006. Rezko was already in default on millions of dollars borrowed from Sirazi. Sirazi and Rezko signed a settlement agreement: Rezko gave Sirazi a security interest in all distributions from Heritage and committed to a priority order for paying off debts using Heritage proceeds. Rezko defaulted on another loan, triggering Sirazi’s guaranty, so that Rezko then owed Sirazi $12.9 million. Meanwhile, Rezko had been indicted. GMH bought him out for $31.8 million. Rezko received $5 million, which paid for his criminal defense; the balance consisted of forgiveness of Rezko’s debt to GMH. With the approval of Heritage’s general counsel and GMH chairman Auchi, the agreement ignored Sirazi’s interest. A jury awarded Sirazi compensatory damages of $12.9 million against GMH and Auchi and punitive damages of $5 million against each; the judge set aside the award against Auchi. The Seventh Circuit affirmed in part, in favor of Sirazi. Rezko breached the settlement by failing to pay Sirazi; the jury reasonably found GMH liable for tortious interference with contract. GMH was enriched unjustly. The award was reduced by $524,000 that Sirazi received in Rezko’s bankruptcy and the award against Auchi was reinstated. View "Sirazi v. Gen. Mediterranean Holding, S.A." on Justia Law

Using a form provided by CGS, the general contractor for construction of an 18-story Milwaukee office building, PNA submitted a $12,675,421 bid to provide a glass curtainwall--a nonstructural outer covering for weatherproofing and aesthetics. The contract manual provided by CGS stated that “[t]he bidder must accept all terms of the [standard CGS] subcontract as a condition for submitting a bid.” After CGS chose PNA’s bid, PNA repeatedly expressed a need to review the finalized prime contract before it would execute a formal subcontract. CGS and PNA engaged in a “value engineering process” during which they refined the price and other terms of the subcontract. PNA regularly updated the proposed price and communicated the updates to CGS. Several times, PNA raised concerns about subcontract terms. CGS never indicated to PNA that, in CGS’s view, there was already an agreement in place. The parties never entered into a formal subcontract. CGS had to use a different subcontractor at a higher price. CGS filed suit. The district court granted PNA summary judgment, finding that the parties did not intend to be bound until the execution of a formal subcontract. The Seventh Circuit affirmed, agreeing that the parties never entered into a binding contract and that CGS’s promissory estoppel claim fails as a matter of law. View "C.G. Schmidt Inc. v. Permasteelisa N. Am." on Justia Law

Trailer Transit contracts with shippers for the movement of cargo, then contracts with independent drivers, who provide the rigs that carry the cargo, promising those 71% “of the gross revenues derived from use of the equipment leased herein (less any insurance related surcharge and all items intended to reimburse [Trailer Transit] for special services, such as permits, escort service and other special administrative costs.” In a class action, about 1,000 drivers claimed that Trailer Transit made a profit on its “special services” and owes 71% of that profit to the drivers. The district court rejected that argument. The Seventh Circuit affirmed, explaining: “That just isn’t what the contract says. Drivers are entitled to 71% of the gross charge for “use of the equipment” (the rigs), but the contract does not provide for a share of Trailer Transit’s net profit on any other part of the bill.” View "Walker v. Trailer Transit, Inc." on Justia Law