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

In 1998 IGF bought Continental’s crop-insurance business at a price to be determined at either side’s option by the exercise of a put or call. In 2001 Continental exercised its put option; under the contractual formula, IGF owed Continental $25.4 million. Around that same time, IGF sold its business to Acceptance for $40 million. The Symons, who controlled IGF, structured the purchase price: $16.5 million to IGF; $9 million to IGF's parent companies Symons International and Goran in exchange for noncompetition agreements; and $15 million to Granite, an affiliated Symons-controlled company, for a reinsurance treaty. Continental, still unpaid, sued for breach of contract and fraudulent transfer. The court found for Continental and pierced the corporate veil to impose liability on the controlling companies and individuals. The Seventh Circuit affirmed, finding Symons International liable for breach of the 1998 sale agreement; Symons International, Goran, Granite, and the Symons liable as transferees under the Indiana Uniform False Transfer Act; and the Symons liable under an alter-ego theory. The Symons businesses observed corporate formalities only in their most basic sense. The noncompetes only made sense as a fraudulent diversion of the purchase money, not as legitimate protection from competition. The reinsurance treaty. which was suggested bySymons and outside industry norms, was unjustified and overpriced. View "Cont'l Cas. Co. v. Symons" on Justia Law

Beverly, a former Abbott employee whose employment was terminated on October 20, 2010, filed suit against Abbott. She alleged that during her employment, Abbott had discriminated and retaliated against her on the basis of her German nationality in violation of Title VII of the Civil Rights Act, as well as on the basis of her disabilities in violation of the Americans with Disabilities Act. The district court denied Abbott’s motion for summary judgment and the parties engaged in a private mediation. During mediation, the parties signed a handwritten agreement stating that Beverly demanded $210,000 and mediation costs in exchange for dismissing the lawsuit. Abbott later accepted Beverly’s demand and circulated a more formal settlement proposal. After Beverly refused to execute the draft proposal, Abbott moved to enforce the original handwritten agreement. The court found that the parties entered into a binding settlement agreement and granted Abbott’s motion to enforce. The Seventh Circuit affirmed, holding that the handwritten agreement was valid and enforceable, since its material terms were clearly conveyed and consented to by both parties, and the existence and content of the draft proposal do not affect enforceability. View "Beverly v. Abbott Labs., Inc." on Justia Law

Segal, a lawyer, CPA, and insurance broker, and his company, were indicted for racketeering, mail and wire fraud, making false statements, embezzlement, and conspiring to interfere with operations of the IRS. Convicted in 2004, Segal was sentenced to 121 months in prison. After further proceedings, in 2011, he was resentenced to time served and ordered to pay $842,000 in restitution and to forfeit to the government his interest in the company and $15 million. In 2013, the parties entered a binding settlement that specified the final disposition of Segal’s assets. After the district judge approved the settlement the parties disagreed and returned to court. The agreement gave Segal two of eight insurance policies on his life outright and an option to purchase the others, but required that he exercise the option within six months of approval of the settlement. He opted to purchase one policy before the deadline and asked for an extension, claiming that the government had not promptly released money owed to him and had delayed his efforts to obtain information from the insurance companies. The Seventh Circuit affirmed refusal to extend the deadline, but reversed with respect to claims relating to Segal’s right to repurchase his shares of the Chicago Bulls basketball team. View "United States v. Segal" on Justia Law

VLM, a Montreal-based supplier, sold frozen potatoes to IT in Illinois. After nine successful transactions, IT encountered financial difficulty and failed to pay for the next nine shipments. Invoices sent after delivery included a provision purporting to make IT liable for collection-related attorney’s fees if it breached the contracts. VLM sued; the deadline for an answer passed. The court entered a default. On defendants' motion, the court vacated the default as to IT’s president only. All three defendants then filed answers, contesting liability for attorney’s fees. The judge applied the Illinois Uniform Commercial Code and found that the fee provision had been incorporated into the contract. The Seventh Circuit reversed, holding that the U.N. Convention on Contracts for the International Sale of Goods applied. On remand, the judge applied the Convention and held that the fee provision was not part of the contracts and that IT could benefit from this ruling, despite the prior entry of default. The Seventh Circuit affirmed. IT never expressly assented to the attorney’s fees provision in VLM’s trailing invoices, so under the Convention that term did not become a part of the contracts. VLM waived its right to rely on the default by failing to raise the issue until its reply brief on remand. View "VLM Food Trading Int'l, Inc. v. Ill. Trading Co." on Justia Law

Plaintiffs, current and former Chicago taxi drivers, paid a “shift fee,” a lease payment that allows the driver to operate one of the defendants’ taxis and earn income. Weekly fees range from $500 to $800 or more. Drivers also pay operating expenses, including fuel, airport taxes, upkeep, and sometimes insurance payments. The drivers do not earn traditional wages or overtime pay. Their only source of income is what they make in fares and tips from passengers. The drivers contend that they often receive less than minimum wage and for some shifts, pay more for fees and expenses than they receive from fares and tips. The Seventh Circuit affirmed dismissal of their class action suit under the Illinois Wage Payment and Collection Act, 820 ILCS 115 and asserting unjust enrichment. The Act defines “wages” as compensation owed by the employer pursuant to an employment agreement between the parties. Even if the drivers were employees under an employment agreement, that agreement did not obligate defendants to compensate the drivers. The Act provides no substantive relief beyond what the underlying employment contract requires. View "Enger v. Chicago Carriage Cab Corp." on Justia Law

After its 2010 merger with Continental Airlines, United Airlines made changes to its frequent‐flier rewards program. In 2014, a member of United’s MileagePlus rewards program claimed that United breached a contract by reducing his anticipated program benefits. The Seventh Circuit concluded (Lagen decision) that the reduction of benefits was not a breach of contract because the program rules allowed United to change the benefits at any time. The plaintiffs in this case also sued for breach of contract. Relying on Lagen, the district court granted summary judgment to United. The Seventh Circuit affirmed, rejecting arguments that the case was different from Lagen because it concerned changes to the “Premier” status program. United did promise to provide the plaintiffs with premier benefits in 2012 that matched the premier benefits previously available in 2011 and cannot be liable for breaching a contract that it did not make. View "Hammarquist v. United Cont'l Holdings, Inc." on Justia Law

Cincinnati Insurance issued a liability policy to Painters, which allowed the insured to add an “additional insured” by oral agreement, if that agreement preceded the occurrence and “a certificate of insurance ... has been issued.” No permission from Cincinnati is required, if the insureds have a relationship consistent with the policy. Painters was hired to paint Vita’s premises and orally agreed to add Vita as an additional insurer. Painters’ worker fell, before there was any written confirmation of the oral agreement, and remains in a coma. In a suit by the insurer, seeking a declaration that Vita was not covered based on a certificate issued to Vita the day after the accident, the court granted summary judgment in favor of Cincinnati. The Seventh Circuit reversed. Summary judgment was premature. The policy is ambiguous. A certificate could be regarded a prerequisite to coverage of the additional insured, but also could be intended merely to memorialize the oral agreement. The policy could also mean that the oral agreement must be memorialized in writing before the insured can file a claim. Oral agreements are valid contracts and the policy is explicit that an oral agreement is sufficient to add an insured. The certificate is not a contract, but “a matter of information only” that “confers no rights upon the certificate holder.” View "Cincinnati Ins. Co. v. Vita Food Prods, Inc." on Justia Law

Continental sells carbon black, a material used in rubber products. BRC makes rubber products for the automotive industry. The companies entered into a contract that stated: It is the intent of this agreement that Continental agrees to sell to BRC approximately 1.8 million pounds of carbon black annually. In 2010, Continental shipped 2.6 million pounds to BRC. In 2011, for various reasons, Continental was struggling to keep up with the total demand from all its customers. When Continental refused to confirm or ship some of BRC’s orders, BRC sued, alleging that Continental had breached and repudiated the contract. The district court entered judgment for BRC, finding that as a matter of law that the agreement was a “requirements contract,” meaning it obligated Continental to sell as much carbon black as BRC needed, and obligated BRC to buy all its carbon black exclusively from Continental. The Seventh Circuit vacated and remanded, finding that the agreement did not obligate BRC to buy any—much less all— of its carbon black from Continental. View "BRC Rubber & Plastics, Inc. v. Cont'l Carbon Co." on Justia Law

In 2005 the Army Corps of Engineers invited bids on a federal reservoir project in Illinois. One of the successful bidders was Slurry, which leased from Pileco a trench cutter made by Bauer. Slurry was a prime contractor on the Corps of Engineers’ project; the Miller Act, 40 U.S.C. 3131, requires prime contractors on some government construction projects to post bonds. Slurry used Fidelity as surety. The bond insured against a failure by Slurry to pay subcontractors, such as Pileco. Contending that the cutter was defective, Slurry refused to pay the agreed rental price. Pileco sued Slurry and Fidelity, asserting breach of contract that Fidelity violated the Miller Act by failing to reimburse Pileco for costs associated with Slurry’s reneging on its obligation to pay. Slurry counterclaimed. A second trial resulted in a verdict in Pileco’s favor except for a $357,716 equitable adjustment in favor of Slurry, based on time that cutter was inoperable because of a defect attributable to Pileco. The net result was that Pileco was awarded $2.23 million against Slurry for breach of contract and the same amount against Fidelity for the Miller Act violation. The Seventh Circuit affirmed, except with respect to the denial of prejudgment interest and costs. View "Pileco, Inc. v. Slurry Systems, Inc." on Justia Law

Morady sold life insurance policies. Davis, a former lawyer, approached elderly African-Americans and paid them small amounts to become the nominal applicant-buyers of the policies, with Morady as the insurance agent, and to put the policies into an irrevocable trust, with Davis as trustee. The beneficial interest in the trust would be sold to an investor who would pay the remaining premiums and wait for the death of the insured. The insurer would not have sold the policies had it known that the premiums would be paid by an unrelated third party in the expectation that the policy would be transferred to him; its contracts with agents, including Morady, required them to conform to an “absolute prohibition against participation in any type of premium financing scheme involving an unrelated third party,” but the law allows an investor to purchase the beneficial interest in an existing life insurance policy. The net loss to Ohio National (beyond $120,000 commissions paid to Morady) was $605,000 in litigation expenses to void the policies. The total death benefits specified in the illegal policies amounted to $2.8 million. The Seventh Circuit agreed that Morady’s conduct constituted fraud and a breach of her contract and affirmed summary judgment, with damages of $726,000. View "Ohio Nat'l Life Assurance Corp. v. Davis" on Justia Law