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

Greving has lived and farmed in southeastern Wisconsin since 1971. In 2003 he began contracting to sell his grain to Northern Grain, an Illinois-based grain buyer. Northern Grain claimed that Greving repudiated several contracts formed years after the parties first began contracting and sought almost $1 million in damages. When Greving refused to arbitrate, Northern Grain sought an order compelling arbitration. The Illinois district court dismissed for lack of personal jurisdiction. The Seventh Circuit affirmed. Greving lacks minimum contacts with Illinois that would permit the district court, consistent with the due process clause, to exercise specific personal jurisdiction over him. Greving only set foot in Illinois once, to attend a seed-corn meeting in 2003, months before the parties entered into the first of their contracts, where he met Wilson, who became his contact with Northern Grain. Even assuming that his attendance at the meeting would enter the “personal-jurisdiction calculus for the later-formed contracts at issue,” there is no indication that Greving attended the meeting in an effort to find grain buyers. Virtually everything else about Greving’s contractual relationship with Northern Grain was based in Wisconsin. View "N. Grain Mktg., LLC v. Greving" on Justia Law

Alforookh manages and operates restaurants under franchise agreements with IHOP. He created companies to hold the franchises, including A&F. Alforookh and A&F are in Chapter 11 bankruptcy proceedings. Their primary assets are 17 IHOP franchise agreements and corresponding building and equipment leases. Generally, Chapter 11 debtors may assume or reject executory contracts any time before confirmation of a plan, 11 U.S.C. 365(d)(2). Unexpired leases of nonresidential real property, however, must be assumed within 120 days, subject to a 90-day extension. A&F did not assume the building leases within 120 days or seek an extension, so IHOP claims that those leases were rejected and that the franchise agreements and equipment leases expired. A&F argued that because the building leases are just one part of the larger franchise arrangement, section 365(d)(2)’s more generous time limit applies to the whole arrangement, including the building leases. The bankruptcy judge deemed the building leases rejected and the franchise agreements and equipment leases expired. A&F’s request for a stay pending appeal was rejected by the bankruptcy and district courts. The Seventh Circuit granted an emergency motion and issued a stay order freezing the status quo during the pendency of the appeal and subsequently held that a continued stay was warranted. View "A&F Enters., Inc. II v. IHOP Franchising, LLC" on Justia Law

An employee benefits plan sued a medical college that provides patient care in clinics and hospitals and an affiliated children’s hospital, with which it had provider agreements, alleging ERISA violations and breach of contract under Wisconsin law. The suit was based on the plan’s determination that an employee’s child was not covered by the plan and the hospital’s denial of its subsequent request that the hospital refund about $1.7 million the plan had already paid on behalf of the child. The plan makes no mention of refunds. The district court dismissed and awarded attorneys’ fees to the hospital as a sanction for having filed frivolous claims. The Seventh Circuit affirmed dismissal of the ERISA claims but reversed dismissal of the breach of contract claim, rejecting the district court’s finding of preemption, and imposition of sanctions. On remand of the contract claim, the district court granted summary judgment in favor of the hospital. The Seventh Circuit affirmed, noting that the hospital, having been paid in full by the plan, has no possible claim against Medicaid, that the plan took 11 months to determine that the child was not a beneficiary, and that the hospital has not been unjustly enriched. View "Kolbe & Kolbe Health & Welfare Benefit Plan v. Med. Coll. of WI" on Justia Law

IMCC loaned Harbins $60 million to buy Georgia land to construct a shopping center. In addition to a mortgage, IMCC obtained a guaranty from Chivas, providing that if IMCC “forecloses … the amount of the debt may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price.” Harbins defaulted; IMCC foreclosed in a nonjudicial proceeding, involving a public auction conducted by the sheriff after public notice. IMCC successfully bid $7 million and filed a petition to confirm the auction. Unless such a petition is granted, a mortgagee who obtains property in a nonjudicial foreclosure cannot obtain a deficiency judgment if the property is worth less than the mortgage balance owed. A Georgia court denied confirmation. Chivas refused to honor the guaranty. A district court in Chicago awarded IMCC $17 million. The Seventh Circuit affirmed, noting that the Georgia statute “is odd by modern standards,” but does not prevent a suit against a guarantor. The agreement guaranteed IMCC the difference between what it paid for the land and the unpaid balance of the loan, even if the land is worth more than what IMCC paid for it. The agreement is lawful under Georgia and Illinois law. View "Inland Mortg. Capital Corp v. Chivas Retail Partners, LLC" on Justia Law

In 1971 Milwaukee County provided its employees with health insurance under an ordinance that stated that the “county shall participate in the payment of monthly premiums” and extended coverage to retirees. In 1993, the ordinance was amended to provide that “[t]he County shall pay the full monthly cost of providing such [health insurance] coverage to retired members” as “part of an employee’s vested benefit contract.” Upon her 1991 retirement, Hussey had paid no co‐payments or deductibles for her health care. Her benefit plan booklet explained that with 15 years of service: “the retiree may participate in the health plan in which he/she is currently enrolled on the same basis as … the active employee group. The County will make the full premium contribution.” Until 2012, the plan coordinated benefits so that expenditures not covered by Medicare were paid in full by the County. In 2012 the County increased deductibles, co‐payments, and co‐insurance charges and modified coordination of benefits so that retirees over age 65 would pay the same deductibles, co‐payments, and co‐insurance charges as active employees. Hussey filed a purported class action, alleging that the failure to provide cost‐free health insurance to retirees constituted an unconstitutional taking of property. The Seventh Circuit agreed with the district court that the County only promised retirees the ability to participate in the same health insurance plan as active employees on a “premium‐free” basis.View "Hussey v. Milwaukee County" on Justia Law

In 1983 Bitler leased gas stations to Marathon. The Environmental Protection Agency adopted new regulations so that that underground petroleum tanks and pipes at the gas stations had to be removed, upgraded, or replaced, 40 C.F.R. 280.21(a). In 1992 the parties amended the leases to make Marathon “fully responsible for removing” the tanks and pipes, filling holes created by the removal, complying with all environmental laws, “leav[ing] the Premises in a condition reasonably useful for future commercial use,” and “replac[ing] any asphalt, concrete, or other surface, including landscaping.” Marathon agreed to return the Premises “as nearly as possible in the same condition as it was in prior to such remediation work,” and to be responsible “for any and all liability, losses, damages, costs and expenses,” and to continue paying rent. The properties can be restored as gas stations with above‐ground storage tanks, and may be suitable for other commercial outlets. After completion of the work Bitler sued Marathon, alleging breach of contract and “waste.” The Seventh Circuit vacated to waste regarding Michigan properties, with directions to double those damages. The court affirmed dismissal of some of the contract claims. It would not conform to the reasonable expectations of the parties to limit liability for waste or other misconduct by a tenant simply because a lease had to be extended for an indefinite period to allow a response to unforeseen changes. View "Bitler Inv. Venture II v. Marathon Petroleum Co. LP" on Justia Law

Contractors Cargo, engaged in heavy-haul operations, commissioned Empire Bucket to fabricate a steel deck to be used with Cargo’s specialized rail freight car for transporting oversized loads. A third party designed the deck, specifying that the deck be fabricated from T-1 high-strength steel and that welding be performed to American Welding Society specifications. The deck was designed to transport up to 800,000 pounds. Empire fabricated the deck, which passed inspection by an outside agency and all nondestructive tests, and delivered it. Cargo connected the deck to its railcar and loaded it to 820,000 pounds. The next morning, an employee observed that the deck had dropped about three inches. Cargo attempted to raise it with a hydraulic jacking system, but the deck fractured. Cargo hired a metallurgical engineer, who determined that a portion of the weld was composed of material with properties different from the properties of the material in the rest of the weld where the crack originated. Cargo refused to pay the full purchase price. Empire sued and Cargo filed counterclaims. The district court granted Empire’s motion in limine to exclude testimony concerning one test performed on the deck after it failed. The jury returned a verdict for Empire. The Seventh Circuit affirmed, stating that, given testimony admitted at trial, the excluded evidence would have added little to the implied warranty claims. View "Empire Bucket, Inc. v. Contractors Cargo Co." on Justia Law

In 2004 GEA, a German company, agreed to sell a subsidiary, DNK, to Flex‐N‐Gate, a U.S. manufacturer for €430 million. The contract required arbitration of all disputes in Germany. The sale did not close. GEA initiated arbitration before the Arbitral Tribunal of the German Institution of Arbitration. The arbitration was pending in 2009 when GEA filed suit in an Illinois federal district court, against Flex‐N‐Gate and its CEO, Khan, alleging that the defendants had fraudulently induced it to enter into the contract; that Khan stripped the company of assets so that it would be unable to pay any arbitration award; and that Khan was Flex‐N‐Gate’s alter ego. GEA then asked the district judge to stay proceedings, including discovery. The judge declined to stay discovery. GEA filed a notice of appeal after the German arbitration panel awarded GEA damages and costs totaling $293.3 million. The Seventh Circuit dismissed GEA’s appeal as moot, but the German Higher Regional Court in vacated the arbitration award. GEA renewed its motion. The district judge again denied the stay, stating that he was unsure how the arbitration would affect the case before him and didn’t want to wait to find out. The Seventh Circuit reversed. The district judge then imposed a stay, which it later lifted for the limited purpose of allowing Khan to conduct discovery aimed at preserving evidence that might be germane to GEA’s claims against him in the district court suit. The Seventh Circuit affirmed, first holding that it had appellate jurisdiction.View "GEA Group AG v. Baker" on Justia Law

Menzies, an air cargo handling business, leased CenterPoint’s 185,280-square-foot warehouse near O’Hare Airport. Another tenant used the building to store airplane parts until 2006. Under the lease, Menzies is responsible for repairing the “floor,” while CenterPoint is responsible for repairing the “foundation.” CenterPoint constructed improvements costing $1.4 million, at Menzies’ request, including increasing the number of dock doors from two to 38 and installing 45,000‐pound dock levelers. When Menzies began moving its operations into the building in November 2007, the six‐inch concrete slab did not exhibit any visible damage. By January 2009, the slab had begun to deteriorate. The damage was not consistent with typical wear and tear. The slab could not support Menzies’ equipment. CenterPoint paid $92,000 for repairs, then stopped doing so and did not submit an insurance claim. The slab is so damaged that it must be replaced, at an estimated cost of $966,000 to $1.23 million. Menzies sued CenterPoint for breach and CenterPoint counterclaimed. The district court held that neither party was entitled to recover because the slab had a “dual nature as both floor and foundation,” but “the damage at issue was related to the slab’s function as a floor.” The Seventh Circuit affirmed. View "Aeroground, Inc. v. CenterPoint Props. Trust" on Justia Law

Immunosciences developed and sold medical tests and testing materials. In 2007, NeuroSciences wanted to expand its offerings. Immunosciences and NeuroScience decided to collaborate, but the relationship fell apart within two years. Immunosciences sued. In the first trial, a jury rejected a claim that NeuroScience did not pay what it had contracted to pay for medical testing materials, but the district judge ordered a new trial, concluding that the verdict was undermined by flawed special verdict questions. The jury in the second trial found for Immunosciences but awarded much less money than it was seeking. NeuroScience appealed, claiming that the court’s grant of a new trial was an abuse of discretion. Immunosciences argued that the court abused its discretion by allowing NeuroScience to argue in the new trial that the parties had orally modified their written contract and that NeuroScience breached a separate confidentiality agreement by continuing to use Immunosciences’ testing methods after the parties ended their business relationship. The jury in the first trial had awarded nearly $1.2 million on that claim, but the district court granted judgment as a matter of law for NeuroScience, explaining that Immunosciences had relied on an impermissible damages theory. The Seventh Circuit affirmed. View "Vojdani v. Pharmasan Labs, Inc." on Justia Law