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

Harley-Davidson had a licensing agreement with a subsidiary of DFS and received notice that the companies had merged. Harley-Davidson did not exercise its right to terminate, but later discovered that DFS had sold unauthorized products bearing the trademark to an unapproved German retailer. Harley-Davidon sent an e-mail saying that it believed DFS was in breach of contract and that it was suspending approval of products. DFS responded in kind. Harley-Davidson then attempted to recover unpaid royalties and to secure from DFS information required under the agreement. DFS refused these attempts, but submitted production samples for a new collection. Harley-Davidson reminded DFS of the termination. DFS advised Harley-Davidson that it had “wrongfully repudiated the License Agreement” and that DFS planned to act unilaterally in accordance with its own views of rights and obligations. The district court granted injunctive relief against DFS, which was attempting to litigate the dispute in Greece. The Seventh Circuit affirmed. Harley-Davidson made strong showings that DFS was deliberately breaching a licensing agreement and “has tried numerous legal twists and contortions to try to avoid the legal consequences.” The court rejected an argument that the agreement provision consenting to personal jurisdiction in Wisconsin was not binding on DFS. View "H-D MI, LLC v. Hellenic Duty Free Shops, S.A." on Justia Law

Trinity terminated Dr. Assaf’s employment in 2009t. Assaf filed suit for breach of contract. While the case was pending, Assaf negotiated with Trinity’s new CEO, Tibbitts, Apparently without attorneys, Assaf and Tibbitts signed an agreement that provided that Assaf would receive a salary of $50,000 each year from 2009 to 2011. After that, his employment would automatically renew for a year unless either party gave notice of termination. Trinity refused to honor the agreement. The district court decided to enforce the agreement, but granted Trinity’s motion to bar any evidence of Assaf’s lost professional fees. Trinity never re-employed Assaf, claiming that “there is a policy against ordering specific performance of a personal services contract.” The court ordered Trinity to reinstate Assaf. Rather than reinstating Assaf, Trinity filed a “motion to clarify or stay.” The court reversed its earlier order, proceeded, without trial, to award Assaf his salary for the years 2009 through 2011, attorney’s fees, and compensatory damages. The court did not award any amount in lost professional fees. The Seventh Circuit reversed, declining to address specific performance because Trinity properly reterminated Assaf in 2011. The district court abused its discretion in barring evidence of lost professional fees. View "Assaf v. Trinity Med. Ctr." on Justia Law

In 2005, a Union Pacific train derailed in Oklahoma causing extensive damage to both the railroad and the train’s cargo. Kawasaki, K-Line, and Union Pacific sought damages, alleging that Plano’s steel injection molds were improperly packed, broke through their crate, and fell onto the track. The district court granted Plano summary judgment. The Seventh Circuit affirmed in part. Negligence claims were properly rejected, Plano had no indication that the parties with which it dealt would be unable to properly package and transport its steel molds from China to the United States, nor did Plano have any special knowledge of any unique danger the molds would pose during transit. Plano owed no special duty of care to the carriers. There were, however, unresolved questions of fact material to the determination of one contract claim, based on a bill of lading. It was unclear whether Plano or another arranged the molds’ shipment. View "Kawasaki Kisen Kaisha, Ltd. v. Plano Molding Co." on Justia Law

After the corporate office of Steak N Shake restaurants tried to require one of its franchisees to adopt a new policy for menu pricing and promotions, the franchisee sued Steak N Shake in a declaratory judgment action and later filed a motion for a preliminary injunction in order to stop the implementation of the new policy. The franchise, in operation since 1939, is the oldest in the country and previously had the ability to set its own prices. The district court found that in the absence of an injunction, the franchisee would have its franchises terminated and would suffer irreparable harm and granted a preliminary injunction. The Seventh Circuit affirmed. There was sufficient evidence to find, as a threshold matter, that the franchise would suffer irreparable harm if it was forced to implement Steak N Shake’s pricing policy. View "Stuller, Inc. v. Steak N Shake Enter., Inc." on Justia Law

WR sought to develop a medical office building by executing a long-term ground lease to a developer, who would design, finance, construct, and own the facility, leasing space to WR. WR requested proposals, describing a 30-year ground lease for a 30,000 square foot medical facility. Citadel submitted a proposal. Negotiations followed. WR signed an “Authorization to Proceed” stating that WR “will only be responsible for architectural and engineering fees in the event [W R] does not execute its space leases and ground lease.” Citadel hired attorneys, architects, engineers; refined plans: conducted zoning review, and began securing financing. Negotiations failed. WR terminated the relationship, just as Citadel was preparing to commence construction. WR refused to pay expenses unless it received the plans; entered into contracts with Citadel’s architect and engineer; used their plans and built the facility. The district court rejected Citadel’s claims. The parties settled with respect to pre-construction costs and fees. The Seventh Circuit affirmed. Citadel failed to show that WR agreed to complete the arrangement. When the relationship ended, they had not agreed on essential lease terms. No language in the agreement required the parties to negotiate in good faith, nor did it establish a framework for the negotiation process. View "Citidal Grp. Ltd. v. Washington Reg'l Med. Ctr." on Justia Law

EAR, a seller of manufacturing equipment, defrauded creditors by financing non-existent or grossly overvalued equipment and pledging equipment multiple times to different creditors. After the fraud was discovered, EAR filed for bankruptcy. As Chief Restructuring Officer, Brandt abandoned and auctioned some assets. Five equipment leases granted a secured interest in EAR’s equipment; by amendment, EAR agreed to pay down the leases ($4.6 million) and give Republic a blanket security interest in all its assets. Republic would forebear on its claims against EAR. The amendment had a typographical error, giving Republic a security interest in Republic’s own assets. Republic filed UCC financing statements claiming a blanket lien on EAR’s assets. After the auction, Republic claimed the largest share of the proceeds. The matter is being separately litigated. First Premier, EAR’s largest creditor, is concerned that Republic, is working with Brandt to enlarge Republic’s secured interests. After the auction, EAR filed an action against its auditors for accounting malpractice, then sought to avoid the $4.6 million transfer to Republic. The bankruptcy court approved a settlement to end the EAR-Republic adversary action, continue the other suit, divvy proceeds from those suits, and retroactively modify the Republic lien to correct the typo. First Premier objected. The district court affirmed. The Seventh Circuit affirmed. First Premier was not prejudiced by the settlement. View "First Premier Capital, LLC v. Republic Bank of Chicago" on Justia Law

Quality owns dozens of restaurants in several states. To refinance its debt, Quality created subsidiaries (plaintiffs-borrowers) and made a deal with Captec Financial and GE Capital for 34 separate loans totaling $49 million, with each loan secured by a restaurant. The parties disagree about the prepayment requirements for 12 of those loans. The borrowers prepaid according to their own interpretation of the prepayment provision and the lender rejected the effort. The district court granted the lender summary judgment. The Seventh Circuit remanded for the district court to consider extrinsic evidence. The court concluded that extrinsic evidence supported the borrowers’ interpretation and awarded prejudgment interest. The Seventh Circuit affirmed. View "BKCAP, LLC v. CAPTEC Franchise Trust 2000-1" on Justia Law

Winforge claimed that defendants breached a hotel development agreement between the parties, causing delay and costs that caused Winforge to default on the separate construction loan agreement between the parties. Defendants cross-claimed that Winforge breached the development agreement. The district court ruled in favor of the defendants and found that the parties had never entered into a final, enforceable contract. The Seventh Circuit affirmed. Even a signed writing is not a contract if there is no mutual assent or “distinct intention common to both;” the parties continued to exchange new drafts of the Scope of Work even after they had signed the Agreement. To the extent that defendants incurred any obligations, their failure to perform was not a breach because that failure was due to Winforge’s deficient performance of Winforge’s duties. View "Winforge, Inc. v. Coachmen Indus., Inc." on Justia Law

Joseph purchased the BP franchise in 2006 for $400,000. In 2009, Sasafrasnet purchased BP’s interests in the land and a Dealer Lease and Supply Agreement, becoming lessor and franchisor. The DLSA authorizes Sasafrasnet to terminate if Joseph fails to make payment according to EFT policy, causing a draft to be dishonored as NSF more than once in 12 months; Sasafrasnet is not obligated to extend credit, but did deliver fuel before collecting payment. There were several instances of NSF EFTs; Sasafrasnet began to require payment in advance. Later, Sasafrasnet allowed Joseph to resume paying by EFT within three days of delivery, but established a $2,500 penalty for any NSF and stated that pre-pay would resume if he incurred two more NSFs. There were additional NSFs, so that Joseph had incurred nine for amounts over $20,000 and three for amounts over $45,000. Sasafrasnet gave Joseph 90 days’ notice that it was terminating his franchise, listing the NSFs and failing scores on a mystery shopper inspection as bases for termination. Joseph sued under the Petroleum Marketing Practices Act, 15 U.S.C. 2801. The district court denied a preliminary injunction to prevent the termination. The Seventh Circuit reversed, holding that the statute requires additional findings.View "Joseph v. Sasafrasnet, LLC" on Justia Law

The Union established two funds for its members—a Pension Fund and a Health & Welfare Fund. DLF entered into a Memorandum of Agreement with the Union, under which DLF agreed to be bound to all Collective Bargaining Agreements between the Union and various employer associations in the geographical jurisdiction of the Union. Under the CBA, DLF is required to make fringe benefit contributions to the Funds on behalf of members of the Union. An audit of DLF’s payroll records showed that DLF had failed to make contributions on behalf of Mata, a cement mason who also performed other work (such as painting), for 1,119.5 hours in 2007 and for 234.5 hours in 2008, a total $11,955.05 in fringe benefit contributions. The district court granted summary judgment in favor of the Funds, The Seventh Circuit affirmed rejecting DLF’s argument that, under the MOA, it is not contractually bound to make contributions for non-bargaining unit work. The MOA binds DLF to the CBAs and establishes the type of employee covered under the CBA. It was not intended to, and does not, define bargaining unit work for purposes of fringe benefit contributions. View "McCleskey v. DLF Constr., Inc." on Justia Law