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

In 2003, the Trust sought group accident and life insurance policies as a benefit for its union members. Consistent with the Trust's request, the broker's RFP specifically sought a policy where the "Trust is the owner of the policy and also [a] beneficiary." Defendant's proposal contained only a summary of proposed terms, expressly cautioned that it was not a contract, and omitted reference to the Trust’s desired beneficiary provision. The policy drafts sent to the Trust did not contain the beneficiary provision the Trust wanted and stated that payment of the required premium after delivery of the policies would constitute acceptance. The Trust's chairman signed and paid the first premium in 2003 In May, 2004, the Trust made a claim on the group life policy. Defendant responded that the terms of the policy required it to pay the full benefit to the decedent's beneficiaries. The Trust terminated the policy, stopped paying premiums, and filed suit seeking a declaratory judgment and rescission of the contract. The district court dismissed the Trust's claims and entered judgment for defendant for $95,059.99 in unpaid premiums. The Seventh Circuit affirmed, finding that the parties had an enforceable contract.

In a national emergency, the Department of Defense can augment its own capabilities with aircraft drawn from the "Civil Reserve Air Fleet," composed of aircraft owned by commercial carriers but committed voluntarily for use during emergencies. The Fleet is divided into teams of airlines. The Department awards mobilization value points; the more points a member has, the more non-emergency Department air transportation the member can bid on. Points are transferrable within teams. Members of defendant's team have a contract with a one-year term and a separate three-year agreement concerning distribution of business among members. Plaintiff's suit is based on a 2006 three-year agreement in the form of a letter. A change from what members of the team had been doing ultimately led to plaintiff's withdrawal from the team. Plaintiff subsequently went into bankruptcy. Plaintiff won a jury verdict of almost $66 million. The Seventh Circuit reversed, holding that the "agreement" did not include crucial terms and was so indefinite as to be unenforceable. The court also criticized the regression analysis on which the award was calculated. A promissory estoppel claim, while not preempted, failed on the facts.

In 1995, defendant signed a 10-year lease with plaintiff's predecessor and occupied about 20% of the building. In 1999, defendant's corporate parent decided to consolidate operations and needed up to an additional 60,000 square feet. During negotiations, defendant's CEO allegedly asserted that defendants should not rent to anybody else. Negotiations failed. Defendant ultimately vacated the building but paid rent and looked for a sublessor until December 2000, when it sent notice that it was cancelling the lease. Plaintiffs sued in state court for breach of lease, breach of guaranty, consequential damages and fraud. Defendants prevailed. In 2004, while the corporate suit was pending, plaintiffs filed the individual suit, alleging fraud against defendants; CEO and general counsel. The suit was dismissed. In 2010, plaintiffs filed a diversity suit in federal court, bringing claims for breach of lease, breach of guaranty, and fraud. The district court dismissed, based on res judicata. The Seventh Circuit affirmed, holding that the the individual suit barred the federal suit.

Defendant is a captive insurer owned by plaintiff plans across the nation. In 2003 healthcare providers filed class action suits in Florida against all of those plans. Twelve plans, which had errors-and-omissions insurance from defendant, asked it to assume the defense and indemnify. Defendant declined, and the plans demanded arbitration. Acting under the Federal Arbitration Act, 9 U.S.C. 5, the district court held that the arbitrators could determine whether arbitration of a class action or consolidated arbitration were authorized by contract and appointed a third arbitrator. The court dismissed the appeal of the court's first ruling for lack of jurisdiction and affirmed the appointment. If defendant wanted a judge to decide whether the plans' demands should be arbitrated jointly or separately, it should have refused to appoint an arbitrator. Both sides appointed arbitrators, however, and the proceeding got under way. Nothing in the Federal Arbitration Act authorizes anticipatory review of the arbitrators' anticipated decisions on procedural questions.

Defendant was managing member of a partnership that built a warehouse and began receiving rent. In 2000, plaintiff acquired a 10% interest in the business that garnered about 45% of its net cash flow. A year later, plaintiff was in an accident and suffered brain injury. In 2002 plaintiff had his guardianship terminated, representing that he was able to manage his own affairs. Weeks later, defendant notified plaintiff that the warehouse tenant was in bankruptcy. In 2003, defendant purchased plaintiff's interest for $600,000. In a complaint filed more than five years later, plaintiff claimed breach of fiduciary duty; that he sold his interest only because defendant represented that the tenant was delinquent on rent. The district court granted defendant summary judgment, applying the Illinois discovery rule with respect to the limitations period, and holding that plaintiff could not rely on his self-serving affidavit to create an issue of material fact when his deposition testimony contradicted his representations about his ability to verify the tenant's payment of rent. The court held that defendant a basis for indemnity by plaintiff. The Seventh Circuit affirmed, finding that plaintiff waived any claim of legal disability and that the 2000 agreement unambiguously provided for an award of fees.

On June 17, 2006, wife applied for a $500,000 life insurance policy. She paid $100 and signed a conditional receipt agreement for immediate coverage, subject to conditions that "on the Effective Date the Proposed Insured(s) is (are) insurable exactly as applied for under the Company’s printed underwriting rules for the plan, amount and premium rate class applied for; ... (C) the Proposed Insured(s) has/have completed all examinations and/or tests requested by the Company." On June 28, wife was examined and submitted specimens. Her cholesterol level and urine sample raised concerns. The company sought medical records from her physician and a second urine specimen. On July 22, 2006, wife was diagnosed with a brain tumor. On August 9, the company declared wife uninsurable based on her brain surgery. About a year later, she died. Husband claimed that the request for the second urine specimen was communicated in a untimely and ineffective fashion. The district court entered summary judgment for the insurance company on claims of breach of contract, estoppel, bad faith, and negligence. The Seventh Circuit affirmed, finding no evidence of purposeful misconduct; if there was no contract, any duty of good faith did not come into play.

For 20 years, GEMS has been taking groups of African American high school students on tours of historically black universities. In 2008, the organization reserved 41 rooms at hotel in Baton Rouge. A day or two later, the hotel canceled the reservation. The group had to drive through the night to their next destination in Texas. The organization filed civil rights and contract claims on behalf of itself and students. Throughout discovery, plaintiffs continually missed deadlines. The district court dismissed as a discovery sanction pursuant to Fed.R.Civ.P. Rule 37(b). The Seventh Circuit affirmed, first rejecting an argument that it lacked jurisdiction. Given the willful nature and volume of the discovery violations, along with the warnings of dismissal that were issued, the district court was within its discretion in granting a motion to dismiss without having explicitly warned of that possibility.

Plaintiffs are producers of coal bed methane gas; defendant is large coal-mining company. Gas extraction firms need access to coal from which to extract gas and coal companies need to have gas removed from their mines before mining. To form an alliance for that purpose, plaintiff began by acquiring options to buy coal-mining rights; it planned to sell the options in exchange for the right to extract gas from its partner's coal. The parties signed memorandum of understanding, which stated that it did not constitute a binding agreement, and, later, a non-binding letter of intent. Plaintiff began transferring coal rights to defendant as contemplated by the letter of intent, but defendant delayed reciprocating. Ultimately defendant announced that it was terminating the letter of intent. The trial court entered summary judgment for defendant on a fraud claim. The Seventh Circuit affirmed, stating that "when a document says it isn't a contract, it isn't a contract" and that plaintiff did not establish promissory fraud or justifiable reliance.

Plaintiff, a supplier of outdoor power equipment, gave defendant, a disttributer of such equipment, as well as of irrigation equipment, a distributor agreement with a multi-state territory. After about four years, plaintiff provided notice of termination and shifted sales to another distributor. Defendant was in significant debt, its lenders had refused to loan it any more money. Defendant is now out of business. During the contract period, defendant also distributed products for other companies. Plaintiff claimed that defendant owed for products purchased. The district court ruled in favor of plaintiff on the breach of contract claim and rejected defendant's claims of wrongful termination and that the new distributor improperly induced plaintiff to terminate. The Seventh Circuit affirmed. Rejecting a Connecticut Franchise Act claim, the court noted that defendant failed to show that more than 50 percent of its business resulted from its relationship with plaintiff. The district court properly awarded interest and rejected claims of unjust enrichment and tortious interference.

The parties, involved in patent infringement cases, agreed to a settlement that required dismissal of their lawsuits and included an arbitration provision and request that a bank subordinate its interests in defendant's patents to the settlement. Defendant stated that the bank had agreed; the parties executed the agreement and dismissed their suits. When plaintiff became aware that the bank would not cooperate, defendant demanded arbitration, but plaintiff went to court to vacate dismissal of its claims and seek compliance with the agreement. The court dismissed for lack of subject matter jurisdiction. Before the Federal Circuit ruled on an appeal, the parties participated in mediation. Plaintiff took a voluntary dismissal, then filed new claims, including claims against defendant's bank and attorneys, claiming that defendant and its attorneys lied or the bank reneged on its commitment. The district court held that defendant had waived its right to arbitrate and that the bank and attorneys, not parties to the settlement, could not be compelled to arbitrate. The Seventh Circuit reversed in part, holding that defendant's participation in earlier litigation did not amount to waiver under the Federal Arbitration Act. 9 U.S.C. 1, and vacated with respect to the bank and attorneys. Plaintiff may want to arbitrate with those parties if it must arbitrate with defendant.