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

The Kivers retained C&T, an Illinois law firm, to prepare trusts to benefit their daughters, Diane and Maureen, among others. Maureen and Diane each served as trustee of various trusts. Maureen died in 2007. Her husband, Minor, represents Maureen’s estate, which filed suit against C&T, alleging that C&T failed to disclose the existence and terms of certain trusts to Maureen, to her detriment, and failed to make distributions to her. The estate filed a separate state court suit against Diane, alleging that Diane breached her duties as trustee by failing to disclose the existence of certain trusts to Maureen or make distributions to her. Diane was a client of C&T during the relevant period. The district court entered an agreed protective order governing discovery disclosure to deal with privilege issues and denied the estate’s motion to compel production. The estate violated the protective order. The district court imposed sanctions and dismissed several of the estate’s claims. The Seventh Circuit affirmed, stating that “The complexity of the multiple trusts … the untimely death of Maureen, the pursuit of concurrent state and federal suits … the length of this litigation, and the disorderly nature of the estate’s presentation… evoke a middle installment of Bleak House." View "Scott v. Chuhak & Tecson, PC" on Justia Law

From 2006 until he was fired in 2011, Chrzanowski was an assistant state’s attorney. In 2011, a special prosecutor began investigating Chrzanowski’s boss, Bianchi. Bianchi allegedly had improperly influenced cases involving his relatives and political allies. Under subpoena, Chrzanowski testified before a grand jury, and later, again under subpoena, he testified at Bianchi’s trial. A few months later, Chrzanowski was interrogated by Bianchi and fired. Chrzanowski believed that the firing was retaliation for his testimony and filed suit, alleging violation of his First Amendment rights and state statutes. The district court dismissed the 42 U.S.C. 1983 claims, finding that First Amendment protections did not apply because the testimony was “pursuant to [his] official duties” and, in the alternative, that the defendants were entitled to qualified immunity, because any First Amendment protections were not “clearly established” at the time. The Seventh Circuit reversed. When Chrzanowski spoke out about his supervisors’ potential or actual wrongdoing, he was speaking outside the duties of employment. Providing eyewitness testimony regarding potential wrongdoing was never part of what Chrzanowski was employed to do; his rights were clearly established at all relevant times. Unlike restrictions on speech made pursuant to official duties, punishment for subpoenaed testimony chills civic discourse “in significant and pernicious ways.” View "Chrzanowski v. Bianchi" on Justia Law

Stern represented Allen in a discrimination suit, after which they became romantically involved. Allen and her husband had separated and had executed a settlement agreement awarding Allen $95,000, to be paid in installments. A month later, Allen visited a bankruptcy attorney, Losey, giving Stern’s name as “friend/referral” on an intake form. In filing for bankruptcy, Allen did not disclose the marital settlement. While her bankruptcy was pending, Allen received the money. A month after her bankruptcy discharge, Allen transferred the settlement proceeds to Stern, who opened a CD in his name. The attorney for Allen’s ex-husband informed the bankruptcy trustee that Allen failed to disclose the settlementand the discharge was revoked. Allen pleaded guilty to making a false declaration in a bankruptcy proceeding, 18 U.S.C. 152(3). She told a grand jury that Stern had not referred her to Losey and was convicted of making a material false statement in a grand jury proceeding, 18 U.S.C. 1623. The court admitted Losey’s client-intake form as evidence of perjury. Stern was convicted of conspiring to commit money laundering, 18 U.S.C. 1956(h). The Seventh Circuit affirmed Allen’s conviction, holding that the intake form was not a communication in furtherance of legal representation and was not subject to attorney-client privilege. Reversing Stern’s conviction, the court held that the judge erred in excluding Stern’s testimony about why he purchased the CDs. View "United States v. Stern" on Justia Law

The pro se plaintiff filed a qui tam suit against the university and nine chemistry professors, charging that they defrauded the United States in violation of several federal statutes by obtaining federal grant money on the basis of plagiarized research papers. He does not allege that the fraud harmed him, but apparently sought a “bounty,” 37 U.S.C. 3730(d)(1-2). The district court dismissed. The Seventh Circuit affirmed, stating that to maintain a suit on behalf of the government, a qui tam plaintiff has to be either a licensed lawyer or represented by a lawyer. Georgakis is neither and cannot maintain the suit in his individual capacity because he does not claim to have been injured. View "Georgakis v. IL State Univ." on Justia Law

Amicas agreed to a merger for $5.35 per Amicas share. Shareholders sued in Massachusetts state court, contesting the adequacy of a proxy statement used to seek approval. A preliminary injunction stopped the vote. The suit settled when a third party made a $6.05 per-share tender offer. Amicas shareholders gained $26 million. The lawyers who filed the suit sought attorneys’ fees based on the difference between the bids. Carolina Casualty had issued a policy covering what Amicas and its directors pay their own litigation lawyers and what Amicas must pay adversaries’ lawyers. The state court awarded $3,150,000, using a lodestar of $630,000 (1,400 hours at $450 per hour) times five, to reflect the risk of nonpayment and “an exceptionally favorable result.” Carolina Casualty filed a diversity suit, claiming that coverage was limited to $630,000. The district judge affirmed, but denied damages for bad faith or vexatious failure to pay. The Massachusetts appeal settled with payment of a sum that cannot be affected by the results of federal litigation. The Seventh Circuit held that the case was not moot, but affirmed, rejecting an argument that the award constituted excluded “civil or criminal fines or penalties … punitive or exemplary damages, the multiplied portion of multiplied damages.” View "Carolina Cas. Ins. Co v. Merge Healthcare Solutions, Inc." on Justia Law

FBI agents Freeman and Howell investigated the Hinds, who worked for Indiana criminal defense attorney Alexander, for bribery of witnesses, including Kirtz. They equipped Kirtz and Chrisp with recording devices for a meeting, during which Alexander stated that he did not know about Hinds’s bribery and would attempt to find out what was going on. Although Kirtz and Chrisp later confirmed that this meeting occurred and that they delivered the recordings, the agents never produced the recordings and claimed that the meeting never occurred. Months later, McKinney, who had a grudge against Alexander, became the new prosecutor. Alexander claims that McKinney conspired with Kirtz and Chrisp (then under investigation for participation in an arson ring) to destroy the recording and manufacture evidence against Alexander. Alexander was acquitted of bribery charges and filed a Notice of Tort Claim with the FBI, stating his intention to sue under the Federal Tort Claims Act, 28 U.S.C. 2671-2680. The FBI declined to act. Alexander filed suit, alleging malicious prosecution and intentional infliction of emotional distress. The district court dismissed, based on failure to state a claim for malicious prosecution and untimely filing of the intentional infliction of emotional distress claim. The Seventh Circuit reversed. Alexander alleged specific events that fell within the limitations period. View "Alexander v. United States" on Justia Law

Spehar, hired by CMGT to assist in finding financing for its business, sued CMGT over a dispute related to this agreement and obtained a $17 million default judgment against CMGT, which had no assets. Spehar Capital devised a plan to: force CMGT into bankruptcy; convince the bankruptcy trustee to bring a malpractice action against CMGT’s law firm on the theory that but for the firm’s negligence, Spehar would not have obtained the default judgment; win the malpractice action or force a settlement; obtain a share of the payment to the bankruptcy estate. The bankruptcy trustee sued CMGT’s law firm, Mayer Brown. The district court granted Mayer Brown summary judgment, reasoning that the doctrine of judicial estoppel barred the inconsistencies in the suit, based on undisputed facts. The Seventh Circuit affirmed. If the trustee were to prevail, there would be a clear impression that a court was misled. It would be “absurd” for Spehar to recover when proving the causation element of malpractice would require the trustee to prove that Spehar was not entitled to prevail in the earlier suit. View "Grochocinski v. Mayer, Brown, Rowe & Maw, LLP" on Justia Law

Gomberg briefly represented Goyal in 2004 settlement negotiations with a former employer over his claims of retaliation for whistle-blowing and gave Goyal’s employer notice of an attorney lien on any settlement or judgment. The negotiations did not produce an agreement; Goyal later retained new counsel to pursue litigation. In 2009, without the aid of any counsel, Goyal settled with his former employer. After Goyal settled, Gomberg reappeared and demanded a share. The employer paid a portion of the settlement to Gomberg. The district court granted Goyal’s motion to quash the lien, effectively ordering Gomberg to pay Goyal. The Seventh Circuit affirmed, stating that Gomberg is not entitled to any part of the settlement funds Goyal secured and that “Gomberg’s professional conduct is questionable.” His position that he “secured” funds for Goyal when the opposing party made an unacceptable and unaccepted settlement offer is unreasonable to the point of being frivolous and possibly warranting sanctions. Gomberg’s assertion of a lien for $70,000 was far greater than 10 percent of even the employer’s unaccepted (and not yet made) offer of $375,000 and was without basis. View "Goyal v. Gas Tech. Inst." on Justia Law

Westerfield was a lawyer working for an Illinois title insurance company when she facilitated fraudulent real estate transfers in a scheme that used stolen identities of homeowners to “sell” houses that were not for sale to fake buyers, and then collect the mortgage proceeds from lenders who were unaware of the fraud. Westerfield facilitated five such transfers and was indicted on four counts of wire fraud, 18 U.S.C. 1343. She claimed that she had been unaware of the scheme’s fraudulent nature and argued that she had merely performed the typical work of a title agent. She was convicted on three counts. The Seventh Circuit affirmed, rejecting challenges to the sufficiency of the evidence, to admission of a codefendant’s testimony during trial, and to the sentence of 72 months in prison with three years of supervised release, and payment of $916,300 in restitution. View "United States v. Westerfield" on Justia Law

The law firm represented a potential buyer in the purchase of a drugstore. Buyer and Seller executed the sales contract separately. The firm misfiled the contract executed by Buyer, however, and Seller subsequently attempted to rescind the contract, which it characterized as an offer, because it had not timely received a copy of the contract executed by Buyer. When Seller’s efforts to avoid the purported contract were successful, Buyer sent a “formal notice of claim” to the firm, which sought coverage from its professional liability insurer. That insurer concluded that the firm was not entitled to coverage because it failed to properly notify the insurer of the mistake that ultimately led to the malpractice claim. The firm sought a declaratory judgment. The district court granted the insurer summary judgment. The Seventh Circuit affirmed, finding that the firm’s knowledge of the email exchange with Seller’s counsel and of an Alabama declaratory-judgment action constituted knowledge of “any circumstance, act or omission that might reasonably be expected to be the basis of” a malpractice claim. View "Koransky, Bouwer & Poracky, P. C. v. Bar Plan Mut. Ins. Co." on Justia Law