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

Novak was the sole shareholder of CMCG. By 2008, CMCG’s solvency was questionable. In 2012 Novak committed suicide, leaving CMCG to Comess, who filed a voluntary Chapter 7 petition weeks later. For four years before the bankruptcy filing, Comess and Hathaway, another friend of Novak’s, had received significant payments from CMCG, though they were not employees. Hathaway received $45,400.81; she runs a small yoga studio and her email correspondence indicated that the payments were personal gifts.The trustee brought an avoidance action and sought discovery sanctions against Hathaway. The bankruptcy judge determined that the women had received money from CMCG while it was insolvent, that Novak typically failed to record the transactions, that CMCG did not receive reasonably equivalent value in exchange, and that the transfers were voidable under 11 U.S.C. 548 and the Illinois Uniform Fraudulent Transfer Act (IUFTA), which applied under section 544(b)(1) because CMCG had unsecured creditors at the time of the conveyances, the IRS and a credit-card company. The judge declined to impose sanctions for Hathaway’s failure to respond to interrogatories and produce tax returns but imposed sanctions ($11,187.25) for Hathaway’s delay and failure to comply with court orders concerning emails causing the Trustee to expend additional time and resources.The district judge and Seventh Circuit affirmed, rejecting arguments concerning trial exhibits for evaluating CMCG's financial health; challenging the finding that CMCG did not receive reasonably equivalent value; and that CMCG did not have IUFTA “creditors.” The court noted Hathaway's violations of appellate procedure. View "Fox v. Hathaway" on Justia Law

Fincher lived in a one‐bedroom apartment with his uncle, a drug dealer, and began selling drugs. Both were arrested after selling heroin to undercover police officers. Police searched the apartment. In the bedroom closet, they found more than 100 grams of heroin, cash, and .40 caliber bullets. A loaded .40 caliber handgun was found in the kitchen. Fincher, whose criminal record was clean, was charged with conspiring to knowingly and intentionally possess with intent to distribute 100 grams or more of heroin and six counts of distribution of and intent to distribute heroin. Fincher pleaded guilty to the conspiracy charge, which carried a mandatory minimum sentence of five years. The safety‐valve provision, 18 U.S.C. 3553(f), however, provides that a court is precluded from applying the mandatory minimum if it finds that the defendant has a minimal criminal history; the defendant did not use or threaten violence or possess a firearm in connection with the offense; the offense did not result in death or injury; the defendant was not an organizer or leader; and the defendant truthfully provided all information and evidence related to the offense before the sentencing hearing. Fincher’s DNA was found on the firearm. The district court found that Fincher possessed the firearm in connection with his offense, and was ineligible for safety‐valve relief and subject to a two‐level firearm enhancement, and imposed a five-year sentence. The Seventh Circuit affirmed. The safety‐valve potentially allows for relief from a mandatory minimum, but it does not increase or trigger it. Judicial fact-finding precluding safety‐valve relief does not violate the Sixth Amendment under the Supreme Court's Alleyne holding. Fincher failed to show by a preponderance of the evidence his possession of the handgun was not in connection with his offense. View "United States v. Fincher" on Justia Law

Police responded to a reported residential burglary in progress. M.G. met officers at the property and stated that he owned the home as a rental property with no current tenants and that no one should be inside. M.G. spotted a window cracked open and, peering inside, he saw someone in the house. Officers banged on the door and ordered all the occupants outside. Sawyer and three others came out and stood with the officers on the porch. M.G. asked the officers to “check my house.” Inside, officers found a backpack; they opened it and discovered four guns. Outside, officers placed the four men in custody. The backpack was brought outside. An officer opened it, found a cell phone, gave Miranda warnings, and asked the arrestees who owned the phone. Sawyer responded that it was his phone and bag. Sawyer later denied it was his bag. Sawyer moved to suppress the contents of the backpack and his statements. The government successfully argued that Sawyer failed to provide evidence that he had a subjective expectation of privacy in the backpack and that, as a trespasser, Sawyer had no legitimate expectation of privacy; officers had obtained the owner's consent to search the home. Sawyer conditionally pleaded guilty to knowingly possessing a firearm as a felon. The Seventh Circuit affirmed. The officers were entitled to search the backpack as part of their ongoing investigation of a burglary; Sawyer, as a trespasser, had no reasonable expectation of privacy in the backpack he brought in when he unlawfully entered the premises. View "United States v. Sawyer" on Justia Law

Under a 2014 agreement, MCFI, a non-profit organization that provides medical care for individuals with brain injuries, would operate a brain-injury center in MHC’s nursing facility. MHC would handle billing and collections for MCFI's services and remit the funds collected to MCFI after taking its cut. MHC instead redirected MCFI’s funds to pay its employees and other creditors. MCFI sued MHC and MHC’s principal, Nicholson. The district court entered summary judgment against MHC for breach of contract and against Nicholson for conversion and civil theft and awarded MCFI over $2 million in damages, interest, and costs against MHC and Nicholson, jointly and severally. It also awarded MCFI over $200,000 in attorney’s fees and costs against Nicholson alone. The Seventh Circuit affirmed. MCFI had an ownership interest in the BIRC Collections. At most MCFI’s acknowledgment of the security interests of MHC’s creditors only estops MCFI from contesting the interests of those creditors; it does not prevent MCFI from asserting its ownership of the property against MHC. The duty to refrain from converting or stealing the BIRC Collections was entirely independent of the contract. It arose from the common law and Wisconsin statutes. Nicholson was personally involved in the wrongful redirection of those funds through the actions of his agent. View "Milwaukee Center for Independence, Inc. v. Milwaukee Health Care LLC" on Justia Law

Gawron, a Polish citizen who has lived in the U.S. for 17 years, and her husband, Motyka, were involved in an elaborate credit card fraud scheme. Gawron pleaded guilty to wire fraud, 18 U.S.C. 1343. The presentence investigation report noted that the court “ordinarily” should not impose supervision on a defendant who would likely be removed from the country after her release from prison, U.S.S.G. 5D1.1(c) but recommended a discretionary condition prohibiting Gawron from leaving the “jurisdiction” where she is being supervised without permission. Gawron objected to other conditions of supervised release, but did not argue that supervised release should be skipped because of her likely removal, nor did she contest the condition restricting her movement. Gawron’s counsel stated that immigration proceedings had started and that her deportation was likely. The court imposed a below-Guidelines prison sentence of 12 months and one day, with two years of supervision. The court granted Gawron’s request to delay reporting to prison until Motyka’s release, for the sake of their children. In the meantime, Gawron would be subject to the conditions of her pretrial supervision. The Seventh Circuit affirmed, rejecting a challenge to the imposition of any term of supervised release because she is likely to be deported after her imprisonment. Her argument that the condition confining her to the district where she is being supervised is flawed for containing no scienter requirement would have warranted relief if she had properly preserved it. View "United States v. Gawron" on Justia Law

Gamero, a Mexican citizen who entered in 1973 and became a lawful U.S. permanent resident 1989, had state drug convictions. An immigration judge found him removable as an alien convicted of the aggravated felony of “illicit trafficking in a controlled substance,” 8 U.S.C. 1101(a)(43)(B). He sought deferral of removal under the Convention Against Torture. The judge denied that relief because the evidence he presented about the risk of torture from Mexican drug cartels was largely speculative. The Board of Immigration Appeals affirmed. Gamero later moved to reopen the removal proceedings based on new evidence that his brother-in-law and nephew had been kidnapped and held for ransom in Gamero’s hometown. The Board denied the motion, ruling that the new evidence was unlikely to change the outcome. The Seventh Circuit denied a petition for review, rejecting arguments that his drug convictions do not qualify as “illicit trafficking” under 1101(a)(43)(B) because the crimes in question do not require proof of remuneration; that the agency’s decision to deny his application under the Convention Against Torture is not supported by substantial evidence; and that the agency applied the wrong legal standard and abused its discretion when it denied his motion to reopen. View "Gamero v. Barr" on Justia Law

Doe, a citizen of Iran, sought lawful permanent residence in the U.S. under the EB-5 visa program, which requires applicants to invest in a new U.S. commercial enterprise, 8 U.S.C. 1153(b)(5)(A). Doe invested $500,000 in Elgin Assisted Living EB-5 Fund, for a memory care facility. The U.S. Citizenship and Immigration Services (USCIS) denied Doe’s petition because the facility had not been built. Doe filed suit. The court granted the government summary judgment. Meanwhile, Doe’s attorney was accused of defrauding 226 immigrants who invested over $88 million; he allegedly misappropriated the memory care center's funds. Doe eventually successfully applied to adjust his status to that of a conditional permanent resident. At the conclusion of his two-year, conditional term, Doe petitioned to remove the conditions on his residency. USCIS denied his petition. The district court upheld the denial, rejecting arguments that the decision was arbitrary and capricious, exceeded the relevant statutory and regulatory authority, and deprived Doe of his due process rights under the Fifth Amendment. The Seventh Circuit affirmed. USCIS reasonably concluded, after questioning the single expenditure supported by Doe’s investment, that significant questions remained unanswered about whether the transaction was legitimate and truly placed the full value of the investment “at risk” for purposes of job creation. View "Doe v. McAleenan" on Justia Law

Arrazabal, born in El Salvador, was admitted as a lawful U.S. permanent resident in 1995, at age 19. In 1996, Arrazabal was recruited into the MS-13 gang. He was convicted on firearms and drug charges. His status as a lawful permanent resident was revoked. His request for asylum was denied and he was ordered removed in 2001. Arrazabal alleges that he renounced his gang membership upon his return to El Salvador and, as a result, suffered violence by MS-13, a rival gang, and the police. He represents that he was repeatedly arrested without cause, jailed for extended periods, and tortured by police. Arrazabal fled El Salvador and returned to the U.S. illegally. He was arrested in 2012 for unlawful reentry and spent 27 months in prison. He applied again for asylum. An asylum officer preliminarily determined that he had a reasonable fear of being tortured if returned to El Salvador. Because Arrazabal’s 2001 removal order precluded asylum, he unsuccessfully sought withholding of removal and Convention Against Torture protection. Following a remand, additional evidence was presented. The IJ and Board of Appeals again denied relief. The Seventh Circuit again remanded, finding that the IJ and the Board mischaracterized certain evidence and again ignored corroborative aspects of the evidence. View "Arrazabal v. Barr" on Justia Law

While Flores was on supervision for a state conviction, Flores and her co-defendant were found with more than 300 pounds of marijuana with a street value of approximately $1.8 million. Flores, who had a prior felony drug conviction, pled guilty to possession with the intent to distribute 100 kilograms or more of marijuana, 21 U.S.C. 841(a)(1). At her sentencing hearing, Flores did not object to standard condition 3, which stated: “Defendant shall maintain lawful employment, seek lawful employment, or enroll and participate in a course of study or vocational training that will equip defendant for suitable employment, unless excused by the probation officer or the Court.” The Seventh Circuit affirmed, rejecting an argument that condition 3’s use of the word “suitable” was unconstitutionally vague. Flores had notice and opportunity to make the challenge in the district court, she submitted other sentencing challenges, and she affirmatively waived reading of the conditions and their justifications at sentencing. Her failure amounts to waiver, precluding appellate review. View "United States v. Flores" on Justia Law

Emmis bought a directors-and-officers liability policy covering October 1, 2009 to October 1, 2010, from Chubb Insurance. Emmis later bought, from Illinois National, a policy covering liability from October 1, 2011, to October 1, 2012, with an exclusion for any losses in connection with “Event(s),” which included “[a]ll notices of claim of circumstances as reported” under the Chubb policy. In 2012, Emmis tried to gain control of enough of its shares to go private. Shareholders filed suit to stop Emmis’s effort. Emmis reported the suit to Chubb and also sought coverage under the Illinois National policy. Illinois National refused coverage. Emmis sued, seeking damages for breach of contract and breach of the duty of good faith and fair dealing. The district court granted Emmis summary judgment for breach of contract, rejecting Illinois National’s interpretation of the “as reported” language. The Seventh Circuit reversed. Illinois National’s proposed interpretation is correct. The phrase “as reported” has no discernable temporal limitations. Once Emmis reported a claim to Chubb, at any time, then that claim was “reported” and excluded. View "Emmis Communications Corp. v. Illinois National Insurance Co" on Justia Law