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

The case revolves around Lee Hofmann, who controlled multiple businesses, including Games Management and International Supply. Games Management borrowed approximately $2.7 million from Citizens Equity First Credit Union (the Lender), with Hofmann guaranteeing payment. When Games Management defaulted and Hofmann failed to honor his guarantee, the Lender obtained a judgment against Hofmann. In 2013, Hofmann arranged for International Supply to pay the Lender $1.72 million. By 2015, International Supply was in bankruptcy, and a trustee was appointed to distribute its assets to creditors.The bankruptcy court held a trial, during which expert witnesses disagreed on whether International Supply was solvent in 2013. The Trustee's expert testified that it was insolvent under two of three methods of assessing solvency, while the Lender's expert testified that it was solvent under all three methods. The bankruptcy judge concluded that International Supply was insolvent in August 2013 and directed the Lender to pay $1.72 million plus interest to the Trustee. The district court affirmed this decision.The case was then brought before the United States Court of Appeals for the Seventh Circuit. The Lender argued that the only legally permissible approach to defining solvency is the balance-sheet test. However, the court disagreed, stating that the Illinois legislation does not support this view. The court also noted that the Lender had not previously argued for the balance-sheet test to be the exclusive approach, which constituted a forfeiture. The court concluded that the bankruptcy judge was entitled to use multiple methods to determine solvency. The court affirmed the district court's decision, requiring the Lender to pay $1.72 million plus interest to the Trustee. View "Stone v. Citizens Equity First Credit Union" on Justia Law

AsymaDesign, LLC, a company that operated a virtual-reality ride in a shopping mall, entered into a lease with CBL & Associates Management, Inc. Following complaints about noise from the ride, CBL relocated it within the mall, as permitted by the lease. The new location proved unprofitable, leading AsymaDesign to stop paying rent, resulting in eviction and subsequent dissolution under the Illinois Limited Liability Company Act. Nearly four years later, George Asimah, the former owner of the LLC, filed a lawsuit against CBL under 42 U.S.C. §1981 and state contract law, alleging racial discrimination when CBL did not allow the LLC extra time to pay its rent.The district court dismissed the suit on the grounds that Asimah was not the real party in interest, as the lease was held by AsymaDesign, not Asimah personally. An amended complaint added AsymaDesign as an additional plaintiff, but this was also dismissed as untimely. The court ruled that although Illinois law allows a dissolved LLC a "reasonable time" to wind up its business, AsymaDesign had not begun to litigate until almost five years after its dissolution, exceeding the benchmark allowed by Illinois law.In the United States Court of Appeals for the Seventh Circuit, AsymaDesign filed a notice of appeal. However, the notice was signed only by George Asimah, who is not a lawyer and therefore cannot represent AsymaDesign or anyone other than himself. The court ruled that only a member of the court's bar (or a lawyer admitted pro hac vice) can represent another person or entity in litigation. AsymaDesign's sole argument was that anyone may represent an Illinois corporation in federal court, which the court dismissed as misguided. Consequently, the appeal was dismissed. View "Asimah v. CBL & Associates Management, Inc." on Justia Law

Sun Holdings purchased a workers’ compensation policy from American Zurich Insurance, which required Sun to reimburse American Zurich for the first $250,000 of each claim. American Zurich fulfilled its obligations under the policy, but Sun did not. When Sun received bills, it ignored them without explanation or justification. American Zurich invoked the policy’s dispute-resolution clause, which called for arbitration in Illinois under New York law and the rules of the American Arbitration Association. During the arbitration, Sun offered a series of weak excuses, which the arbitrators dismissed. The arbitrators ordered Sun to pay what American Zurich claimed (approximately $1.1 million plus 9% interest from the time each bill was due) and added almost $175,000 in attorneys’ fees as a sanction for frivolous defense.American Zurich applied to the United States District Court for the Northern District of Illinois for enforcement of the arbitration award. Sun argued that the arbitrators had exceeded their authority by directing it to pay the insurer’s legal fees, citing two sentences in the contract. The district court disagreed with Sun and ordered it to pay the award in full.The case was then brought before the United States Court of Appeals for the Seventh Circuit. The court held that the arbitrators had interpreted the contract when they concluded that its reference to legal fees did no more than adopt the American Rule, which allows each side to pay its own lawyers but does not forbid sanctions for frivolous litigation. The court stated that whether the arbitrators were right or wrong in their interpretation was not its concern. The court also noted that Sun's arguments were requests to contradict the arbitrators’ findings, which the Federal Arbitration Act forbids. The court affirmed the district court's decision and issued an order for Sun to show cause why sanctions should not be imposed for its frivolous appeal. View "American Zurich Insurance Company v. Sun Holdings, Inc." on Justia Law

Emanuel Dameron was charged with possessing a firearm as a felon after police officers spotted him on a live video feed from a pole camera, observed an "L-shaped object" resembling a gun in his waistband, and subsequently found a gun on him during a frisk search on a public bus in Chicago. Dameron moved to suppress the firearm and other evidence gathered during the stop, arguing that the police's search violated the Fourth Amendment and the standards set in Terry v. Ohio. The district court denied Dameron's motion, and he was found guilty at trial.The district court held an evidentiary hearing, during which the officer operating the pole camera testified about his familiarity with the neighborhood, its history of gang and narcotic activity, and his observation of the "L-shaped object" in Dameron's waistband. The court concluded that the visible bulge in Dameron's waistband and his presence in a high-crime area generated reasonable suspicion to justify the Terry stop. Dameron was subsequently found guilty and sentenced to 110 months' imprisonment.On appeal to the United States Court of Appeals for the Seventh Circuit, Dameron renewed his contention that the search violated the Fourth Amendment. He argued that Illinois permits the concealed carrying of firearms and that the police had no way of knowing whether he was an authorized license holder. The court declined to address this argument as it was not presented to the district court. Instead, the court focused on the fact that Dameron was on a public bus when the search occurred, noting that the Illinois Concealed Carry Act prohibits carrying a firearm on public transportation. The court concluded that the officers had reasonable suspicion to believe Dameron had violated the law and that their pat-down search did not violate the Fourth Amendment. The court affirmed the lower court's decision. View "United States v. Dameron" on Justia Law

The case revolves around Morgan Morales, who appealed against an administrative law judge's (ALJ) decision that she was not disabled and hence, not entitled to Social Security disability benefits. Morales claimed to suffer from several conditions, including bipolar disorder, depression, anxiety, ADHD, and narcolepsy. After being treated at a mental health center and starting on prescription medications, Morales reported that her conditions were in remission. The ALJ, however, denied her application for benefits, finding that her mental impairments were mild and did not limit her ability to perform basic work activities, including her past job as a material handler.Morales challenged the ALJ's decision in the United States District Court for the Southern District of Indiana, Indianapolis Division. She criticized the ALJ's decision about her functional capacity to work but failed to provide evidence compelling the conclusion that the adverse disability decision lacked substantial support in the record. The District Court upheld the ALJ's decision, stating that Morales had not carried her burden of proof and that the ALJ's decision was supported by substantial evidence.The case was then brought to the United States Court of Appeals for the Seventh Circuit. The court affirmed the lower court's decision, stating that Morales had misunderstood the burden she bore on appeal. The court noted that it was not enough to criticize the ALJ's decision; Morales needed to point to evidence compelling the conclusion that the adverse disability decision lacked substantial support in the record. The court also dismissed Morales's criticism of the District Court's decision, stating that the District Court had conducted an adequate review of the ALJ's determination and correctly applied the law. The court concluded that the ALJ's determination was reasonable and supported by substantial evidence, and therefore, affirmed the decision. View "Morales v. O'Malley" on Justia Law

The defendant, Otho Harris, visited a Boost Mobile store for assistance with his broken cellphone. When told it could not be repaired, he became enraged and later set fire to the store, causing extensive damage. Harris was charged with arson and, after difficult relationships with three different appointed attorneys, he chose to represent himself and eventually pleaded guilty. He was sentenced to eight years in prison and ordered to pay $195,701 in restitution.The case moved slowly due to Harris's disagreements with his appointed counsel. After the third appointed lawyer moved to withdraw, Harris decided to represent himself. He filed numerous pretrial motions and requests with the court. A few weeks before the scheduled trial date, he agreed to plead guilty and signed a written plea agreement with the government. The judge accepted his guilty plea and set the case for sentencing.On appeal, Harris challenged only the restitution order, arguing that it was not supported by a proper investigation and determination of the loss amount. However, the United States Court of Appeals for the Seventh Circuit found that Harris had waived his right to challenge the restitution order by expressly affirming the accuracy of the factual material in the presentence report at the sentencing hearing. The court noted that Harris had ample notice of the restitution amount, the factual basis for it, and an opportunity to object. He did not object; on the contrary, he affirmed that he was satisfied with the accuracy of the factual material in the presentence report. Therefore, the court affirmed the judgment. View "United States v. Harris" on Justia Law

The case revolves around an incident where Charles Brumitt, who was intoxicated and lying on a utility box, struck Evansville Police Department Sergeant Sam Smith. In response, Smith punched Brumitt four times in the face, knocking him unconscious. Brumitt sued Smith under 42 U.S.C. § 1983, alleging that Smith used excessive force in violation of his Fourth Amendment rights. Smith sought summary judgment, arguing that his use of force was objectively reasonable and that he was entitled to qualified immunity.The district court denied Smith's motion for summary judgment. It concluded that there were factual disputes that prevented it from determining whether the force used by Smith was reasonable and whether Smith was entitled to qualified immunity. The court stated that the right Brumitt asserted—“to be free from force once subdued”—was clearly established. Smith appealed this decision.The United States Court of Appeals for the Seventh Circuit reversed the district court's decision. The appellate court concluded that Brumitt had not met his burden of showing that Smith violated a clearly established right. The court found that no case clearly established that a reasonable officer must reassess his use of force within less than four seconds. Therefore, Smith was entitled to qualified immunity. The court remanded the case with instructions to enter judgment in Smith's favor on the Fourth Amendment claim. View "Brumitt v. Smith" on Justia Law

Thermoflex Waukegan, a company that required its hourly workers to use handprints to clock in and out, was sued for allegedly violating the Biometric Information Privacy Act (BIPA) by not obtaining workers' written consent and using a third party to process the data. Thermoflex had multiple insurance policies, including three from Mitsui Sumitomo Insurance, which declined to defend or indemnify Thermoflex, leading to this suit.The district court ruled that an exclusion in the Basic policy made it inapplicable to any claim based on BIPA. The exclusion stated that the insurance did not apply to claims arising out of any access to or disclosure of any person’s or organization’s confidential or personal information. The court found this exclusion straightforward, as BIPA identifies biometric information as confidential.The Excess and Umbrella policy had two parts. Coverage E contained the same exclusions as the Basic policy, and the court agreed with the district court's ruling that it did not apply to claims under BIPA. Coverage U lacked an exclusion relating to nonpublic information. The district court found that none of the three arguably applicable exclusions to Coverage U clearly foreclosed a duty to provide Thermoflex with a defense in the state-court suit.The United States Court of Appeals for the Seventh Circuit affirmed the district court's decision. It agreed with the district court's interpretation of the Basic policy and Coverage E of the Excess and Umbrella policy. It also agreed that the three exclusions to Coverage U did not apply to BIPA. Therefore, it held that Mitsui owed Thermoflex a defense under the Umbrella policy, provided that the limits of another policy that applies to the BIPA claims, plus deductibles, have been exhausted. View "Thermoflex Waukegan, LLC v. Mitsui Sumitomo Insurance USA, Inc." on Justia Law

The Equal Employment Opportunity Commission (EEOC) brought a Title VII employment discrimination action on behalf of black employees of Village at Hamilton Pointe, LLC, a long-term care facility in Indiana. The EEOC alleged that Hamilton Pointe and Tender Loving Care Management, LLC (TLC), which provides services to Hamilton Pointe, subjected the employees to racial harassment. The district court granted TLC’s motion for summary judgment with respect to some of the employees, ruling that TLC could not be considered an employer under Title VII. The court also granted Hamilton Pointe’s motion for partial summary judgment with respect to the claims of forty employees. Seven remaining employees proceeded to a jury trial, with damages awarded to one employee. The EEOC appealed the grant of summary judgment for TLC and Hamilton Pointe, and the jury’s verdict.The United States Court of Appeals for the Seventh Circuit affirmed the district court's judgment. The court found that the EEOC failed to establish that the employees were subjected to a racially hostile work environment that was so severe or pervasive as to alter the conditions of their employment. The court also found that the EEOC failed to establish that TLC was a joint employer of the claimants. The court emphasized that the federal law governing racial harassment proscribes conduct that is so severe or pervasive as to change the conditions of the victim’s employment, but does not ensure that the worker will have wise and skilled superiors with a sharply honed sense of social justice and a mastery of personnel management skills. View "EEOC v. Village at Hamilton Pointe LLC" on Justia Law

The case involves Maria and Jose Jimenez, who were involved in an auto accident with Stephen Kiefer. After the accident, the Jimenezes requested $100,000 from Kiefer's auto insurer, Travelers Commercial Insurance Company, to settle their claim against Kiefer. Travelers refused the offer, leading the Jimenezes to sue Kiefer in Illinois court. The Jimenezes and Kiefer entered into an agreement where Kiefer stipulated to a judgment against himself and assigned his rights and claims against Travelers to the Jimenezes. In exchange, the Jimenezes agreed not to execute the judgment against Kiefer personally. The Jimenezes then initiated a citation proceeding against Travelers, seeking to discover whether it held any of Kiefer’s assets.Travelers removed the action to federal court and filed for summary judgment. The district court granted summary judgment for Travelers, finding that Kiefer and the Jimenezes (as his assignees) were entitled to nothing under the insurance policy and had no claim for breach of any duties Travelers owed Kiefer. The Jimenezes appealed this decision.The United States Court of Appeals for the Seventh Circuit affirmed the district court's decision. The court found that the citation proceeding was an independent, removable action. It also agreed with the district court that the Jimenezes, as Kiefer’s assignees, could not recover under the policy in light of the legally responsible provision. The court concluded that Travelers could hold Kiefer to the terms of the policy, and under a strict construction of those terms, Kiefer was not legally responsible for the judgment because the covenant not to execute precluded its enforcement. Therefore, the legally responsible provision bars the Jimenezes’ recovery as Kiefer’s assignees. View "Jimenez v. Travelers Commercial Insurance Company" on Justia Law