Litigation Law Roundup

Sharp  Thinking

No. 211    Perspectives on Developments in the Law from Sharp-Hundley, P.C.    July 2022

Notice In Forfeiture Action Merely A Statutory Requirement

In an in rem forfeiture action, “the lack of notice, even if that lack of notice amounted to a due process violation, [cannot] deprive the circuit court of its jurisdiction,” the Illinois Supreme Court ruled recently.

Acting in People ex rel. Alvarez v. $59,914 U.S. Currency, 2022 IL 126927, the high court applied the modern theory of subject matter jurisdiction (see generally Sharp Thinking Nos. 160, 162, 166, 191) in the forfeiture context and said that “failure to comply with a statutory requirement or prerequisite cannot deprive a circuit court of subject-matter jurisdiction because jurisdiction is conferred entirely by our state constitution.”

The case involved allegedly defective notice given to the owner of the currency in a drug asset forfeiture case.  Notice by mail was returned undeliverable, but notice to unknown owners was published in a legal newspaper.  The owner filed a petition under § 2-1401 of the Code of Civil Procedure more than two years after the forfeiture judgment was entered, meaning that he had to rely on the provision for challenges that may be made to “void” judgments at any time.

“Here, there was subject-matter jurisdiction, because the circuit court had the power to hear and determine cases under the Forfeiture Act,” the court ruled.  “The circuit court also had in rem jurisdiction over the currency, based upon the State’s seizure of the currency and filing of a forfeiture action under the Forfeiture Act.   It follows, then, that once the circuit court obtained jurisdiction over the currency in this case, any purportedly erroneous judgment entered with regard to that currency would render the circuit court’s judgment voidable, not void.”

“Personal jurisdiction over [the owner] was not required with respect to the underlying in rem proceedings, and any failure to provide [him] with statutory notice did not render the forfeiture order void for lack of jurisdiction.”

Justice Neville dissented from the 6-1 decision.

 Foreign Part Maker May Be Subject To Specific Jurisdiction

Illinois courts have specific jurisdiction over a foreign defendant which manufactured a custom component of a medical device that allegedly injured an Illinois resident where the defendant knew the device was sold in the United States (but not which specific states) and where the defendant also sold other similar products directly to Illinois, a panel of the Appellate Court in Chicago has held.

Acting in Harding v. Cordis Corp., 2021 IL App (1st) 210032, the panel dealt with a jurisdiction claim under 735 ILCS 5/2-209(c), which permits jurisdiction “on any other basis now or hereafter permitted by the Illinois Constitution and the Constitution of the United States.”   It said the claim of specific jurisdiction “requires a showing that (1) the defendant purposefully directed its activities at [Illinois] and (2) the cause of action arose out of or relates to the defendant’s contacts with [Illinois].”

Citing World-Wide Volkswagen Corp. v. Woodsen, 444 U.S. 286 (1980), it said a forum state “does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum state.”

Because defendant in Harding merely supplied a component of the final product, defendant disputed whether the stream-of-commerce doctrine applied.  The panel said it did, distinguishing “between the sale of standardized component parts having many useful applications, such as ordinary nuts and bolts, and the purposeful availment by the manufacturer of a highly specialized component part of a distributor’s exclusive network of nationwide marketing and sales.”

Settlement Agreement Was Not A “Consumer Transaction”

Section 2-1301(c) of the Illinois Code of Civil Procedure, 735 ILCS 5/2-1301(c), does not nullify confession-of-judgment provisions merely because they “relate to” or “arise out of” consumer transactions, a panel of the Appellate Court’s Second District has held.

Acting in Sopris Concrete, LLC v. Meeks, 2022 IL App (2d) 210331, the panel dealt with a confession clause in a settlement agreement resolving a disputed mechanic’s lien asserted by a subcontractor on the consumer’s property.  The settlement agreement provided that the subcontractor would release its lien upon payment of a compromised amount; if not paid, the owner confessed judgment in the full amount plus attorney fees and interest.  The settlement agreement was entered into two years after the underlying transaction.

The owner failed to pay in accordance with the agreement and the subcontractor sued under the confession clause.  The trial court entered judgment for the subcontractor, and the owner appealed.

The panel based its decision on the specific language of § 2-1301(c): “‘Consumer transaction’ as used in this Section means a sale, lease, assignment, loan, or other disposition of an item of goods, a consumer service, or an intangible to an individual for purposes that are primarily personal, family, or household.”

“We cannot plausibly say that the Settlement Agreement here – entered two years after plaintiff completed its performance under the contract – was an instrument that was used in a consumer transaction,” the panel said.  It said the settlement agreement itself “did not effectuate any ‘sale, lease, assignment, loan, or other disposition of an item of goods, a consumer service, or an intangible.’”

Analyzing the legislative history of the provision, the court found that § 2-1301(c) was compromise legislation which intended to apply only to consumer transactions.

• John T. Hundley