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Notice In Forfeiture Action Merely A Statutory Requirement

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…

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“Dead” Corporation Can’t Claim Attorney-Client Privilege

Corporate Law Roundup Sharp  Thinking No. 210      Perspectives on Developments in the Law from Sharp-Hundley, P.C.    June 2022 “Dead” Corporation Can’t Claim Attorney-Client Privilege A dissolved corporation which is not engaging in winding up activities and has no active management may not assert the attorney-client privilege, a panel in the Appellate Court’s…

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7th Circuit Extends New Standing Rules, But Open Dissent Develops

Sharp Thinking No. 209     Perspectives on Developments in the Law from Sharp-Hundley, P.C.     May 2022 7th Circuit Extends New Standing Rules, But Open Dissent Develops By John T. Hundley, Sharp Thinking Editor In past issues of this newsletter, we’ve covered the new standing rules handed down by the Seventh U.S. Circuit Court of Appeals…

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Court Clarifies Standing Requirements In FDCPA Context

Litigation Law Roundup Sharp Thinking No.  208    Perspectives on Developments in the Law from Sharp-Hundley, P.C.    May 2022   Court Clarifies Standing Requirements In FDCPA Context The Seventh Circuit Court of Appeals recently issued an important decision clarifying federal standing requirements in the Fair Debt Collection Practices Act context. Acting in Ewing v. Med-1…

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COVID Case Highlights Impossibility, Related Issues

Focus On Contract Law Sharp  Thinking No. 207   Perspectives on Developments in the Law from Sharp-Hundley, P.C.   April 2022 COVID Case Highlights Impossibility, Related Issues By John T. Hundley, Sharp Thinking Editor A restaurant operator which attempted to have its rent obligations set aside under the doctrines of  impossibility, impracticability and commercial frustration failed to…

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Laches Bars Challenge To Void Judgment

Litigation Law Roundup Sharp  Thinking No. 206    Perspectives on Developments in the Law from Sharp-Hundley, P.C.    March 2022  Laches Bars Challenge To Void Judgment We previously have noted a trend, particularly in the Appellate Court’s Second District, to use the doctrine of laches to limit the principle that a void judgment may be attacked…

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8:1 Punitive Damages Ration OK In Egregious Cases

Litigation Law Roundup Sharp  Thinking No.  205   Perspectives on Developments in the Law from Sharp-Hundley, P.C.   February 2022   8:1 Punitive Damages Ratio OK In Egregious Cases             A ratio of punitive to compensatory damages in the high single-digit range is appropriate “when the defendant’s conduct is particularly egregious and the plaintiff’s harm arose from…

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Four New Cases Address Equitable Remedies

Focus On Contract Law Sharp  Thinking No. 204   Perspectives on Developments in the Law from Sharp-Hundley, P.C.   January 2022 Four New Cases Address Equitable Remedies By John T. Hundley, Sharp Thinking Editor As 2021 drew to a close, a spate of cases addressed the question of what equitable remedies are available in contractual contexts. …

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Court Issues Key Decision On Judicial Estoppel

Happy Holidays! Sharp  Thinking No. 203   Perspectives on Developments in the Law from Sharp-Hundley, P.C.    December 2021  Court Issues Key Decision On Judicial Estoppel By John T. Hundley, Sharp Thinking Editor The Appellate Court in Chicago has issued a potentially seminal decision involving application of judicial estoppel in Illinois. In Davis v. Pace Suburban…

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Court Limits Fiduciary Duty In Lawyer Context

Happy Thanksgiving! Sharp  Thinking No. 202         Perspectives on Developments in the Law from Sharp-Hundley, P.C.          November 2021  Court Limits Fiduciary Duty In Lawyer Context By John T. Hundley, Sharp Thinking Editor A lawyer who functioned as president of a small law firm, who did not own a stake…

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Defective Tenancy By Entirely Creates Joint Tenancy

Real Estate Roundup Sharp  Thinking No. 201  Perspectives on Developments in the Law from Sharp-Hundley, P.C.  October 2021 Defective Tenancy By Entirety Creates Joint Tenancy A defective attempt to create a tenancy by the entirety results in a joint tenancy, not a tenancy in common, a panel of the Appellate Court in Chicago has ruled….

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Foreclosure Fee Unconstitutional, High Court Rules

Mortgage Law Roundup Sharp  Thinking No. 200   Perspectives on Developments in the Law from Sharp-Hundley, P.C.   September 2021 Foreclosure Fee Unconstitutional, High Court Rules Illinois’ special $50 fee for filing mortgage foreclosure cases is unconstitutional, the Illinois Supreme Court has ruled. Acting in Walker v. Chasteen, 2021 IL 126086, the high court characterized the…

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New Law Limits Restrictive Employment Covenants

Sharp  Thinking No. 199  _   Perspectives on Developments in the Law from Sharp-Hundley, P.C.   _August 2021 New Law Limits Restrictive Employment Covenants   By Alexis Wiggley, alexis@sharp-hundley.com Illinois Gov. J.B. Pritzker this month approved legislation to expand the Illinois Freedom to Work Act (820 ILCS 90) to limit employers from creating and enforcing covenants not…

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Elements For Preliminary Injunction Fiercely Debated

Litigation Law Roundup Sharp  Thinking No. 197   Perspectives on Developments in the Law from Sharp-Hundley, P.C.   June 2021 Elements For Preliminary Injunction Fiercely Debated By John T. Hundley, Sharp Thinking Editor Litigation over the validity of Governor J.B. Pritzker’s eviction moratoria has given rise to a fierce debate in the Appellate Court’s Third District over…

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Lawyer Liability Under RICO Made More Difficult

Litigation Law Roundup Sharp  Thinking No. 196         Perspectives on Developments in the Law from Sharp-Hundley, P.C.         May 2021  Lawyer Liability Under RICO Made More Difficult The Seventh Circuit U.S. Court of Appeals has made significantly more difficult the task of tagging law firms with liability under the Racketeer Influenced…

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Foul Ball Results In Primer On Unconscionability

Sharp  Thinking No. 195   Perspectives on Developments in the Law from Sharp-Hundley, P.C.   April 2021 Foul Ball Results In Primer On Unconscionability By John T. Hundley, Sharp Thinking Editor Foul ball hits baseball fan in face. She sues.   Major League Baseball and Chicago Cubs invoke arbitration clause. Court rules clause is unenforceable as…

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Gratuitous Transfers Don’t Violate Citation Statute

Litigation Law Roundup Sharp Thinking No. 194     Perspectives on Developments in the Law from Sharp-Hundley, P.C.     March 2021  Gratuitous Transfers Don’t Violate Citation Statute Gratuitous transfers for the benefit of the judgment debtor by citation respondents during the pendency of a citation to discover assets do not violate the restraining provisions of the…

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General Description of Improvements Held Sufficient

Mortgage Law Roundup Sharp  Thinking No. 193    Perspectives on Developments in the Law from Sharp-Hundley, P.C.    February 2021 General Description Of Improvements Held Sufficient Failure of the plaintiff to include in the mortgage foreclosure sale notice detailed information about the improvements on the property does not constitute such a failure in the notice…

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7th Circuit Hands Down New Rules On Standing

Sharp Thinking No. 192  ___   Perspectives on Developments in the Law from Sharp-Hundley, P.C.   __   January 2021 7th Circuit Hands Down New Rules On Standing By John T. Hundley, Sharp Thinking Editor Dramatic changes in litigation under the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. (FDCPA) – and probably in federal…

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Crack Develops In Rule Against Divorce Contingent Fees

Happy Holidays! Sharp  Thinking No. 191  Perspectives on Developments in the Law from Sharp-Hundley, P.C.  December 2020 Crack Develops In Rule Against Divorce Contingent Fees The rule against contingency fees in marriage dissolution matters may be crumbling. That’s the implication from a recent decision from the Appellate Court in Chicago.  Grund & Leavitt, P.C. v….

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High Court Reaffirms Successor Liability Rule

SharpThinking No. 190  Perspectives on Developments in the Law from Sharp-Hundley, P.C.  November 2020 High Court Reaffirms Successor Liability Rule By John T. Hundley, Sharp Thinking Editor Illinois’ traditional doctrine on corporate successor liability – not the federal doctrine on that subject – applies to claims arising under the Illinois Human Rights Act (775 ILCS…

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Court Tells Standards For E-Filing Error Decisions

Litigation Law Roundup Sharp  Thinking No. 189   Perspectives on Developments in the Law from Sharp-Hundley, P.C.   October 2020  Court Tells Standards For E-Filing Error Decisions The Appellate Court in Chicago has given guidance on what constitutes “good cause shown” in seeking relief when a court clerk’s rejection of an e-filing makes a document untimely. Acting…

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Attacks On Void Judgment Rule Continue Apace

Mortgage Law Roundup Sharp  Thinking No. 188 _Perspectives on Developments in the Law from Sharp-Hundley, P.C. _ September 2020 Attacks On Void Judgment Rule Continue Apace By John T. Hundley, john@sharp-hundley.com Attacks on the principle that a void judgment may be attacked at any time continue apace in the Appellate Court’s Second District. In April,…

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Intent To Surrender In Bankruptcy Yields All Rights: Court

Bankruptcy Law Roundup   Sharp Thinking No. 187    Perspectives on Developments in the Law from Sharp-Hundley, P.C.     September 2020  Intent To Surrender In Bankruptcy Yields All Rights:  Court The proposition that void judgments may be attacked at any time presumes that the judgment is being attacked by one with a valid interest in…

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One-Year Statute Controls TILA Rescission Suit

Banking Law Roundup Sharp  Thinking No. 186  Perspectives On Developments In The Law From Sharp-Hundley, P.C.  August 2020 One-Year Statute Controls TILA Rescission Suit A debtor’s right to file suit to rescind a mortgage under § 1635 of the federal Truth-In-Lending Act (“TILA”) (15 U.S.C. § 1635) should be subject to a one-year statute of…

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Court Limits Specific Jurisdiction Doctrine

Litigation Law Roundup Sharp   Thinking No. 185   Perspectives on Developments in the Law from Sharp-Hundley, P.C.   July 2020 Court Limits Specific Jurisdiction Doctrine An Illinois court may not exercise specific personal jurisdiction over out-of-state defendants on behalf of out-of-state plaintiffs where the claims at issue do not “arise out of,” or “relate to,” the defendants’…

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High Court Affirms Restore Decision; Holding Unclear

Focus On Contract Law Sharp  Thinking No. 184   Perspectives on Developments in the Law from Sharp-Hundley, P.C.    July 2020 High Court Affirms Restore Decision; Holding Unclear By John T. Hundley, john@sharp-hundley.com The Illinois Supreme Court has affirmed the Appellate Court’s decision in Restore Constr. Co. v. Bd. of Ed. of Proviso Tp. H.S. Dist….

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Appellate Court Tells Privilege Waiver Rules

SharpThinking No. 183    Perspectives on Developments in the Law from Sharp-Hundley, P.C.     June 2020 Appellate Court Tells Privilege Waiver Rules By John T. Hundley, 618-242-0200, john@sharp-hundley.com             Selby v. O’Dea, 2020 IL App (1st) 181951, discussed on other points in Sharp Thinking No. 182 (May 2020), looks to…

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Courts Crack Down On Summary Judgment Affidavits

SharpThinking No. 182   Perspectives on Developments in the Law from Sharp-Hundley, P.C.     May 2020 Courts Crack Down On Summary Judgment Affidavits By John T. Hundley, John@sharp-hundley.com Litigators frequenting Illinois state courts had best beware: the requirements for affidavits supporting and opposing motions for summary judgment increasingly are being interpreted strictly. That’s the message being…

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Court Issues Primer On Lis Pendens

Real Estate Roundup SharpThinking No. 180   Perspectives on Developments in the Law from Sharp-Hundley, P.C.    April 2020 Court Issues Primer On Lis Pendens              By John T. Hundley, 618-242-0200, john@sharp-hundley.com The Appellate Court’s Third District has issued a valuable primer on the theory and use of the doctrine of…

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Two E-Mails Sufficient To Invoke Specific Jurisdiction

Litigation Law Roundup SharpThinking No. 179   Perspectives on Developments in the Law from Sharp-Hundley, P.C.   April 2020 Two E-Mails Sufficient To Invoke Specific Jurisdiction Two emails sent into Illinois from outside the state were sufficient contacts to force the sender to defend a defamation lawsuit in Illinois, a panel of the Appellate Court’s Third District…

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Separate Series Status Must Be Asserted Promptly

Corporate Law Roundup SharpThinking No. 181     Perspectives on Developments in the Law from Sharp-Hundley, P.C.    April 2020 Separate Series Status Must Be Asserted Promptly By John T. Hundley, 618-242-0200, john@sharp-hundley.com A series limited liability company (“LLC”) may not rely on a conclusory assertion of its separate existence and may be estopped from asserting…

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Realty “Flippers” May Be Liable Under Consumer Fraud Act

Real Estate Roundup SharpThinking No. 178  Perspectives on Developments in the Law from Sharp-Hundley, P.C.   March 2020 Realty “Flippers” May Be Liable Under Consumer Fraud Act While an individual who sells his or her own residence to another individual generally is not subject to Illinois Consumer Fraud & Deceptive Business Practices Act, 815 ILCS 505,…

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Court Limits Liberal Citation Remedies

SharpThinking No. 177  Perspectives on Developments in the Law from Sharp-Hundley, P.C.   February 2020 Court Limits Liberal Citation Remedies By John T. Hundley, john@sharp-hundley.com An Appellate Court panel in Chicago has limited sharply the use of citations to discover assets to apply remedies provided by the garnishment statute. Contrasting the garnishment statute (735 ILCS…

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Default, Acceleration Terms Are Critical Condition Precedents

Mortgage Law Roundup Sharp  Thinking No. 176   Perspectives on Developments in the Law from Sharp-Hundley, P.C.   January 2020 Default, Acceleration Terms Are Critical Condition Precedents By John T. Hundley, 618-242-0200, john@sharp-hundley.com Creditors and their collection counsel are being advised to read promissory notes and mortgages closely before filing suits thereon as a result of…

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Chapter 13 Plan Confirmation Creates Judicial Estoppel

Happy Holidays! Sharp  Thinking No. 175    Perspectives on Developments in the Law from Sharp-Hundley, P.C.   December 2019 Chapter 13 Plan Confirmation Creates Judicial Estoppel Confirmation of a Chapter 13 plan is a sufficient benefit to estop the bankruptcy debtor from prevailing on an inconsistent position taken in state-court litigation the existence of which was…

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Municipality May Be Liable In Quantum Meruit Even Though Contract Is Void In Law, Court Says

Happy Thanksgiving Sharp Thinking No. 174     Perspectives on Developments in the Law from Sharp-Hundley, P.C.    November 2019 Municipality May Be Liable In Quantum Meruit Even Though Contract Is Void In Law, Court Says A municipal body can be held liable under the equitable doctrines of quantum meruit and implied in law contracts even…

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Refi Mortgage Can Take Priority Of Prior Mortgage

Banking Law Roundup SharpThinking No. 173    Perspectives On Developments In The Law From Sharp-Hundley, P.C.      October 2019 Refi Mortgage Can Take Priority Of Prior Mortgage                                         By John T. Hundley, John@sharp-hundley.com, 618-242-0200 A mortgage…

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Court May Not Hold Creditor In Contempt If There Is “Fair Ground of Doubt” As To Legality Of His Acts

Bankruptcy Law Roundup Sharp  Thinking No. 172  Perspectives on Developments in the Law from Sharp-Hundley, P.C.    September 2019 Court May Not Hold Creditor In Contempt If There Is “Fair Ground Of Doubt” As To Legality Of His Acts A court may not hold a creditor in civil contempt for violating a bankruptcy discharge order…

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Laymen May Not Open Decedent’s Estate Without Lawyer

Litigation Law Roundup Sharp Thinking No. 171    Perspectives on Developments in the Law from Sharp-Hundley, P.C.    August 2019 Layman May Not Open Decedent’s Estate Without Lawyer A layman may not represent the legal interests of a decedent’s estate, the majority of a panel in the Appellate Court in Chicago has held. Ruling in…

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Court Holds Strict Test For Association Capacity

It’s a common practice in transactions involving big corporations and large sums of consideration.
To alleviate concerns about whether a party has authority to conduct the transaction, sophisticated
parties often ask for an opinion of counsel that the opposing entity has such authority and that all
required prerequisites have been met.

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7th Circuit Breathes New Life Into Debt Collection Act’s Bona Fide Error Defense

The bona fide error defense – a long standing but rarely successful part of the Fair Debt Collection Practices Act (15 U.S.C. §§ 1692 et seq.) – had new life breathed into it by the Seventh U.S. Circuit Court of Appeals last month.

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7th Circuit Upsets Settled Thinking On Bankruptcy, Foreclosure Interplay

Seemingly settled practice regarding the interplay of bankruptcy and foreclosure law was turned on its head late last month when the U.S. Court of Appeals for the Seventh Circuit held that a state court in a foreclosure case has jurisdiction and authority to enter a deficiency judgment against a debtor with a pending bankruptcy.

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Court Has No Discretion On Wage Withholding

The wage deduction provisions of the Illinois Code of Civil Procedure leave a circuit court with no discretion to deny a request for a wage deduction order on grounds of extreme hardship, a panel of the Appellate Court in Chicago held recently.

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No Five-Day Notice Doesn’t Mean No Jurisdiction

Just as decades of apparently settled law governing post-judgment collection methods were turned on their heads by a decision of the Appellate Court in Chicago last fall (see Sharp Thinking No. 160 (Oct. 2018)), decades of apparently settled law governing eviction jurisdiction were upended by that same court just as fall turned to winter last month.

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Court Always Has Jurisdiction To Enforce Discovery Order

A circuit court has jurisdiction to enforce its discovery orders despite the case having been closed and the usual 30-day jurisdictional period having passed, a panel of the Appellate Court’s Second District ruled recently.

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Course-Of-Dealing Doctrine Applies In Non-UCC Cases

The use of course-of-dealing practices to define contractual commitments is statutorily established in sales-of-goods cases governed by the Uniform Commercial Code (810 ILCS 5/1-303(d)-(g)), but may a party rely on such evidence in a case involving services not covered by the UCC?

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Appellate Panel Rewrites Theory For Standards On Garnishment Summonses

Decades of apparently settled law governing post-judgment collection methods apparently were turned on their heads by a decision of the Appellate Court in Chicago last month.

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Corporate Officers Have No Duty To Second-Guess Board Of Directors

Officers of a bank holding company “had no right – much less a duty – to pursue a course of action that directly contradicted” their Board of Directors’ “clear instructions.”

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Officers Have No Fiduciary Duties In Manager-Managed LLCs, Court Says

In manager-managed limited liability companies, the manager “alone” is responsible for the “management and conduct of the company’s business,” and he, “exclusively,” decides any matter relating to the company’s business.

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Court Without Jurisdiction Can’t Backdate Post-Trial E-Filed Motion

Neither Supreme Court Rule 183 nor the rules on e-filing permit a court to backdate a filing when the lapse of the 30-day period under Supreme Court Rule 303 and 735 ILCS 5/2-1203(a) means that the Court has lost jurisdiction.

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No Special Rep Required When Deceased Mortgagor Has Transferred All Interest

It is not necessary for the court in a foreclosure action to appoint a special representative for a deceased mortgagor when that mortgagor transferred all interest in the property to another before his death, a panel in the Appellate Court in Chicago has concluded.

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No Need For Repeated Futile Attempts At Service, Court Says

A process server who is told flatly by the defendant’s spouse that the defendant does not live at an address need not make repeated attempts to serve the defendant at that address, a panel of the Appellate Court in Chicago has ruled.

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Court Distinguishes Perfection From Enforcement In Assignment-Of-Rent Cases

Applicants for the bar exam routinely are taught to distinguish between the creation of a security interest and its perfection, and that the resolution of competing claims will depend upon when perfection occurs.

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7th Circuit Speaks On Concurrent Conflict Waivers

Client waivers of concurrent conflicts of interest are ineffective if a lawyer cannot reasonably believe that he will be able to provide competent and diligent representation to each affected client, the Seventh U.S. Circuit Court of Appeals has held.

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Confidentiality Clauses Must Meet Public Policy Tests

“A bargain to refrain from disclosing to a third person, to whom a duty of disclosure exists, information of value or interest to him is illegal.”

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Installment Sales Act Provides New Protections For Some Purchasers By Contracts For Deed

In newly-enacted legislation that went into effect January 1, 2018, additional protections were added for individuals who purchase their home on an installment sales contract.

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Dina Overturned On Mortgagee Registration Issue

First Mortgage Co. v. Dina, 2014 IL App (2d) 130567, holding that the issuance of a home mortgage by an entity that is not registered under the Residential Mortgage License Act (205 ILCS 635) voids the mortgage (see generally Sharp Thinking No. 116 (June 2014)), has been overturned.

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“Mere Continuation” Doctrine Requires Common Ownership

The absence of significant common ownership between the alleged predecessor and successor dooms a creditor’s attempt to hold the latter responsible for the debts of the former under the “mere continuation doctrine,” a panel of the Appellate Court in Chicago has held.

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Citation Respondents Can’t Lend To Judgment Debtor’s Entities

Financial institutions subject to citations to discover assets had best not enter into loan agreements
with entities affiliated with the judgment debtor until the citation proceedings have been resolved

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Door Opens For Condoning Respondents’ Snubbing Of Citations To Discover Assets

The Appellate Court in Chicago last month issued an opinion that sets the stage for widespread
condoning of supplementary proceeding respondents’ ignoring of supplementary proceedings papers.

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Appellate Panel Calls For More Sanctions

Believing that “frivolous motions or appeals are more likely to be found in the mortgageforeclosure context” than in other areas of the law, a panel in the Appellate Court’s Third District has
issued a call that “it is incumbent upon the courts, both trial and appellate, to impose sanctions for . . .
frivolous conduct designed to help defendants remain in their home, with little regard for the law.”

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In Growing Trend, Illinois Court Imposes Sanctions For Filing Bankruptcy Papers Without Actual Signature

No circumstances ever justify an attorney filing a bankruptcy petition, including its related schedules and statement of financial affairs, “without first obtaining a debtor’s actual signature on the documents,” a bankruptcy judge from the Central District of Illinois recently held

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Mortgage Loan Acceleration Provisions Require Strict Compliance, Court Rules

Mortgagees and their counsel had better pay close attention to the acceleration terms of their
mortgages before foreclosing as a result of a recent decision of the Appellate Court in Chicago.

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Three-Year Statute Applies To Misapplied Deposits

The three-year statute of limitations of Uniform Commercial Code § 4-111 (810 ILCS 5/4-111) applies
to a lawsuit pleaded as a common-law breach-of-contract case if the claim is related to banking transactionsinvolving negotiable instruments, a panel of the Appellate Court in Chicago has reiterated.

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Successor Agents Do Not Owe Fiduciary Duties To Principal Until They Take Office

The Appellate Court recently confronted a novel issue over whether a successor agent under apower of attorney owes a fiduciary duty to the principal before he becomes the attorney-in-fact.

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Appeals Court Reins In CFPB

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit dealt a significant blow to the Consumer Financial Protection Bureau (CFPB) last month in a 101-page opinion that overturned the bureau’s enforcement action against PHH, a New Jersey mortgage lender,

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Former Defendants May Be Respondents In Discovery

Nothing prevents an amended complaint from naming as respondents in discovery persons who had been named as defendants in the original complaint, according to a 2-1 decision of a panel of the Illinois Appellate Court in Chicago.

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Excess Litigation Results in Holding Fee Award Non-Dischargeable in Bankruptcy

The Seventh Circuit U.S. Court of Appeals has ruled that attorney fees ordered to be paid by one spouse to the other spouse’s attorney in a domestic proceeding, as a result of that party’s unreasonable approach to litigation, are non-dischargeable in bankruptcy.

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Courts Split On Whether Guarantors Are “Applicants” Under Credit Opportunity Act

Rejecting a contrary Federal Reserve Board regulation and cases thereunder, the Eighth Circuit U.S.
Court of Appeals has held that it does not violate the Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.)
(ECOA) for a lender to require wives to guarantee debts of their husbands’ businesses.

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Intent To Benefit Certain Creditors Sufficient For Fraud

The common intent to benefit friendly creditors by not listing them in one’s bankruptcy papers is sufficient intent to support denial of a bankruptcy discharge, the Seventh Circuit U.S. Court of Appeals has ruled.

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Rule 277(f) Provides Affirmative Defense In Citation Cases

The Illinois Appellate Court has upheld a trial court’s decision allowing a defendant to use the termination language of Supreme Court Rule 277(f) as an affirmative defense against a judgment creditor in supplementary proceedings.

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“In Rem” Deficiency Judgments: Risky Nonsense?

It’s a curious practice: Foreclosure plaintiffs file a complaint seeking a personal deficiency judgment against the mortgagor, but provide in the order confirming sale that the deficiency judgment is “in rem”. In rem, of course, means that the judgment is against the thing – the property which, by the terms of the order of confirmation, is transferred to the purchaser at the foreclosure sale (or its assignee).

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Court Issues Key Decision On “Merger” Clauses

Contractual ambiguity may allow consideration of extrinsic evidence to clarify those portions of “integrated” contracts that are unclear, but it does not open the flood gates for consideration of parol evidence on other points or to establish entirely new terms.

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Plaintiff Must Show Due Inquiry Before Publication

Three attempts to serve process at approximately the same hour over a four-day period do not “demonstrate a well-directed effort to ascertain the whereabouts of defendant by inquiry ‘as full as circumstances permit’” and hence fail the law’s preconditions for resort to publication service, a panel of the Appellate Court in Chicago has ruled.

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“Void After 90 Days” Legend On Check Does Not Constitute Valid “Stop Payment” Order, Court Rules

A “void after 90 days” notation on a check does not constitute a stop-payment order under Uniform Commercial Code (UCC) § 4-403(a) (810 ILCS 5/4-403(a)) and “is not a reasonable means by which to direct a bank to stop payment on a check”, the Appellate Court in Chicago has ruled.

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Land Trust Cannot Rescind Under TILA

A land trust which is not an obligor on a loan but which gave a mortgage to secure the loan cannot seek rescission under the Truth In Lending Act, 15 U.S.C. § 1601 et seq. (TILA), a panel in the Appellate Court’s First District has held.

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Extra Burdens Apply For Breach Of Confidentiality Agreement

A plaintiff claiming breach of a confidentiality agreement cannot merely rely on the existence of such an agreement and its breach, the U.S. Court of Appeals for the Seventh Circuit has held.

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Proof of Grace-Period Notice Required

A plaintiff seeking to foreclose on a single-family owner-occupied residence should specifically allege
that the 30-day grace-period notice of 735 ILCS 5/15-1502.5 was sent, and had better attach proof of that
sending to the complaint.

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Minimizing “Minimum Contacts,” At Least For Those That Are “Closely Related”

Courts in Illinois may exercise personal jurisdiction over a plaintiff or defendant by enforcing a forum selection clause against them, even though they were not a signatory to the contract containing the clause, where it was closely related to the dispute such that it became foreseeable that the non-signatory would be bound, the Appellate Court’s First District has held.

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Trial Courts Must Explain Rule 137 Sanction Denials, Appellate Panel Holds

A trial judge must provide an explanation for a denial of a motion for sanctions brought pursuant to Illinois Supreme Court Rule 137, the Appellate Court’s Fifth District has held.

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“Mutual Agreement To Terminate” Clause Unenforceable

A sales representative contract which was terminable only by the mutual agreement of the parties was a contract of indefinite duration and hence terminable at will, a panel of the Appellate Court in Chicago has ruled.

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Buyers Cannot Waive Incomplete Condition Disclosures

Illinois home buyers do not waive their rights under the Residential Real Property Disclosure Act (765 ILCS 77) by closing the transaction despite omissions on sellers’ disclosure form, a panel in the Appellate Court’s Fourth District has held.

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Violation of Mortgage License Act Voids Mortgage

A mortgage made by an entity that lacked authorization to conduct such business under the Residential Mortgage License Act (205 ILCS 635) is void as against public policy, a panel in the Appellate Court’s Second District has held.

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Response Deadline Is 32 Days For Mailed Requests to Admit

When requests to admit are served by mail, the four-day effectiveness provision of Illinois Supreme Court Rule 12(c) must be taken into account in determining when responses must be served to avoid binding admission of those requests, a panel in the Appellate Court’s First District has held.

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2014 Employee Classification Act Amended, Sustained

The Employee Classification Act (820 ILCS 185) has been amended to address the defects found
in Bartlow v. Shannon, 399 Ill.App.3d 560 (5th Dist. 2010), and, as amended, has been sustained by
the Illinois Supreme Court. Bartlow v. Costigan, 2014 IL 115152.

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Shareholder, Officer Status Not Required To Pierce Corporate Veil

Neither share ownership nor officer status is required for Illinois courts to apply the doctrine of piercing
the corporate veil, a panel in the Appellate Court’s First District held this month.

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“Predatory” Lending May Prevent Foreclosure

Predatory lending may give rise to a defense preventing foreclosure on a mortgage loan, the Supreme
Court of Arkansas held recently.

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Exempt Assets Can’t Be Surcharged Due To Debtor Misconduct

A bankruptcy court may not order that a debtor’s exempt assets be used to pay administrative expenses incurred as a result of the debtor’s misconduct, the U.S. Supreme Court has held.

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Appellate Court Issues Valuable Primer On Liquidated Damages Clauses in Contracts

An Appellate Court panel in Chicago has issued a valuable primer on when liquidated damages clauses will be deemed permissible and impermissible under Illinois law.

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Crime-Fraud Rule May Apply Despite Lawyer Innocence

A trial court need not conduct an in camera review of the subject communications in order to hold that they are subject to the crime-fraud exception to the attorney-client privilege, the Illinois Supreme Court has reiterated.

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Party Charged With Reading Actual Recorded Document

A party must read the actual notice of lis pendens and may not rely upon an erroneous summary
thereof provided by a recorder of deeds, a panel in the Appellate Court’s First District has held.

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§ 2-1301(e) Applies Until Confirmation Motion Is Filed

A mortgagor who is properly served, who receives notices of the default, the judgment of foreclosure and the sale, who participates in the proceedings, but who waits 10 months after the default judgment before seeking to vacate same and to raise pleading defects, may not have the judgment and sale vacated even under the liberal rules of 735 ILCS 5/2-1301(e), the Illlinois Supreme Court held recently.

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Collective Liability Complaint Strikes Out

A complaint which alleges wrongs against multiple defendants collectively, without details about who did what, fails the requirement of plausibility which Supreme Court cases have imported into Federal Rules of Civil Procedure 12(b)(6), the U.S. Court of Appeals for the Seventh Circuit has held.

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Citation Respondent May Rely on Face of Un-Freeze Order

A respondent that has frozen an account in response to a citation to discover assets is entitled to unfreeze that account upon receipt of an order “the most reasonable reading of which” unfreezes the account, the U.S. Court of Appeals for the Seventh Circuit has held.

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Organization’s Financial Difficulty Doesn’t Insulate Officers

Just because an organizational employer is in financial trouble does not absolve its managers of potential personal liability under the Illinois Wage Payment and Collection Act, 820 ILCS 115 (“IWPCA”), if they “have discretion to pay plaintiff but cho[o]se to allocate resources elsewhere,” according to a recent decision of the Appellate Court’s Second District.

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Divorce Retainers May Be Diverted To Opponent

The Illinois Supreme Court has affirmed that in a dissolution-of-marriage action, a trial court may order that advance payment retainer funds held by one party’s attorney be turned over to opposing counsel as interim attorney fees.

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Bankruptcy Intake Form Held Not Privileged

Look for increased attempts to discover those intake forms used by bankruptcy practitioners – and also fee information for all lawyers – as a result of a recent decision by the Seventh Circuit U.S. Court of Appeals.

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Bankruptcy Discharge May Justify HAMP Re-review, Sale Suspension

A mortgagee’s violation of 735 ILCS 5/15-1508(d-5) and of the Housing Affordable Mortgage Program
(“HAMP”) rules may require denial of confirmation of a foreclosure sale held in violation of those rules, a
panel in the Appellate Court’s Second District has held.

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Warranty Deed in Mortgage Rescue Scam May Have Been An Equitable Mortgage, Court Says

A “mortgage rescue” victim’s argument that an apparent warranty deed should be construed as an equitable mortgage should have gone forward to a full trial, a panel of the Appellate Court’s First District has held.

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ISBA Suggests Duty to Make “Noisy Withdrawal

Mere withdrawal when a client persists in utilizing false material evidence, without disclosure thereof to the tribunal in a civil matter, ordinarily is improper even if the lawyer had no role in creating or presenting the false evidence, an Illinois State Bar Association committee has opined.

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Suit Against Insurer Tossed After Joint Payee Forges Check

A mortgagee who was entitled to a property insurance payment may not sue the insurer on the policy after the insurer’s payment check is fraudulently endorsed by a co-payee, a panel in the Appellate Court’s First District has held.

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Judicial Estoppel Doctrine Is Flexible, 7th Circuit Emphasizes

Because judicial estoppel is concerned with protecting the integrity of the courts from the appearance and reality of manipulative litigation conduct, courts considering that doctrine have the “freedom to consider the equities of an entire case” and can even impose the estoppel where the party estopped and the party which committed the underlying conduct are not perfectly identical, the U.S. Court of Appeals for the Seventh Circuit has held

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Publication Service on Known Incompetent Violates Due Process

Service of process upon a person known to have been adjudicated incompetent to manage his affairs violates due process, a panel in the Appellate Court’s First District has held.

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Defalcation” Exception to Bankruptcy Discharge Requires At Least Gross Recklessness, Court Holds

The term “defalcation” in § 523(a)(4) of the Bankruptcy Code includes a culpable state of mindrequirement involving knowledge of, or gross recklessness in respect to, the improper nature of the
fiduciary behavior, the U.S. Supreme Court held recently.

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Wage Payment Act Imposes No Duty To Make More Capital Contributions To Failing Business

A business owner does not have a duty to make voluntary capital contributions to his financially-troubled business in order to avoid personal liability for its wage payment obligations, a bankruptcy judge in Northern Illinois has held.

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Fast Track” Foreclosure Bill Becomes Law

Illinois residential real estate that has been abandoned now is subject to “fast track” judicial foreclosure procedures aimed at minimizing the blight effects which abandoned houses have been having during the usual foreclosure process.

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Verify Agent’s Authority When Making Contract

A party who fails to verify that a purported corporate representative has authority to make a contract on the corporation’s behalf assumes a risk that he does not under a recent decision by a panel of the Appellate Court in Chicago.

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Cross-Collateralization Clauses in Commercial Mortgages Are Enforceable, 7th Circuit Rules

Those cross-collateralization clauses common in commercial mortgages are enforceable and put subsequent lenders on inquiry notice of other debts brought within the scope of the mortgage by such clauses, the Seventh Circuit U.S. Court of Appeals ruled last week.

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Insufficient Efforts Void Publication Service

Insufficient efforts to locate and serve the defendant before seeking and effecting publication service may be attacked by that defendant even after judgment by default has been entered, a panel in the Appellate Court’s Third District has ruled.

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Supreme Court Adopts New Foreclosure Rules

The Illinois Supreme Court has issued three new rules aimed at mitigating abuses and
uncertainty in mortgage foreclosures.

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Not All Check Signers Are Fiduciaries, Court Says

Not everyone authorized to sign a check is a fiduciary for purposes of the Uniform Fiduciaries Act (760 ILCS 65), the Seventh Circuit U.S. Court of Appeals ruled last month.

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Quitclaim Buyer May Not Claim Breach of Contract

A buyer of property by quitclaim deed generally may not claim breach of contract when it learns that the seller did not have fee simple title, a panel in the Appellate Court’s Third District has held.

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Court Levies Harsh Sanctions for Filing Bankruptcy Papers Without Actual Signature

There are no circumstances that would ever justify an attorney filing a bankruptcy petition, the
supporting schedules, or the debtor’s Statement of Financial Affairs (“SOFA”) without first obtaining
the debtor’s actual signature thereto, the chief judge of a Texas bankruptcy court has held.

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Guaranty Triggered by Resistance to Foreclosure Is Enforceable, Court Says

By John T. Hundley, Jhundley@lotsharp.com, 618-242-0246
A provision making obligors personally liable if they resist foreclosure on an otherwise non-recourse obligation is enforceable, a panel of the Illinois Appellate Court in Chicago has held.

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Foreclosure Judgment Not Final And Appealable, High Court Says

A mortgage foreclosure judgment generally is a “final order” but not a “final and appealable” order, the Illinois Supreme Court said late last month.

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Price Alone No Basis To Void Judicial Sale, Court Holds

Inadequacy of the sales price, standing alone, is not a sufficient reason to deny confirmation of a judicial sale, a panel in the Appellate Court in Chicago held late last month.

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Three-Year Statute Governs Conversion of Check

Conversion and negligence claims against a bank, arising from a lawyer’s forgery of a client’s
signature to a settlement check, are governed by the three-year statute of limitation of 810 ILCS 5/3-118(g), a panel in the Appellate Court’s Fifth District has held.

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Judicial Estoppel Doctrine Continues To Evolve

The doctrine of judicial estoppel, which has become one of the most potent weapons against bankruptcy fraud (see Sharp Thinking No. 57 (February 2012), continues to evolve in the nation’s federal courts.

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No “Subject Matter Waiver” of Privilege From Disclosure in Business Transaction

The doctrine of “subject matter” waiver of privilege does not apply to the extra-judicial disclosure of attorney-client communications not thereafter used by the client to gain an adversarial advantage inlitigation, the Illinois Supreme Court held late last month.

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Illinois Statute on Citations to Discover Assets Is Amended

Illinois’ statute on citations to discover assets (see Sharp Thinking No. 1 (Nov. 2007), No. 68 (July
2012)) has been significantly amended.

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Assembly Increases Sanctions for Visitation Violations

The General Assembly has increased the sanctions for custodial parents who violate visitation orders.
Effective August 21, 2012, the legislature added to 625 ILCS 5/7-701 (a statute previously reserved
for parents who failed to pay child support) language making the violation of a visitation order grounds fordriver’s license suspension. In P.A. 97-1047, it also toughened other enforcement mechanisms for
visitation abuse as set forth in 750 ILCS 5/607.1.

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Failure to File Sworn Response in 28 Days Yields Binding Admission

Another panel of the Illinois Appellate Court has come down on the side of putting teeth into Illinois Supreme Court Rule 216 on requests to admit (see Sharp Thinking No. 39, Nov. 2010).

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Forbearance Agreements Are Enforceable, Court Rules

Forbearance agreements, including waivers of defenses and other concessions which the lender
sought in exchange for forbearing, are legally enforceable, even against consumers, a panel of the
Illinois Appellate Court has ruled.

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Decision Shows FDIC Power to Ban Officials from Banking

The Federal Deposit Insurance Corp. (FDIC) has broad powers to banish bank officials from the industry, a recent decision by the United States Court of Appeals in Chicago demonstrates.

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New Corporation Sometimes May Be Held Liable for Old Corporation’s Debts

A court may hold that a new corporation is liable for the debts of a predecessor corporation where the
common shareholders are sufficient to exercise control of the new corporation, an Appellate Court panel in Chicago has ruled, rejecting an argument that the ownership of the two corporations had to be identical.

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Appellate Court Moves Toward More Uniform Approach On Burden of Proof on Non-Custodial Parent Visitation

The Fourth District of the Illinois Appellate Court has reversed its prior holding regarding the
burden of proof for non-custodial parents’ visitation rights and moved toward a more uniform
interpretation across the state on that issue.

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Spouse’s Duty to Pay Opponent’s Attorney Fees May Be Held Non-Dischargeable in Bankruptcy

Attorney fees ordered to be paid by one spouse on behalf of the other are non-dischargeable in Chapter 7 bankruptcy proceedings, a bankruptcy judge in Central Illinois held recently

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Use of Credit Card Accepts Previously-Communicated Standard Terms

A credit card holder who uses the card after receipt of original or amended standard terms thereby agrees thereto for purposes of that transaction, an Appellate Court panel ruled recently.

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Retainer Moneys May Be Diverted to Opponent In Marriage Dissolution Actions, Court Holds

An attorney may be forced to turn over to the opponent retainer moneys received in a dissolution-of-marriage action, regardless of the fee structure arranged with the client, a panel of the Illinois Appellate Court ruled last
month.

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Defendant Must Raise “Standing” Challenge Early or It Is Waived

Defendants in mortgage foreclosure cases must raise challenges to the plaintiff’s standing early in the
litigation or those challenges are waived, a panel in the Illinois Appellate Court has reiterated. Rejecting challenges to Mortgage Elec. Reg. Systems, Inc. v. Barnes, 406 Ill.App.3d 1 (2010),

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Violation of Citation Justifies Serious Sanctions

Violations of the restraint provisions of citations to discover assets justified a finding of contempt of
court and the appointment of a receiver to investigate the defendant-judgment debtors’ financial affairs, a panel of the Illinois Appellate Court has held.

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State Act Permits Suit Against Debt Collectors

On its face, the Illinois Collection Agency Act (225 ILCS 425) threatens violators with significant
criminal, administrative and other sanctions for violations of the myriad provisions summarized in Sharp
Thinking Nos. 65 and 66 (June 2012). Less obvious, but equally real, is the threat of civil lawsuits by the
debtors subject to collection activity.

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State Act Limits Debt Collector Misconduct

In addition to requiring registration with the Department of Financial & Professional Regulation (see harp Thinking No. 65 (June 2012)), the Illinois Collection Agency Act (225 ILCS 425) contains a plethora
of provisions regulating collection agencies’ conduct. Some of these regulate the agency’s relations with its principal/creditor, but others regulate how agencies may go about attempting to collect the debts assigned to them. We will focus on the latter as they are more likely to result in claims of concern to Sharp Thinking readers.

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Collection Agency Non-Registration Voids Judgment

A judgment obtained by a collection agency that sues in its own name without registering under the Collection Agency Act (225 ILCS 425) is void, an Illinois Appellate Court panel has ruled. However, when registered and holding a written assignment separate from the contract listing the debt with the agency, a
collection agency may sue to collect in its own name, even though it is only an assignee for collection,
another panel has ruled.

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FDCPA Prohibits Wide Range of Misconduct

Harassment, Abuse, Misleading Representations, “Unfair Practices” All Prohibited

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Liberal Damage Rules Apply in FDCPA Suits

As noted in the last two issues of Sharp Thinking, the Fair Debt Collection Practices Act (15 U.S.C.
§§ 1692 et seq.) (“FDCPA”) contains numerous provisions which threaten liability for debt collectors in
the collection of consumer debt. In this issue we address remedies for violations of that Act and
affirmative defenses which can allow collectors to prevail despite a violation.

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Debt Collection Law Often Misunderstood

Individuals who are mistakenly dunned by debt collectors have standing to seek relief under the
Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. (“FDCPA”), a federal appeals court ruled recently. However, debts not arising from consensual consumer transactions for goods or services are
not “debts” covered by that act, another appeals court has ruled.

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Affordable Mortgage Program Is Enforceable Through State Causes of Action, Court Rules

The Obama Administration’s Home Affordable Mortgage Program (“HAMP”) does not contain a
federal private right to sue for violation of its terms, but it also does not preempt otherwise viable state law claims which incorporate terms and standards of the federal program, a federal appeals court in
Chicago ruled last month.

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“Short Sale” Provision Adopted For Foreclosure Proceedings

The Illinois Mortgage Foreclosure Law, 735 ILCS 5/15-1101 et seq . (“IMFL”), has been amended to
require mortgagees to say aye or nay to requests that they approve “short sales” of residential real
estate that is in foreclosure.

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Posner Pens a Primer on Promissory Fraud

The murky waters surrounding alleged “promissory fraud” and “letters of intent” received
noteworthy explications from the U.S. Court of Appeals for the Seventh Circuit recently.

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Judicial Estoppel Proves Potent Weapon Against Bankruptcy Fraud

The judicial estoppel doctrine, which has emerged as one of the most potent weapons against bankruptcy fraud in federal courts, finds equally fertile ground in Illinois’ state courts, a recent Appellate Court decision shows

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Broad Effect of Property POAs Called Into Question

The effect of broad authority-granting clauses in powers of attorney (“POAs”) for property has been called into question by a recent decision of the Illinois Appellate Court.

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Reliance on Automated Database Held Sanctionable

Bankruptcy Rule 9011 is modeled after Federal Rule of Civil Procedure 11 and is “essentially
identical” to Rule 11. In re Park Place Assocs., 118 B.R. 613, 616 (Bankr. N.D. Ill. 1990). The rule
provides that by filing a document with the court a party is certifying that to the best of that person’s knowledge, information, and belief, formed
after an inquiry reasonable under the circumstances, that the allegationsand other factual contentions have evidentiary support and the legal theories expounded therein have merit. Rule 9011.

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Lawyers Tagged With Losses For Accepting Checks Later Shown To Be Counterfeit

Lawyers who accept checks and then promptly wire-transfer part of the funds to clients or others out of
the country are exposed to substantial losses, a series of recent federal court cases in Northern Illinois
demonstrates.

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Bankruptcy Courts Prove Surprisingly Hostile to “Defense of Marriage” Act

The federal “Defense of Marriage” Act, Pub. L. 104-199, 110 Stat. 2419, codified in pertinent part at 1
U.S.C. § 7 (“DOMA”), has received an unpleasant welcome from an unexpected quarter – the nation’s
bankruptcy courts.

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Sharing Information in Business Transactions May Result in Waiver of Attorney-Client Privilege

Persons who share privileged information with others as part of a business transaction may find that they have waived the privilege as to all communications on the subject matter of the shared information, a
panel of the Illinois Appellate Court ruled late last month.

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Court Expands Tort of Retaliatory Discharge

In the 30 years since the Illinois Supreme Court first recognized an action for retaliatory discharge
(Palmateer v. Int’l Harvester Co., 85 Ill.2d 124 (1981), that tort has had a checkered past.

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ABCs: Court Issues a Primer on Assignments for Benefit of Creditors

An assignee’s claim for compensation under an Assignment for Benefit of Creditors (“ABC”) trumps even a
properly-perfected security interest under the Uniform Commercial Code (810 ILCS
5), a panel of the Illinois Appellate Court ruled recently.

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