Friday, August 28, 2009

New notice required under Mechanics Lien Act.

The Mechanics Lien Act was amended to require a new notice to homeowners in owner-occupied single-family residences. Contractors now must send homeowners written notice within 10 days after recording a lien against their property.

The amendment does not apply to subcontractors. The amendment is effective for contracts entered into after January 1, 2010.

Complete text of the amended section (770 ILCS 60/7).

Wednesday, August 26, 2009

New Home Repair and Remodeling Act case.

There are now conflicting opinions between the 1st and 4th districts as to whether the equitable remedy of quantum meruit is available under the Home Repair and Remodeling Act -- Who wants to go to the Supreme Court?

On August 10, 2009, the 1st District issued its opinion in K. Miller Construction Company, Inc. v. McGinnis (Opinion here). In that case, the homeowner, a lawyer, ordered nearly $500,000 in remodeling work to his house. The general contractor did not require a written contract. Long story short, the homeowner did not pay. The contractor sued for breach of oral contract and quantum meruit (literally, "as much as he deserves") and the trial court dismissed.

The 4th District held in Smith v. Bogard, 377 Ill.App.3d 842 (2007), that permitting a recovery in quantum meruit "would run afoul to the legislature's intent of protecting consumers, would reward deceptive practices, and would violate public policy."

However, the 1st District said that it was "unpersuaded by the reasoning" in Smith. The Court then spent nearly 40 pages explaining its reasoning before it held that quantum meruit remains an equitable remedy available under the Act. The Court explained that in a case for quantum meruit, the plaintiff is only entitled to "as much as he deserves." The defendants are allowed to present evidence concerning unfinished work, shoddy work, etc., and the plaintiff's claim would presumably be reduced accordingly. Quantum meruit is a proper avenue of recovery because the nature of the remedy itself provides ample protection against abuses the passage of the Act was meant to protect.

It should be noted that the plaintiff in K. Miller v. McGinnis was a general contractor. I believe that a quantum meruit recovery is still unavailable to subcontractors, but this case definately gives us some good points to argue.

Tuesday, August 25, 2009

Can they sue the fence company?

I'm just kidding about that one, of course. I would never advocate a lawsuit against a fence company. As most people who know me realize, I built miles and miles of fence while growing up and working for my dad's fence company. But still, it seems like the salesman for the fence company discussed below should have had a little more sense when bidding this job.

A woman in Tooele, Utah, named Paula Warr bought a model home from a company called Ivory Homes. When Ms. Warr first visited the house, it did not have a fence. She eventually negotiated a contract to purchase the house and the contract specified that the builder would provide 92 linear feet of white vinyl fence. The homebuilder then contracted with a third party fence builder, who could not get to the job prior to closing. So, the parties closed anyway, with an agreement that the fence would be installed post-closing.

Sometime later, Ms. Warr returned home from work to find that her new fence had been installed around the backyard. She began walking around the fence trying to get into the backyard, but she could not get into her backyard. There was no gate in the fence.

Now, her grass is more more than a foot tall. Her lawnmower can't fit through the kitchen and it is too heavy to lift over the fence. Her garage does not have backyard access either. "Who puts up a fence without a gate?" Warr asked. "Nobody wants to take a lawnmower through their house."

Ivory Homes says a gate was never part of the deal. A spokesperson for Ivory Homes released a statement saying that "Paula Warr's contract does have 92 lineal feet of fencing to be installed as part of the purchase agreement. However, there was no request for a gate as part of the agreement. Based on these facts, we feel that we have fulfilled our contractual obligation."

So, maybe the fence company did suggest a gate, but the homebuilder did not want to pay for one. I knew it couldn't be the fencers' fault!

Friday, August 21, 2009

Illinois Courts ....on Twitter?

It seems, everyone has some type of social networking or communication web page now days. Well leave it to the Illinois courts to keep up with the trends. Below is the link to the official Illinois Courts Twitter Page, where you can find out about new opinions, programs, and more.

Wednesday, August 19, 2009

Required Statements to Accompany Motions for Relief from Stay

Effective August 18, 2009, the Northern District of Illinois has amended the Required Statement to Accompany Motions for Relief from Stay. The new form now requires that the movant attach a payment history listing the dates and amounts of all payments received from the debtor(s) post-petition.

I had always included that information in my Motion for Relief anyway, but now it is a requirement.

Here is a link to the form in a fillable PDF.

I have also posted it to the NLB Forms Archive.

Friday, August 14, 2009

Big time.

The judge in Lehman Brother's bankrupty case has approved $55.14 million in legal fees for New York law firm Weil Gotshal & Manges. Those fees were incurred in the four month period from September 2008 through January 2009.

The awarded fees amount to about $357,000 a day for the firm, or nearly $15,000 an hour around the clock. The firm employed 490 lawyers on the case. The lead partner on the file, Harvey Miller, billed 795 hours at $950 per hour, or $755,250. The firm also billed $2.77 million in expenses. Click here for a report from the Wall Street Journal.

A “fee committee” appointed by the judge reviewed fee and expense requests and found very few issues. The committee determined only $223,262 of the fees and $75,000 of the expenses did not pass muster, most because they were inadequately described in the fee petition.

The committee also recommended that in the future further explanations were needed for charges of more than 18 billable hours in a day for one person and hotel charges exceeding $500 a day. The committee also suggested overtime and working meals be limited to $20 a person and that car services only be used after 8 p.m. and limited to $100 a trip.

Thursday, August 13, 2009

Good business card trick.

I came across a great way to make sure that you will never lose a business contact for failure to have a business card on you. I have seen it described online as a $7.00 insurance policy against losing a business contact.

Most people's contact information appears online at some place or another, but it can be difficult to explain to someone, and more difficult for them to remember, the web address to your law firm's site, your facebook page, etc. Even if you just say "google me," they still have to remember how to spell your last name. That is the point of having business cards. But what do you do if you are caught without your business card?

For roughly $7.00 you can purchase an internet domain featuring your first name only. I chose That way, if I don't have a card on me when I meet someone, I can direct them to that short and simple website rather than explaining to them that my law firm's website is at, Dreyer has two Es, and Foote has an E at the end, etc.

The idea was originally proposed by this guy. As you can see from the comments to his blog, most people love this idea. Although I have seen other people say that this is ridiculous and pretentious, I think it is a great idea.

By the way, if my business cards were as awesome as the one pictured above, I would never leave home without them.

Friday, August 7, 2009

The dog ate my homework...

...and the cat downloaded my child pornography.

Keith R. Griffin, of Martin County, Florida, was charged Wednesday with 10 counts of possession of child pornography after detectives found more than 1,000 child pornographic images on his computer, according to a news release.

Griffin told detectives he would leave his computer on and his cat would jump on the keyboard. When he returned, there would be strange material downloaded.

Damn perverted cats. That is why I like dogs. Full article here.

Thursday, August 6, 2009

Successor Liability

Last month I took a very large default judgment against a local construction company. Their attorney claims that they have "gone out of business" and that a "new corporation" is now in control. I sometimes drive by their office/warehouse which is located on prime real estate right on a local highway. They seem to be operating at full strength. They have about a dozen vans and trucks out front with their name on them, along with what appears to be a large amount of inventory, equipment, tools, etc.

A search of the Secretary of State's website reveals that my defendant corporation is dissolved, but that there are several different, newer corporations in existence. The new corporations' names are all very similar to that of my defendant and they are all seem to be run by the same people. I have served the president of my corporate defendant with a citation to discover assets and I believe that he is also the president of the new corporations.

In preparation for his citation, I have been researching the areas of fraudulent conveyances and successor liability. Conveyances of assets from one party to another can be set aside if a court finds that there was an intent to defraud the creditors of the transferring party. A discussion of the laws relating to fraudulent conveyances will be discussed more fully in a later post.

This post deals with successor liability. Successor liability comes into play when one company buys the assets of another company. Generally, the purchaser tries to buy those assets free and clear of the seller's debts and liabilities. When successor liability is imposed, a creditor of the seller can proceed against the assets of the purchaser.

There are four categories of successor liability recognized by Illinois courts. See Vernon v. Schuster, 179 Ill.2d 338 (1997). I will comment briefly on each.

Intentional assumption of liabilities

To make this determination, you need to look to the purchase contract between the two organizations. The general rule is that the purchaser does not assume the liabilities of the seller absent a specific contractual agreement to the contrary.

De facto mergers

The courts will look to whether there was a continuation of the enterprise of the seller corporation. For instance, is there a continuity of management, personnel, physical location, assets, or general business operations? Are the owners of the old corporation now working at the new corporation? Etc. If so, you may argue that it is a de facto merger and that successor liability should attach.

The business continuation exception

For this theory, the courts will look to see if there is a continuity of ownership in the two organizations. For instance, is there a continuity of officers, directors, or shareholders? If so, you can argue that the new company is simply a continuation of the old company. This argument should be used when the assets were seemingly purchased for fair market value. If they were not, see the last category.

Fraudulent schemes to escape liability

If the seller's shareholders sell the assets of the company for less than fair market value to another company in which they also hold an ownership interest, or to other "insiders," the courts can impose successor liability.

Tuesday, August 4, 2009

Did you see Dean Pernell's picture this morning?

Less than one year after leaving NIU and taking over as Dean at the Florida A&M University College of Law, Dean LeRoy Pernell has succeeded in gaining full accreditation for the school from the American Bar Association.

Full article here.