Wednesday, March 30, 2011

8500 Billable Hours

The Chicago Tribune reported last week that Fisher and Shapiro had 1700 foreclosure cases stayed in Cook County.  The General Administrative Order is pretty interesting.  HERE is a link to the order.  The Court set up a new courtroom to handle these cases.  The order establishes the new court calls, outlines the procedures that Fisher and Shapiro must use to spindle their motions for the special calls, provides for notice to all parties and unknown tenants, and requires courtesy copies to the Court before all of the hearings.

The order also requires that Fisher and Shapiro file five separate motions on each case, if applicable -- a Motion to Vacate Judgment of Foreclosure and Sale, a Motion for Leave to File an Amended Affidavit, a Motion to Vacate Judicial Sale, a Motion to Lift the Stay, and a Motion to Vacate Confirmation of Sale. Then the law firm has prepare new affidavits and basically re-start the entire process.

This is going to take huge amounts of work.  Someone has to pay for attorney hours, paralegal hours, trips to the clerk's office, courtesy copies, notices, postage, and photocopies into the hundreds of thousands.   I figure that it will take a minimum of five billable hours to get each case back on track, maybe more.  Even though Fisher and Shapiro is probably efficient with the volume, and will be firing on all cylinders, you still have to account for defense lawyers and sympathetic judges.  It will take months to get some of the cases back on track. 

I'm not going to speculate whether the law firm or the banks will bear the majority of these costs, but I will speculate as to the total cost of lost productivity to the law firm.  Five hours per case multiplied by 1700 cases is 8500 hours.   That's more than a million dollars worth of time if the hourly rate is more than $117, which it probably is.  At $200 per hour, that is $1,700,000.  You get the idea.  That is an enormous about of billable time that could have been devoted to something else.  And it could get really ugly if homeowners decide to use this situation as an excuse to start looking deeper at the banks' and/or law firms' prior practices.  I think 8500 lost hours is the minimum that this will cost.  That would be a fatal blow to a lot of law firms.  We'll see what happens in the next couple of months.

Saturday, March 26, 2011

Fisher and Shapiro's Cases Suspended

The Chicago Tribune reports that the Circuit Court of Cook County has stayed nearly 1,700 foreclosure cases filed by Fisher and Shapiro LLC.  The sanction came after the large foreclsoure law firm disclosed to the Court it changed the contents of affidavits after the documents were signed by their clients.  The law firm was ordered to vacate all judgments of foreclosures and any judicial sales that have occurred on the affected cases, and then file new motions for relief.  I haven't heard anything other than what is in this article.  If anyone else has specific information about this situation that's fit to print, we'd love to hear about it in the comments.  Thanks.

Wednesday, March 16, 2011

Dismissals for Want of Prosecution

If a plaintiff in a civil action fails to actively pursue his or her case, the court may dismiss the case for want of prosecution.  This happens most often when the plaintiff's attorney fails to appear for a previously scheduled court date.  In legal parlance, you will hear this process referred to as a DWP.

What happens when your case gets DWP'd?  First, you probably have some explaining to do to your client.  Full disclosure is usually the best option.  This will present a minor setback to your case and will delay the proceedings for a month or two while you get the case reinstated.  Also, you probably shouldn't bill the client for the time or costs involved with reinstating the case, absent special circumstances.

Next, you need to determine whether you want to move to vacate the DWP or refile the case.  If you are still within 30 days of the DWP, it is a generally cheaper vacate the DWP considering that most circuit clerks will charge between $40 and $60 for that motion.  I see those types of motions filed all of the time, and judges routinely grant them without question.

If you have really lost track of the case, however, and it has been more than 30 days since the DWP, you still have options.  The Illinois Supreme Court addressed this issue in S.C. Vaughan Oil Company v. Caldwell, Troutt & Alexander, 181 Ill.2d 489 (1998).  In that case, the court held that if a plaintiff's action is dismissed for want of prosecution, that plaintiff has the option, pursuant to 735 ILCS 5/13-217, to refile the action within one year of the entry of the DWP order or within the remaining period of limitations, whichever is greater.  Section 217 is referred to as a savings statute, with the purpose of facilitating the disposition of litigation on the merits and to avoid its frustration upon grounds unrelated to the merits.  Vaughan Oil at 497.

So, on a case involving a ten year statute for breach of a written contract, you potentially have a long, long time to refile the case.  I would be careful, however, and try to get the case refiled before the expiration of the statute.  The Supreme Court gives you the extra year following the DWP, even if it is outside of the statute, but I believe that conflicts with the actual statutory language.  The statute specifically provides that "no action which is voluntarily dismissed by the plaintiff or dismissed for want or prosecution by the court may be filed where the time for commencing the action has expired."  See Section 217.  So, to be absolutely safe, get the case refiled before the statute runs...or just show up to court in the first place. 

Tuesday, March 15, 2011

Fraudulent Intent Required for Objection to Discharge

Linda Reeves hired a contractor in Indiana to perform numerous home remodeling tasks, including the construction of a covered porch.  They did not execute a written contract.  When the contractor walked off the job, Ms. Reeves filed suit under the Indiana Home Improvement Contracts Act.  The Act, which I haven't read but which sounds similar to Illinois' Home Repair and Remodeling Act, requires a written contract for home improvements, among other things.  The Act also provides that any person who violates the Act commits a "deceptive act." 

The contractor alleged that the porch was not a part of the contract, but rather only on Ms. Reeves' "wish list."  The state court disagreed and found in Ms. Reeves' favor to the tune of $77,000.  Shortly after entry of the judgment, the contractor filed bankruptcy.  Ms Reeves objected to discharge under Section 523(a)(2)(A) of the Bankruptcy Code, which requires evidence (1) that the debtor made a false representation or omission, which he either knew was false or that was made with reckless disregard for the truth; (2) that the debtor possessed an intent to deceive or defraud; and (3) that the injured person justifiably relied on the false representation.  See Ojeda v. Goldberg, 599 F.3d 712, 716-717 (7th Cir. 2010).

Ms. Reeves argued that the principles of collateral estoppel required a finding of non-dischargability because a judgment under the Act constitutes a "deceptive act" under Indiana law.  The bankruptcy court disagreed, as did the 7th Circuit.

The issue of the case came down to the debtor's intent.  The 7th Circuit acknowledged that the findings made by the Indiana state court were entitled to collateral estoppel in the subsequent bankruptcy proceeding, but they also noted that there was never a specific finding of fraudulent intent by the trial court.  Rather, the state court case basically involved a miscommunication between Ms. Reeves and contractor.  The contractor testified that he did not believe that the porch was included in the contract.  Ms. Reeves would have had to prove that he knew the porch was part of the deal, took payment for the porch, and never intended to build it.

Although there was a judgment entered against the contractor under the Act, and that judgment by extension constitutes a deceptive act, there was no evidence of the contractor's fraudulent intent entered at trial in the state court, or at trial in the bankruptcy court.  So, Ms. Reeves' objection to the contractor's bankruptcy failed. 

In Re Davis, No. 10-2757, slip op. (March 14, 2011).

Friday, March 11, 2011 terminates Illinois-based contracts after Governor Quinn signs "E-fairness" online tax law

Yesterday Illinois Governor Quinn signed a new law that broadens sales tax on online purchases. This new law requires online merchants to collect sales tax on purchases made through business partners based in Illinois. In response, for Illinois-based businesses, has pulled the plug on its Amazon Associates Program, which according to the Wall Street Journal, affects 9,000 websites that refer shoppers to Amazon's site and receive a commission on the purchases.

Additionally, the Performance Marketing Association revealed that the Illinois affiliates generated ad revenue of $611 million in 2009 and $18 million in tax revenue. It's estimated that Illinois will lose up to 30% of the tax revenue, as firms lose business, cut jobs or move out of state. sent all Illinois-based Associate Program members the following Notice of Contract Termination and will close such accounts as of April 15, 2011.

---------- E-mail message ----------
From: Associates Program
Date: Thu, Mar 10, 2011 at 5:32 PM
Subject: Notice of Contract Termination Due to New Illinois Law


For well over a decade, the Amazon Associates Program has worked with thousands of Illinois residents. Unfortunately, a new state tax law signed by Governor Quinn compels us to terminate this program for Illinois-based participants. It specifically imposes the collection of taxes from consumers on sales by online retailers - including but not limited to those referred by Illinois-based affiliates like you - even if those retailers have no physical presence in the state.

We had opposed this new tax law because it is unconstitutional and counterproductive. It was supported by national retailing chains, most of which are based outside Illinois, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that its enactment forces this action.

As a result of the new law, contracts with all Illinois affiliates of the Amazon Associates Program will be terminated and those Illinois residents will no longer receive advertising fees for sales referred to,, or Please be assured that all qualifying advertising fees earned prior to April 15, 2011 will be processed and paid in full in accordance with the regular payment schedule. Based on your account closure date of April 15, 2011, any final payments will be paid by July 1, 2011.

You are receiving this email because our records indicate that you are a resident of Illinois. If you are not currently a permanent resident of Illinois, or if you are relocating to another state in the near future, you can manage the details of your Associates account here. And if you relocate to another state after April 15, please contact us for reinstatement into the Amazon Associates Program.

To be clear, this development will only impact our ability to continue the Associates Program in Illinois, and will not affect the ability of Illinois residents to purchase online at from Amazon’s retail business.

We have enjoyed working with you and other Illinois-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to Illinois residents.


The Amazon Associates Team

Sunday, March 6, 2011

Official Bankruptcy Forms

This is just a quick note to tell you that I have added a link to the official bankruptcy forms to the Forms Archive of this blog.

The official bankruptcy forms can be found HERE on the website.