Tuesday, December 30, 2014

New Laws Effective January 1, 2015

I just wanted to pass along THIS succinct chart that outlines each of the new laws take take effect in Illinois on Thursday. I've seen several news articles that highlight three or four interesting laws, but this chart lists each of the more than 150 new laws for 2015. 

I am especially in favor of SB 2015, which increases the interstate and tollway speed limit to 70 miles per hour. But long-time Blog readers already know about my driving habits, as I more fully explained in THIS classic post from January 2012.

Saturday, December 27, 2014

Legal Writing 201 by Judge Mark P. Painter

I was browsing the law blogs this morning when I saw a link to Judge Mark P. Painter's 30 Suggestions to Improve Readability. HERE is a link. This document is brilliant. Please print it out, read through it, and keep it sitting on your desk for the next couple of months. 

The 30 suggestions cover a lot of material, but you can read through the entire document in about 15 minutes. It is presented very simply. Judge Painter makes it look easy.

Pay particular attention to the Words and Phrases chart contained on pages 25-27. I will be referring to this chart the next time that I draft a motion or pleading. And I might personally serve that chart on my opposing counsel before the response is due. 

Saturday, December 20, 2014

Less Jurors, More Pay

Beginning on June 1, 2015, Illinois jurors will receive $25 for their first day of service and $50 for each subsequent day of service. Senate Bill 3075 (here), signed by Governor Quinn yesterday, further provides that all civil juries will consist of 6 persons regardless of the nature of the case.

Depending on population, 55 ILCS 5/4-11001 currently requires counties to pay jurors from $4 to $10 per day unless a county sets a higher rate. Cook County jurors now earn $17.20 a day (here), Will County jurors earn $10 a day (here), Winnebago County jurors earn $13 per day (here), and Du Page jurors earn $10 for their first day of service and  $15 thereafter (here). The main criticism of this part of the new law comes from counties because they must fund the pay increase.

Currently, 735 ILCS 5/2-1105 provides for 12 person civil jury trials unless the plaintiff seeks $50,000 or less in which case the jury consists of 6 persons. But the current statute permits a party to demand a jury of 12 in any civil case regardless of the amount claimed. Senate Bill 3075 amends section 5/2-1105(b) by requiring that all civil juries consist of 6 persons and by eliminating the provision permitting a litigant to increase the jury size to 12 persons. This change has been criticized by the Chicago Tribune (here) and the Chicago Council of Lawyers (here). The criticisms vary but include claims that smaller juries reduce minority representation, reduce debate, and reduce the tolerance for dissenting voices on the jury. Proponents argue that 6 person juries will shorten voir dire, reduce litigation costs, and disrupt the lives of fewer citizens.

It is unclear how much research and discussion preceded the enactment of these significant changes to the jury system.

Monday, December 1, 2014

Mutual and Correlative Orders of Protection

Section 215 of the Illinois Domestic Violence Act (here) flatly prohibits a judge from entering mutual orders of protection. While discouraging the entry of correlative orders of protection, Section 215 allows for the entry of such orders if the statutory requisites are met. In re Marriage of Kiferbaum, (here) provided the appellate court with its first opportunity to discuss the difference between the two types of orders of protection.

Two years after an acrimonious divorce including allegation of threats, sexual abuse, and damaging automobiles with urine, feces, and vomit, Judith and Hanan Kiferbaum filed petitions seeking orders of protection against each other. The trial judge set the “cross-petitions” for hearing on January 30, 2013. The judge conducted a hearing on Hanan’s petition first because he filed it two weeks earlier than Judith. After granting Hanan’s petition, the judge dismissed Judith’s petition considering it a request for mutual orders of protection which were barred by Section 215. On appeal, Judith claimed that she requested a “correlative” order of protection, not a “mutual” order of protection.

In siding with Judith, the appellate court first noted that no court had previously considered the difference between mutual and correlative orders and that neither term was defined in the Illinois Domestic Violence Act. The court when on to characterize mutual orders as typically appearing in a single document, based on a single petition, and entered even if one party did not seek an order of protection. The court found good reason for strictly prohibiting mutual orders because they tend to violate due process, exacerbate violence, and are difficult for the police to enforce.

The court did not find the same drawbacks with correlative orders because under the statute they can only be obtained when separate written petitions are filed, both parties prove past abuse,  both parties give prior notice (unless excused), and  the trial court enters separate orders justifying each  remedy granted. The court concluded by stating that if the “clear roadmap” set out by Section 215 is followed, correlative orders of protection, while disfavored, remain an available remedy.

Sunday, November 16, 2014

Deposition Tweeting

Everyone knows that Illinois prohibits tweeting while operating a motor vehicle. 625 ILCS 5/12-610.2 (here) bans the use of any electronic communication device when driving. Avid cyclists also know that a Chicago ordinance (here) prohibits tweeting while operating a bicycle. Going a step further, one judge believes that lawyers should not tweet while conducting a deposition.

According to an ABA Journal article (here), a Texas state court judge has barred live tweets during the deposition of a former county sheriff who is being sued for allegedly receiving illegal campaign contributions. Lamenting the lack of guidance on the live-tweeting issue, the judge accurately observed that “[o]ur technology is far out pacing our ability to formulate rules.”

If an Illinois judge allowed the tweeting of deposition testimony, Illinois Rule of Professional Conduct 1.6(a) would require that the tweeting lawyer first obtain her client’s informed consent. Rule 1.6(a) prohibits an attorney from revealing information relating to the representation of a client without the client’s informed consent. That prohibition applies to all information regarding the representation and is not limited to secret or confidential information, or information received from the client.  And even if an Illinois judge does permit deposition tweeting and a client is willing to consent, hopefully counsel will devote his time and energy at the deposition to adequately representing his client rather than to keeping his “followers” updated or entertained.

Monday, November 3, 2014

Election Ballot "Selfies"

In the late 1800s, New Hampshire enacted legislation prohibiting voters from showing their completed ballots to anyone for the purpose of proving how they voted. The statute sought to address the apparently widespread problem of politicians purchasing votes for their candidates. Effective September 1, 2014, the New Hampshire legislature updated the law to specifically prohibit persons from “taking a digital image or photograph of his or her marked ballot and distributing or showing the image via social media or by any other means.” The American Civil Liberties Union has filed suit claiming that the law violates the First Amendment.

Illinois does not have a similar statute. Section 29-9 of the Illinois Election Code makes it a Class 4 felony for a person to “knowingly mark[] his ballot or cast[] his vote on a voting machine or voting device so that it can be observed by another person.” Section 29-9 also prohibits anyone from knowingly observing a voter marking a ballot. And while a Peoria Journal Star article  indicates that it might be a violation of this statute to take a photograph of a completed ballot and then post it on social media, that interpretation seems strained.  The statute is clearly intended to prevent a person from standing in such proximity to a voter in the polling place so as to allow observation of the actual act of voting. The law does not mention displaying a completed ballot after the fact. Even a New York law that specifically prohibits showing a marked ballot to another has reportedly been interpreted by lawyers of the New York State Board of Elections as not prohibiting the posting of a ballot photograph on Facebook.

Whether legal or illegal under the Election Code, people might consider the advisability of displaying their voting record on the internet in perpetuity.

Friday, October 24, 2014

Don't get hit in the head with a brick!

I just signed up for my park district 35+ basketball league. All participants must sign a "Waiver and Release of all Claims and Assumption of Risk." The form contains the following language, under the heading "Warning of Risk":
"Basketball is intended to challenge and engage the physical, mental and emotional resources of each participant. Despite careful and proper preparation, instruction, medical advice, conditioning and equipment, there is still a risk of serious injury. All hazards and dangers cannot be foreseen. Certain risks include, but are not limited to, the acts of shooting, passing, and catching the ball, being struck by errant balls, being struck by another player's body, running, jumping, stretching, sliding, diving, collisions with other players and with stationary objects, acts of God, horseplay, unsportsmanlike conduct, dangerous playing conditions, poor floor conditions, defective equipment, equipment failure, premises defects, slips and falls, failure in supervision and officiating, and all other circumstances inherent to the sport of basketball. In this regard, it is impossible for the Naperville Park District to guarantee absolute safety."
Shooting?! I have been playing basketball since before I could walk, but I never knew there was such a huge risk from shooting the basketball. Now, when OTHER people shoot the basketball, there is a huge risk of being hit in the head with a brick, such as Ryan Holmes, Andy Honaker, Brian Moore, Dexter Evans, etc., but I never knew that shooting the ball by oneself was such a risk.  (Just kidding guys....just checking to see who's reading!!)

Friday, October 17, 2014

No Immunity for Lawyer Who Prepared Order at Judge’s Request

Every day lawyers prepare orders reflecting a judge’s ruling.  Lawyers simply do not worry about potential liability for preparing an order that the judge lacked authority to enter. Quasi-judicial immunity should protect a lawyer who drafts an order at a judge’s express or implied request.

But not so fast. In Burton v. Infinity Capital Management, the Ninth Circuit Court of Appeals refused to  apply the doctrine of absolute quasi-judicial immunity to insulate a private lawyer from a claim that the order he drafted at the judge’s direction violated the automatic stay provisions of 11 U.S.C. § 362(a).

This is what happened. A Nevada state court judge ordered that a rule to show cause issue against attorney Koch when he learned that Koch deposited a personal injury award with the bankruptcy court rather than the Nevada state court. Attorney Gugino, in court representing a party asserting a lien against the settlement funds, was directed by the judge to prepare the show cause order.

Koch sued Gugino for preparing the order. The Ninth Circuit found that quasi-judicial immunity did not protect Gugino because he did not exercise judicial discretion in drafting the order. He merely acted as the judge’s scribe. The Court of Appeals further found that Gugino had “volunteered” to prepare the order. But the transcript hardly supported such a finding. During the hearing, the state judge declared, “I’m going to issue an order to show cause.” After dictating the details of the order, he asked, “Who wants to prepare the order?” The judge then said, “Mr. Gugino?” who responded, “I’ll prepare it, Your Honor.” This exchange could only be deemed to have secured a “volunteer” in the Ninth Circuit, in the military, or possibly in the marital relationship.

In dissent, Judge Gilman noted the unfairness of holding an attorney liable for carrying out the order of an immunized judge. He also lamented that the majority opinion “puts at risk the common practice of private attorneys drafting proposed orders on behalf of a judge.” Hopefully, Judge Gilman’s view will ultimately prevail since it is difficult to envision a trial court operating efficiently without orders drafted by attorneys.

Friday, October 3, 2014

Seeking Leave to Prosecute or Defend a Civil Lawsuit Under a Fictitious Name

Last month, the Illinois Appellate Court issued one of the few opinions interpreting section 2-401(e) of the Code of Civil Procedure. Section 2-401(e) allows a litigant to appear under a fictitious name upon a showing of “good cause.” In  Doe v Northwestern Memorial Hospital, 2014 IL App (1st) 140212, a group of plaintiffs filed complaints against Northwestern Memorial Hospital and Northwestern Medical Faculty Foundation alleging that the defendants negligently allowed a cryogenic tank to fail causing damage to semen and testicular tissue stored in the tank. Most plaintiffs suffered from cancers which were likely to significantly interfere with their ability to engage in ordinary reproductive activities.

In affirming the trial court’s order allowing the use of pseudonyms, the appellate court noted the dearth of authority addressing what constitutes “good cause” to avoid the general rule that the public has the right to know who is utilizing tax supported courts. Doe at ¶ 35. The court recognized that the use of pseudonyms is disfavored and reserved for “exceptional circumstances” involving “highly personal” matters such as abortion, adoption, sexual orientation, and religion. Doe at ¶ 35, 39. Applying a balancing test, the court found that plaintiffs’ reproductive health and medical treatments were “extremely private and sensitive topics” and that individual privacy concerns outweighed the public’s interest in open court proceedings. Doe at ¶39.

Like most courts that break new ground, the justices tried to limit the impact of their decision by describing the circumstances as “exceptional, the result of a confluence of factors that might never recur.” Doe at ¶ 43. But the ramifications of the opinion should not be underestimated. Reproductive health and potentially a litigant’s privacy interest in treatment for any serious illness might justify invoking section 2-401(e). Indeed, it appears that “good cause” might be established whenever any type of privacy interest outweighs the public’s interest in open judicial proceedings. Doe v. Northwestern Memorial Hospital is necessary reading before seeking leave for a client to appear under a fictitious name.

Monday, September 29, 2014

Formatting an Appellate Brief in Microsoft Word

I just came across a Lawyerist post from last year that gives very detailed, step-by-step instructions on how to format a brief in Microsoft Word.

I have been using Microsoft Word for nearly 20 years with frustrating results, so I finally decided to learn the intricacies in order to become more efficient. It was just a coincidence that I saw this post a week or so ago. It deals with section breaks, fields, citations, headings, tables of contents, etc.

I'm simply linking to the original post HERE so that I can find it again the next time that I need it. If anyone has a brief coming due, you might want to check it out.

Friday, September 12, 2014

Could Adrian Peterson have used a switch if he was in Illinois?

News broke this afternoon that Adrian Peterson, one of the greatest running backs of all time, was indicted for “reckless or negligent injury to a child.” Multiple media outlets report that the indictment stems from an incident in which Adrian Peterson disciplined his 11 year-old-son by smacking him with a switch. 

Adrian Peterson has already retained prominent Houston attorney Rusty Hardin, who I have written about before, to defend this case. This case will surely make headlines for months to come, especially with this indictment coming so quickly after the release of the Ray Rice video.

Rusty and Adrian certainly have their work cut for them because of the allegation that Adrian used a switch to hit his son. Ordinarily, parents are granted broad leeway when disciplining their own children. A parent's "right" to corporally punish his or her child is derived from the right to privacy, which is viewed as implicit in the United States Constitution. This right to privacy encompasses the right to care for, control, and discipline one's own children. In Illinois, "discipline" had been interpreted by the courts to extend to reasonable corporal punishment. People v. West (In re F.W.), 261 Ill. App. 3d 894, 898 (4th Dist. 1994). 

However, what is "reasonable" is always subject to debate and may eventually be left to a jury to determine. In Illinois, the use of switches, belts, or other objects to corporally punish a child have been found to constitute neglect or abuse, depending on the severity of the punishment. Factors that the court will consider are whether any physical injury resulted from the use of the object, the psychological effects of the discipline on the child, and the circumstances surrounding the discipline, including whether the parent was calmly attempting to discipline the child or whether he was lashing out in anger.  In re F.W. at 903.

In fact, the odds may be against Rusty and Adrian due to the use of the switch. Here is a quote from a leading case in Illinois:
“Corporal punishment as a method of discipline remains a controversial issue. It is not our function in an abuse or neglect proceeding to determine whether parents measure up to an ideal, but to determine whether the child's welfare has been compromised. Whether to employ corporal punishment as a means of discipline is a decision each parent must make for himself or herself. However, parents should understand a swat on a child's buttocks with an open hand and the "paddling" of a child with belts, boards, cords, or ropes are intrinsically distinct exercises of corporal punishment. The cases reviewed above, and the dearth of cases finding striking with objects to be "reasonable," should put parents on notice. When allegations of neglect or abuse are levelled, parents using boards, belts, cords, or ropes as weapons to inflict corporal punishment may encounter an unwillingness on the part of DCFS and the courts to regard their conduct as reasonable.” Id. at 903.
So, Adrian will get extra scrutiny due to the use of the switch. If he had simply used the back of his hand, things may be have been different. However, please keep in mind that I am completely speculating about the facts of this case because the news just broke about 30 minutes ago. If it turns out that Adrian Peterson's son did in fact suffer serious injuries, I apologize in advance for anyone that I may have offended and I will be back here in short order to delete this post and scrub any evidence of it from the interwebs. Have a nice weekend.

Tuesday, September 9, 2014

This law firm should subscribe to the Northern Law Blog.

A law firm from Chicago was hired to appeal the property tax assessments for 71 different parcels of real estate located in Aurora Township, Kane County, Illinois. The tax appeals were due by October 4, 2013, the thirtieth day after the publication of the tax assessments. On October 4, 2013, the law firm sent its petitions to the Kane County Board via FedEx. The Board received the petitions on October 7, 2013 and rejected them as untimely.  

The petitioner appealed, arguing that the "mailbox rule" should apply. The mailbox rule, which is contained in the Statute on Statutes, 5 ILCS 70/1.25, provides that a document is deemed "filed" as of the date of mailing via United States mail, regardless of when the document is actually received. However, petitioner's argument was unsuccessful because multiple Illinois appellate courts have previously held that the mailbox rule does not apply to private carriers such as UPS or FedEx, but rather only applies to documents placed in the U.S. mail. Here is a link to the 2d District's opinion.

It's too bad that the petitioner's law firm does not subscribe to this Blog because I wrote about one of those cases more than five years ago. See Mailbox Rule Does Not Apply to UPS, Northern Law Blog (February 10, 2009). I don't know how much money was at stake in those 71 tax appeals, but I do know that a subscription to the Northern Law Blog would have been much, much cheaper than the malpractice case that will most certainly follow this decision.

Wednesday, August 6, 2014

Revised Kendall County Eviction Guidelines

The Kendall County Sheriff's Department has revised their eviction guidelines, effective July 11, 2014. I just received the revised guidelines in the mail, so I thought that I would pass them along. The new eviction guidelines can be found HERE.

Monday, August 4, 2014

By bequest, devise, or inheritance

In a Chapter 7 bankruptcy, the trustee can administer (sell) non-exempt property of the bankruptcy estate. The bankruptcy estate is defined in Section 541 of the Bankruptcy Code to include all of the debtor's legal or equitable interests in property as of the date the case is filed, wherever located and by whomever held. Therefore, every interest that the debtor has in any property whatsoever on the date of filing is included in his or her bankruptcy estate, subject to very limited exceptions. 

Normally, property that is acquired after the bankruptcy filing is not property of the estate and, therefore, not subject to administration by the bankruptcy trustee. However, Section 541(a)(5) lists three categories of property that can become part of the bankruptcy estate after the filing date. Those three categories include any interest in property that the debtor acquires, or becomes entitled to acquire, within 180 days of filing (A) by bequest, devise, or inheritance; (B) as a result of a property settlement agreement with the debtor's spouse, or of an interlocutory or final divorce decree; or (C) as a beneficiary of a life insurance policy or of a death benefit plan.

I represent a debtor who owned real estate in joint tenancy with her mother. The debtor's mother passed away within 180 days of the bankruptcy filing. While the mother was still alive, the debtor's "half" of the house was undoubtedly property of the estate. But, now that the mother has died, is the other "half" of the house property of the estate as well, pursuant to the language in Section 541(a)(5)(A) that talks about "bequest, devise, or inheritance"?

In order to determine the answer, I turned to Black's Law Dictionary. Here are the definitions of the three key terms:

  • Bequest - The act of giving property (usu. personal property) by will.
  • Devise - The act of giving property (usu. real property) by will.
  • Inheritance - Property received from an ancestor under the laws of intestacy.
So, the first two options require that the property, either personal property or real property, pass via a will. That did not happen here. Next, the third option requires that the property pass via the laws of intestacy. In this case, although there was no will, the house did not pass via the laws of intestacy. The house passed via the Illinois Joint Tenancy Act, making it not property of the estate and not subject to the claims of creditors or the bankruptcy trustee. Everybody goes home happy (except the trustee).

Thursday, July 10, 2014

Are you entitled to a piece of the $2 billion foreclosure settlement with Ocwen?

If you currently have a mortgage that is serviced by Ocwen Financial Corporation or Ocwen Loan Servicing, or if you had been involved with these companies and lost your home to foreclosure between January 1, 2009 and December 31, 2012, you may be entitled to share in a massive settlement.

In December 2013, both of the Ocwen entities into a consent order with 49 States, including Illinois, as a result of Ocwen’s systemic misconduct at every stage of the mortgage servicing process that required them to provide $2 billion in principal reduction to underwater borrowers who still have their homes, and to provide $125 million to people who already lost their homes.

Notice packages have now been mailed to affected borrowers and The National Ocwen Settlement Administrator has created a website with information for consumers. If you have received correspondence from Ocwen, or if you think that you may be entitled to file a claim, please submit a confidential email to me HERE.  

Wednesday, July 2, 2014

The Illinois Residential Mortgage License Act

Earlier this year, the Illinois Appellate Court held, as a matter of first impression, that residential mortgages made by an unlicensed entity are invalid under the Illinois Residential Mortgage License Act of 1987, 205 ILCS 635, et seq. The court relied on the rule that courts will not enforce a contract made by an unlicensed entity when licensing is expressly required by a law that seeks to safeguard the public's interest. HERE is a link to that case. 

I am currently defending a homeowner in a mortgage foreclosure case and I thought I better check to see if the lender is licensed in Illinois. It turns out that they are. But I wanted to relay the link to the current list of licensed mortgage lenders just in case anybody is interested. The list can be found HERE. Good luck.

Friday, June 27, 2014

Two years in prison for Idiocy.

The Eighth Circuit has affirmed the two year prison sentence against Michael A. Smith, of Nebraska, for basically being an idiot. Specifically, he was charged under 18 U.S.C. 39A(a), which imposes criminal liability on anyone who "knowingly aims the beam of a laser pointer at an aircraft in the special aircraft jurisdiction of the United States, or at the flightpath of such an aircraft."

Mr. Smith's problems started on July 11, 2012 when authorities in Omaha, Nebraska, learned that the cockpit of a Boeing 737 had been illuminated by a laser while flying over the city. The local police dispatched a helicopter to locate the laser. As the helicopter approached the approximate location of the laser's source, Smith, standing in his backyard, directed his laser's green beam at the helicopter. Smith's beam struck the helicopter several times, but when the helicopter got close, his beam disappeared.

Unable to pinpoint Smith's location, the helicopter was forced to depart. But as the helicopter began to do so, Smith again shone his laser's beam on the helicopter. At that point, the helicopter pilots described a back-and-forth game of "cat-and-mouse," during which the helicopter pilots feigned departure from the scene several times to get Mr. Smith to reveal his location. The helicopter pilots engaged Mr. Smith until an officer on the ground was able to walk right into his backyard and catch him in the act.

What an idiot. He had plenty of opportunities to stop. He could have stopped at any time and got away. Plus he was standing in his own backyard while fighting a laser battle with a police helicopter. Someone didn't think this plan all the way through.

At trial, Mr. Smith admitted shining the laser at the airplane, but denied intentionally shining the laser at the helicopter. His defense was that he did not "knowingly" aim the laser at the airplane because he did not believe that the laser could travel far enough to actually hit the airplane. He didn't know he could hit the airplane. The trial court ruled that the knowing requirement only applied to the aircraft element of the statute. As long as he knew that he was pointing a laser at the airplane, he violated the statute. The Eight Circuit affirmed.

Saturday, June 21, 2014

Does a creditor have to release a bank citation if the debtor files bankruptcy?

A third party citation served upon a bank operates as freeze on any money that the debtor has in his account. Plus, any funds that the debtor deposits after service, but prior to the termination of the citation, will also be subject to the citation freeze. If the debtor files bankruptcy, does the creditor have to dismiss the citation and release the account?

The U.S. Bankruptcy Court for the Northern District of Illinois just analyzed this issue in the case In re Kuzniewski, 2014 Bankr. LEXIS 1443. In that case, after filing bankruptcy, the debtor's attorney made a demand upon the bank and the creditor's attorney to immediately release the account. The bank and the creditor's attorney refused and the debtor filed a motion for sanctions against each for violation of the automatic stay.

The court analyzed the unique nature of a citation lien under Illinois law. A citation lien gives a creditor secured status in a bankruptcy. While the automatic stay does prevent a creditor from taking certain actions in furtherance of a lawsuit, the Bankruptcy Code generally requires notice and an opportunity to be heard before a creditor in bankruptcy may be deprived of a property interest, including a lien. The court noted that there are several provisions of the Code that would authorize avoidance of the citation lien, but all of those provisions require notice and a hearing. Without notice and a hearing on an avoidance action, liens generally pass through bankruptcy. 

For these reasons, the court found that the creditor's actions did not violate the automatic stay. If the debtor wanted the account released, she had an obligation to file an adversary proceeding or a contested matter for avoidance of the lien, not simply make unsubstantiated demands that were not warranted by existing law. In other words, this was a decision to be made by a judge, not by debtor's counsel. 

Thursday, June 19, 2014

Citation to Discover Asset Materials

I had the pleasure to speak about citations to discover assets this morning at a Kane County Bar Association seminar. I mentioned to the audience that I would be placing several documents on this Blog.

First, HERE is an updated copy of my outline from the seminar.

Second, HERE is a copy of the modified citation form in Word format.

And, in case anybody is interested, HERE is a link to the Dexia case that I mentioned briefly at the end of my presentation as I was running out of time.

Please let me know if anybody has any questions about this morning's presentation, or anything else related to the collection of judgments.  

Friday, June 13, 2014

Supreme Court rules that inherited IRAs are not protected in bankruptcy

A unanimous Supreme Court ruled (9-0) yesterday in Clark v. Rameker, 13-299, that inherited individual retirement accounts are not retirement funds within the meaning of the Bankruptcy Code. The decision affirms a recent 7th Circuit decision and clears up a circuit split about the status of unspent IRAs that pass by way of an inheritance. Prudent bankruptcy practitioners may wish to amend their intake forms to specifically ask if the potential client owns an inherited IRA. 

Retirement assets are exempt under the bankruptcy code and Illinois law. But the Supreme Court distinguished inherited IRAs from other retirement accounts. If the heir is a spouse of the decedent, that spouse has a choice when he or she inherits an IRA. He can roll it over into his own IRA, which would retain the exemption, or he can keep it in an inherited IRA, which would not be exempt from creditors. If anyone other than a spouse inherits an IRA, he or she cannot roll it over. The funds must remain designated as an inherited IRA, which are governed by different rules than a traditional or Roth IRA under the tax code.

Unlike a typical IRA, money in an inherited IRA can be withdrawn without waiting for the new owner to retire. Writing for the court, Justice Sonia Sotomayor said that this crucial change in the status of the account makes it less like retirement savings and more like a pot of money available to pay off creditors. Otherwise, Sotomayor said, nothing would prevent someone who declares bankruptcy from using the entire balance of an inherited IRA "on a vacation home or a sports car immediately after her bankruptcy proceedings are complete." For this reason, an inherited IRA does not deserve the typical protection afforded to more traditional "retirement funds."

HERE is a link to the Court's opinion. 

Thursday, June 12, 2014

Does the homestead exemption protect prepaid rent?

From a debtor's perspective, Illinois' $4,000 wildcard exemption can seem woefully inadequate. Imagine receiving a $8,000 tax refund, but owing much more than that to several different creditors, all of whom have filed suit to collect their money. Those creditors may be able to take half of the tax refund. But the debtor can use other exemptions besides the wildcard to protect the excess cash from those lawsuits. Also, if the debtor is forced into bankruptcy, he can use his other exemptions to shield that excess money from the bankruptcy trustee.

There are actually several ways to exempt excess cash. The debtor can invest in a qualified retirement plan up to the applicable yearly limits proscribed by the IRS. The debtor can pay down a car loan so that he has up to $2,400 in equity in the car. The debtor can purchase a whole life insurance policy naming his spouse or children as beneficiary. The debtor can also prepay a mortgage and exempt up to $15,000 in equity in his homestead. 

But what if the debtor cannot afford to invest in a retirement account, or may have already invested the maximum? Assume that he does not own real estate. Can he send his landlord all of his excess cash and then use the homestead exemption to protect that equity? I think so. Here is the Illinois Homestead Exemption statute:
Every individual is entitled to an estate of homestead to the extent in value of $15,000 of his or her interest in a farm or lot of land and buildings thereon, a condominium, or personal property, owned or rightly possessed by lease or otherwise and occupied by him or her as a residence, or in a cooperative that owns property that the individual uses as a residence. That homestead and all right in and title to that homestead is exempt from attachment, judgment, levy, or judgment sale for the payment of his or her debts or other purposes and from the laws of conveyance, descent, and legacy, except as provided in this Code or in Section 20-6 of the Probate Act of 1975 [755 ILCS 5/20-6]. This Section is not applicable between joint tenants or tenants in common but it is applicable as to any creditors of those persons. If 2 or more individuals own property that is exempt as a homestead, the value of the exemption of each individual may not exceed his or her proportionate share of $ 30,000 based upon percentage of ownership. 735 ILCS 5/12-901.
I always thought you had to own real estate to claim a homestead exemption, but after actually reading the statute (novel concept huh?) it appears that a debtor can exempt up to the $15,000 of his interest in a lot of land and buildings thereon "rightly possessed by lease or otherwise" and occupied by him or her as a residence. The annotations do not provide any support for this concept, but it appears that the language of the statute is clear.

Of course, savvy creditors' counsel will claim that any attempt to prepay rent to avoid an obligation to a creditor is a fraudulent transfer. But there is plenty of federal case law that supports "exemption planning" on the eve of a bankruptcy filing. Those cases are easily analogized for purposes of state court litigation. 

For instance, the Seventh Circuit has held that conversions of assets from non-exempt to exempt forms within the year preceding a bankruptcy filing are not necessarily fraudulent to creditors. In re Smiley, 864 F.2d 562, 566 (7th Cir. 1989). Also, the U.S. Bankruptcy Court for the Western District of Wisconsin, in a very thorough opinion dealing with exemption planning, looked specifically at the amount of money at stake, among other things, to determine whether claimed exemptions should be upheld. See In re Bronk, 444 B.R. 902 (Bankr. W.D. Wisc. 2011). That court noted that when deciding on whether to uphold claimed exemptions, the temptation is to place considerable weight on the amount of money a debtor hopes to shield from creditors. This sentiment, the court noted, manifests itself in a variety of characterizations, such as a "smell test" or the age-old adage that "pigs get fat and hogs get slaughtered." The court went on to reject any notion that the size of the claimed exemption was itself indicative of fraud. The court very clearly held that a debtor should not be prohibited from the full use of his exemptions. The court even quoted Judge Learned Hand from a different context when that judge noted that "There is nothing sinister in arranging one's affairs so as to keep taxes as low as possible." 

So, to make a long story short, there is support in the law for last-minute exemption planning on the eve of bankruptcy or trial, even when that exemption planning involves creative applications of existing law, including the prepayment of rent to a landlord. 

Wednesday, June 11, 2014

ACLU Sues Over Fake Twitter Account

Back in April, the Peoria police department raided the house of a man who they believed to be behind a satirical twitter account that mocked the thin-skinned Mayor, Jim Ardis. The Mayor and the police department were outraged that anybody would actually go on twitter and make comments that were not true. There was a lot of uproar online at the time because of, you know, the constitution and all.

Well, today the ACLU filed suit on behalf of the man behind the twitter account. The lawsuit alleges violations of the First and Fourth Amendments of the US Constitution and the Illinois Constitution. They seek injunctive relief, compensatory damages, punitive damages, and attorneys' fees.

Here is the complaint:

Friday, May 23, 2014

Dr. Dre Loses $3 Million Claim in the Suge Knight Bankruptcy Case

Andre Young (a/k/a "Dr. Dre") was in the news last week when Apple announced that it was buying his Beats headphone company for more than $3 billion. Media reports estimate that Dr. Dre will net nearly $800 million from the deal. So, I guess he wasn't too upset when U.S Bankruptcy Court for the Central District of California denied his motion for a $3 million administrative expense claim in the Death Row Records/Suge Knight bankruptcy case.

By way of background, Death Row Records ("DRR") and Suge Knight filed separate bankruptcy cases in 2006, which were subsequently consolidated. The consolidated bankruptcy case is still pending. DRR has continued to sell music the whole time, including music on which Dr. Dre claims that he is due royalties. In fact, Dr. Dre claimed that he was due nearly $3 million for post-petition royalties.  

He filed a motion for allowance of an administrative expense claim. The court had several problems with Dr. Dre's motion. First, the court took issue with the affidavits used to support the claim for $3 million. To make a long story short, the court found that Dr. Dre could not prove his damages because the affidavits were full of hearsay and speculation. The court also noted that Dr. Dre has previously made claims for royalties in this same case, which were denied, so, for reasons of claim preclusion and issue preclusion, the motion for allowance of an administrative expense claim was denied.  

HERE is a copy of the order if anyone is interested.

Tuesday, May 13, 2014

Rolewick & Gutzke, P.C. is Hiring

ROLEWICK & GUTZKE, P.C. is interviewing to hire a new associate attorney. They are looking for an attorney who has been admitted to the Illinois Bar at least 4 years and who has an interest in working in a general civil practice firm. They need a litigation attorney with trial experience in the areas of estate, probate, contract and shareholder disputes as well as plaintiff’s personal injury and malpractice.  
ROLEWICK & GUTZKE is a general practice firm presently consisting of six (6) full time attorneys. Although they handle some Cook, Will, and Kane County cases, as well as appear in Federal Court, their work is primarily concentrated in DuPage County. They represent clients in general corporate and commercial matters, business acquisitions and mergers, corporate litigation, personal injury and wrongful death, residential and commercial real estate transactions, estate planning, tax planning, and probate estates.
They ask that anyone who is interested in the position please mail or e-mail a resume, a transcript of their law school grades, a writing sample, job references, and salary requirements to the attention of Bruce Robinson as soon as possible.

Tuesday, April 29, 2014

Here is the whole complaint.

This is a copy of the lawsuit filed by Mrs. Donald Sterling against V. Stiviano. She alleges that Mr. Sterling transferred more than $2.5 million to the girlfriend. She wants it back because it was community property and Mr. Sterling transferred it without her consent.

There are even quiet title and reformation of deed counts, meaning that Mrs. Sterling wants to take Stiviano's house because it was purchased with community property. That would be an interesting eviction proceeding once Mrs. Sterling gets title to that property.

This is how the plaintiff sums it up: "This lawsuit involves the activities of Defendant Stiviano, who, Plaintiff is informed and believes and thereon alleges, engages in conduct designed to target, befriend, seduce, and then entice, cajole, borrow from, cheat, and/or receive as gifts transfers of wealth from wealthy older men whom she targets for such purpose."

That must be how lawyers who charge $1,000 per hour write. 

  Vanessa Stiviano Lawsuit

Monday, April 28, 2014

The Mrs. Donald Sterling v. V. Stiviano Lawsuit

The Donald Sterling recording has been all over the news recently. Supposedly, the tape was released by V. Stiviano to gain leverage in a lawsuit that was filed against her by Donald Sterling's wife, Rochelle Sterling. Mrs. Sterling alleges that Mr. Sterling gave V. Stiviano more than $2 million in marital funds, including a $1.8 million townhouse, $240,000 in cash, and more than $500,000 in vehicles, including two Bentleys, a Range Rover, and a Ferrari. Mrs. Sterling wants her money back.

I'm still trying to locate a full copy of this complaint, but I do have the first page. Illinois is not a community property state, so I am not familiar with the law behind Mrs. Sterling's theories, but the titles of all ten counts are spelled out pretty clearly on this first page. You'll see counts for conversion, constructive trust, unjust enrichment, etc. If anyone has a copy of the full document, please let me know. 
Tip of the hat to www.black-and-right.com for posting this photo, and also to Laura Erickson (@impetrio1) for directing me to it on twitter.

Saturday, April 19, 2014

Blake would have been able to retire after this settlement.

All of the Northern people who read this blog know my friend Blake Cosentino. Blake likes to unwind with a cocktail. And when he makes a drink, Blake prefers clear ice. I have seen Blake spend more money on ice for a party than most people spend on hors d'oeuvres. I'm not kidding. That is why Blake is the first person I thought of when I read about this class action settlement. 

In 2008, multiple class action lawsuits from around the country were consolidated into one mega case called In re Packaged Ice Antitrust Litig., No. 7-md-1952 (E.D. Mich.). The lawsuits alleged a conspiracy to raise and fix the price of ice against numerous major ice companies, including Arctic Glacier, one of the largest suppliers of ice in North America. I have read about this case before. There was direct evidence of an explicit conspiracy to steal hundreds of millions of dollars from consumers. 

The lawsuit drove Arctic Glacier into bankruptcy and, as part of their reorganization, they have allocated more than $460,000,000 to settle the class action claims. Anyone who bought at least three bags of ice from Arctic Glacier between 2001 and 2008 will be entitled to a $6.00 settlement. Anyone who bought more than 10 bags of ice during that time period will be entitled to $6.00 for the first 10 bags and an additional $.60 for each additional bag. You'll need receipts to claim more than 10 bags. Claims must be filed by June 12, 2014. Here is the website: www.arcticindirectpurchaser.com. The problem, however, is that those purchases of ice must have occurred in either AZ, CA, IA, KS, ME, MA, MI, MN, MS, NE, NV, NM, NC, TN and/or WI. 

What!!? Are you kidding me! No Illinois? And did you notice the dates? 2001-2008!! I met Blake in the fall of 2000, our first year of law school. We've been friends ever since. I know Blake keeps his receipts too. I know he could have made claim to a large portion of that 460 million dollar settlement if only Illinois was included in this class. It really could have been something. It's kind of depressing actually. Especially because I do feel partly responsible for some of those high ice bills, along with some of my unnamed co-conspirators from Old Orchard #4.  

Friday, April 11, 2014

Landlord and Tenant Obligations

I would like to thank the folks at Sterling Education Services for inviting me to speak at today's seminar in Rockford. The seminar was titled Fundamentals of Landlord-Tenant Law, and my particular topic dealt with the obligations of landlords and tenants.

HERE is a link to the written materials that I used for my presentation. These materials have been updated slightly based on several questions that I received from the audience, so this link contains the most recent version. I have also added this link to the Forms Archive section of the Blog.  

Wednesday, April 9, 2014

Reverse Mortgages

A reverse mortgage is a type of loan available to an individual borrower who is more than 62 years of age and who has sufficient equity in his or her primary residence. A reverse mortgage allows a borrower to cash out the equity in his or her house, in exchange for a lump sum or monthly payments, without making any immediate payments back to the lender. The lender is not entitled to repayment until the borrower dies, the property is sold, or the house is no longer used as the borrower's primary residence. 
All of that seems very straightforward, but what actually happens after the death of the borrower? Oftentimes, children may expect to inherit their parents' real estate and they may not even know that their parents had taken reverse mortgages later in life. There are very specific rules dealing with the timelines and payoff procedures which, if not followed, can lead to a mortgage foreclosure lawsuit. Children of parents who die with reverse mortgages risk losing the family home if they are not aware of their rights.
Under federal regulations governing reverse mortgages, heirs have up to 30 days from when the loan becomes due to determine what they want to do with the property, and up to six months to arrange financing. More importantly, there is a rule that allows heirs to pay 95 percent of the current fair market value of the property for a release of the mortgage. The difference offered by the 95 percent rule can be critical. Following the financial crisis, the disparity between the current value of a home and the total balance on the mortgage can often mean the difference between keeping a home and losing it to foreclosure.
If you are dealing with a reverse mortgage lender following the death of a parent, you may wish to consult an attorney to make sure that you understand all of your options.

Sunday, March 16, 2014

A father has no legal right to be in the delivery room, a court rules.

A woman preparing to give birth has no obligation to notify the father when or where the birth will occur, a New Jersey court has ruled. And if the father does appear at the hospital, the mother can bar him from entering the delivery room. The case appears to be the first of its kind nationwide.

The case arose after a couple conceived a child, got engaged, but later called off the wedding. After the wedding was called off, they were barely on speaking terms. The father finally sued the mother and requested access to the baby at the hospital after its birth. He didn't even request to be in the delivery room.

The court specifically ruled that fathers have no established legal right to be present at the birth of their children. Going further, the court also said that the father wasn't even entitled to know at which hospital the birth would occur. 

The court first noted that he father’s presence could put undue stress on the mother and possibly harm the fetus. In this case, the mother had undergone testing for premature labor and stress. But, more importantly, the court pointed to the strong constitutional and statutory protections afforded to all medical patients, not only pregnant women. Basically, any patient can decide who he wants to have at his bedside. The fact that they were dealing with the birth of a baby had no consequence. The court ruled that any interest a father has before the child’s birth is “subordinate to the mother’s interests.” 

This seems like a tough result, but it was the only logical decision for the court after it analyzed two landmark Supreme Court cases on abortion. The court cited Roe v. Wade from 1973 and Planned Parenthood v. Casey from 1992. Both of those cases established stronger privacy rights for expectant mothers and their unborn child than their fathers. Specifically, the Casey ruled that women are not even required to tell their spouses about abortions. An abortion seems like much more of a drastic situation than a birth, so the court ruled that the same privacy rights should be extended to births as well.

Friday, March 14, 2014

Deposition Levity

I'm going through some deposition transcripts in preparation for an upcoming trial. I thought you might enjoy the following exchange:
Mr. Huseman:  Do you have an attorney in that case?
Witness:  Yes.
Mr. Huseman:  Who is it?
Witness:  Grossman.
Mr. Huseman:  Rex Grossman?
Witness:  No. Jay Cutler.
Sometimes it's the little things that get me through the Friday afternoons.

Thursday, March 13, 2014

Refresher on Bailment

I'm reading a 7th Circuit opinion concerning the bankruptcy case of a commercial livestock operation, In re Mississippi Valley Livestock, Inc. Without getting into the facts or the holding of the case, I just thought I would pass along the following succinct definition of a bailment relationship in case anybody is interested:
Under Illinois law, “bailment is ‘the delivery of goods for some purpose, upon a contract, express or implied, that after the purpose has been fulfilled [the goods] shall be redelivered to the bailor, or otherwise dealt with according to his directions, or kept till he reclaims them.’” Kirby v. Chi. City Bank &  Trust Co., 403  N.E.2d  720,  723 (Ill. App.  Ct.  1980);  see also Berglund v. Roosevelt Univ., 310 N.E.2d 773, 775 (Ill. App. Ct. 1974) (“Bailment is defined as the rightful possession  of  goods  by  one  who  is  not  an owner.”).  Although bailment takes  many  forms,  the  “characteristics common to  every bailment  are the intent to create a bailment, delivery of possession of the bailed items, and the acceptance of the items by the bailee.” Id. at 775–76.

Tuesday, February 4, 2014

Federal Defender Job Opening.

The United States Court of Appeals for the Seventh Circuit is accepting applications from all qualified applicants for the position of Federal Defender for the Central District of Illinois headquartered in Peoria.

The application deadline is February 24, 2014. HERE is a PDF with more information.

Friday, January 31, 2014

Someone didn't think this plan all the way through.

The majority of my practice involves the collection of debts in one form or other. I represent both creditors and debtors and almost every one of my cases involves somebody trying to get money from someone else.

Over the past ten years, I've seen many crazy and unbelievable things. But I've never seen anything this crazy. A woman in Russia recently underwent a sex change operation in an attempt to become a new person to get out of paying a debt.

Unfortunately, changing your gender does not make you an entirely different person and Nataly, now known as Andrian, is still liable for the original debt. HERE is a link to the article.

Thursday, January 23, 2014

Fundamentals of Landlord-Tenant Law Seminar

For those of you who are interested, I will be speaking at a landlord-tenant law seminar in Rockford on April 11, 2014.

Here is a copy of the brochure: http://store.sterlingeducation.com/pdf/1483.pdf

Tuesday, January 14, 2014

Ty Warner is a really good guy (with lots of really good lawyers).

Ty Warner, the creator of Beanie Babies, has been in the news recently for all the wrong reasons. His name was on a list of tax cheats that the Swiss bank UBS turned over to authorities in an attempt to lessen their own culpability in a tax scandal. It turns out that Mr. Warner used an illegal tax shelter to avoid payment of approximately $850,000 in income taxes in 2002. (He made $49 million that year.) He was indicted for tax fraud and eventually pleaded guilty. He agreed to pay a fine of $53 million. He was scheduled to be sentenced on January 14, 2014.

In preparation for the sentencing hearing, Mr. Warner hired a bunch of really expensive lawyers. He hired at least three separate firms, including Kirkland & Ellis, Caplin & Drysdale, and Scandaglia & Ryan, from New York, Washington D.C., and Chicago, respectively. These three firms filed a 35 page Memorandum in Support of a Sentence of Probation, basically a mitigation report.  

HERE is a link to the report. This thing is fascinating. Just open the Memo and scan the table of contents. It is a legal masterpiece. I can't even guess how many hours went into the preparation of this report, nor the average hourly rate. In addition to making compelling and well-supported legal arguments as to the appropriateness of a sentence of probation, this Memo could also be filed in support of Mr. Warner's canonization. It basically outlines his entire life starting with his humble beginnings and then details nearly every bit of good he has ever done in his life, including specific itemization of more than $140 million in charitable gifts that he's made since 1995. 

In the end, whatever this Memo cost him was worth the price. He was sentenced this morning to two years of probation.  Nice work counselors.