Child Representatives Enjoy Absolute Immunity

In Davidson v. Gurewitz (October 20, 2015) (here), the Appellate Court, Second District, held that a child representative appointed under section 506(a) of the Marriage and Dissolution of Marriage Act enjoys absolute immunity from malpractice liability.

Pursuant to section 506(a)(3), the trial court appointed Thomas Gurewitz as the child representative of the divorcing parent’s minor child. After the trial court entered the judgment of dissolution, the mother sued Gurewitz for malpractice. The mother claimed that Gurewitz completed his duties as a child representative on October 1, 2012, when the parties entered into a parenting agreement that settled all issues relating to the best interests of the child. The plaintiff further alleged that instead of withdrawing from the case after completing his duties, Gurewitz participated in the trial by cross-examining the plaintiff and making a closing argument. According to the malpractice complaint, Gurewitz’s unauthorized actions resulted in the entry of a judgment “replete and filled with vindictiveness relating to [plaintiff].”

Gurewitz moved to dismiss the malpractice action arguing that it was barred by the doctrine of absolute immunity. The appellate court acknowledged that section 506(a) does not, by its terms, immunize child representatives. But the court determined that the common law affords immunity to court-appointed child representatives. Thus, the Second District aligned itself with the First District’s decision in Vlastelica v. Brend (here), finding that absolute immunity is necessary so that a child representative can “fulfill his obligations without worry of harassment and intimidation from dissatisfied parents.”

A $1.5 Billion Clerical Error

In 2001, General Motors obtained a $300 million loan from a group of lenders that included J. P. Morgan Chase Bank. J. P. Morgan obtained a security interest in real estate owned by GM. J. P. Morgan then perfected its security interest by properly filing two separate UCC-1 financing statements, making it a secured lender. 

In 2003, General Motors needed another $1.5 billion. GM borrowed the money from a different group of lenders that also included J.P. Morgan. This time, J.P. Morgan obtained a security interest in a significant portion of GM's equipment and fixtures at forty-two facilities throughout the United States. Again, J.P. Morgan perfected its security interest by properly filing one UCC-1 financing statement, making it a secured lender for purposes of the larger loan.

In 2008, GM decided to pay off the $300 million dollar loan. GM contacted its attorneys at Mayer Brown LLP to prepare documents that would release the liens on GM's real estate once the loan was paid off. Apparently, a partner at Mayer Brown assigned this work to an associate, who then assigned the work to a paralegal. The paralegal obtained a UCC lien search which revealed all three UCC-1s, the two for the $300 million loan and the one for the $1.5 billion loan.

You can probably guess what happened next. Mayer Brown prepared a closing checklist and proposed UCC termination statements for all three liens. The closing checklist and draft documents were circulated to J.P. Morgan and its counsel, Simpson Thacher & Bartlett LLP. No one who reviewed the documents noticed anything out of the ordinary. After the $300 million loan was paid in full, all three UCC termination statements were filed with the Delaware Secretary of State, including a termination statement on the $1.5 billion loan.

In 2009, GM filed bankruptcy. As part of the scramble for assets, the Official Committee of Unsecured Creditors discovered that J. P. Morgan was not secured on the $1.5 billion like it thought it was. The Committee then filed suit to declare J. P. Morgan unsecured. J. P. Morgan argued that the UCC termination statement was ineffective because UCC Section 9-509(d)(1) provides that termination statements are only effective if "the secured party authorizes the filing." J. P. Morgan argued that it could not have "authorized" the filing of the release on the $1.5 billion loan because it did not intend to terminate that security interest, nor did it instruct anyone else to do so on its behalf.

The case eventually made it to the Second Circuit Court of Appeals. The Second Circuit pointed out that what J. P. Morgan intended to accomplish was not the relevant issue when determining whether it "authorized" the filing. The relevant inquiry was what actions J. P. Morgan had authorized to be taken on its behalf. The Court found that J. P. Morgan, directly and through counsel, had plenty of opportunities to review the closing documents. Each time, it consented to the closing checklist and all three UCC termination statements. Therefore, the incorrect UCC termination statement was effective because it was "authorized" by the secured party as required by the Uniform Commercial Code.

The Second Circuit's opinion can be found HERE.  

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.