Video: Plain Language Explanation of Cypress Creek and House Bill 3636

Do you get a headache trying to navigate through the Illinois Supreme Court's Cypress Creek decision on mechanic lien vs. mortgage priority and Illinois House Bill 3636 to seeking to overturn that decision? Here's relief.

The Illinois House Judiciary Committee held hearings on House Bill 3636 yesterday in Chicago. At hearings last spring the committee asked stakeholders and witnesses to return later and explain—simply—what the Cypress Creek decision does, what House Bill 3636 proposes to change, and the effect those changes would have. And because it's impossible to simply explain using only words, the Illinois Bankers Association produced and presented this video at yesterday's hearing.....  

Personal disclaimer: I worked on production of this video and presented in testimony before the committee yesterday.


Fraud Claim Killer: The Contract Non-Reliance Clause--It's Not Just For Securities Anymore (Part 2)

Man Pointing Finger in Viewer's FaceIn Episode 1 of Fraud Claim Killer we talked about how the contractual non-reliance clause just became a lot more potent in the Schrager v. Bailey (PDF) decision. And at the end I promised to fill you in on:

  • Limits on non-reliance clauses
  • When judges are reluctant to enforce them
  • What makes them reluctant
  • Tips to make your non-reliance clause useful and enforceable
Continue Reading...

Fraud Claim Killer: The Contract Non-Reliance Clause--It's Not Just For Securities Anymore (Part 1)

Fraud Complaint Non-Reliance clauses: language in a contract where one (or more) of the parties affirms that in making their decision to enter into the contract, they're relying exclusively on what's written on the paper in the contract, and nothing else. Why have them? To cut off claims. Particularly the kind that involve a lot of "he said, she said" About what one side said they’d do, or wouldn't do, but what they're alleged to have said didn’t make it into the contract. It's a situation that comes up most often in misrepresentation claims.

Judges have long enforced non-reliance clauses to nip misrepresentations claims in the bud and early in a case. But that’s usually been in securities fraud cases. Recently though, a panel of Illinois Appellate Court judges expanded non-reliance clause enforcement far beyond securities cases, in a way that suggests they’ll be just as potent in contracts used in the design and construction industries. The decision: Schrager v. Bailey (PDF), where the judges applied a non-reliance clause to summarily dismiss misrepresentation claims in a legal malpractice case.

Continue Reading...

How to Stop a Bank Run

Laundromat that was formerly Bronx Branch of Bank of the United StatesThe recent trouble surrounding banks in Greece got NPR's Planet Money team to produce piece on how to stop a bank run. There's 3 traditional tools. To learn about them we have to go back to the bank failures in the Great Depression and before. The story starts at this laundromat, once the Bronx branch of the Bank of the United States, site of a 1930 bank and continues in this podcast.......


D'Oench, Duhme Doctrine Applies to Failed Bank Subsidiaries

Blank Cmpany Organizational ChartA federal court in Milwaukee recently decided that the subsidiary of a failed bank, not the receiver for the failed bank itself, may also use the D'Oench, Duhme doctrine and 12 USC § 1823(e) to stop claims by a borrower and developer fostered by a construction loan that went very badly. The decision: SJ Properties Suites v. Specialty Finance Group, LLC (PDF).

Backstory: SJ Properties Suites v. Specialty Finance Group, LLC

Silverton Bank in Atlanta, Georgia had a wholly owned subsidiary called Specialty Finance Group, LLC (the "Lender"). The Lender focused on acquisition, development, and construction lending to hotel and other hospitality developers. One borrower was SJ Properties Suites for a project in Milwaukee, Wisconsin.

Continue Reading...

US Green Building Council LEED Certification and Accreditation Lawsuit Dismissed

US Green Building Council LogoAn architect, an engineer, and a consultant sued the US Green Building Council in federal court in Manhattan. They claim that LEED building certification and professional accreditation is deceptive and violates racketeering, trademark, and consumer protection laws. 

A few days ago, the judge hearing the case, Hon. Leonard B. Sand, dismissed the lawsuit in this order (PDF)





Mortgage vs. Mechanics Lien: Following- Up on LaSalle Bank, N.A. v. Cypress Creek 1, LP

Much Shelist Litigation & Counseling Alert Graphic Header

My colleagues Scott Smith, David Eisenberg, and I just published a short article about the Illinois Supreme Court's controversial LaSalle Bank, N.A. v. Cypress Creek 1, LP decision.  It focuses on three things:

  • A summary of who was involved, what their respective stakes were, the positions they took, and how the Justices reacted to them to decide the case
  • How this decision affects construction industry stakeholders, particularly construction lenders and anyone who may claim a mechanics lien (e.g., prime contractors, subcontractors, material and equipment suppliers, architects, engineers, and other design professionals)
  • Initiatives in the Illinois General Assembly to amend the Mechanics Lien Act to change the results in future cases

And it's a  wrap-up on Construction Law Today coverage that started back here: Mechanics Lien Priority: Contractor vs. Lender - Part 1. Click this link to navigate on to our article

Also in the same Litigation & Counseling Alert, some of our other colleagues also wrote these companion articles that may interest you too:

  • Insurance and Due Diligence in the Business Transaction
  • Can a Forbearance Agreement Actually Help a Lender Collect from Its Debtor?


How Does D'Oench, Duhme Affect Joint Venture and Partnership Agreements: ORL, LLC v. Hancock Bank

Joint Venture AgreementA federal court in Orlando, Florida recently decided that the D'Oench, Duhme doctrine stops claims for breach of a joint venture agreement. So does D'Oench's statutory supplement, Section 13(e) of the Federal Deposit Insurance Act (also referred to as 12 USC §1823(e)). The decision: ORL, LLC v. Hancock Bank (PDF).

Backstory: ORL, LLC v. Hancock Bank

A pair of real estate development companies borrowed money from a pair of banks (Peoples First Community Bank and Colonial Bank).  They used the money to buy land and construct a condominium project called the Blue Heron Beach Resort. Some of the borrowers' principals guaranteed the loans too.

As the borrowers encountered trouble, the banks agreed to modify some terms of the loan documents. One of the banks also agreed to provide purchase money "end-loans" to the buyers purchasing completed condominium units from the borrowers.

Unfortunately, the banks ran into trouble too. Colonial failed. Then Peoples First failed too. The FDIC was appointed as receiver for each bank. The FDIC sold the Peoples First loan to Hancock Bank under a Purchase and Assumption Agreement.

Continue Reading...

Chicago: Big Cement Pour on Wacker Drive

Estimating that over 125 cement trucks will be delivering loads for a big pour today, the Chicago Tribune warned commuters to avoid Wacker Drive, especially around Randolph and Lake Streets.  Here's crews and trucks at work as I walked past on the way to work this morning.....


 Construction workers pouring concrete at Wacker and Randolph in Chicago



Cement Truck delivering cement at Wacker and Randolph in Chicago 


Does D'Oench, Duhme Apply to Employment Contract Claims: Ortiz-Hernandez v. Westernbank of Puerto Rico

WesternBank Plaza BuildingA federal court in Puerto Rico recently decided that the D'Oench, Duhme doctrine applies to deny claims for breach of informal employment contracts by former employees of failed banks.  And D'Oench's statutory supplement, Section 13(e) of the Federal Deposit Act (the "FDI Act", also referred to as 12 USC §1823(e)), applies too.  The decision: Ortiz-Hernandez v. WesternBank of Puerto Rico (PDF).

Backstory: Ortiz-Hernandez v. WesternBank of Puerto Rico

Rafael Ortiz-Hernandez worked as an employee for Westernbank of Puerto Rico.  He resigned in the spring of 2008 and, as part of his departure, entered into a severance contract with the bank. The severance contract didn't mention a Christmas bonus (the employee had traditionally received a $13,000 bonus each Christmas from the bank).  Despite the omission, the employee claimed that bank executives assured him he would still receive $13,000 as a bonus the following Christmas.  The assurances weren't written.  When Christmas arrived, the bank paid him less than $13,000 as a bonus.  So, the employee sued the bank for the remainder of his bonus.

Continue Reading...