Justia Legal Ethics Opinion Summaries

VLM, a Montreal-based supplier, sold frozen potatoes to IT in Illinois. After nine successful transactions, IT encountered financial difficulty and failed to pay for the next nine shipments. Invoices sent after delivery included a provision purporting to make IT liable for collection-related attorney’s fees if it breached the contracts. VLM sued; the deadline for an answer passed. The court entered a default. On defendants' motion, the court vacated the default as to IT’s president only. All three defendants then filed answers, contesting liability for attorney’s fees. The judge applied the Illinois Uniform Commercial Code and found that the fee provision had been incorporated into the contract. The Seventh Circuit reversed, holding that the U.N. Convention on Contracts for the International Sale of Goods applied. On remand, the judge applied the Convention and held that the fee provision was not part of the contracts and that IT could benefit from this ruling, despite the prior entry of default. The Seventh Circuit affirmed. IT never expressly assented to the attorney’s fees provision in VLM’s trailing invoices, so under the Convention that term did not become a part of the contracts. VLM waived its right to rely on the default by failing to raise the issue until its reply brief on remand. View "VLM Food Trading Int'l, Inc. v. Ill. Trading Co." on Justia Law

FirstMerit Bank sued CFE Group in federal court to enforce a promissory note and guaranties. The district court dismissed without prejudice, with leave to amend. Rather than amend, FirstMerit filed a notice of voluntary dismissal under Federal Rule of Civil Procedure 41(a)(1)(A)(i). FirstMerit then filed a new complaint in an Illinois state court asserting the same claims. CFE moved to dismiss the new suit, arguing that the earlier federal dismissal meant that FirstMerit’s claims were barred by claim preclusion (res judicata). The state trial court denied the motion. CFE filed a new federal action, seeking to enjoin the state court under the relitigation exception to the federal Anti‐Injunction Act, 28 U.S.C. 2283. The district court refused, ruling that the dismissal of the first federal case was not a judgment on the merits and, therefore, did not preclude the state action. The Seventh Circuit affirmed, noting that CFE’s request for an injunction was also barred by the Full Faith and Credit Act, 28 U.S.C. 1738, and finding the appeal frivolous, so that sanctions on CFE are appropriate. View "CFE Group, LLC v. FirstMerit Bank, N.A." on Justia Law

Lawyer Spicer represented plaintiff Egan in a case that alleged sex discrimination and the creation of a hostile work environment. The complaint included allegations that Egan, at her deposition, emphatically denied. Spicer conceded that the allegations in the paragraph were false and claimed “proofreading error.” The case was ultimately dismissed for lack of personal jurisdiction. The district judge imposed a $5,000 sanction on Spicer for “bad faith” misconduct/ The Seventh Circuit affirmed, calling Spicer’s excuses “pathetic” and noting that it took six months for Spicer to correct the complaint. View "Egan v. Pineda" on Justia Law

The law firm represented Goesel, a minor, and his parents in a personal-injury suit that settled before trial. The law firm needed judicial approval to finalize the settlement. The contingent-fee agreement entitled the firm to one-third of the gross settlement; all litigation expenses would be covered by the Goesels’ share. The court refused to approve the settlement unless litigation expenses were deducted off the top and one-third of the net settlement was allocated to the firm and rejected the firm’s attempt to count the cost of computerized legal research as a separately compensable expense rather than rolling it into the fee recovery. The Goesels declined to participate in an appeal, so the court appointed an amicus to argue in support of the decision. The Seventh Circuit reversed. Though the court enjoys substantial discretion to safeguard the interests of minors in the settlement of litigation, this discretion is not boundless. Here, the judge criticized aspects of the firm’s contingent-fee agreement that have received the express blessing of Illinois courts. Once these improper reasons are stripped away, the only rationale that remains—that “fairness and right reason” require that the Goesels receive 51% of the gross settlement amount rather than 42%—is insufficient to justify discarding a reasonable contingent-fee agreement. View "Williams, Bax & Saltzman, P.C. v. Boley Int'l (H.K.) Ltd" on Justia Law