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Tuesday, July 27, 2010

Ind. Decisions - Two Indiana decisions today from 7th Circuit, and a FDCPA case out of Illinois

In Prime Eage v. Steel Dynamics (ND Ind., Moody), an 8-page opinion, Chief Judge Easterbrook concludes:

Prime Eagle suggests that, when the reorganization began, and a new set of investors took over (the old bondholders’ claims were converted to equity, and new debt capital was raised), Nakornthai effectively “forgot” what the board had been told in 1998. The board members to whom Schultes passed the information were no longer there; Schultes himself was gone. The common law of agency does not provide for corporate forgetfulness, however; information is a corporate asset that does not vanish when investors elect a new board. A corporation is a continuing entity as the board changes, just as the United States of America is a continuing entity governed by legal texts adopted in 1788 and 1791, even though George Washington is no longer the President and James Madison no longer sits in the House of Representatives. More: if Schultes’ report drops out of the picture, then Steel Dynamics’ statements do too; it is not possible to adopt a rule that turnover on the board causes selective corporate amnesia.

Prime Eagle argued in the district court that Steel Dynamics is equitably estopped to plead the statute of limitations, but it has not contested on appeal the judge’s adverse decision. It does argue for equitable tolling during its insolvency, but it misunderstands the doctrine. Equitable tolling does not restart the period of limitations, as Steel Dynamics supposes. Instead it permits deferral of suit until the tolling event ceases and requires diligent action thereafter. See, e.g., Pace v. DiGuglielmo, 544 U.S. 408, 418–19 (2005); Cada v. Baxter Healthcare Corp., 920 F.2d 446 (7th Cir. 1990); Jay E. Hayden Foundation, slip op. 10–11. Nakornthai was out of bankruptcy, and had its mill running, with at least eight months left in the period of limitations, even on the earliest possible accrual date. (Steel Dynamics contends that the first injury occurred in August 1998.) Nakornthai waited more than four years after the success of its mill put the lie to Steel Dynamics’ analysis, and 5½ years after the consultant reported that the mill would run just fine as is. Prime Eagle has been anything but diligent and cannot use equitable tolling to justify the untimely filing. AFFIRMED

In Marion County Coroner's Office v. EEOC and Lineham (EEOC), a 16-page opinion, Judge Evans writes:
The chief deputy coroner of Marion County, Indiana, John Linehan, a white male, was stripped of certain duties and ultimately fired by the coroner, Dr. Kenneth Ackles, an African-American male. After hearing testimony from fourteen witnesses, an Equal Employment Opportunity Commission (EEOC) administrative law judge (ALJ) found that the coroner’s office took action against Linehan based on his race and in retaliation for an internal complaint that Linehan filed against Ackles. Linehan was awarded front and back pay, attorney’s fees, and $200,000 in compensatory damages. The EEOC affirmed in all material respects. The coroner’s office now petitions for review, arguing that the findings of discrimination and retaliation were erroneous and that, even if they were not, the compensatory damages award was excessive under the circumstances. * * *

For the foregoing reasons, the petition for review is DENIED IN PART and GRANTED IN PART. The compensatory damages award is VACATED, and the matter is REMANDED to the EEOC for proceedings consistent with this opinion.

In Gburek, et al v. Litton Loan Servicing (ND Ill.), a 14-page opinion, Judge Sykes writes:
Litton Loan Servicing (“Litton”) serviced a mortgage on a home owned by Camille Gburek. When Gburek fell behind on her mortgage payments, Litton sent her a letter offering to discuss ways she could avoid losing her home in foreclosure and asking for her current financial information. A few days later, Gburek received a letter from Titanium Solutions (“Titanium”) on behalf of Litton; this letter reiterated Litton’s offer to work with Gburek on foreclosure alternatives and asked again for Gburek’s financial information.

Gburek responded with this lawsuit, claiming that Litton had engaged in illegal debt-collection practices in violation of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq. The district court granted Litton’s motion to dismiss, concluding that Litton’s conduct did not fall within the scope of the FDCPA because the letters Gburek received did not contain a demand for payment.

We reverse. Generally speaking, a communication from a debt collector to a debtor is not covered by the FDCPA unless it is made “in connection with the collection of any debt.” Id. §§ 1692c, 1692e. The district court thought Litton’s offer to participate in loan-workout negotiations was not made “in connection with” any debtcollection efforts because it did not contain an explicit demand for payment. This reads the statutory language too narrowly and ignores salient facts alleged in the complaint: Gburek’s mortgage was in default, and the text of the letters indicate they were sent to induce her to settle her mortgage-loan debt in order to avoid foreclosure. The complaint thus sufficiently alleges communications that were “sent in connection with an attempt to collect a debt,” Ruth v. Triumph P’ships, 577 F.3d 790, 798 (7th Cir. 2009), and in violation of the FDCPA.

Posted by Marcia Oddi on July 27, 2010 01:52 PM
Posted to Ind. (7th Cir.) Decisions