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Defenses to Libel and Slander

Not every false statement, even ones that seem very egregious on their face, can be the basis of a defamation claim. As a recent decision involving media coverage of a political candidate illustrates, when the statements at issue do not fall into one of the per se defamatory categories under Illinois law, the lack of special damages can be fatal to a defamation suit.

Philip Piscopo Protects Parent's Rights and Wins Reversal of Custody Decision

We are really proud of our partner, Philip Piscopo, for his outstanding work on an appeal last year in obtaining an outright reversal of trial court's decision to deny a father's request to obtain primary residential custody of his daughter. In In re the Parentage of A.I.G-K.,2018 Ill App (2d) 170601-U, a father asked the court to modify custody so that he could have primary residential parenting time for his daughter. The Guardian recommended against granting the father primary residential parenting time, and the trial court agreed. However, on appeal our partner persuaded the Appellate Court that the Guardian's recommendation was wrong, and it reversed the trial court's decision, finding that the best interests of the child required that she be placed with her father.

Complex Partnership Litigation- Breach of Contract or Rescission

Complex Partnership Litigation- Breach of Contract or Rescission
The choice between seeking money damages for the breach of contract versus rescission of the contract can be an important one. And knowing the rules governing appeals is also crucial. The recent case of Horwitz v Sonnenchein Nath & Rosenthal ,2018 IL App (1st) 161909 illustrates both points.
The Plaintiff was an equity partner in a law firm who exchanged his existing equity stake for a new interest as a partner under a "special partnership agreement" that was supposed to allow him to continue to work for the firm but lower his workload and compensate him differently. The partner claimed that the law firm started breaching the new agreement almost immediately but he continued to work for the firm under the new agreement for six years before he filed suit. He sued for a breach of contract and money damages (for the amounts he should have received under the new agreement) but also sued to rescind the contract to regain his original equity position.
The law firm succeeded in forcing the Plaintiff to try his breach of contract claim first to a jury, where he recovered a judgment for the amounts the jury found he should have been paid under the new agreement. The Plaintiff did not appeal the judgment or seek and new trial or an "additur" to change the amount he was awarded. It appears that if he had succeeded in being restored to his earlier position, he would have been due significantly more than what the jury awarded him. However, the law firm next argued that he had received an adequate remedy at law in the form of the money judgment and therefore was barred from pursuing his rescission claim. The trial court disagreed and allowed the Plaintiff to try his rescission claim, but the Plaintiff lost that claim with the Court finding that the Plaintiff had waited too long to seek rescission and that his claim for the monetary amounts he was seeking were too speculative.
On appeal the court ruled that the Plaintiff's money judgment awarded on his breach of contract claim was an "adequate remedy at law" which then barred his rescission claim. The Court reviewed a number of cases which discussed the issue of whether a claim for breach of contract and a claim for rescission are mutually exclusive. The Court held that here, the damages for the breach of the contract were an adequate remedy that barred his rescission claim as a matter of law.
The case illustrates that in partnership matters, careful thought should be given to whether or not to pursue claims based upon a breach of contract theory versus rescission or some other equitable theory.
The case also highlights that in these complex partnership litigation cases, paying close attention to the rules governing appeals may become extremely important.
By: PETER M. STORM ©
Cooper, Storm & Piscopo handles both complex partnership litigation and appeals.

THE ILLINOIS OPEN MEETINGS ACT REQUIRES PUBLIC BODIES TO MAKE A PUBLIC RECITAL OF THE MATTER UNDER CONSIDERATION BEFORE VOTING

BUT HOW WILL THE ILLINOIS SUPREME COURT RULE?
Two cases from the Fourth District Appellate Court interpreting the "Public Recital" requirement of the Illinois Open Meetings Act have set the stage for the Illinois Supreme Court to weigh in on this issue.
Section 2 (e) of the Illinois Open Meetings Act (5 ILCS 120/2 (West 2014)) sets forth what is known as the "Public-Recital" requirement. It states as follows:"Final action. No final action may be taken at a closed meeting. Final action shall be preceded by a public recital of the nature of the matter being considered and other information that will inform the public of the business being conducted."
In Board of Education of Springfield School District No. 186 v. Attorney General of Illinois, 2015 IL App (4th) 140941, the appellate court determined that the Board of Education of Springfield complied with the public-recital requirement of section 2(e) of the Act before it approved an agreement terminating the employment of its superintendent, by posting an agenda on its website that included an item entitled, " 'Approval of a Resolution regarding the *** Agreement *** Between Superintendent *** Milton *** and the Board.' " (Id. ¶ 7) with a hyperlink directly underneath that item linked to a digital copy of the agreement. (Id. ¶ 39).
In addition, at the meeting, the Board's president introduced the item by stating as follows: " 'I have item 9.1, approval of a resolution regarding the *** Agreement. The Board president recommends that the Board ***vote to approve the *** Agreement between *** Milton *** and the Board." Id. ¶ 7.
But in a case just decided this month Allen v. Clark County Park District Board of Commissioners2016 IL App (4th) 150963 the Fourth District Appellate Court ruled that the Clark County Park District Board of Commissioners violated the Act's public recital requirement when they voted to approve unidentified leases and covenants but only announced that approval of lease rates and covenants were the matters up for consideration before moving to approve both.
However, the appellate court stopped short of setting forth any specific requirements for public recitals in general, leaving that task for the Illinois Supreme Court because it has granted leave to appeal to hear the Springfield case.Watchdog groups and public bodies will want to follow the progress of the Springfield case carefully because the Illinois Supreme Court may be in a position to clarify what public bodies must do to meet this requirement.
Peter M. Storm
Cooper, Storm & Piscopo

Illinois Appellate Court Rules That Shareholders in a Dispute Cannot Be Forced to Pay for A Provisional Director

Illinois Appellate Court Rules That Shareholders in a Dispute Cannot Be Forced to Pay for A Provisional Director
In Sinkus v. BTE Consulting 2017 IL App (1st) 152135 the First District Appellate Court reversed a trial court's ruling holding a shareholder in contempt after he refused to obey the Court's order directing him to contribute to a capital call ordered by the Court to pay for a provisional direction which the Court appointed pursuant to Section 12.56(g) of the Business Corporation Act of 1983 ("Act") (805 ILCS 5/12.56(g) (West 2014)). The order grew out a lawsuit between two shareholders each owning fifty percent (50%) of the shares of the corporation. The Plaintiff resigned as a director and sued the other shareholder for breach of fiduciary duties and other claims alleging among other things that the other shareholder had diverted corporate business to another company he had formed. Plaintiff moved to disqualify the Defendant shareholder's attorney from representing both the corporation and the individual shareholder but the trial court denied that motion and appointed a provisional director instead. Because the corporation allegedly did not have sufficient funds to pay the provisional director, the trial court ordered both shareholders to contribute first $25,000 each to pay the provisional director and later another $30,000 each, but the Plaintiff refused to comply with the court's orders. The Plaintiff allowed the court to hold him in contempt and impose a fine and then appealed the order.
The appellate court held that the trial court lacked the authority to have ordered the Plaintiff to contribute to the payment of the provisional director's fees. Noting that Section 6.40 of the Business Corporation Act provides that shareholders are not responsible for financial obligations of the corporation other than the payment of the full consideration for their equity shares. 805 ILCS 5/6.40. The Appellate Court then further held that plain language of Section 12.56(g) of the Act requires that the compensation of a provisional director appointed under the Act be paid by the corporation, not its shareholders.
The Court mentioned in passing that shareholders may agree in a written shareholder's agreement to be subject to capital calls. The Court cited Salce v. Saracco,409 Ill. App. 3d 977 (2011) in which the court considered what is necessary to plead a breach of contract claim for the breach of a capital call provision in a shareholder's agreement.
In the wake of the ruling in Sinkus, a controlling shareholder's request to appoint a provisional director in a shareholder dispute will almost certainly result in the corporation and not the complaining shareholder being held responsible for the payment of the provisional director's fees. And from a business planning perspective, those considering investing in a close corporation should be wary of shareholder agreements that authorize capital calls in the event of a dispute or litigation between shareholders.
Peter M. Storm Posted 20th March 2017 by Peter Storm

WARNING: THE INDEMNITY CLAUSE IN YOUR ILLINOIS SNOW REMOVAL CONTRACT FOR 2016-2017 MIGHT BE VOID

Illinois has just enacted "The Snow Removal Service Liability Limitation Act".
This new law declares that any indemnity, hold harmless, or liability shifting provisions in snow removal contracts entered into after the effective date of the new law, August 25, 2016, are void and against public policy in Illinois. Basically, it is no longer possible for snow removal customers (Shopping centers, Home Owner's Associations, Condominium Associations, other property owners, etc.) to shift to the snow removal contractor the liability for snow and ice related accidents and injuries arising out of the negligence of the property owner or their customers or members. Similarly, snow removal contractors can no longer contractually require their customers to assume the liability for and defend claims for accidents and injuries that are the fault of the snow removal contractor.
This change in the law is the result of a continuing effort on the part of the Accredited Snow Contractors Association to have all snow-industry states adopt their model legislation.
Proponents of the new legislation say that it will lower insurance rates, and increase the value of professional snow and ice management services, because property owners will no longer be able to pass their liability on to the contractor. They also claim that snow removal customers will not have contracts that reduce services essential to create safe conditions.
Snow removal contractors and property owners/managers throughout Illinois should seek legal counsel to be sure that their snow removal contracts for the coming winter season comply with this law.
Peter M. StormCooper, Storm & Piscopo

NEW ILLINOIS LAW WILL VOID COVENANTS NOT TO COMPETE FOR HOURLY EMPLOYEES EARNING LESS THAN $13 PER HOUR

Beginning January 1, 2017, a new Illinois law will prohibit employers from requiring employees earning less than $13 per hour to sign a covenant not to compete. The new law, the "Illinois Freedom to Work Act" provides that any such agreement is void and illegal. Employees of governmental or quasi-governmental employers are not covered by this new law. Employers with hourly employees covered by this new law should carefully review all of their existing employment agreements to assure compliance. Illinois General Assembly - Full Text of Public Act 099-0860
Peter M. StormCooper, Storm & Piscopo

Beneficiaries Stated Claim for Breach of Fiduciary Duty and Breach of Trust Provisions Where Their Father Made a Gift from Marital/Family Trust to His New Wife


Gwinn v. Gwinn, 2016 IL App (2d) 150851

The Second District Appellate Court in Illinois has ruled that the gift provisions in a Marital/ Family Trust did not give the surviving Husband as trustee the discretion to make a large gift from the trust to his new wife. The Court held that even though the trust provisions permitted him to use the trust assets for what he deemed in his discretion to be "necessary or advisable" for his health, support and maintenance, that did not authorize him to use large amounts of money to pay for the construction of a home in Colorado and title it in his new wife's name. The court relied with authority on the the Restatement (Third) of Trusts § 50 cmt. d(2) (2003),which explains that provisions for using trust assets for the support and maintenance of a beneficiary do not authorize distributions in order to enlarge the beneficiary's personal estate or to enable the making of extraordinary gifts. The Court also relied on the principle of construction "expressio unius est exclusio alterius" to interpret the Trust provisions to decide that the express grant of power to make gifts of assets to the Grantor's (deceased wife's) descendants was an implied denial of power to make gifts of assets to any person other than the Grantor's descendants. The case illustrates that practitioners and trustees should carefully review Marital/Family Trusts to be certain that the intended level of discretion is set forth in the trust provisions. In addition, in administering a Family Trust, a trustee/beneficiary must carefully consider whether contemplated distributions may be deemed to be outside the discretion granted by the Trust provisions. Peter M. StormCooper, Storm & Piscopo

EMPLOYER REQUIRED TO MAKE POST-TERMINATION PAYMENTS EVEN THOUGH IT WAIVED NON-COMPETE

Reid v. Getco, LLC. 2016 IL App (1st) 151801
The First District Appellate Court has ruled that provision in an employee agreement ostensibly designed to permit an employer to avoid paying post-termination payments to a terminated employee by waiving the enforcement provisions of the non-compete, still obligated the employer to pay the post termination consideration despite the employer's election to waive the non-compete. The agreement contained a provision prohibiting the employee from engaging in any "competitive activity" for six months following the termination of his employment. In exchange, the employer promised to make post termination payments to the employee in the amount of $1 million dollars according to a specified formula. The agreement contained a standard provision prohibiting any modification or amendment to the agreement without the written approval of both parties. However, the agreement also purported to give the employer the unilateral right to waive the enforcement of the non-compete. While the agreement specified certain conditions under which the post-termination payments would cease, unfortunately for the employer, the agreement did not list the waiver of the non-compete as one of those conditions.
Following the employee's termination the employer sent the employee an e-mail notice which stated as follows:
The Company hereby notifies you that the Restricted Period will bezero (0) months and/or is waived. You will not receive any Non-compete payments. For theavoidance of doubt, you may begin working for any employer immediately following yourSeparation Date."
The employee waited until the non-compete period had expired and then began working for a competitor. The employer failed to make the post termination payments and the employee sued to enforce the payment provision of the employment agreement. The trial court ruled that the employer's attempted "wavier" was ineffective to modify the payment provisions of the agreement and entered judgment in favor of the employee. The appellate court affirmed.
The appellate court ruled that the purpose of the wavier provision was to provide the employee with a mechanism to request that the employer waive the enforceability of the non-compete if the employee obtained an offer of employment that he was concerned might be interpreted to violate the covenant not to compete, rather than to provide the employer with a unilateral means to avoid making the post-termination payments. Relying upon the provision of the agreement which required both parties to approve any modification, the appellate court ruled that the unilateral wavier was not an amendment or modification entered into in accordance with the agreement.
Employers and their counsel would be well advised to review and update their employment agreements in light of this ruling. We think there are certainly ways that such post-termination payment provisions could be held enforceable. However, it is clear that the agreement must specify that one of the conditions under which payments would cease includes a post-termination wavier of the enforceability of the non-compete. In addition, it is likely courts would still question the enforceability of such a provision without some additional mutuality or other consideration for the employer's right to elect to waive the non-compete and cease the post-termination payments.

Strict Pleading Rules Do Not Apply in Probate Cases

The Fourth District Appellate Court in Illinois this week decided that in pleading an affirmative defense or a counterclaim to a claim filed against the estate, the executors or administrators are not required to plead those defenses or counterclaims under the same rules that apply to other civil lawsuits. See, In Estate of Craig v Zink, 2016 IL App (4th) 150939. The Court found that the Illinois legislature intended pleadings that assert claims against an estate and any defenses or counterclaims, were intended to be evaluated under more relaxed standards than pleadings in a formal lawsuit. The Court also noted that this interpretation is consistent with with the purpose of the Probate Act, namely to facilitate the early settlement of an estate. While this may appear to be good news for those seeking a speedy resolution of estate claims, persons or businesses who file claims against an estate should be aware that under this ruling, an administrator or executor can now defend those claims without necessarily having to provide all of the facts or even a detailed explanation of the legal theories that support the Estate's position prior to the hearing on the claim. http://www.illinoiscourts.gov/Opinions/AppellateCourt/2016/4thDistrict/4150939.pdf

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Geneva, IL 60134

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Phone: 630-232-6170
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