Chicago Business Litigation Lawyer Blog

Lubin Austermuehle DiTommaso’s Oak Brook and Chicago Attorney Peter Lubin Named 2011 Illinois Super Lawyers as Class-Action, Business Litigation and Consumer Rights Attorneys

July 21, 2011 | Peter S. Lubin, Patrick Austermuehle and James V. DiTommaso

Super Lawyers named Chicago and Oak Brook business trial attorneys Peter Lubin a Super Lawyer in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Lubin Austermuehle DiTommaso’s Oak Brook and Chicago business trial lawyers have over a quarter of a century of experience in litigating complex class action, consumer rights, and business and commercial litigation disputes. We handle emergency business law suits involving injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist businesses and business owners who are victims of fraud.

Peter S. Lubin

online at

Consumer Law and Policy Blog Reports: “Grand Theft Auto, or Preemption Run Amok”

July 21, 2011 | Peter S. Lubin, Patrick Austermuehle and James V. DiTommaso

Consumer Law and Policy Blog Reports:

In a case now before the 4th Circuit Court of Appeals, Chase Bank asserts that it may repossess an auto loan borrower’s car without complying with consumer protections in state commercial law. The Maryland District Court found for Chase Bank, concluding that 1) the National Bank Act preempts state repossession notice law and 2) Chase was not bound by the mandatory loan contract term specifically incorporating Maryland repossession law, because as an assignee of the contract, Chase had not voluntarily agreed (!) to the choice of law provision.

The opening brief of the appellants is here and the lower court opinion is here. The logic of the lower court opinion is remarkable. It seems to suggest that even the repossession rules of Article 9 of the Uniform Commercial Code could be preempted by the National Bank Act and OCC regulations. What is truly extraordinary, however, is the idea that a national bank could on the one hand invoke the privilege, created by the UCC and other state law, to repossess collateral without judicial process, while on the other hand disregarding the restrictions and consumer protections that accompany that privilege. If the entirety of state commercial and debt collection law conflicts with the National Bank Act, then there was no state law basis for Chase to seize Ms. Epps’ car, and the purported repossession was nothing more than grand theft.

Video — The Federal Goverment Loses Hundreds of Billions of Dollars Each Year to Fraud — Our Chicago Business Trial and Fraud Lawyers Bring Qui Tam and Whistle Blower Claims to Assist in Recovering Some of Those Monies

July 21, 2011 | Peter S. Lubin, Patrick Austermuehle and James V. DiTommaso

Video — Fraudster Barry Minkow Describes How He Conceals Fraud From Auditors — Our Chicago Litigation Attorneys Combat Business Fraud and Breaches of Fiduciary Duty

July 18, 2011 | Peter S. Lubin, Patrick Austermuehle and James V. DiTommaso

Barry Minkow, who, while still in high school, founded ZZZZ Best, a carpet cleaning and restoration company that turned out to be a massive Ponzi scheme, talks about one of the many ways he manipulated auditors.

Dirty Car Salesmen Come Clean

July 18, 2011 | Peter S. Lubin, Patrick Austermuehle and James V. DiTommaso

Video — New Complaints Against Car Dealership

July 17, 2011 | Peter S. Lubin, Patrick Austermuehle and James V. DiTommaso

Video On Used Car Dealer Sued For Fraud BY AG — Our Chicago Auto Dealer Fraud Lawyers File Suit On Behalf of Consumers

July 17, 2011 | Peter S. Lubin, Patrick Austermuehle and James V. DiTommaso

Wall Street Journal Reports: “Judge Rules Against Lightstone And Enforces Bad Boy Clause in Real-Estate Loan Penalizing Borrower For Declaring Bankruptcy”

July 17, 2011 | Peter S. Lubin, Patrick Austermuehle and James V. DiTommaso

Many real-estate loans for large transactions include a so called “bad boy” clause which penalizes borrowers for declaring bankruptcy. Many borrowers didn’t take these clauses seriously in the past believing that they could declare bankruptcy and argue that the clauses were uneforcable as violating public policy encourcaging business business reorganizations as permitted by federal bankruptcy laws.

The Wall Street Journal however reports that a federal court following a trial has enforced a “bad boy” clause and penalized Lightstone Holdings LLC $100 million for putting the Extended Stay LLC hotel chain into bankrupcy. The article states:

A New York state judge has ruled that investor David Lichtenstein’s Lightstone Holdings LLC owes lenders $100 million because he violated a clause in his loan documents prohibiting him from seeking bankruptcy protection for the Extended Stay Inc. hotel chain.

The ruling Thursday by New York Supreme Court Judge Melvin L. Schweitzer stands to focus more attention on so-called bad-boy clauses in real-estate loans. Those clauses require the borrower to pay lenders a set penalty for putting the property pledged as collateral on a loan into bankruptcy or otherwise wasting its value. …

The ruling marks a victory for lenders, including Bank of America Corp., Wells Fargo & Co.’s Wachovia Corp. and the Federal Reserve’s Maiden Lane fund as successor to Bear, Stearns & Co. Those lenders collectively provided Lightstone roughly $2 billion of mezzanine loans, but their claims were wiped out after Extended Stay filed for bankruptcy protection in 2009. …

Mr. Lichtenstein had agreed to the “bad boy” clause while arranging for nearly $8 billion of financing for his 2007 purchase of the 660-hotel chain from Blackstone Group LP. The deal was one of the last big, debt-financed real-estate buyouts before the lending markets, and subsequently the global economy, went into one of its worst downturns …

Throughout the bankruptcy, Lightstone’s attorneys argued that the bad-boy clause wasn’t enforceable.

The full article provides additional insights. You can read the full article by clicking here.

Appellate Court Overturns Dismissal of Chicago Paramedics Unpaid Overtime Class-Action

July 15, 2011 | Peter S. Lubin, Patrick Austermuehle and James V. DiTommaso

Every day there are hard working people who are denied the overtime wages that they have rightfully earned. At Lubin Austermuehle DiTommaso, we have much experience representing those with unpaid overtime claims in class-action litigation. As such, we track the changes in the wage laws and are always looking out for new court decisions in the field.

Alvarez v. City of Chicago is a recent class-action case brought by paramedics in the city of Chicago for the systematic miscalculation of their overtime wages. In so doing, Plaintiffs alleged that Defendant willfully violated the Fair Labor Standards Act (FLSA) when it failed to properly compensate the Plaintiffs. The parties each filed motions for summary judgment, and the trial court ruled in favor of Defendant. In making the ruling, the trial court found that the Plaintiffs were not similarly situated and they could not be “readily divided into homogenous subgroups.” The lower court then dismissed the claims and directed the parties to arbitrate the dispute.

On appeal, the Appellate Court disagreed with the trial court’s decision, and held that the case could proceed by using sub-claims if the Plaintiffs were similarly situated and common questions predominated. The Court also held that the case should not have been dismissed; instead the Plaintiffs should be allowed to proceed individually if class certification is inappropriate. The Court then remanded the case with instructions for the district court to consider which form of judicial resolution would be most efficient.

Appellate Court of Illinois Upholds Circuit Court’s Rescission of Oral Agreement to Jointly Purchase a Gas Station due to Fraudulent Misrepresentation

July 13, 2011 | Peter S. Lubin, Patrick Austermuehle and James V. DiTommaso

When starting a new business venture, choosing the right partners is one of the most important decisions any company owner will make. Unfortunately, not all partnerships work out, and in some instances that is due to the dishonest machinations of fellow owners. Our Elgin business attorneys recently discovered one such case where one business partner was allegedly defrauded by two other owners in a transaction to jointly purchase and operate a gas station in Tinley Park.

Hassan v. Yusuf pits Plaintiff, a man who thought he was investing in the purchase of a gas station, against his two business partners who were also involved in the deal. Defendants solicited an investment of $120,000 from Plaintiff, equal to their own contributions, to purchase the gas station in question, but allegedly failed to inform Plaintiff that he was only purchasing one-third of the business, and had no claim to the real-estate upon which the station was built. After Plaintiff entered into an oral agreement to purchase the station with Defendants and run the day-to-day operations of the business, Defendants acquired title to the property and conveyed that title to a corporation solely owned by Defendants. The business was profitable at first, but eventually began operating at a loss. Defendants then demanded Plaintiff invest more money in the venture to cover these losses, but Plaintiff had no additional funds to invest, and requested an accounting of the business’s financial records and documentation showing his ownership and portion of the losses. Defendants failed to provide said documentation, and Plaintiff ceased working at the station and eventually filed suit.

The Circuit Court of Cook County found that Defendants had defrauded Plaintiff through their misrepresentations regarding the purchase of the business and accompanying real estate. In its judgment, the trial court granted Plaintiff rescission of the contract and damages for the total amount of money he invested in the business. After the trial verdict, Defendants appealed the finding of fraud on the basis that there was not clear and convincing evidence of a misrepresentation that Plaintiff would be an owner of the real estate under their agreement.

The Appellate Court upheld the Circuit Court’s decision, finding the record sufficient to support a finding that Defendants misrepresented to the Plaintiff that he was purchasing a one-third interest in the station and accompanying real estate, even though they had no intention of actually doing so. Furthermore, there was clear evidence of a fiduciary relationship between the parties, which gave rise to a claim for fraud by omission when Defendants failed to make explicit to Plaintiff that he was not acquiring an interest in the land. The Court went on to state Plaintiff’s reliance upon Defendants’ misrepresentations were justifiable, and upheld the trial court’s decision to rescind the contract, but reduced the damages award in an amount equal to Plaintiff’s share of the profits from the station. The Court did so because giving Plaintiff his share of the profits would be inconsistent with the remedy of rescission, which is supposed to place a party in the same position they would be in had the contract never occurred.