Weekly Case Digests July 29, 2019 August 2, 2019.

Byline: Rick Benedict

7th Circuit Digests

7th Circuit Court of Appeals

Case Name: Milwaukee Center for Independence, Inc., v. Milwaukee Health Care, LLC, et al.

Case No.: 18-3205

Officials: BAUER, MANION, and ROVNER, Circuit Judges.

Focus: Breach of Contract

Milwaukee Health Care, LLC (MHC) and Milwaukee Center for Independence, Inc. (MCFI) entered into an agreement in 2014. Per that agreement, MCFI, a non-profit organization dedicated to providing medical care for individuals with brain injuries, would operate a brain-injury center in MHC's nursing facility. MHC would handle all billing and collections for the services MCFI provided and, through a process outlined in the agreement, remit the funds collected to MCFI (after taking a cut for itself).

But MHC failed to follow through on its obligations under the contract, redirecting MCFI's funds to pay its employees and other creditors instead. MCFI sued MHC for breaching the contract and brought claims against MHC's principal, William Nicholson. The district court, exercising diversity jurisdiction, entered summary judgment against MHC for breach of contract and against Nicholson for conversion and civil theft. The district court awarded MCFI over $2 million in damages, interest, and costs against MHC and Nicholson, jointly and severally. It also awarded MCFI over $200,000 in attorney's fees and costs against Nicholson alone.

MHC and Nicholson appeal the judgments against Nicholson. Because we agree with the conclusions of the district court, we affirm.

Affirmed

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7th Circuit Court of Appeals

Case Name: United States of America v. Devontay Sawyer

Case No.: 18-2923

Officials: WOOD, Chief Judge, and BARRETT and ST. EVE, Circuit Judges.

Focus: Suppression of Evidence Denied

Devontay Sawyer entered a conditional guilty plea to possessing a firearm as a felon, 18 U.S.C. 922(g), preserving for this direct appeal his challenge to the denial of his motion to suppress evidence. Sawyer contests the search of his backpack, which he left inside a home that he had entered unlawfully. The police found guns inside the backpack. The district court denied the motion to suppress, concluding that Sawyer, as a trespasser, had no legitimate expectation of privacy in the house and therefore none in the unattended backpack. We agree with the district court and affirm the judgment.

Affirmed

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7th Circuit Court of Appeals

Case Name: United States of America v. Claudius L. Fincher

Case No.: 18-2520

Officials: MANION, SYKES, and BRENNAN, Circuit Judges.

Focus: Sixth Amendment Violation

Claudius Fincher possessed a firearm; that much is certain. The questions raised in this appeal are whether the district court clearly erred by finding Fincher's possession of the firearm was "in connection with" his drug offense, and whether resolving that factual question at sentencing without a jury determination violated the Sixth Amendment. Due to finding Fincher possessed the gun in connection with his drug offense, the court held Fincher was ineligible for safety-valve relief and sentenced him to the mandatory minimum sentence of five years. For the reasons stated below, we affirm the district court's sentence.

Affirmed

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7th Circuit Court of Appeals

Case Name: Chicago Management Consulting Group, Inc., et al. v. Julia Hathaway

Case No.: 17-2354

Officials: RIPPLE, SYKES, and SCUDDER, Circuit Judges.

Focus: Court Error Bankruptcy Sanctions

Frank Novak tragically took his own life in February 2012. He left his company, Chicago Management Consulting Group, Inc., to his close friend Debra Comess. She was not in a position to manage the struggling firm, so she initiated bankruptcy proceedings almost immediately after Novak's death. The Chapter 7 Trustee discovered numerous transfers from Chicago Management Consulting Group's coffers to Comess and Julia Hathawayanother Novak companion who ran a small yoga studio. Believing the transfers to be fraudulent under the Bankruptcy Code, the Trustee sought to reclaim their value for the Estate. After a bench trial, the bankruptcy judge ruled that the transfers to Comess and Hathaway were voidable on grounds of actual and constructive fraud and imposed sanctions on Hathaway for discovery lapses. The district court affirmed.

Comess settled her case; this appeal concerns the transfers to Hathaway. She launches several arguments. First, she contends that the bankruptcy judge committed clear error by ignoring one of the Trustee's trial exhibits when evaluating the company's financial health. Second, she challenges the bankruptcy judge's finding that the company did not receive reasonably equivalent value in return for its transfers. Third, she argues that the company did not have "creditors" under the Illinois Uniform Fraudulent Transfer Act ("IUFTA" or "the Act") at the time of the transfers. Finally, Hathaway vigorously disputes the sanctions ruling.

We affirm. As a preliminary matter, Hathaway failed to comply with multiple rules of appellate procedure. On the merits, our review of a bankruptcy court's factual findings is constrained; we reverse only for clear error. Not one of Hathaway's arguments meets this high bar. The bankruptcy judge was amply justified when he concluded that the company was insolvent, the transfers to Hathaway were gratuitous, and the company had creditors under the Act. And we see no reason to disturb the imposition of discovery sanctions.

Affirmed

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7th Circuit Court of Appeals

Case Name: Jiri Vyloha v. William P. Barr

Case No.: 18-2290; 18-3298

Officials: RIPPLE, HAMILTON, and ST. EVE, Circuit Judges.

Focus: Abuse of Discretion Subject-matter Jurisdiction

Jiri Vyloha, a citizen of the Czech Republic, brings two petitions for judicial review in this consolidated appeal. About ten years after an Immigration...