Justia Banking Opinion SummariesArticles Posted in Supreme Court of Illinois
Whitaker v. Wedbush Securities, Inc.
In 1987, Whitaker opened commodity futures trading accounts that eventually were assigned to Wedbush. Whitaker did not enter into a new customer or security agreement with Wedbush. Wedbush held Whitaker’s funds in customer segregated accounts at BMO Harris, which provided an online portal for Wedbush to process its customers' wire transfers. In December 2014, Wedbush received emailed wire transfer requests purporting to be from Whitaker but actually sent by a hacker. Wedbush completed transfers to a bank in Poland totaling $374,960. Each time, Wedbush sent an acknowledgment to Whitaker’s e-mail account; the hacker apparently intercepted all email communications. Whitaker contacted Wedbush after receiving an account statement containing an incorrect balance. After Wedbush refused Whitaker’s demand for the return of the transferred funds, Whitaker filed suit seeking a refund under the UCC (810 ILCS 5/4A-101). The circuit court rejected the UCC counts, stating that Wedbush had not operated as a “bank” under the UCC definition. The appellate court affirmed.The Illinois Supreme Court reversed, rejecting an argument that an entity may not qualify as a bank if it does not offer checking services. Courts construe the term “bank” in article 4A liberally to promote the purposes and policies of the UCC. The term “includes some institutions that are not commercial banks” and that “[t]he definition reflects the fact that many financial institutions now perform functions previously restricted to commercial banks, including acting on behalf of customers in funds transfers.” View "Whitaker v. Wedbush Securities, Inc." on Justia Law
First Midwest Bank v. Cobo
First Midwest sued defendants for breach of a promissory note. Defendants responded that First Midwest or its predecessor had already sued them twice for the same breach of the same promissory note: once in a foreclosure suit in 2011 and once in a breach of promissory note suit in 2013. First Midwest claimed that the first lawsuit involved a claim for foreclosure on a mortgage, which is different from a breach of a promissory note. The circuit court agreed, but the appellate court reversed. The Illinois Supreme Court affirmed the appellate court’s decision. In Illinois, a plaintiff who voluntarily dismisses a claim has only one opportunity to refile that same claim. Whether two lawsuits assert the same claim does not depend solely on how the plaintiff titles the complaint. A lawsuit for breach of a promissory note asserts the same cause of action as a prior foreclosure complaint when that foreclosure complaint specifically requested a deficiency judgment based on the same default of the same note. View "First Midwest Bank v. Cobo" on Justia Law
Citibank, N.A. v. Illinois Department of Revenue
Citibank provided sales financing to Illinois retailers who offered customers the option of financing their purchases, including the amount of Illinois tax due on the purchases. Citibank originated or acquired consumer charge accounts and receivables from the retailers on a non-recourse basis. When a customer financed a purchase using that account, Citibank remitted to the retailer the amount the customer financed, which included some or all of the purchase price and the sales tax owed based on the selling price. The retailers then remitted the sales tax to the state. Under the agreements between Citibank and the retailers, Citibank acquired “any and all applicable contractual rights relating thereto, including the right to any and all payments from the customers and the right to claim Retailer’s Occupation Tax (ROT) refunds or credits.” Citibank filed a claim for tax refunds under 35 ILCS 120/6 for ROT taxes paid through retailers on transactions that ultimately resulted in uncollectible debt. The Department denied Citibank’s claim. The Illinois Supreme Court reinstated the denial, noting the legislature’s clearly expressed preference in the statutory framework for reporting, remission, and refund only through the retailer. Sophisticated lending institutions no doubt anticipate the eventuality of default and can order their commercial relationships accordingly. View "Citibank, N.A. v. Illinois Department of Revenue" on Justia Law
1010 Lake Shore Ass’n v. Deutsche Bank National Trust Co.
Defendant Deutsche Bank National Trust Company, as Trustee for Loan Tr. 2004-1, Asset-Backed Certificates, Series 2004-1, purchased a condominium unit at a judicial foreclosure sale in 2010. On March 27, 2012, plaintiff 1010 Lake Shore Association mailed defendant a demand for payment of the unit’s assessments for common expenses. After defendant filed its answer, plaintiff moved for summary judgment arguing there were no questions of material fact on the amount owed or defendant’s failure to pay the assessments. Based on section 9(g)(3) of the Condominium Property Act (Act, 765 ILCS 605/9(g)(3) (West 2008)), plaintiff asserted that the lien against the property for the prior owner’s unpaid assessments had not been extinguished because defendant failed to pay the assessments accruing after it purchased the unit at the judicial foreclosure sale. Defendant responded that it could not be held liable under section 9(g)(3) of the Act for unpaid assessments that accrued before it purchased the unit at the judicial foreclosure sale. Following a hearing, the trial court granted summary judgment for plaintiff, and awarded plaintiff possession of the property. On appeal, defendant contended that the trial court misconstrued section 9(g)(3) of the Act, arguing that a purchaser of a condominium unit at a foreclosure sale is only required to pay the common expenses that accrued following the sale. The appellate court affirmed the trial court, with one justice dissenting. Finding no error in the majority's judgment, the Supreme Court affirmed. View "1010 Lake Shore Ass'n v. Deutsche Bank National Trust Co." on Justia Law