Quarles & Brady Appellate Year in Review – 2017
02/01/18 E. King Poor, Rodney W. Ott, Adriane J. Hofmeyr
Appeals are crossroads. Whether our clients are on the winning or losing side in the trial court, an appeal means they must pause to ask some basic questions: How long will an appeal take and how much will it cost? Is now the time to attempt a settlement? Should we focus on some issues and drop others?
Answering these questions calls for a team—one that includes both trial and appellate lawyers. And while what makes for good advocacy is in many ways universal, the appellate forum poses challenges that are unique. Working together, our trial and appellate lawyers strive to meet those unique challenges.
In 2017, as in years past, we have represented our clients in appeals in state and federal courts across the country and in cases ranging from bank lending to civil rights, from franchise disputes to intellectual property, from Native American law to tax—and a wide variety of others in between.
The cases below are a sample of that work over the past year. They highlight our commitment to serving our clients when they reach the crossroads of an appeal.
Bank Lending and Bankruptcy
Jefferson-Pilot Investments, Inc. v. Cottonwood Phase V LLC, 2017 WL 3484521 (N.M. App. 2017)
A borrower leased property from an outlet store and the loan was secured by real property, as well as assignment of rents. Later, after the store went into bankruptcy, the borrower received damages for the rejection of its lease. When the borrower defaulted, its lender claimed those same damages as part of its collateral. The appellate court disagreed and held that the distribution from the bankruptcy court constituted damages, and not rents subject to the lender’s lien.
Mordi v. Zeigler, 870 F.3d 703 (7th Cir. 2017)
The Seventh Circuit considered whether our client who pleaded guilty to drug charges could bring an action under the federal Civil Rights Act alleging that the police officers who found the drugs violated his Fourth Amendment rights. Reversing the district court, the Seventh Circuit held that the prisoner could do so. The Seventh Circuit’s decision reinforces Supreme Court precedent that a person convicted of a crime may still seek redress for unconstitutional police conduct so long as prevailing in that action would not be contrary to the underlying conviction.
Bank of New York Mellon v. Stallbaum, 2017 WL 5907224, ___ So.3d ___ (Fl. App. 2017)
A bank filed its foreclosure complaint more than five years after borrower’s default and the trial court dismissed the case as untimely under the statute of limitations. The appellate court reversed and ruled that because the complaint alleged a "continuous state of default" within the five-year period, the statute of limitations did not bar the complaint.
Perry v. United States, 877 F.3d 751 (7th Cir. 2017)
Our client’s sentence hinged on language in the federal sentencing guidelines that was almost identical to that in a criminal statute that the Supreme Court had ruled was unconstitutionally vague. A later Supreme Court decision concluded that the sentencing guidelines could not be challenged as unconstitutionally vague because they were only advisory. Our client maintained that when he was sentenced, the Seventh Circuit had treated the guidelines as effectively mandatory, and not as advisory. The Seventh Circuit disagreed and held that the guidelines were treated as advisory when our client was sentenced, but left open whether the guidelines could still be challenged on vagueness grounds when they were in fact mandatory.
Entertainment and Privacy Law
Comolli v. Huntington Learning Centers, Inc., 683 Fed. Appx. 27 (2nd Cir. 2017)
Actresses who performed in a television commercial for a student learning center brought suit under New York’s Privacy Law claiming that the center did not have valid releases to continue using their images. The Second Circuit affirmed the district court's dismissal of the claim, and held that given the structure of the releases, the actresses had objectively manifested an intent to be bound by them, despite their claiming a subjective intent not to be bound. The Second Circuit underscored that a binding contract is not dependent on the parties' subjective intent, but on object intent as shown by words and actions.
HRCC, Ltd. V. Hard Rock Cafe International (USA), Inc., 703 Fed. Appx. 814 (11th Cir. 2017)
After its franchise was terminated, a franchisee sued the franchisor's affiliate and executives under the Florida Deceptive and Unfair Trade Practices Act. The district court granted summary judgment for the defendants, finding that the Act required proof of actual damages and that the franchisee had failed to offer any evidence of such damages. The Eleventh Circuit affirmed. Following Florida law that actual damages required proof of the difference between the market value of the product or services at issue, the court held that the franchisee offered no such evidence.
Dunkin' Donuts Franchising LLC v. C3WAIN Inc., 677 Fed. Appx. 779 (3rd Cir. 2017)
A franchisor terminated a franchise based on its franchisee misrepresenting an interest in a competing business and sued for breach of contract resulting from the fraud and continued operation of the store. The Third Circuit affirmed the district court’s grant of summary judgment, holding that there was insufficient evidence for a jury to conclude that the franchisee did not misrepresent its interest in a competing business.
Gradis v. Banner Health, 2017 WL 773522 (Ariz. App. 2017)
Five months after a self-insured employer denied an employee’s workers compensation claim, the employer and employee signed a settlement agreement covering all claims relating to their employment relationship. But the employee then sued the employer for a bad-faith denial of coverage. The appellate court affirmed the trial court’s dismissal of the case because the language of the release, though not including the workers compensation claim itself, was broad enough to cover the bad-faith claim which related to the employment relationship.
Ultratec, Inc. v. CaptionCall, LLC, 872 F.3d 1267 (Fed. Cir. 2017)
A party sought to challenge the validity of our client’s patents (for telephone equipment to assist the deaf or hard of hearing) before the Patent Trial and Appeal Board ("PTAB"). In proceedings before the PTAB, the board refused to allow evidence that the expert for the party challenging the patent had testified inconsistently in another case involving the same patent. In a rare reversal of the PTAB, the Federal Circuit overturned the PTAB’s ruling on the merits and held that the board had abused its discretion in refusing to admit the evidence without any reasoned basis for doing so.
Labor & Employment
Rumann v. Phoenix School of Law, LLC, 692 Fed. Appx. 358 (9th Cir. 2017)
Two tenured professors sued a law school alleging a breach of their employment contract by renewing their contracts with shorter appointment letters. The Ninth Circuit affirmed the district court's ruling that the professors failed to state a claim because the appointment letters incorporated all the professors’ rights from their contracts and that their attempt to vary the terms of the letters with a competing proposal of their own nullified the school's offer of employment. The court stated that interpreting a contract may require evidence of the surrounding circumstances, including, as in this case, that the appointment letters did not reduce the professors' rights under their existing contracts.
Equal Employment Opportunity Commission v. Union Pacific Railroad, 867 F.3d 843 (7th Cir. 2017)
Two employees sued a railroad alleging racial discrimination and the trial court dismissed their claims on the merits. Later, the Equal Employment Opportunity Commission (EEOC) sued the railroad to enforce a subpoena based on the same charges that the trial court had dismissed. The Seventh Circuit affirmed the district court's decision that the EEOC could still enforce its subpoena, even after the employees had received a right-to-sue letter from the agency, and even after their charges had been dismissed on the merits. In its decision, the Seventh Circuit recognized that the case presented an issue of first impression and that its ruling conflicted with a decision from the Fifth Circuit.
Native American Law
Modoc Lassen Indian Housing Authority v. U.S. Dep’t of Housing and Urban Development, 878 F.3d 889 (10th Cir. 2017)
Indian tribes sued the Department of Housing and Urban (HUD) challenging its recouping payments to the tribes under a federal affordable housing program. The Tenth Circuit reversed the district court’s ruling and held that HUD had no authority to recapture the funds, but because repaying the funds amounted to money damages, sovereign immunity prevented repayment. One tribe (our client), however, was repaid. Because our client’s funds were held in a specific account, the Tenth Circuit ruled that repaying those funds would not be money damages and therefore would not implicate sovereign immunity.
In re Garza, 893 N.W.2d 1 (Wis. 2017)
An electric utility had a written easement over property for its wooden poles installed in the 1960s. Many years later, the wooden poles were replaced by steel poles and the utility entered the property to trim trees. The property owner then argued that the easement was no longer valid because it applied only to wooden poles. The Wisconsin Supreme Court held that the easement remained valid for the utility poles because the reference to wooden poles simply described them, but did not limit the easement. The Supreme Court held that easement allows for advances in technology for the same equipment. Quarles & Brady’s client supported the utility with an amicus brief.
Baez v. Specialized Loan Servicing, LLC, 2017 WL 4220292, __ Fed. Appx. __ (11th Cir. 2017)
A borrower sued her mortgage lender, alleging violations under the Real Estate Settlement Procedures Act (RESPA) for not adequately providing information. The Eleventh Circuit affirmed the district court’s grant of summary judgment because the borrower failed to provide evidence, as required by RESPA, of actual damages. The court pointed out that despite allegations of losses, the borrower failed to prove a causal connection between any non-compliance and any damages.
Fannie Mae v. LaRuffa, 702 Fed. Appx. 505 (9th Cir. 2017)
Fannie Mae brought suit against two guarantors in a case in which the primary issue depended on the value of an apartment complex. The Ninth Circuit affirmed the district court's decision that an appraisal report offered by Fannie Mae was the proper place to begin a fair market valuation, even though the date was different from that of a trustee's sale, and reiterated longstanding precedent allowing an appraiser to rely on another expert's opinion.
Hidden Chutes, LLC v. Dick Blick Holdings, Inc., 2017 WL 3426075-U (Ill. App. 2017)
A tenant left a retail property three years into a ten-year lease and the landlord sued for damages. The trial court found that the landlord failed to mitigate damages when it declined offers to re-let the property in favor of subdividing it for a three tenant layout which would increase the property’s value. The appellate court affirmed and held that subdividing the property was done to increase its value, not because it was necessary to re-let it. The court also affirmed the trial court’s ruling that the landlord could not recover the costs of subdividing the property because such costs represented capital improvements that were unnecessary for re-letting.
Schmidt v. Indiana Dept. of State Revenue, 81 N.E.3d 705 (Ind. Tax Ct. 2017)
The Indiana Department of State Revenue assessed taxes against two taxpayers domiciled in Florida, alleging that they were actually Indiana residents or were receiving income from Indiana sources. The Indiana Tax Court rejected that contention and held that the taxpayers were in fact Florida residents and not subject to tax in Indiana because their income, though earned for an Indiana company, was not derived from sources within the state.
Trusts & Estates
Sudman v. O'Brien, 218 So.3d 986 (Fl. App. 2017)
A widow sought an elective share in her husband's estate. The trustee for the estate objected because the widow had waived any interest in the election as part of a prenuptial agreement. The trial court ruled for the trustee because the widow failed to respond to a request for admission that she had in fact waived the election. The appellate court affirmed and held that the admission was binding, particularly since the widow never sought to be relieved of it in the trial court.