Bankruptcy Law, News
De Groff Featured on American Bankruptcy Institute
Melissa J. De Groff, of Counsel at KGR, is currently featured at the American Bankruptcy Institute (ABI) site. De Groff summarizes a recent case in the Seventh Circuit of the United States Court of Appeals, in which the District Court’s decision was overturned:
A cross-collateralization clause in first priority mortgage put second priority mortgagee on inquiry notice of debt in excess of promissory note specified in first mortgage. Therefore, first mortgage holder entitled to sales proceeds of real property securing both mortgages up to maximum amount secured by first mortgage.
Read more of De Groff’s coverage at the ABI’s Volo (Circuit Court First Responder) here.
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Blog, News, Sports and Entertainment Law
Bill Bock and the USADA Team
Kroger, Gardis & Regas partner, Bill Bock, who serves as General Counsel to the United States Anti-Doping Agency (USADA) recently concluded a high profile investigation into anti-doping rule violations engaged in by Alberto Salazar and Dr. Jeffrey Brown, who were affiliated with the well-known distance running group formerly known as the Nike Oregon Project (NOP). Salazar, once regarded as one of the best known running coaches in the world, and Brown, who served for years as a performance consultant to the Nike Oregon Project (NOP), are now suspended from the sport for four years. On September 5, 2019, a AAA arbitration panel found Salazar guilty of trafficking testosterone, tampering with the doping control process and administration of prohibited, over-limit L-carnitine infusions. The arbitration cases against Salazar and Brown were the result of a more than 6 year investigation into the conduct of Salazar and Brown by USADA and a 2 year arbitration process in which Salazar and Brown contested the charges against them and Bock served as USADA’s lead counsel. USADA’s investigation was aided by whistle blowers who came forward with their personal observations and provided USADA with access to their patient records with Brown and their email communications with Salazar. Fallout from the ban has resulted in the NOP being shuttered in an announcement made by Nike the week after the arbitration decisions. “The athletes in these cases found the courage to speak out and ultimately exposed the truth,” said USADA Chief Executive Officer Travis T. Tygart. “While acting in connection with the Nike Oregon…
Banking and Commercial Transactions, Bankruptcy Law, Blog
Indiana’s Dislike of Cognovit Notes
Indiana doesn’t look kindly upon cognovit notes, even though its neighbor, Ohio, routinely uses them. In fact, Indiana’s dislike of cognovit notes is demonstrated by the existence of an Indiana statute providing it’s a Class B misdemeanor to procure, retain possession of, or attempt to recover upon a promissory note with a cognovit provision in it. (see Indiana Code §34-54-4-1.) So, cognovit provisions aren’t just unenforceable in Indiana, they’re illegal. How can two states with a common border disagree so vastly about the legal attributes of the cognovit note? To answer this, it’s important to understand what a cognovit note is. A cognovit provision is a legal device by which a debtor gives advance consent to a noteholder obtaining a judgment against him or her without prior notice or hearing. A cognovit is essentially a confession of judgment included in a note. Should there be a default, the holder can obtain judgment without giving the debtor notice or a hearing. This allows the noteholder to obtain a judgment without the delays inherent in having to serve notice on the debtor or dealing with any defenses the debtor might throw up. This makes the process much smoother and quicker for the noteholder. But, what about the debtor? Doesn’t this fly in the face of constitutional due process? Indiana thinks so, although several states, not just Ohio, think cognovits are okay. The states who agree with Ohio and consider cognovit notes legal are: Delaware, Virginia, Pennsylvania, and Maryland. Why would any borrower agree to this? Simply because a…
Bankruptcy Law, Blog
Coulda, Shoulda, Woulda: Delay in Accelerating Note After Default Fatal
A lender that waited 16 years after default before invoking an optional acceleration clause in a promissory note was prohibited from collecting the unpaid balance and from foreclosing on the mortgage that secured the note. Borrowers Dean and Paula Blair borrowed $110,300 in 1992 from United Companies Lending Corporation (“UCLC”), and granted a mortgage to UCLC on two properties to secure repayment of the loan. Both the promissory note and the mortgage contained an acceleration clause, which permitted UCLC to require payment of the entire balance of the loan when the note or mortgage was breached. Less than a year later, in November 1993, the Blairs sued UCLC and its agent for breach of contract and various torts (the “Ash Suit”). The Blairs stopped making loan payments in June 1995 and filed a bankruptcy petition in August 1997. Although the bankruptcy court subsequently permitted UCLC to file a foreclosure action in state court by terminating the automatic stay, and the trial court in the Ash Suit entered an order in October 1998 permitting UCLC to file a counterclaim against the Blairs to foreclose the mortgage, UCLC did neither. Instead, UCLC filed its own bankruptcy petition in Delaware in March, 1999, and in July 2000, assigned the note and mortgage to EMC Mortgage (“EMC”). The Delaware bankruptcy court did not authorize the sale of UCLC’s assets until September, 2000. What followed was years of delay: October 2003 – the Blairs Chapter 13 bankruptcy discharge was entered March 2007 – the Blairs obtained judgment against the broker in…
Blog, Construction Law, News
New Protections for Architects, Engineers and Other Design Professionals Senate Bill 230 Becomes Law
On July 1, 2019 Senate Bill 230 becomes law giving important new protections for architects, engineers and other design professionals (DPs). The DPs “duty to defend” their clients becomes null and void for contracts entered into after July 1st. This duty was uninsurable and exposed DPs to significant costs during litigation, prior to any finding of negligence. Also on July 1st, indemnification between parties to construction contracts is reconfirmed, reversing a prior Court ruling. Greg Cafouros, Chair of KGR’s construction law practice group, assisted the American Council of Engineering Companies in shepherding this new law through the Indiana Legislature. Greg is standing third from left at the bill signing ceremony with Governor Holcomb, with Rep. Jerry Torr and Sen. Mark Messmer.
Construction Law, News
NEW LAW PRODUCES SIGNIFICANT CHANGES IN THE FIELD OF DESIGN PROFESSIONAL LIABILITY – SENATE BILL 230
A significant change has occurred in the field of design professional liability during this session of the Indiana Legislature. Senate Bill 230 was passed and it has been signed by Governor Holcomb. This new law fixes a troubling decision from the Court of Appeals and eliminates a design professional’s duty to defend its client if the client is sued. A discussion of both aspects of the bill follows. The Anti-Indemnification Statute One of the hallmarks of a standard construction or design contract is the inclusion of an indemnity provision, which can be found in all AIA and most other construction contract documents. Essentially, indemnification is when one party to a contract (known as the “indemnitor” or “promisor”) agrees to pay any amounts which the other party to the contract (known as the “indemnitee” or “promisee”) is required to pay in a lawsuit (including defense costs). The typical scenario involving indemnity agreements occurs when a general contractor subcontracts out different portions of a construction project, and the employee of a subcontractor is injured on the job site. If the subcontractor’s employee receives workers compensation benefits, the subcontractor’s employee will be prohibited from suing his employer. However, a typical plaintiffs’ attorney will file a lawsuit on behalf of the injured subcontractor’s employee against the property owner, the general contractor, and in some cases the architectural/engineer/design firm that prepared the plans for the project. Normally, the plaintiffs’ attorney for the injured subcontractor’s employee will sue the property owner, general contractor, and/or architectural/design firm under a vicarious liability theory. As…
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