Page 22 - John Hundley 2011

paid by the homeowner’s insurance company.

Under P.A. 97-235, effective Jan. 1, 2012, contractors will be prohibited from paying or rebating
insurance deductibles, and from receiving compensation for allowing out-of-area contractors to use their
business names or licenses. The amendments also will allow the homeowner to cancel a contract upon
being informed it will not be covered by the owner’s insurance in whole or in part, and will require that the
contractor give the homeowner notice of the right to cancel whenever entering into a contract under which
it is to be paid from insurance proceeds.

P.A. 97-235 also will amend the Act and the Roofing Industry Licensing Act (225 ILCS 335) to provide
for a civil penalty for roofing contractors who fail to put their names and license numbers on their
commercial vehicles.

Credit Card Collection Complaint Requires Agreement Be Attached

In Sharp Thinking No. 21 (June 2009), we outlined how credit card account statements, summaries
and similar documents were insufficient to evidence the agreement for purposes of the statute of
limitations for written contracts.

Citing Portfolio Acquisitions, L.L.C. v. Feltman, 391 Ill.App.3d 642 (2009), which we discussed there,
Velocity Inv., LLC v. Alston, 397 Ill.App.3d 296 (2010), has taken that logic a step further and held that
such documents are insufficient under 735 ILCS 5/2-606, which requires that copies of contracts generally
be attached to complaints seeking to recover thereon. In the view of the Velocity court, credit card
collection complaints must have attached a copy of the actual account agreement – and are subject to
dismissal if they do not.

9th Circuit Rejects 7th’s View on “Negative Equity”

In Sharp Thinking No. 34 (June 2010), we explained how the Seventh Circuit had decided to permit
auto financiers to claim purchase money security interests for the “negative equity” that results when a
dealer gives the auto buyer a higher trade-in credit than the trade-in vehicle is actually worth. Rejecting
that decision and others in other circuits, the Ninth Circuit has held that a creditor does not have a PMSI
to the extent of such negative equity. In re Penrod, 611 F.3d 1158 (9th Cir. 2010). The open disagree-
ment between the circuits sets up a situation where the Supreme Court may be asked to resolve the
issue.

HCPA Does Not Give Agent Authority to Commit to Arbitration

How far a Health Care Power of Attorney (“HCPA”) (see Sharp Thinking Nos. 25, 46 (October 2009
and April 2011)) goes in authorizing the agent to bind the principal to decisions other than actual medical
care is a question that has always been open to some doubt. Late last year, the Appellate Court held that
an HCPA does not give a spouse-agent the right to bind the husband-patient to an arbitration agreement
in a nursing home admission context. Curto v. Illini Manors, Inc., 405 Ill.App.3d 888 (2010). How far the
court’s logic may be applied to other financial-related documents is unclear.

-- John T. Hundley, 618-242-0246, Jhundley@lotsharp.com

John\Sharp Thinking\#51.doc.
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