Craigslist Ad = Improper Hearsay Evidence at Bike Theft Trial

bikeIn re Jovan A, 2014 IL App (1st) 103835, poses the question of whether the content of a craiglist.org advertisement (the “craiglist Ad” or “Ad”) is admissible under the hearsay exception for showing what steps police took in the course of investigating a crime.  The First District answered “no”; it’s not admissible.

The State charged the defendant with stealing a bike off the back of a parked car in Chicago’s Bucktown neighborhood.  The bike belonged to the car owner’s friend.  Later that same night, the car owner visited the craigslist.org site and saw a bike for sale that looked just like her friend’s stolen bike.  The Ad also directed the viewer to call a phone number if interested in buying the bike.  The car owner printed the Ad, cross-referenced it to find an address associated with the phone number and gave it to her detective friend, who then started an investigation.

The detective eventually located a person he believed to be defendant (based on car registration data), called the number on the Ad, and the defendant’s cell phone rang.  Defendant was arrested and charged with theft of property over $300. 720 ILCS 5/16-1(a)(1) (criminal theft statute).  At trial, the detective, the car owner (off whose car the bike was stolen) and two other witnesses testified against the defendant.  The detective and car owner both testified as to the contents of the craiglist Ad over defendant’s hearsay objection.  After a bench trial, the defendant was sentenced to 18 months probation for stealing the bike.  Defendant appealed.

Held: Trial court reversed.  The craiglist Ad is inadmissible hearsay.

Reasoning:

The craigslist Ad was the key piece of evidence relied on by the trial court when it found defendant guilty of stealing the triathlon bike.  The First District reversed the trial court because the Ad was hearsay evidence and didn’t satisfy any exceptions.

Hearsay is an out-of-court statement offered in court to prove the truth of the matter asserted. IRE 801-807.  Hearsay is generally disallowed because it is “no better than rumor or gossip” and can’t be tested by cross-examination.  U.S. v. Boyce, No. 13-1087 (7th Cir. 2014). 

Hearsay includes both oral and written statements (and sometimes non-verbal conduct) and encompasses matters directly asserted as well as matters implied by the declarant (the person making the out-of-court statement). 

Hearsay is inadmissible unless it falls within an exception to the rule.  In the criminal context, a hearsay exception exists where a law enforcement member testifies concerning out-of-court information he read, heard, or saw during the course of an investigation to explain why he arrested a defendant or took other action.  

This testimony is not hearsay because it is offered to show the steps the officer took in his criminal investigation; not for the truth of the matter asserted. Id.   Under the course-of-investigation exception to the hearsay rule, an officer’s testimony is limited to what is necessary to explain his actions.  Beyond that, he can’t testify to the content of any statements he received in the course of the investigation.  Jovan, ¶¶ 23-28.

The challenged hearsay statements allowed in at trial were (1) the car owner’s and (2) detective’s description of the craiglist Ad’s written text and (3) their separate recitation of the Ad’s phone number and how that number led to defendant’s apprehension.  The trial court admitted this testimony not for its truth, but to show the course of the bike theft investigation and the steps taken to arrest the defendant.

The First District held that the trial court improperly allowed the testimony concerning the Ad’s content in evidence.   Ruling that the in-the-course-of-investigation exception didn’t apply, the Court pointed out that the car owner was not a member of law enforcement but was instead a lay person.  As a result, her trial testimony about what the Ad said exceeded the limits of the exception.

The Court also found the detective’s testimony exceeded the scope of the course of investigation hearsay rule.  He testified that he relied on the Ad to locate the subject bike and used the Ad’s phone number to connect that number to the defendant.  The detective should have stopped there (since that testimony satisfied the exception).

But he went further: he also testified that his friend (the car owner) told him that the bike was being sold on craiglist, that he called the number on the Ad and that defendant’s cell phone rang when he called.  The detective violated the hearsay rule by relying on the out-of-court statements – namely, the car owner’s description of the Ad and the phone number and picture featured on the Ad.  The Court found that the Ad’s specifics were improper hearsay and should have been excluded by the trial court.

Afterword:

Jovan is interesting for its discussion of an atypical hearsay exception (at least in the civil litigation context).  The  course-of-investigation hearsay exception is broad but not without limits. Curiously, the State didn’t use the actual craiglist Ad at trial.

I was left wondering why it didn’t try to get the Ad into evidence under IRE 902’s self-authenticating rules for newspapers and periodicals.  I would think craiglist is enough of a ‘Net household name – and similar enough to a generally circulated “newspaper” – that a print-out from the site would be  sufficiently trustworthy to be utilized at trial.  Jovan is also unique in the sense that the First District acknowledges that there was enough circumstantial evidence – aside from  the craiglist Ad – to convict the defendant.

Even so, since the trial court relied so heavily on out-of-court evidence (the Ad), the conviction was reversed.

Settlement Agreement Construed Like Any Other Contract

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This one naturally resonated with me as I’ve experienced how time-consuming and expensive it is to monitor and enforce a settlement agreement that, in theory, ended the case.

In Sprint Nextel v. AU Electronics, Inc., 2014 WL 2580, the parties executed a written settlement agreement ending litigation involving defendants’ illegal sale of Sprint cell phones.  The agreement required the defendants to make several installment payments in exchange for Sprint dismissing the suit and not enforcing the agreement’s consent judgment term.

A month after the settlement agreement was signed, government agents raided defendants’ corporate offices (as part of a crackdown on cell phone trafficking), took its equipment and slapped a $1,000,000 lien on the corporate bank account.  Convinced that Sprint was behind the raid, the defendants repudiated the settlement agreement and Sprint moved to enforce it.  The Illinois Northern District granted Sprint’s motion.

The Court enforced the settlement agreement under basic contract interpretation rules.

A district court has inherent power to enforce a settlement agreement in a case before it;

–  A settlement agreement is a contract and state contract law governs the construction and enforcement of a settlement agreement;

– The terms of a settlement are based on the parties’ intent derived from the objective language of the agreement terms;

– A settlement agreement is effective when arrived at unless the parties specify that it’s subject to contingencies.

– A binding contract must contain an offer, acceptance and consideration and a meeting of the minds on all material term;

– Consideration means “bargained-for exchange” – where the promisor receives a benefit in exchange for his promise;

A “meeting of the minds” is based on the parties’ objective manifestations of intent;

–  A “material term” is one so essential to the contract that it wouldn’t have been made without itSprint, *4-5.

Here, all contract elements were present: the settlement agreement clearly delineated the parties obligations, it recited consideration and was signed by the defendants.  Consideration existed too:  Sprint agreed to dismiss the suit and forbear from executing on the judgment as long as defendants made the payments.  Sprint also established defendants’ breach (the repudiation of the settlement) and damages – defendants’ refusal to comply with the settlement meant that Sprint would now have to spend more time and money litigating the case and would not receive the installment payments.

The defendants’ tried to defeat the settlement agreement under rescission and commercial frustration theories.  The Court rejected both arguments.  Defendants’ rescission attempt was based on Sprint’s supposed breached of the agreement’s confidentiality/non-disclosure provisions.  The Court nixed this argument because the non-disclosure provision wasn’t a material term of the settlement agreement.

Under Illinois law, only a material breach will merit rescinding a contract.  Sprint, *9.  Here the material terms were simple: (a) Sprint dismisses the suit; and (b) defendants make payments.  The non-disclosure term was viewed as collateral to the agreement’s main purpose.

The Court also rejected defendants’ commercial frustration defense.  A sparingly used doctrine, a commercial frustration defense requires a showing that (1) the frustrating event was not reasonably foreseeable, and (2) the value of counter-performance has been totally or nearly totally lost or destroyed by the frustrating event.

The Court labeled the commercial frustration test as “rigorous” and “demanding.”  The Court held that the government’s raid on the corporate defendant’s office was reasonably foreseeable given that defendants were involved in a criminal enterprise and under investigation by state and Federal authorities.  Also, the defendants’ performance of the settlement terms wasn’t completely foreclosed.  The individual defendants’ bank accounts were not frozen by the government.  This made it possible for defendants to perform under the settlement agreement by paying the installments to Sprint.

Afterword: Monitoring compliance with and enforcing settlement agreements often leads to protracted, “satellite” litigation.  It can be tedious and demoralizing to realize that you are spending more energy (and money) babysitting and litigating the settlement than you did in the underlying case!  The Sprint case, in back-to-basics fashion, shows that settlement agreements are enforced like any other contract,

Partnership Dissolution: Illinois Basics

Cross v. O’Heir, 2013 IL App (3d) 120760 spotlights a dispute over the division of partnership property.

The plaintiff’s husband (who died before lawsuit was filed) entered a written partnership with the defendant to develop property.

A few years later, and unbeknownst to plaintiff’s husband, the defendant signed a cross-easement agreement with some adjacent owners to provide vehicle and pedestrian access over three parcels that were allotted to the defendant after he and plaintiff’s husband began dividing up the partnership real estate.

The plaintiff, as executor of her husband’s estate, filed suit for a declaration that the cross-easement agreement benefitted her property (adjacent to the defendant’s three parcels) and defendant counter-sued to dissolve the partnership and for an accounting.

The court entered summary judgment for the defendant and on defendant’s dissolution action.  After a bench trial on damages, the court entered a money judgment of about $40K for the defendant and the plaintiff appealed.

(¶¶ 17-19).

The Court affirmed summary judgment on the defendant’s partnership dissolution counterclaim.

The dissolution of a partnership means a change in the relation of the partners caused by any party ceasing to be associated in the carrying on of the partnership’s business.

 A partnership can be dissolved by judicial order or by operation of law.  Death of a partner normally dissolves a partnership unless the partnership agreement says otherwise. 

Judicial dissolution can be granted upon a partner’s application if the court finds that the partnership business can’t be carried out in accordance with the partnership agreement.  (¶¶ 32-33); 805 ILCS 206/801(5). 

After dissolution, each partner is entitled to a settlement of partnership accounts and a partner’s right to an accounting accrues on the date of dissolution.  A dissolution action can be brought in tandem with an accounting suit.  (¶ 34), 805 ILCS 206/807(b). 

Following dissolution, each partner must contribute to the partnership, amounts equal to any surplus funds (over credits) in the partnership’s account to pay creditors.  In addition, the estate of a deceased partner is liable for the partner’s obligation to contribute to the partnership.  805 ILCS 206/807(b), (e).

The plaintiff argued that the defendant’s dissolution action was untimely since the partnership “constructively dissolved” when it stopped doing business twelve years before the lawsuit was filed.  The Court disagreed, noting that at the time defendant filed its dissolution action, the partnership still owned property.  It wasn’t until 2011 when the last of the partnership property – the two outlots – was finally transferred.  Until those two lots were disposed of, a dissolution and accounting suit was still timely.  (¶¶ 36-37).

Afterwords:

–  A partnership agreement can provide that the partnership continues after the death of a partner;

– If a partnership has ceased doing business, a partner can still bring a dissolution action so long as there is partnership property at the time the dissolution suit is filed;

– A deceased partner’s estate is liable to the partnership for the deceased partner’s contribution to the partnership after dissolution.