Commercial Banking, Collections, and Bankruptcy

In action under 11 USC section 547(b)(4)(A) by plaintiff-Trustee seeking to recover $3,700 that debtor had paid to defendant-creditor pursuant to garnishment order during 90-day period prior to debtor filing bankruptcy petition, Bankruptcy Ct. erred in dismissing Trustee’s application for recovery of said payments, where Bankruptcy Ct. found that under Coppie, 728 F.2d 951, as matter of Indiana law, instant transfer of money to defendant occurred when garnishment order was entered, which was beyond applicable 90-day period. Under Barnhill, 503 U.S. 393, federal law, and not state law, defined meaning of “transfer” under section 547, and that under federal law, “transfer” occurs when money passes to creditor’s control. As such., Ct. of Appeals overruled Coppie and found that Trustee had viable cause of action to seek recovery of money actually paid to defendant-creditor during relevant 90-day period.

Dist. Ct. did not err in granting defendant’s motion to dismiss plaintiff’s action, alleging that defendant breached contract to form partnership with plaintiff. While parties can enter into agreement to form partnership, and plaintiff alleged that it and defendant orally agreed to content of terms sheet that provided sufficient terms of partnership, plain language of term sheet showed no intent to bind parties in legally enforceable manner, where there were no definite and certain terms for performance. Moreover, other sections of term sheet used only aspirational terms such as what partnership “would” or “will do” in future that did not resemble contract language. Also, term sheet did not contain clear timelines when parties were to allegedly perform their obligations. As such, allegations in complaint indicated only that the parties were considering going into business together, and parties’ oral agreement to provisions in term sheet did not create contract.

Dist. Ct. did not err in granting defendant-bank’s motion to dismiss plaintiff-customer’s action, alleging that defendant breached its contract with plaintiff by charging plaintiff $25 non-sufficient funds (NSF) fee under circumstances when plaintiff’s account had sufficient funds under ledger-balance method. Dist. Ct. could properly find that language in subject contract did not require defendant to use ledger-balance method when assessing whether plaintiff had sufficient funds in her account, that defendant could use available-balance method to make such assessment, and that plaintiff did not have sufficient funds when using available-balance method. Ct. of Appeals also rejected plaintiff’s claim that defendant could not charge multiple NSF fees where individual resubmitted same check multiple times, and where said check was rejected for insufficient funds on each occasion.

Dist. Ct. did not err in granting defendants-entity and guarantor’s motions for summary judgment in action seeking to collect on 2004 loan that plaintiff gave to entity, where Dist Ct. found that instant action was filed beyond applicable 10-year limitations period. Record showed that in August and September of 2008, principal of entity sent emails to plaintiff essentially admitting inability to pay on loan, which triggered start of limitations period, and which precluded plaintiff from recovering loan proceeds from entity, where instant lawsuit was filed on November 2, 2018. Moreover, plaintiff waived any argument that November 5, 2008 forbearance agreement constituted new promise to pay, so as to start new limitations period, where plaintiff failed to raise argument in Dist. Ct. Also, Dist. Ct. could properly find that language in guaranty agreement did not waive any limitations defense, where operative language in guaranty did not waive all defenses to enforcement of guaranty obligation.

Bankruptcy Ct. did not err in granting defendants-Irish creditors’ motion to dismiss on lack of personal jurisdiction grounds debtor’s adversary complaint in his Chapter 11 bankruptcy proceeding, alleging that defendants (who are located in Ireland and conduct business there) improperly exercised control over debtor’s property located in Ireland in violation of Bankruptcy Code’s automatic stay provisions. Existence of specific personal jurisdiction cannot depend solely on actions of plaintiffs or third-parties, and record showed that only link between defendants and Illinois was fact that plaintiff lived in Illinois and unilaterally filed bankruptcy petition in Illinois forum. Fact that defendants took actions, including taking control of debtor’s property pursuant to result of litigation in Ireland that allowed defendants to dispose of debtor’s property to satisfy debts owed to defendants, that had negative result on plaintiff in Illinois was insufficient to establish personal jurisdiction over defendants. Ct. rejected debtor’s claim that personal jurisdiction over defendants could be established through Bankruptcy Ct.’s in rem jurisdiction over debtor’s property.

Dist. Ct. did not err in affirming Bankruptcy Ct. order that allowed creditor to file amended proof of claim in debtor’s Chapter 13 payment plan to include attorney’s fees generated during pendency of debtor’s Chapter 13 petition. Record showed that: (1) under terms of contract calling for debtor’s purchase of vehicle from creditor, debtor agreed to pay attorney’s fees generated to collect amounts owed under agreement; (2) after creditor submitted initial proof of claim regarding said vehicle and after Bankruptcy Ct. ordered debtor to amend his plan to require debtor to pay vehicle debt in full, parties participated in hearings to address debtor’s failure to provide for full payment of vehicle in his plan; and (3) Bankruptcy Ct. approved creditor’s attorney’s fee affidavit, which represented fees incurred after debtor’s initial failure to properly amend plan to include full payment of vehicle debt. While confirmed payment plans under Chapter 13 are generally binding on both debtors and creditors under 11 USC section 1327(a), creditor’s request for amendment to proof of claim qualified as compelling circumstance to amend proof of claim, where: (1) parties’ contract called for attorney’s fees arising out of collection of debt; (2) debtor’s counsel was aware of existence of fees prior to plan confirmation; and (3) instant fees were reasonable and were legitimately generated because of creditor’s duty to respond to pleadings filed by debtor.