Commercial Banking, Collections, and Bankruptcy

Dist. Ct. did not err in affirming Bankruptcy Ct. order denying debtor's second motion to reopen his Chapter 13 proceeding that had been filed one year after first motion to reopen had been denied and five years after said bankruptcy proceedings had been closed. While debtor argued that reopening of bankruptcy proceeding was warranted because creditor was attempting to collect on pre-petition debts by issuing mortgage pay-off letter and by seeking foreclosure on debtor's property, second motion to reopen was untimely. Moreover, creditor's actions did not violate terms of approved bankruptcy plan since: (1) mere issuance of pay-off letter was not attempt to collect on pre-petition debt; and (2) filing of foreclosure action did not did not violate any bankruptcy court plan calling for debtor's continued payment of mortgage since automatic stay was not in effect at time debtor defaulted on said mortgage for second time.

Dist. Ct. did not err in dismissing for failure to state cause of action plaintiffs’ Truth in Lending Act (TILA) lawsuit seeking rescission of plaintiffs’ mortgage based on defendant allegedly misstating certain charges on mortgage disclosure statement. Ordinary three-day period allowed for rescission under TILA did not apply, and plaintiffs failed to show how 10 different discrepancies on their TILA statement were material as defined under 12 CFR section 226.23(a)(3), where plaintiffs failed to assert how any alleged misstated figures on statement related to either their finance charge, APR or amount financed.

Dist. Ct. erred in granting defendant’s motion for summary judgment in action alleging that defendant breached contract calling for defendant’s transfer of its interest in mortgage to plaintiff where defendant failed to provide plaintiff with original or copy of mortgage note. Plaintiff presented sufficient evidence to create triable fact as to whether defendant’s production of note was part of instant contract. Fact that plaintiff’s evidence (which included uncontested affidavit from individual testifying that parties had agreed that defendant would produce note) was open to differing interpretations did not require different result. Moreover, plaintiff presented sufficient proof of damages arising out of alleged breach of contract where state court had previously denied its request to foreclose on instant mortgage due to plaintiff’s failure to produce copy of said note.

Bankruptcy Ct. did not err in rejecting Trustee's application under section 365(f)(2)(B) to assume and assign to third-party entity certain contracts involving debtor to develop gas-to-energy conversion systems at solid waste landfills. Record supported concerns by objecting owners of landfills as to ability of subject entity to perform under contracts where: (1) managers of subject entity had been managers of debtor; (2) subject entity had only minimal assets; and (3) there was lack of explanation as to how entity would obtain $3 million in financing that was necessary to fulfill obligations under contracts.

Dist. Ct. did not err in granting defendant's motion for summary judgment in action alleging that defendant breached oral agreement reached over telephone by charging annual fees in excess than amount stated during telephone call. Ct. found that voluntary payment doctrine precluded plaintiff from obtaining any remedy where plaintiff actually paid disputed annual fees over four-year period. Ct. rejected plaintiff's claim that he paid said charges under mistake in fact, where plaintiff's mistake had nothing to do with defendant's actions, and noted that plaintiff could have easily uncovered basis for increased annual fees during said period of time.

Dist. Ct. erred in affirming Bankruptcy Ct.'s finding that debtor was insolvent no later than August of 1997, and that certain payments made by debtor to defendant-creditor from August 1997 to July 1998 were fraudulent for purposes of seeking return of said payments pursuant section 550(a)(1) of Bankruptcy Code. Record showed that debtor was current in paying its creditors up to date of its April 2000 bankruptcy petition and had positive financial statements, and Dist. Ct. could not consider debtor's $18.5 million Medicare penalty that occurred in 1999/2000 to determine debtor's insolvency without factoring in fact that said penalties were actually paid by debtor's majority stockholder. Remand, though, was required for determination as to whether and when debtor became insolvent after August 1997.

Dist. Ct. did not err in finding that plaintiff breached contract with defendant by furnishing some defective furniture for use in department store displays and by not delivering other furniture, which caused defendant to either replace or repair said items. However, Dist. Ct. erred in calculating defendant’s damages where: (1) email between parties indicated that defendant could only charge plaintiff its out-of-pocket costs, as opposed to said costs plus defendant’s overhead and costs of capital; and (2) other portions of same email indicated that plaintiff was entitled to $3.4 million bid price that included its markup when subtracting any appropriate damage figure.

In 2006 Chapter 11 bankruptcy proceeding, Dist. Ct. did not err in affirming Bankruptcy Ct. order overruling objections to two claims that had their origins in 2000 bankruptcy reorganization plan where: (1) while objector challenged one claim on ground that claim should have been deemed asset sale instead of bona fide loan to debtor, objector failed to preserve said contention when it litigated different reason for claim's disallowance in Dist. Ct., and terms of parties' stipulation otherwise precluded objector from raising recharacterization issue; and (2) language of 2000 reorganization plan expressly retained creditor's liens as to second claim, so as to permit said creditor to file claim in instant bankruptcy proceeding. However, Dist. Ct. erred in overruling objection as to third claim since judicial estoppel applied to said claim where, prior to obtaining assignment of said claim, creditor took diametrically opposite position on viability of said claim and obtained favorable ruling based on said position in prior bankruptcy proceeding.