Commercial Banking, Collections, and Bankruptcy

Dist. Ct. did not err in finding that defendant breached software licensing contract calling for plaintiff to provide software and training services to defendant where record showed that defendant had failed to make required monthly payments, even though software had begun to malfunction. Defendant had failed to provide plaintiff with 90-days' written notice of material malfunction in software as required by contract prior to withholding of payments, and defendant could not otherwise rely on 90-day, no-questions-asked guarantee that was contained in prior proposal to void contract where said guarantee was not contained in actual, signed contract. However, remand was required to re-calculate damages where Dist. Ct. awarded plaintiff damages covering lifetime of three-year contract and should have cut off damage award on date that defendant had unilaterally stopped operation of software due to plaintiff's withholding of payments.

Dist. Ct. did not err in granting defendant's motion for summary judgment in plaintiffs' action alleging that defendant breached two contracts calling for plaintiffs to run defendant's business and for plaintiffs' purchases of 4% and 2% of defendant's business, where defendant terminated plaintiffs after deadline for plaintiffs' purchase of their portions of defendant's business had expired. Terms of contract allowed defendant to terminate plaintiffs for cause if plaintiffs had failed to purchase portions of defendant's business by date set forth in contract, and Dist. Ct. properly rejected plaintiffs' claim that their obligation to purchase business was excused by defendant's failure to fulfill its promise to use best efforts to reach agreement on third, buy-sell contract, where: (1) best-efforts clause required that defendant only engage in good-faith exchange of proposals for third contract; and (2) best-efforts clause did not mandate that defendant accept plaintiffs' final offer with respect to third contract.

Dist. Ct. did not err in granting defendant's motion for summary judgment in RICO action alleging that defendant's use of heavy-handed tactics to force plaintiff to accept buy-out of his interest in joint venture at greatly below market value price amounted to extortion. Record showed that defendant had right to terminate joint venture upon payment of fees and costs, and plaintiff's claim that defendant's offer was too low did not amount to extortion where plaintiff was free to reject offer and sue for breach of contract.

Bankruptcy Ct. did not err in granting Trustee's objection to discharge of debtor's debts under 11 USC section 727(a)(4) after finding that debtors had reckless disregard for truth when making several omissions about estate assets in bankruptcy petition. Record showed that debtors misstated gross income on tax return, failed to disclose interests in two defunct businesses, as well as in two limited partnerships, and failed to disclose receipt of $90,000 in refinance proceeds on their home. Moreover, Bankruptcy Ct. could properly find that said failures were material and reckless given debtors' post-secondary education and business experience. Fact that debtors had amended bankruptcy petition to correct said omissions did not require different result.

Dist. Ct. did not err in affirming Bankruptcy Ct. determination that $77,015.98 money judgment in which Indiana state court had found that debtor violated Indiana Home Improvement Contract Act was dischargeable even though state court had found that debtor had committed deceptive act by only partially repairing customer's home. Creditor did not establish exception to discharge under 11 USC section 523(a)(2)(A) where Bankruptcy Ct. found that debtor's failure to complete repairs was not tantamount to fraudulent intent since debtor and customer had only different understandings of substance of repair contract.

In action by plaintiff seeking recovery for certain fees arising out of plaintiff's loan of $3.53 million as part of agreement calling for plaintiff to loan defendant $6 million, Dist. Ct. did not err in finding that defendant was not required to pay said fees where terms of agreement required that plaintiff both inform defendant that it owed said fees and allow defendant three-day window to pay said fees as condition precedent to plaintiff enforcing said fees, and where plaintiff had repudiated agreement by informing defendant that it would not loan defendant any more money prior to plaintiff giving defendant required notice that defendant owed said fees. Ct. rejected plaintiff's argument that it retracted its repudiation of agreement when it sent summary statement to defendant indicating availability of remaining portion of $6 million loan commitment.