Commercial Banking, Collections, and Bankruptcy

In bankruptcy proceeding where third-party filed cure claim arising out of claim purchased from creditor and stemming from executory contract with debtor, Dist. Ct. erred in finding that third-party could not potentially enforce its rights under cure provisions set forth in 11 USC section 365(b)(1)(A). Dist. Ct., though, could properly find that third-party was barred from recovering cure amount where debtor timely rejected subject executory contract under circumstances where specific terms of debtor's Chapter 11 plan gave debtor option to decline said contract after date that plan had been confirmed by Bankruptcy Ct. Moreover, failure of third-party to object to ability of debtor to postpone decision to reject executory contract until after plan's confirmation or otherwise appeal from confirmation of plan precluded third-party from challenging said ability at time debtor rejected executory contract.

Dist. Ct. did not err in granting defendant-debt collector's motion for summary judgment in FDCPA action alleging that defendant's telephone call to debtor's lawyer about outstanding debt violated section 1692c(c) of FDCPA where lawyer had previously instructed defendant to cease all further collection activities. Debtor's lawyer was not within definition of consumer for purposes of coverage under section 1692c. Accordingly, defendant could communicate freely with debtor's lawyer about instant debt even though debt collector could not speak directly to debtor about said debt.

Dist. Ct. did not err in affirming Bankruptcy Ct. decision finding that debtor's $3,000 student loan was non-dischargeable debt under Bankruptcy Code. Ct. rejected debtor's claim that loan was dischargeable because loan proceeds were not used for educational purposes, after finding that instant loan was educational where loan was part of aid package that included scholarship and grant money earmarked for completion of debtor's education at creditor-college, and where debtor had to be student to obtain loan. Moreover, Bankruptcy Ct. did not err in imposing on debtor collection costs and attorney fees generated by creditor where both items were included in promissory note for instant loan. Also, while Dist. Ct. could properly sanction debtor and his attorney for committing several procedural errors during appeal of Bankruptcy Ct. order, instant sanction of $61,942.50 (which Ct. of Appeals reduced by 50%) was excessive in view of lack of bad faith on part of debtor or his attorney.

Bankruptcy Ct. did not err in finding that creditor had not established that debtor acted in any fiduciary capacity so as to render instant debt non-dischargeable under 11 USC section 523(a)(4) of Bankruptcy Code under circumstances where debtor failed to pay outstanding advertising debts out of money fronted to debtor by creditor. While debtor may have had fiduciary duty towards creditor under Illinois law to extent that his company was insolvent during time that part of instant debt arose, said state-law duty would not have constituted basis for non-dischargeability since creditor failed to show that debtor was acting as trustee without reference to any wrong arising out of instant debt. Moreover, instant creditor failed to show existence of either express or implied trust arising out of instant contract to provide creditor with bill-paying services.

In action alleging that defendant breached financing agreement by failing to pay plaintiff for go-karts that defendant had purchased from third-party, Dist. Ct. did not err in granting plaintiff's motion for summary judgment as to defendant's counterclaim that plaintiff actually breached financing agreement by failing to pay manufacturer of go-karts. While defendant attempted to establish said counterclaim solely through two letters from manufacturer claiming that it had not been paid for said go-karts, Dist. Ct. could properly conclude that said letters constituted inadmissible hearsay evidence. Moreover, Dist. Ct. properly rejected defendant's related claim that it was not required to pay plaintiff pursuant to financing agreement because said go-karts were defective since defendant had failed to present any facts suggesting that plaintiff had warranted goods that it had merely financed.