Commercial Banking, Collections, and Bankruptcy

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.

Dist. Ct. did not err in affirming Bankruptcy Ct. order that pro-rated debtor tax refund pursuant to date bankruptcy petition had been filed in tax year to calculate proportion of refund that belonged to pre-petition asset pool. Record showed that pro-rata by days method used by Dist. Ct. was appropriate where debtor's federal and state withholding taxes tracked her income, and where debtor failed to provide evidence that debtor's rate of income varied throughout tax year so as to support alternative calculation method.

Dist. Ct. erred in failing to grant defendant's Rule 50 motion for judgment as matter of law in action alleging that defendant violated back-solicitation clause by obtaining shipping contract from one of plaintiff's clients after defendant had ceased doing business on behalf of plaintiff. No violation of clause occurred where defendant had performed same shipping work for said client prior to time defendant began performing shipping work for plaintiff. Moreover, ordinary meaning of term traffic as contained in clause meant that defendant was precluded from generating shipping business only from plaintiff's clients with whom defendant had no relationship prior to performing services for plaintiff.

Dist. Ct. erred in finding that defendants-sole stockholders and Bd. members of insolvent corporation owed plaintiff $1.2 million in legal fees associated with plaintiff's underlying lawsuit against corporation alleging tortious interference. While plaintiff and corporation entered into contract that covered instant award of attorney fees, Dist. Ct. could not, under Nevada law, impose said fees on instant stockholders since plaintiff was aware of corporation's insolvency at time contract had been effectuated. Moreover, plaintiff had not required that instant defendants be guarantors of corporation's debts.

Dist. Ct. did not err in dismissing as untimely portion of plaintiff-taxpayer's action alleging that IRS violated discharge injunction provisions of section 524 of Bankruptcy Code by seeking to collect on back taxes that had been discharged in prior bankruptcy. Plaintiff's cause of action accrued at time IRS sent certain notices of intent to levy that concerned tax years that had been discharged, and instant case was filed beyond two-year limitation period (as set forth in 26 USC section 7433(e)) after said notices had been sent to plaintiff. Moreover, plaintiff could not otherwise invoke continuing violation doctrine since issuance of said notices constituted discreet act. However, Dist. Ct. erred in dismissing portion of case that concerned IRS issuance of collection letters that occurred within applicable two-year limitation period.