Commercial Banking, Collections, and Bankruptcy

Dist. Ct. did not err in finding that defendant debt-collector’s $43.28 cost to mail single collection letter counted as “collection cost” under contract between parties for purposes of section 1692(f) of Fair Debt Collection Practices Act, even though plaintiff-debtor argued that said cost violated section 1692(f) because it was not “expressly authorized by the agreement creating the debt.” Contract at issue allowed for creditor to collect “any cost”, and most reasonable reading of said term is to include fees paid in attempting to collect on instant debt. Fact that instant cost had not been incurred at time demand was made did not require different result, since creditor would be responsible for $43.28 cost if debtor paid on debt.

Bankruptcy Ct. erred in finding that direct payments made by debtor’s customers to debtor’s creditor did not constitute “disbursements” for purposes of 28 USC section 1930(a)(6), when calculating debtor’s quarterly fees owed to Trustee in instant Chapter 11 bankruptcy proceeding. Such payments are disbursements, where said term has expansive meaning that included payments made in ordinary course of business. Moreover, instant payments to debtor’s creditor were made on debtor’s behalf for purpose of paying down debtor’s revolving line of credit. Ct. also rejected debtor’s request to waive said quarterly fees and further found that debtor’s contention that Bankruptcy Ct.’s use of amended fee schedule violated uniformity requirement under Bankruptcy Clause of U.S. Constitution was untimely because it had failed to raise said issue in Bankruptcy Ct.

Bankruptcy Ct. did not err in finding that certain transfers by owner of company to third-party were voidable under 11 USC section 548 on grounds of actual or constructive fraud, under circumstances, where: (1) company had filed Chapter 7 bankruptcy petition; (2) third-party had received $45,400.81 in payments from company during four-year span prior to bankruptcy filing under circumstances that suggested that payments were for personal reasons; (3) company did not receive reasonably equivalent value in exchange for its transfers to third-party; and (4) company was insolvent at time of instant transfers where company’s liabilities exceeded its assets during relevant time period. Also, Bankruptcy Ct. could properly impose sanctions on third-party for attorney fees incurred for third-party’s discovery lapses, even though third-party eventually complied with discovery requests.

Dist. Ct. did not err in granting plaintiff’s motion for summary judgment in action alleging that: (1) defendant-entity breached contract with plaintiff by redirecting to entity’s employees and others funds belonging to plaintiff that entity had collected on behalf of plaintiff who performed medical services in joint medical center; and (2) defendant-principal of entity committed theft and conversion of said funds by instructing third-party to redirect said funds. Record showed that principal told third-party to “help manage the cash” to alleviate entity’s cash flow problems, and principal conceded that third-party, who accomplished said transfers, was his agent. Ct. further rejected principal’s claim that plaintiff did not have ownership interest in funds that had been initially segregated for later distribution to plaintiff, where Ct. noted that applicable agreement entitled plaintiff to specific funds that defendant had collected for services rendered at medical center. Fact that plaintiff had conceded that defendant could grant security interest in said funds to others did not constitute concession that plaintiff did not have ownership interest in said funds. Also, plaintiff could proceed against principal on both contract and tort claims, where tort claims that stemmed from common law were independent from contract claims.

Dist. Ct. did not err in dismissing plaintiff’s breach of contract action for failure to state cause of action, after finding that contract was not in force at time of alleged breach. While plaintiff argued that operative contract allowing it right to exclusively purchase defendant’s surplus sportswear was in force at time defendant allowed others to purchase said surplus sportswear, clear language of contract indicated that renewal provision did not apply to last extension of contract. As such, defendant could properly do business with third-party regarding sale of its surplus sportswear, since said sales to third-party occurred after expiration of contract.