Commercial Banking, Collections, and Bankruptcy

Dist. Ct. did not err in entering judgment on pleadings in favor of defendant on breach of contract and fraud claims, where plaintiff alleged that defendant made false representations concerning potency of product used to make medical animal feed pursuant to contract calling for defendant to supply plaintiff with said feed. Prior to filing instant lawsuit, parties entered into termination agreement with respect to instant supply contract that contained clause that stated that plaintiff had released defendant “from any and all claims, whether known or unknown.” As such, Dist. Ct. could properly find that instant release included claims for breach of contract and/or fraud, and that plaintiff was precluded from proceeding on instant complaint due to unambiguous language in release. Fact that potential claims for breach of contract or fraud were not specifically mentioned in release or that alleged fraud was unknown at time of termination agreement did not require different result, especially where plaintiff was sophisticated business.

Dist. Ct. did not err in dismissing on timeliness grounds plaintiff’s action under Truth in Lending Act (TILA) to rescind mortgage he signed with defendant-bank. Record showed that plaintiff notified defendant that he was rescinding loan on August 15, 2008, April 16, 2009 and June 17, 2010, but did not file instant action until 2016, which was after state court had entered final judgment on March 23, 2016 on defendant’s foreclosure action on subject property. While section 1640(a)(1) of TILA authorizes awards of damages for violations of said Act, section 1640(e) sets one-year limitations period for any claim under section 1640. Moreover, instant limitations period began on September 4, 2008, which was 20 days after plaintiff sent defendant his first notice of rescission and when defendant had ignored said notice. Fact that plaintiff sent subsequent notices did not serve to extend limitations period.

Dist. Ct. did not err in granting defendants' motion for summary judgment in plaintiff’s action alleging that defendants breached parties’ contract to purchase assets of defendants' business that produced biodegradation products that contained bacteria designed to break down various forms of waste, where plaintiff alleged that within one year of closing on instant purchase some products of its newly acquired business were being shipped at defendant-president’s direction to customers with below-specification bacteria. Plaintiff’s breach of contract claim was untimely, where it was filed beyond applicable one year period set forth in instant purchase agreement. Moreover, while defendant-president should not have instructed employees to falsify certificates of analysis and to ship products with bacteria counts too low to meet specifications, plaintiff failed to demonstrate that president’s actions destroyed plaintiff’s contractual expectations, where: (1) plaintiff was aware that defendants had shipped defective product prior to asset purchase; and (2) plaintiff failed to present any evidence that it did not receive profitable company free from customer complaints, or that any customer had complained post-asset sale about quality of product it had received. As such, plaintiff could not establish that it incurred any customer-related damages.

Bankruptcy Ct. did not err in denying Trustee’s motion to recapture $1.9 million in payments made to defendant-creditor that occurred within 90 days of debtor filing bankruptcy petition. While creditor conceded that instant payments potentially qualified as preferential payments under 11 USC section 547(b), Bankruptcy Ct. could properly find that creditor provided debtor with new values within preferential payment period in form of additional telecommunications services so as to qualify as affirmative defense under 11 USC section 547(c). Moreover, Bankruptcy Ct. could properly use per diem method to calculate new value transferred to debtor. Fact that debtor made debt assignment to third-party did not require different result, even though said debt assignment indirectly benefited creditor.

In action to enforce provisions of covenant not to compete that were part of defendants’ agreement to sell business to plaintiff, Dist. Ct. did not err in finding that instant covenant, which prohibited defendants from providing assistance to plaintiff’s competitors for 5-year period for entire North American continent, was enforceable, but that defendants, who only assisted third-party that distributed plaintiff’s products, did not violate said covenant. Noncompete agreements that concern sales of businesses and usually involve parties with relatively equal bargaining power stand in better stead than similar noncompete provisions in employment contracts, and instant restrictions on defendants’ activities after sale of business were enforceable under Indiana law. However, terms of agreement only prohibited defendants from assisting plaintiff’s competitors. As such, their assistance to distributor of plaintiff’s products did not violate covenant since distributor was not competitor to plaintiff.

Dist. Ct. did not err in dismissing plaintiff-buyer’s RICO lawsuit against defendants-sellers of whey protein concentrate alleging that defendants altered said concentrate by adding urea to make it appear that protein levels in concentrate were higher than they actually were. Plaintiff failed to produce any evidence of damages arising out of defendants’ misconduct. Fact that plaintiff claimed that it might be subject to future lawsuits from its customers arising out of defendants’ doctored product was too speculative to support claim for damages under RICO. Also, Dist. Ct. did not err in granting intervening plaintiffs-insurers’ request for declaration that they had no duty to indemnify or defend defendants in any breach of warranty claim arising out of defendants’ alteration of concentrate since defendants’ adulteration of concentrate was deliberate act that did not fit within policy’s definition of “accident.” Too, defendants’ purchase of policy to indemnify them for loss caused by any non-fraudulent breach of warranties made to plaintiff did not require that insurer cover said losses where defendants had settled any relevant claims with plaintiff without insurance company’s knowledge.

Record failed to contain sufficient evidence to support plaintiff-franchisee’s claim under Indiana Franchise Disclosure Act, alleging that defendant-franchisor “unfairly discriminated” against plaintiff by providing more favorable pricing concessions on truck purchases to other franchise dealerships than it gave to plaintiff during process of selling trucks manufactured by defendant. Applicable franchise agreement allowed defendant discretion when awarding concessions, and plaintiff failed to show that unexplained difference in treatment with respect to 13 transactions at issue in case was “unfair” or otherwise was not norm among franchisees. Result might be different had plaintiff been able to show consistent pattern of offering worse concessions to plaintiff than it offered to others for same truck purchase by same customer. Also, Dist. Ct. did not err in granting plaintiff’s motion for summary judgment on defendant’s claim that plaintiff breached dealership agreement by failing to build new facility, where said alleged promise was not contained in written dealership agreement that had integration clause.