Commercial Banking, Collections, and Bankruptcy

Dist. Ct. did not err in reversing Bankruptcy Ct. order that rejected creditor’s objection to debtor’s discharge of listed debts in her bankruptcy petition, where record showed that debtor failed to list said creditor’s debt, as well as debts of four other creditors and failed to list certain jointly owned property, and where Ct. of Appeals found that said failures established pattern of reckless indifference to truth so as to support Dist. Ct.’s denial of discharge. Moreover, Bankruptcy Ct. erred in believing that “fraudulent” making of false oath, for purposes of 11 USC section 727(a)(4)(A), required showing that false oath resulted in pecuniary gain for debtor, since finding of reckless indifference to truth was sufficient basis to establish debtor’s fraudulent intent in instant bankruptcy proceeding.

Dist. Ct. erred in granting defendants’ motion for summary judgment in plaintiffs’ action alleging that defendants violated terms of asset-purchase agreement concerning exclusive license to sell certain “Kashwere” products in Japan when defendants sold rights in said contract to third-party without obtaining plaintiffs’ permission and marketed certain products with Kashwere product name that did not contain “chenille” fabric. Language in contract required defendants to seek permission from plaintiffs to sell defendants’ rights in contract to third-party, and fact that sale of rights to third-party was not preceded by “written offer” as mentioned in agreement did not excuse defendants from obtaining permission for sale from plaintiffs. Moreover, question of fact remained as to whether defendants violated non-compete clause in agreement, where, among other things, one defendant allegedly made efforts to damage one of plaintiff’s businesses by accusing said plaintiff of engaging in unlawful activities and selling inferior products.

Dist. Ct. erred in dismissing for lack of jurisdiction plaintiff’s Fair Debt Collection Practices Act claim after finding that defendant’s settlement offer of $1,500 rendered her claim moot because it exceeded any potential recovery she could have obtained. Under Gates, 430 F3d 429, instant dismissal would only be proper if defendant’s offer satisfied plaintiff’s monetary demand, and record showed that plaintiff demanded more than $1,500. Moreover, Dist. Ct. cannot determine merits of plaintiff’s claim and then determine that it lacked jurisdiction where defendant had offered more than what Dist. Ct. believed to be value of claim.

Dist. Ct. did not err in granting debtor-Archdiocese of Milwaukee’s motion for summary judgment in bankruptcy proceeding in which claimant sought recovery for sexual abuse by one of claimant’s priests. Record showed that claimant had already settled instant sexual abuse claim with debtor for $80,000 after participating in voluntary mediation of said claim, and although claimant argued that his settlement was fraudulently induced by statements made during mediation from debtor’s representatives, Wisc. statute precluded claimant from using said statements in any proceeding to establish his claim, where instant bankruptcy action was not distinct from underlying sexual abuse claim that formed basis of mediated settlement.

Dist. Ct. erred in granting plaintiff’s request to vacate arbitration award obtained through franchise agreement, even though plaintiff argued that she was not obligated to arbitrate dispute because she had not signed said agreement containing arbitration clause that her husband had signed. Record showed that plaintiff and her husband co-owned corporation that was formed to run franchise, and that plaintiff and her husband was required to seek defendant’s consent upon her acquisition of her ownership interest in corporation. Moreover, plaintiff was bound by franchise agreement, as well as arbitration clause contained therein, under direct benefits doctrine, where record showed that she, like her husband, had received direct benefits from franchise agreement in terms of trading upon name, goodwill, reputation and other benefits of said franchise. Ct. rejected Dist. Ct.’s observation that plaintiff was not bound by arbitration clause, since she had received only indirect benefits through her joint ownership of said corporation.

Dist. Ct. did not err in granting defendant’s motion for summary judgment in action alleging that defendant breached confidentiality agreement arising out of defendant’s manufacture of plaintiff’s metal enclosure devices for tablets that arose from designs supplied by plaintiff, when defendant began to manufacture its own enclosure devices. Record showed that plaintiff had failed to take reasonable steps to keep its propriety information confidential by obtaining additional confidentiality agreements from individuals who had access to said designs. As such, plaintiff’s confidentiality agreement was unenforceable. Ct. also found that plaintiff could not maintain similar breach of fiduciary claim, where, although parties may have shared profits generated by defendant’s manufacture of plaintiff’s enclosure devises, record did not show that parties had engaged in other activities that suggested existence of partnership that was required to support any breach of fiduciary claim.