Commercial Banking, Collections, and Bankruptcy

In breach of contract action alleging that defendant failed to pay plaintiff invoice price for medical testing materials, as well as breached confidentiality provision in contract by using plaintiff’s confidential materials after defendant had terminated contract, Dist. Ct. did not err in ordering new trial on invoice price claim, after Dist. Ct. found that jury’s special verdict that plaintiff had failed to show that defendant had not paid invoice price was inconsistent with defendant’s admissions in record. Dist. Ct. also did not err in granting defendant’s motion for judgment as matter of law on plaintiff’s breach of confidentiality claim, even though jury had awarded plaintiff approximately $1.2 million on said claim, where: (1) record showed that defendant’s compliance with confidentiality agreement would not have gained plaintiff any money; and (2) plaintiff failed to assert loss of royalty claim as basis for any potential damages award.

In adversary proceeding filed in Bankruptcy Ct. in which Trustee sought to avoid recorded mortgage entered into by debtor, Dist. Ct. did not err in finding that Trustee could not avoid mortgage under 11 USC section 544(a)(3), even though said recorded mortgage failed to state applicable interest rate and maturity date. Instant mortgage, which included amount of debt, was sufficient to satisfy common law and permissible terms of 765 ILCS 5/11, in spite of absence of interest rate and maturity date, so as to give Trustee constructive notice of said mortgage.

Bankruptcy Ct. did not err in denying plaintiff-creditor’s request to except from bankruptcy discharge defendant-debtor’s debt from state-court judgment in breach of contract and tortious interference action, alleging that defendant had wrongfully accepted real estate commission during time when commission belonged to plaintiff. While plaintiff asserted that instant debt was not dischargeable because defendant’s conduct (in signing plaintiff’s real estate client to separate agreement) constituted “willful and malicious” injury, Bankruptcy Ct. could properly find that defendant did not intend to injure plaintiff, so as to exempt instant debt from discharge order, where Bankruptcy Ct. found that defendant did not realize that prior real estate contract between plaintiff and client was still in force at time defendant entered into subsequent real estate agreement with same client. Moreover, defendant’s actions did not affect plaintiff’s ability to seek instant commission directly from client based on language in plaintiff’s contract with client.

Bankruptcy Ct. erred in denying creditor’s claim against debtor’s bankruptcy estate, where said claim was based on final judgment against debtor that creditor had previously obtained in state court. While Bankruptcy Ct. believed it had power to inquire into validity of creditor’s claim against debtor, Bankruptcy Ct. was precluded from doing so pursuant to doctrine of issue preclusion, where debtor’s current arguments against validity of claim were heard and rejected by three state courts. Ct. further noted that creditor did not assert any exception to application of doctrine of issue preclusion such as creditor obtaining state court judgment by means of fraud.

Dist. Ct. did not abuse discretion in denying creditor’s motion to reopen Chapter 7 bankruptcy proceedings where Bankruptcy Ct. had issued discharge order with respect to debt owed to creditor, even though creditor argued that he was never given proper notice of instant bankruptcy proceeding. Record showed that creditor had been listed as creditor in bankruptcy schedule, and that notice of bankruptcy petition had been served on creditor’s attorney, who had recently represented creditor in series of lawsuits against debtor in attempt to collect on debt. As such, service on attorney constituted proper and timely notice that could be imputed to creditor. Moreover, instant request was untimely, where attorney notified creditor of existence of bankruptcy petition 24 days prior to entry of discharge order, and creditor waited 13 months after he learned of bankruptcy petition to file instant action.

Dist. Ct. did not err in granting defendant’s motion for summary judgment in action by plaintiff alleging that defendant breached parties’ contract by refusing to pay amount owed to plaintiff for goods delivered to defendant, where Dist. Ct. found that instant action was filed beyond 4-year limitation period set forth in section 2-725 of Uniform Commercial Code. Both parties had invoices indicating that payment was due sixty days from date of invoice, and instant lawsuit was filed more than four years after applicable payment date contained in last invoice between parties. Fact that parties’ Uniform Terms and Conditions (UTC) agreement did not contain 60-day provision set forth in invoices did not require different result, where UTC did not specify when payments on invoices became due, such that Dist. Ct. could look to parties’ conduct to supply payment due date for purposes of triggering any limitations period.

Dist. Ct. did not err in denying plaintiff’s request for preliminary injunction in action under Petroleum Marketing Practices Act (PMPA) seeking to enjoin defendant’s termination of plaintiff’s gas station franchise, where defendant terminated said franchise after plaintiff had tendered three $22,000 checks to defendant that were returned to plaintiff due to insufficient funds (NSF) in plaintiff’s bank account. Franchise agreement allowed for termination, where plaintiff failed to timely pay defendant for debts owed to defendant, and Dist. Ct. could properly conclude that two of three NSF checks were within plaintiff’s control, and thus counted as “failures” under PMPA that justified termination of franchise.