Commercial Banking, Collections, and Bankruptcy

In action in which jury found that defendant breached contract to pay full contract price for steel railcar deck manufactured by plaintiff, even though said deck sustained fracture, Dist. Ct. did not commit reversible error in granting plaintiff’s motion in limine to exclude any reference to “Charpy impact test” performed on deck, where parties’ contract did not specify any Charpy toughness criteria. While defendant contended that evidence of Charpy test was relevant on its counterclaims for breaches of implied warranties of merchantability and fitness for particular purpose to show that weld material used at location of inclusion had low fracture toughness, any error was harmless, where defendant’s experts were repeatedly allowed to testify that material in location of inclusion was brittle. As such, proposed evidence about Charpy test would not have affected outcome of trial.

Bankruptcy Ct. did not err in approving auction sale of certain assets of debtor for $2.5 million, where only objector to said sale was potential buyer of assets. Potential buyer lacked standing to object to instant sale, where it had not participated in auction, since: (1) it could not have obtained debtor’s assets regardless of what other bidders had done; and (2) potential buyer was not creditor for purposes of receiving any reduced payment as result of instant sale. Moreover, potential bidder’s bare claim that two other bidders had formed joint venture was insufficient by itself to establish any forbidden collusion.

Dist. Ct. did not err in awarding plaintiff only $3,750 in attorneys’ fees arising out of her efforts to resist IRS’s claims for back taxes that had previously been discharged in bankruptcy. Most of plaintiff’s attorneys’ fee request was uncollectible because fees had been generated outside applicable two-year limitations period. Moreover, Bankruptcy Ct. properly calculated fee at $150 per hour statutory rate under 26 USC section 7430. Ct. rejected plaintiff’s contention that Bankruptcy Ct. should have found that fee request was recoverable under section 7433, which has no statutory per hour fee limitation, and that she was entitled to all of her requested fees because she was prevailing party.

Dist. Ct. did not err in dismissing plaintiff’s lawsuit seeking recovery on bearer bonds that Germany had issued or guaranteed before World War II began, where: (1) 1953 Treaty entered into between US and West Germany provided that foreign debt contracted before end of World War II would be paid if found by validation panel to be legitimate; and (2) one plaintiff failed to submit said bonds to validation panel, and other plaintiff submitted bonds to validation panel, which found bonds to be ineligible for payment. Instant Treaty was binding on plaintiffs, such that they could not seek collection on un-validated bonds. Ct. further found that instant lawsuit had been filed beyond applicable statute of limitations period since plaintiffs should have submitted bonds to validation panel decades ago.

Bankruptcy Ct. did not err in finding that tax purchaser’s interest in debtor’s home was secured claim that is treatable in bankruptcy and was modifiable in debtor’s Chapter 13 plan, even though tax purchaser had previously acquired “Certificate of Purchase” by paying debtor’s unpaid assessments imposed by County. Moreover, tax purchaser was unable to obtain tax deed, even though redemption had subsequently expired, where debtor had filed for bankruptcy protection during redemption period, and where debtor eventually paid full amount of assessment as specified in plan. Ct. rejected tax purchaser’s argument that: (1) automatic stay provisions of Chapter 13 did not apply because his interest in “Certificate of Purchase” was real property interest that was not part of debtor’s bankruptcy estate; and (2) if automatic stay provisions did apply, they should have been modified to permit him to obtain tax deed once redemption period had expired.

Dist. Ct. did not err in granting defendant’s motion to dismiss plaintiff’s action seeking review of decision by FDIC to deny plaintiff’s claims against his bank that had gone into receivership, where said lawsuit was filed more than 60 days after date FDIC sent its notice of decision. Instant 60-day period, as set forth in Financial Institutions, Reform, Recovery and Enforcement Act, was jurisdictional prerequisite for filing lawsuit and was not mere claim-processing requirement. Moreover, Ct. rejected plaintiff’s claim that 60-day period did not start until he actually received said notice and held that instant complaint was untimely since it was filed more that 60 days after date FDIC mailed notice of its decision to address he maintained at bank. Fact that plaintiff did not actually receive notice until after 60-day period had expired did not require different result.

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.