Commercial Banking, Collections, and Bankruptcy

Dist. Ct. erred in granting defendant-employer's motion for summary judgment in action alleging that defendant terminated plaintiff in attempt to interfere with plaintiff's FMLA rights after plaintiff had reported to his supervisor that he had chest pains and needed to go to hospital. While defendant explained that plaintiff was terminated for failing to meet expectations with respect to sales volume and contacts, record contained dispute as to whether defendant had failed to make reasonable adjustment to employment expectations to account for plaintiff's FMLA leave and then terminated him when he failed to meet unadjusted expectations. Record also showed that supervisor relied on inaccurate data in finding that plaintiff did not meet some of company's reporting requirements.

Bankruptcy Ct. did not err in approving settlement of adversary action seeking among other things avoidance of creditor's blanket lien on debtor's assets where terms of settlement included retroactive modification of blanket lien to correct typographical error by indicating that lien was on debtor's assets rather than creditor's property. Settlement of claim was proper since reformation of lien was at least possible outcome of case and settlement would avoid expensive litigation costs for bankruptcy estate. Moreover, while third-party creditor argued that settlement was improper since reformation of lien gave lien creditor potential advantage in pending state court lawsuit involving distribution of some of debtor's assets among other creditors, settlement would not preclude any creditor in state court lawsuit from litigating reformation issue since Bankruptcy Ct.'s approval of settlement was with understanding that issue of actual reformation of lien was not determined in adversary proceeding.

In bankruptcy proceeding, Dist. Ct. did not err in finding in favor of bank-creditor in adversary proceeding seeking to set aside bank's secured status obtained through series of loans made by debtor where Trustee argued that bank was aware that debtor was fraudulently using segregated customer accounts to finance loan to cover debtor's in-house trading activity and still made loans with debtor anyway. While instant transfers from segregated accounts were improper, Trustee failed to show that debtor made said transfers with specific intent to prevent customers from accessing their accounts since Dist. Ct. could find that debtor had genuine belief that it could ultimately repay all transfers. Moreover, Trustee was not entitled to equitable subordination of bank's lien since, even if bank officials should have known that debtor had violated segregation requirements associated with customer accounts, bank officials' incompetence in failing to discover debtor's scheme did not rise to level of egregious misconduct necessary to establish equitable subordination of lien.

Dist. Ct. erred in granting defendant-debt collector's motion for summary judgment in action under FDCPA alleging that defendant sent plaintiff misleading dunning letter that informed plaintiff that creditor "may take legal steps against you" that might result in award of court costs and attorney fees if plaintiff did not promptly pay debt. Language concerning award of attorney fees was false and misleading since: (1) creditor could not have obtained any attorney fees had case gone to court: and (2) unsophisticated consumer would not have known that creditor could not have obtained said attorney fees. Fact that dunning letter did not state that creditor actually would seek attorney fees did not require different result.

Dist. Ct. did not err in finding after bench trial that defendants did not breach construction contract since parties had not entered into final enforceable contract under Virginia law. Record showed that while parties had signed agreement that contained preliminary scope of work provision, parties continued to negotiate and were unable to reach final agreement as to scope of work to be performed by parties that precluded finding that signed agreement was enforceable contract. Fact that defendants did not challenge validity of contract in their answer did not require different result where existence of valid contract was not affirmative defense under Virginia law. Moreover, Dist. Ct. did not err in alternatively finding that defendants did not breach agreement that called for defendants to build certain modular units for new hotel where record supported Dist. Ct.'s finding that plaintiffs own failure to obtain certain building permits precluded defendants from performing under said contract.