UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF KENTUCKY
COVINGTON DIVISION
IN RE:
MIDWEST COMMUNICATIONS CORPORATION CASE NO. 91-01031
CHAPTER 11
MIDWEST COMMUNICATIONS CORPORATION PLAINTIFF
VS. ADV. NO. 91-2200
JOVON BROADCASTING CORPORATION DEFENDANT
MEMORANDUM OPINION
This matter is before the Court on the defendant's Motion to Alter or Amend Judgment and for Leave to Amend Its Answer, filed herein on September 18, 1992. Judgment for the plaintiff had been entered on September 8, 1992, the Court having heard this matter at trial on August 31, 1992. The plaintiff filed its Memorandum in Opposition to the defendant's Motion on September 28, 1992.
This matter was initiated by the filing of the plaintiff's Complaint on October 30, 1991. The defendant filed its Answer on December 31, 1991. As stated above, the trial in this matter took place on August 31, 1992. Prior to the trial the parties entered into Joint Stipulations which included the following pertinent facts:
1. The defendant purchased equipment from the plaintiff totalling over $150,000.00. The defendant paid the plaintiff for all but approximately $99,000.00, of which $73,000.00 was to be cleared from equipment that was no longer of use to the defendant. The plaintiff received some of that equipment back, and issued the defendant a credit for $73,000.00.
2. The Ace Arena Switcher ("the Switcher") for which the defendant sought additional credit was not included in the equipment for which the $73,000.00 credit was issued.
3. After application of the $73,000.00 credit, the defendant owed a balance of $25,327.87 for the equipment it had purchased, plus some additional charges related to those purchases which brought the balance to $27,632.02.
4. The defendant admitted that it owed $25,327.87, as evidenced by its letter dated May 24, 1991, made part of the record herein as Exhibit B. The plaintiff agreed to accept $25,327.87 by its letter dated June 26, 1991 (Exhibit C). The defendant agreed to pay that amount by its letter dated July 2, 1991 (Exhibit D).
5. The plaintiff made further demand for the agreed amount by its letter dated August 21, 1991 (Exhibit E).
6. By its letter dated August 27, 1991 (Exhibit F), the defendant proposed that the plaintiff keep the Switcher that the defendant had sent to it for repairs, and reduce its purchase account balance to $1,762.12.
Testimony was elicited at trial from Dale Dickman, the plaintiff's former credit manager, that the plaintiff never accepted the defendant's proposal to receive credit for the Switcher (Transcript, pp. 9-10; 13; 40-41). Leonard Brown, the plaintiff's president, similarly testified that the plaintiff never accepted the defendant's offer. (Transcript, p. 16). The defendant did not offer any evidence that the plaintiff had accepted the offer. Glenn Hannigan, the employee who had made the proposal contained in Exhibit F, did not testify at trial. Joseph Stroud, the defendant's president, testified that no one from the plaintiff told him that the plaintiff had accepted the proposal. (Transcript, p. 31).
The only other witness to testify at trial was Reginald Jones, the defendant's director of operations and assistant to the president. Mr. Jones was the engineer who operated the Switcher during the period in question. He testified extensively as to the problems encountered in its operation. He stated that he began to operate it in February 1991, and that it immediately began to "lock up". He stated that it continued to "lock up", and then did so permanently in May 1991, at which time it was shipped to the plaintiff for repair. He also stated that during the time the "lock up" problems were being encountered, the Switcher was periodically in use. (Transcript, pp. 32-39).
Based on the stipulated facts and the evidence adduced at trial, this Court found that there had been no accord and satisfaction, and entered judgment for the plaintiff. The defendant's Motion to Alter or Amend Judgment is apparently based on the contention that the alleged defective condition of the Switcher was a fact underlying the accord and satisfaction defense and that the defendant was not allowed to offer sufficient testimony as to that condition. In that regard, the Affidavit of Mr. Stroud, the defendant's president, was attached to the Motion as Exhibit 1.
Mr. Stroud's Affidavit adds nothing to the testimony heard from him and from Mr. Jones at trial. Review of the trial transcript reveals that Mr. Jones in fact testified extensively as set out above concerning the problems the defendant had with the Switcher. The Affidavit offers the unsubstantiated statement that the plaintiff and the defendant entered into an agreement whereby the plaintiff would credit the defendant's account in exchange for the Switcher. As established at trial, however, Mr. Stroud did not make this proposal to the plaintiff, Glenn Hannigan did, and he did not testify.
The defendant argues that while it did not plead defective merchandise and breach of warranty defenses to the Complaint, the issue of breach of warranty was "raised implicitly" in the accord and satisfaction defense. The defendant contends that this Court should grant it leave to amend its Answer so as to include these defenses in order to "prevent a manifest injustice". First of all, the Court would point out that there is no merit in the defense of accord and satisfaction, as the defendant has never proved that the plaintiff agreed to its proposal. Consideration of other legal theories adds nothing to this failed defense.
Secondly, if the defendant intends to claim nonacceptance or revocation of acceptance by asserting defenses of defective merchandise and/or breach or warranty, these claims must also fail. The facts established at trial, both by stipulation and by testimony, do not suggest that the defendant refused or revoked acceptance, or was even contemplating it. As the plaintiff points out, the defendant did nothing, either before or after the initiation of litigation, to advance any claim of defective merchandise.
What the facts in this case do show is that the defendant purchased equipment from the plaintiff, that the parties agreed to certain adjustments involving the return of merchandise and the granting of credits, that the Switcher was not included in this agreement, and that the defendant made what amounted to a unilateral decision that it would be granted a credit in return for the plaintiff's keeping the Switcher. Nothing in the defendant's arguments can change these facts. It is therefore the opinion of this Court that the defendant's Motion to Alter or Amend Judgment and for Leave to Amend Its Answer should be overruled.
Dated:
By the Court -
__________________________________
Judge
Copies to:
Debtor
John C. Greiner, Esq.
Barbara B. Edelman, Esq.
mjovon.opi