Branch v. SEI Corp. (In re Bank of New England Corp.)

210 B.R. 404
CourtUnited States Bankruptcy Court, D. Massachusetts
DecidedJune 4, 1997
DocketBankruptcy No. 91-10126-WCH; Adversary No. 95-1278
StatusPublished
Cited by3 cases

This text of 210 B.R. 404 (Branch v. SEI Corp. (In re Bank of New England Corp.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Branch v. SEI Corp. (In re Bank of New England Corp.), 210 B.R. 404 (Mass. 1997).

Opinion

DECISION ON CROSS MOTIONS FOR SUMMARY JUDGMENT AS TO COUNT VI OF THE AMENDED COMPLAINT

WILLIAM C. HILLMAN, Bankruptcy Judge.

I. Introduction

Bank of New England Corporation (“BNEC”), the holding company for a variety of banking and non-banking subsidiaries,1 filed a petition under Chapter 7 of Title 11 on January 7, 1991. Dr. Ben S. Branch was elected as the Chapter 7 Trustee (the “Trustee”).

The Trustee commenced this proceeding objecting to the claim of SEI Corporation (“SEI”) and seeking a declaratory judgment as to the rights of the Trustee and certain defendants under a contract more particularly described below. SEI answered, offered affirmative defenses, and counterclaimed. Defendants Fleet Data Processing Corp. (“Fleet Data”) and Fleet Services Corporation (“Fleet Services”) (collectively “Fleet”) answered. The Trustee responded to the SEI counterclaim.

The Trustee’s amended complaint is in six counts, the first five of which relate to the SEI claim and are not implicated by the present motions. Count VI seeks a judgment declaring that, to the extent that the Trustee is liable to SEI, Fleet is required to indemnify him. The Trustee also seeks payment of his attorneys’ fees.

[406]*406The Trustee moved for summary judgment against Fleet on Count VI of the Complaint.2 Fleet filed an opposition and a cross motion. I conducted a hearing and took the matter under advisement. The parties have filed a number of pre- and post-hearing memoranda of law.

Fed.R.Civ.P. 56(c) provides, in part, that: “The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”

There are no factual disputes, leaving the sole inquiry before me whether either moving party is entitled to judgment as a matter of law.

II. Findings of Fact

On July 12, 1991, The Trustee and Fleet entered into an Agreement to Assume and Assign Software Agreements (the “Assignment Agreement”) in which Fleet agreed to assume certain software agreements and to pay BNEC $600,000. Section 2 of the Assignment Agreement provides that:

“Fleet agrees to assume full responsibility to the licensors and vendors under the Software Agreements for any and all payments due or which may become due from the Trustee, whether prior to or subsequent to the effective date of the assignment of the Software Agreements hereunder, and for any and all other obligations or responsibilities of the Trustee pursuant to the Software Agreements and to indemnify and hold harmless the Trustee from and against any and all claims, damages, liabilities, costs (including reasonable attorneys’ fees) or expenses resulting from or arising under the Software Agreements at any time from and after the effective dates of such Agreements.”3

The Assignment Agreement also contains a choice of law clause adopting the laws of the Commonwealth of Massachusetts and an integration clause both of which state as follows:

“7.3 Entire Agreement. This Agreement (including the Schedules) contains the entire agreement between the parties with respect to the transactions contemplated hereby and the subject matter hereof and supersedes all prior or contemporaneous negotiations, understandings and agreements, written or oral, with respect thereto.
7.4 Governing Law. This Agreement shall be governed by, and shall be construed and interpreted in accordance with, the internal laws of the Commonwealth of Massachusetts applicable to agreements made and to be performed wholly within such State, without giving effect to the conflict of laws principles thereof.”

On July 18, 1991, the Trustee filed a motion to approve the Assignment Agreement. I granted the motion on August 9, 1991.

Subsequent to the filing of motion to approve, Fleet decided that it would not assume the SEI agreement. On July 25, 1991, Fleet and the Trustee executed an amendment (the “Amendment”) making changes to the Assignment Agreement. First, the SEI Agreement was deleted from the definition of “Software Agreements” without a corresponding change in the consideration. Second, the Amendment modified the language of Section 2 quoted above by adding the words “and the SEI Agreement” after the words “Software Agreements” four times, so that it now reads (with the added words emphasized):

“Fleet agrees to assume full responsibility to the licensors and vendors under the
[407]*407Software Agreements and the SEI Agreement for any and all payments due or which may become due from the Trustee, whether prior to or subsequent to the effective date of the assignment of the Software Agreements and the SEI Agreement hereunder, and for any and all other obligations or responsibilities of the Trustee pursuant to the Software Agreement and the SEI Agreement and to indemnify and hold harmless the Trustee from and against any and all claims, damages, liabilities, costs (including reasonable attorneys’ fees) or expenses resulting from or arising under the Software Agreements and the SEI Agreement at any time from and after the effective dates of such Agreements.”

The Trustee also determined that he would reject the SEI Agreement. To obtain the required authorization for the Amendment and rejection, on July 26, 1991 the Trustee filed a motion “to Amend Prior Motion for Approval of Assumption and Assignment of Certain Executory Contracts and to Reject Contract Which is Subject of Proposed Amendment” (the “Amendment Motion”). In support of his Amendment Motion, the Trustee stated:

“The Trustee believes that removal of the SEI Agreement from the list of Software Agreements to be assumed and assigned to Fleet, and the rejection of the SEI Agreement pursuant to Section 365(a) of the Code are necessary to carry out the intent of the parties to the Agreement and to secure the cooperation of Fleet in its implementation. The Trustee also believes that for this reason, because the consideration to be paid by Fleet will continue to be $600,000, because rejection of the SEI Agreement will eliminate the possibility of further liability in the future, and because Fleet has agreed in the Amendment to accept responsibility for any liability under the SEI Agreement preceding the rejection, the actions proposed in this Motion are in the best interest of the Debtor’s estate and its creditors and represent a prudent and proper exercise of business judgment.”

On October 29, 1991, I entered an order granting the Amendment Motion. Thereafter SEI filed a general unsecured claim (the “Claim”) seeking (1) $24,815.55 in damages for pre-petition services rendered under the SEI Agreement; (2) $250,000.00 for pre-petition services pursuant to alleged oral agreements between SEI and BNEC; and (3) $7,590,000.00 in damages resulting from rejection of the SEI Agreement, for a total of $7,864,815.55.

III. Discussion and Conclusions of Law

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Bluebook (online)
210 B.R. 404, Counsel Stack Legal Research, https://law.counselstack.com/opinion/branch-v-sei-corp-in-re-bank-of-new-england-corp-mab-1997.