Background
This adversarial proceeding arose from the bankruptcy of Paniolo Cable Company, which owns undersea telecommunications infrastructure connecting five Hawaiian Islands. The bankruptcy court awarded partial summary judgment to the Chapter 11 Trustee and denied Clearcom’s motion for reconsideration. The Bankruptcy Appellate Panel affirmed, and Clearcom timely appealed to the Ninth Circuit.
The court’s reasoning
The court reviewed the bankruptcy court’s legal conclusions de novo. Regarding breach of contract, the court found that a reasonable factfinder could conclude the Master Services Agreement and Emergency Service Order concerned the Paniolo infrastructure and remained in effect when Clearcom made its settlement guarantee. Clearcom failed to introduce evidence showing the agreements did not relate to the infrastructure or had terminated. Regarding unjust enrichment, the court held that while Clearcom disputed the amount of payments, it did not dispute that retention of payments for leasing access constituted unjust enrichment. On the motion for reconsideration, the court found no abuse of discretion because Clearcom did not explain why it could not have used formal discovery processes to secure the testimony of a Charter employee.
What it means going forward
The ruling confirms that parties in bankruptcy proceedings must provide specific evidence to rebut summary judgment on contract scope and duration, and that general claims of inability to obtain witness testimony without attempting formal discovery are insufficient to warrant reconsideration.