Opinion ID: 2981683
Heading Depth: 5
Heading Rank: 2

Heading: Accounts Receivable Repurchase Provision

Text: Section 7.6 of the APA provides that, at Invacare’s option, Naylor and Underwood must repurchase accounts receivable unpaid 180 days after the date of invoice, for an amount equal to the unpaid balance less “any amount by which the Closing Net Book Value exceeds the Target Net Book Value.” Central to this dispute, that section provides, “Seller shall have the right to verify the existence of the unpaid balance of any accounts receivable.” APA § 7.6. The district court sided with the plaintiffs in concluding that Invacare’s illegible spreadsheets violated the plaintiff’s contractual right to verify the claimed unpaid balance. Invacare relies on the more general notice provision in Section 3 of the Escrow Agreement, which only requires providing the “natural and dollar amount” of the claim in “reasonable detail.” But the district court rightfully supplanted this requirement with the more specific requirement set forth in the Accounts Receivable Repurchase Provision, which requires the claimant to provide enough evidence for the plaintiffs to “verify the existence of the unpaid balance of any accounts receivable.” See Cocke Cnty. Bd. of Highway Comm’rs v. Newport Utils. Bd., 690 S.W.2d 231, 237 (Tenn. 1985) (“As a rule, where there are, in a contract, both general and special provisions relating to the same thing, the special provisions control.” (internal quotation marks omitted)). The district court accepted Underwood’s testimony that he unsuccessfully attempted to obtain a readable spreadsheet, unpaid invoice numbers, and invoice dates. Though Invacare’s brief quips - 11 - Nos. 11-5820/11-5844/11-6044/11-6050 Naylor Med. Sales & Rentals, Inc., et al. v. Invacare Continuing Care, Inc., et al. that the aggregate figures provided in the notice letter are “clearly legible,” that is beside the point. Plaintiffs cannot “verify” the notice letter by just taking the claimed totals at face value. See App. 273; PageID 806 (conclusorily stating demands in notice letter without providing supporting evidence). Moreover, to identify qualifying unpaid accounts receivable—that is, “accounts receivable unpaid 180 days after the date of invoice”—plaintiffs would, at the least, need to verify the invoice dates associated with each unpaid invoice account. The district court correctly concluded that the plaintiffs could not “verify the existence of the unpaid balance” when Invacare failed to disclose such information. Accordingly, we uphold the district court’s factual findings regarding the inadequate responses to the plaintiffs’ requests for information and accept the district court’s determination that Invacare violated plaintiffs’ verification rights under the Accounts Receivable Repurchase Provision. For similar reasons, Invacare’s related breach-of-contract counterclaim fails as well.2 Invacare alleges that plaintiffs breached the Accounts Receivable Repurchase Provision by refusing to buy back a certain amount of the unpaid accounts receivable. But that provision imposes no obligation on the plaintiffs to honor unverified claims. We thus affirm the district court’s implicit denial of this counterclaim. 2 Though Invacare discusses the counterclaim in its appellate brief as though resolved, it appears that the district court failed to acknowledge the existence of this counterclaim in its opinion. Nevertheless, we need not remand, as we deem this counterclaim implicitly rejected. See Bank of Lexington & Trust Co. v. Vining-Sparks Sec., Inc., 959 F.2d 606, 615 (6th Cir. 1992) (“W here a district court has implicitly decided a narrow and specific issue, we will review the findings of fact and conclusions of law which necessarily support that decision, rather than remand for a certain express determination.” (citing Brown v. Baltimore & Ohio R.R. Co., 805 F.2d 1133, 1141 (4th Cir. 1986))). - 12 - Nos. 11-5820/11-5844/11-6044/11-6050 Naylor Med. Sales & Rentals, Inc., et al. v. Invacare Continuing Care, Inc., et al.