Opinion ID: 205909
Heading Depth: 2
Heading Rank: 3

Heading: Arlington Was Free From its Obligations Once LF

Text: Repudiated LF argues that Arlington cannot assert an anticipatory repudiation because it incurred no detriment nor changed its position as a result of any breach. It is true 8 LF also points to the fact that in October, the parties agreed to continue the bankruptcy court hearing on final approval of an order regarding the parties’ financing agreement. LF contends that this was a retraction, because they effectively represent agreements to extend the interim order. We disagree. The routine continuation of a court hearing says nothing regarding LF’s intentions to honor its financing obligations, certainly not in any way that would be sufficiently clear and unequivocal so as to constitute a retraction. No. 09-3560 21 that Arlington never requested more funding after its initial Revolver draw, nor did it immediately notify LF that it treated the September 29 statement as a breach. But LF’s repudiation immediately discharged all of Arlington’s remaining duties under the lending agreement. See Timmerman, 915 N.E.2d at 124; Restate- ment (Second) of Contracts § 253. At the moment LF repudiated, Arlington was entitled to treat the agreement as having ended and was no longer under any obligation to perform. Builder’s Concrete Co. of Morton v. Fred Faubel & Sons, 373 N.E.2d 863, 867-68 (Ill. App. 1978); In re C&S Grain Co., Inc., 47 F.3d 233, 237 (7th Cir. 1995); see also Timmerman, 915 N.E.2d at 124 (repudiation effective “at the moment” defendant rendered performance impossible). LF clearly stated it would lend no more money and thus breached, and Arlington was entitled to treat it as such and walk away. LF argues that it is significant that Arlington never sought rescission or brought suit against LF for any alleged breach. But it did not need to. “Unless the nonrepudiating party wishes to hold the repudiator responsible for contract damages, the non-repudiating party need not make efforts to keep the contract in force.” In re C&S Grain Co., 47 F.3d at 237. It is LF seeking additional money in this case, not Arlington. Arlington— which paid LF in full for the money it borrowed—simply believes it has no further obligations under the agreement. Once LF declared it was unwilling to perform its obligations memorialized in the Interim Order, LF “was quite clearly not entitled to payments it would otherwise have been due.” SMS Demag Aktiengesellschaft v. Material 22 No. 09-3560 Scis. Corp., 565 F.3d 365, 370 (7th Cir. 2009). LF’s theory that Arlington needs to have done more than it did in reaction to the breach “would allow a party to announce repudiation of its contractual duty and then be held blameless unless the other party objected and attempted to change [the] repudiating party’s mind. Such is not the law.” Builder’s Concrete, 373 N.E.2d at 868. And the record shows that LF’s repudiation did adversely affect Arlington. There was evidence before the bankruptcy court that upon learning that no more funds would be available under the DIP facility, Arlington felt increased pressure to rapidly negotiate an asset purchase, and was more constrained in its ability to explore other strategic options for the company.9 We can, of course, never know what parallel universe might have unfolded if Arlington did have access to additional DIP lending, but that does not mean LF did not breach. Simply put, once LF walked away from its obligations on September 29, Arlington no longer had what it had bargained for: the availability of financing during the Chapter 11 bankruptcy process. D. The Bankruptcy Judge Complied with Bankruptcy Rule 7052 Finally, LF advances a general argument that the bankruptcy court failed to comply with Federal Rules of Bank- 9 Counsel for Arlington stated at oral argument that Arlington had to “scramble” in reaction to the news. No. 09-3560 23 ruptcy Procedure 7052 in its opinion. This argument fails. Rule 7052, which makes Fed. R. Civ. P. 52(a) applicable to adversarial bankruptcy proceedings, requires a bankruptcy court to “make findings that supply a clear understanding of the grounds underlying the court’s decision.” Freeland, 540 F.3d at 732. The bankruptcy judge did so here. The bankruptcy court supplied more than adequate findings supporting the conclusions it reached, and LF’s arguments, and the evidence it submitted in support thereof, were adequately considered. The bankruptcy judge was not required to discuss every single piece of evidence before him—which would have been a virtually impossible task given how extensive the record was in this case. See Mozze v. Jeffboat, Inc., 746 F.2d 365, 370 (7th Cir. 1984). To the extent LF disagrees with the findings that the bankruptcy judge made—particularly, the judge’s finding regarding the September 29 statement—such findings would only be set aside if clearly erroneous. They are not. LF’s Rule 7052 argument essentially asks us to assign importance to varying pieces of evidence in the record in a manner differently than the bankruptcy court did, but we do not reverse a bankruptcy court’s factual findings “even if we would have weighed the evidence differently.” In re Lifschultz Fast Freight, 132 F.3d 339, 343 (7th Cir. 1997). At most, LF has presented an alternative characterization of what transpired in September and October of 2005. But “where two permissible conclusions can be drawn, the factfinder’s choice cannot be clearly erroneous.” In re Weber, 892 F.2d 534, 538 (7th Cir. 1989). The bankruptcy court’s conclusions were more than plausible in light of the record. Freeland, 540 F.3d at 729. 24 No. 09-3560