Charles Gabus Motors, Inc. v. Martin J. Tirrell
17-6009
| 8th Cir. | Sep 6, 2017Background
- Gabus Motors sued Debtor in bankruptcy court and the parties settled: Debtor agreed to pay $45,000 in five installments, with the first payment due January 3, 2017; court approved the settlement.
- Settlement included a default mechanism: if Debtor missed payments Gabus Motors could file an affidavit of default and seek denial of Debtor’s Chapter 7 discharge.
- Debtor failed to make the January 3 payment, claiming flight/weather delays prevented timely delivery and sought to excuse performance under doctrines of impracticability/temporary impracticability.
- Gabus Motors filed the affidavit of default; bankruptcy court overruled Debtor’s objection and entered judgment denying Debtor a discharge.
- Debtor appealed, arguing (1) temporary impracticability excused his nonperformance, (2) the settlement is governed by UCC Article 2 and the default clause is an unenforceable liquidated-damages penalty; he also raised additional contract defenses for the first time on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether temporary impracticability excused missed Jan. 3 payment | Debtor: weather/flight cancellation prevented timely payment; doctrine suspends duty | Gabus: Debtor procrastinated, could have secured funds earlier and anticipated weather | Court: No; factual finding that Debtor’s delay, not weather, caused breach — no temporary excuse upheld |
| Whether settlement is governed by UCC Article 2 | Debtor: Article 2 applies; default clause may be barred by Iowa Code §554.2718 | Gabus: Settlement is not a sale of goods and Article 2 does not apply | Court: Not Article 2; settlement not a transaction in goods |
| Whether default provision is a liquidated-damages clause void as a penalty | Debtor: default provision functions as liquidated damages/penalty | Gabus: provision is not a liquidated-damages clause | Court: Not liquidated damages; provision does not fix a specific sum or damages — enforceable |
| Other contract defenses raised on appeal (material breach, common-law penalty, substituted performance) | Debtor: raises these new arguments on appeal | Gabus: issues were not preserved below | Court: Forfeited — not considered because not raised in bankruptcy court |
Key Cases Cited
- In re Ungar, 633 F.3d 675 (8th Cir. 2011) (standard of review: clear error for facts, de novo for law)
- Anderson v. City of Bessemer City, North Carolina, 470 U.S. 564 (1985) (factfinder’s choice between permissible views is not clearly erroneous)
- Fonder v. United States, 974 F.2d 996 (8th Cir. 1992) (oral findings can be construed to support a judgment if record supports it)
- In re Edwards, 446 B.R. 276 (B.A.P. 8th Cir. 2011) (issues not raised below are not reviewed on appeal)