In re Rappaport, 517 B.R. 518

Debtor filed Chapter 11 and sought expungement of The Ridge’s claims for membership dues; court treated The Ridge’s claim as potentially executory and damages-bearing.
Trial found a contract existed between Debtor and The Ridge and that The Ridge could amend terms; Debtor contested meeting of the minds.
Court held the contract was not unconscionable and there was a meeting of the minds; The Ridge could modify terms.
Contract was determined to be executory, with both sides having material unperformed obligations crucial to the contract.
Debtor rejected the contract under 11 U.S.C. § 365; rejection did not terminate the contract but gave rise to rejection damages.
Court estimated damages under § 502(c), credited Debtor for deposits, and awarded a net unsecured claim of $283,677.79 to The Ridge.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Ridge–Debtor contract is enforceable	Ridge	Debtor	Not unconscionable; meeting of minds found
Whether the contract is executory	Ridge	Debtor	Contract is executory
Effect of rejection on the contract	Ridge	Debtor	Rejection breaches contract; damages allowed as unsecured claim
How to estimate 502(c) damages	Ridge	Debtor	Court must estimate; credit for deposits; determine present value; net unsecured claim $283,677.79

In re Columbia Gas Systems, Inc., 50 F.3d 233 (3d Cir. 1995) (definition of executory contract; material breach standard)
Sharon Steel Corp. v. National Fuel Gas Distrib. Corp., 872 F.2d 36 (3d Cir. 1989) (rejection does not terminate contract; damages addressed as pre-petition breach)
Bittner v. Borne Chemical Co., 691 F.2d 134 (3d Cir. 1982) (court must honor breach claims under contract law; estimation permitted)
Pickett v. Lloyd’s, 131 N.J. 457 (N.J. 1993) (damages for breach are the natural and probable consequences)
In re Exide Tech., 607 F.3d 957 (3d Cir. 2010) (definition of executory contract; material obligations)