Mail America Communications, Inc. v. World Healing Center Church, Inc.

Background

Mail America performed printing and distribution services for World Healing Center beginning in early 2006. World Healing Center accumulated unpaid obligations, and on April 26, 2012, it signed a promissory note with a principal amount of $5,621,851.62.

After World Healing Center defaulted, the parties entered into a 2014 forbearance agreement, in which World Healing Center acknowledged the note’s validity and its default. The parties later entered into a 2018 forbearance agreement and a related affidavit. In those documents, World Healing Center acknowledged that its outstanding obligation under the note totaled $3,098,380.06 as of June 30, 2018.

World Healing Center again defaulted. Mail America accelerated the amounts due and demanded payment by September 17, 2018. World Healing Center did not pay, and Mail America filed this action to collect the accelerated amounts.

Parties’ Arguments

Mail America moved for summary judgment under Rule 56 and for an evidentiary preclusion order under Rule 37. Summary judgment is a decision without a trial when the record shows no genuine dispute over a fact that could affect the result and the moving party is entitled to judgment under the law.

Mail America argued that it had established the note, World Healing Center’s default, and the amount due. World Healing Center admitted signing and delivering the note and failing to make required payments after written demand. It disputed the amount owed, arguing that Mail America had improperly accounted for payments. World Healing Center claimed it had paid the note in full and was owed approximately $49,364, relying on two spreadsheets.

Evidentiary Preclusion

The court ruled that World Healing Center could not introduce evidence or documents that it could have produced in response to Mail America’s first discovery requests. World Healing Center had not asserted a payment-in-full defense in its answer, had not taken that position during the litigation, and had not produced supporting evidence during discovery. Its new position also contradicted an admission in its answer that it made no payments toward the note or the 2014 forbearance agreement during a specified period.

The court further found that World Healing Center had failed to provide responsive evidence after receiving discovery requests about payments and the amount allegedly owed. The two spreadsheets were submitted during confidential settlement discussions rather than produced in discovery. Allowing the new evidence would have deprived Mail America of the opportunity to investigate and respond to it, and World Healing Center did not show substantial justification or harmlessness for the late disclosure.

Amount Due and Ruling

The court held that Mail America established a prima facie case for recovery on the promissory note by showing the valid note and World Healing Center’s failure to pay. The court rejected World Healing Center’s claim that the $3,098,380.06 acknowledgment was merely a placeholder because the claim lacked specifics and contradicted the parties’ written agreement.

The court calculated the amount due as of August 31, 2018, at $2,993,221.74. That amount included $17,841.68 in additional interest and deducted $123,000 in additional forbearance payments. Interest continued to accrue after August 31, 2018, at 4% per year, or $328.02 per day, on the unpaid outstanding balance.

Judge Hellerstein granted Mail America’s motion for summary judgment and its motion for an evidentiary preclusion order. The Clerk was directed to enter judgment for Mail America against World Healing Center for $2,993,221.74, plus post-August 31, 2018 interest at 4% per year, costs of suit, and reasonable attorney’s fees. The judgment excluded accelerated or unmatured late fees and penalties, and the court closed the case.