IEI Inc. v. ETG Capital LLC

Background

IEI Inc. and ETG Capital LLC entered into a Master Claims Purchase Agreement and a related Confirmation, also called a Put Letter. Under those agreements, ETG agreed to purchase IEI’s insolvency claim against Sears Canada Inc. if Sears Canada filed for insolvency during the specified period. Sears Canada filed for insolvency on June 22, 2017.

The parties later signed a February 2018 Settlement Agreement. The agreement addressed their dispute about an Assignment of Claim Agreement and stated that IEI had complied with its obligations concerning submission of the assignment notice. The parties also agreed that, after final acceptance of IEI’s claim in the Sears insolvency proceeding, ETG would purchase the claim.

ETG did not purchase IEI’s insolvency claim. IEI sued for breach of the Master Claims Purchase Agreement and the Settlement Agreement and sought CAD $457,447.06. ETG argued that IEI had not timely provided an executed Assignment of Claim Agreement and therefore had not satisfied a required condition before ETG’s duty to purchase arose.

Motions

ETG moved for partial summary judgment on IEI’s claim involving the Settlement Agreement. Summary judgment is a decision without a trial when the evidence shows that no important factual dispute requires a jury and that one side is entitled to judgment under the law.

IEI filed a renewed motion for summary judgment on both of its breach-of-contract claims and on all three of ETG’s counterclaims. ETG’s counterclaims sought declarations concerning IEI’s alleged failure to reduce its damages, ETG’s alleged right to indemnification, and ETG’s alleged lack of any payment obligation under the agreements.

Court’s Analysis

The court concluded that the Settlement Agreement’s plain language resolved the dispute over the Assignment of Claim Agreement. The court found that IEI had fulfilled its obligations under the Master Claims Purchase Agreement and the Settlement Agreement, while ETG breached both agreements by failing to purchase IEI’s insolvency claim. The court therefore granted IEI summary judgment on both breach-of-contract claims.

The court also dismissed ETG’s three counterclaims. It ruled that resolving IEI’s contract claims settled ETG’s request for a declaration that it had no duty to pay IEI under the agreements. Regarding mitigation, the court found that IEI acted reasonably by stopping deliveries to Sears Canada after learning of the insolvency and arranging for merchandise to be returned. The court rejected ETG’s indemnification claim because IEI had performed its obligations and had not caused the damages ETG claimed.

Disposition

The court denied ETG’s motion for partial summary judgment. It granted IEI’s renewed motion for summary judgment on its breach-of-contract claims and ETG’s counterclaims. The court dismissed ETG’s counterclaims and awarded IEI damages totaling CAD $457,447.06.