Opinion
No. CV 03 0402999, 04 4001007, 03 0406728, 03 0406732, 03 0402880, 04 0411414, 03 0406730, 04 0411411, 04 0412807, 03 0407557, 04 0411412, 04 4000018, 03 0407558, 04 0411413, 04 411452, 04 0411451, 03 0407559, 03 0406731, 03 0406729, 03 0406495
March 10, 2008
MEMORANDUM OF DECISION
Before the court is the court's reconsideration of its prior ruling on November 29, 2006 on defendants' motion to dismiss and/or for summary judgment, the court having previously granted plaintiff's motion to reargue dated December 19, 2006.
On June 29, 2001, The Bax Group, Inc. (Bax) filed a Chapter 11 bankruptcy petition. At that time, Bax was a party to various contracts (the Bax contracts) with the defendants currently before the court. Pursuant to the Bax contracts, the defendants granted Bax exclusive licenses to place its payphones on their premises. In exchange, Bax paid the defendants commissions based on net profits from the operation of the payphones.
On January 4, 2005, Bax' Chapter 11 proceeding was converted to a Chapter 7 bankruptcy proceeding.
According to Tel Comm Technologies, Inc. (Tel Comm), the plaintiff in this action, it paid $15,000 to purchase the Bax contracts from Bax in February 2003 pursuant to Bax' Chapter 11 reorganization plan. Tel Comm further alleges that the defendants breached the Bax contracts in 2003 and 2004. In response to the alleged breaches, Tel Comm commenced separate suits against each defendant beginning in 2003. Those cases have been combined in one caption for purposes of addressing the issues presently before the court, with Tel Comm Technologies, Inc. v. Ali Trading Co., Superior Court, judicial district of Fairfield, Docket No. CV 04 4001007 as the lead case.
At this time, Tel Comm is itself a Chapter 11 debtor.
In August 2005, the defendants filed a motion to dismiss and/or for summary judgment, as well as a supporting memorandum of law. The grounds asserted were that: 1) Tel Comm has no standing to pursue any causes of action regarding the Bax contracts because those contracts were not properly assumed and assigned pursuant to 11 U.S.C. § 365 of the Bankruptcy Code; and 2) Tel Comm is judicially estopped from pursuing claims against the defendants because Bax failed to disclose the causes of action related to the Bax contracts during Bax' bankruptcy proceedings. Tel Comm filed a memorandum in opposition to the motion dated October 21, 2005. The defendants ultimately filed three memoranda in support of their motion, while Tel Comm relied on its initial memorandum in opposition as well as a surreply. The parties also filed various affidavits and exhibits with the court. On November 29, 2006, the court, Skolnick, J.T.R., granted the defendants' motion, finding that only a bankruptcy trustee has standing to pursue the claims pressed by Tel Comm. See Tel Comm Technologies, Inc. v. Toprani, Superior Court, judicial district of Fairfield, Docket No. CV 03 0402999 (Nov. 29, 2006, Skolnick, J.T.R.).
On December 19, 2006, Tel Comm filed a motion to reargue on the grounds that the November 29 opinion reflects certain inconsistencies and various misapprehensions of law and fact. Tel Comm also asserted that two matters, Tel Comm Technologies, Inc. v. Massood, Superior Court, judicial district of Fairfield, Docket No. CV 03 0406495, and Tel Comm Technologies, Inc. v. Toprani, Superior Court, judicial district of Fairfield, Docket No. CV 03 0402999, should not have been included in the caption of the November 29 opinion. Next, the defendants filed a motion for articulation and/or clarification of the November 29 opinion, dated February 5, 2007. The defendants requested that the court articulate that: 1) Tel Comm lacks standing because the contracts were not properly assumed and assigned; 2) Tel Comm is judicially estopped from pursuing these actions; and 3) the court did not intend to find a breach of contract by the defendants, but simply assumed there was a breach for purposes of its analysis. Both sides filed memoranda in support of their motions.
As an initial matter, the court agrees that in characterizing the alleged breach in its earlier opinion, it simply assumed that a breach had occurred for purposes of its analysis. Additionally, the inclusion of Tel Comm Technologies, Inc. v. Massood, Superior Court, judicial district of Fairfield, Docket No. CV 03 0406495, and Tel Comm Technologies, Inc. v. Toprani, Superior Court, judicial district of Fairfield, Docket No. CV 03 0402999, in the November 29, 2006 opinion was unintentional, and the court's ruling on the defendants' motion to dismiss and/or for summary judgment does not apply to those cases.
The court heard oral argument on November 9, 2007, granting both Tel Comm's motion to reargue and the defendants' motion for articulation and/or clarification. For the following reasons, the court vacates its November 29, 2006 decision granting the defendants' motion due to the absence of trustee involvement in the lawsuits, and instead grants the defendants' motion based on the fact that the Bax contracts were not properly assumed and assigned.
"The motion to dismiss . . . admits all facts which are well pleaded, invokes the existing record and must be decided upon that alone . . . Where, however, . . . the motion is accompanied by supporting affidavits containing undisputed facts, the court may look to their content for determination of the jurisdictional issue and need not conclusively presume the validity of the allegations of the complaint." (Internal quotation marks omitted.) Ferreira v. Pringle, 255 Conn. 330, 346-47, 766 A.2d 400 (2001).
"The proper procedural vehicle for disputing a party's standing is a motion to dismiss." (Internal quotation marks omitted.) D'Eramo v. Smith, 273 Conn. 610, 615 n. 6, 872 A.2d 408 (2005). "If a party is found to lack standing, the court is without subject matter jurisdiction to determine the cause . . ." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. New London, 282 Conn. 791, 802, 925 A.2d 292 (2007). "The plaintiff bears the burden of proving subject matter jurisdiction, whenever and however raised." Fink v. Golenbock, 238 Conn. 183, 199 n. 13, 680 A.2d 1243 (1996).
"[Standing] is a practical concept designed to ensure that courts and parties are not vexed by suits brought to vindicate nonjusticiable interests and that judicial decisions which may affect the rights of others are forged in hot controversy, with each view fairly and vigorously represented . . . These two objectives are ordinarily held to have been met when a complainant makes a colorable claim of direct injury he has suffered or is likely to suffer, in an individual or representative capacity. Such a personal stake in the outcome of the controversy . . . provides the requisite assurance of concrete adverseness and diligent advocacy . . . The requirement of directness between the injuries claimed by the plaintiff and the conduct of the defendant also is expressed, in our standing jurisprudence, by the focus on whether the plaintiff is the proper party to assert the claim at issue.
"Two broad yet distinct categories of aggrievement exist, classical and statutory . . . Classical aggrievement requires a two part showing. First, a party must demonstrate a specific, personal and legal interest in the subject matter of the [controversy], as opposed to a general interest that all members of the community share . . . Second, the party must also show that the [alleged conduct] has specially and injuriously affected that specific personal or legal interest . . ." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. New London, supra, 282 Conn. 802-03.
At issue in this case is whether Tel Comm can satisfy the first prong of the test for classical aggrievement. Specifically, the defendants assert that Tel Comm cannot demonstrate a legal interest in the Bax contracts because those contracts were not properly assumed and assigned. According to the defendants, not only did Bax fail to file a motion during its bankruptcy proceedings seeking to assume and assign the contracts, but Bax' failure to notify the defendants of the bankruptcy proceedings would have precluded effective assumption and assignment even if Bax had filed a motion. Additionally, the defendants contend that Tel Comm is judicially estopped from pursuing these claims because Bax failed to list any causes of action against the defendants during the course of Bax' bankruptcy proceedings.
The court agrees with Tel Comm that other standing requirements articulated in 11 U.S.C. § 1107 and Rule 6009 of the Federal Rules of Bankruptcy Procedure have been met.
Tel Comm counters that while judicial approval is required for a debtor in possession to effectively assume and assign an unexpired lease or executory contract, such approval was properly obtained in this instance through confirmation of Bax' reorganization plan, rather than by motion. Tel Comm further posits that Bax gave proper notice of assignment of the Bax contracts via letters to the defendants on January 8, 2003. Additionally, Tel Comm argues that the defendants are equitably estopped from contesting the assignments because: 1) they received written notice of the assignments and did not object; 2) certain defendants accepted commission payments from Tel Comm pursuant to such assignments; and 3) all but one of the Bax contracts (namely, Bax' contract with Ali Trading Company) allowed assignment without consent.
The parties hotly contest whether the Bax contracts are adequately identified in Bax' reorganization plan. The plan states that "all site leases shall be assumed by confirmation of the Plan," and a section of the first amended disclosure statement references payphone leases; additionally, the plan mentions payment of $15,000 to Bax for various assets. Tel Comm insists that this language read together makes clear that the payphone leases and site leases are one and the same, that the site leases were clearly assumed, and that Tel Comm paid Bax $15,000 for the site leases. Not surprisingly, the defendants assert that the site leases are not properly identified in the plan, that Tel Comm's "connect the dots" strategy is unworkable, and that there is no evidence in the plan that Tel Comm paid $15,000 solely for site leases. The court notes that the disclosure statement and the plan are not models of clarity. This court does not, however, need to address this dispute further. Even if the court assumes that the Bax contracts are among the site leases listed in the confirmed plan, the defendants received no notice of the assumption as explained later in this opinion, and Tel Comm therefore lacks standing.
11 U.S.C. § 365, which governs executory contracts and unexpired leases, is central to the court's analysis. Pursuant to § 365(1)(2)(A), an executory contract must first be assumed before it can be assigned. Either "a trustee or a debtor in possession may assume or reject an executory contract at any time before the confirmation of a plan." In re Amerivision Communications, Inc., 349 B.R. 718, 722 (B.A.P. 10th Cir. 2006). Accordingly, if Bax, as debtor in possession, properly assumed the Bax contracts, its assignment of those contracts to Tel Comm may be valid.
The courts have discussed two methods by which a debtor in possession properly may assume an executory contract. Specifically, "[i]n a Chapter 11 case, assumption or rejection of an executory contract may be accomplished by specific motion as set forth in Fed.R.Bankr.P. 6006(a)." In re Amerivision Communications Inc., supra, 349 B.R. 722. Alternatively, "[a]n assumption or rejection may also be accomplished as part of a Chapter 11 plan, obviating the need to file a separate motion as a contested matter." Id.; see also In re Dynamic Tooling Systems, Inc., 349 B.R. 847, 853 (Bankr.D.Kan. 2006), appeal dismissed, 378 B.R. 417 (B.A.P. 10th Cir. 2007) ("[p]rocedurally, there are two avenues to assume or reject an executory contract, either by motion or pursuant to a plan provision under § 1123(b)(2)").
Regardless of the method used to assume an executory contract, the debtor in possession must give proper notice to the other party to that contract. Federal Rules of Bankruptcy Procedure, Rule 6006(c) discusses notice only in the context of a debtor seeking to assume an executory contract via motion. Nevertheless, the courts have made clear that a debtor may not avoid the duty to notify merely by assuming a contract through a reorganization plan, rather than by motion. As the Fifth Circuit explained in In re National Gypsum Co., 208 F.3d 498, 512 (5th Cir.), cert. denied, 531 U.S. 871, 121 S.Ct. 172, 148 L.Ed.2d 117 (2000), "Rule 6006 was not intended to establish a two-tier standard of notice in which formal notice is required if the assumption is to be by motion, but if assumption is to be by plan, the responsibilities of the debtor are radically diminished." Rather, "reasonable notice" of a debtor's intent to assume is also required when assumption is to be by plan. Id., 511-12; see also In re Amerivision Communications, Inc., supra, 349 B.R. 722 ("[i]f assumption is to be undertaken in a Chapter 11 plan, a plan proponent must provide the requisite notice as part of the confirmation process"). Additionally, a hearing is required after notice is given. See In re National Gypsum Co., supra, 208 F.3d 512.
The courts have also provided some guidance as to exactly what constitutes proper notice regarding assumption or rejection of an executory contract. For example, in In re National Gypsum Co., the Fifth Circuit stated that "[u]nless there is a showing that the non-debtor possessed actual knowledge of a sufficiently refined degree, the debtor must demonstrate delivery of the proposed plan of reorganization or some other court-ordered notice that set forth [the debtor]'s intent to assume the [executory contract] . . ." Id., 513. Additionally, a Tenth Circuit appellate bankruptcy panel discussed the following checklist in determining that the nondebtor party had received adequate notice of the debtor's intent to reject an executory contract: "Dataprose [the nondebtor contracting party] had notice of the bankruptcy filing, and the Production Contract was listed on Schedule G. Both Dataprose and its counsel were served with Amerivision's [the debtor's] and the Creditors' Plan, the notice of the confirmation hearing, the ballot provided with the competing plans, and the deadline for filing rejection damage claims contained in the Creditors' Plan. The Creditors' Plan contained a provision which explicitly rejected all executory contracts not specifically assumed by separate motion. Dataprose was served with the separate Notice of Intent and the Notice of the Effective Date." In re Amerivision Communications, Inc., supra, 349 B.R. 723-24.
Nothing in the affidavits presented by the parties suggests that the documents discussed in either In re Amerivision Communications, Inc. or In re National Gypsum Co. were provided to the defendants in this case when Bax, as debtor in possession, attempted to assume the Bax contracts as part of the reorganization plan. Moreover, affidavits provided by the defendants specifically state that Bax failed to notify the defendants of its intention to assume the Bax contracts.
Interestingly, Bax' Chapter 7 trustee has also weighed in on this issue, averring that the Bax contracts were not properly assigned to Tel Comm and instead remain the property of Bax' Chapter 7 bankruptcy estate.
Tel Comm does not dispute the defendants' assertion that although Bax sent letters to the defendants on January 8, 2003 explaining that the Bax contracts were being "transferred" to another entity, Bax provided no notice of either the bankruptcy filing or the plan confirmation hearing. Additionally, Tel Comm does not counter the defendants' contention that the defendants were never served with copies of the proposed plan.
Tel Comm instead posits that Bax had no duty to provide the defendants with these details because with one exception, the contracts were assignable without the defendants' consent. The court finds this argument unpersuasive. As the defendants properly note, the assignability clauses in the Bax contracts did not give Bax license to choose unilaterally to dispense with the notice and hearing requirements that govern assumption. Moreover, "[s]trict adherence to the Code provisions governing assumption of contracts might appear overly simplistic, [but] it is important in that it allows a debtor in possession the flexibility intended by the Bankruptcy Code in deciding whether or not to assume or reject contracts or leases . . . Also, the requirements of court approval and a hearing after notice to interested parties provide necessary safeguards to parties forced to maintain contractual relations with a reorganizing debtor." (Citation omitted; internal quotation marks omitted.) In re National Gypsum Co., supra, 208 F.3d 512.
Additionally, "[u]nder [11 U.S.C.] § 365(b)(1), a debtor is required to cure all defaults (or give adequate assurance that the trustee will promptly cure such defaults) as a condition to assuming the contract." In re Greater Southeast Community Hospital Corp. I, 327 B.R. 26, 31 (Bankr.D.D.C. 2005). Because Bax failed to provide the defendants with notice of assumption, the defendants were denied an opportunity to address any perceived defaults prior to the assumption.
Accordingly, even assuming arguendo that the Bax contracts are listed in Bax' confirmed reorganization plan, the court concludes that the assumption was ineffective because the defendants received no notice. Because the Bax contracts were not properly assumed, they could not be properly assigned to Tel Comm, and Tel Comm therefore lacks standing to sue the defendants.
Cases cited by Tel Comm for the proposition that Bax' letters to the defendants signaling the transfers of the Bax contracts provided adequate notice are inapposite. Not only are Tel Comm's cases significantly older than the cases requiring formal notice, but in every instance, the nondebtor party in Tel Comm's cases was aware of, and often intimately involved in, the debtor's bankruptcy proceedings. See, e.g., In re Moreggia Sons, Inc., 852 F.2d 1179, 1186 (9th Cir. 1988) (case involved neither executory contract nor unexpired lease, and nondebtor party was aware of bankruptcy proceedings and cooperated with trustee in connection with assumption at issue); Brown v. Presbyterian Ministers Fund, 484 F.2d 998, 1000, 1007 (3d Cir. 1973) (nondebtor party was aware of bankruptcy proceedings in case governed by Bankruptcy Act of 1898, 11 U.S.C. § 110(b)); Nostromo, Inc. v. Fahrenkrog, 388 F.2d 82, 84-85 (8th Cir. 1968) (trustee's attorney orally notified nondebtor party that debtor would assume executory contract during relevant statutory window of Bankruptcy Act of 1898, 11 U.S.C. § 110(b), and all parties "knew the situation from the inception of the bankruptcy proceedings"); In re Kroh Bros. Development Co., 100 B.R. 480, 481 (W.D.Mo. 1989) (Chapter 11 proceeding in which "[n]otice of approval of the Disclosure Statement and a hearing on confirmation of the Plan was mailed to all creditors and other parties at interest"); In re Ro-An Food Enterprises Ltd, 41 B.R. 416, 418-19 (E.D.N.Y. 1984) (Chapter 7 proceeding in which landlord was aware of bankruptcy proceeding from the initial stages, trustee's efforts to assume the lease properly were hampered by the debtor's imprisonment, and the court "limit[ed] its holding to the particular facts before it"); In re Fugel, 197 B.R. 92, 96 (Bankr.S.D.Cal. 1996) (Chapter 13 bankruptcy proceeding in which nondebtor party was served with "specific notice that the Debtors intended to assume the lease" and "had an opportunity to object, which it did . . . and an opportunity to be heard"); In re Avery Arnold Construction, Inc., 11 B.R. 34, 35 (Bankr.S.D.Fla. 1981) (Chapter 7 proceeding in which landlord's attorney was informed by trustee's attorney of trustee's intent to assign the lease, and then approved the assignment). Based on the information presented to this court, the current defendants, by contrast, had no knowledge of or involvement in Bax' bankruptcy proceedings, and therefore did not receive even the informal notice discussed in Tel Comm's cases.
The defendants assert that judicial estoppel provides an alternate ground for dismissal of these actions. Specifically, they argue that because some of the lawsuits at issue here commenced shortly after Bax' reorganization plan was confirmed, Bax must have had information about potential causes of action prior to plan confirmation. Therefore, Bax' failure to disclose those causes of action prior to plan confirmation renders Tel Comm judicially estopped from prosecuting these actions.
The court finds the defendants' argument unavailing. Debtors are required to disclose potential causes of action of which they are aware prior to plan confirmation. See In re Coastal Plains, Inc., 179 F.3d 197, 208 (5th Cir. 1999), cert. denied, 528 U.S. 1117, 120 S.Ct. 936, 145 L.Ed.2d 814 (2000). By the defendants' own admission, Tel Comm's lawsuits commenced after the plan was confirmed. The defendants' speculative assertions as to what Bax knew and when it knew it are insufficient to establish that Bax was required to identify these causes of action during its bankruptcy proceedings. Accordingly, judicial estoppel does not apply.
Additionally, Tel Comm offers several reasons why the defendants should be barred from disputing the assumption and assignment, invoking both equitable estoppel and the clean hands doctrine. It asks the court to analyze these issues under a summary judgment standard, noting that the defendants' motion is entitled "motion to dismiss and/or for summary judgment."
According to Tel Comm, equitable estoppel applies here because certain defendants' acceptance of commission payments from Tel Comm and the defendants' failure to contest the assignments until fairly recently caused Tel Comm to formulate a reasonable belief that the Bax contracts were properly assumed and assigned. At the very least, Tel Comm argues, genuine issues of material fact exist as to whether the defendants induced Tel Comm to believe that the assumption and assignment were proper.
"Our Supreme Court . . . stated, in the context of an equitable estoppel claim, that [t]here are two essential elements to an estoppel: the party must do or say something which is intended or calculated to induce another to believe in the existence of certain facts and to act upon that belief; and the other party, influenced thereby, must actually change his position or do something to his injury which he otherwise would not have done. Estoppel rests on the misleading conduct of one party to the prejudice of the other." Johnnycake Mountain Associates v. Ochs, 104 Conn.App. 194, 208-09, 932 A.2d 472 (2007). Additionally, "silence will not operate as [an] estoppel absent a duty to speak." Celentano v. Oaks Condominium Assn., 265 Conn. 579, 615, 830 A.2d 164 (2003).
"`Broadly speaking, the essential elements of an equitable estoppel . . . as related to the party to be estopped, are: (1) conduct which amounts to a false representation or concealment of material facts, or, at least, which is calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2) the intention, or at least the expectation, that such conduct shall be acted upon by, or influence, the other party or other persons; and (3) knowledge, actual or constructive, of the real facts.' 28 Am. Jur.2d 640, Estoppel and Waiver § 35 (1966)." Johnnycake Mountain Associates v. Ochs, supra, 104 Conn.App. 209.
Based on the foregoing, Tel Comm's equitable estoppel argument is not compelling. Tel Comm has not explained on what basis the defendants should have contested the assumptions and assignments or refused the commission payments. As noted earlier, Tel Comm does not dispute the defendants' contention that they never received notice of the bankruptcy proceedings. Absent such notice, Tel Comm had no duty to speak, and its silence, without more, cannot be interpreted as an effort "to induce [Tel Comm] to believe in the existence of certain facts and to act upon that belief." Id.
The cases cited by Tel Comm for the proposition that equitable estoppel should apply are so dissimilar to the current facts that they have no bearing here. For instance, in In re Nucentrix Broadband Networks, Inc., 314 B.R. 581, 589 (Bankr.N.D.Tex. 2004), not only was the nondebtor party aware of the bankruptcy proceedings when they occurred, but the bankruptcy court's finding of promissory estoppel was reversed by the district court. Savoy IBP 8, Ltd v. Nucentrix Broadband Networks, Inc., 333 B.R. 114, 125-26 (N.D.Tex. 2005).
Additionally, in In re THW Enterprises, Inc., 89 B.R. 351, 356 (Bankr.S.D.N.Y. 1988), the court declined to find estoppel, but found waiver because "the Lessor here was fully aware of the debtor's bankruptcy," and "[t]he fact that the Lessor knew it was dealing with a chapter 11 debtor placed it on notice that its rights and duties in relation to that debtor would be altered." Similarly, in In re Ranch House of Orange-Brevard, Inc., 78 B.R. 323, 327 (Bankr.M.D.Fla. 1987), the fact "that both [nondebtor parties] had actual knowledge of those reorganization proceedings initiated by [the debtor]" was a factor in the court's finding that the nondebtor parties "ha[d] waived their right to treat the lease agreement between the parties as rejected." The Ranch House court further determined that estoppel should apply in part because "the failure of the parties to obtain a court order approving that assumption may in part be attributed to the unexplained failure of counsel for [one of the nondebtor parties] to prepare and file a motion seeking that approval." Id.
Moreover, use of the summary judgment standard does not benefit Tel Comm. "It is frequently stated in Connecticut's case law that, pursuant to Practice Book §§ 17-45 and 17-46, a party opposing a summary judgment motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact . . . [T]ypically [d]emonstrating a genuine issue requires a showing of evidentiary facts or substantial evidence outside the pleadings from which material facts alleged in the pleadings can be warrantably inferred . . . Moreover, [t]o establish the existence of a material fact, it is not enough for the party opposing summary judgment merely to assert the existence of a disputed issue . . . Such assertions are insufficient regardless of whether they are contained in a complaint or a brief . . . Further, unadmitted allegations in the pleadings do not constitute proof of the existence of a genuine issue as to any material fact." (Internal quotation marks omitted.) McKinney v. Chapman, 103 Conn.App. 446, 451, 929 A.2d 355, cert. denied, 284 Conn. 928, 934 A.2d 243 (2007). Even assuming that Tel Comm relied on the defendants' silence, Tel Comm has failed to establish that genuine issues of material fact exist as to whether the defendants engaged in intentionally misleading behavior. Accordingly, equitable estoppel does not apply under these circumstances.
Tel Comm also contends for the first time in its surreply that the clean hands doctrine precludes the defendants from contesting assumption and assignment of the Bax contracts. "Our jurisprudence has recognized that those seeking equitable redress in our courts must come with clean hands . . . The party seeking to invoke the clean hands doctrine to bar equitable relief must show that his opponent engaged in wilful misconduct with regard to the matter in litigation . . . The trial court enjoys broad discretion in determining whether the promotion of public policy and the preservation of the courts' integrity dictate that the clean hands doctrine be invoked." (Internal quotation marks omitted.) Emigrant Mortgage Corp. v. D'Agostino, 94 Conn.App. 793, 804, 896 A.2d 814, cert. denied, 278 Conn. 919, 901 A.2d 43 (2006).
To make its case, Tel Comm relies primarily on affidavits stating that Samir Toprani, a former employee of both Bax and Tel Comm, induced the defendants to breach the Bax contracts and enter into new agreements with an individual named Jonathan Dentz, and that Dentz approved these actions. Even assuming that these allegations are true, they do not center around the defendants' alleged actions, but instead center around the actions of third parties. Moreover, the allegations have no bearing on whether the defendants engaged in wilful misconduct regarding the subject of the current litigation: namely, the purported assumption and assignment of the Bax contracts. Accordingly, Tel Comm cannot invoke the clean hands doctrine in this instance.
The court vacates its November 29, 2006 opinion, and grants the defendants' motion to dismiss for the foregoing reasons.