2009 Chapter 11 Recent Developments (Part III)

found that they complied with the factors outlined above. Additionally, the bankruptcy court considered the Settlements' effects on public policy but it found that NJ was in the best position to protect its policies. Thus, the bankruptcy court's ruling as to the Settlements is approved.

(3)

Principal liability: "In the law of agency, a principal will be liable for contracts made in its behalf by an agent if the agent was authorized to enter into the agreements... This authority may be actual or ostensible... Actual authority is created by manifestations form the principal to the agent... while ostensible authority is created when the principal allows a third person to believe that agent has authority to act on the principal's behalf." The ostensible authority must be traceable to the principal's acts, not the agent's acts. And a principal is only bound when a third party in good faith and without negligence incurred a liability or parted with value upon their belief in such authority. The third person must also show reasonable diligence and prudence in ascertaining the agent's authority.

(4)

"A judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot be reasonably questioned." Because judicial notice essentially deprives a party from offering rebuttal evidence, caution should be taken in determining that a fact is beyond controversy. "One of the requirements of Rule 201 is procedural, namely, that the parties be given notice and an opportunity to object to the taking of judicial notice."

Holding: "We affirm the district court's denial of Hoich's motion for recusal and disqualification. We reverse the district court's judgment that Hoich was a guarantor of, or a party to, the ... alleged Settlement... and we hold that the district court abused its discretion when it took judicial notice of the April 23, 2003 TSF meeting minutes and portions of Hoich's book."

Reasoning: (1) Recusal and Disqualification: The district court admitted to making a mistake in using certain language in one opinion it had issued. The district court's opinions were based on facts and evidence that had been derived from the bankruptcy proceedings. Because of that, there was no basis to believe that Hoich had met his burden to prove bias. The district court was affirmed on this point. (Additionally, Hoich's motion was untimely.)

(2)

Guaranty: Hoich did not "sign a written contract to guarantee the settlement agreement. Hoich was not present at the ... [confirmation] hearing, and could not have made a personal financial commitment on the record. At no time during the hearing did any agent on behalf of Hoich expressly represent Hoich was guaranteeing the alleged settlement agreement." Moreover, NCC did not present any evidence to satisfy the requirements of the exceptions to writing requirement under South Dakota's guaranty laws. Thus, the district court is reversed on this point.

(3)

Agency: Here, an NCC representative that dealt with Hoich in the Settlement negotiations and that was present at the confirmation hearing testified that "he did not know where the money would be coming from, and when asked if Hoich had guaranteed the money would be paid,... responded, 'I don't believe so.'" Additionally, at the H-earing, no one was ever asked to confirm any representation of Hoich's commitment to the Settlement or whether Hoich had agreed to be personally bound by the Settlement. Thus, NCC has not met its burden of proving that the parties had actual or ostensible authority to bind Hoich. The district court was reversed. (4) Judicial Notice: The TSF business records neither directly nor indirectly imply the fact for which the district court took judicial notice. Additionally, Hoich did not have notice of what facts from the TSF business records would be used by the court in finding them subject to judicial notice. Moreover, there was no foundation for admitting the business records under the evidence rules. Similarly, there was no foundation laid for the admission of Hoich's book as evidence. Nor was there notice that it would be considered by the court to make factual findings. The use of it was improper. The district court was reversed on this point.

In re Ingersoll, Inc., 562 F.3d 856 (7th Cir. 2009)

Facts: Since its formation in the late 1800s, the Ingersoll Cutting Tool Company ("ICTC") was at the