Walker v. Given International

Opinion

STEPHENS, J. Appellant James R. Walker, Jr., dba Grimes-Walker, Stillborn Corporation, a California corporation (hereinafter referred to as Walker) brought this action against respondent Given International (hereinafter referred to as Given) for fraud, breach of contract, and breach of warranty. The trial court granted summary judgment for respondent. We affirm with regard to the issues dealing with the arrangement proceedings and the effect of the discharge, but reverse the lower court’s holding that a bankruptcy court has the full and exclusive jurisdiction over the issue of whether respondent reaffirmed a prebankruptcy obligation owed to appellant.

The pertinent facts of the case are as follows: Appellant Walker purchased a Given/Tudor 2213 lathe machine from Given on May 15, 1975. Appellant had trouble with the machine from the outset. During the latter part of 1975, Given offered to redesign the machine and incorporate the new changes in appellant’s machine. In the meantime, Given sent personnel to Walker to assist in the operation of the machine. Walker was still awaiting the design to be completed and incorporated as of March 26, 1976, the date of respondent’s bankruptcy discharge.

Just prior to August 30, 1976, Walker was informed that the redesign of the machine was complete. The incorporation was completed a few days later. It. was at this point in time that appellant concluded that the major problems were not solvable.

On November 18, 1976, appellant filed its initial complaint against respondent in the superior court. On July 14, 1977, appellant filed its second amended complaint. On December 14, 1977, respondent filed its notice of motion and petition for summary judgment asserting that ap[57]pellants were discharged by the order of confirmation entered in the “Chapter XI” arrangement. On January 26, 1978, the trial court entered its minute order granting respondent’s motion.

The facts relative to the bankruptcy proceedings are that on February 13, 1976, Given filed under chapter XI for bankruptcy. The proposed arrangement contained a creditor’s composition agreement which had been entered into in September 1975; this was the product of a creditor’s committee appointed by unsecured creditors on May 13, 1975. On May 15 of that same year Walker’s purchase of the lathe was accomplished without Walker’s knowledge of the precarious financial condition of Given. Walker claims that the expert supplied by Given to analyze Walker’s business was relied upon insofar as recommendations and representations made regarding capability of the Given lathe was concerned. Walker argues that the lathe was untested and inadequate for the required work, though represented to be redesignable to satisfaction.