Matter of Sapse

• Citation: 31 BR 914
• Decision Date: 26 July 1983
• Docket Number: Bankruptcy No. 83-00531-BKC-SMW,Adv. No. 83-0479-BKC-SMW-A.
• Parties: In the Matter of Alfred T. SAPSE and Renee Sapse, Debtors. IMMUGEN, INC., Plaintiff, v. Alfred T. SAPSE and Stephen H. Judson as Trustee, Defendants.
• Court: United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Southern District of Florida

31 B.R. 914 (1983)

In the Matter of Alfred T. SAPSE and Renee Sapse, Debtors IMMUGEN, INC., Plaintiff, v. Alfred T. SAPSE and Stephen H. Judson as Trustee, Defendants.

Bankruptcy No. 83-00531-BKC-SMW, Adv. No. 83-0479-BKC-SMW-A.

United States Bankruptcy Court, S.D. Florida.

July 26, 1983.

Holland & Knight, Miami, Fla., for plaintiff.

Britton, Cohen, Kaufman & Schantz, Miami, Fla., for defendant.

Stephen Judson, Miami, Fla., for trustee.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

SIDNEY M. WEAVER, Bankruptcy Judge.

This cause came on for trial on the adversary complaint filed by the Plaintiff, IMMUGEN, INC. (IMMUGEN), seeking a determination that a contract entered into by and between it and the Debtor ALFRED T. SAPSE (Debtor/SAPSE) on June 30, 1982 was a fully executed contract, and for a declaration of its rights in connection with said contract, including but not limited to injunctive relief. The Defendant Debtor denied that the contract was fully executed, sought a determination that the said contract was executory and could be rejected, and prayed that the Plaintiff's request for injunctive relief be denied. The Defendant Trustee answered and requested an adjudication of the issues contained in the complaint filed by the Plaintiff.

The Court having heard the testimony and examined the evidence presented, observed the candor and demeanor of the witnesses, considered the pleadings and argument of counsel, and being otherwise fully advised, does hereby make findings of fact and conclusions of law in narrative form.

The contract of June 30, 1982, by mutual agreement of the parties, provided that it was to be interpreted and governed by the laws of the State of Florida. Under Florida law, a trial court is required to interpret as a matter of law the effect of written documents or agreements which are clear and unambiguous. Smith v. State Farm Mutual Automobile Insurance Co., 231 So.2d 193 (Fla.1970); Automatic Canteen Company of America v. Butler, 177 So.2d 712 (3rd DCA Fla.1965); Olin's, Inc. v. Avis Rental Car System of Florida, Inc., 141 So.2d 609 (3rd DCA Fla.1962). This judicial prerogative has been recognized by the United States Court of Appeals for the Fifth Circuit, Allen v. Carlotti, 552 F.2d 1086 (5th Cir.1977). The courts in the Eleventh Circuit are bound by the judicial opinions of the Fifth Circuit. Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir.1981) (en banc).

The Bankruptcy Code does not contain a precise definition of the term "executory contract". This omission was intentional. H.R.Rep. No. 95-595, 95th Cong., 1st Sess. (1977) at 347, S.Rep. No. 95-989, 95th Cong., 2d Sess. (1977) at 58, U.S.Code Cong. & Admin.News 1978, p. 5787. Both the House and Senate Reports indicate that the term "executory contract" includes contracts containing provisions where performance remains due to some extent on both sides. Id. The contract under consideration is a fully executed agreement. The agreement describes its objects with particularity, and provides for the bargain and sale of specifically enumerated subject matter on the part of SAPSE, by the delivery of existing formulas and manufacturing processes. SAPSE further agreed not to compete with IMMUGEN. In exchange, SAPSE was to receive royalties and a stock option. The agreement further provided a fiduciary relationship between SAPSE and IMMUGEN; if breached by SAPSE, IMMUGEN could obtain injunctive relief; and the resolution of any disputes between the parties to the contract would be submitted to arbitration.

The evidence indicated that on the date of the filing of the original petition commencing these proceedings, or shortly before, SAPSE either voluntarily terminated his employment by IMMUGEN, or IMMUGEN discharged him. No issue was made as to whether or not the termination or the discharge affected the parties' rights under the agreement. As the pleadings were framed, the Court was not required to dispose of said issue. It is apparent that SAPSE is free to pursue employment or to undertake personal endeavors, so long as he does not violate or interfere with the provisions of the June 30, 1982 contract and IMMUGEN's reserved rights thereunder.

The stock options and the royalties provided for in said contract are in fact assets of the Debtor estate (11 U.S.C.Sec. 541), and are therefore items which the Trustee is charged to liquidate in accordance with his management of the estate.

Inasmuch as SAPSE's employment has been terminated and he is free to pursue employment...