Supplemental Document by Duane Jones, William Pasewark, Robert Ricketts, Texas Tech University, Brittany Todd as to 12 Brief/Memorandum in Support of Motion Supplement¶

Patel v. Texas Tech University et al, No. 5:17-cv-00174-C (N.D. Tex.) · Dkt. 45 · 2017-12-11 · PDF

Text extracted from the PDF; scanned pages were read by OCR. The PDF is the authoritative copy.

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
LUBBOCK DIVISION
RAJIN PATEL,
§
§
Plaintiff,
§
v.
§
§
TEXAS TECH UNIVERSITY; DUANE §
JONES, individually and in his official §
capacity as adjunct professor; WILLIAM §
PASEWARK, INDIVIDUALLY and in his §
official capacity as TTU Rawls College of §
CIVIL ACTION NO. 5:17-cv-174-C
Business Associate Dean of Graduate §
Programs and Research; ROBERT §
RICKETTS, individually and in his §
official capacity as Area Coordinator in §
Accounting; and BRITTANY TODD, §
individually and in her individual capacity §
as Associate Director of the Office of §
§
Student Conduct;
§
Defendants.
§
§

SUPPLEMENT TO APPENDIX TO DEFENDANT’S RESPONSE TO PLAINTIFF’S
MOTION FOR PRELIMINARY INJUNCTION
KEN PAXTON
Attorney General of Texas
JEFFREY C. MATEER
First Assistant Attorney General
BRANTLEY STARR
Deputy First Assistant Attorney General
JAMES E. DAVIS
Deputy Attorney General for Civil Litigation

ROLA DAABOUL
Assistant Attorney General
Texas Bar No. 24068473
Office of the Attorney General
General Litigation Division
P.O. Box 12548, Capitol Station
Austin, Texas 78711-2548
(512) 836-1322
(512) 320-0667 (FAX)
rola.daaboul@oag.texas.gov
ATTORNEYS FOR DEFENDANTS

ANGELA V. COLMENERO
Chief, General Litigation Division

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TABLE OF CONTENTS
Exhibit 1 – Affidavit of Brittany Todd ................................................................................001
Exhibit 1-A – Investigation Report ......................................................................................006
Document 0 – Investigation Report ................................................................................ 006
Document 1 – Initial Incident Report filed by Professor ................................................010
Document 2 – Investigation Report Documents ............................................................ 012
Document 3 – Investigation Report Documents (2) ...................................................... 016
Document 4 – Rajin Patel Final BLAW Exam .............................................................. 118
Document 5 – Evidence provided by Rajin Patel ...........................................................142
Document 6 – False Positives Article ............................................................................. 144
Document 7 – SS Tool ....................................................................................................146
Document 8 - Dr. Pasewark response to Rajin Patel's Concerns ....................................148
Document 9 – Professor Jones response to Rajin Patel’s Concerns ...............................152
Document 10 – Rajin Patel Investigation Witness Statements .......................................155
Document 11 – Professor Jones response to witness statements ....................................157
Document 12 – Allegation Letter .................................................................................. 161
Exhibit 1-B – Patel Determination .......................................................................................176
Exhibit 1-C – Decision Letter ............................................................................................. 180
Exhibit 1-D – Appeal Decision ........................................................................................... 186
Exhibit 2- Summary ……………………………………………………………………… 187

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CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing instrument has been served
electronically through the electronic-filing manager on this the 11st day of December, 2017, to:
Jason J. Bach
The Bach Law Group, LLC
2802 Flintrock Trace, Suite 255
Austin, Texas 78738
/s/ Rola Daaboul
Rola Daaboul
Assistant Attorney General

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Rajin Patel

Summary:
A. Allegation
See email from Dr. Duane Jones and Mrs. Brittany Todd
B. Pre - Hearing:
As soon as I received the allegation (December 19th,2016), I drove to see Dr. Duane Jones. I
drove from Plano to Lubbock. However when I arrived to Lubbock Dr. Jones was not available
to meet. I emailed Dr. Ricketts prior to arriving in Lubbock about the situation and wanted to
meet with him as well. When I came down to Lubbock I met two other students (Preston and
Travis) who also had allegations towards them for the same class, in Dr. Pasewark’s office. I
went to see the Dean, Dr. Pasewark with them. Dr. Pasewark agreed to see us 3 together in the
same room. After listening to the two other students allegations of being caught cheating during
the final exam (in which the allegations were that they were googling as observed by another
student). During the interview Preston stated an incident alleging Dr. Jones allowing an
openbook/ open note test to the first group of students. Dr. Pasewark proceeded to allow both
Preston and Travis to be dismissed of their allegations and of their sanctions prior to any due
process. Preston said to Dr. Pasewark, “ The first group that took the test were able to have an
open book/ open note exam”. Based on this fact Dr. Pasewark replied, “How do you know?”
Preston replied, “ The people from the first test group said that the test was administered whilst
allowing them to use their books and notes”. Dr. Pasewark responded, “ I will see if I can speed
up the process by talking/ emailing your professor about the situations.” Dr. Pasewark told me,
“You have time (To go through the process). If you did not plagiarize, you have nothing to worry
about”.
The next day (December 20,2016) I was informed by Preston that their allegations were
dismissed.
On January 4, 2017, I had an over the phone meeting with Brittany Todd (Academic
Misconduct). She asked me if I had used anything during the test, in which I replied that I did not
have any materials during the test. She further explained that my answers were similar to Dr.
Jones’ answers and stated that I must have used the internet during the test. I replied saying I did
not use the internet or any material during the test and that I studied the book and questions and
cases at the end of each chapter to prepare for the exam. These were my best answers on the
exam. She further explained that she was going to place my answers in turnitin.com. I explained
saying that I studied hard for the test and those were my best answers that I assimilated from
reading the required text book, reading the cases, answering the case questions, and the example
questions at the end of each chapter. At the conclusion of the phone conversation she adamantly
stated that I needed to purchase the required textbook. She further stated that, “You need to stop
being a helpless graduate student and to find a way to obtain the textbook”.

2

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I received an email stating that Mrs. Brittany Todd wanted to meet and discuss the
information she gathered through the course of the investigative process and complete the prehearing process. I drove to Lubbock with my mother to meet with Mrs. Brittany Todd at 2 pm on
Thursday January 19, 2017. On this day we met and the following is the summary of our
conversation: She accused me of cheating by using the internet during the final exam. She also
accused me of having a test bank and opening a test bank during the exam. I said at this point, “I
do not understand why I am here, I did not do anything wrong. I studied the book and took my
exam.” At that point she became very angry and started screaming at me and stated “You already
know why you are here”. She was screaming that I had memorized other sources prior to the
exam. I responded in a calm and civil way, “That I did not know what questions were going to be
on the exam, that’s why I studied the textbook and the questions and cases after each chapter and
these were my best answers for the questions on the exam. She continued to yell and scream in
the presence of myself and my mother and stated that, “You are liar”. I responded, “I am not
lying and I am telling the truth and these are my best answers”. I responded, “the professor (Dr.
Jones was proctoring the exam) was 4 feet away and that to please check the cameras in the
room”. She stated, “that this will be like you winning the lottery. This will go to hearing and you
will be expelled”. I felt threatened due to her yelling and screaming and I repeatedly, in an civil
manner, told her I studied hard prior to the exam using the textbook and by studying the cases
and questions at the end of each chapter. At the end of the conversation Mrs. Brittany Todd led
my mother and I to Dr. Sofia Chapman’s office (Director of Student Conduct).
On January 24th, 2017 I received an email from Mrs. Brittany Jones with a copy of my
graded test and turnitin.com report. There is a discrepancy in the way Mrs. Brittany Todd entered
the essay answers into the turnitin.com program. She entered all the essays combined into the
report instead of each independent essay separately to give her a false positive overall aggregate
percentage number.
On January 25th, 2017 I contacted the office of the President at Texas Tech and spoke
with Mrs. Mikaela Michkam. I explained to her that I am wrongly being accused of cheating and
I believe I am not getting due process and that they are not listening to me. Mrs. Mikaela
Michkam told me to get in touch with Elizabeth Massingayle.
On January 26th, 2015, I submitted my evidence. I also submitted my own plagiarism
checker for question 8 which showed 86% uniqueness. There was a research paper which refutes
turnitin.com’s utility due to false positives on plagiarism and definition based submissions.

C. Discrepancy in the examination process
1. The first test group was allowed an open-book final exa
was brought to the attention of Dr. Pasewark by student P.C.
2016).This is a major concern of mine because the rest
an open-book during the exam.

fessor Duane Jones. This
(December 20th,
s were not allowed to use

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2. I have further evidence that a student named Kristina confirms that the first test group did in fact
have an open book final exam. She apparently was the sole test taker during her test taking
rther brought this to the attention of Dr. Fleischman. Kristina’s phone number
(
).
3. Another discrepancy was regarding a student finding P.C.
and Travis using google
during the final exam. This was brought to the attenti
e Jones by the observing
student. Dr. Jones proceeded to bring allegations of plagiarism/cheating, including sanctions (sent
by email to both students). When Preston, Travis, and I went to Dr. Pasewark’s office (December
20th,2016), Dr. Pasewark, after listening to Preston disclosing that the first test group had open
book, decided to drop the allegation of plagiarism and cheating against Preston and Travis. My
concern is that, two students that were blatantly found cheating by another student were allowed
to have their allegations dropped by Dr. Pasewark.
4. Another major concern is that why did Dr. Jones allow the first test group of students to have an
open book final exam, but not allow the rest of the test groups to do so also to be consistent with
the test administration process.

5. Another concern is two students who were caught cheating by another student, yet they were
allowed to have their allegations dropped even though Dr. Jones and Dr. Pasewark had hard
evidence against them.
6. Another concern is that I requested Mrs. Brittany Todd to check the cameras in the testing room
to prove my innocence. She was unable to prove that it was a secure testing center (where the test
was administered).

7. Another concern is that Dr. Duane Jones reported, “there were no issues with any student that
took the exam on December 12th, 2016” during my test date. I finished the exam in approximately
the same amount of time as the other students in my test section. Dr. Jones Alleges that this was
to be a closed book/ closed note exam all though he allowed the first testing group to use an openbook.

D. Discrepancy to the Pre-Hearing Process
During the entire pre-hearing process Mrs. Todd was biased and was unwilling to listen
to any of my concerns. She was accusatory before she looked at both sides of the
evidence. I feel that she had a biased approach to my entire pre-hearing process.

E. My Current Student Status
I am currently an undergraduate/graduate student:
undergraduate student: August 26th, 2012 – in progress
graduate student: August 2016 – in progress

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F. Evidence
Question 8.
When OmniOil Corporation wishes to issue certain securities, it must provide sufficient
information for Petra, and other unsophisticated investors, to evaluate the financial risk involved.
Specifically, the law imposes liability for making false statement or omission that is “material”.
What sort of information would Petra consider material?
Answer:
Petra and other average unsophisticated investors are not concerned with minor inaccuracies.
However the facts that would be considered material and deter Petra from buying Securities
(facts that have important bearing on the condition of the issuers and its business) would be
as follows: fraud activity, a dividends change, a significant change in the firm’s financial
condition, and a new possible discovery, process change, or product change, as well as its
liabilities, loans to officers and directors, customer delinquencies, and pending lawsuits. Making
false statements or omissions with respect to this type of information could subject a corporation
to liability under the securities laws.
Guide for highlighted areas:
1. Petra and other average unsophisticated investors – this is part of the question being
asked
2. (facts that have important bearing on the condition of the issuers and its business) – found
in text book “Note that any one of these facts, by itself, is not automatically considered
material. Rather, it is will be regarded as a material fact only if it is significant enough
that it would likely affect an investor’s decision as to whether to purchase or sell the
company’s securities”.(Miller 120)
3. fraud activity, a dividends change, a significant change in the firm’s financial condition,
and a new possible discovery, process change, or product change, as well as its liabilities,
loans to officers and directors, customer delinquencies, and pending lawsuits. – (areas
that are green are found in textbook on page 120)
“1. Fraudulent trading in the company stock by a broker-dealer. 2. A dividend change
(whether up or down). 3. A contract for the sale of corporate assets. 4. A new discovery, a
new process, or a new product. 5. A significant change in the firm’s financial condition 6.
Potential litigation against the company.” (Miller 120)
Loans to officers and directors, customer delinquencies, and pending lawsuits are
examples of litigation
4. Making false statements or omissions with respect to this type of information could
subject a corporation to liability under the securities laws. – “Any material omission or
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misrepresentation or material facts in connection with the purchase or sale of a security
may violate Section 10(b) of the 1934 act and SEC Rule 10b-5. The key to liability
(which can be civil or criminal) is whether the information omitted or misrepresented is
material.” (Miller 120)
Question 45
Federal Bank is a secured party on a $50,000 loan to Gigi, who owns Home HealthCare, an
assisted living facility. When Gigi experiences financial difficulty, creditors other than Federal
Bank petition her into involuntary bankruptcy. The value of the secured collateral has
substantially decreased in value. On its sale, the debt to Federal Bank is reduced to $25,000.
Gigi’s estate consists of $100,000 in exempt assets and $20,000 in nonexempt assets. After the
bankruptcy costs and back wages to Gigi’s employees are paid, nothing is left for unsecured
creditors. Gigi receives a discharge in bankruptcy. Later she deciedes to go back into business.
By selling a few exempt assets and getting a small loan. The bank claims that the balance of its
secured debt was not discharged in Gigi’s bankruptcy. She signs an agreement to pay Federal
Bank the $25,000, and the bank makes a new unsecured loan to her. Is Federal Bank correct that
the balance of its secured debt was not discharged in bankruptcy? What is the legal effect of
Gigi’s agreement to pay the bank $25,000 after the discharge in bankruptcy?
Answer:
A secured creditor is entitled to priority to the proceeds from the disposal of the secured
collateral of the bankrupt debtor up to the amount of the debt owed. If the proceeds do not cover
the secured debt, the secured party becomes an unsecured creditor for the given balance.
However, unless the debtor has been denied a discharge in bankruptcy, all debts of the debtor are
rendered void on the granting of the discharge. However, in this case, Federal Bank is incorrect
(in the wrong). Federal Bank became an unsecured creditor to the balance of $25,000. Gigi’s
discharge in bankruptcy discharged her obligation to pay the debt.
The Bankruptcy Code restricts the legality of reaffirmation—agreements to pay debts discharged
in bankruptcy. For these agreements to be binding, they must be executed before the discharge in
bankruptcy is granted.
All reaffirmation agreements must be filed with the court. Unless Gigi, the debtor, is represented
by an attorney, court approval is required. The court will only approve the reaffirmation if the
agreement will not cause the debtor a hardship and is in her best interests. If Gigi is represented
by an attorney, the attorney must file a declaration stating that Gigi was fully informed of the
consequences, the agreement was voluntarily made, and that the agreement does not impose a
hardship on Gigi or her dependents. Gigi has a right to rescind this agreement. Because the
reaffirmation agreement in this case was made after Gigi’s discharge in bankruptcy, she is not
legally obligated to pay the $25,000 debt previously discharged in bankruptcy.
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Guide to highlighted portions within answer:
1. A secured creditor is entitled to priority to the proceeds from the disposal of the secured
collateral of the bankrupt debtor up to the amount of the debt owed. If the proceeds do
not cover the secured debt, the secured party becomes an unsecured creditor for the given
balance. – “Thus, the secured party has priority over unsecured parties as to the proceeds
from the disposition of the collateral. Should the collateral be insufficient to cover the
secured debt owed, the secured creditor becomes and unsecured creditor for the
difference”. (Miller 430)

2. However, unless the debtor has been denied a discharge in bankruptcy, all debts of the
debtor are rendered void on the granting of the discharge. – “Also, certain debtors may
not qualify to have all debts discharge in bankruptcy. These situations are discussed
next”.(Miller 431) “3. The granting of a discharge to the debtor within eight years before
the petition was filed”. (Miller 432)
3. The Bankruptcy Code restricts the legality of reaffirmation—agreements to pay debts
discharged in bankruptcy. For these agreements to be binding, they must be executed
before the discharge in bankruptcy is granted. – “An agreement to pay a debt
dischargeable in bankruptcy is called a reaffirmation agreement. A debtor may wish to
pay a debt-for example, a debt owed to a family member, physician, bank, or some other
creditor-even though the debt could be discharged in bankruptcy”. (Miller 432)

4. All reaffirmation agreements must be filed with the court. Unless Gigi, the debtor, is
represented by an attorney, court approval is required. – reaffirmation agreements must
be made before the debtor is granted a discharge. The agreement must be signed and filed
with the court. Court approval is required unless the debtor is represented by an attorney
during the negotiation of the reaffirmation and submits the proper documents and
certifications.” (Miller 432)
5. The court will only approve the reaffirmation if the agreement will not cause the debtor a
hardship and is in her best interests. – “The court will approve the reaffirmation only if it
finds that the agreement will not result in undue hardship to the debtor and that the
reaffirmation is consistent with the debtor’s best interests”.(Miller 432)

6. If Gigi is represented by an attorney, the attorney must file a declaration stating that Gigi was
fully informed of the consequences, the agreement was voluntarily made, and that the agreement
does not impose a hardship on Gigi or her dependents. Gigi has a right to rescind this agreement.
Because the reaffirmation agreement in this case was made after Gigi’s discharge in bankruptcy,
she is not legally obligated to pay the $25,000 debt previously discharged in bankruptcy. –
“Among other things, these disclosures explain that the debtor is not required to reaffirm any
debt…The reaffirmation agreement must disclose the amount of the debt reaffirmed, the rate of
interest, the date payment begins, and the right to rescind. The disclosures also caution the debtor:
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“Only agree to reaffirm a debt if it is in your best interest. Be sure you can afford the payments
you agree to make”. (Miller 432)

Question 64
Fruit­of­the­Plant Seed Company is engaged in the agricultural seed industry in the Midwest.
The firm currently has about 40 percent of the market for these products. GreatGro Seed
Corporation competes with Fruit­of­the­Plant in the same states. Carbonate has about 35 percent
of the market. If Fruit­of­ the­Plant were to acquire the stock and assets of GreatGro, would
Fruit­of­the­Plant be in violation of any of the antitrust laws? If so, which one? Discuss fully.
Answer:

Section 7 of the Clayton Act prohibits the type of action by Bubbly suggested in this question, a
horizontal merger that would increase market concentration. Other factors include the overall
concentration of the relevant market, that market’s history of tending toward concentration, and
whether the merger is apparently designed to establish market power or restrict competition.
Based on the facts stated in the question, most of these factors are present. The major antitrust
law being violated is Section 7 which is in the Clayton Act. Section 7 does not allow any person
or business organization from acquiring the stock or assets in another business where the result
would be a significantly increased market share and the effect would most likely be to lessen
competition. The removal of a competitor that controls 35% of the market (GreatGro) combined
with the 40% held by the acquiring company (Fruit­of­the­Plant) definitely could drive out the
remaining small competitors and be a barrier to future entrants into this market. Either the U.S.
Department of Justice or the Federal Trade Commission could file for divestiture of the resulting
firm if these parties were to merge.
1. Section 7 of the Clayton Act prohibits the type of action by Bubbly suggested in this
question, a horizontal merger that would increase market concentration. Other factors
include the overall concentration of the relevant market, that market’s history of tending
toward concentration, and whether the merger is apparently designed to establish market
power or restrict competition. – “Under Section 7 of the Clayton act, a person or business
organization cannot hold stock or assets in more than one business when “the effect. .
.may be to substantially lessen competition.” Section 7 is the statutory authority for
preventing mergers that could result in monopoly power or a substantial lessening of
competition in the marketplace. Section 7 applies to both horizontal mergers and vertical
mergers, as discussed in the following subsections.”(Miller 510)
Example 26.14
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If the four of the largest grocery stores in Chicago accounted for 80 percent of all retail food
sales, the market clearly would be concentrated in those four firms. If one of these stores
absorbed the assets and liabilities of another, so the other ceased to exist, the resulting merger
would further concentrate the market and possibly diminish competition. Compeition is not
necessarily diminished solely as a result of market concentration, however. Courts will
consider other factors in determining if a merger violates Section 7. Oe factor of particular
importance is whether the merger will make it more difficult for potential competitors to
enter the relevant market.” (Miller 510)
2. Based on the facts stated in the question, most of these factors are present. The major
antitrust law being violated is Section 7 which is in the Clayton Act. Section 7 does not
allow any person or business organization from acquiring the stock or assets in another
business where the result would be a significantly increased market share and the effect
would most likely be to lessen competition. – “If a horizontal merger creates an entity
with a significant market share, the merger may be considered illegal because it increases
market concentration… three additional factors. The first factor is the overall
concentration of the relevant market. The second is the relevant market’s history of
tending toward concentration. The final factor is whether the merger is apparently
designed to establish market power or restrict competition.” (Miller 510)
3. The removal of a competitor that controls 35% of the market (GreatGro) combined with
the 40% held by the acquiring company (Fruit­of­the­Plant) – stated within the question
4. definitely could drive out the remaining small competitors and be a barrier to future
entrants into this market. – “If a horizontal merger creates an entity with a significant
market share, the merger may be considered illegal because it increases market
concentration” (Miller 510).
5. Either the U.S. Department of Justice or the Federal Trade Commission could file for
divestiture of the resulting firm if these parties were to merge. – “The federal agencies
that enforce the antitrust laws are the U.S. Department of Justice (DOJ) and the Federal
Trade Commision (FTC), which was established by the Federal Trade Commission Act
of 1914. Section 5 of that act condemns all forms of anticompetitive behavior that are not
covered under other federal antitrust”. (Miller 511)
“ The DOJ or the FTC may ask the courts to impose various remedies, including divestiture
(making a company give up one or more of its operations) and dissolution”. (Miller 511)
Question 83
Loren signs a note that states, “Payable in thirty days.” The note is dated March Micah buys the
note on April 3. Is Micah an HDC of the note? Explain.
Answer: No, the time that a due date on an instrument begins is the day after the date of an
instrument, which would mean that this note is due April 1. In which this means that the note is
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overdue. A requirement for becoming an HDC is that a party must take an instrument without
notice that it is overdue.

1. due date on an instrument begins is the day after the date of an instrument, which would
mean that this note is due April 1. In which this means that the note is overdue. – “What
constitutes notice that an instrument is overdue depends on whether it is a demand
instrument (payable on demand) or a time instrument (payable at a definite time).”(Miller
249)
“Normally, a time instrument is overdue on the day after its due date”. (Miller 249)

2. A requirement for becoming an HDC is that a party must take an instrument without
notice that it is overdue. – “The basic requirements for attaining HDC status are set forth
in UCC 3-302. An HDC must first be a holder of a negotiable instrument and must have
taken the instrument (1) for value, (2) in good faith, and (3) without notice that it is
defective (such as when the instrument is overdue, dishonored, irregular, or incomplete).”
(Miller 246)
Question 85
Motor Vehicles Body Shops contracts to buy from Paint Supply & Equipment Headquarters,
Inc., twenty­four spray paint guns at $30 each to be delivered by October 1. Paint Supply knows
that Motor Vehicles Body Shops will use the guns to complete a special job by October 31 for a
certain auto dealer. Motor Vehicles Body Shops expects to make $17,000 profit from the job.
Paint Supply fails to deliver on October 1. Motor Vehicles Body Shops attempts to buy substitute
spray guns, but must pay $40.00 for each and take delivery on October 15, cutting Motor
Vehicles Body Shops’ profits when the dealer arranges for some of the job to be done elsewhere.
Motor Vehicles Body Shops sues Paint Supply. What is the measure of recovery?
Answer: There is a valid case for Motor Vehicle Shops to sue Paint supply. This is due to the
fact that Motor vehicles lost all of its profit from the dealer due to the non­delivery of Paint guns,
there is a case of irreparable damage. Here the Motor Vehicles can sue them for the loss of
profits including the permanent damage done for the reputation of the Motor Vehicle Body Shop.
In the future auto dealers may hesitate to come back to the company as they may not make up for
their promise.With this being said, the total recovery that Motor Vehicles can get would be to get
the twenty four spray guns in delay + the paint supply should make good the profit of 17,000 +
the a sum of money to measure the irreparable damage done to the Motor Body Shop.
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1. “In certain situations, buyers and lessees can protect themselves by
obtaining cover—that is, by buying or leasing substitute goods for those
that were due under the contract. This option is available when the seller
or lessor repudiates the contract or fails to deliver the goods, or when a
buyer or lessee has rightfully rejected goods or revoked acceptance. In
purchasing or leasing substitute goods, the buyer or lessee must act in
good faith and without unreasonable delay [UCC 2-712, 2A-518]. The
buyer or lessee can recover from the seller or lessor: 1.The difference
between the cost of cover and the contract price (or lease
payments).2.Incidental damages that resulted from the
breach.3.Consequential damages to compensate for indirect losses (such
as lost profits) resulting from the breach that were reasonably foreseeable
at the time of contract formation. The amount of consequential damages
is reduced by any amount the buyer or lessee saved as a result of the
breach (such as when a buyer obtains cover without having to pay
delivery charges that were part of the original sales contract). Buyers and
lessees are not required to cover, and failure to do so will not bar them
from using any other remedies available under the UCC. A buyer or
lessee who fails to cover, however, risks collecting a lower amount of
consequential damages. A court may reduce the consequential damages
by the amount of the loss that could have been avoided had the buyer or
lessee purchased or leased substitute goods.” (Miller 353)

2. “Les Entreprises Jacques Defour & Fils, Inc., contracted to buy a thirty-thousand-gallon
industrial tank from Dinsick Equipment Corporation for $70,000. Les Entreprises hired
Xaak Transport, Inc., to pick up the tank, but when Xaak arrived at the pickup location,
there was no tank. Les Entreprises paid Xaak $7,459 for its services and filed a suit
against Dinsick. The court awarded compensatory damages of $70,000 for the tank and
incidental damages of $7,459 for the transport. To establish a breach of contract requires
an enforceable contract, substantial performance by the nonbreaching party, a breach by
the other party, and damages. In this case, Les Entreprises agreed to buy a tank and paid
the price. Dinsick failed to tender or deliver the tank, or to refund the price. The shipping
costs were a necessary part of performance, so this was a reasonable expense.” (Miller
353)

Question 95
Best Yogurt Corporation orders refrigeration equipment from Cold Storage, Inc., which has an
unperfected security interest in the equipment until it is paid for. Meanwhile, Best Yogurt takes
out a loan from Dependable Credit, Inc., subject to a security interest in Best Yogurt’s building
and equipment, which Dependable Credit perfects. Best Yogurt files a petition in bankruptcy for
App. 196

Case 5:17-cv-00174-C

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Filed 12/11/17

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relief in a liquidation proceeding. If the petition is granted, in what order will the creditors be
paid?
Answer: If the petition is granted: Dependable Credit will be paid first and then Cold Storage
will be paid.
1. “Promptly after the order for relief in the liquidation proceeding has been
entered, a trustee is appointed. The basic duty of the trustee is to collect
the debtor’s available estate and reduce it to cash for distribution,
preserving the interests of both the debtor and the unsecured creditors.
The trustee is held accountable for administering the debtor’s estate. To
enable the trustee to accomplish this duty, the Code gives the trustee
certain powers, stated in both general and specific terms. These powers
must be exercised within two years of the order for relief.” (Miller 427)
2. “The trustee has the power to require persons holding the debtor’s property at the time
the petition is filed to deliver the property to the trustee. To enable the trustee to
implement this power, the Code provides that the trustee has rights equivalent to those of
certain other parties, such as a creditor who has a judicial lien. This power of a trustee,
which is equivalent to that of a lien creditor, is known as strong-arm power.”(Miller 427428)

App. 197