Free Response to Motion - District Court of Delaware - Delaware

Case 1 :04-cv-00148-GIVIS Document 76 Filed 08/22/2005 Page 1 of 4
IN THE UNITED STATES DISTRICT COURT
FOR TI-IE DISTRICT OF DELAWARE
In re: Chapter 1 1
INACOM CORP., et al., Bankruptcy Case No. 00-2426 (PJW)
Debtors.
INACOM CORP., on behalf of all affiliated Case N0. O4-CV-148
debtors,
Plaintiff
vs.
TECH DATA CORPORATION,
Defendant.
TECH DATA CORPORATION,
Third-Party Plaintiff,
vs.
COMPAQ COMPUTER CORP., ITY
CORP., and CUSTOM EDGE, INC.,
Third-Part Defendants.
HEWLETT-PACKARD COMPANY ’S REPLY IN SUPPORT OF MOTION IN
LIMINE TO EXCLUDE TESTIMONY REGARDING GUARAN TY BASED ON
FRANCIS LETTER DATED FEBRUARY 16, 2000
Tech Data seeks to hold Hewlett-Packard Company ("HP”) liable for over
$4.6 million on grounds of alleged breach of contract based on a severa1—sentence
informational letter that was sent to Tech Data in connection with the closing of an asset
purchase agreement. The Francis Letter dated February 16, 2000 does not constitute an
enforceable contract -— and should be excluded from evidence -- because there was no
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Case 1:04-cv—00148-G|\/IS Document 76 Filed 08/22/2005 Page 2 of 4
consideration in exchange for the purported assumption or guaranty of Inacom’s pre-
existing obligations to Tech Data.
ARGUMENT
I. WHETHER TECH DATA ALLEGES THAT THE FRANCIS
LETTER IS A PRIMARY OR SECONDARY OBLIGATION
MAKES NO DIFFERENCE.
Tech Data insists that the Francis Letter is not merely a secondary
obligation, but an "outright contractual assumption of debts owed to Tech Data."
Regardless of whether the letter purports to be a primary or secondary obligation, it is (
unenforceable because there was no consideration.
As a matter of basic hombook law, the formation of a contract requires
mutual assent between the parties to be bound by a promise and consideration for the
promise. See, eg., ATACS Corp. v. Trans World Communications, Inc., 155 F. 3d 659,
665 (3rd Cir. 1998) ("While typically analyzed in terms of offer and acceptance, [Corbin
citation], the decisive inquiry in contract formation is the ‘manifestation of assent of the
parties to the terms of the promise and to consideration for it...’ [Williston citation]").
See genernlbz Restatement (Second) of Contracts § 17 and Restatement (Third) of the
Law of Suretyship and Guaranty § 9(1).
II. THE ALLEGED "ASSUMPTION" OR "GUARANTY"
FAILS FOR LACK OF CONSIDERATION.
Tech Data is tmable to cite any consideration in exchange for the alleged
promise set forth in the Francis Letter. For an agreement to be enforceable there must be
some consideration in exchange for the promise. See, e. g., In re Johnson ’s Estate, 346
N.Y.S.2d 283, 286-87 (1973) (bank promise to serve as trustee in the future at reduced
rate if it were selected did not bind either party).
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Testimony by Ben Wells that the letter was sent "to ensure the continued
flow of products" from vendors does not evidence consideration. The letter did not
create any new obligations on the part of either Tech Data or Compaq. Tech Data did not
bargain for any additional guarantee of payments by Compaq or any assumption of
obligations by Compaq. Tech Data’s continued shipment of products to Inacom did not
constitute separate consideration because shipments were based on a pre-existing
contract. Moreover, Tech Data was fully paid for its shipments of products to both
Inacom and Compaq.
Tech Data’s attempt to turn the Francis Letter into a contractual obligation
should be rejected because the letter lacks the basic elements required of a contract.
CONCLUSION
HP requests that the Court grant an in limine order precluding Tech Data
from presenting any testimony, documentary evidence, or argument that the Francis
Letter constitutes a "contractual assumption" or "guaranty" requiring that HP pay
amounts were actually paid by Inacom, and are now the subject of a preference action.
Dated: August 22, 2005
Wilmington, Delaware MORRIS, NICHOLS, ARSHT & TUNNELL
William Sudgi, Jr. (No. 463)
Derek C. Abbott (No. 3376)
Gregory T. Donilon (N0. 4244)
Daniel B. Butz (No. 4227)
1201 N. Market Street
Wilmington, DE 19899-1347
(302) 658-9200
- and -
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FRIEDMAN DUMAS & SPRINGWATER LLP
Ellen A. Friedman
Cecily A. Dumas
Gail S. Greenwood
Brandon C. Chaves
One Maritime Plaza, Suite 2475
San Francisco, CA 94111
(415) 834-3800
Attomeys for Third-Party Defendant
Hewlett-Packard Company
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