American Paper Recycling Corp. v. IHC Corp.

707 F. Supp. 2d 114 (2010)

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American Paper Recycling Corp. v. IHC Corp.

United States District Court for the District of Massachusetts
707 F. Supp. 2d 114 (2010)

  • Written by Tammy Boggs, JD

Facts

American Paper Recycling Corp. (APR) (plaintiff) was a corporation in the business of purchasing wastepaper for recycling. Ivy was a corporation in the business of manufacturing paper packaging, which generated a lot of wastepaper. APR and Ivy entered a 1990 sales contract under which Ivy agreed to sell all its wastepaper to APR. The wastepaper was generated at Ivy’s Indiana and Kentucky plants. The parties’ sales contract was extended numerous times and, in its final iteration, was not set to expire until 2020. Ivy was a wholly owned subsidiary of a company called Cinram. In 2009, pursuant to an asset-purchase agreement, Cinram sold substantially all of Ivy’s assets to MPS/IH, LLC (MPS). Cinram received $23.5 million in cash and 7,750 shares of nonvoting stock of MPS’s parent company, representing 3.2 percent of outstanding stock and which could be redeemed by the parent company. A few specified assets of Ivy were not transferred to MPS under the asset-purchase agreement, including cash, all real estate owned in fee, and Ivy’s 1990 sales contract with APR. MPS, which did acquire Ivy’s physical plants, intended to change and consolidate operations. To that end, MPS directed APR to stop picking up wastepaper at the Indiana and Kentucky plants. APR sued IHC Corp. (formerly, Ivy) and MPS (defendants) to compel performance of the sales contract and prevent MPS from selling wastepaper to a third party. On cross-motions for summary judgment, MPS argued that it could not be held liable for breach of contract because it did not acquire the sales contract.

Rule of Law

Issue

Holding and Reasoning (Stearns, J.)

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