First National Bank of Omaha v. Three Dimension Systems Products, Inc.

Brief Fact Summary.

The First National Bank of Omaha (Bank) (plaintiff) contracted Three Dimension, Inc. (3D) (defendant) to create a computer software. After Stage delivery 3D sent an invoice for additional $250,000 and informed that it would not be fixing any errors after delivery. The Bank sued 3D for anticipatory breach. 3D counterclaimed. A jury ruled in favor of the Bank. Later, The district court granted 3D’s motion for judgment as a matter of law. The Bank appealed.

Synopsis of Rule of Law.

An anticipatory breach happens when one party to an agreement shows an unequivocal intent not to execute as promised while the other party is generally willing and ready to perform.

Facts.

The First National Bank of Omaha (Bank) (plaintiff) entered an agreement with Three Dimension Systems Products, Inc. (3D) (defendant), under which 3D was to make a PC programming software program for the Bank. After 3D conveyed Stage I of the program to the Bank, 3D sent the Bank a receipt for an extra $250,000. 3D likewise educated the Bank that 3D would not be fixing any errors in Stage I after conveyance. The Bank sued 3D for anticipatory breach, contending that 3D had anticipatorily breached by declining to ensure that Stage I would work accurately and by demanding the $250,000. 3D counterclaimed for breach of the agreement and shielded itself on the premise that the Bank had not given 3D a chance to cure the alleged breach. The Bank's proof included records from 3D concerning the 10-day fixing period and the $250,000 receipt. The Bank additionally presented declaration that 3D's president had orally indicated that any Stage I mistakes would not be settled until Stage III or IV, if at all, and that 3D would not proceed onward to the following phase of advancement unless and until the point that the receipt had been paid. The Bank's confirmation additionally proposed that the agreement did not approve the receipt. 3D contended that it would have fixed any errors in the later phases of the project and that its continued performance was not conditioned on the Bank’s payment of the invoice.  A jury decided for the Bank, finding that 3D had anticipatorily breached the agreement. Nonetheless, the district court granted 3D's motion for judgment as a matter of law. The Bank appealed.

Issue.

Does anticipatory breach happen when one party to an agreement shows an unequivocal intent not to execute as promised while the other party is generally willing and ready to perform?

Held.

Yes. An anticipatory breach happens when one party to an agreement shows an unequivocal intent not to execute as promised while the other party is generally willing and ready to perform.

Dissent.

N/A

Concurrence.

N/A

Discussion.

To demonstrate an anticipatory breach, a party must demonstrate that while it was willing and ready to play out its legally binding commitments, the other party's words showed an unequivocal intent not to perform as promised. An anticipatory breach happens before the time that execution is required by the agreement. In like manner, a party stating that another party has anticipatorily breached the agreement must demonstrate that the other party has positively and unequivocally communicated its refusal to perform when execution becomes due. This requires verification of the purportedly breaching party's clear intent not to execute as promised and evidence that the non-breaching party was willing and ready to perform without the other party's anticipatory breach. Here, the agreement between the Bank and 3D contemplated about that there would be three phases of software programming advancement following Stage I. The Bank brought its suit after conveyance of Stage I, asserting that 3D had anticipatorily breached the agreement by declining to ensure that Stage I was working and by demanding an extra $250,000. The parties displayed conflicting declaration in the matter of whether 3D had adapted its execution on the Bank's payment of the $250,000. The jury believed the Bank's interpretation of the facts and reasoned that 3D's actions shown an unequivocal intent] not to execute as promised while the Bank was generally willing and ready to perform. Since the jury's finding that 3D anticipatorily breached the agreement is supported by the record, the district court's judgment for 3D is reversed, and the jury decision for the Bank is restored.