Cathay Enterprises, Inc. v. Design Trend International Interiors Ltd. (In Re Cathay Enterprises, Inc.)

MEMORANDUM

Cathay Enterprises, Inc. (“Cathay”) appeals from the district court’s reversal of the bankruptcy court’s judgment. The district court found that Cathay had waived any material breach by Design Trend International Interiors, Ltd. (“Design Trend”) based on timeliness of performance on a construction contract for renovations to a hotel owned by Cathay. We have jurisdiction under 28 U.S.C. §§ 158 (d), 1291, and we affirm the district court’s decision as to waiver and substantial performance in favor of Design Trend, but reverse and remand the issues of prejudgment interest calculation and attorneys’ fees.

This case has an extensive history that we will not recount. We simply note that after Design Trend missed the final completion date of the construction contract, Cathay repeatedly insisted that it continue to perform, communicating through letters and two administrative enforcement actions enlisting the help and authority of the Arizona Registrar of Contractors. An ALJ found that Design Trend had substantially completed the project, but the bankruptcy court relieved Cathay of responsibility to pay the amount outstanding because Design Trend had materially breached the…