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PERMA RESEARCH & DEV. CO. v. SINGER CO.

January 27, 1970

PERMA RESEARCH & DEVELOPMENT COMPANY, Plaintiff,
v.
The SINGER COMPANY, Defendant


MacMahon, District Judge.


The opinion of the court was delivered by: MACMAHON

MacMAHON, District Judge.

This is a motion by defendant, The Singer Company ("Singer"), for summary judgment dismissing the complaint, pursuant to Rule 56, Fed. R. Civ. P. Plaintiff, Perma Research & Development Company ("Perma"), contends that the motion should be denied both because of the doctrine of "law of the case" and because there are many issues of material fact in dispute.

 The complaint, far from a model of clarity, asserts three claims. The first seeks damages of $41,000,000 for breach of a June 1964 contract between the parties, alleging that substantial numbers of an automobile anti-skid braking device invented by Frank A. Perrino, the president of Perma, and assembled by Singer under the contract were "defective as a result of inadequate quality control." The second seeks to set aside a superseding contract made in December 1964 and to recover damages of $41,000,000 for fraud in the inducement. Both of these counts were dismissed by this court (Bryan, J.) and summary judgment granted in favor of Singer. The Court of Appeals affirmed. 410 F.2d 572 (2d Cir. 1969).

 We are concerned here with the third claim, which is buried in the "WHEREFORE" clause of the complaint under the prayer for other relief. It alleges in the alternative that "if it be determined that the contract of December 21, 1964 be valid, Plaintiff demands judgment upon this contract for breach and nonperformance thereunder in the amount of 41 million dollars."

 There was extensive discovery, but neither party sought evidence concerning this alternative claim. Rather, it was either overlooked or intentionally ignored. Not surprisingly, therefore, on the earlier motion for summary judgment, Singer did not address itself directly to the alternative claim, nor did Perma. Despite this, it did not escape the notice of Judge Bryan, who, after noting the neglect of the parties, held that "in the present posture of this action and on the papers before me Singer has not demonstrated that there are no material issues of fact as to this claim which require trial and summary judgment on the claim must therefore be denied."

 Had the matter stopped there, we would not feel constrained to follow Judge Bryan, for it is plain that because of the parties' neglect the court lacked sufficient information in proper form to consider the merits of the alternative claim and in such circumstances the doctrine of law of the case is not a strait jacket. *fn1" However, the matter did not stop there. Instead, Singer moved successfully for reargument asserting that "this claim of breach must be dismissed because as a matter of law the contract provided the exclusive remedy of termination for any alleged inadequacy of performance (Point I), or, alternatively, because on the basis of undisputed facts now before the Court, there has been no breach (Point II)."

 Singer then made the precise argument, cited the same authorities and presented the identical facts now urged on this second attempt for summary judgment in its favor. There is no suggestion that there are any newly discovered facts or that there has been a change in the applicable law. In short, the very points now made were all made and rejected by this court when Judge Bryan granted reargument and adhered to his original decision. This squarely raises the question of whether this motion is barred by the doctrine of law of the case.

 As Judge Learned Hand said, "the 'law of the case' does not readily bind a court to its former decisions, but is only addressed to its good sense." *fn2" Since the doctrine is addressed to the court's "good sense," it ought not be imposed on a mechanical basis. *fn3" Rather, its applicability turns upon a number of considerations. *fn4" One is judicial economy and another is the unseemliness of a court's altering a legal ruling as to the same litigants. A decision in a given case is, therefore, said to be the law of the case, and no question previously decided will be decided again unless there is some compelling reason. *fn5"

 The balance of considerations here argues strongly against overruling Judge Bryan, for, although we are not compelled to follow his decision, in all "good sense" we are unable to find any convincing reason for refusing to do so. *fn6" We rest on his opinion both because it is the law of the case and because we are satisfied with it. *fn7"

 Singer contends that the alternative claim for breach of the December agreement must be dismissed because as a matter of law Singer was not required under the contract to do anything until January 1966 and because the contract provides the exclusive remedy of termination for any alleged inadequacy of performance. Singer's contentions are based on paragraph 10 of the contract, which, in pertinent part, provides:

 
"Reversion Right. In the event * * * [Singer] does not incur direct and indirect costs of at least $100,000 for marketing, promoting and advertising the Product * * * in any calendar year between January 1, 1966 and the December 31st preceding the time of expiration of * * * [Singer's] duty to pay royalties hereunder * * * [Perma] upon written notice * * * may notify * * * [Singer] of its exercise of its rights * * * [to reversion of its patents, tools, etc.]."

 It was further provided that upon receipt of such notice, Singer "shall assign and convey to * * * [Perma] the patents and patent application assigned and conveyed hereunder" in consideration of Perma's payment to Singer of all its debts, plus $50,000 in cash, whereupon the December agreement would terminate.

 Relying on the above provision and its tender of the patents and waiver of the $50,000 cash payment, Singer argues that paragraph 10 defines not only the sole measure of the performance required of Singer, but also specifies Perma's exclusive remedy for breach. We think, however, that paragraph 10 simply gives Perma an option to recover its patents and terminate the contract upon specified conditions. The option rests not with Singer but with Perma.

 An option to terminate is not an exclusive remedy, and a party is not obligated to exercise such an option but may stand on his rights. *fn8" There is, thus, no basis in the agreement for Singer's contention that "under any conceivable version of the facts, as a matter of law Perma's sole remedy would be to reacquire its patents." Nor do we find support in the cases urged by Singer *fn9" for all of them, as Singer concedes, are predicated on the fact that patents were assigned without an express agreement by the assignee to pay any specified amount or to perform any particular act. That premise is absent here. It is not supplied by reiteration of the complaint's erroneous conclusion that the contract is illusory ...


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