Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

MAGNALEASING, INC. v. STATEN ISLAND MALL

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK


March 22, 1977

MAGNALEASING, INC., Plaintiff, against STATEN ISLAND MALL, BLACKFRIARS REALTY CORP. and TOTTENHAM REALTY CORP., Defendants.

The opinion of the court was delivered by: MACMAHON

MEMORANDUM

MacMAHON, District Judge.

 Plaintiff moves, by order to show cause, to confirm the report of Magistrate Martin D. Jacobs, pursuant to Rule 53(e)(2), Fed.R.Civ.P.

 In our decision dated June 30, 1976, we granted plaintiff rescission of its lease with defendant, Staten Island Mall, finding that defendants had made material misrepresentations with respect to occupancy levels, amount of tax rent, and amount of common area charges. We also referred the action to Magistrate Jacobs, as Special Master, "to take an accounting and to hear, compute, determine and report as to the amount of damages due to plaintiff," because it appeared that the damage issue was complex and would involve time-consuming mathematical computations or matters of accounting best delegated to a Magistrate.

 Opposing the motion, defendants contend that by our reference we improperly reopened the case, thus giving plaintiff "two bites of the apple" in proving damages. We disagree.

 The trial record contained sufficient evidence for a computation of damages by the Special Master but, in our view, required clarification and focusing into a meaningful pattern of proof. The case was not reopened to hear new evidence on the damage issue. In any event, the trial judge, in his sound discretion, may reopen a case and sua sponte refer it to a Special Master to hear further evidence. *fn1"

 Defendants have failed to make any showing of prejudice or surprise by any additional evidence, and any such evidence was received merely to clarify that already offered at trial. Therefore, even if the case were deemed to have been reopened, we find that the reopening was in the interests of fairness and substantial justice.

 Defendants contend that the reference was improper because the case does not involve the determination of issues for which a reference is appropriate. However, that objection is untimely and not made in the proper forum because defendants did not raise it until their appearance before the Magistrate for the hearing on damages. An objection to reference should be made before the trial judge at or prior to the time of reference. *fn2" Furthermore, defendants waived that objection by consenting to the judgment of reference. Finally, this non-jury action obviously falls within the category of cases appropriate for reference to a Magistrate because it involves matters of accounting and complex damage computations. *fn3" Therefore, we find the reference was proper in all respects.

 Defendants also contend that plaintiff Magnaleasing is not entitled to any damages because any damages involved in this case were incurred by Magnavox, its parent company, rather than by plaintiff. However, plaintiff operated as a separate corporate and financial entity. Although the payments for improvements, rent, and taxes were made directly by Magnavox on behalf of plaintiff, plaintiff incurred a liability to Magnavox for those expenditures and has in fact been repaying Magnavox. Therefore, plaintiff is entitled to damages. *fn4"

 Defendants further contend that plaintiff is not entitled to damages representing the difference between the common area charges and tax rent paid and that which defendants represented would be due because it is a claim for lost profits, a forbidden measure of damages under New York law. Such a contention is totally lacking in merit. It is clear that the measure of damages in an action for fraud is the pecuniary loss suffered by the defrauded party as a direct result of the false representations. *fn5" Plaintiff seeks, in effect, restitution of the excess money it actually paid to defendants for common area charges and tax rent, and those payments are a pecuniary loss directly caused by defendants' fraudulent misrepresentations.

 Defendants also claim that plaintiff failed to mitigate damages. Defendants, however, have failed to carry their burden of showing how plaintiff acted unreasonably or what damages it could have mitigated. In addition, the Magistrate found that the improvements were particularly adapted for use in the store and would have no salvage value if removed. We cannot say that conclusion is clearly erroneous. We, therefore, reject defendants' contention that plaintiff failed to mitigate damages.

 Defendants further contend that it is improper to assess damages attributable to tax rent and common area charges on the basis of "leased" space, as provided in plaintiff's lease with the Mall, because plaintiff could have secured lower rates based on "leasable" space. Thus, defendants argue, the damages representing the difference between those rates is attributable to plaintiff's inept negotiating rather than to defendants' misconduct. Defendants cite absolutely no authority for this proposition, and we think it is patently wrong.

 Plaintiff suffered damages because it made payments on the basis of leased space, and those damages resulted from defendants' misrepresentations which induced plaintiff to sign the lease. Plaintiff is entitled to damages based upon the lease which it actually signed and the monies it expended as a result, not upon some hypothetical lease or expenditures. Furthermore, there would have been little difference between damages based upon leased space and those based on leasable space had the actual occupancy level been as defendants represented. Finally, 101 of the 114 leases at the Mall were entered into on a leased space basis, and, therefore, plaintiff's lease was neither unusual, nor it appears, the result of inferior bargaining.

 An appropriate sum for inflationary costs which plaintiff would have incurred in any event must be subtracted from plaintiff's claim for overpayment of common area charges to arrive at the proper amount of damages. Defendants, however, challenge the 15.5% inflationary rate the Magistrate selected to compute that sum and argue that either a 48.7%, 42.2% or 24.9% rate is closer to the actual rate. Plaintiff had earlier championed a 10.0% rate. All of these rates are subject to challenge on one ground or another because the data from which they were computed is incomplete and does not permit accurate comparison between different years due to the method and manner of its compilation.

 The Magistrate found that the most significant evidence concerning the inflationary rate was that common area charges assessed against plaintiff had not increased since it entered the Mall in August 1973. In addition, defendants did not introduce any evidence of increases in common area expenses since the shopping center was opened. Under all the circumstances, we cannot say that the Magistrate's conclusion that a 15.5% rate was appropriate is clearly erroneous.

 Accordingly, plaintiff's motion to confirm the report of Magistrate Jacobs, dated February 14, 1977, is granted. Settle judgment within ten (10) days.

 LLOYD F. MacMAHON / United States District Judge


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.