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THOMPSON v. LIQUICHIMICA OF AMERICA

September 12, 1979

RICHARD S. THOMPSON, Plaintiff,
v.
LIQUICHIMICA OF AMERICA, INC., LIQUICHIMICA S.p.A., LIQAM, INC., LIQUIGAS S.p.A., LIQUIFIN OF AMERICAN, INC. and LIQUIGAS (JERSEY) HOLDINGS, LTD., Defendants



The opinion of the court was delivered by: LASKER

In November of 1978 Richard S. Thompson entered into an agreement with Liquichimica of America, Inc., (LOA) by which a new company was to be formed, a part of which would be owned by Thompson and part by LOA. The parties further agreed that the new company would evaluate two proposed joint ventures in the chemical industry. Shortly thereafter, the Liquigas group, a family of companies which included LOA, concluded that it would be adverse to its interests to proceed with the contract because one of its members, Liquichimica Italiana S.p.A., had the capacity to produce the materials to which the Thompson-LOA contract related. Accordingly, the Liquigas group advised Thompson that although it admitted the validity of the November 14th agreement, it would not permut LOA to proceed. Instead, it entered into negotiations with Thompson to settle his rights.

Early in February, 1979, Thompson met with LOA's president, Gerard J. Griesmer, and Giulio Porro of the Liquigas group to commence negotiations. Their discussions resulted in a letter from LOA to Mr. Thompson dated February 9, 1979, wich reads as follows:

"Dear Mr. Thompson:
 
Following the discussion we have had with you in the presence of Mr. G. Porro, representing the Liquigas Group, it is understood that all parties will exercise their best efforts to reach an agreement on or before May 15, 1979 for Richard S. Thompson to acquire Liquichimica of America, Inc. eith including the Ronson Corp. common stock as per proposal A attached, or excluding the Ronson stock as per proposal B attached.
 
It is agreed that the 90 days period referred to in paragraphs (1) and (4) of the November 14, 1978 Agreement is extended to May 15, 1979.
 
This letter will not relieve the parties from any obligations or liabilities that may arise from the non-completion of this agreement."

 Thompson argues that the February 9th letter constitutes a binding agreement by which he was given the right to acquire LOA either alone or together with the Ronson Corporation common stock owned by it, and that the Liquigas group had the option to choose which of the two alternatives would be consummated. He asserts that some time after the February letter, the Liquigas group advised him that they refused to sell the Ronson stock and that thereafter he, Thompson by telex of May 1, 1979, exercised his "option" to acquire LOA alone.

 Thompson has brought this suit on the claim that the defendants thereafter refused to sell him the "assets of Liquichimica of America, Inc. and its subsidiary companies" (Amended Complaint, P 15).

 Upon the filing of the complaint, Thompson moved for a preliminary injunction enjoining the defendants from disposing of their assets, particularly a parcel of land located in the State of Louisiana and the Ronson Corporation stock owned by them.

 The defendants oppose the motion and move the for summary judgment.

 Thompson's original complaint consisted of four counts, asserting rights under the February 9th letter only. In substance, he claimed that he had a contract to buy LOA which had been breached in various ways by one or more of the defendants. The defendants' motion for summary judgment is based on the ground that the February 9th letter is not a binding contract. Accordingly, the sole issue as to the first four causes of action is whether the February 9th letter constitutes a binding agreement. A reading of this letter makes it hard to understand how it can be contended that it is a binding contract. For example, nowhere in its language is the word "agreement" used; to the contrary, the critical language of the letter is the clause which states that "it is understood that all parties will exercise their best efforts to reach an agreement on or before May 15, 1979." The defendants argue that this language, and the entire text of the February 9th letter constitutes no more than a universally unenforceable "agreement to agree." This seems apparent on its face, and there would be no reason to look into the matter further had the plaintiff not submitted the affidavit of Mr. Griesmer, who drafted the February 9th letter, to the effect that it was intended that the letter should constitute a binding contract between the plaintiff and defendants.

 We have reviewed the Griesmer affidavit with care and find that it does not carry the day. Its contentions are so inconsistent with the terms of the letter of February 9th that it cannot be accepted as the "illumination" of the meaning of the letter it purports to be. Moreover, Griesmer's contention that "the contract which I reduced to writing on February 9th was a binding one" is the expression of a legal conclusion which would be inadmissible if he testified to this effect at trial. Finally, Griesmer's contentions that the February 9th letter was a "contract" and was intended to be "binding" is altogether at odds with the fact that the letter itself continues in force the agreement of November 14th which the February 9th "contract" was allegedly intended to replace. Although at argument on the motion we indicated that a further inquiry into the facts surrounding the formation of the alleged contract might be required under the decisions of this Circuit, a further study of the documents has persuaded us that, even in the light of the Griesmer affidavit, there is no basis for holding that the February 9th letter, insofar as it purports to constitute a contract for the acquisition by Thompson of LOA, is anything but an unenforceable agreement to agree. Accordingly, defendants' motion for summary judgment as to the four causes of action in Thompson's original complaint is granted.

 As a result of the claim by the defendants that the February 9th letter is unenforceable the plaintiff has moved to amend his complaint by adding two causes of action. The proposed sixth cause of action asserts a claim under the original contract of November 14, 1978 and, in particular, alleges that:

 
"Plaintiff and defendants entered into a written agreement whereby it was agreed that a joint venture would contract operate a petrochmical ...

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