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R-T LEASING CORP. v. ETHYL CORP.

February 7, 1980

R-T LEASING CORPORATION, Plaintiff, against ETHYL CORPORATION, Defendant.


The opinion of the court was delivered by: MOTLEY

Ethyl Corporation (Ethyl) has moved for summary judgment under Rule 56 of the Federal Rules of Civil Procedure to dismiss the complaint of R-T Leasing Corporation (R-T Leasing) on the ground that R-T Leasing has failed to establish the existence of genuine issues of material fact ripe for disposition at a plenary trial on the merits. This motion arises from an action lodged against Ethyl, the lessee of railroad tank and hopper cars, by R-T Leasing, the lessor, for two purported breaches of leases executed, respectively, in 1967 and 1968. More specifically, R-T Leasing has alleged that Ethyl's failure to forward inventories of the tank and hopper cars within the thirty-day curative period as provided in the lease as well as the inadequacy of the inventories belatedly received each constitutes breaches of the leases. Second, R-T Leasing has alleged that Ethyl's use of the railroad cars to transport a lead-based substance, referred to as "motor-fuel antiknock compound" (MFAC), violated Ethyl's duty under section 7 of the lease to maintain the railroad cars in "good working order, condition and repair, reasonable wear and tear excepted."

In addition, R-T Leasing has brought a claim based on Ethyl's alleged wrongful detention of the railroad cars and, finally, has requested declaratory relief.

 The parties have agreed, pursuant to section 15.5 of the lease, that the terms of the lease were to be construed according to Virginia law. Contracting parties may stipulate controlling law as long as the contract bears a reasonable relationship to the state whose law is stipulated. Sears, Roebuck & Co. v. Enco Assocs., 83 Misc.2d 552, 370 N.Y.S.2d 338 (1975), aff'd, 54 App.Div.2d 13, 385 N.Y.S.2d 613 (1976), modified, 43 N.Y.2d 389, 401 N.Y.S.2d 767, 372 N.E.2d 555 (1977); cf. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S. Ct. 1020, 85 L. Ed. 1477 (1941) (federal court must apply conflicts of law rules of the state in which it sits; thus New York conflicts law applies in this action). As the lease bears a reasonable relationship with Virginia, Virginia law governs the construction of the lease.

 As a preliminary observation to a discussion of the merits of this motion for summary judgment, the court notes the absence of a 9(g) statement, detailing the material facts in dispute as required by the local rules of this court, among the affidavit S and supporting memoranda submitted by R-T Leasing in opposition to this motion. This unexplained oversight alone may furnish a ground for a decision in favor of Ethyl. See Securities Exchange Commission v. Research Automation Corp., 585 F.2d 31 (2d Cir. 1978). However, now that the court has considered the facts presented both in the affidavits of the parties and at oral argument, the court has chosen to overlook R-T Leasing's failure to conform to the procedural niceties so important to the expeditious disposition of a motion for summary judgment. Instead, the court has decided to grant Ethyl's motion on the grounds that: 1) R-T Leasing has neglected to comply with the requirements of Rule 56(e) of the Federal Rules of Civil Procedure in its failure to present, in its affidavit, specific facts that establish the existence of genuine issues of material fact with respect to Ethyl's allegedly unauthorized transport of MFAC and 2) R-T Leasing has not disputed any of the factual issues raised by Ethyl relevant to the timeliness and sufficiency of the inventories.

 More punctiliously, the court has sifted through the ninety-three paragraphs in the affidavit submitted by R-T Leasing and has failed to unearth any factual allegations challenging Ethyl's statement of the material factual issues in this action. At best, R-T Leasing disputes facts that are in no way material or even relevant to the resolution of the factual and legal issues extant in this action. Far from stating material facts that challenge Ethyl's version of the underlying facts, R-T Leasing offers for the scrutiny of this court a congerie of unsupported legal conclusions and immaterial facts, leading this court to conclude that no genuine factual issues remain in this action that deserve resolution at a subsequent trial on the merits.

 FACTS

 The events leading to the initiation of R-T Leasing's suit against Ethyl and Ethyl's subsequent motion for summary judgment are described as follows:

 In 1967, Ethyl placed orders with two manufacturers for railroad tank and hopper cars. Ownership of these cars was to vest in an unspecified third party. After placing these orders, Ethyl contacted North American Leasing Company (North American) to inquire about the possibility of North American's purchase of the railroad cars. According to Ethyl's proposal, after a purchase, the railroad cars were to be leased to Ethyl.

 Mr. Lincoln Stevenson, the president of North American at that time, ultimately agreed to purchase and then to lease the railroad cars to Ethyl. The parties entered into the first lease of the railroad tank and hopper cars on March 15, 1967. The term of the 1967 lease commenced on July 15, 1967 to terminate on July 15, 1982. The second lease, covering the same subject matter, was executed on May 20, 1968; its term commenced on July 15, 1968 to terminate on July 15, 1983. The railroad tank cars were placed into service almost immediately after the commencement of the terms of each lease.

 In May, 1970, North American changed its corporate name to R-T Leasing Corporation and operations continued as before until November 13, 1978. It is undisputed that North American and R-T Leasing are identical corporate entities notwithstanding the name change. On this date, the president of R-T Leasing, Mr. Peter Starr, sent a letter to Mr. Bruce Gottwald, a representative of Ethyl, informing Ethyl of its default in its duty to forward inventories of the tank and hopper cars as required by section 15.1 of the 1967 (and 1968) leases.

 At a later time, Mr. John Donohue, then the president of R-T Systems, the parent of R-T Leasing, notified Mr. Gottwald in a letter dated December 22, 1978, that Ethyl was still in default of its obligations under the lease. Soon thereafter, on January 26, 1979, Mr. Donohue, by letter, informed Ethyl that 1) R-T Leasing's recent discovery of Ethyl's use of the railroad cars to transport lead-based compounds, MFAC, constituted a clear violation of section 7 of the lease and 2) Ethyl's recently mailed inventories failed to cure its default as their format, too vague to enable R-T Leasing's inspection of the cars, did not comply with the format envisioned in section 15.1 of the lease. Mr. Donohue then stated that R-T Systems had elected to terminate Ethyl's right of possession of the cars pursuant to section 12.1(i) of the lease and directed that Ethyl deliver possession of the railroad cars.

 Ethyl's refusal to surrender possession of the tank and hopper cars marked the genesis of the complaint.

 DISCUSSION

 Timeliness of the Inventories

 Although R-T Leasing alleges in its complaint that Ethyl failed to forward the inventories within the requisite thirty-day curative period as set forth in the lease, R-T Leasing, in its opposing papers, has not challenged Ethyl's contention that the inventories were forwarded in a timely manner. The court, therefore, deems the following facts undisputed.

 Ethyl forwarded the requested inventories in an envelope postmarked November 17, 1978, which was then returned as unclaimed by the Post Office on December 4, 1978. Ethyl proceeded to re-mail the inventories on December 5, 1978, pursuant to the instructions of R-T Systems. These inventories reached R-T Leasing well within the thirty-day curative period as set forth in section 12.1(b) of the lease.

 In the event that:

 
(b) The Lessee shall default in the observance or performance of any other covenant, condition or agreement required to be observed or performed by the Lessee hereunder and such default shall continue for more than 30 days after notice thereof from the Lessor to the Lessee. . . .

 It also must be noted that, according to the lease, notice is deemed given when mailed. Section 15.4 provides:

 
Notices. Any notice required or permitted to be given by either party hereto to the other shall be deemed to have been given when deposited in the United States mails. . . .

 Given these facts, it seems quite obvious to the court that the inventories reached R-T Leasing well within the permissible time period for a cure of the alleged default. Thus, based on these undisputed facts, the court finds as a matter of law that the receipt of the inventories was timely and did not contravene the provisions of the lease regarding cures of default in obligations under the lease.

 Sufficiency of the Inventories

 Ethyl challenges the allegations in the R-T Leasing complaint with respect to the sufficiency of the inventories on two major grounds. First, Ethyl argues that R-T Leasing's inspection of the railroad cars was in no way dependent on the receipt of inventories, making the inventories submitted sufficient as a matter of law. Second, and in the alternative, Ethyl contends that even if the inventories did not comply with the lease, R-T Leasing's acceptance of the inventories in the years 1974 and 1977 in a format ...


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